WB and IMF caution Albania over rail project

TIRANA (Reuters) – The World Bank and International Monetary Fund (IMF) warned Albania yesterday it might run into budget difficulties over a commercial credit plan to finance a high-speed train line from the capital to the coast. The government last week approved foreign commercial credits totaling 77 million euros – over 1 percent of the country’s GDP – for new trains and an upgraded rail link from the capital of Tirana to the port of Durres on the Adriatic sea, plus a new spur line to the Rinas airport. But the IMF said that seeking foreign commercial financing at higher interest rates than the concessional loans currently contracted for upgrading other Albanian infrastructure «would limit the government’s ability to implement other projects.» «This project is too large and too expensive to be realized on top of current budget projections,» said the IMF. The World Bank added it was worried «by the lack of analysis of the economic and social benefits that might stem from the project, and which would be essential to justify the significant costs involved.» The road currently connecting the airport with the coast is badly potholed in parts and gets congested with holidaymakers in the summer months. The IMF cautioned that Albania needed to accommodate the budget and financial impacts from the loan «without undermining the declining path of public debt.» It added that if the loan were ratified, domestic borrowing would need to be reduced by amounts corresponding to the new credit. The loan needs to be approved by Parliament, which has been dissolved ahead of July 3 parliamentary elections. The next Parliament will vote on the loan. Albania entered into a partnership with the Italian subsidiary of General Electric without calling a tender for the project. The World Bank called for an «open and transparent competition… to ensure the efficient allocation and use of scarce public resources.»