S&P boosts Albania

S&P said it raised Albania’s long-term sovereign rating to BB- from B+.

“Albania has consistently improved its government balance sheet, despite multiple shocks in recent years. It suffered an earthquake in 2019, as well as facing the pandemic and the indirect macroeconomic effects of the Russia-Ukraine war. Albania's resilient economy has grown by 5.8% a year, on average, over the past three years. This, combined with the authorities' efforts to consolidate public finances, led to a reduction in net general government debt to an estimated 52% in 2023 from a peak of 71% of GDP in 2020,” S&P said in a press release.

However, the country has a “relatively weak institutional framework, limited monetary policy flexibility, and moderate external financing needs. Over 50% of government debt is denominated in foreign currency or is short-dated. Furthermore, the economy makes extensive use of the euro and is highly informal. This, combined with shallow capital markets, impairs the Bank of Albania's ability to transmit monetary policy,” the agency said.

The outlook is stable.

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