S&P upgrades Albania to B+

Standard & Poor's said it raised its long-term foreign and local currency sovereign credit ratings on the Republic of Albania to B+ from B and affirmed its short-term foreign and local currency sovereign credit ratings at B.

The outlook is stable.

The agency also revised upward its transfer and convertibility (T&C) assessment to BB.

S&P said the upgrade reflects its view that Albania's fiscal performance will remain strong over 2016-2019 as authorities continue to make progress under an International Monetary Fund (IMF) program that targets fiscal and structural reforms.

As a result, S&P expects general government debt to decline to under 60% of GDP in 2019 from about 70% of GDP in 2015. The agency includes debt issued mainly by the electricity sector and guaranteed by the government (nearly 4% of 2015 GDP) in its calculation of general government debt to reflect the view that the probability of these guarantees being called is high.

Under the IMF program, the government has also cleared the arrears – mostly related to VAT refunds – that it recognized in 2013.

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