In the 2007, the Albanian government approved one of the most incisive reforms on the Albanian economy relative to a fixed rate on 10% revenues. Although this reform was widely debated also at the international level, for the first two years it contributed to increasing the revenue of the Albanian state of 20%, thanks also to an increase in prices at the time.
But the golden age for the state budget soon ended and from the 2008 the fixed rate ceased to realize a surplus of revenue for the state coffers. While the government was unable to increase revenue, expenditures continued to rise, both from electoral factors and from the global financial crisis, putting government finances in serious trouble.
Public revenues increased by NNUMX billion ALL, while outputs almost double. The government financed the difference through loans, increasing the debt of the Albanian state. The fixed rate of 37% is not the only reason for the increase in public debt.The question arises: who is really responsible for the strong indebtedness of Albania? The fixed rate of 10%, or electoral expenses? Government analysts have admitted that the 10% tax is not able to manage a level of spending higher than 30% of GDP and at the moment when the government finds it impossible to cover the public expenditure sustained with its income, it makes debt recourse. During the 2009, expenses reached 34% of GDP. Is this an isolated case, or a trend that cannot be stopped? Beyond 80% of public budget expenditures are current expenses, which cover salaries, pensions, social protection services and public debt interests. Starting with the 2007, state expenditures, mainly consisting of pensions, increased by more than 46 billion ALL. State finances have recently heard of another factor: the Durres-Kukes highway, the cost of which will continue to be a significant item for the budget over the next three or four years. First five months of this year, Bechtel Enka, The company that manages the tunel works has requested the government additional 100 million dollars.
Under these conditions, the country's economic growth is slowing, as has happened in the last three years, and the financial situation is worsening. The ultimate goal of the state is to restore public finances without raising taxes. As from the conclusions of the International Monetary Fund, this year Albania will be required to implement one of three painful measures: freeze salaries and payments, decrease public investment or increase taxes. However, these three measures have a high political and economic cost.
Notes: ALL - Lek Albanese
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