The World Bank has brought a new package of recommendations about the
measures that Albanian should take for softening the current crisis.
The report analyzes 13 priority sector,s and states that the economy is facing a difficult situation that requires short and long-term intervention for avoiding collapse. The first part starts with the macro-economic and fiscal situation. The crisis of 2008 ended the economic model in Albania, which was based on the domestic consumption, according to the report.
Although Albania was able to avoid recession, it received a strong blow form the crisis, which has brought the economic growth to minimal levels. Bank experts foresee that this situation will last at least three years.
“The internal request was weak, and with the prolonging crisis of the Eurozone, Albania’s economic growth is expected to be 2% until 2016” the document states.
For this part, the report gives two basic recommendations. The first is focusing the economy’s orientation on the internal demand and export, and the second is fiscal consolidation and decreasing debt due to the high risk. But the public debt is not the only threat of the economy, according to the Bank. The financial sector also has high risks coming from the economic slowdown and increased number of unpaid loans.
“Resolving the bad loans is the most important issue that should be addressed by the Albanian authorities”, the report notes. There are several recommendations for the financial sector. First of all, experts recommend the holding of a wide crisis stimulus by the beginning of the next year, in which all banks and other institutions are involved, in order to identify the potencial system problems.
They also require a change of the tax system for bad loans, reinforcing the judicial procedures, for guarantees and establishing a legal mechanism that would enable an intervention with budget funds, if certain banks would need capitals. The other sectors that the bank mentions is that of the social protection and the pension system. In the first one is recommended an urgent reformation and reinforcing of the economic scheme, and the one which assists the people with disabilities for making them reduce abuses.
As for the pension scheme, the bank requests the government to connect more contributions with profits, for making the scheme more attractive, and replace rural retirement pensions with ceiling social pensions, and increase the pension age for women by making it equal to men.
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