| Nuamah: The World Bank is advising Albania on the economic challenges Available in: Albanian The World Bank and the International Monetary Fund foresee a decelerated economic growth in Albania due to the current global crisis. Camille Nuamah, the representative of the World Bank in Albania says that the bank is advising the government to face the challenges emerging from the instability of the financial markets, the increase of energy and food prices.  The deceleration of the economic growth in the United States and in Europe seems to have quite an impact on the Albanian economy. The instability in the financial markets is causing a reduction and costly international crediting. The representative of the World Bank says that for a country like Albania, where a part of the growth in the crediting market is supported by the remittances (foreign transfers), therefore this situation might lead to a reduction of the crediting market, which assists the promotion of the economic growth.
"Our advice to the government is the careful supervision of the banks, in order to better see their investments in Albania and to increase the attentiveness regarding the banks’ crediting activities.”
The increase of food items and energy prices is causing an increase of the inflation rate, which makes it necessary to have stronger monetary and fiscal policies. In these circumstances the World Bank considers the commitment of the government to decrease the budgetary deficit a good starting point.
"After the last agreement with IMF, we have witnessed a draw back of the government from some fiscal policies that were planned for 2007, aiming at the decrease of the budgetary deficit from 7.9 per cent into 5.2 percent. And this is a good start. The financial conditions of KESH (Albanian Electric Power Corporate) should be very carefully taken into consideration, because that has consequences for the fiscal policies and when some strong fiscal policies are necessary in one year, special attention should be paid to how the electric energy price will affect (have an impact) on the financial situation of KESH and the possibilities of the budget to assist it.”
The World Bank is one the biggest donors in the energetic sector in Albania. Together with the Monetary Fund, the World Bank suggested the increase of the energy price, which seems to be insufficient and might be followed up by another increase.
"The increase of the price was delayed by two months, as such Albania lost in a way the possibility to get sources for its imports or its production in crucial months, like January and February. The World Bank is of the opinion that this price increase will not be sufficient and this is the reason why we and IMF are encouraging the government for another price increase. The timing for this increase will depend on the cost-estimations, because in case that there is more energy production in the country (locally) there will be less need for imports. Another factor will be the capability of KESH to collect incomes from the bills.”
With regard to the impact that the increase of prices will have on the poor class of the society, the World Bank is advising the government to improve the objective of its salary and pensions’ policies, in order that they support exactly those who are not in the position to afford the prices.
"The World Bank is of the opinion that there is a serious need for intervention in these policies, in order that the support is not provided for the whole middle class sin general, as this would increase the demand and consequently would lead to increase of the inflation rate. Special attention should be paid to the subsidies that will be provided for the electric energy and to the increase of pensions, which is a very important part of the poverty alleviation in Albania, should be provided to the poor.”
The electric energy remains the most important (key) issue for the Albanian economy, which seems to keep away the foreign investments, which have been smaller than expected. The representative of the World Bank says that a lot of attention should be paid to the labor market restructuring, in order to accomplish a deep reform that would rank Albania in a more convenient competitive position. Despite of the relatively cheap labor costs, Albania lacks the capabilities and effectiveness in attracting the foreign investments.
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