Albania Must Reduce Deficit, IMF Urges

TIRANA, November 21

The International Monetary Fund (IMF) has forecast a GDP growth at 4 percent. Despite this, the head of IMF’s mission to Tirana, Jan Kees Martijn said that there’s much to be done in order to produce a steady and inclusive economy that will help to reduce emigration. In order to achieve this, the Albanian government should implement structural reforms on improving the business climate, the fight against corruption, and rule of law enforcement.
Moreover, Martijn added that Albania is exposed to the risks of partner countries in Europe and their weaknesses would have a negative impact on foreign investment, remittances, and exports.
IMF strongly urged the Albanian authorities to withhold from introducing ad-hoc tax cuts, exemptions, or preferential treatments and consider rolling back those already implemented. These make the tax system more complicated and less predictable, thereby undermining both the investment climate and tax collection.
According to IMF, in order to achieve the objective of reducing public debt to 60% of GDP by 2021 as claimed by Albanian authorities, a further fiscal adjustment will be needed.
Further on, Martijn said that the rapid increase of Public-Private-Partnerships (PPP) needs additional improvements in all governmental levels.
“We also advise promoting a competitive bidding process by halting the acceptance of unsolicited PPP proposals,” he said.

One of the conclusions of the report highlighted that on the expenditure side, efforts to strengthen efficiency should not erode the level of spending in priority areas. The need for upgrading education, health care, and infrastructure towards European standards requires raising both the quality and the level of spending. In particular, spending on education remain low while skills shortages are a serious constraint to productivity and growth.

News Source: IMF