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Albania halves 2020 GDP growth to 2% amid coronavirus slowdown

TIRANA (Reuters) - Albania halved its 2020 growth forecast to 2% and almost doubled its budget deficit to 3.9% on Sunday as it set out measures to cope with the economic impact of the coronavirus.

The finance ministry said it would budget spending of 12 billion leke ($104.99 million) to help businesses and the needy, giving more details on a raft of plans announced on Friday.

Prime Minister Edi Rama’s government shut the country’s borders after the first infected Albanian arrived from Italy a fortnight ago, halted mass gatherings and has since escalated orders for people to stay at home.

The coronavirus has hit an economy still struggling to recover from an earthquake that killed 51 people and left 17,000 homeless in November.

“We forecast the real economic growth in the country at 2%, according to the estimate that led us to draft this budget review,” the ministry said.

In December, it was optimistic gross domestic product would grow by 4.1% in 2020, after growth shrank to 2.7%-2.9% in 2019 because of falling electricity exports and the quake.

The budget deficit will now swell to 68.7 billion leke, or 3.9% of gross domestic product, from a planned 2.2%, the ministry said, reversing what had been a falling trend.

Public debt is expected to rise to 68.8% of gross domestic product, up four percentage points from a budgeted 64.8% in December, the ministry added.

The revised budget sees a drop of 20 billion leke in revenue.

Under the new measures, the government will offer guarantees of 11 billion leke ($96.24 million) to companies to make sure they can borrow and pay employees, the ministry added

Around 6.5 billion leke will support employers, those in need or people who have lost their jobs due to the crisis, while 2.5 billion leke will go on medical equipment. Penalties on delayed electricity payments will also be written off.

Two people have died and 89 were reported infected as of Sunday.

Reporting by Benet Koleka; Editing by Andrew Heavens