WB: Albania to be cautious with debt
17/03/2012 00:00
Redundant guards and employed prisoners left without salaries even though the fund was allocated 5 months ago 27/11 21:15
The leading economist of the World Bank for Europe and Asia, Intermit
Hill, says in an interview for Top Channel that Albania must reduce the
public debt to 40% of the GDP.
“I think that on Albania’s case, the first that requires attention is the public debt. Albania’s public debt is high, for countries of average income. The 60% debt level of the GDP is considered 20% bigger than it should. This means that there is a cost for financing this debt, which is usually taken by other sectors, such as health and education. The good news is that Albania is better than the other countries with some economic components, such as the social protection. But on the other hand, the country must make big efforts for the high debt”, Gill declared.
Mr. Gill explained the reasons why the country must decrease the debt level, for having a stable future for the economy.
“The best public debt level is based on the experience of other countries in the world. For every given group of countries, there is a given debt level. For the big economies it is up to 90%. For small developed economies is 60% and for economies like Albania is 40 to 50%. Beyond this limit, you must convince the foreign investors for funds with reasonable terms. Beyond the 40% level, the finances become more expensive. This is the reason”, Gill declared.
But which are the measures that the World Bank economist suggests to the Albanian government for keeping the debt under control?
“The government expenses towards the GDP in Albania are lower, compared to the other countries. The first thing to do would be finding a way for increasing the income. I am not speaking about raising taxes, but raising the efficiency of the tax collection. Secondly, the government expenses: the measures that improve their efficiency in health, education, social protection and infrastructure, which would have a bigger economic growth, by increasing the income and by reducing the debt and the deficit”, Gill declared.
However, based on Albania’s history in the last 20 years, Intermit Gill is optimist.
“When I analyze Albania’s performance, I consider it a success case. You can rarely find a country that has increased the per capita income in such a short time, and for me this is a success story. I think that the future is optimistic. Although the economic situation might have changed now, Albania needs more efforts than earlier to keep this pace”, Gill declared.
Mr. Gill was in Tirana for presenting the “Golden Growth” report, published lately by the World Bank, for which he is one of the main authors.
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