SCAN Exclusive: Moody’s retained Albania’s B1 Stable outlook, but downgraded economy’s mark
Several days ago, Moody`s announced an unchanged rating for Albania at B1 with a stable outlook.
This decision is also accompanied by a wider report that explains not only the reasons for this decision but offers details. This report was exclusively seen by SCAN TV.
In its press release, Moody’s spoke optimistically about the Albanian economy, but gave some warnings. These warnings are discussed in the report seen by SCAN.
Here Moody’s has made a devaluation. Albania’s credit profile is built on 4 pillars: economic strength, institutional strength, fiscal power and risks.
Estimates for three of these remains unchanged, while that of the economic strength there is a devaluation, from moderate to low.
“We have adjusted Albania’s economic strength from indicative score ‘Moderate’ to ‘Low; because we believe the country’s economic strength to be weaker than quantitative indicator would suggest, as reflected by its relatively lower economic diversification and narrow export base compared with peers. The assigned score also reflects the country’s low GDP per capita, its small size, moderate volatility and low competitiveness,” states Moody’s in the extended report on Albania.
Among other things, Moody`s also lists three challenges that have a direct impact on the credit profile: High public debt with an unfavorable internal structure, small, unmanufactured and low-wealth economy, as well as institutional weakness and corruption.
Moody’s gives a grade for each sector, along with the overall sovereign debt rating.
The banking sector is estimated at B2 moderate, ie a mark above the general level.