IMF warns Albania against government payment arrears

Fecha de publicación: 
28 Jun 2016

The International Monetary Fund said on Tuesday Albania's economic recovery should strengthen this year but warned it not to let government payment arrears grow and risk a repeat of the heavy borrowing when it came to power three years ago.

Reviewing Albania's 330 million euro ($365 million) 36-month programme signed in February 2014, an IMF team said they had reached a staff-level agreement with Albania after finding their economic programme was "broadly on track".

But Anita Tuladhar, the IMF's team leader, said "the re-emergence of arrears at the central government, mainly in public investment projects, poses a key challenge".

"To ensure continued fiscal consolidation, efforts to broaden the tax base and to strengthen tax administration will be important," Tuladhar told a news conference.

"The government should also step up its efforts to prevent the accumulation of new arrears and improve investment planning and implementation," she added.

The arrears - unpaid bills of more than 60 days - had reached just 1,413.2 million leke ($11.4 million) in 2015, but the IMF wants to make sure the government does not slip back to the pre-2013 period when arrears reached $720 million.

Tuladhar noted good progress in pushing structural reforms, including bankruptcy legislation, and added the quantitative performance criteria under the program had been achieved. However, a reform of the judiciary remains stalled.

"Tax revenues were in line with the target for the first five months of 2016, despite weak oil prices and low inflation, partly reflecting early gains from the government's efforts to improve tax compliance," she added.

The IMF team expects gross domestic product growth to reach 3.4 percent in 2016, unlike the World Bank which has revised its forecast down to 3.2 percent.

It believed growth would be backed by the construction of a large hydropower plant and of the TAP gas pipeline as well as a pickup in domestic demand thanks to an eased monetary policy. ($1 = 0.9051 euros) ($1 = 123.6300 leke) (Reporting By Benet Koleka, Editing by Dominic Evans)