Do not increase the wages!

Last week, IMF warned the Albanian government to be very careful with its planned increase of wages. According to IMF, the Albanian government should only provide social (economic) help to those most in need. IMF encouraged the Albanian government to reduce the budget deficit to 5.2 percent of GDP and declared that under such conditions there was ‘no space’ for another increase of wages. The government should cut its spending by Euro 242 million in order to comply with the advice of IMF.
According to the governor of the Bank of Albania, Ardian Fullani, any significant increase of wages can increase the inflationary pressures on the demand side, causing another increase of prices. Bank of Albania reiterated the warnings of IMF. In its statement, the BoA said that the increase of wages can increase the imports deepening county’s trade deficit and disrupting exchanges rates.
Socialist MP and former minister of Finances, Arben Malaj said, “the government should be very careful with its wage increase, because the trade deficit is considerably higher than the economic growth”. (Tirana Times Staff)