IMF concerned about transparency of concessions: “Could increase debt with 7%”

“The economic growth for this year will be 3.9% or 3.7%, supported by the quick growth of tourism and construction, reducing the negative consequences of this year’s drought in the energy sector”, the IMF says.

Despite agreeing with the economic progress evaluation, the IMF had heated debates with the government about the risks of public finances. The hottest topic is that of concessions. The IMF asked the government to register as debt the obligations deriving from concessions, based on practices followed by EU countries.

“The ambitious plan of the government regarding GDP raises three substantial risks. Contrary to current practices, the effects of concessions on fiscal accounts and the public debt should be portrayed with transparency and based on international practices”, IMF notes.

The fund is not against concessions, but they are concerned about the way how the concessionary agreements are given. The government insisted during the past two years and tightened the legal framework for concessions, clearly defining the steps how projects are selected and evaluated. But, according to the IMF, this is not being implemented fully, increasing risks for the state’s finances.

According to the IMF, this will create obligations for the state budget in the future. It will leave less room for public investments and may put at risk the debt reduction. According to IMF, the current concessionary agreements would increase the public debt with 7% from the current level, if registered fully.

But the government says that the budget is protected, since the payments they make for concessionaries in one year are capped by law at 5% of revenues.

IMF: “New government structure, unclear organization”.

Concessions are not the only concern for the IMF. Another matter for which experts have remarks, is the reorganization of the government and public institutions.

According to IMF, although it has been more than three months since elections, there is still no clear plan on how the public administration is going to be formed.

IMF fears that this may weaken the work of institutions, especially after the merging of the Tax Office with Customs.

The IMF mission was against this change, since they fear that it could damage the budget revenue collection, which would crate other difficulties for public finances.

Top Channel