The global crisis left Albania fairly unscathed and ushered in the needed economic rebalancing. The policy framework has been challenged in the post-crisis environment significant headwinds. Despite improvement, external imbalances remain elevated. Fiscal consolidation in terms of a more realistic macroeconomic framework will require credible measures and sustained efforts. Financial sector supervision and regulation will need to stay ahead of evolving challenges. Boosting productivity by attracting foreign investment is essential for higher sustainable growth.
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.
KEY ISSUESContext and outlook: Angola’s recent economic developments have been positive, but softening oil revenue and limited proven oil reserves highlight the need to contain emerging fiscal deficits, preserve policy buffers, and continue diversifying the economy.Focus of consultation: Discussions focused on mitigating the main risks to the macroeconomic framework and, inter alia, policies to return to structural fiscal surpluses over the medium term, and to support economic diversification and inclusive growth, the modernization of the monetary policy framework, and financial stability.Key policy recommendations:• Return to structural fiscal surpluses in line with the objective set forth in Angola’s Sovereign Wealth Fund, by mobilizing additional nonoil tax revenue, improving the efficiency of public investment, and reducing current spending, including by phasing out the costly and regressive fuel subsidies—while mitigating the impact on the poor through well-targeted social assistance.• Adopt an improved medium-term fiscal framework, focusing on the structural fiscal balance to limit the impact of the oil sector on the nonoil economy.• Develop a coherent asset-liability management framework, including awell-designed stabilization fund to shield the budget from oil revenue fluctuations.• Further improve public financial management systems to avoid, inter alia, a recurrence in the future of domestic payments arrears.• Continue improving the business climate to boost economic development, diversification, and competitiveness.• In transitioning over the medium-term toward an inflation targeting regime, enhance the central bank’s capacity to collect and analyze high-frequency economic data, and continue de-dollarizing the economy.• Further strengthen the financial system, by continuing to improve the transparency and accountability of banks, and enhancing bank supervision.• Manage public guarantees transparently and with a view to minimize fiscal costs, as envisaged in the recently-approved law on public guarantees.
This 2011 Article IV Consultation reports that the vulnerability of Belgium’s sovereign debt to market pressures makes credible medium-term fiscal consolidation a priority. The 2012 budget includes sizable consolidation measures, and the government is committed to take additional measures as needed with the aim of reaching structural balance by 2015. In light of the weak growth prospects, automatic stabilizers should be allowed to operate freely around the consolidation path. There is a need to strengthen banking supervision and to implement the Basel III and Solvency II regulatory frameworks.
Following successful reforms during the government's initial year in office, the year 2016 proved to be more difficult. The terror attacks in Paris and Brussels had a significant, albeit temporary, effect on the economy. The fiscal strategy veered off track, with a sizeable overshoot of the deficit target. Growth prospects for 2017 and beyond are modest, as in other euro area countries. The Belgian labor market remains severely fragmented.