The Minister of Finance and Economy, Ervin Mete, in a statement to the media this Friday, held after the meeting of the Council of Ministers, communicated the decisions taken regarding the draft budget of 2024.

In his speech, Minister Mete said that an economic growth of 3.8% is expected for the next year, a positive primary balance, further fiscal consolidation, increased employment and lower inflation.

The minister’s full communication

Hello to everyone,

Today, at the meeting of the Council of Ministers, we approved the 2024 Budget Project, which sets a new level regarding the planning of public expenditures that exceed 7 billion euros.

The draft budget supports further economic development, promotion of employment and social protection, aiming at the same time the proper balance of macroeconomic and fiscal balances.

As the IMF also assessed today, the Albanian economy appears as one of the most resistant economies in the region, already entering a new phase. The current favorable conjuncture creates opportunities to push forward a series of reforms to ensure sustainable and inclusive growth.

In our projections, we foresee an economic growth of 3.8% for next year, a positive primary balance, further fiscal consolidation, employment growth and lower inflation.

Our ambition is that as we have been one of the most resilient economies in the region, we aim to be one of the main destinations in the region in terms of tourism, aiming at the same time to offer quality employment and among the highest salaries in the region.

The draft budget 2024 responds to this ambition,

• By supporting the increase in wages and making it possible to achieve the objective set by the government to reach an average wage level of 900 euros per month within the year 2024. The draft budget foresees a fund of 11 billion lek for the further increase of salaries of general doctors, nurses and other health workers, teachers in pre-university education, law enforcement, defense and enforcement levels of the central and local administration. In total, the overall effect on the budget for the financing of this major reform in the salary system amounts to ALL 39 billion.
• The indexation of pensions is also financed, which in the last two years reached the figure of about 25 billion ALL. Support for social protection and the needy strata follows, allocating about 33%, 1/3 of the general public expenditure for the pension scheme, economic assistance, disability payment, unemployment payment, social assistance, ex-persecuted, ex- owners, etc.
• The financing of public investments programmed for 2024 will be over 5% of GDP, continuously supporting economic growth, to further develop tourism, agriculture and connectivity, as well as promoting employment. The investment package supports the national and local infrastructure, to better respond to the growing tourism demand.
• The draft budget continues to finance the reconstruction process, following the support provided through the Normative Act.
• The required level related to NATO membership commitments is respected, with 2% of GDP in 2024 and this is achieved for the first time.
• The budget available for local government units is significantly increased, where for 2024 the expenses are expected to be 71 billion ALL, or 10.4% more than the 2023 budget. An important part of the local government budget is the central government grant to local units in the amount of 36.5 billion ALL.

As for the fiscal package, also due to your interest, I inform you that there will be no impact of VAT on the education sector and financial services, and we have discussed this with the IMF, with whom we have agreed to review the Medium-Term Revenue Collection Strategy, with a focus mainly on improving fiscal administration.

Regarding the excise tax, although the law provides for the indexation of the excise rate, based on the cumulative level of inflation every two years, in our estimation, based on the unusual level of inflation in the past two years, this measure of the law will have to change. Therefore, we propose setting a ceiling of 1.5% indexation every two years.

Also, in the tax procedures, a series of rules have been established for the exchange of information with the counterpart tax authorities, in order to provide periodic information from the parent companies of international groups that have branches or subsidiaries operating in Albania.

Furthermore, the procedures related to double taxation elimination agreements are clarified, so that there is more good administration in this area.

With the approval in the Council of Ministers, the draft budget 2024 and the fiscal package will be subject to an extensive phase of discussions in the parliamentary committees, so we will have time to address the questions that may arise, both from the media, but also from the side of deputies, citizens or interest groups.

Thank you!