This 2008 Article IV Consultation highlights that over the last decade, Albania’s macroeconomic performance has generally been strong and per capita GDP in U.S. dollar terms more than doubled. Strong fiscal policy, largely based on major improvements in tax administration, lowered public debt from 66 percent of GDP in 2001 to 53 percent in 2007. Risks to domestic and external stability have receded somewhat. Domestic credit growth, though still elevated, has decelerated from past highs. The authorities have adapted regulatory and supervisory regimes to keep abreast with the rapidly developing financial system.
In the aftermath of adverse supply shocks, and with further measures to promote investment, growth of production and exports is expected to recover. Efforts to remove barriers to investment and ensure a reliable provision of electricity are critical to private-sector-led growth. External sustainability hinges on further improvements in the business climate to expand the production of tradables, and ongoing fiscal consolidation. Although the Albanian government remains committed to the program, serious risks to growth and the execution of the poverty reduction strategy remain.