IMF urges Albanian Gov’t to reduce public debt: Economic momentum might not last too long

The International Monetary Fund has completed the first monitoring mission held after the end of the program with the Albanian government.

At the end of the visit held on March 7-20, the delegation headed by Anita Tuladhar appreciated the positive moment that Albania enjoys in the political and macroeconomic aspect.

“Policy makers will have to use this good time to further reforms for mitigation risks arising from high public debt and contingent liabilities and under-standard loans in the financial sector, and to strengthen the medium-term growth potential a difficult climate for investment with a high level of informality and weak rule of law. The key priorities are: pushing ahead fiscal consolidation, increasing the efficiency of public investment spending, strengthening the institutional framework for banking supervision and solving under-standard loans, and removing obstacles in the business / investment environment through judicial and anti-corruption reforms,” the IMF states according to the concluding statement.

According to the Fund, efforts in the above directions will create new growth opportunities that will accelerate the country’s EU integration process.

However, according to the mission, this good moment may not last long.

The biggest risks that might harm the country’s economy is a slowdown in EU growth, the global risks of financial markets, as well as other domestic factors such as high public debt, the domestic banking system exacerbated by under-standard large loans, bad weather conditions and insufficient progress in justice reform.

The IMF recommends pursuing a more ambitious target for fiscal deficit.

The mission has also reiterated the risks of the current PPP investment program.

The Fund estimates that the current practice of unrequested proposals should be eliminated, so the government should only finance those investments it deems necessary and not wait for new private proposals.

SCAN

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