* Albania cuts 2013 GDP growth forecast to 3.1 pct
* Public debt seen up at 63.8 pct from 62.6 pct
* Economy seen operating below potential
* PM says debt at 67 pct of GDP healthy for economy
By Benet Koleka
TIRANA, Feb 5 Albania's economy will grow more
slowly than planned this year and its public debt will rise
further above the country's self-imposed ceiling, according to
Finance Ministry forecasts on Tuesday.
Facing criticism from the World Bank for breaching its
self-imposed public debt cap of 60 percent of gross domestic
product (GDP), the government said it needed to breathe life
into the sluggish economy.
It forecast the economy would grow 3.1 percent this year -
more slowly than an earlier 4 per cent forecast - and public
debt would rise to 63.8 from 62.6 percent.
Albania is one of Europe's poorest countries. It enjoyed a
growth spurt averaging 6 percent a year in the decade to 2008
but has been hard hit by the crisis in the euro zone,
particularly in Italy and Greece, its main trade partners,
bankers and investors.
Albania plans to finance its deficit this year by borrowing
domestically both in leks and euros. Prime Minister Sali Berisha
said on Monday that even at 67 percent of GDP, debt was healthy.
The sale of the Albpetrol oil company was expected to bring
an unprecedented privatisation bonanza of 850 million euros
($1.15 billion), but winner Vetro Energy has not paid its
contract guarantee two months after a second deadline expired.
The ministry predicted the economy would grow 3.1 percent in
2013, 3.9 percent in 2014 and 4.1 percent in 2015, after an
estimated 1.5 percent last year.
The government has raised this year's budget deficit target
to 3.5 percent from 3.4 approved in the budget, "attempting to
stimulate economic activity", the ministry's programme said.
However, it said "a sustainable decline in the fiscal
deficit is key and unavoidable in the medium to long term future
in order to stabilise and then gradually reduce the public debt
and ensure public finance sustainability".
It said slow growth would help hold down inflation. "Within
this context the Bank of Albania will continue to provide an
anchor of stability and confidence and to stimulate the
economy," it added.
($1 = 0.7376 euros)
(Reporting by Benet Koleka; Editing by Ruth Pitchford)