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International Monetary Fund. Statistics Dept.

Abstract

The 2019 Financial Soundness Indicators Compilation Guide (2019 Guide) includes new indicators to expand the coverage of the financial sector, including other financial intermediaries, money market funds, insurance corporations, pension funds, nonfinancial corporations, and households. In all, the 2019 Guide recommends the compilation of 50 FSIs—13 of them new. Additions such as new capital, liquidity and asset quality metrics, and concentration and distribution measures will serve to enhance the forward-looking aspect of FSIs and contribute to increase policy focus on stability of the financial system.

International Monetary Fund. European Dept.

Abstract

The European recovery is strengthening and broadening appreciably. Real GDP growth is projected at 2.4 percent in 2017, up from 1.7 percent in 2016, before easing to 2.1 percent in 2018. These are large upward revisions—0.5 and 0.2 percentage point for 2017 and 2018, respectively—relative to the April World Economic Outlook. The European recovery is spilling over to the rest of the world, contributing significantly to global growth. In a few advanced and many emerging economies, unemployment rates have returned to precrisis levels. Most emerging market European economies are now seeing robust wage growth. In many parts of Europe, however, wage growth is sluggish despite falling unemployment.

International Monetary Fund. European Dept.
This paper discusses Albania’s Ninth and Tenth Reviews under the Extended Arrangement and Proposal for Post-Program Monitoring. All performance criteria were met, although of the three indicative targets were missed by a narrow margin. Eleven structural benchmarks were also implemented. Over the past three years, the authorities have met most quantitative targets and have made good progress in implementing the structural reform agenda under the program, albeit with some delays. The IMF staff supports the completion of the Ninth and Tenth Reviews under the Extended Arrangement.
International Monetary Fund. European Dept.
This paper discusses Albania’s Fourth Review Under the Extended Arrangement and Request for Modification and Waiver of Applicability of Performance Criteria (PC). Economic recovery is under way, but growth remains below potential. The low oil price is expected to have a muted effect on growth and on the balance of payments, as pass-through is weak and Albania is only a small net oil exporter. The program is on track. All end-December 2014 and continuous PCs and most indicative targets were met, with comfortable margins. The IMF staff supports the completion of the Fourth Review under the Extended Arrangement, as well as the modification and waiver of applicability of PC.
International Monetary Fund. European Dept.
This paper discusses Albania’s Second and Third Reviews Under the Extended Arrangement and Request for Waiver for the Nonobservance of Performance Criterion, Waiver of Applicability of PCs, and Rephasing of Future Disbursements. The program is on track. All end-June, end-September, and available end-December quantitative PCs were met. However, the continuous PC on the accumulation of external arrears was not observed because of technical delay with one interest payment. The IMF staff supports the authorities’ request for the completion of the second and third reviews under the Extended Arrangement, waiver of applicability of PCs, and rephasing of future disbursements.
International Monetary Fund. European Dept.
KEY ISSUES Background: On February 28, the Executive Board approved a three-year Extended Arrangement with access of SDR 295.42 million (492.4 percent of quota). A purchase of SDR 23.55 million (about EUR 26.4 million) was made in April 2014, and another will be made in the same amount upon completion of the first review. Recent Economic Developments: Growth in 2013 was the lowest in more than 15 years. The economy is showing tentative signs of recovery, but remains below potential. Successive monetary easing has not prevented credit contraction. The banking system remains stable, but asset quality is a concern. Program Performance and Risks: The program is on track. All end-March quantitative performance criteria and structural benchmarks were met, except for the structural benchmark on contracting an external auditor to conduct risk-based audits of arrears payments, which was not met but the government expects to complete in the coming weeks. An indicative target on accumulation of new arrears was not met although by a small margin and inflation has been slightly below the inner band prescribed under the inflation consultation clause. Program risks emanate from the complexity of reforms, particularly in electricity sector, and the need for sustained political commitment over the medium term. Policy Recommendations: No new fiscal measures will be needed in 2014, but the authorities should tackle emerging fiscal risks. Arrears clearance can be accelerated once external audits have progressed sufficiently. Addressing high NPLs will require continued efforts to clean bank and private sector balance sheets. Preparatory work related to the 2015 budget and structural reforms should start soon.
International Monetary Fund. European Dept.
This 2013 Article IV Consultation for Albania focuses on economic developments and policies that have led to weakening and imbalance of the economy. It highlights that high nonperforming loans (NPLs) are constraining credit growth, and weak external drivers are preventing a sustained reduction in external imbalances. Reduction in NPLs would safeguard financial stability and help release credit supply constraints by lowering bank risk aversion. The authorities have requested a three-year arrangement with proposed access equivalent to SDR 295.42 million.
International Monetary Fund. European Dept.
This paper discusses the Financial System Stability Assessment report on Albania. The IMF report states that the Albanian economy is weak, macroeconomic imbalances are large, and the financial sector faces several risks. Capital-to-asset ratios are sizable, but banks hold large amounts of government bonds that expose banks to sizeable losses in case of a sovereign debt re-pricing and balance sheets have deteriorated as a result of a rapid increase of nonperforming loans (NPLs). The authorities have taken steps to reduce the existing stock of NPLs with technical assistance from the World Bank.
International Monetary Fund. European Dept.
Despite a stern global financial crisis and fiscal imbalances within the country, Albania's prudent policies supported its economy to grow and safeguarded the soundness of the financial system. The Executive Board of the International Monetary Fund (IMF) encouraged the authorities to use prospective privatization receipts mainly for debt reduction and clearance of unpaid bills. The Directors recognized that financial risks remained elevated, and called for continued supervisory vigilance. They stressed the need to accelerate structural reforms in many areas to boost potential growth.
International Monetary Fund
Albania enjoyed strong growth with comparatively benign external vulnerabilities before the crisis. Monetary policy provided timely support, and the exchange rate functioned as a shock absorber. However, policy buffers are now exhausted and must be rebuilt. Fiscal tightening has to be quickly effected. Medium-term fiscal policy should be governed by a credible and monitorable fiscal rule. The Albanian economy has to broaden its sources of growth and strengthen competitiveness. Sound macroeconomic statistics are essential for competent policy making and investor confidence.