The International Monetary Fund has warned the Albanian government about the tax risks public-private partnerships can bring to the Albanian budget and economy.
The IMF report
In the latest report published on Albania, the institution emphasizes how the commitment of infrastructure projects through PPP (public-private partnerships) have involved the stipulation of poorly designed contracts, which can hinder the efficiency of public investments.
The main concern regarding PPPs is represented by the figures that showed a rapid increase in GDP:
"The rapid growth of PPPs has increased tax risks, further steps will need to be taken to control this.
On the domestic front, public debt is high, while the low level of savings and the lack of large national investors increase the dependence on foreign sources of financing.
Increased dependence on PPPs in infrastructure projects has led to an increase in potential liabilities. Internal risks also include the impact of drought in energy production, thus creating risks to the state budget. ”- reads the IMF report.
Furthermore, the latter recommended to strengthen and consolidate the decision-making process concerning public investments, ie assigning these through a competitive offer criterion. Another problem faced by the International Monetary Source is the evaluation and selection of investment projects:
"The IMF welcomed the changes in the legislation to increase the role of the Ministry of Finance and the economy in supervising the potential costs of PPPs.
It would be fundamental to guarantee a competitive bidding procedure for all projects, which blocks the receipt of unsolicited bids. On the other hand, annual government spending on PPPs should remain below the 5% legal limit. "
In conclusion, the International Monetary Fund has stressed the importance of taking measures to avoid creating 'arrears' that could undermine economic activity and trust in the public sector. All these IMF recommendations - as emphasized by the organization itself - have not yet been implemented in the country.
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