The country’s tax efficiency is low compared to its neighbours and additional measures are needed to mobilise revenues for extra spending on health, education and infrastructure, the IMF said in its concluding statement on Albania following its annual check on the country’s economy.

Albania’s low tax efficiency reflected high tax thresholds and weak compliance and the tax authorities should refrain from granting new exemptions, favourable tax treatments, or lowering tax rates, the fund said.

It also urged stronger management of public investment, with projects better appraised and selected in order to “reduce waste and abuse”.  

The Albanian economy continues to strengthen as it benefits from increasing domestic demand, large energy-related foreign investment, growing tourism and recovered interest in key EU trading partners.

The Albanian authorities have also lowered fiscal and financial vulnerabilities, but further efforts are needed to strengthen the benefits, the IMF said.

Albania’s GDP growth is projected to increase to 3.9% this year, driven largely by tourist and construction sectors. Unemployment has fallen to 13.9% and the deficit is expected to widen slightly in 2017, reaching 8.0% of GDP, driven by energy investment and electricity imports.