Gov’t pays $200 million in arrears

TIRANA, April 29 – The Albanian government says it has already disbursed USD 200 million to pay off accumulated unpaid bills to the business community and plans pay another $150 million by next June. The statement was made this week by Finance Minister Shkelqim Cani in a meeting with the National Labour Council discussing safety at work.
“We have accelerated the process of payment of arrears and plan to close it by next June,” said Cani.
The Finance Minister said government expected more investments and employment from the payment of arrears which had become a barrier for the business community.
“We target paying off accumulated unpaid bills so that the business community responds with more investments and as a result brings more employment,” said Cani.
The payment of the arrears comes after the IMF has awarded the Albanian government a Euro 331 million soft loan which is expected to give a boost to the ailing economy by promoting new investments and reducing non-performing loans.
The Socialist Party-led government estimates the payment of USD 350 million in accumulated bills to the business community will also help banks by reducing their non-performing loan stock by 3 to 4 percent.
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 bills from 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 lek include bills from court decisions and expropriations and social protection.
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.
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.”