Standard & Poor's (S&P) Global Ratings said it has raised its long-term foreign and local currency sovereign credit ratings on Albania to 'BB' from 'BB-', with a stable outlook, reflecting the country's strong economic and fiscal performance over the last several years.

At the same time, S&P affirmed its 'B' short-term foreign and local currency sovereign credit ratings and revised Albania's transfer & convertibility (T&C) assessment to 'BBB-' from 'BB+', it said in a statement on Friday.

"Large net foreign direct investment (FDI), remittance inflows, and booming service exports underpin Albania's solid economic prospects, despite elevated geopolitical tensions, and uncertainty ahead of this year's parliamentary elections," the global ratings agency said.

S&P expects Albania's real GDP growth to remain above 3% until 2028, driven by investment and consumption.

Structural challenges persist, such as a shrinking workforce and sustained emigration, while its reliance on tourism and external demand from key EU markets adds economic vulnerability.

Fiscal risks persist due to high foreign currency debt, short domestic debt maturities, and substantial public-private partnership commitments, while diplomatic tensions with Greece could challenge its EU accession progress, the global ratings agency said.

According to the report, Albanian authorities have adopted legislative changes to strengthen revenue generation, focusing on progressive individual taxation, corporate income tax adjustments, and improved tax compliance measures.

Combined with the government’s fiscal consolidation efforts and stable economic growth projections, S&P expects budget deficits to remain moderate, averaging around 2% of GDP through 2028.

Albania has faced many challenges, including the earthquake and the COVID-19 pandemic, but despite these difficulties, the government has continued fiscal consolidation, ensuring strong GDP growth, controlling expenditures, and implementing revenue-enhancing reforms to reduce the debt trajectory. As a result, general government gross debt has declined to around 55.4% of GDP in 2024, from 65.7% in 2019. Given fiscal projections, S&P expects debt levels to continue to decline, reaching around 51.7% of GDP by 2028.

Furthermore, Prime Minister Edi Rama described as very good news the improvement of Albania's rating to "BB" with a stable outlook by S&P Global Ratings.

"Very good news. In its latest report, the prestigious international rating agency, Standard & Poor's Global Ratings, a fixed reference point for financial markets, investors, and country evaluators, has again improved Albania's long-term credit rating to "stable" (to "BB" from "BB-"), further elevating our country to a new level, and confirming from this perspective Albania's unstoppable progress," Rama said in a post on social networks.

The Ministry of Finance announced on Monday that this rating comes as a result of Albania's stable economic and fiscal performance in recent years.

S&P emphasizes that the improvement in the rating reflects the strength of Albania's economic and fiscal performance in recent years.