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Albania Affected “Slightly” By Global Crises
Tirana, Nov. 20, 2008 (AENews) – The global financial Crises will have little effect on Albania, said the Minister of Economy Genc Ruli on Thursday, adding that his government was planning large investments in the energy field.
Despite the Minister’s assurances Albania was forced to postpone its plans to issue a €300 million in denominated bonds, because international financial crisis had increased costs in October.
“We have projected to issue bonds in hard currency for a total of €300 million, but we will wait for better times”, said Minister of Finance Ridvan Bode in the occasion.
The IMF and the Bank of Albania have warned that the country should pay close attention to the crises.
“Albania’s still limited integration into global markets currently provides an important buffer, but the economy is not immune: export growth is expected to decline from recent heights, remittance payments could be affected, and investors may reassess risks”, IMF said in a statement today.
The IMF concluded its last negotiations with Government of Albania and asked for lower than projected budged deficit for the next year.
“The mission recommends to contain the 2009 deficit at below 4 percent of GDP”, IMF said in a press conference today. Albania will close its 17 year old advising agreement with IMF in January.
“Beyond macroeconomic necessity, the mission would recommend that any cut in contribution rates await comprehensive pension reform that would strengthen the link between contributions and benefits and provide important incentives for self enforcement”, – IFM said.
This would help combat informality, improve voluntary self compliance, and hence allow the authorities to rely less on administratively burdensome regulations that currently create significant scope for discretion and corruption. After the IMF program expires, the authorities are urged to commit to a clear fiscal rule to anchor budget policy, such as an appropriate expenditure, deficit, or debt ceiling
Albania has issued its first foreign currency denominated bond in 2006. On March 2007, Albania received a syndicated loan of €230 million from Alpha Bank and National Bank of Greece, with the interest rate Euribor + 1.25 per cent.
Government intends to use international market to finance its investments in the country thus benefiting from low interest rates. Moody’s Investors Service assigned Albania the nation’s first-ever sovereign ratings of ‘Ba1′ country ceiling for foreign-currency bonds and an issuer rating of ‘B1′ for the debt obligations of the government on June 2007. Ministry of Finance announced this week that intends to commission a new assessment in 2009.
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