The European Bank for Reconstruction and Development (EBRD) worsened its outlook for Albania’s economic growth in 2013 revising down its forecast to 1.5% from 1.6%, the bank said in the latest edition of its Regional Economic Prospects released on May 10. Another forecast was published by Raiffeisen International sees Albania’s economy growing by 2% this year, keeping the pace of expansion from 2012. The two forecasts are broadly in line with the IMF’s estimate for a 1.8% GDP growth but well below the government’s target despite the fact that the cabinet lowered its expectations to 3.1% from 4%.

The general budget deficit widened by 41.5% on the year in the first quarter of 2013 to equal to 0.9% of the projected full-year GDP. The bigger deficit resulted from lower revenues mainly due to a 5% drop in tax proceeds, while budget spending increased by 1.4%.

Albania’s general government debt keeps on increasing registering an annual growth of 3.8% as of end-March 2013 to account for 60.1% of the projected full-year GDP. The country’s rising indebtedness is putting pressure on economic growth prospects and limiting the room for fiscal manoeuvres, the IMF, international financial institutions have warned.

Consumer prices in the country advanced 2.3% year on year in April, slowing from a month earlier but well above the year-ago level. Rising food prices continued to be the main growth driver.