ECONOMY

IMF urges Albania to speed up reforms in runup to elections

TIRANA – An International Monetary Fund mission said yesterday it had urged political parties to keep up the pace of reforms in the runup to Albania’s July parliamentary elections. The IMF mission ended a two-week visit to Tirana to check on the three-year, $42.7 million (33.6-million-euro) Poverty-Reduction and Growth Facility Program, designed to help the tiny Balkan country maintain macroeconomic stability and to accelerate structural reforms. The program began in June 2002 and expires in November. «It is important to provide the international and financial community with the assurances that during the electoral period there will not be a drifting of economic policy,» IMF mission head Julio Escolano said at a news conference. The July 3 ballot is considered a test of maturity of the country’s politics, and Albania is under pressure to hold a fair and trouble-free vote in order to further its ambition to join NATO next year and the European Union by 2015. Escolano said the mission had asked the ruling Socialist Party government and the opposition Democratic Party not to surpass the planned budget deficit, and told the parties to ensure that «ongoing initiatives to reform the tax administration, customs and develop the financial section are not stopped or slowed down during this interim period.» «We hope that this commitment will calm elections and investors and give assurances that these elections, from the economic point of view, will be just a normal situation,» he said. The IMF mission praised Albania’s success in carrying out «prudent fiscal and monetary policies» to keep inflation under 2-4 percent, with regular 6 percent GDP annual growth expected in 2005 as well, and increasing domestic production, particularly in agriculture and energy. Debt down Albania’s public debt burden also was reduced to less than 56 percent of GDP at the end of 2004, compared to 65 percent in 2002 when the program began. The budget deficit has been reduced from 6 percent to 4.6 percent. If budget discipline continues throughout the year, the budget would deliver the first surplus on current operations since the beginning of transition, the IMF said, adding that «this implies that the government will borrow only to invest.» Nevertheless, the IMF urged Albanian authorities to improve the business environment, further modernize fiscal institutions, improve tax collection and its management, and reduce the economy’s dependence on cash transactions and black-market labor. International institutions will continue support to Albania «in strengthening the rule of law, registering and enforcing property rights, and reforming the court system and the judiciary – all of which are also essential to improving the business environment,» the IMF said. «We are confident that reforms will continue during and after the electoral period,» the IMF said in a statement.