Press statement by the Minister of Finance and Economy Arben Ahmetaj following cabinet meeting on 2019 state budget and fiscal package:

Hello everyone,

I want to share with you the news and the information that the Council of Ministers approved the 2019 state budget in its regular meeting today.

In its entirety, the proposed state budget and the accompanying fiscal package reflects this government’s entire attention to the citizens, both in terms of fiscal consolidation – that is to cut the inherited debt over the years – and in terms of revenue growth and, above all, prioritizing public investment to support economic growth.

Specifically:

The annual GDP growth in 2019 is projected to be 4.3%. In other words, based on the International Monetary Fund and World Bank reports, Albania expects one of the highest economic growth rates in the region.

The budgetary deficit in 2019 is forecast to be -1.9% of the Gross Domestic Product, the lowest historic budget deficit level, which is in line with this government’s commitment and mind-set to reduce the public debt burden on the citizens.

For the fourth consecutive year – and this is crucially important to the citizens – the budget projects a primary surplus. It is a technical term and simply put it means that for the fourth consecutive year, the government of Prime Minister Edi Rama doesn’t create a new debt, but a surplus that is allocated to settle the inherited debt and arrears accumulated by the previous governments over the years.

Although we are cutting the public debt, we still plan a considerable public investment level of 5 % of GDP. So, the government will keep on supporting major public investment projects worth of around $900 million in nominal terms.

At the same time, what we see as the main anchors of public finances, the public debt will fall to 64.9% by end of 2019.

Dear citizens,

You all remember that we inherited a public debt at a rate of 74%, plus the related risks on the expense of the country’s economy and the citizens the public debt rate was estimated at around 84%, while it will fall to 64.9 % next year and will keep falling to further ease the burden of inherited debts.

The budget revenues are planned to be 27.8 % of the GDP. One might ask, what is this percentage? We have inherited a budget revenue level at about 25 of the GDP but is has increased despite we have constantly lowered taxes every year.

The 2019 draft budget will support new policies and this is the good news the Prime Minister took care to directly convey to the citizens and employees today:

The government will raise the salaries of employees in education, health, defence and penitentiary system, justice system and Albania’s diplomatic service across the world.

As many as 4,650 doctors, and 13,765 nurses, or a total of 18,415 healthcare personnel will see their wages increase under an annual funding of over 1 billion lek;

A total of 35,783 education and teaching staff will have their salaries increased under an extra annual funding of around 1.4 billion lek;

Around 6,800 servicemen and military officers will see a pay rise under an annual funding of 300 million lek;

More than 3,560 guardians and penitentiary system employees will benefit under an annual funding of around 200 million lek;

Albanian diplomats will also see a considerable increase of their salaries by over 20 %.

The second policy worth of informing with the citizens is the Prime Minister’s latest initiative on the baby cash gift, or baby bonus and the government plans to add an extra funding of a total of 2 billion lek to support around 30 000 families.

Regarding the fiscal police, the government plans to further ease fiscal burden and the following categories are set to benefit:

More than 15 000 employees in middle and high-paying job positions will see the income tax rate cut;

Some 20 000 businesses, or more than 50 000 capital investors will see the dividend tax rate reduced to 8% from a current 15% rate;

More than 50 agricultural cooperation entities will benefit incentives.

Dozens of packaging sector operators will benefit from various tax cuts on packaging.

The projected exemptions from having to pay VAT will help hundreds of economic operators in the garment and footwear industry, agricultural machineries and pharmaceuticals.

Education:

The government expenditure on the public education will remain above 3% of GDP and the teachers’ salaries will increase by around 7%.

The textbooks will be provided for free to around 190 pre-university schoolchildren around the country.

Free of charge transport will be provided for around 28 000 schoolchildren and 10 000 teachers;

Provision of food quota for 1000 to 1400 schoolchildren.

Meanwhile, the state budget will support projects on construction of new schools around the country.

Education and social protection:

The government’s social package, which we will explain to the public over the coming weeks, has expanded significantly since 2013 when we took office.

The budget for the Ministry of Health and Social Protection will grow by over $24 million, or 2.4 billion lek in nominal terms to include the baby bonus and salaries.

We will support the initiative launched by the Minister of Health and the Prime Minister on reconstruction of all healthcare centres. A total of 100 healthcare centres will undergo restoration and 80 of them will complete this year, keeping the Prime Minister’s promise. A total of 100 new healthcare centres will be constructed in 2019, whereas 380 health care centres will be reconstructed across the territory of the Republic of Albania by 2021.

A series of hospitals will be fully reconstructed, including the regional hospitals in Lushnja, Elbasan, Vlora, Berat, Lezha, Pogradec, and Mat.

The road infrastructure takes its considerable investment share.

Construction of national road axis, including the Arberi Road, will continue. Procedures are already underway for the construction of Thumane – Vore – Kashar highay, Milot – Balldren and Orikum – Dukat roads.

The state budget will support construction of the following road axis:

Kardhiq – Delvine

Fushe Kruje-Milot-Morine

Qafe Thane-Lin-Pogradec

Tirana North-eastern Ring Road

Tirana Ring Road project. It is with pleasure to highlight that this spectacular project will meet the best European infrastructure standards.

Tepelene Bypass road

Shkoder Bypass road

Construction works on “Kardhiq – Delvine” tunnel

Completion of the Tirana-Durres and Tirana-Rinas Airport railway lines

The Fier Bypass road will open to traffic next year, while works will advance to construct Vlora Bypass, whereas, Tirana-Elbasan highway will fully open to traffic by next March or April following a series of mistakes in the initial project, with the cost edging up by around 40%.

Agriculture and rural development:

2019 can be best seen as the year of agricultural development. The government will provide a funding of 2.6 billion lek in support for farmers and the good news is that IPARD programme will continue and we will be able to withdraw over 3 billion lek in funding for agriculture under the IPARD programme.

I would like to emphasize that the 2019 budget fundamentally finances justice reform: raising salaries for judges and prosecutors and financing the creation of all new justice reform bodies and full financing of vetting process. The government funding for the justice reform totals more than 2.2 billion lek. The government will provide over 500 million lek in funding for creation of High Prosecutorial Council, High Judicial Council, Bureau of Investigation and Special Prosecution Office, SPAK.

These were the main aspects of the new 2019 state budget I wanted to share with you.

Following today’s approval by the government, the draft budget will be forwarded to the Assembly, with the Parliamentary Committees set to discuss the draft first before it is finally adopted by the Assembly.

Thank you.