IMF to Albanian gov’t: Do not lower taxes and do not apply preferential tax

At the end of the Article IV Consultation with Albania, the International Monetary Fund (IMF) has published a report on the conclusions of the mission.

The institution that now has only a monitoring role emphasizes reforms and the positive performance of the Albanian economy during the current year and the next one.

The IMF emphasizes that “the growing economy and the new government’s clear electoral mandate provide a good opportunity to continue reform efforts to increase Albania’s growth potential, enhance the resilience and competitiveness of the economy, and strengthen the financial system while maintaining fiscal discipline.”

According to a press release issued by the IMF, the institution states that its Board if Directors “supported the need to reduce public debt to build fiscal space and ensure debt sustainability. They recommended that the authorities consider a more ambitious and front‑loaded consolidation path. They also emphasized that strengthening fiscal institutions remains key for mitigating fiscal risks and enhancing efficiency. They noted that public debt management should focus on lengthening the maturity of public debt and diversifying the investor base.”

According to the conclusions, the IMF underscores the need for higher revenues while refraining from lowering tax rates or granting any new exemptions or preferential tax policies. IMF supports the tax administration’s efforts to improve compliance and welcomes “the plan to introduce a value‑based property tax.”

As far as public investment management is concerned, the Washington-based institution urges the authorities to ensure proper implementation of the framework for public‑private partnerships in line with international best practices. “After impressive early gains, reforms in the state‑owned electricity sector have been delayed and need to resume,” stresses the IMF.

The IMF agrees that the Bank of Albania’s accommodative monetary policy stance remains appropriate, “and any unwinding of monetary easing should await evidence of a sustained rise in inflation,” while also supporting “the authorities’ de‑euroization strategy” and stressing “the importance of aligning the central bank law with modern central banking legislation.”

The IMF welcomed the progress achieved in structural reform implementation, and “stressed the need to further advance institutional reforms in areas such as the judiciary, property rights, and anti‑corruption.”

While in terms of projections, the inflation has been adjusted up, at 3%, something that seems to be a concerning news for households.

SCAN

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