Albanian Free Press interview with leading economy expert, Sherefedin Shehu

Albanian Free Press interview with leading economy expert, Sherefedin Shehu
“Concessions? Of course they will increase debt”

Mr. Shehu, how would you comment the declaration that was made yesterday by the minister of Economy and Finance, Arben Ahmetaj that Public-Private Partnership will not affect public debt?

In fact, it will increase it, but, as the International Monetary Fund has pointed out, international standards must be applied when reporting debt increases due to the so called concessions, because the terms that the government uses, such as “partnerships”, are a lie. What we have here is nothing more than a contractual agreement where the payment is made at a later date. In other words, this is a loan which the government is not taking from banks, but from businesses. Or, investment expenses which will be made during this next budget year, if they are not registered as a debt of the current year, will be registered as a debt which will have to be paid in the years to come. It goes without saying that this debt will start to be paid in one or two years time.

In fact, IMF too has declared that PPPs will increase public debt.

As a matter of fact, the IMF is asking is for the country to apply the best international practices, which means that the debts or expenses which are made next year, should, at least, be recognized as such, even if they remain outside budget calculations. But, the 2018 budget report doesn’t provide for such item and doesn’t even mention these debts. Then, it’s easy to determine whether it is a debt or not, because the government has declared that once these investments enter their second year, payments will start to be made. This means that the government has signed payments for the next 15 years. It hasn’t formalized them into a standard bank loan, but it has decided to take this money from the business sector in the form of an unwritten agreement.

Are there other problems that may be caused by the so called Public-Private Partnerships?

Yes, there are also other issues to discuss. First, the loans that the government receives from businesses are much more expensive from the loans granted by the banking sector, because businesses cannot afford paying for expenses which it will collect in the next 15 years. Businesses will go to the bank. But, the government is better than the business sector at requesting loans from the banking sector. Secondly, businesses will make the necessary calculations about the fact that the money that they will spend today, will be collected in the next 15 years. So, this missing profit and this large cost for a loan that it is requesting on behalf of the state, will be an added cost to the projects which will be implemented through this mechanism.


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