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Price crisis - The government is making millions, why it's distributing crumbs

2022-06-10 20:04:13Fokus SHKRUAR NGA REDAKSIA VOX

Price crisis - The government is making millions, why it's distributing

The entire government's rhetoric since late February and early March, when the war in Ukraine began, has focused on blaming this war for the price crisis and with it right. But signs of the crisis were given since November when it declared an extraordinary situation for electricity supply.

The situation was declared due to the five-fold energy price, where a megawatt exceeded 200 euros. Due to this price and with hydropower levels at the lowest historical levels, the Government was forced to spend millions of euros to ensure the country's electricity supply.

By February, the estimated figure of this expenditure in just six months approached 500ml euros, 150ml less than the debt it took through the Eurobond in the autumn. So the crisis had begun and the start of the war in Ukraine was the strongest blow.

But rising prices had positive effects on government revenues. In the first quarter of this year alone, customs taxes collected about 230 ml more than the first quarter of 2021.

These additional revenues, the International Monetary Fund, the World Bank and other international financial bodies have advised to be used to help layers in need and small business cope with the price crisis, thus avoiding tax cuts.

What has the Albanian government done? Of the 230ml extra euros raised in the first quarter of this year, the Government has made available to pensioners and families with social assistance an 80ml euro fund. Since April, the categories in question have benefited 3,000 additional leks of aid to mainly cope with rising food prices.

When it passed this package, the Government referred to the annual inflation change of about 7 percent and estimated that the price crisis had added an extra cost to these families' budgets spending on the value of 2500 dollars.

This support package ends at the end of June. The government hasn't given a signal on whether it's going to last, has it. But even if it lasts, in current terms it will be a crumb for families most in need, who risk destituction. Why? According to THE INSTAT report for the month of May, the basket goods food group suffered an increase of 18 to 30 percent, or about four times the Government's March estimate.

This means that to meet the added costs, families in need and pensioners the government must support them financially with 9,000 to 12 thousand new leks per month.

On the other hand, small business, which in its overwhelming part is family business, the Government has reminded the government that it does not pay profit tax, no VAT and other fiscal amenities, according to it, leaving it out of support packages. Are they enough? If we refer to the standard you're following with big business, no!

Quite the opposite has happened with tender companies, which according to a Government decision are entitled to apply for compensation for increased prices of building materials for additional values of 5 to 30 percent of public procurement for some of these products.

The Finance Ministry has been discreet in providing a figure of how much this decision will cost the budget, but estimates between 60 and 80 ml euros.

So, accounting for both support packages, the one for pensioners and the one for tender companies, from 230ml euros, the Government has redistributed about 160ml and here only half of that amount has gone to distribution for people in need, the rest goes to a small group of companies.

The rest, for 70 ml euros, has not been mentioned, but Voxnews.al learns that the sum is being preserved as a reserve to cope with the increased debt interest that the government has received over the years. How many have these interests grown? The Finance Ministry is silent, but losses can amount to millions of euros. As a comparison, in Great Britain, Finance Secretary Rishi Sunak is being accused that only by increased government loan interest rates has caused The British a damage of 15 billion euros.

Put simply, the Government is passing the entire burden of the price crisis on to citizens, and this is hardly going to change in the rest of the year, although second-quarter data should be expected, rather than additional budget citations from rising prices. Started by the April and May inflation rate, these revenues are forecast to go above 230ml in the first quarter, always if consumption does not fall before and officially plunge the economy into a deep crisis.

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