IMF: Albania's Incubation, away from EU standards

International Monetary Fund in a report titled “Public infrastructure in the Western Balkans, possibilities and challenges” has underlined that the aggregate index of individual components of public infrastructure results in 50 percent lower than the European Union average and directly affects foreign direct investments. Based on the index assessment is the combination for highways, railways, airports, energy, wide-based internet and telephones.

With little surprise, the Aggarga index confirms the region's major gaps. The proportion of individual components of public infrastructure suggests that average infrastructure development in the Western Balkans is about 50 percent lower than the EU average, starting from 30 percent lower in Serbia to nearly 70 percent lower in Albania. This most likely limits deepening regional integration, hinders Western Balkan countries from the greater profit of the economy in scale, and dims the proportion to them as destinations for Foreign Direct Investment” is said in the report.

On the other hand, even when comparison is made with more historical countries in Albania or other Western Balkan countries, The IMF notes the gap is again large.

The Western Balkan countries are far apart, even with dynamic regional developments in similar countries that have managed to exploit integration into European supply chains. No doubt some Central and Eastern European countries have infrastructure at least based on quantitative indicators and are comparable to those in advanced economies like Germany, France and Spain. But in Southeast European countries part of the EU and the Baltic countries also appear with more extensive infrastructure than the Western Balkans, which share a gap similar to that of the Community of Independent States with 9 states, the former Soviet Union)” estimates the report.

IMF recommendations, away PPPs

The closure of the public infrastructure gap will help the region achieve living standards in Western Europe. But where does the money come from? Increasing funding will be necessary both from local and foreign sources. A good plan for planning and implementation of public investment projects is also a necessity. The convergence of income towards EU levels has slowed significantly in the Western Balkans since the global financial crisis. The region's economic development is moving slowly. If countries are to bridge the gap in living standards with the EU, they will have to find a way to reactivate economic growth.

When the government plans to build several road axes in the form of private public partnerships, under the International Monetary Fund, the One Billion project, recommends to Western Balkan countries a whole other way to secure financing for road infrastructure construction.

Strengthening planning capacities, not politicising projects, regional co-operation and attracting donations, providing external financing, expanding taxpayers' base, and not jeopardising macroeconomic stability are some of them. Using private public partnership projects is not recommended by the IMF at all. Especially in high public debt countries (where it belongs and Albania) The IMF recommends providing external financing and working with donors, while internal financing should be used to boost the private sector. Countries should not jeopardise their overall macroeconomic stability from exaggerated or weak public infrastructure projects, the IMF recommends. /Monitor