Parliament approves in principle the budget

TIRANA, Nov. 13 – The voting for the 2007 budget generated fierce debate in the parliament. As expected the ruling party ad the opposition aligned themselves in opposite poles. Both Finance Minister Ridvan Bode and Prime Minister Sali Berisha praised the budget as the best economic legislation in Albania in the last 15 years. Bode summarized once again the main pillars of the project. The main sectors that will be supported by government spending for 2007 will be infrastructure, education and health care. Another important initiative of this budget is to meet in advance the required standard for military expenses in the context of NATO integration. Thus, military spending will reach 1.79 percent of the GDP. The draft budget bill predicts a deepening of the budget gap. Hence from a deficit target of 3.8 percent of the GDP, the Finance Ministry predicts a realistic rate of 4.8 percent. The GDP will increase from 899.7 billion leks for this year to to 982.2 billion leks in 2007 (nominal terms). GDP per capita will thus increase by 8.2 percent. Other predicted figures include: economic growth at six percent and a three percent average annual inflation. For the current year the economic growth is at five percent and an average inflation of between two and four percent. Prime Minister Berisha highlighted the social aspects of the budget, the rise in salaries for the public sector around 15-20 percent and the adjustments in the minimal level of pensions. The reaction from the opposition has been negative. Socialist deputy, Ben Blushi said that the budget doe not fulfill the economic promises of the electoral campaign of Berisha. Blushi expressed sever concern over the fact that the overall debt of the government is increasing to $447 million, a figure which will present the future generations with considerable management dilemmas. Blushi also commented on the stagnant nature of the Albanian economy as a highly consumer economy and the budget has done nothing to address this feature. The debt figure was contested by the finance Minister. The reaction to the budget from the business community was fairly positive. The parliament decided with 74 votes pro, 44 against and 1 abstention thus approving in principle the budget program for 2007. The Albanian Business Association Konfindustria, with representatives from both product and service providing industries also approved the budget draft presented and approved in principle by the Parliament. Konfindustria cherished two main pillars of the budget: the 30 percent allocated to investments and the functional focus on infrastructure. The association evaluated with positive tones the initiatives taken to establish a strong trade network with Kosova through major road building projects which will prove very beneficial to Albanians in the long term. Financial stability as a macroeconomic indicator necessary for sustainable progress was also at the center of the statement. Konfindustria disclosed again the main issues that it believes should be thoroughly considered especially in relation to the encouragement of domestic production and service economy. In the context of European integration, the Association called for responsible work in achieving the targets established in the draft budget.