TIRANA, Nov. 1 – Visa-free travel, a dream expected to turn true for Albanian citizens by the end of this year, could bring a considerable depreciation of the Albanian currency lek against Euro, Albania’s business community represented by Konfindustria has warned. Worried that some 300,000 Albanians could leave the country to visit friends and family or travel as tourists, Konfindustria says that the visa-liberalization will drive considerable amounts of money out of the country, affecting the national currency which has been losing considerable ground to the European currency in the past two years.
According to Konfindustria, the only solution to this expected situation for the Albanian government is to accelerate the implementation of a tax amnesty reform by the end of this year, making use of the immigrants’ return to spend their year-end holidays as the best way to be successful in this effort.
Konfindustria’s assumptions on a possible depreciation of the national currency are based on the experience of Serbia and Macedonia whose citizens were granted visa-free travel in the Schengen area in 2009.
“It is very probable that the depreciation of the national currency against Euro will be considerably felt for at least a 6-to- 12 month period from the start of the visa-free travel in December 2010,” said Konfindustria in a statement.
Government
Finance Minister Ridvan Bode reiterated on Wednesday government stance in favour of carrying out the tax amnesty as a very positive measure for the country’s economy and financial system. However, he said the amnesty cannot be implemented without the opposition’s consent because the bill requires a qualified majority of 84 votes. According to Bode, the approval of the bill would first require the amendment of the country’s Criminal Code and that’s why government cannot implement the reform under a simple majority vote.
Tax amnesty
Finance Minister Ridvan Bode declared earlier this year that the legalization of the informal business would produce positive results for the economy, unfreezing some USD $3 billion. He said the process for the implementation of the fiscal amnesty will be launched and concluded this year.
The opposition and some experts are also skeptical of the reform the Albanian government wants to make, considering it an effort and good opportunity to collect money in a time of crisis.
Konfindustria says that it is completely unacceptable that in a 20-year period of such radical economic, fiscal and institutional changes, Albania remains the only country which has not implemented a real tax amnesty, especially when our neighbours Greece and Italy continuously implement them. According to Konfindustria, delays are also affecting investment initiatives and keeping migrants’ savings abroad.
However, the International Monetary Fund has warned that a tax amnesty should nevertheless be only considered as a last resort, as it threatens to undermine future tax compliance and the credibility of the tax system.
Regarding tax administration, the IMF mission said an effective compliance strategy is especially urgent, including by addressing the under-reporting of taxable income by high-wealth individuals and by capturing a greater share of informal economic activity.
