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Country Risk Service Albania 1st Quarter Updater

  • ID: 4995086
  • Country Profile
  • February 2020
  • Region: Albania
  • 20 Pages
  • The Economist Intelligence Unit
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The sovereign risk rating was B in The Economist Intelligence Unit's most recent ratings report, with a 2-point increase in the score to 55. The deterioration was driven by a combination of increased political instability and a decline in the level of official foreign-exchange reserves. The public debt/GDP ratio is high, at 69.9% of GDP, and fiscal consolidation is proceeding slowly. We nevertheless expect gradual progress and consider the B rating to be stable.

The currency risk score rose by 3 points, to 53, and Albania slipped from the BB-rating band to the B band in our November rating, reflecting short-term lek:euro exchange-rate volatility (which has happened on previous occasions too) and a reduction in the level of foreign-exchange reserves in the first six months of 2019. We expect the lek-on an appreciating trend against the euro in recent years-to be broadly steady against the euro in 2020.

The banking sector risk rating was unchanged, at B, in our most recent rating, but the score deteriorated by 2 points, reflecting greater political risk and the decline in foreign-exchange reserves. We expect that the Bank of Albania (BoA, the central bank) will begin to raise the repurchase (repo) rate in late 2020, from the current record low of 1%. Banks are well capitalised and liquid, but the share of non-performing loans, at 11% as at end-August 2019, remains high.
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Country Risk Service Albania 1st Quarter Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2020-21: Political stability

Central scenario for 2020-21: Election watch

Central scenario for 2020-21: International relations

Central scenario for 2020-21: Policy trends

Central scenario for 2020-21: Fiscal policy

Central scenario for 2020-21: Monetary policy

Central scenario for 2020-21: Economic growth

Central scenario for 2020-21: Inflation

Central scenario for 2020-21: Exchange rates

Central scenario for 2020-21: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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