IMF says Albanian fight against informal economy is vital

TIRANA, May 22 – Murilo Portugal, Deputy Managing Director of the International Monetary Fund currently visiting the country, appealed to all political forces in Albania to support the fundamental economic reforms by consensus.
Portugal came to the country and met with top officials, beginning with Prime Minister Sali Berisha, Parliament Speaker Jozefina Topalli and Finance Minister Ridvan Bode and central Bank of Albania’s Ardian Fullani. He also met with representatives of parliament, civil society, and the media.
“Albania has posted a solid growth performance and demonstrated strong ownership of the IMF programs,” said Portugal after discussing with authorities how the IMF can continue to support Albania in the future.
Preserving macroeconomic parameters and fighting poverty were the two main issues that all Albanian institutions should pay special attention to, according to Portugal.
The IMF said they would further strengthen monitoring of the banking system in the country, considered as a top priority among the country’s steps toward integration into the European Union.
Portugal said that the parliament played a very important role, adding that the fight against Albania’s informal economy is progressing well.
The government has begun a series of reforms that have created significant controversy from the opposition and also the business community. These reforms include setting the level of wages and also setting a ceiling on prices for goods.
“The IMF supports the government’s fiscal policies aimed at achieving a lean but efficient government, with the fiscal deficit and the public debt steadily declining in terms of GDP over the medium term, and with expenditures focusing on priority areas such as education, health, and infrastructure investment.”
Such acts have been often considered as simply new ways for the government to collect additional taxes, though the executive claims it is, in fact, reducing taxes. The government also continues plans to institute a flat tax this summer.
Portugal said that he “agreed on the need for further structural reforms to enhance the business climate and attract direct foreign investment,” which would “be necessary in order to further develop Albania’s exports sectors and maintain the current high growth rates over the medium term.”
He also said that “such reforms will need to focus on reducing the informal sector and enhancing governance; improving public institutions, including the judiciary; upgrading infrastructure, in particular the electricity and transportation networks; and completing land registration.”
Portugal said they discussed how the IMF can continue to support Albania, including following the conclusion in 2009 of the current arrangement.
Portugal said that it is very important that everyone pays taxes so there is more honest competition in the market. “It is necessary for the government’s fundamental reforms for all sides to give consensus,” said Portugal.
The IMF was ready to discuss with the government its ambitious agenda for tax reform, bringing the experience of the best international practices to maintain a sustained fiscal position, he said.
The IMF said that the government had agreed on the importance of further improvements in revenue administration and in debt management, including the use of short-term domestic debt to help develop a secondary market for government securities.
“Albania’s inflation expectations are well anchored at low levels, thanks to the credibility, transparency, and professionalism of the Bank of Albania. Looking ahead, strong independent institutions, such as the Bank of Albania, will become the key internal anchors for economic policy making. While the current, very high rate of credit growth will entail additional challenges for the Bank of Albania, we are heartened to see that this growth is mainly directed at business investments,” noted Portugal.
In the end, Portugal said he was “impressed by the commitment of the government to address the challenges of the Albanian economy, and put the country firmly on the path toward an emerging market economy” and expressed further IMF commitment to continue working with Albania.