Expert Arben Malaj analyzes the performance of Albanian public finances

Expert Arben Malaj analyzes the performance of Albanian public finances

IBNA Analysis/Former minister of Economy and Finance, MP of the Socialist Party in several terms, Arben Malaj, analyzes the performance of public finances for the year to come. The prominent expert of finances, currently president of the Institute for Public Policy and Good Governance (IPPGG)

Dr. Arben Malaj, professor at the Faculty of Economy at the University of Tirana, talks about the fiscal statistics of last month, June 2014. He identifies a fall in revenues.

“The indicators of the month of June compared to forecasts indicate a fall in revenues. 2014 monthly and progressive data, compared to the 10 year trend confirm an improvement of budgetary revenues, especially of revenues from taxes”.

As far as budgetary expenses are concerned, Malaj says that there’s still a lack efficiency, where expenses of a domestic source have a 40% shortfall.

On the other hand, the prominent economist points out the fact that local government has shown an improvement in the collection of monthly and progressive revenues, but he also says that that the failure to carry out expenses is considerable.

Malaj says that there’s a growth of public revenues from customs and taxes.

“Public revenues in the month of June 2014 were 30.58 billion ALL. Compared to the same month a year ago, there’s an increase of total revenues by 27.23% mainly attributed to the increase of revenues from taxes and customs”.

As far as total expenses in June 2014 are concerned, they reached a value of 40.84 billion ALL, marking an increase of 12.74% compared to total expenses of June 2013, which was an electoral year. The main factor which has had an impact was the increase of expenses on special funds.

Fall of public investments

Public investments in the month of June were 5.85 billion ALL or 14.91% less than the same month a year ago.

The highest level of shortfalls relates to foreign investments.

State budget revenues

Based on official data from the monthly fiscal statistics secured from the Ministry of Finance, Mr. Malaj does an analysis focused on the main indicators of public finances.

Total revenues for June in nominal value was 30.58 billion ALL or 6.54 billion ALL more than revenues in the same month a year ago. The increase by 27.23% of revenues on annual terms has mainly come as a result of the increase of revenues from taxes by 23.68%. In June 2014, there were 5.27 billion ALL more in tax revenues than in June 2013, out of which 4.55 billion was the increase of revenues from customs and taxes.

Analyzing these figures, Mr. Malaj says: “This increase was affected by the 35.69% increase of revenues from VAT, the increase of 24.28% of revenues from national taxes and increase of 89.25% of revenues from tax on earnings”.

As far as the central government expenses are concerned, during the month of June 2014, total expenses saw a rise of 12.74% compared to the same month a year ago, amounting to 40.84 billion ALL. Meanwhile, expenses on interests in June 2014 fell by 8,39% compared to June 2013.

But, what is the current state of the Albanian economy?

Malaj says that the economy of the country is far from its potential, in terms of growth and the opening of jobs and reduction of poverty. “We continue to have an economic growth which doesn’t guarantee growth of employment. We have an improvement in the growth of revenues, but there must be reforms for the modernization of the public and fiscal administration. Routine inspections must be reduced based on risk analysis and fight against contraband must be more efficient. An end must be put to abusive taxes and forced collection just to be in line with some monthly figures. That part of the budget which needs improvement is expenses, their forecast and efficiency”.

According to Malaj, public investments remain the most critical element, not only due to the volume of investments, but also the lack of their efficiency. “The fractioning of investments must be stopped along with the delays in their realization and their displacementl for shorter periods at the end of the budget year”.

On the other hand, Malaj says that the reforms in the domain of property rights, construction permits, facilitation of procedures and costs, must be verified in the process. “Every delay or poor quality in their implementation has negative effects which are not only short term”, says Malaj.

Performance during the 300 days

Malaj also analyzes the general performance during the first 300 days of the government led by prime minister Edi Rama. He says that the analyses of the first 300 days can be focused on reforms and credibility on public opinion and international opinion.

“The country has seen several important steps which can be mentioned: the granting of the EU candidate status, the restore of cooperation with international financial institutions such as IMF, police operation in Lazarat, the presentation of several structural reforms, such as the territorial one, reform in higher education and reform in pensions”.

Dr. Malaj also mentions the challenges that the government must face. “Employment remains the main challenge of the government. On the other hand, the functioning of the rule of law, a professional administration and facilitating environment for small and medium sized businesses must continue to be priorities”. /ibna/