Home Economy COVID / 19: IMF approves 174 million Euros of emergency support for Albania
• The earthquake on November 26, 2019 and the global pandemic of Covid-19 have caused significant losses and disruptions in the Albanian economy
• To address the urgent need for balance of payments, the IMF has approved $ 190.5 million (€ 174 million) in financial assistance under the Rapid Instrument for Financing (RFI)
• The immediate challenge is to respond effectively to Covid-19 by strengthening health care and mitigating the effects of the crisis on those sectors and households most affected.
The IMF Executive Board today approved SDR 139.3 million (approximately $ 190.5 million or € 174 million, 100 percent of the quota) emergency support to Albania under the Rapid Instrument for Financing (RFI) to meet urgent balance of payments needs stem from the outbreak of the Covid-19 pandemic and after the strong earthquake that hit the country earlier.
RFI provides rapid financial assistance to member countries facing an urgent need to cover their balance of payments without the need for an economic program or revisions. The instrument can provide support for a range of urgent needs, including those arising from stock market commodity prices, natural disasters, conflicts and post-conflict situations. Financial assistance under the RFI instrument is provided in the form of immediate disbursement.
Due to two consecutive shocks (earthquake and pandemic Covid-19) economic activity in Albania may undergo significant contraction in 2020, to be followed by a recovery in 2021. Given the situation that is constantly evolving, these forecasts are subject to high uncertainty and downside risks.
At the end of the board discussions, Mr. Tao Zhang, Deputy General Manager and Chairman-in-Office issued the following statement.
"The earthquake of November 26, 2019 and the current pandemic of Covid-19 have caused considerable difficulties and cessation of economic activity in Albania. "These two consecutive shocks are expected to create great fiscal pressures and an urgent need for balance of payments in the face of tightening global financial conditions."
"The response of the authorities to the strikes has been in the right time and direction. In response to the Covid-19 pandemic, authorities have taken austerity measures to control and slow down the spread and have announced a fiscal package of 1.4 percent of GDP to provide proper health care and support to affected families and businesses. The recent decision of the Bank of Albania to lower the key interest rate is also welcome.
"To limit the impact of Covid-19 it is necessary to significantly increase the fiscal deficit in 2020. It is critical to provide sufficient spending on health care and support for citizens and firms affected by the Covid-19 pandemic. . The Albanian authorities remain committed to ensuring macroeconomic stability. Once these shocks have been overcome, it will be important for the debt to return to a clear downward trajectory.
"The fund is ready to help Albania fight the pandemic and help economic recovery."