Budget relief from the sinful past and present

While the pandemic first and inflation second continue to affect the everyday economy, it is important for people to reassess their priorities to make sure they are spending on the things that are most important to them. Since inflation erodes purchasing power, this is especially true to analyze and comment on.

Taking as a basis that families with two people without children (generally from pensioner families) spend no less than 44.9% only on food and 3.6% on alcoholic beverages and tobacco, just from this increase in inflation with a 7-month average of 10.3 %, then the increased monetary weight in their budgets is at least 3,700 ALL/month, but not including other increased living costs (transportation, education, health, housing maintenance, rent, etc.). If we add the increased cost of transportation, expenses for health, for education, for clothing, for housing maintenance and others (hotels, cafes, restaurants), then the calculations show that at least 1,800 additional lek are needed from the effect of the “tax” of inflation.

Now, according to the comparison of the increase in prices with the increase in income for wages, pensions, and social support, it is a simple fact to notice that the decline in real income has wiped out all the increase in wages since 2012, as well as the increase in pensions from 2002. For social protection, the comparison does not apply, as the average earned income for all categories of beneficiaries was below the calculated, unofficial minimum subsistence level.

The energy crisis is at the top of the priorities. The plight is worsening, as in many other countries. Mainly not because it is dependent on gas, but because many of the projects and laws approved with little real effect have created formal comfort until the current crisis faced the accumulation of unrealized tasks by the government. Inflation has already been in double digits for months for most goods and services that make up over 90 percent of daily spending.

At the root of everything lies the challenge of revitalizing growth and productivity, which have remained in a mess created by cronyism [1] and incompetence, but also by corruption and weak administrative capacities held hostage by politicians undeserving of the voters. This has damaged living standards, and a secondary effect appears in the mediocre quality of public services.

Meanwhile, social policies should be evaluated much more, at least for the short term.

Although late, the government must harmonize the political instruments to stimulate the market of private funds, and a significant increase in funds for pensions as never before, redoing the strategy in accordance with the changed circumstances.

The narrowing of labor evasion should be the objective to reach historical minimum levels. Evasion must be fought harder than ever.

In the same way, the objectives for encouraging dialogue about new labor contracts should be changed to a significant improvement, where wage indexation should be automatic and not a wish or a pawn of bad politics. Prices do not decrease unless the heavy demand balances change in favor of supply.

The increase in disposable income that affects the improvement of consumption, the remaking of programs that have not performed well, as well as the minimization of political cronyism that has strongly influenced the weakening of the state and the strengthening of corruption must be main actions in this time to start changing the perception of the economy.

A strong modification of budgetary policies is needed, as the current formula is not working well enough. A different approach should be to increase social funds and stimulate production and the creation of food and water reserves.

However, the budget must wash away some sins of the past.

In times of war, sources of supply for food and water are needed, and we may not predict the times, but at least we can mitigate them by planning differently. Naturally, the salty bills of infrastructure and poor management of public resources, which are already the heaviest budget weight in these 30 years, can be placed in front of the policy of direct monetary supply to enter into function the easing of the budget from the sinful past and present.

No one has solved these problems and there seems to be a lack of faith that anyone can solve all these problems in the time left before the next local and general elections.

Can someone at least start turning things around?

From the analysis of the entire political organization, no one is still fulfilling this great task. However, great hopes remain, beyond the international factor, for the young technicians who are already trying to break the strong barriers and firmly welded by the old politicians.

The loss of faith for positive changes by the current politicians has many reasons to be vague, since they keep only 1 out of 4 promises, they made to the voters 20 years ago. The standards of fulfillment are low, and the effect of the reforms is short-term and with great problems to use as a basis for the future. The record of accomplishment of economic reform successes is poor. The current leadership has spent an endless amount of time making promises they cannot keep to a small electorate that is easily tied to every election. And the complete exhaustion of successive decades of governments loyal to authoritarian mentalities are the product of governing cabinets run by leaders loyal to the leader, but not loyal to the voters and the promises made to them.

The same model of governance by one individual and many loyalists has inhibited accountability and holding responsibilities, where the result would be the minimum of ethics based on resignation.

From the lack of circulation of the leadership, it seems as if the government has been in the process of mummification for a long time (normal outward appearance, but without any body from the inside).

And yet we at ALTAX share the view that even living in these conditions we need to promote economic growth, which should be the main objective of the government and the opposition consensus. Prime Ministers can set milestones by articulating simple messages well, leaving aside big and unattainable promises. Berisha, the disgruntled predecessor of Prime Minister Rama managed to make “infrastructure”, his objective to reduce inequalities, and make it part of the political vernacular. Mr. Rama has done the same thing in the service of growth, but targeting cheap and informal money, which surprisingly also has an excessive cost, for reasons that are still not accepted as coming from the governing model and not simply from the past.

But, living in the time of the existentialist crisis of the system, the immediate test Mr. Rama is facing right now the crisis of the cost of living. His plan to deal with rising energy bills is the main anti-crisis measure. Mr. Rama has quickly abandoned his campaign stance to oppose “certain morally harmful activities” and is guaranteeing that average annual cost-of-living bills will not increase as far as energy, water and some public services are concerned.  Businesses also look like they will get help. But this time is one of the most delicate moments, as the budget programs start to be implemented as soon as they start to fall one by one to reach the starting point.

Political stability is increasingly being undermined and the public’s trust in reforms is decreasing little by little, starting from corrupt practices with a profound influence on the morals of the left, for the second time, after the rampant corruption in the socialist government led by Majko, Meta and Nano until 2005.

But the social-political stability was bad even with the leadership of the government by Berisha, since in the years after the socialist government until 2013, the model of cronyism and corruption hit even harder the hope for governance with “clean hands”, as a promised change from the right spectrum political. Even the corruption of Berisha’s government began to undermine the integrity of the budget little by little until the policy to stimulate infrastructure through informal money and corruption at the expense of social policy were the first stage of failure of the right-wing government, but also to him personally.

Same story with the welfare state, for which every government has done truly little beyond not imposing new taxes and reducing existing ones and not cutting public services.

In fact, these promises cannot be made, as they contradict each other.

Our country has lacked statesmen in the profile of the reformer.

Is this statement really a correct statement?

Let’s discuss it…

A true reformer would start an honest comprehensive conversation about property and labor rights, which are in tatters, and not repeat the accusations that there are too many incompetent managers around along with blaming the predecessor.

A true reformer would first take stock of all the unfinished business and the state. Second, it would continuously carry out the accountability process to dialogue with facts as it has raised the standard to a higher level. Especially when it comes to the financing of priorities, the tax burden, which is often increased by corruption and misadministration. And the most important reform would be the political project that increases pensions to the levels of coping with a dignified life.

In fact, government after government reforms have stalled or remained in the middle of the road.

If the chaos of policymaking and the lack of accountability continue to be unresolved, according to a “each on their own account ” style, then we will remember not reformers, but tugboats of governing cabinets full of old and new viruses.

[1] partiality to cronies especially as evidenced in the appointment of political hangers-on to office without regard to their qualifications (Merriam-webster)