IMF: Lack of public infrastructure in Western Balkans obstacle to faster growth

Source: Beta Monday, 12.02.2018. 13:42
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The analysis by the International Monetary Fund (IMF) has shown that the lack of basic public infrastructure in the Western Balkans region is a considerable impediment to a quicker economic growth, the IMF announced on Thursday, February 8, 2018.

– Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia have insufficiently developed transport, energy and telecommunications networks compared to the EU average. The Western Balkans region lags behind the European average when it comes to supporting economic development with adequate infrastructure – the report says.

As said, better transport, energy and telecommunications networks would help the Western Balkans countries to raise productivity, achieve better integration into the global trade flows and make the region more attractive for foreign investments.

The analysis shows that regionally coordinated intensive activities in upgrading the public infrastructure, combined with better project management, might considerably increase per capita income.

– A long-term increase of real per capita GDP might be three to four percentage points – the IMF says.

The high level of public debt and the high budget deficit in most Western Balkans countries, but also poor public investment management, are cited as obstacles to increasing the public investments.

The IMF assesses that the Western Balkans countries need to invest in modernizing the key traffic routes and in the energy and the TC infrastructure.

They also recommend an enhancement of capacities for planning, selecting and carrying out infrastructural projects, in order to secure the optimal usage of available resources and increasing the ability of the region to absorb available financing by donors.


A better regional coordination of investment projects is also needed, and the countries should also consider tax exemptions, in order to increase the collection of revenues.

It is also assessed that donation, multilateral and bilateral financing under concessional conditions will be dominant, especially in countries with a high public debt.

– The countries should not jeopardize their general macroeconomic stability with overly ambitious or poorly conducted public infrastructural projects. Compromises between the economic growth, inflation and deficit of the balance of current transactions should be the key element of any discussion about the policy of improving public infrastructure in the region – says the IMF analysis.

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