Albanian Government Plans Sharp Hike in PPPs for 2019

SManalysis


Albanian Prime Minister Edi Rama, "Projects For The Albania We Want"
The government’s planned value for new public-private partnerships (PPP) for 2019 amounts to 15 per cent of the GDP, or €1.65 billion, according to the latest report by the International Monetary Fund (IMF). The report used information and documents provided by the government.

The 2019 value reported by the IMF is 2.5 times bigger than the total value of PPPs since Prime Minister Rama came to power six years ago. In case the government’s plan gets implemented, the total value of PPPs in Albania would reach to 45 per cent of the GDP, or €5 billion.

The IMF report estimates the current value of PPPs to be 31 per cent of the GDP, of which 23 per cent are concessions in the energy sector. PPPs in other sectors (health, roads, waste management, etc.) amount to about 6 per cent of the GDP and were almost exclusive handed out by the Rama government.

This sharp hike in the value of planned PPPs, which is basically long-term public debt, has raised concerns for the IMF regarding the high risk it carries for the Albanian budget and economy.

“The rapid increase in Public-Private Partnerships (PPPs) has raised fiscal risks, and staff proposed further steps to control these,” the report states.

The report particularly stresses IMF’s concern that the government has not met its previous recommendations regarding the need to improve the administration of PPPs. Therefore, the report reiterates the same recommendations:

— The government should ensure value for money for PPP projects through competitive bidding.

— The government should halt the acceptance of unsolicited PPP proposals from private companies.

— The government should improve the risk analysis and consolidate the decision-making processes for public investments, including the management of PPPs.