SCAN exclusive: Moody`s rates Albania at B1, political engagement and investments cited as main risks

The global rating giant Moody`s has not changed its opinion on Albania’s sovereign debt rating.

The rating remains unchanged at B1 with a sustainable perspective, states the credit analysis for the country, an extended report that is published once a year, and which Scan TV has exclusively seen.

Since the first lines of the report, which analyzes Albania’s credit profile, Moody’s speaks of structural economic challenges, limited institutional strength, a sub-potential economy, but also a satisfactory fiscal consolidation as well as progress with structural reforms.

Further on, when it comes to public debt, Moody`s points out that it is declining, but on the other hand, the needs for Albanian government funding continue to remain quite high, even over those of countries that share the same rating with the country.

The fall in debt as well as the strengthening of institutions, which consequently will improve both the business climate and competitiveness, are the two key factors that can lead to the growth of the rating for the country.

This translates into lower funding costs.

On the other hand, the sovereign debt would be depreciated if the government would avoid fiscal adjustment, would fail with the public debt policy, or demonstrate insufficient engagement on the economic and institutional agenda.

But what is really concerning is the fact that Moody’s warns of a debt depreciation even if there is a decline in FDI.

This is something that has been announced both by the International Monetary Fund and the European Commission.

Country debt rating is based on four main pillars; economic force, institutional force, fiscal force, and risk, and each of these four pillars gets a separate assessment.

The highest mark belongs to the risks, while the lowest mark belongs to fiscal force.

Among other things, Moody`s speaks of an improvement of the business climate after the July elections and progress in implementing justice reform, two key aspects of the growth of the rating for Albania.

Meanwhile, as far as the economic growth projections are concerned, they remain close to 3.6% this year, and at 3.8% for next year, below government projections, the International Monetary Fund or the European Commission ones.

SCAN

*Material i përgatitur nga portali SCAN. Ripublikimi mund të bëhet vetëm kundrejt citimit të autorësisë dhe burimit origjinal.