From the Executive Board

• Pages: 170

Page 170

Albania: ESAF

The IMF approved a three-year loan for Albania under the Enhanced Structural Adjustment Facility (ESAF), equivalent to SDR 35.3 million (about $47 million), to support the government's 1998-2001 economic program. The first annual loan, equivalent to SDR 11.8 million (about $16 million), is available in two equal semiannual installments, the first of which is available immediately. Medium-Term Strategy and 1998/99 Program

The main objectives of Albania's medium-term strategy are to sustain rapid growth and reduce inflation further, with a view to generating employment and reducing poverty. Over the three-year program, the authorities intend to achieve sustainable growth of 7-8 percent; reduce inflation to the levels of Albania's main trading partners (to about 3 percent by 2001); and maintain international reserve cover at about 3.7 months of imports of goods and nonfactor services externally. The goal is to bring down the current account deficit to levels consistent with medium-term viability.

Fiscal policy is designed to support these objectives by reducing the domestically financed deficit to about 6!/2 percent of GDP in 1998 from about 11 percent in 1997, with a gradual reduction to about 3 percent by 2001. Monetary policy will also support inflation targets through appropriate interest rate policy and judicious application of credit ceilings. In the first year of the program, GDP growth is targeted at 10 percent in 1998 following an estimated decline of 7.0 percent in 1997; inflation is anticipated to fall to 10 percent during 1998, from 42.1 percent during 1997. The external current account deficit is expected to be...