Moody’s says fiscal challenges, rising debt and subdued growth constrain Albania’s rating.

By bne IntelliNews November 20, 2013

Albania's B1 government bond rating remains constrained by the country's significant fiscal challenges, its rising debt levels and subdued economic growth, expected in the coming year, ratings agency Moody’s said in a report.

The agency noted that Albania's credit challenges are primarily reflected in the significant deterioration in the government's fiscal performance over the past year, which has resulted in materially higher debt levels than its B1-rated peers. In addition, Moody’s sees fragile structure of government financing, which in particular displays low average debt maturity, narrow investor base via the domestic banking system and significant FX exposure.

According to the report, mitigating factors include central bank’s macro-prudential track record and strong price-stability credentials, which are reflected in its stable exchange-rate performance over the past few years. In addition, recently implemented improvement in the collateral execution process is expected to contribute for improvement of the quality of portfolio in the banking system.

Moody's expects Albania growth to remain subdued over the next few years.

The ratings agency expects positive externalities to be derived from Albania's potential EU candidate status and from the construction of the Trans Adriatic Natural Gas Pipeline starting in 2015.

Finally, Moody’s stressed that an upgrade of the country's ratings requires more substantial progress in addressing the economy's structural problems.

Related Articles

Shell to invest $42.5mn in oil, gas exploration in Albania

International oil major Shell plans to invest $42.5mn in oil and gas exploration in southern Albania over the next seven years, Albania’s National Agency of Natural Resources ... more

Freedom House keeps “partly free” status for Macedonia despite new government’s efforts

Macedonia was rated only “partly free” in the latest report from international watchdog Freedom House, the same almost all of the six Western Balkan countries, despite efforts by the ... more

Albania’s central bank to issue new high-denomination banknote

The Albania’s central bank has announced it will issue a new ALL10,000 (€74.9) banknote. The new ALL10,000 banknote will have the highest value issued so far, as the current biggest value ... more