The International Monetary Fund (IMF) assesses that Albania has made significant progress in fiscal consolidation and strengthening macroeconomic stability, but warns that some new policy initiatives risk undoing some of these achievements. In its report for the Article IV Consultation following the mission in November 2025, the IMF emphasizes that further strengthening of tax administration – through risk-based controls, data integration, and the use of technology – is essential to ensure the full realization of the revenues foreseen in the Medium-Term Revenue Strategy (MTRS).
In this context, the IMF expresses particular concern about the so-called "Fiscal Peace" agreement, approved by the Assembly, which provides for: the forgiveness or conditional repayment of tax and customs liabilities, including fines and interests; a voluntary agreement for the predetermination of taxable profit and the suspension of tax audits during the agreement period; the revaluation of previous financial statements at a uniform preferential rate of 5 percent.
According to the IMF, these measures risk significantly undermining the culture of voluntary tax compliance, undermining Albania's progress towards a modern, fair and equitable tax system. Furthermore, they raise serious concerns about the functioning of the anti-money laundering and counter-terrorism financing (AML/CFT) system, as they could facilitate the entry into the formal financial system of previously undeclared funds or assets of unclear origin.
IMF: Debt forgiveness should be integrated into permanent legislation
Instead of ad-hoc initiatives, the IMF recommends that any tax debt relief be incorporated into permanent legislation, with clear, transparent rules that are in line with international standards for debt relief. In the long term, improving governance, strengthening the rule of law, and reducing informality would be more effective ways to sustainably increase budget revenues.
The report highlights that Albania has already benefited from strong revenue performance and fiscal discipline, reducing public debt to around 54.5 percent of GDP in 2024, with projections for a decline below 50 percent by 2030. However, the IMF warns that medium- and long-term pressures on public spending – particularly from defense, pensions, health, and demographic changes – require prudent and sustainable fiscal policies.
Budget practices: IMF calls for more parliamentary transparency
Another critical point of the report is related to budget review practices. The IMF recommends that budget amendments go through the regular legislative process, rather than through normative acts, which reduce transparency and make fiscal planning less predictable. According to the IMF, this practice weakens parliamentary oversight and reduces the credibility of the fiscal framework in the medium term.
Public investments and PPPs: need for a unified cycle and stronger control
The IMF report also focuses extensively on public investment management (PIM) and the oversight of public-private partnerships (PPPs). The IMF recommends the return of a unified project cycle, with mandatory feasibility studies, clear prioritization, and control of multi-year commitments. Decision-making should be harmonized between traditional projects and PPPs, with the Ministry of Finance as the central coordinator of the entire public investment cycle.
Particularly critical is the practice of unsolicited proposals, which account for about 80 percent of the current PPP portfolio. The IMF recommends eliminating them and simplifying governance structures to avoid institutional fragmentation and hidden fiscal risks.
In this context, the IMF suggests conducting a Climate-PIMA (C-PIMA) to assess progress since the last assessment in 2016 and to further strengthen the public investment agenda, especially in light of the increasing needs for climate-related investments.
A clear message for policymakers
In conclusion, the IMF sees Albania at a “pivotal moment”, with strong economic growth and positive prospects for European integration, but warns that short-term fiscal solutions and deviations from good governance practices could jeopardize the sustainability achieved with difficulty in recent years. The message for policymakers is clear: strengthening tax administration, budgetary transparency and good governance remain the main pillars for sustainable and fair economic growth. /ekofin.al
