IMF opposes reduction in contributions

Sep 24. International Monetary Fund in Albania has expressed it concerned over the governments latest projected reform to lower contributions in social insurance program. IMF declared its support over reforms that help the formalization of the Albanian economy, however, the latest reform is considered to be an administrative burden that adds to abuse and corruption opportunities.
“In this context, we advice against lowering social insurance contribution rates,” said yesterday Gerwin Bell, head of the IMF mission. According to Bell, the fiscal space should be preserved to finance a pension reform that improves relation between contributions and profit, and therefore motivates business participation.
It seems, however, the government is not pulling back on their project. “The fact is that lower taxes and their efficient administration, and the expansion of the contributors’ base is the best way to increase budget revenues and make for the best instrument in economic and private business development.” answered Ridvan Bode, Minister of Finance. According to him, this is the last government act to reduce direct business taxes. If reforms against informality have been successful in many sectors, the job market remains problematic. Because of the new reform, the employers will pay only half in social insurance contributions of what they are currently paying.