The International Monetary Fund declared that the Albanian economy has
been weakened by the blockage of reforms which lasted several years, and
by the lack of discipline in the financial policies, causing an
economic slowdown and increasing risks.
The International Monetary Fund assesses that the economy has crossed the most difficult part and that economy will get better starting from 2014. According to the International Monetary Fund, after a slowdown at 0.7% economic growth for 2013, the Gross Domestic Product will increase with 2% this year and will reach 4.5% by 2016.
The International Monetary Fund says that this scenario also has some significant dangers, such as a possible prolongation of the European crisis, the lack of structural reforms by the government, and insufficient fiscal consolidation for keeping the debt under control. The last point is the most sensible one in this agreement. The government has vouched to reduce the public debt at 60% of the Gross Domestic Product within 2019. According to the International Monetary Fund, reducing debt in this level will require strong fiscal measures which will affect taxes.
International Monetary Fund experts have given a series of recommendations about the taxes that should be raised, so that the government can keep the public debt under control. Among the short-term measures there is the enlargement of the VAT basis by reducing exclusions, a toll tax for the Durres-Kukes highway, a 50% increase of the tax for used cars, and an increase from 10% to 12% for the tax on profit, for bank interests, dividend, intellectual property and rents.
The International Monetary Fund also suggests taxes on individuals who travel abroad, using VAT for phone calls coming from abroad, additional taxes for luxury goods and enlarging the base for the property tax. These are the measures proposed for the income.
There are suggestions for the spending, the most important of which is increasing the retirement age from 65 to 67 for men. The International Monetary Fund also recommends a discipline of the energy sector by reducing robberies, and by making a better payment system. These measures are added to what the government decided in the beginning of this year, increasing the fiscal burden with 20 billion ALL in order to keep the debt under control, warned for not increasing the administration salaries, besides police officers, and for raising retirement pension payments only according to the inflation. It remains to be seen what International Monetary Fund recommendations will the government implement. As the International Monetary Fund document underlines, it is certain that the debt reduction to 60% goes through these propositions.
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