 |
The director-general of the International Monetary Fund (IMF) has stated that the governments of the countries affected by the coronavirus will need more than the $ 8 trillion they have provided so far, which is estimated at 10% of world GDP. Albania has a package of measures of 1.4% of GDP. Do you consider it sufficient to keep the engines of the economy on?
2020 will be a particularly difficult year, with a global humanitarian crisis. It is predicted to be a difficult year for everyone. It is also true that developing countries have less fiscal space or means available to support businesses or families than in developed countries. This is why it is important that designed policies are well-designed and targeted at those most in need, to do what is possible. Therefore, assistance from international institutions is needed to cope with this situation.
What are your recommendations for the measures that the Albanian government should take to keep the economy afloat during this period?
The main priority is to ensure that the health sector has all the necessary tools to pay medical staff and that people are protected from the spread of the virus. The second is to help those people whose livelihoods have been affected by the economic downturn and the coercion imposed to fight pandemics. The measures taken by the Albanian government, on both these fronts, have been timely and well designed.
Keeping the engines running is an aspect of the assistance package but beyond that? Are these budgets enough to revive the economy?
We don't know how long the pandemic will last. At the moment, our forecast is that in the second half of the year there will be a reactivation of the economy. To stimulate demand, countries that have more opportunities and more fiscal space should do more than those countries that have less fiscal space. The IMF stands ready to assist Albania in the process of economic recovery.
Has the IMF made recommendations for Albania in this period? Have our governors taken it into account?
During this time, we have been in constant discussion with the authorities. Even in the future, we are ready to continue the dialogue and give our expertise.
The business community has made a list of demands, including a 1-year deferral of tax payments. An initiative that has been taken in some of the countries affected by coronavirus. Is this possible?
It is understandable that in this situation, businesses have difficulty paying taxes because their activity has been stopped. Several measures have been taken to delay the payment of taxes, especially for small businesses. Such measures should be targeted because it is impossible to take action against everyone at the same time. The government budget is limited, and if taxes are not paid, the government would have nothing to support those most in need.
The IMF Executive Board has approved 174m euros in emergency support for Albania to cope with the Covid-19 pandemic. Can the state budget cope with this crisis? If not, what should be done?
The IMF Board has approved doubling the level of access for countries that want to benefit from the Rapid Financing Instrument within the pandemic. Only yesterday, the board approved emergency support for Albania, Kosovo, and Northern Macedonia. This assistance is not accompanied by conditions, the disbursement of funds will be done immediately.
Does the IMF have a program to postpone debt service costs for the governments of developing countries? What about Albania?
The IMF, along with the World Bank, has taken the initiative to suspend debt service payments to poorer countries. However, since 2008, Albania is no longer classified as a poor country, but as a middle-income country. Moreover, Albania's debt is stable. Excluding this year, where for understandable reasons it will increase, we expect Albania's debt to continue with its downward trajectory and the Albanian authorities are committed to making that happen.
How much do you think the impact of this crisis will be on the Albanian economy, as the government is still optimistic and stands by the 2% forecast? A prediction of yours for the best scenario and the worst-case scenario.
Today there is an unprecedented level of uncertainty and it is difficult to make predictions in this situation. At the moment, the IMF predicts that economic activity in about 170 countries will shrink and will fall per capita income.
Albania is one of these countries, due to the very strong links of tourism and trade with countries that have been greatly affected by Coronavirus, such as Italy. We anticipate that this year there will be a decline and contracting of economic activity, accompanied by a recovery in 2021.
Some experts argue that this crisis will last until the end of this year and the slight recovery will begin next year. The IMF estimates that coronavirus could cause an even deeper crisis than that of the Great Depression in the 1930s. Prime Minister Edi Rama has said it will last three years. When do you think the recovery will begin, as even business has to make its own plans?
Covid-19 has caused a halt in economic activity around the world and is expected to lead to a contract and economic contraction even worse than the 2008 financial crisis. Albania is affected because the pandemic has affected its key partners. In the current situation, it is difficult to make credible scenarios, but the longer the restrictions and constraints in Albania and its partners last, the longer it will take for tourism and exports to recover.
Thank you for the interview.
Thank you and take care of yourself.