Albania has the weakest medium-term budget perspective in the Balkans

Albania has the weakest medium-term budget perspective in the Balkans

Tirana, 13 July 2016/Independent Balkan News Agency

By Edison Kurani

Albania is seen by experts of the European Commission as one of the countries with the gloomiest perspective of budget revenues. According to the European Commission, in the years to come, Albania will continue to have the weakest tax performance in the Balkan region.

The report published by the European Commission on the economic reforms of the countries aspiring EU accession, points out the economic and fiscal developments in the Balkans.

The report considers Albania as a weak country in terms of budget revenues, expenses and public debt, comparing them with Gross Domestic Product.

Even in the 2016-2018 medium-term perspective, Albania is expected to collect 27,3% of GDP, while Serbia, Turkey and Montenegro aim at collecting 39%, the report notes.

The European Commission says that FYR Macedonia aims at collecting 31%, while Kosovo 25%.

In the part on Albania, the EC report says that the country continues to have a poor performance even in terms of budget expenses as opposed to GDP. In 2015, this indicator was 30.2%/ After two years, it is expected to go even lower to 27.8%. In Montenegro, budget expenses are 42.4% of GDP, in Turkey they are 40%, in FYROM they are 33.8%, in Bosnia they are 35.3% and in Kosovo they are 26.6%.

Further reduction of budget expenses in Albania comes as an effort to reduce public debt.

Currently, Albania has the highest debt after Serbia, with 72,2% of GDP.

Great regulatory burden, informality continues throughout the Region

According to the European Commission, Albania’s regulatory burden is excessive and suggests a simplification. According to the EC, the country suffers as a result of legislative uncertainty with frequent and non transparent legal changes.

The report suggests that the adjusting tax measures are often unspecified, by considering this not only an Albanian problem, but a problem throughout the region.

Meanwhile, informal economy has spread in all West Balkan countries. If the data of the EC report are compared to the situation on field, a conclusion may be drawn that this is a typical Balkan problem.

Many businesses including cafes, restaurants, hotels, night clubs, partially issue receipts for customers, especially in tourist areas which are numerous in the countries of the region.

This way, they evade a good part of taxation by boosting their profits.

However, this is not an exclusively Balkan problem. In many European countries, businesses try to evade taxes to have bigger profits, especially with the black labor market.

Employment, problems continue

In Albania, authorities say that unemployment has fallen, but many people say that this s sheer demagogy. According to them, there is not a proper labor market which could encourage them to be part of this market in order to secure a job and advance in a career.

The EC report (the chart below offers more details) suggests that the weak performance of the labor market is a joint denominator in all West Balkan countries.

Meanwhile, the report says that in Albania, the labor market is deterred by remittances.

The EC says that there are strong inequalities in the labor market, therefore it suggests an improvement in the quality of educational systems in Western Balkans, in order to better link skills with the labor market needs.

According to the EC, this requires further reforms of the educational system in all levels, beyond the current focus.

In fact, many people are clear that the weak quality and the results of basic education endanger the future perspective of employment and what’s worse is that they will have wider effects on the economic and social situation among the population. /