IMF: Economic growth slows down through 2019

The International Monetary Fund (IMF) expects the Albanian economy to grow by 3.7% in 2019, slowing down the pace compared to the previous year, due to lower energy output.

Jan Kees Martijn, IMF Mission Chief for Albania, in his first interview with the media, after taking office in Albania, also draws attention to Public-Private Partnerships (PPP) projects. He warns that current fiscal costs of PPPs may be much higher than expected.

“The growth in 2019 is expected to be around 3.7%; slightly lower than in 2018, as we appreciate that energy production will return to normal levels. In the medium term, we expect growth to stay close to 4%, supported by strong exports, including tourism and infrastructure investments. Albania is highly exposed to the added risks that growth in Europe will decline, including its trading partners, such as Italy. The decline in these countries would spread to Albania and reduce growth through lower exports, remittances and Foreign Direct Investment (FDI), “said IMF Mission Chief for Albania when asked about the 2019 economic forecasts.

Regarding the PPP projects that the government has launched, he states: “While it is likely that PPPs will offer good quality and lower cost, in many countries has resulted that current fiscal costs of PPPs can be much higher than expected. Albania does not yet have a good system to manage the costs and risks that come from PPP-s. We advise the Ministry of Finance to undertake a full assessment of the risks associated with PPP-s, their impact on the medium-term budgetary framework and debt sustainability. We welcome the so far efforts to give the Ministry of Finance and Economy a stronger role as guardians in curbing the potential fiscal cost of PPP-s,” said Jan Kees Martijn, IMF Mission Chief for Albania.

/Klara Ruci/