IMF expects economic growth unaffected from energy crisis

TIRANA, January 12 – Last week the International Monetary Fund (IMF) said that Albania’s on-going power crisis is not expected to affect severely the country’s projected six percent economic growth for this year. The controversial statement come sin a time when long-lasting, nation-wide electricity cuts are plaguing the country. The statement followed the signing of an IMF-Albanian memorandum on economic and financial policies within the fund’s current three-year financial facility. IMF mission representative in Albania Ann-Margaret Westin said in her statement that “Certainly, an energy crisis, like a political crisis, could affect economic growth. However, there is no doubt of the six percent growth as the Albanian economy is a dynamic economy.” IMF adjusted its expectations due to the power crisis in the 2005/2006 winter and lowered its real economic growth forecast for Albania for 2006 to 5 percent from previously projected 5.5percent. The power cuts hit the country’s economic growth for 2005, which fell to 5.5 percent from initially forecast 6 percent. Economic growth data for last year are not available yet. Albania joined the IMF in 2002 when it signed its first three-year Poverty Reduction and Growth Facility (PRGF), the fund’s financial facility for low-income countries. Last January Albania signed the next three-year loan arrangement with the global lender, combining the IMF’s PRGF and Extended Fund Facility (EFF). This years crisis has been a result of the combined effects of extreme drought, lack of proper investment and poor management by the power utility KESH. Local media report that the power cuts were longer than the official timetables of KESH, reaching 12 hours in cities and up to 20 hours in the most remote areas. Albania has an excessive dependency on hydropower plants which are accountable for more than 90 percent of its electricity. These power plans are outdated as is the distribution system which causes repeated problems. The worst power cuts are experienced in the rural areas but this year multiple problems have hit even the country’s capital city, Tirana.