IMF, Government and missing contribution of local experts

In the next mission, the members of the Monetary Fund team made a statement, which in itself has findings with a positive approach to fiscal and budgetary actions taken by the Government, where in this position there are confirmations of the positions held by Albanian experts, as well as there are findings that are not considered effective.

Inflation
1. Inflation has increased significantly turning into broad-based inflation. Inflation will remain high in the coming months — driven by import prices, before returning to target in early 2024.
Confirmation: All parties (IMF, Government, Domestic Experts) have the same statement and position.

Government response to the inflation crisis
2. The authorities have reacted quickly to the recent shock and some of the support measures taken are well-oriented and time-limited.
Confirmation: The majority of Albanian experts have confirmed this position.
3. The authorities have taken a fair decision that they have avoided temporary tax cuts, which bring benefits indirectly to those who are better off economically, may distort price signals.
Confirmation: The majority of Albanian experts have confirmed this position.

Function of Boards of transparence for consume prices
4. Given the challenges of the transparency board that monitors the prices of some basic food items, we see fit to replace it with well-oriented support for the poor and the exposed strata in order to protect them from the effects of rising prices.
Confirmation: All publicly stated Albanian experts have confirmed this position, for the futility of the decisions to raise them as a “cover” for the protests.

Fiscal Spaces 2022
5. The 2022 budget (as revised in March) has ample room to support citizens and the economy. Therefore, any additional revenue beyond what is provided in the budget should be saved to recreate the necessary space for fiscal policy. This is very important, as the costs of external financing have increased significantly and may be high for a long time
Confirmation: A large number of Albanian experts have not confirmed this position.

Medium Term Revenue Strategy
6. Work on the preparation and implementation of the Medium Term Revenue Strategy (SAA) should continue.
Confirmation: Most Albanian experts will remain spectators until the end of the process, although this strategy will be addressed to those for implementation, as “contracting” parties.

Amending the income tax law
7. We commend the initiative taken by the government with the support of the IMF, to strengthen the law on income tax, which aims to simplify, increase efficiency and greater equality among taxpayers who earn different types of income.
Confirmation: Most of the Albanian experts have not confirmed this position, occurred in the conditions of lack of information, which the Monetary Fund, apparently owns and may have authorship of proposals.

Fiscal amnesty
8. We reiterate our advice against a possible fiscal amnesty, given the concerns about its impact on tax compliance, as well as the risks associated with money laundering and tax administration.
Confirmation: The majority of Albanian experts have confirmed this position.

Monetary policy
9. In order to curb domestic inflationary pressures and to turn inflation expectations back towards the target, further increases in the key interest rate are needed. Vigilance is required, as excessive delays in tightening monetary policy may later require higher base rate hikes to return inflation to target.
Confirmation: The majority of Albanian experts have confirmed this position, which means a “critique” of the Bank’s stepping stone to the realities that occurred at the beginning of 2022.

In summary of the Monetary Fund statement it appears that the positions held are largely in sync with the actions of the government realizing that coordination and communication on all affected topics has been agreed.

What seems to be missing is the involvement of stakeholders in this communication, where their expertise counts as a valid opinion. Currently, experts receive notifications only from statements from both parties, remaining in a waiting position and having no active and effective role, although in many cases they and their clients (taxpayers) pay the cost of meetings between the government and the Monetary Fund. Many times this cost has proved detrimental, as the recommended policies have not worked as agreed.

This attitude between the parties should be different, as long as these discussions need the input and professional voice comments of Albanian experts and business organizations and beyond.

Although the rules of communication and invitations for cooperation are not made by the IMF team, it seems that if it remains in the hands of the government this approach will not happen and for some time.