Albania’s current account deficit to fall after TAP starts operation
Baku, Azerbaijan, Jan.30
By Leman Zeynalova – Trend:
The current account deficit is expected to fall in Albania with the commissioning of the Trans Adriatic Pipeline (TAP), Trend reports citing the International Monetary Fund (IMF).
“Over the medium-term, the deficit is expected to fall further as imports generated from foreign direct investments (FDI) in large energy projects, especially the Trans-Adriatic Pipeline (TAP), decline as the projects come to an end, and an expansion of domestic energy production leads to increased exports,” IMF said in its Country Report for Albania.
However, IMF believes that Albania’s reliance on hydropower, and dependence on Italy and Greece as export destinations, makes the current account vulnerable to exogenous shocks.
“The current account deficit declined slightly to 7.5 percent of GDP at end-2017, the lowest level over the past decade. This improvement was led by the strong growth of tourism, back office services and remittances, offsetting a slight deterioration of the trade deficit due to an increase in electricity imports caused by prolonged drought. Significant rains returned in early 2018 supporting a surge of electricity exports and a projected narrowing of the current account deficit to 6.2 percent in 2018,” reads the report.
TAP project, worth 4.5 billion euros, is one of the priority energy projects for the European Union (EU). The project envisages transportation of gas from Azerbaijan's Shah Deniz Stage 2 to the EU countries.
Connecting with the Trans Anatolian Pipeline (TANAP) at the Greek-Turkish border, TAP will cross Northern Greece, Albania and the Adriatic Sea before coming ashore in Southern Italy to connect to the Italian natural gas network.
The project is currently in its construction phase, which started in 2016.
Once built, TAP will offer a direct and cost-effective transportation route opening up the vital Southern Gas Corridor, a 3,500-kilometer long gas value chain stretching from the Caspian Sea to Europe.
TAP shareholders include BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).
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