In the report published on April 19, 2024, the international credit rating agency Moody’s confirmed Albania’s B1 rating and improved the outlook from “stable” to “positive”.
This improvement is due to the possibility of a better-than-expected fiscal scenario and the macroeconomic stability that has allowed the country to overcome three consecutive crises in the last five years, namely the 2019 earthquake, the Covid-19 pandemic and the 2022 energy crisis.
According to the agency, the debt-to-GDP ratio returned to a stable trajectory in 2022, after increasing in the period 2019-2021. It is expected to decrease from 59.2% recorded in 2023 to 56.3% in 2024.
Moody’s expects the debt-to-GDP ratio to continue to fall to 45% in the coming years. The strengthening of the fiscal rules established in the Organic Budget Law should in fact contribute to improving the primary balance. Furthermore, stable growth in gross domestic product is expected.
The fiscal reforms implemented by the government in medium-term revenues and the improvement of public investment management are expected to have a positive impact, even exceeding the agency’s current forecasts.
The medium-term economic outlook is considered positive thanks to the significant and constant improvement in the current account balance, supported by the tourism boom, the increase in remittances, the ever-increasing foreign direct investments in the tourism and energy sectors, as well as the increase in productivity and employment. According to Moody’s, real GDP growth will reach 3.5% this year.
Moody’s also positively evaluates the banking system, which is considered strong and highly liquid.
The growth potential of the Albanian economy in the medium term will also improve with the gradual implementation of new reforms related to the accession process to the EU, which is the country’s main trading partner.
These reforms are supported by the Reform and Growth Plan for the Western Balkans, approved by the European Commission in November 2023.
According to Moody’s estimates, the EU pre-accession funds and the financing provided for by the Western Balkans Investment Framework (WBIF) should also favor the alignment of per capita income with the levels of the EU countries.
