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EC report: Strengthen control of concessions; there is a lack of transparency of earthquake funds

2023-11-09 09:28:33Biznes SHKRUAR NGA REDAKSIA VOX

EC report: Strengthen control of concessions; there is a lack of transparency of

The European Commission assesses in the latest enlargement report that our country has a moderate and good level of preparation in the development of a functional market economy and has made some progress in this area.

But the problems encountered in the Albanian economy are mainly related to Public Private Partnership (PPP) contracts and the lack of transparency of earthquake funds.

"The post-earthquake reconstruction costs lacked transparency as they were not integrated into regular public finance procedures.

The reforms launched at the end of 2022 aim to harmonize and improve the evaluation procedures for different types of public investment projects and have so far resulted in the establishment of a single national project, which also strengthens the priorities of projects in accordance with the space fiscal and may contribute to the reduction of arrears. A change in the PPP legislation is necessary for the integration of PPPs in these new procedures", the report notes.

A guidance published in December 2022 introduced additional reporting requirements for all public bodies on potential fiscal risks, including those related to PPPs, but the report points out that the capacity and mandate of the fiscal risk unit to make full use of this information.

The report claims that there has been a significant decrease in the number of new PPPs. The use of unsolicited PPPs was also restricted. At the end of 2022, the PPP/concession register contained information on 228 contracts.

However, in the 2024 draft budget, all 11 concession contracts that are in process will continue even though most of them are under investigation by the court.

What next summer report?

The report notes that the shortage of skilled labor is becoming a concern.

"There is a growing perception that difficulties in recruiting skilled labor are becoming a hindrance to business, and entrepreneurs are increasingly seeking government measures to help retain workers and provide incentives for diaspora return."

Despite some progress and ongoing efforts in the fight against corruption, it remains an area of ​​serious concern, the report points out.

SPAK bodies have conducted investigations into a number of high-profile cases, ordering several arrests and convictions in a number of high-profile cases.

Overall, corruption is widespread in many areas of public and business life, and preventive measures continue to have limited impact, especially in vulnerable sectors.

Increasing the number of final convictions to a high level remains an important priority to further address the culture of impunity.

Further efforts are needed to ensure proper prosecution in verification cases where there are indications of criminal offences, the report recommends.

However, the report also evaluates some positive indicators of the Albanian economy.

Despite the economic fallout from Russia's war of aggression against Ukraine, the Albanian economy showed resilience and GDP growth remained strong in 2022. Inflation rose above target in 2022, but remained in single digits and then eased in early 2023.

The strong recovery supported labor market performance, giving Albania the highest participation rate and one of the lowest unemployment rates in the region.

The report estimates that the public debt ratio fell much more than expected, below its pre-2019 crisis level, but remains among the highest in the region.

There have been reforms to improve investment spending, planning and execution, and monitoring of fiscal risks, but the Commission notes that weaknesses persist in both areas.

There has been some progress on income-related reforms, but plans to adopt a medium-term income strategy have been shelved.

On the other hand, the low level of income continues to hinder investments, which are very necessary. The financial sector remained stable and continued to expand, but financial intermediation remains low.

The business environment benefited from a higher level of digitization of public services. However, challenges related to a large informal economy and a lack of skilled labor persist. There was no significant improvement in government consultations with the public either.

 


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