IMF hits the government: PPP contracts in Albania are politicized in practice, monitoring is lacking

Public-Private Partnerships (PPPs) are increasingly becoming an important tool for some Western Balkan countries to reduce their infrastructure gaps, but the lack of legislation and its weak implementation could turn these projects into a risk for fiscal stability, evidences a recent study "The future of PPP contracts in the Western Balkans" by the International Monetary Fund. The comparative study points out that Albania has made progress in the legal framework of PPP contracts in relation to other countries in the Region and also has a ceiling for their annual financing, but the process is politicized. "PPP legislation in Albania, Bosnia, Kosovo and Montenegro explicitly requires the approval of the Minister of Finance for PPP projects as before the start of procurement, even before signing the contract. In Albania, however, PPP decisions remain highly politicized in practice," the study states. Practices have shown that there are economic benefits when PPP projects are well conceived and implemented, but they also carry the potential for large fiscal risks and cost overruns if not well managed. PPP programs are considered successful when the legislation covers and is implemented in all phases of the contract from the idea to its conclusion, but the Western Balkan countries encountered major gaps in their management. The public units of PPPs established in the countries of the Western Balkans differ in the roles they play. In Albania, Bosnia, Kosovo and Serbia, PPP units assist authorities in the preparation and evaluation of PPP projects through technical support. In Albania, the PPP unit is subordinate to the Ministry of Finance, but is not officially mandated with fiscal management functions. In North Macedonia, PPP units seem to have advisory roles.