By ervin lisaku
TIRANA, June 9 – Prime Minister Sali Berisha announced on Wednesday government will increase wages and pensions for 820,000 citizens starting from July 1, and cut the budget of state institutions by 20 percent. “The unprecedented increase of “Made in Albania” exports, the increase of bank deposits by 14 percent and the increase of business registration by 28 percent in the first 5 months of this year urge the Albanian government to go against the mainstream and increase wages and pensions as predicted,” said Berisha at a government meeting on Wednesday.
According to him the increase in exports is a major investment because the export industry is the main sector of employment in the country.
However, the wage and pension increase which Berisha did not specify, will be followed by a 20 percent cut in the budget of all state institutions.
“If we decide to increase wages and pensions, we will rely on what we have declared to cut the budget of all institutions by 20 percent,” added Berisha, requesting the understanding of state institutions.
According to Finance Ministry sources, wages are expected to increase from 4 to 10 percent while pensions 7 percent in cities and towns and 15 percent in villages. However, the final decision has not been made yet.
The cuts will affect all state institutions including government and its agencies.
The Prime Minister also dismissed as untrue declarations by the opposition Socialist Party that lending has increased by 860 percent.
“The truth is that we haven’t borrowed more than 16 or 17 billion lek (160 to 170 million dollars) until now, which is 32 percent of what government is authorized to borrow by law.”
Berisha said the wage and pension increases, a measure against the mainstream of many other European countries which are freezing or cutting them, was also made possible by the reform in the transport of senior officials who had their state cars and drivers removed last year. “The reform has cut the public administration expenses by 30 percent,” said the Premier.
“We will continue to cut other expenses to keep the country’s macroeconomic indicators under full control,” added Berisha.
The expected wage and pension increases comes at a time when government is being criticized of high public debt levels, currently at a record 60 percent of the GDP and budget deficit at 7 percent.
IMF warning about wage increases
Earlier this year, the International Monetary Fund (IMF) warned Albania cannot increase wages and pensions by 10 percent in 2010 as Prime Minister Sali Berisha has promised because of the country difficult financial situation. The official warning came in a report issued by IMF after an inspection the Fund’s experts carried out in Albania.
“Current spending needs to be revisited with a view to rightsizing the civil service, and keeping wages and pensions in check. This could be helped by indexing in the latter to only inflation,” said IMF in a statement. This means that the wages and pensions could increase up to 3.4 percent, the same as the annual inflation rate is projected for 2010.
