Experts: Gov’t must consider IMF’s recommendations
The recommendations that the International Monetary Fund Mission handed to the Albanian Government should be seen clearly and cautiously.
Experts Adrian Civici and Selami Xhepa stated for SCAN TV that the government should safeguard fiscal parameters, especially the level of debt, but it needs to show transparency in public investment, especially those that can be achieved through PPP.
“If we draw a matrix, including the need for new debt for investment, the realization or non-realization of revenues, the entry into another visible or concealed debt and the tendency to reduce the current debt, of course, the equation becomes difficult. As the IMF states, public investment should never be reduced in the name of some adjustments or budget adjustments, because if every time there are difficulties of this nature, the way of solution remains the failure to realize public investments, hiring, affecting and realizing income in a second phase,” Civici says.
“The Fund, rightly, also makes some warnings that are very important in terms of, first, the need to maintain the stability of the public finances in the long run, despite the fact that the government and its program has foreseen that public debt will be placed in a downward trajectory, below 60% of GDP in the next 4 years, but in fact, given the government’s commitment under the already-known $ 1 billion investment project, which will be procured in the form of public-private partnerships, these constitute hidden government debts and in this sense pose a serious risk to the financial stability. This means that the public debt is not only expected to decrease, but rather the commitments taken through these initiatives may be a cause for the instability of the financial system,” Xhepa said.
The new relationship between the IMF and the Albanian government is seen by the two experts in different perspectives.
For Civici, the consulting role of this organization is OK, while Xhepa estimates that the agreement with the IMF should be signed once again.
“In the situation we find ourselves in, if the government will show a reliable attitude, far from populism or politics of the type “today for tomorrow”, I believe that we have the capacity and the ability to implement the IMF’s recommendations. I don’t believe that we are at the moment that we need a new agreement with the IMF, even because these obligations are accompanied by some funding or budget compensation. In the situation we find ourselves in, we simply have to be serious and responsible for our macroeconomic policies and development policies,” Cicivi added.
“I would welcome a continuation of the role of the International Monetary Fund, moreover that Albania has nothing to lose, because normally the continuation of the financial discipline in Albania is an urgent need. If today the public debt is almost 70% of the domestic production, there can be no more serious concern for the country’s economy than keeping this indicator under control and consequently, the presence of the IMF would be a further guarantee for achieving such an objective,” Xhepa argued.
The International Monetary Fund team arrived in Tirana on September 20 and held close meetings with senior representatives of the country’s financial system, as well as with business community.
After the end of the program, the IMF in Albania is in the role of monitoring the performance of the implementation of the recommendations.