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IMF: Effective implementation of reforms could increase Albania's GDP by 9% in the medium term

2025-08-20 13:44:00, Aktualitet CNA

IMF: Effective implementation of reforms could increase Albania's GDP by 9%

The efficiency of reform implementation will increase the economy of Albania and the Western Balkans in general by about 9 percent in the medium term, according to IMF estimates, in a recent document on structural reform priorities in Europe.

Analyzing the structural reform priorities for Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, the IMF noted that our country is facing profound challenges in the labor market, human capital, business regulations, governance efficiency and the rule of law.

The Fund noted that Albania needs to further increase the efficiency of public spending and strengthen investment management. Improving the performance of state-owned enterprises and fiscal transparency are part of the necessary reforms.

Internal data shows that the Albanian government is showing weaknesses in implementing budget expenditures according to plan. Our country has great needs for investments in infrastructure, health and education, but on the other hand, the failure to implement budget plans for investments in these areas on time deprives the country of the chances for a higher rate of economic growth. In 2024, about 420 million euros were not spent from the annual budget plan. Half of this amount was part of the salary fund and pensioners' compensation, while the rest was saved for debt interest and investments.

Albania faces high emigration and a shortage of skilled labor. The IMF suggests policies that promote labor market participation, especially for young people, women, and older workers. At the same time, it is necessary to increase the quality of education and vocational training programs. Albania has taken steps back in learning achievements in the Global PISA test between 2018-2022 at a time when the number of students in schools is rapidly falling due to falling birth rates and emigration of young people. Increasing the quality of education is seen as a key tool for moving to a higher-productivity economic model than the one we currently have, which is based mainly on free labor.

Entrepreneurs in Albania still face obstacles from bureaucracy and complex procedures. The IMF recommends simplifying regulations, easing licensing procedures, and improving conditions for businesses to enter and exit the market.

Strengthening institutions and controlling corruption are essential for Albania, according to the IMF. In Albania, judicial reform and improving the investment climate are considered a condition for attracting foreign capital and increasing business confidence. Without these reforms, the effects of any other economic policy remain limited.

The IMF estimates that challenges remain great for Albania, especially in the field of governance and productivity growth, but the potential for economic gains is considerable if reforms are carried out./ Monitor