Albania to sign new, less stringent agreement with the IMF
Gone are the days in which the IMF could tell Albania’s economy managers how to run the state budget, but both the organization and the Albanian government realize that the relationship does not need to be completely severed. IMF’s opinion remains very important, officials say.
By Tirana Times Staff
After Albania’s government decided not to renew its strong loan agreement with the International Monetary Fund at the beginning of this year, the IMF will continue to play a role in Albania’s economy, albeit mainly to advise the government and report to Washington and Brussels about Albania’s economic development.
The IMF can no longer tell to Albania’s economy managers how to run things, but both the organization and the Albanian government realize that the relationship does not need to be completely severed, official from both sides said in public events earlier this week.
To that end, Albania and the International Monetary Fund are scheduled to sign a new and more flexible agreement in the spring of 2010.
The latest IMF mission to Albania, headed by Gerwin Bell, arrived for the second time this year under a more flexible status. Unlike the earlier IMF missions, they can advise the government, but cannot impose conditions on monetary policies.
IMF ended its very close cooperation with Albania in January 2009, but the IMF office in Tirana continues its mission with a lighter schedule.
IMF officials have explained that the loan agreement with Albania has ended, but there is an international agreement that functions with many IMF member countries, which are monitored through regular visits.
With a change in status the relationship with the Albanian government, the IMF officials say that that although the current status of monitoring no longer allows the IMF to determine many terms in the government’s budget, the IMF is still the institution that sends its reports to the Washington headquarters, from where they are sent to EU countries to inform them of Albania’s economic development. So IMF’s opinion remains important.
The IMF mission was in Albania for a few days to keep updated with latest developments in the economy and the draft indicators in 2010. It found that the government applied incentives to support the economy at a time of crisis. The IMF says the 2010 budget will be a strong tool to overcome all the effects of the international financial crisis.
“Albania in 2009 is one of the few countries in the world that has positive growth, and it is now optimistic that the worst of the crisis has been left behind,” Mr. Bell said.
Although in technical terms at odds, as is the case of economic growth, the government and the IMF have forecasts that point in the same direction.
Minister Bode said that the 2010 draft budget is not as conservative as IMF would like, but it targets a reduction of budget deficit to 3 percent, from 4 percent that it was this year.
“Under the current conditions the 2010 budget is very important for the country. Through it, the government can push for a stronger position of the economy in relation to global developments as well as support financial funds to boost productivity,” Mr. Bell said. “A strong fiscal position and public debt consolidation will help the economy to improve trust within and outside the country. It will also allow the banking system to channel credit to productive activities in the private sector and not government debt.”
Meanwhile, the IMF is expected to soon bring a new representative to Albania, because the term of its current representative, Ann Margaret Westin, has ended.
The International Monetary Fund currently assists in more than 185 countries with primarily macroeconomic developments.
