Albania to Receive International Financial Aid
Albania has received additional funds from the IMF and World Bank to support programs aimed at reducing poverty and developing the country’s infrastructure. On 23 January, the IMF announced that its board had approved disbursement of a $5.9m loan. That comes on top of $18m that the Fund has already granted towards the same project.
The IMF made its decision after completing an examination of Albania’s economic performance and the financing assurances review under Albania’s Poverty Reduction and Growth Facility (PRGF) arrangement.
“Albania’s performance during the first half of the three-year PRGF-supported program has been satisfactory overall, in spite of some delays on the structural side. Growth has recovered, inflation remains low, and the exchange rate has strengthened,” said the IMF Deputy Managing Director and Acting Chairman, Agustín Carstens. “However, revenue shortfalls persist, and could compromise the program’s poverty reduction objectives,” he added.
Carstens said improving revenue mobilization is a policy priority, requiring not only improvements in tax administration and in tax policy design, but also actions to enhance governance and the business climate in order to reduce the size of the informal economy and widen the tax net. The program includes significant tax administration measures which, taken collectively, are expected to improve the efficiency, equity, and volume of tax collections.
In 2002, Albania signed a three-year agreement with the IMF on poverty reduction. The document envisions $41.5m in financing.
Finance Minister Arben Malaj says the agreement demonstrates the country’s macro-economic stability. The Albanian government is committed to economic reforms, reducing the informal economy, strengthening its fight against corruption and supporting the private sector, Malaj said.
The government also announced the successful conclusion of negotiations in Washington with the World Bank, the European Bank of Investments and the EBRD for disbursement of a loan to build a thermo-central facility in the city of Vlora.
According to the agreement, three banks will offer $100m, while the Albanian Power Corporation will invest $12m for the first phase of construction. Work is expected to start in June, with phase one completed in 18 months. The project is considered one of the most important for the country’s power sector.
In the early 1990s, Albania abandoned its long-time Communist rule in favor of democracy and a move into the 21st Century. Blessed with many natural resources, Albania has (for the most part) remained somewhat isolated from the world because of its mountainous topography and the policies of its former hard-line government. In recent times the country has suffered economic hardships because of the onslaught (into Albania) of thousands of ethnic Albanian Muslims exiting the former Yugoslavia.
By Ardi Pulaj
Southeast European Times
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