ECONOMY

Albanians targeting 6 pct growth for 2007

TIRANA (Reuters) – Albania’s parliament endorsed a 2007 draft budget late on Monday, forecasting 6 percent growth and a slightly higher budget deficit to allow for major infrastructure projects. Finance Minister Ridvan Bode said the budget objectives were in line with Albania’s three-year accord with the International Monetary Fund and the guidelines of the Stabilization and Association Agreement it signed with the European Union in June. «GDP growth will strongly increase to 6 percent, passing for the first time the level of $3,000 per capita,» Bode told Parliament. «The budget aims to preserve macroeconomic stability through fiscal consolidation and a total deficit of 4.77 percent of GDP.» GDP growth in 2006 is expected to come in at just over 5 percent, from 5.5 percent the previous year, a slowdown blamed on a power crisis last winter that crippled industry and hurt exports. The 2006 budget deficit is forecast at 4.1 percent. Growth in Albania, one of Europe’s poorest countries, hit 9 percent in the late 1990s, when it came out of a decade of political instability after the fall of communism but living standards still lag behind the regional average. Construction, services and remittances from some 1 million expatriate workers are the main drivers of the boom. Bode said GDP was estimated at 982 billion leks ($9.8 billion) compared to 900 billion in 2006. Total budget revenue is seen at 253 billion leks, or 25.8 percent of GDP, and expenditure at 300 billion leks, or 30.6 percent of GDP. «Growth in 2007 will be fueled by productive sectors like construction, transport and industry. The contribution of services and agriculture will fall,» he said in his report, which also forecast an 11 percent real growth in industry. Bode said Albania aims to speed up the use of donations from international organizations and soft or commercial loans to rebuild roads, ports and power plants. It plans to spend some 70 billion leks ($700 million), or 7.1 lek for every 100 leks of GDP, to improve infrastructure, most of which was built cheaply and hastily during the regime of Enver Hoxha and has since fallen into disrepair. Bode said that sum could be higher if Albania used foreign credits more effectively, or if state-owned telecom operator Albtelecom and state-owned insurer INSIG were successfully sold. «The level of commercial credit in 2007 will reach 380 million,» Bode added. The fund, which says Albania’s strong growth should create the perfect environment for much-needed reforms, is considering a request for the country to borrow more than the currently allowed 50 million euros at commercial rates to finance its ambitious projects.