Albania renews public procurement freeze until new government takes over

Tirana Times
By Tirana Times July 11, 2017 10:20

Albania renews public procurement freeze until new government takes over

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  • The freeze in public tenders is expected to have a negative impact on scheduled public investment and private companies engaged in public works and services, and potentially affect the 3.8 percent GDP growth for 2017

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TIRANA, July 11 – Albania has renewed a freeze in public tenders until a new government is formed next September. The government decision comes after Albania previously suspended all new public tenders and concession for one month ahead of the June 25 general elections.

The decision is apparently meant to prevent any possible misuse of taxpayer money in the post-election period after the Socialist Party won a second consecutive term in a mandate that allows it to comfortably rule on its own.

The current government led by Socialist Party Prime Minister Edi Rama includes Socialist, technocrat ministers proposed by the opposition Democratic Party in late July and some ministers representing the Socialist Movement for Integration, the Socialists’ former junior ally which will now be in opposition.

In addition to new procurement, the July 5 government decision also temporarily suspends the continuation of initiated tender procedures by central government institutions.

Only contracts signed before this decision became effective and small purchase procurement are excluded from the new temporary freeze. A procurement procedure can be allowed only in emergency cases after receiving the Prime Minister’s okay.

The Public Procurement Agency has also called on central government institutions to temporarily suspend initiated procurement procedures until a new government decision.

Earlier in June, all ministers and their subordinates were banned from initiating new public tenders and concession or PPP procedures during the 30-day electoral campaign for the  June 25 elections, except for emergency purchases necessary for the institutions’ operation. The decision was part of  political deal to curb the use of public administration and its human, financial and logistics resources during the electoral campaign.

One of the main doing business barriers for local and foreign investors in Albania, public procurement continues to face issues related to limited competition and discriminatory criteria although the country has been offering e-procurement procedures since eight years in a bid to reduce corruption and increase transparency.

Public-private partnerships have also become a hot topic in Albanian politics after some risky concessions and warnings by international financial institutions that some 55 public-private partnerships the Albanian governments have signed during the past decade, have created commitments with a present value of about 7 percent of the GDP or €700 million in which the government will either pay the cost of the investment in installments or guarantee the revenue of concessionaires.

The concessions, especially the medical check-up and hemodialysis, have been marred by accusations of lack of transparency and inexperience by concessionaires.

The freeze in public tenders is expected to have a negative impact on scheduled public investment and private companies engaged in public works and services, and potentially affect the 3.8 percent GDP growth for 2017.

Latest finance ministry data shows public investment in the first five months of this electoral year rose by 72.5 percent to 22.2 billion lek (€167.7 million), but only slightly above the January-May target.

Meanwhile, government revenue was up by 7.6 percent in the first five months of this year, boosted some major energy-related investment which are having a key impact on the country’s economic recovery.

Government revenue has traditionally underperformed in electoral years during the past two decades with incumbent governments increasing spending to apparently gain an electoral advantage but a mid-2016 law set a fiscal rule with a long-term debt target of 45 percent, also disciplining spending in electoral years.

Albania’s public debt, currently stands at about 68.4 percent of the GDP, down from a record high of 72.6 percent of the GDP in 2015. The debt level is still considered too high for the current stage of the Albania’s economic development with its high servicing costs, curbing much-needed investment in key priority areas.

 

 

 

 

Tirana Times
By Tirana Times July 11, 2017 10:20