IMF: “One Billion Euro Plan” Not Discussed with Us

Jens Reinke, the permanent representative of the International Monetary Fund in Albania, denied that the IMF had been involved in the consultation process for the “one billion euro plan” of the Rama government.

Prime Minister Rama presented the “one billion euro plan” a few days ago, as the investment plan for his next mandate. The one billion euros of investments would include a major renovation of infrastructure, more than hundred schools, and a hospital, all of which would be developed through public-private partnerships (PPP).

In an interview with Monitor, Reinke cautioned for the blanket usage of PPPs, especially if the intention is to keep hidden costs outside the balance of the state budget. This however, appears to be the main reason the government is currently implementing PPPs at an unprecedented scale.

PPPs are a form of financing investments. We have had intensive consultations about their usage in principle and the agreement [with the Albanian government] also holds for any project under the one billion dollar [sic] umbrella, which has not been a theme of our discussions.

It is important to consider that PPPs are not always the most efficient way from the perspective of costs to finance public investments. The financing of projects through PPPs never should be done if the only reason is to keep the costs outside the balance.

Projects that are implemented as PPP have to pass through all the evaluations and prioritizations, just like all the other public investments that are done.

Besides that, the government needs to evaluate the fiscal costs and risks that follow from the subsidies or guarantees that accompany PPPs.

The long-term financial risks of the government have to be transparent in the fiscal data and have to managed in a careful way.

It will be very important that all engagements are fully documented in enforceable contracts and that fiscal experts make careful analyses of the future costs and risks.