IMF urges Albania to gather more taxes, improve public investment

IMF urges Albania to gather more taxes | thebluediamondgallery

Albania needs to gather more taxes and strengthen its public investment management, despite the economy’s continued recovery.

According to the International Monetary Fund (IMF), the country’s tax efficiency is low compared to its neighboring countries and additional measures are needed to mobilize revenues for extra spending on health, education and infrastructure.

In its concluding statement on Albania following its annual check on the country’s economy, the IMF urged stronger management of public investment, with projects better appraised and selected in order to “reduce waste and abuse”. 

Albania’s low tax efficiency reflected high tax thresholds and weak compliance and the tax authorities should refrain from granting new exemptions, favourable tax treatments, or lowering tax rates, the fund underscored.

The Albanian economy continues to strengthen as it benefits from increasing domestic demand, large energy-related foreign investment, growing tourism and recovered interest in key EU trading partners.

Moreover, the IMF pointed out that the Albanian authorities have also lowered fiscal and financial vulnerabilities, but further efforts are needed to strengthen the benefits.

Albania’s GDP growth is projected to increase to 3.9% this year, driven largely by tourist and construction sectors. Unemployment has fallen to 13.9% and the deficit is expected to widen slightly in 2017, reaching 8.0% of GDP, driven by energy investment and electricity imports.

In June 2016, the IMF said after concluding a visit to Albania that the country should address reemerging arrears at the central government and mainly in public investment projects, as well as in the restructuring plan of the General Directorate of Taxes.

Albania’s central bank in its turn published a statement saying that though economic activity appears upward, the Albanian economy continues to face structural weaknesses, which decelerate the pace of growth. It also mentioned the economic performance in the euro area, which is unfavorable and will be further complicated by the Brexit.