Blog

THERE IS NO TIME TO WAIT FOR THE END OF THE PANDEMIC

Albania's ability to increase fiscal support has not changed, although the election campaign does not appear to be taking place in a time of pandemic. Ministry of Finances cannot borrow more. 

Meanwhile, the economic recovery cannot resemble any of the surrounding countries, as the pandemic itself clearly showed us that some countries can move faster, while other countries can't be so active. Until the pandemic is brought under control, it will take several months to another year. 

Fiscal policy will need to remain flexible and supportive. 

The need and space for such support should not be the same for sectors that want more time to recover. But of course, each of them has the right to have a response tailored to the circumstances of the economy. However, the government must continue to prioritize continued support for families in need. 

The pandemic has had a disproportionately negative effect on poor people, including low-wage workers and especially those who are still part of the informal sector. 

The current government should leave the budget option open to the government that will be created after the elections in April 2021. It must ensure that social protection is available, and spending is sustainable throughout the crisis by expanding social security coverage in a cost-effective manner (launching a nationwide campaign against informal work and with clear objectives for strengthening administration). 

But businesses that need financial and technical support to transform the new modeling of their business in the conditions of the new market created by the pandemic, also need the continuation of the most organized and consolidated support with the administration services. At the same time, the government must clearly address its support to orient the distribution of those resources it has decided to give to the business by not holding back with hope those businesses that cannot recover from the latest effects from the pandemic. 

The government does not have time to wait for the end of the pandemic and hold out hope that vaccines and current measures will reactivate the economy. The moment of the current political elections and after them should stimulate the attention of the government to reorganize coming out of the current structural shell to express clearly (for itself or the successor), that it will aim at a strong transformation of vital sectors, digitalization and inclusion of productive economy in a world that is changing without being understood. 

Current electoral promises seem to address recovery topic, but this time the promises do not raise hopes that we will have a big incentive to use troubled foreign investment in vital sectors better although they could be in function of fiscal consolidation. Ongoing projects in partnership with private sector  and reconstruction process will mitigate the sharp effects of consumer stagnation. But, the  manufacturers  for export are waiting for Europe to open, but some new markets should be targeted so that now that they have the opportunity of time of adapting of their production ability, to should not use their capacities below the levels they carried years ago. 

Temporary help to return to the job and change job posts, based to budget subsidy, solution trainings and innovation programs should be done during this  renewal  and remodeling process  of the country's economy that will also come maybe not so early for Albanians. 

On the other side, reform of the tax system is necessary, if fiscalization is considered as a permanent mechanism for whitewashing informality. But we need to increase technical assistance to local tax administrations to promote a different mentality from the experiences we have today. 

To help meet budget needs, tax revenue collection should aim to track cash flow and rediscover itself with new resources, especially in view of the needs of the new tax model based on technology.