Statement from Finance Minister Petrit Malaj on Moody’s rating:
Good afternoon,
Today I would like to share with you some very good news.
On the 18th of October, Moody’s, the prestigious global rating agency, upgraded Albania’s outlook from “B1- with positive outlook” to “Ba3 – stable”.
The efforts made to guarantee sustainable economic growth, more public financial strengthening, and improved efficiency in putting structural changes into place are all reflected in this Moody’s rating.
The Albanian review takes place at a time when the world economy is dealing with a number of problems, including demography, digitalization, climate change, and geopolitical crises. Above all, this favorable assessment demonstrates that we are headed in the right direction with regard to changes within the framework of the integration process, ensuring sound governance and bolstering public finances.
The benefits of this rating to the economy and the country are tangible: the improvement will boost foreign direct investment, enhancing investor confidence.
Additionally, Albania will have access to global markets and be able to obtain loans at cheaper financing prices than previously. Therefore, to put it simply, the higher grade indicates a “certification” or increased confidence that the Albanian economy would continue to be stable even in the medium run. It goes without saying that this ranking did not occur “overnight,” but rather represents all of the reforms carried out by the “Rama” government during the past ten years.
From €9.6 billion at the end of 2013 to an estimated €24.9 billion by the end of 2024, the GDP has more than doubled over the last ten years. By the end of 2024, per capita income is predicted to have increased from €3,300 at the end of 2013 to €10,383.
Over the past ten years, Albania’s GDP has grown by nearly 80%, compared to the region’s GDP growth of roughly 53%.
Conversely, the rate of unemployment has dropped to its lowest point in history. By the end of 2023, it had fallen from 16% in 2013 to 10.7%. In comparison, the average unemployment rate in regional countries was 12.4%, which is much higher than this figure.
Moreover, the average inflation rate in Albania during the 2014-2023 period was 2.5%, while the regional figure was estimated at 3%.
Foreign direct investment in Albania averaged 8% of GDP during the 2013-2023 period, significantly higher than the regional average for this period, which was only 6.1% of GDP.
Public debt, on the other hand, has decreased significantly over the last decade, despite facing three severe crises in recent years (the earthquake, the pandemic, and the energy crisis). Public debt has been reduced by more than 14 percentage points, from 70.4% of GDP in 2013 to an expected 56.3% at the end of 2024. While public debt in the regional countries increased by about 2% on average over the last decade, Albania achieved a reduction of about 14 percentage points.
Albania’s efforts to reduce debt, achieve fiscal consolidation and improve public finance management have also been positively assessed by other international institutions.
Finally, the European integration process remains an important factor for us, both in terms of accelerating the necessary reforms and in terms of the economic benefits within the Western Balkans Growth Plan.
Thank you very much!
Summary of the Moody’s report:
In its “detailed review” dated October 18, Moody’s, the international rating agency, upgraded Albania’s rating to “Ba3 – stable” from “B1 – positive”, highlighting the improvement of the country’s credit profile as a result of the ongoing strengthening of economic and fiscal capacities.
Moody’s expects stable economic growth in the medium term, driven by European Union funding and the implementation of relevant reforms. Foreign direct investment, particularly in the tourism and energy sectors, is expected to play a key role, while sectoral reforms are aimed at increasing productivity. These changes are expected to improve the economy by shifting the labor force from agriculture to more productive sectors such as tourism. In addition, a sustained increase in labor force participation will help alleviate the population’s demographic challenges.
Moody’s rating highlights the improvement in the country’s fiscal position, driven by stable economic growth combined with a significant reduction in the fiscal deficit. The public debt-to-GDP ratio has declined significantly since its peak in 2021 and is expected to continue to decline gradually over the medium term, supported by the implementation of fiscal reforms. The debt-to-GDP ratio falls to 57.5% in 2023, the lowest level since 2008. The agency expects the debt-to-GDP ratio to fall further to 54.3% in 2025 and, barring any shocks, to below 50% by 2029.
Moody’s also highlights the Albanian authorities’ commitment to adhere to the fiscal rules set out in the Organic Budget Law, which include maintaining a non-negative primary balance and steadily reducing the public debt ratio each year until it reaches 45% of GDP.
The agency assesses the progress of fiscal reforms, including the possible adoption of the medium-term revenue strategy by the end of this year, as well as improvements in public investment management.
In addition, Moody’s believes that EU funding and the gradual implementation of further reforms related to the EU accession process will contribute positively to Albania’s credit profile. The pace of reforms is likely to increase as EU accession negotiations progress, particularly in the areas of rule of law, anti-corruption and accountability. Further economic integration with the EU, Albania’s largest trading partner, is expected to enhance medium-term economic growth potential and eventually narrow the income gap with EU member countries.