Electoral pledges fight poverty

TIRANA, April 28 – The government increases salaries and pensions May 1st, only two months ahead of the June 28th polls while the opposition pledges to double the unemployment payment if it comes to power after the polls.
They are all political pledges to the country (though the salary increase is a practical one).
One may question if they are really intended to fight the country’s poverty or to increase its well being or purely political pledges that may or may not be fulfilled (in the case of the opposition) or that may have high financial costs on the country (for the government’s salary increase).
Opposition Socialist party leader Edi Rama has pledged in his daily trips and meetings with the electorate that his government would double the social assistance to the unemployed, that he would assist the country’s rural population and farmers with assistance in fuel, marketing, and collecting their products.
The opposition has pledged to fix the living minimal wage and along with many other pledges.
The government will increase salaries. Prime Minister Sali Berisha said at a government meeting last Sunday the average salary would increase from 26,500 ALL to 46,000 ALL per month. Pensions would also raise to 8,300 ALL to the rural population and to 12,400 ALL to the urban population.
The premier further pledged a salary raise if they remain in power after the June 28th general elections.
All these pledges come at a time when the whole globe is involved in the effects of a general financial crisis.
Albania insists that it has not been directly affected by the crisis.
The government insists that the 2009 GDP growth will again be close to 4-5 percent unlike the IMF which lowered Albania’s growth 0-1 percent.
Albania is facing several early blows from the global crisis, with remittances, the lek’s exchange rate, foreign trade and banking activity are all headed downward.
However, Albania is facing a difficult economic situation this year, first noted in less money collected in the tax and customs collections during the first months or quarter this year.
As the June 28th elections draw near, the government promotes voter-friendly proposals to increase wages by 15% in public administration, health and education sectors, and increase pensions by 10 to 20%. It is ignoring IMF and central bank warnings against overspending which say they are unaffordable and have advised the government not to increase salaries and pensions.
The central Bank of Albania has warned that the economy is decelerating and threatens revenue collection.
But Finance Minister Ridvan Bode said the budget has large contingency funds and the government had accrued 260 million euros from privatization last year. It is also seeking a loan of 250 to 350 million euros from foreign banks. He said the government wants to “boost consumption” to deal with the problems created by the global crisis.
But the remittances have decreased by 27% in 2008 compared to the previous year. The Albanian lek has depreciated against major currencies, and exports fell by 15% in February year-on-year, according to the Institute of Statistics. The banking sector has recorded only a 2% year-on-year increase in deposits in 2008 after a gain of 20% in 2007.
Economists and the opposition say the government should acknowledge the crisis and launch new measures adding that a tardy reaction would have the biggest negative impact on the economy and the people’s well-being.