“As for the size of the loan, let me say it will be big enough to cover the fiscal gap once the fiscal framework is agreed, and all revenue and expenditure are agreed,” says World Bank’s Ellen Goldstein
TIRANA, Oct. 22 – The Albanian government is negotiating with the World Bank over several loans including support to the country’s severe situation of public finances. Ellen Goldstein, the World Bank Country Director for the Western Balkans, who visited Albania this week, said the World Bank was ready to support Albania handle its difficult financial situation. The World Bank says negotiations are being carried out on loans to support several priority investments in the energy and water supply areas while support to the state budget will be conditioned with a programme of financial and fiscal reforms the Bank hopes to start next spring.
Goldstein said the World Bank would provide a loan for budget support linked to programme of financial and fiscal reforms. “As for the size of the loan, let me say it will be big enough to cover the fiscal gap once the fiscal framework is agreed, and all revenue and expenditure are agreed,” she added.
The World Bank said it supports the new government’s progressive taxation as long as it does not affect budget revenue. The World Bank says Albania faces several challenges with the energy sector and the improvement of the business climate, fiscal consolidation and the need to protect the huge natural resources.
In meeting with Prime Minister Rama, the Executive Director of the World Bank Group, Piero Cipollone, expressed his support for the government’s strong commitment to tackle vital issues for Albania’s macroeconomic stability and sustainable development, such as strengthening public financial management, enhancing government accountability, ensuring financial sector stability, promoting private sector activities and most importantly, identifying new sources of growth and creating an environment conducive to investment and job creation. He expressed his satisfaction for the dynamic collaboration so far between the government team and the World Bank for the timely preparation and implementation of programs that support the reforms needed to achieve these ambitious objectives.
The World Bank has conditioned its financial assistance to Albania with the country’s macroeconomic stability stressing the importance of fiscal consolidation and reducing public debt.
Kseniya Lvovsky, the World Bank country manager for Albania has earlier said the international financial institution was carrying out detailed analysis on the public finances to understand the causes of the imbalances and suggest intervention options.
“These recommendations will be concluded in a draft and sent to the government that will be formed after the general elections. But the emergency thing is the payment of unpaid bills,” said Lvovsky. She warned the new government from the June 2013 elections will have improving public finances, the efficiency of the tax administration and the predictability of the fiscal regime as the new objective. “I don’t think there is much room for a tax reduction and this is valid not only for Albania but the whole region.”
Setting a credible debt target and achieving gradual fiscal consolidation over the medium term is Albania’s biggest challenge as the country economy struggles with crisis impacts from the Eurozone and debt levels now above the former 60 percent of the GDP ceiling, the World Bank and the IMF said after a recent meeting in Tirana.
The World Bank has revised upward Albania’s economic growth forecast on improved external conditions in the Euro area. In its new Global Economic Prospects report for June 2013, the World Bank expects the Albanian economy to grow by 1.8 percent, up from an estimated 1.6 percent in 2012. The World Bank expects growth in Albania to slightly accelerate to 2 percent in 2014 and 3 percent in 2015.
