Macro sustainability, but without social inclusion in Normative Act No. 6, of June 2025

The Minister of Finance, in presenting Normative Act no. 6, dated 11.06.2025, emphasized that the changes in the budget came as a need for more efficient reallocation of resources, based on a five-month analysis of fiscal performance and on-the-ground progress of projects.

The central argument was to favor those projects and sectors that have shown better implementation rates and measurable economic impact, without compromising macro parameters.

In this context, the emphasis was placed on:

• Maintaining fiscal sustainability and debt.
• Accelerating infrastructure development.
• Increasing public investments with medium-term effect.
• Supporting sectors such as agriculture, cybersecurity, and technology through specific funds and sovereign guarantees.

From a narrow fiscal perspective, the performance for the period January – May 2025 appears healthy:

• Total revenues increased by 6.5% compared to the same period in 2024, supported by tax and customs administrations.
• Public expenditures recorded an even higher increase, of 12.8%, but this increase was mainly concentrated on current expenses, not on capital expenditures that impact long-term development.
• The budget surplus suffered a sharp decline of 22.4%, reflecting an increase in pressure on net expenditures.

Although the budget revision is considered technically neutral, maintaining the same macro indicators (deficit, debt, total revenues), the essence of the change lies in the priorities that orient the allocation of resources.

This kind of fiscal neutrality, although in line with budget rules, is not neutral in social priorities. Investments in infrastructure and technology have increased, while education and health face fund cuts, overshadowing the impact the budget has on social equality, youth mobility, and preparation for integration.

Basically, sustainable fiscal policy should not replace social justice again this year as a priority of budget policies.

The analysis of budget reallocations highlights a pronounced imbalance between investments in sectors with measurable economic impact and those with direct social effect:

a. Significant increase for technology and infrastructure:

• 3.3 billion lek go to cybersecurity and artificial intelligence, as a modern and necessary investment for the digital economy, but with indirect and long-term benefits for the ordinary citizen.
• 1.5 billion lek for infrastructure projects from the Albanian Development Fund, which impact economic development but not necessarily the improvement of basic services for communities.

b. Lack of focus on key social sectors:

• Only 64 million lek are allocated for critical medical equipment, a relatively modest figure for the urgent needs of the health system.
• 318 million lek for sports in schools, a symbolic support that does not address major challenges of education and health in school environments.

This approach shows a prioritization of economic and technocratic development at the expense of human and social development. When education and health are the main pillars for improving quality of life and developing human capacities, insufficient commitment to these sectors fuels inequality and risks social stability in the long term.

In this context, fiscal policy should revise priorities by better balancing short-term economic development and investments in human capital, necessary for comprehensive and sustainable growth.

The sovereign guarantee for agriculture is a positive step but has delayed effects and there is no certainty of the effectiveness of this measure, which is not enough to address the challenges.

The sovereign guarantee scheme for agriculture worth 3 billion lek is a welcomed initiative, as it aims to solve one of the main obstacles of the sector, the lack of collateral for lending. However, the effects of this measure must be realistically evaluated:

• The effects are medium-term, as the success of the scheme depends on the ability of farmers and agricultural businesses to effectively use and manage loans.
• The scheme does not address the structural challenges of the sector, such as poor agricultural infrastructure, lack of value chain, or barriers to market access, which require other complementary investments and policies.

Thus, although this step is important for easing financing, it does not immediately and fully solve the fundamental problems that hinder the sustainable development of Albanian agriculture. For real and long-term impact, it must be accompanied by integrated efforts in infrastructure, market, and technology.

In the analysis of Normative Act no. 6 of 2025, which brings changes to Albania’s budget, it is essential to evaluate this act in the broader context of the country’s challenges and strategic objectives.

Three key elements come into play here. The process of integration into the European Union (through the Growth Plan and the opening of negotiation chapters), acceleration of social convergence to face inequalities, and ensuring sustainable economic development over time.

In this context, a strong concern raised by ALTAX analyses, as well as many other professional analyses and comments in the media and discussions on national portals and television, is the lack of a sustainable balance between investments in physical capital, such as infrastructure and technology, and human capital, which includes education, health, and social support.

Basically, the approval of this act without public discussions and with an approach that bypasses the Parliament through approval by normative act (although the time consumed by the electoral process is understood) reveals three main contradictions:

1. Contradiction between revenue performance and limitation of social spending
   Although fiscal revenues increased significantly during the January–May 2025 period (about 6.5% more than a year earlier), this increase was not proportionally reflected in budgets for socially important sectors. Education, health, and social protection did not receive sufficient support, deepening the gap between fiscal potential and social reality. Analyses done on this topic (rarely heard and discussed while governance is still closed) underline that this underinvestment in human capital risks worsening inequalities and weakening long-term development.
2. Contradiction between inclusive narrative and selective policies
   The government promotes inclusive development, but budget changes mostly favor technological and digital infrastructure sectors. Investments in cybersecurity and artificial intelligence are considerable, while most citizens, facing rising living costs, remain far from direct benefits. This has been criticized by the media and informative programs, highlighting the lack of balance and the risk of widening social gaps.
3. Contradiction between claimed transparency and lack of public debate
   Changes were approved through a Normative Act, which, although legal and fast, avoids broad public and institutional discussions on strategic priorities. This has sparked criticism in the media and constitutes a call for broader dialogue and more active involvement of civil society, experts, and the public to ensure legitimacy and effectiveness of budget policies.

Although the Ministry of Finance’s normative act represents an effort for responsible management and fiscal discipline, critical analysis shows that it is not fully aligned with EU integration requirements and the needs for sustainable social and economic development.

A successful budget policy must better balance investments in physical and human capital, as well as ensure a more transparent and comprehensive process for public discussion on national priorities.

The 2025 budget revision, instead of serving as a tool to bring citizens closer to European standards, risks deepening social inequalities and deviating from long-term integration goals.

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