Albania PM sees 4-5 pct 2010 GDP growth
Albanian Prime Minister Sali Berisha said on Tuesday he expects economic growth this year in the 4 to 5 percent range, roughly twice the amount predicted by the International Monetary Fund.
Berisha told Reuters on the sidelines of the United Nations General Assembly meeting growth was going to be strong because the feared impact of the Greek financial crisis has not taken a big bite out of revenues.
"(GDP) will be something between 4 and 5 percent, I think," Berisha said in an interview, noting that budget revenues are running at 99.6 percent of expectations.
He predicted a budget deficit of 3.2 percent for 2010 as revenues are running 13 percent ahead of last year.
In July, the IMF raised its forecast for Albania's economic growth to 2.6 percent from an April estimate of 2.3 percent.
At the time the IMF cautioned, however, that lower demand from Albania's trading partners and still heightened fragility and risks in the global financial system, which forced Albania this month to cancel its 400 million Eurobond [ID:nLDE6681P0], would linger for a while longer.
EUROS OR DOLLARS?
Berisha said the government was still debating whether to issue a sovereign bond in euros or U.S. dollars.
"Holding it up is the situation of (the) euro," he said.
"It seems that the situation is somehow recovering. ... With the situation of the Greek debt, there is (a) tendency for recovery, but (if) other euro zone economies' debt becomes a very serious issue, chances for raising money in euro markets will not be so favorable, I think," Berisha added.
The scars from the Greek debt crisis, which shook financial markets in the first half of this year, are not yet healed and the outlook for growth remains dismal given austerity measures adopted by governments to rein in spending.
Albania wants to raise 300 million to 500 million euros to pay off an 11 percent 200 million euro loan from private lenders.
"It was a very difficult time last year. However, we were among the very few countries that got a loan," he said of the high interest payments.
Berisha said he would like to have a yield on the eurobond of "up to 7 percent, but whether it will be 7 percent or not I cannot tell you."
Berisha said the government could easily issue debt in its local markets but is mindful of crowding out local industry.
"We could do very well in our internal market. We have no difficulty," he said, referring to the local market. But he said too much domestic government debt issuance would hinder industry from raising capital.
At 7 percent, Albania's expected eurobond would be below the well received maiden eurobond from Montenegro issued on Sept. 7.
In that deal its Balkan brethren issued 200 million euros' worth of debt at a discount and a coupon of 7.875 percent. That bond is now trading above par, yielding 7.48 percent .
Demand for the Montenegrin bond was strong, indicative of investor appetite for high-yielding assets in emerging markets where robust growth prospects compare favorably to near-zero interest rates and grimmer economic prospects in developed nations.
The top priority for the cash is to continue to build infrastructure, with roads, water and power the key issues.
"Still we are not changing the expenditures that we cut. We are keeping them (the cuts). Probably the (public) debt will be 1 percent lower than we thought.
That would put the public debt to GDP ratio at around 58 percent.
"The majority of EU countries are higher," he said.
http://www.freshplaza.com/news_detail.asp?id=69200
