{"id":17065,"date":"2023-11-26T12:32:53","date_gmt":"2023-11-26T11:32:53","guid":{"rendered":"https:\/\/altax.al\/?p=17065"},"modified":"2023-12-13T13:33:19","modified_gmt":"2023-12-13T12:33:19","slug":"the-economy-should-have-the-same-focus-as-the-reconstruction-program","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/the-economy-should-have-the-same-focus-as-the-reconstruction-program\/","title":{"rendered":"The economy should have the same focus as the Reconstruction program"},"content":{"rendered":"

Immediately after the 2019 earthquake, the government committed a good part of its budgetary and human resources[1]<\/a>,\u00a0 specifically creating a ministry for reconstruction[2]<\/a>. According to the Minister, “In these 30 years, it is the first time that such a large enterprise framed in a set of by-laws, the framework law and in a detailed procedure related to programming, design, evaluation and reconstruction or reconstruction has been carried out like this in time and quality.”<\/em><\/p>\n

But, if we look at the progress and the way it has consumed quite a bit of funds from the state budget, it does not seem that the process is really in these performance coordinates.<\/p>\n

In the fiscal package[3]<\/a> for the reconstruction after the earthquake of 2019, we see that part of the financial resources from 2020 to 2023 occupy on average up to 5% of the total expenses of the annual budget.<\/p>\n

They are oriented to cover 120 billion Lek (985.07 million Euro) damages estimated after the earthquake disaster, according to the Report[4]<\/a> of the working group set up for this purpose by Prime Minister Rama. Damages to be recovered included housing, production, education, infrastructure, culture, civil defense and health, where 696 million euros were calculated as damages and losses in housing alone.<\/p>\n

In the emergency conditions, immediately after the event, the Government focused entirely through the mechanism of the State Budget Reserve Fund, undertaking a series of immediate measures, in different time series:<\/p>\n

– a fund of 200 million ALL was granted, with the aim of reconstructing and rebuilding damaged houses in Tirana, Durr\u00ebs and Lezh\u00eb districts.
\n– a fund of 270 million lek was allocated for the purpose of providing temporary accommodation in hotels for the injured in Durr\u00ebs, Tirana and Lezh\u00eb districts.
\n– a fund of 70 million ALL was allocated to cover the expenses for inspection and damage assessment.<\/p>\n

For the implementation of the programs of the Reconstruction process, the Budget Law for the period 2019-2023 sanctioned the creation of the Reconstruction Fund, the sources of which were the financial means and\/or contributions in kind given by the state budget and donors, where:<\/p>\n

– 9 billion Lek funds were allocated from the state budget for transfers to individuals and public investment projects;
\n– 8 billion are funds allocated from the state budget for subsidizing the rents of temporary housing for injured families, of which Lek 500 million are in the 2023 plan;
\n– 5 billion Lek are foreign grants or cash inflows were used for this process;<\/p>\n

Until the middle of 2023, according to the presentation in the interpellation of the Minister of MFE[5]<\/a> the total cost of the Reconstruction process is 117.6 billion ALL, funds approved by decisions of the Council of Ministers, for compensations, projects or investments. This amount was financed, both through the reduction of other expenses\/investments, as well as by borrowing.<\/p>\n

A significant financial cost, completely covered by the state budget, has also brought about the Rent Subsidy policy for the housing of damaged families. In 2020, the number of families benefiting from the housing policy, i.e. rent subsidy, was around 14,100, while today there are 8,400 families that receive a rent bonus with an average value of 20 thousand lek per month.<\/p>\n

All this amount that has been allocated by the budget in the form of investments and expenses to cover the costs of renting and other operating expenses is approximately 92% of the country’s total investments for the year 2023 or 25% of all capital investments of the budget of of the state for the years 2020-2023.<\/p>\n

If we were to stop at the allocations by year, for the Reconstruction program, 93.04 billion ALL have been used or are in use, where:<\/p>\n

– 540 million ALL from the Reserve Fund of the State Budget in 2019<\/p>\n

– 16.7 billion ALL in 2020<\/p>\n

– 29.7 billion ALL in 2021<\/p>\n

– 29.1 billion ALL in 2022<\/p>\n

– 17 billion ALL in 2023 (5 billion ALL in the initial budget and 12 billion ALL later)<\/p>\n

Meanwhile, 7 billion ALL are expected according to the 2024 draft budget to be used during the year.<\/p>\n

The beneficiaries of the reconstruction, according to the official statistics of the allocated grants, are:<\/p>\n

– 500 beneficiaries under the “Reconstruction Grant” program;
\n– 800 beneficiaries under the “Reconstruction Grant” program.<\/p>\n

Regarding the commitment through the state budget, for the construction of new buildings, it turns out that:<\/p>\n

– From the Individual Housing Reconstruction sub-program (Implementing Units and Donors), the reconstruction of 2552 individual housing was financed;
\n– The reconstruction of 299 collective dwellings has been financed by the sub-programme of Reconstruction of Collective Housing;
\n– The reinforcement of collective and individual dwellings was financed, specifically 216 collective dwellings and 12 individual dwellings;
\n– Reconstruction of 2001 collective housing;
\n– As far as public infrastructure is concerned, 9 construction sites in the New Development Zones have been completed;
\n– There are 182 educational facilities included in the Reconstruction Program;
\n– 34 Institutions and Public Works financed by the Reconstruction Fund.<\/p>\n

In order to reduce costs for the state budget, the government proposed to the Assembly and it was approved by it the exemption from VAT of all supplies related to the reconstruction, reducing expenses by 20% of VAT.<\/p>\n

Even though the Reconstruction process was declared and reported in the state budget reports for 2023 that it is being implemented successfully aiming for its completion within the first half of 2023,[6]<\/a> it can be seen that even in the draft budget report for in 2024, new funds were allocated in the amount of 7 billion Lek[7]<\/a>.<\/p>\n

From everything that is seen in relation to the reconstruction process, it seems that the summary financial bill that we taxpayers are financing is very high (up to 1 billion Euros). In terms of financial management, it looks similar to the high bill that was paid by the taxpayers, the construction of the “Nation Road” 1 decade ago, at the time this process began, created additional problems and risks, still unverified to the end by KLSH [8]<\/a>.<\/p>\n

But, in addition to the expensive bill and unfavorable expenses that must be paid for social bills, as found in the 2021 report, it seems that the main risk has been that of shifting donations in the direction of coping with COVID-19 in real time .<\/p>\n

Meanwhile, the signals from the investigative media increased regarding the increase in the level of political corruption, but also the capture of the budget by avoiding competition and the use of funds for public works in function of the electoral race.<\/p>\n

Likewise, the creation of a new structure for Reconstruction, uncoordinated with the structure of civil emergencies, created problems of increased administrative costs due to the overlapping of duties and responsibilities derived from Law No. 45\/2019 “On Civil Defense”. and Normative Act No. 9 dated 16.12.2019, of the Council of Ministers, “On dealing with the consequences of natural disasters.<\/p>\n

Reconstruction as a process lasted beyond the anticipated deadlines with a direct impact on the increase in the costs of products (construction equipment, services, etc.) beyond the budget forecasts. This trend, which has strong reasons to believe that precisely the favoritism in the distribution of public works was also clientelistic, is superimposed by the increase in prices, the increase in credit for builders and the devaluation of the lek for domestic products. This unfavorable situation increased the budget allocations at the end of 2022 and continued throughout 2023 with at least 3 billion additional lek, which also included other works outside of reconstruction.<\/p>\n

Despite all the risks, the government’s focus seems to have problems with coordinating resources and mobilizing policies. A national disaster risk reduction policy[9]<\/a> has not yet been implemented, which would have an impact on minimizing the costs and delays of the process. The lack of a National Strategy for Disaster Risk Reduction automatically leads to the lack of drafting of Local Strategies for Disaster Risk Reduction by Local Self-Government Units, as is the case of Tirana and Durr\u00ebs Municipalities.<\/p>\n

On the other hand, the National Civil Emergencies Plan should be implemented based on the updates and current situations, given that the structures and organizations have changed with all the changes in the legal framework that civil emergencies have undergone.<\/p>\n

In this whole process, which already passes the mid-term terms of implementation, it is necessary to change the harmful practice of the procedure for the procurement of reconstruction works and services, where the government should no longer use the fast procedures, but those dictated by the law on public procurement . This affects the addressing of the risks as above related to avoiding the use of state budget funds for electoral policies which have costs that have entered the hack of other social and development policies. On the other hand, partial transparency and difficult to monitor seems to create strong suspicions of corrupt approaches, which also result in continued profitable and exclusionary practices[10]<\/a>.<\/p>\n

In closing the argument<\/em>, we can mention that it is true that earthquakes cause an initial drop in production due to great damage to human and financial capital. But, due to the induced flow of external capital inflows and investments, as well as the higher capital return rate after the earthquake, then the trajectory of the value added in the economy as well as the domestic output of the year after the earthquake can be reversed at least at the level of the previous year.<\/p>\n

In fact, the reconstruction as a process may have affected the domestic production by at least 1% per year, but overall they are lek that should have had the opportunity to go to consumption and not all in the construction sector that is exceeding the demand of the market and interacts little with the economy. Funds for housing construction are hardened capital that only indirectly helps the economy.<\/p>\n

The earthquake seems to have a longer-term impact in the case of Albania, because it will still enjoy the positive stimulation of investment for reconstruction until the end of the fourth year, due to the slower functioning of the “reconstruction mechanisms<\/em>“.<\/p>\n

Compensation of losses is the driving force of recovery after the earthquake disaster, and social productivity and sustainable economic development are the economic basis of compensation for losses from this disaster[11]<\/a>.<\/p>\n

To this end, economic development is and remains the most effective way to compensate for losses from disasters.<\/p>\n

The economy should have been in the same focus as the reconstruction of the civil infrastructure, but it seems that this for the government was only for the process of reconstruction of the earthquake damage!<\/p>\n

 <\/p>\n

[1]<\/a> https:\/\/rindertimi.gov.al\/ligje\/<\/a><\/p>\n

[2]<\/a> https:\/\/rindertimi.gov.al\/<\/a><\/p>\n

[3]<\/a> https:\/\/altax.al\/wp-content\/uploads\/2021\/09\/PAKETA-FISKALE-2020-PR-RINDRTIMIN-PAS-PASOJAVE-T-TRMETIT-2019.pdf<\/a><\/p>\n

[4]<\/a> https:\/\/shqiptarja.com\/\/uploads\/ckeditor\/5e3ab23b4c272raporti%20i%20plote%20i%20termetit.pdf<\/a><\/p>\n

[5]<\/a> https:\/\/financa.gov.al\/ministrja-ibrahimaj-ne-interpelance-procesi-i-rindertimit-teresisht-transparent-mbeshtetem-qytetaret-dhe-bizneset\/<\/a><\/p>\n

[6]<\/a> https:\/\/financa.gov.al\/wp-content\/uploads\/2021\/12\/Buxheti-per-Qytetaret-2022.pdf<\/a><\/p>\n

[7]<\/a> https:\/\/financa.gov.al\/wp-content\/uploads\/2023\/11\/Relacioni-PB-2024-Ripunuar.doc<\/a>, page 15<\/p>\n

[8]<\/a> https:\/\/panel.klsh.org.al\/storage\/phpQ4rBYo.pdf<\/a><\/p>\n

[9]<\/a> https:\/\/konsultimipublik.gov.al\/Konsultime\/Detaje\/509<\/a><\/p>\n

[10]<\/a> https:\/\/sot.com.al\/politike\/procesi-i-rindertimit-ne-tirane-birn-konflikte-gjyqesore-dhe-qindra-te–i612226<\/a><\/p>\n

[11]<\/a> https:\/\/altax.al\/ndikimi-afatshkurter-i-demeve-te-termetit-ne-ekonomine-e-shqiperise\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Immediately after the 2019 earthquake, the government committed a good part of its budgetary and human resources[1],\u00a0 specifically creating a ministry for reconstruction[2]. 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