TIRANA TIMES
TIRANA, June 30 – Government decided on Wednesday to raise pensions for around 520,000 pensioners from 4 to 10 percent starting from July 1 despite difficulties handling the country’s high budget deficit and public debt.
The warned decision will raise monthly pensions for pensioners living in villages by 10 percent and 4 percent for pensioner living in cities and towns.
Speaking at the cabinet meeting, Prime Minister Sali Berisha said the decision on wage increases would be taken next week. “Of course this decision was not easy,” said Berisha admitting the impacts of the European crisis on Albania.
“This decision is taken in accordance with promise made by government,” added Berisha. However, the increase for low pensions in towns and villages won’t be more than 6,140 lek (nearly 60 dollars)
Last year, government decided pensions in the cities and towns could not be lower than 12,226 lek (120 dollars) in towns and 7,130 lek (70 dollars) in villages.
Earlier this year, the International Monetary Fund (IMF) warned Albania cannot increase wages and pensions by 10 percent in 2010 because of the country difficult financial situation.
“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.
However, Prime Minister Berisha said the increase was 3 to 5 times higher than the year-on-year inflation.
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 GDP and budget deficit at 7 percent.
Last year, government announced the freeze of 30 billion lek (300 million dollars) in expenses, nearly 2.5 percent of the GDP.
Public spending cut by 25 percent
The wage increases will affect public spending, with drastic cuts of up to 25 percent. Premier Berisha called initiative a measure to preserve the country’s macroeconomic indicators.
“As warned we will send the budget to Parliament to considerably cut expenses by 25 percent in all fields,” added the Prime Minister.
The cuts, bigger than the 20 percent figure Berisha announced two weeks ago, will affect all state institutions including government and its agencies.
