Berisha government starts new mammoth road project

Foreign debt destined to expand due to the 400 mln USD project

Tirana, 29 April 2011 (AENEWS) – The Prime Minister of Albania Sali Berisha attended the ground breaking ceremony today for another mammoth project that intends to build a four lane highway between Tirana with Elbasan, some 40 km south.

The project is expected to cost 400 million USD, approximately 3.5 per cent of the country’s Gross Domestic Product and the government started works after securing 220 million USD loan from the Islamic Bank for Development. Other loans are being negotiated currently with Abu Dhabi fund with the aim of providing 100 million USD financing facility, Saudi Arabia Fund and Opec Fund for 15-25 million USD each.

The Islamic Development Bank approved the financing in March and the final agreement was signed in April. The Ministry of Finance of Albania announced that the financial facility provided by IDB will include approximately 5 per cent interest rate per year. Currently the sovereign bonds of Albania are priced at about 7.5 per cent.

The new road is 31 km long and the project includes two tunnels with total length of 4.4 km. Greek company Actor had won the tender to build the tunnels.

The Ministry of Finance canceled its plans to reduce the country’s public debt from 59 to 53 per cent till 2013 as result of this project. The current target is to keep the public debt lower than 60 per cent in the next few years.

Albania completed its major ever construction project in 2010, a 60 km highway to connect the country with Kosovo. The whole project cost exceeded 1 billion euro.