Tirana12 November 2008 Tirana _ The International Monetary Fund lowered its forecast for Albania’s economic growth for 2009 to between 3.5 and 4 per cent from between 5 and 6 per cent, due to the turmoil that has hit global financial markets.
“Albania’s still limited integration into global markets currently provides an important buffer, but the economy is not immune: export growth is expected to decline from recent heights, remittance payments could be affected, and investors may reassess risks,” the IMF said in a statement.
“The mission recommends containing the 2009 deficit at below 4 per cent of GDP,” it added. “Beyond macroeconomic necessity, the mission would recommend that any cut in contribution rates await comprehensive pension reform that would strengthen the link between contributions and benefits and provide important incentives for self enforcement”.
This would help combat informality, improve voluntary self compliance, and hence allow the authorities to rely less on administratively burdensome regulations that currently create significant scope for discretion and corruption. After the IMF program expires, the authorities are urged to commit to a clear fiscal rule to anchor budget policy, such as an appropriate expenditure, deficit, or debt ceiling.
However, the Minister of Finance Ridvan Bode rebuffed the forecast of the IMF, arguing that growth will be on target. “We have programmed that economic growth will be the same as in 2006, at six per cent, the strongest in the region,” said Bode.
The Albanian government has caused a storm by signalling that it will not renew its contract with the IMF next January. Opposition leaders have been quick to accuse the Prime Minister, Sali Berisha, and the Minister of Finance, Ridvan Bode, of arrogance and irresponsibility.
They say the decision not to renew the IMF deal has political undertones, and that the government wants to spend freely in the coming year to boost its image before the country goes the polls in the summer of 2009.
