The International Monetary Fund is suggesting that the Albanian government undertake a genuine reform of the pension scheme.

The latest IMF report published earlier this week states that the reform remains a top priority, even though the pension scheme deficit is currently at a historically low level.

The IMF estimates that, with pension liabilities exceeding contributions, the pension system in Albania is already facing a deficit, and pressures on spending are expected to increase as the number of elderly people in the country increases. “The old-age dependency ratio in Albania today is 26 percent, but is expected to triple by 2070, reaching 83 percent, a level much higher than in neighboring countries. The increase in pension costs is supported by United Nations projections on the country’s expected long-term demographic performance and the weight of the elderly population,” the report states.

However, the IMF also projects an increase in social contributions, along with Gross Domestic Product per worker.

Furthermore, the IMF said in the report that Albania's economy is seen growing by 3.5% year-on-year in 2025, following a projected rise of 3.6% in 2024.

Real GDP growth is projected to average around 3.5% in the 2024–2029 period, driven by domestic consumption, tourism, and construction activity, the IMF said in a press release following the conclusion of Article IV consultation with Albania. "The Albanian economy has turned in a strong performance in recent years, underpinned by prudent macroeconomic policies. Output is now well above its pre-pandemic trend thanks to a booming tourism sector," the IMF said.

Additionally, prudent fiscal policies have contributed to a reduction in public debt while proactive monetary policy, falling global commodity prices, and lek appreciation have facilitated disinflation, as external imbalances have shrunk considerably.

End-of-year inflation in 2024 is expected at around 2%. In 2025, base effects from a sharp month-on-month decline in early 2024 will temporarily drive inflation higher in the first half, with a sustained return to target unlikely before 2026.

Public debt is projected to decline from 56% in 2024 to 50% by 2029, remaining sustainable medium-term, the global lender said.

Systemic financial vulnerabilities appear contained, with well-capitalized banks, but risks stem from banks’ large-borrower and sovereign exposures, as well as rapid real estate lending growth, which dominates unhedged FX loans. "Wide-ranging reforms, including to enhance governance and public financial management frameworks, boost human capital and productivity, are needed to catalyze lasting higher growth and convergence," the IMF concluded.

Albania's GDP grew by an annual 3.94% in 2023, after increasing by 4.83% in 2022, the country's statistics office, INSTAT, has said earlier.