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| From the left: The Minister of Economy and Finance will be Ervin Mete, and the Governor of the Bank of Albania Genc Sejko |
Albania has been removed from the money laundering watchlist it entered in February 2020, according to Minister Ervin Mete in a press conference with the IMF and BoA.
"The decision was made by FATF, the Financial Action Task Force, for Albania's removal from the grey list, also known as enhanced monitoring, Monitor reports.
The decision was taken today by the FATF Plenary Assembly and is a result of the progress made by our country in implementing the recommendations. This is a decision with a number of positive impacts, both in terms of reputation and in facilitating the cost of financial transactions within and outside the country's banking system.
This is an encouraging and motivating news for us to continue strengthening the fight against money laundering and terrorist financing, as well as to fulfill the commitments made with international partners," said the minister.
"In this positive spirit, discussions with the IMF mission during the last two weeks were also helpful, with the IMF mission present within the framework of Article IV.
Discussions focused on the performance of the Albanian economy and public finances, challenges for the coming period, and recommendations for further improvements. It should be noted that for the first time, since no significant risks have been identified by the IMF mission, the positions expressed in the concluding statement will be approved through a consensual procedure, without prior referral to the IMF Board.
The country's economy has shown a pleasing resilience to a series of shocks, having one of the fastest recoveries in the region.
Macroeconomic fundamentals have remained stable during this period of challenges, which have served as a test of the economy's resilience and recovery. This stability is encouraging for the medium and long-term perspective of the Albanian economy, as well as for the health of public finances in the country.
In the first half of 2023, economic growth was 3%, with an acceleration from the first quarter to the second, where consumption and investment increased by 4.2% and 9.2% respectively compared to the first half of 2022.
The sectors that led economic growth were tourism and construction, supported by the growth of domestic demand. In the first half of 2023, employment continued to strengthen, increasing by 2.7% compared to a year earlier. Meanwhile, the unemployment rate continued its downward trend, dropping to 10.7%, one of the lowest historical figures.
Indirect preliminary data for the third quarter indicate a faster pace of economic growth. Economic sentiment indicators have reached historical highs, uncertainties have diminished, and other indicators of consumption and investment suggest an acceleration of economic growth.
Based on this positive trend, we have reviewed our projections for real growth for this year to 3.7%, up from the initial projection of 2.6%.
As for the economic outlook, in our baseline scenario for the coming year, we anticipate economic growth of 3.8%, with an average annual growth of around 4% for the medium-term period. We anticipate that such growth in the medium-term will be generated primarily by domestic demand, both from private consumption and total investment in the economy. We also anticipate that net external demand will make a positive contribution, primarily due to good expectations for services, especially tourism.
The external balance in terms of the current account has also improved, thanks to tourism and a high level of foreign direct investment (FDI). For the first half of the year, foreign investments reached around 700 million euros, or 7.5% more than the same period in 2022.
Moreover, the latest data for the number of foreign visitors for January-September 2023 is very positive, with around 8.3 million foreign visitors, 29% more than the same period a year earlier.
The financial sector, as the Governor will explain more broadly, remains well-capitalized and liquid to support lending and further economic growth. As for inflation, monthly inflation this year has been continuously declining, recently reaching 4.1% in September of this year.
We have had a positive performance in revenues, resulting in a revision of the revenue projection at the end of the year, also reflected in the Regulatory Act adopted last week by the Council of Ministers. This act aims to support and optimize projects with positive developments, to support further economic growth.
Today, in a special meeting of the Council of Ministers, we will approve the 2024 budget project, which continues to support the salary reform, in education, health, law enforcement, defense, and other sectors. Moreover, the budget project for the coming year maintains public investment financing at a level above 5% of GDP, provides support for the development of tourism, as well as continues to support farmers and vulnerable groups.
We remain committed to continuing fiscal consolidation, aiming for further reduction of public debt, respecting a positive primary balance, also stipulated in the law.
We have discussed with the International Monetary Fund the revision of the Medium-Term Revenue Collection Strategy for a more coherent strategy, taking into account recent macro-fiscal developments, and focusing mainly on better fiscal management. In terms of better fiscal management, there will be dedicated technical assistance from the IMF.