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labour are also increasingly prominent, the central bank said

The car industry is one of the major manufacturing sectors being hit by
shortages of intermediate goods such as semiconductors, and by
bottlenecks in shipping and metals in 2021. Car production and sales
have fallen globally while prices for both new and used vehicles have
risen in a number of countries.

4.0 Budget and debt outlook

4.1 Budget and debt - Albania

Albanian MPs backed the 2022 budget at a plenary session on
November 16 after two days of often heated debate. The budget is
based on projected GDP growth of 4.1% in 2022. The fiscal deficit in
2022 is planned at 5.4% of GDP, as revenues are projected to reach
ALL536.8bn and expenditures ALL637.6bn. Public debt is projected at
around 78.9% of GDP.

The government intends to continue to support priority sectors such as
education, health, agriculture and infrastructure, as well to continue the
reconstruction process after the 2019 earthquake, Minister of Finances
and Economy Delinda Ibrahimaj told MPs in October. Public
investments are projected at 6.4% of GDP, or ALL119bn.

Shortly after the budget was adopted Albania placed a €650mn,
10-year sovereign eurobond on November 24. The country’s fifth
eurobond to date was issued with a coupon of 3.50%, down from
3.625% on the previous eurobond, with a seven-year tenor, issued in
2020. The long-term interest rate is 3.75%. The government is using
the funds raised to support the 2021 and 2022 budgets.

The IMF has called for fiscal consolidation in Albania. Despite the
recovery in tax revenue, Albania’s primary deficit is expected to remain
at 4.6% of GDP, which is close to the 2020 level. Meanwhile, general
government debt is projected to rise to almost 80% of GDP at
end-2021, which the fund points out is among the highest in the region.

“[Debt] is expected to decline gradually as support measures and
reconstruction wind down and the fiscal rule of a zero primary balance
is adhered to starting 2024 as per the requirement of the Organic
Budget Law (OBL). Without further adjustment efforts we project debt
will still hover above 70% of GDP in the medium term. The

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