Why couldn’t the IMF mission be completed in Albania?

Why couldn’t the IMF mission be completed in Albania?

IBNA Special Report

Tirana, September 15, 2014/Independent Balkan News Agency

By Edison Kurani

International Monetary Fund stayed several days in Albania, holding a number of meetings with representatives of the Ministry of Finance, Bank of Albania, Ministry of Economic Development, Commerce and Enterprise, Taxation authorities, customs, INSTAT, etc. The delegation was chaired by Nadeem Illahi, head of the IMF mission for Albania.

At the focus of the talks was the macro economic situation, developments and perspectives. IMF obtained information on the economic growth and issues such as performance with revenues, taxes, payment of arrears for businesses and plans for next years. IMF also sought information on the state budget, expenses and investments that the government has done in the first nine months of the year. IMF also discussed on the governing of the Bank of Albania.

IMF’s visit was part of the memorandum of cooperation and three year loan agreement with a value of 331 million Euros signed with the Albanian government.

But, at the end of the talks, IMF boycotted a joint conference scheduled to take place with the Albanian Ministry of Finance. The mission left without providing its evaluations and recommendations for the progress of the economy.

It’s believed that the theft at the BoA and the arrest of its two senior officials, governor Ardian Fullani and general inspector Elivar Golemi, have had an impact in the decision of IMF to postpone the mission.

In past missions, IMF has also issued its evaluations on economy, macroeconomic situation and financial stability in a joint press conference with the minister of Finance, minister of Economy and the governor of the Bank of Albania. This time, it was impossible for the governor to be present, due to his arrest.

In the USA, after it left Albania, IMF mission released a statement where it says that the discussions would continue in Washington. The IMF issued no date as to when the mission could finalize its job. “The mission will come back to finalize its task on a later period”.

But, the postponement also postpones the third loan installment for Albania. The installment of 26 million Euros was expected to be allocated in mid September.

For economy experts, this is not expected to produce negative effects for the economy. They say that the government may apply for funding in the domestic market during this period, thus putting pressure on the bond market.

Minister Cani talks about the talks with the IMF

Minister of Finance, Shkelqim Cani admits that negotiations with the International Monetary Fund were difficult. He admitted that due to the situation at the Bank of Albania, IMF could not issue the final conclusions. Nevertheless, Mr. Cani claims that this is not the only reason. The minister says that the Albanian government and IMF have not yet come to a conclusion about the investments, taxes for next year and reform in the energy sector.

The minister says that several other taxes may increase next year, but this has not yet been decided yet.

What’s known is the increase of the price of electricity, which is the main demand of IMF. IMF has also demanded a further increase of taxes.

In an informal meeting with journalists, minister Cani said that the budget review didn’t project any falls in revenues, but an increase of expenses.

Meanwhile, this review of this year’s budget is expected to be done in the coming days in parliament. The minister says that the collected revenues will be redistributed for investments.

Expert Kadia: The event at the Bank of Albania prevented IMF’s public appearance

Economy expert, Besart Kadia sees the scandal at the Bank of Albania as the main reason why IMF didn’t come out in front of the public to speak about the end of its mission in Albania. “It was too early for IMF to take a stance for what happened at the Bank of Albania”, says Kadia.

Nevertheless, some say that IMF was quite clear about the scandal, because it was made public in July and the visit took place two months after.

Kadia says that this time, the agenda of the mission was busy, as experts also discussed about the governing of the Bank of Albania. Expert Kadia also comments the silence of IMF. “With its silence, the mission sent a message that the Oversight Committee of the Bank of Albania and the election of the governor falls under the responsibility of the Albanian governing and legislative. But, IMF has made it clear that the Bank of Albania must be independent”.

Experts at the Bank of Albania have admitted that in its mission during these days, IMF has demanded changes in the structure of the Bank, not only to preserve its independence, but also to guarantee financial stability and the stability of the domestic currency.

Former vice minister Shehu: Unprecedented

Former vice minister of Finance, Sherefedin Shehu regards the fact that the mission left without issuing conclusions at the end of its analysis made to the economic situation in the country as unprecedented.

He believes that the situation at the Bank of Albania and the arrest of governor Fullani have had an impact on this unusual act of the IMF.

In this framework, Mr. Shehu also talks about the situation at the Central Bank. He says that it’s affecting the economic stability. “The immediate increase in the Euro’s exchange rate or USD against ALL, is an indicator that the financial system is in danger”, says Mr. Shehu.

The head of IMF talks about the economic situation and scandal at the Bank of Albania

Head of the International Monetary Mission for Albania, Nadeem Ilahi says that what happened at the Bank of Albania is a “serious incident”. Meanwhile, he says that decisions can only be made once the investigations come to an end. “This is a criminal issue over which inquiries are taking place. We believe that the government and the others must wait until the end of criminal investigations to understand what has happened and then, decisions for the future can be made. Illahi says that the same thing also goes for the stance toward the heads of the Bank of Albania.

Talking about the economic situation in the country, Mr. Illahi said that revenues are performing well. ‘We don’t see anything to worry about in terms of falling revenues. We notice that some types of revenues are not performing like they should and excise may be one of them”, says Mr. Illahi, adding that there may be special technical factors, therefore discussions are taking place with the Albanian government as to what can be done to improve this.

Mr. Illahi also talks about the situation of infrastructure on the country, relating it to the attempt to bring back economic potential. He says that Albania needs investments in infrastructure, therefore investments must be made. “These investments must be made, in order to have the economic growth that we expect, predicted in the three year program, to bring back the economy’s potential”. Mr. Illahi says that investments can also be made through a partnership between the public and private sector and suggests that the business climate in Albania needs to improve. “The legal domain, judiciary system need to be improved, in order to enable direct foreign investments to come in this country, including infrastructure”. /ibna/