The Albanian government says that it has struck a good deal with the International Monetary Fund (IMF) on the 2017 state budget.
On its part, the IMF says that it conditions the agreement with the way how the Albanian government will solve the issue of state arrears.
Ahmetaj: We expect many positive things in 2017
Minister of Finance, Arben Ahmetaj says that an important deal was struck with the IMF for the 2017 budget, which he considered as the most optimal budget in the history of public finances in the past 25 years.
According to him, this is the budget of economic growth, as growth is accelerated by 3.8% or quadrupled compared to 2013.
According to Mr. Ahmetaj, this is the budget of reforms and the increase of salaries and pensions: “For the first time around 100 million USD (in 12 months) are allocated for the increase of salaries and pensions”, says Mr. Ahmetaj, stressing that this is “the largest fund for salaries and pensions allocated within a budget in 25 years”.
The minister says that the government is committed to reduce public debt with almost 3% to 69.1%. It also promises to cut deficit to 2% in 2017 and this is expected to be the lowest one in 25 years.
IMF: Moderate growth of salaries and pensions
IMF representative in Albania, Anita Tuladhar says that the increase of salaries and pensions will be moderate. While the government talks about a high increase of salaries and pensions, IMF mission says that in relation to the Gross Domestic Product, the fund of salaries will not change from the one this year: “The budget enables a moderate increase of salaries of the public pension and pensions, preserving the level of expenses for salaries as a percentage of GDP in 2016”, Mrs. Tuladhar says.
Another issue that is a concern for the IMF mission is the payment of debts. The minister of Finance says that thanks to the reforms that have been realized, mainly in the domain of public finances, the incurrence of new debts has been put under control. But the way how this will be achieved consists on the condition that the IMF has imposed when it agreed on the 2017 budget.
When it came to power 3 years ago, the government was forced to pay several hundreds of millions of dollars of debt incurred by the previous government, but it seems that it couldn’t avoid this phenomenon.
“Besides approving the budget and the tax package, for which it was agreed, the government is committed to take preliminary measures in handling the issue of the arrears of the central government and to strengthen tax on property”, says the head of the IMF mission, Anita Tuladhar.
For several weeks, there have been a lot of talks about a drastic increase of salaries. The government and the prime minister mention an increase which goes up to 35% for several categories of the public sector and an average of 10 to 15% for the others.
Experts say that in spite of the loud claims, the average growth is around 10% They explain that in reality, the growth is no higher than 2%, due to the fact that for nearly four years, there hasn’t been any increases for the administration and neither there has been any indexation of inflation with at least 2% a year. This was also confirmed by the minister of Finance, Arben Ahmetaj when he said that “The increase for salaries will be on average of 10% and for the first time in these 7-8 years, it will exceed real growth. 2009-2013 growth could not catch up with the increase of inflation. Within a year, in 2017, we’re exceeding the accumulative inflation of four years by +2%. This is real growth and not a lie”. /balkaneu.com/