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VOA: Business in Albania is facing difficulties for the third year in a row

2023-01-04 22:55:27Biznes SHKRUAR NGA REDAKSIA VOX
VOA: Business in Albania is facing difficulties for the third year in a row
VOA: Business in Albania is facing difficulties for the third year in a row

The business sector in Albania faced many difficulties for the third year in a row, which were deepened by the Russian aggression in Ukraine, which shook all international markets. Representatives of the private enterprise told the Voice of America that production costs increased as a result of the increase in the price of raw materials and that the government did not support them with special policies. Authorities say that subsidizing electricity occupies an important place in support measures. Officials are optimistic about the future, as according to them the economic growth was according to the forecasts and that the public debt and inflation suffered a decrease in the second half of last year.

In Albania, the business sector closed the third difficult year, after successive blows, the earthquake of 2019, the coronavirus pandemic, 2020-2021, and the Russian aggression in Ukraine, in February of the year we left behind, which also shocked the whole the world economy. As a result, the prices of raw materials increased by two to three times, leading to an increase in production costs. Representatives of the private enterprise say that they felt in great difficulties and that they did not find themselves supported by subsidy packages from the government, as happened in other countries. Average inflation for 2022 was about 7%, or about twice as much as before the start of the war in Ukraine. But although they burdened consumers, the higher prices brought 14%, or about 500 million euros, more income to the budget than a year ago.

"There is a significant surplus of income for 2022, and the minimum is that this surplus should have been returned to Albanian enterprises and citizens. All EU countries have done such a thing, and not only that, but they have also included subsidy packages in support of entrepreneurship, in order to facilitate the passing of the crisis" - said Nikolin Jaka, Chairman, for the Voice of America. of the Chamber of Commerce and Industry, Tirana.

But officials make other calculations when it comes to added revenues to the budget, mainly from price increases.

"The majority of the public thinks of it in the simple form, that there is more income and these funds are there extra, as a surplus, but it is not so. During these two years, due to the additional role that the government took on the pandemic and the reconstruction process, the public debt has increased. The first is the additional costs that must be covered, the second is the cost of borrowing with international interest rates that have increased. In order to keep the fiscal and macroeconomic process unchanged, it is necessary that the debt be kept under control and reduced, so that in the coming years, if we have a negative impact, we will be in optimal conditions to help the economy" - spoke for the Voice of America Besart Kadia, Deputy. Minister of Finance and Economy.

To amortize the crisis, the government approved during the past year two packages of social resistance, for the needy classes. Pensions were indexed by 9.5%, salaries for some categories increased by 7-15%, and the total financial support reached about 360 million euros, where the main part was the subsidy of the price of electricity with about 280 million euros. The price of energy was partially liberalized only for the medium voltage business. Officials say that subsidizing electricity for business as well as keeping taxes unchanged is an optimal support for private enterprise in crisis conditions. But representatives of the opposition think that the business did not have enough support.

"The business should have an easier tax system, today we have it with 6 levels. Against this, the government intends to introduce fiscal amnesty, which increases informality. We should have aimed to increase the formality, while the government, by introducing new tasks and tightening it more, will increase the informality. We should have had a medium-term strategy for development, but also for the collection of income" - Jordia Tabaku, DP deputy, told Voice of America.

Referring to the government's financial initiatives to increase salaries for some categories in the public administration, Mrs. Tabaku brings to attention that the private enterprise, which has the highest number of employees, around 90%, has not had the opportunity to raise wages, due to the crisis. As a result, private sector employees, according to her, are vulnerable to price increases.

"The private sector has found it impossible to raise wages because the 15% tax, increased local taxes, additional costs for energy since some businesses have entered the free market, additional costs for fuel, such as increased sales tax between years, the increased excise tax is also increasing with the rate of inflation. And these increases in business expenses have made it impossible for there to be an increase in wages in the private sector, or for it to develop and make investments. The government had to stimulate the economy through the private sector. To remove a load from the private sector and he would throw this into the economy" - continued Jorida Tabaku, DP deputy.

Although the average inflation for 2022 was about 7%, many experts have raised concerns that essential basket items such as oils, grains or dairy had an increase several times higher than that of wages and pensions, and that this aggravated exceeding the family budget. Even the 10% increase in immigrants' remittances for the period January - September 2022, compared to the same period a year ago, they see as related to the inability of families to cope with the crisis without help from their relatives abroad . Officials say it is difficult to compensate each social class for all the costs of the basket.

"Every time we have an increase in prices in the economy, the current policy in many countries is related to amortization of this problem. However, it is difficult to compensate each social class or each family for all the costs they have in the monthly basket. Public finances, if they go to immediate compensation of these prices, will ensure that in the medium and long term the prices will not return to the previous level, because the market will see that it has the same purchasing power. We hope that the prices will return to normal in the next 6-8 months" - continued Besart Kadia, Deputy. Minister of Finance and Economy.

Meanwhile, the authorities have increased optimism, based on some economic indicators for the past year. Economic growth was within the expected 3.7%, inflation suffered a slight decrease at the end of the year, while in the third quarter, the public debt also decreased below 70%. During this year, the economy is expected to face numerous challenges, depending on this and the developments in the global markets. Experts say that countries like Albania with a weak economy, informality and high public debt are more at risk from crises and measures to minimize them do not have much impact on the family economy and private entrepreneurship./ VOA


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