TIRANA, May 19 – The International Monetary Fund has warned it could slightly revise downward Albania’s projected growth of 3 percent for 2015 on underperforming public finances mainly affected by a sharp drop in international oil prices.
“Growth has accelerated but maybe at a slower pace than we predicted. A new IMF mission will arrive next month to make a full review of macro framework. I believe there will a slight review downward of the economic growth we expect for this year, but yet we are optimistic,” says Jens Reinke, the IMF resident representative in Albania.
The IMF representative described the performance of public finances in the first four months of this year when they rose by 4.6 percent but failed to meet the target by 3.4 percent or (Euro 30 mln) as disappointing.
He blamed the situation on low fuel prices which have affected royalty and VAT but also several VAT exemptions government has made on imports of machinery and the insurance market.
“The budget deficit target can be achieved although failure to meet revenue and spending targets is not the best way to do it,” said Reinke, implying a possible budge cut.
The IMF representative suggests the Albanian tax and customs administration should increase the efficiency of tax collection considering widespread informality estimated at around 30 percent of GDP.
The IMF has recently disbursed around 36 million Euros bringing the total disbursements to the Albanian government to Euro 153 million. The loan tranches are part of a three-year Euro 367 million loan the IMF provided to the Albanian government in early 2014 to help clear accumulated unpaid bills to the private sector.
“The authorities should shield the 2015 budget deficit target from the risk of falling oil royalties and external disinflationary pressures. Reducing public debt over the medium term will require political commitment to sustain the significant fiscal consolidation which began in 2014.” said the IMF in its latest report.
