TIRANA May 14 Albania's economy has hit all the
targets the International Monetary Fund set for a
multi-million-euro loan programme, an IMF team said, but the
country's electricity sector still poses a threat to the
After Albania met all the end-March targets, it reached a
staff-level agreement with the IMF team on policies needed to
complete a first review of the 36-month, 330.9 million-euro
programme before the IMF board's June meeting, Nadeem Ilahi, the
team's leader, said late on Tuesday.
"After slowing in 2013, economic growth is projected to
increase to 2 percent this year, boosted by continued growth in
exports and a modest recovery in domestic demand," Ilahi said.
Confirming the IMF's and the government's predictions for
growth this year, Ilahi said output remained "below its
potential" and inflation was expected to remain low.
The government expects the economy to pick up in the second
half of this year after it pays arrears to businesses. The IMF
estimates Albania grew just 0.7 percent in 2013.
Ilahi said the "fiscal performance was in line with
programme targets in the first quarter of 2014". Albania raised
corporate and income tax for high earners but cut taxes for low
earners and small businesses.
"The authorities remain committed to further fiscal
consolidation in 2015 in order to begin to reduce public debt as
envisaged under their economic program," he said.
Rains in April and May have only temporarily decreased the
need for electricity imports, ranging from 90 to 200 million
euros ($274.13 million) outside the budget. Albania relies fully
on water to produce electricity.
"The electricity sector poses a large fiscal risk. Reforms
are urgently needed to improve collections, curb high
distribution losses and reduce theft in order to end the current
reliance on fiscal support to finance the sector," Ilahi
said.($1 = 0.7296 Euros)
(Reporting By Benet Koleka; Editing by Larry King)