TIRANA, May 15 – The International Monetary Fund predicts Albania’s public debt will not drop to 60 percent of the GDP before 2023 and remain the highest among regional EU aspirant Western Balkan economies.
Public debt, currently at about 70 percent of the GDP and at a high level for Albania’s stage of development, is considered one of the key threats to Albania’s macro-economic stability, with its high servicing costs holding back much-needed public investment in key infrastructure, education and health sectors.
Albania’s public debt hit a four-year low of about 70 percent of the GDP in 2017, slightly dropping for the second year in a row after a record high of 73 percent in 2015, according to Albania’s finance ministry.
Meanwhile, the IMF estimates Albania’s public debt was at 71.2 percent of the GDP in 2017 including central and local government unpaid bills and arrears of about 0.9 percent of the GDP equal to 14.4 billion (€112.5 mln).
The IMF’s baseline scenario does not take into accounts arrears that could stem from the Albanian government’s ambitious but controversial €1 billion public private partnership program.
The International Monetary Fund has earlier warned the Albanian government’s ambitious Euro 1 billion public private partnership project will not only fail to bring public debt down to 60 percent by 2021, but could create hidden costs which if included in the debt stock could take it to 71 percent of the GDP.
While the PPP projects are expected to be completed in four years, the government intends to repay concessionaires over 12 years in annual instalments and road concessionaires are also expected to collect tolls to meet investment costs.
The Arbri Road linking Albania to Macedonia as well as several internal highways, some 150 schools, hospitals and healthcare facilities are on the PPP agenda.
Public debt levels among regional EU aspirant countries currently range from 21 percent of the GDP in Kosovo to about 40 percent of the GDP in Bosnia and Herzegovina and Macedonia, 61 percent in Serbia and 67 percent of the national output in Montenegro.
In its latest World Economic Outlook, the Washington-based lender of last resort expects the Albanian economy to register one of the region’s highest growth rates in the next six years, but growth will only linger between 3.7 percent in 2017 to about 4 percent in 2023.
The Albanian government’s forecast is that growth will recover to 4.5 percent by 2021.
The IMF’s growth forecasts on other Western Balkan economies between 2018 to 2023 range from 3 to 4 percent.
The IMF’s role in Albania was downgraded to advisory in early 2017 after the conclusion of a 3-year binding deal supported by a €331 million loan also conditioning the government’s tax policies.
