Abstract
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.
This statement provides information that has become available since the issuance of the Staff Report. The information does not alter the thrust of the staff appraisal.
1. Albania’s Parliament appointed a new Governor of the Bank of Albania (BoA) on February 5. Mr. Gent Sejko secured broad cross-party support in parliament for his nomination.
2. The BoA has continued its gradual monetary easing, most recently by lowering its policy rate by another 25 basis points on January 28. The central bank has lowered its policy rate by a cumulative 325 basis points since mid-2011, in order to counter slack in the economy and, more recently, disinflationary pressures from abroad.
3. The latest financial soundness data indicate that nonperforming loans have declined from 25 percent in September to just under 23 percent in December 2014. The decline in the NPL ratio appears to be driven by a broad-based reduction in banks’ NPL portfolios, as well as a pick-up in credit growth.