IMF deal with Albania for economic stability

TIRANA – The International Monetary Fund agreed yesterday to assist Albania over the next three years to preserve its economic stability. Government officials reached agreement with a visiting IMF delegation, led by Istvan Szekely, «on economic policies for 2006-2008 necessary to maintain macroeconomic stability, enhance growth potential, reduce vulnerabilities and strengthen government solvency.» The mission, visiting the Balkan country for two weeks, also reached understanding on key reforms to Albania’s management of taxes, customs, market development, public debt and spending. «Monetary policy targets are set to promote continued price stability, while the medium-term fiscal program strikes a balance between reducing public debt and increasing growth-enhancing and poverty-reducing expenditure,» Szekely said at a news conference. The IMF Executive Board is to discuss the deal in early 2006. «Despite a temporary decline in 2005-2006 because of electricity shortages, economic growth is projected to return to about 6 percent in the medium term if these policies are implemented,» an IMF statement said. Albania’s domestic product growth is projected to grow 5 percent in 2006, down from an estimated 5.5 percent this year. Inflation is expected to remain at 2-4 percent, where it has been for several years. The government has said it wants to cut taxes and increase spending on education, healthcare and public investment. «We are pleased with this scheme of cooperation – better administration, higher expenditure,» Albanian Finance Minister Ridvan Bode said. In October, the IMF praised Albania’s efforts at keeping inflation down and maintaining growth, but encouraged the country to do more to fight corruption and improve governance. The previous three-year, $42.7 million (36.56-million-euro) Poverty Reduction and Growth Facility program began in June 2002 and expires this month.

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