The Executive Board of the International Monetary Fund (IMF) approved on February 28 a 36-month SDR 295.42mn (EUR 330.9mn) arrangement under the Extended-Fund Facility (EFF) for Albania in support of the authorities’ reform program, the IMF said in a statement. The amount equals to 492.4% of country’s quota in the Fund. The decision allows for immediate disbursement of EUR 26.4mn.

The financial support has been requested by the Albanian government in order to enable clearance of arrears and unpaid bills towards the private sector.

The financing will help the country meet its external financing needs while providing the necessary support to strengthen fiscal and debt sustainability, lower public financing risks, and put the economy on a sustained medium-term growth path.

The IMF has urged Albanian authorities to implement fiscal consolidation measures in order to lower the public debt to GDP ratio to below 60% in the mid-term. The Fund believes that this will require significant tax and expenditure policy measures, supported by extensive public financial management and tax administration reforms. It recommended putting in place mechanisms to prevent recurrence of arrears.

The IMF also noted that further moderate easing of monetary policy could help support economic recovery, provided inflation expectations and financial stability remain well anchored. Reducing NPLs will safeguard financial stability and may help release credit supply constraints by lowering bank risk aversion.

The World Bank and the EU are also likely to provide assistance to the authorities’ reform program.