Tirana, Aug. 7 – The IMF has expressed concern that the energy crisis will have adverse effects on economic growth in Albania.
“The energy crisis presents a great danger for Albania. It affects all medium-term economical indexes and could create a hole in this year’s budget,” the IMF said in a press release.
The drought this summer has lowered Albanian reservoirs, significantly reducing the ability of hydroelectric plants to generate electricity.
The Electro-Energy Corporation, KESH, has also limited capabilities to import large quantities of electricity.
Added to power demands has been heavier than usual use of air conditioners, due to record temperatures.
Recently, Albanians has had to deal with massive power cuts, sometimes lasting as long as 16 hours a day.
The central Bank of Albania has expressed similar alarm to the IMF, warning that continued power failures “will curb economic growth by raising the cost of production for goods and services”.
There is also a concern that the power crisis may negatively affect the forecast of the GDP growth of six percent this year. While the first two quarters seemed to match projection in terms of growth, in the second part of the year the economy will feel the burden of the energy crisis.
Albania’s power generation system has not had major investments for the past 20 years.
After the fall of communism, the demand for energy grew rapidly. The power grid is estimated to need $1.6 billion in investments to eliminate power failures, according to a strategy of the government planned until 2020.
Construction of a new World Bank-funded thermal power plant is expected to start in Vlora in southern Albania at the end of this year.
