Almost half of the arrears, some 35 billion lek (Euro 244 million), will be paid in 2014 while the remaining part some 20 billion lek (Euro 140 million) and 17.5 billion lek (Euro 122 million) will be paid in 2015 and 2016
TIRANA, Jan. 29 – The Finance Ministry has prepared a draft strategy which foresees the payment of a total of 72.6 billion lek (Euro 500 million) in government arrears over the next three years. The arrears, estimated at 5.3 percent of the GDP include unpaid bills to the business community for finished public works and services, VAT and profit tax refunds as well as court decisions against the Albanian government, expropriations and payment of social assistance to people with disabilities.
Almost half of the arrears, some 35 billion lek (Euro 244 million), will be paid in 2014 while the remaining part some 20 billion lek (Euro 140 million) and 17.5 billion lek (Euro 122 million) will be paid in 2015 and 2016.
The Finance Ministry has identified 24.6 billion lek in unpaid bills for finished public works, some 5 billion lek for goods and services, 12.8 billion lek in VAT refunds and 10 billion lek in profit tax refunds.
Other obligations estimated at 20.1 billion include bills from court decisions and expropriations and social protection.
The strategy foresees the older debts will be the first to be paid off. Several measures are also foreseen to prevent the accumulation of new debts including the amendment of the budget law and the VAT reimbursement scheme.
Last December, accountancy giant Deloitte identified 24.6 billion lek (Euro 172 million) in unpaid bills and arrears government owed to Albanian and foreign business community for finished public works. “The debts tax authorities, the local government, courts and bailiff offices owe to businesses and households will be audited in another moment,” said Finance Minister Shkelqim Cani.
The Albanian government and the International Monetary Fund have reached a new three-year deal on an economic program that could be supported by a Euro 300 million loan, returning the IMF back to Albania after five years.
The loan will be used to support the Albanian government handle the difficult situation with public finances and pay off unpaid bills and arrears to the business community.
In its latest report on Albania, the IMF said “addressing the problem of unpaid bills and arrears would enhance the government’s credibility and boost liquidity and confidence. Clearance of these liabilities would strengthen private sector balance sheets, facilitate the resumption of credit growth by helping lower nonperforming loans (NPLs) and support domestic demand.”
