Western Balkans

ECOFIN COUNCIL Joint Dialogue with the Western Balkans on the ERP 2021-2023, 12 July 2021

Tirana, Albania, 14/07/2021 - 10:45, UNIQUE ID: 210714_23
Press releases

Conclusions on Albania

  1. Conditional on the economic recovery becoming well entrenched, foresee in the 2022 budget and medium-term fiscal plan a gradual reduction of the public debt ratio and, based on a realistic revenue forecast, a return to a positive primary balance as of 2023 in compliance with the corresponding fiscal rule. Complete the Medium-Term Revenue Strategy and begin its implementation in line with the inter-ministerial committee agreement but at the latest before the next ERP submission. Increase the institutional capacities of the fiscal risk unit to continue and expand its work without reliance on external assistance.

 

  1. Continue to reduce the stock of contract-based arrears; reduce VAT arrears to zero in 2022 and analyse the reasons for the increasing arrears of local governments. Assess and approve all investments, which involve public funds including PPPs, through the same approval process and continue to report actual earthquake reconstruction expenditure in the consolidated budget implementation. Re-orient public expenditure composition towards development of human capital and innovation by foreseeing a continuous gradual increase of expenditure on education, health, social security and R&D in terms of shares in total expenditure.

 

  1. Maintain a strong financial sector regulatory framework in line with international and EU best practices, ensure sound credit risk management, a transparent display of asset quality and adequate provisioning. Further reduce remaining institutional and legal obstacles to swift and effective NPL resolution, including by resolving the bailiff deadlock and strengthening bankruptcy proceedings. Continue with the implementation of measures aimed at promoting the use of the national currency, including by developing the market for forex hedging instruments.

 

  1. Provide enhanced business support services to improve access to finance and entrepreneurial know-how. Improve transparency in the adoption and implementation of legislation particularly by ensuring an effective timely consultation of businesses and social partners on the new legislation affecting their operations. Draft and consult a comprehensive strategy to tackle and monitor all aspects of informality, with an action plan with baselines, including clear and measurable targets and establish the regular a performance-based monitoring of its implementation and results.

 

  1. Establish an inter-ministerial task force involving relevant ministries, their agencies and stakeholders to develop a Youth Guarantee Implementation Plan. Develop institutionalised tools to monitor skills needs in the labour market with an aim to provide relevant career guidance and to improve the offer of short-term vocational courses accordingly. Incentivise the link between innovative businesses and academia in the upcoming draft Strategy on Business and Investment Development 2021-2027 by including clear targets to increase science and research funding and by creating the conditions for the development of business incubators.

 

  1. Perform an assessment of the adequacy of benefits under the ‘Economic Aid’ scheme, taking into account the data from the ‘Statistics of Income and Living Conditions’ survey, in view of their systemic adjustment. Build capacities in local governments to apply for support from the Social Fund and to plan, manage and deliver social care services. Redesign coverage policy, including for outpatient medicine, to reduce unmet need for medical care and financial hardship, particularly among persons with disabilities and chronic disease, poor households, people aged 65 and over, and minorities.

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