Weekly communication of the Prime Minister Edi Rama, Finance and Economy Minister Anila Denaj, and the State Minister for Reconstruction Arben Ahmetaj, with economics reporters:
Prime Minister Edi Rama: Good afternoon! Thanks for taking the trouble to come over.
Today we hold this weekly communication on economy and I am very pleased we can officially announce today the news about the decision to increase the salaries of doctors, nurses, health workers and teachers.
These are the two categories that increasingly deserve a lot more and given the current conditions, despite all the constraints triggered by the two big consecutive blows, namely the earthquake and COVID-19 pandemic, we are obliged to give them today a strong support to reward their efforts, professionalism, commitment to these two social categories, a mobile social category thankfully, which is the category of people in need of health care and the stationary social category, which are children. On the other hand, to further encourage motivation and also through motivation encourage a growing quality of these two absolutely vital services for today and the future.
The health workers’ salaries will increase by 40%, undoubtedly the biggest pay rise ever approved for doctors, nurses and medical professionals in our country.
The teachers’ salaries will increase by 15%.
The second figure I would like to provide that with a number of employees in the country’s public sector, which is smaller than the number of employees in the public sector in 2013 – but let’s consider it as the same number without going over details – the overall fund for the salaries has increased from 450$ million in 2013 to $710 million in 2020, including the today’s pay rise. This means that the two terms in office of those who do not know where do they find courage to seek to seize power again, and in our two terms in office, the state budget allocations for salaries of public workers are almost twice higher than the salary fund in the public sector, in terms of amount with the same number of employees, though the number of employees is slightly smaller today.
The third figure is for all of those who confuse tariffs with taxes, all of those who confuse what they should pay for water, energy consumption with taxes, but also for all of those who insist without taking into account facts and claiming that tax rates have been increased, that savings from the progressive tax system is $21 million a year and $166 million over the past seven years. So, it is $166 million the previous government used to take away from the people’s pockets, while we have returned it to the households’ coffers only in savings after abolishing the notorious flat tax rate and replacing it with a honest progressive tax, stipulating that high earners pay more in taxes, whereas the opposition wants to reintroduce the flat tax so that nurses, teachers, state employees pay again more in taxes than “oligarchs” and the wealthiest people in this country.
My grandmother used to say “to err is human, but to insist on erring is devilish.” The (the opposition) made a mistake once, but they still insist on their mistake and sell their mistakes to Albanians as virtue.
Grab whatever you can, let as many people as possible buy it and see what happens then.
Next week we will announce other changes regarding the honest taxation regime in a bid to further ease burden on the middle class of people who are on top of the pyramid for personal income taxes and the minimum wage set to enter into force starting January 1, 2021.
In the meantime, we have already completed our draft state budget for the coming year. I am very pleased that despite the needs to cope with the effects of the earthquake and the COVID-19 health crisis, which we are facing with dignity, we plan a series of investments, not only because reconstruction programme has become an engine of the economic recovery, but also because we will now finalize a series of important processes, which will bring the largest influx of money injected into economy from internal and foreign investments in the next three or four years.
Thank you! The floor is now for the Minister of Finance!
Finance Minister Anila Denaj: The government of Albania is set to approve this week a considerable pay rise for the education and health system workers, a decision due to enter into force on Jan 2021. Specifically, health workers will benefit a 40% pay rise above the assignment salary for doctors, nurses, primary and secondary public health service lab workers, whereas pre-university education system teachers will benefit a 15% salary increase.
A total of 18,415 of health system workers, of which 4,650 doctors and 13,765 nurses, will benefit under the government decision, as well as 35,883 pre-university education teachers.
It is important to highlight that the decision to increase salaries in health and pre-university education system will incur an estimated state budget cost of 8 billion lek, higher than the cost we had projected in the draft medium-term budget.
The total amounts specifically for each category are as following: the current average assignment pay for a doctor is 57,000 lek and with the 40% rise in 2021 it will go up to 79,800 lek.
The current primary care nurses and lab workers salary is 37.000 lek and they will see their monthly pay rise to 51.810 lek in 2021. The doctors’ gross salary will grow by 37.753 lek to 110.553 lek. The nurses’ gross salary will go up to 65.700 lek from a current amount of 50.890 lek.
The current monthly salary in pre-university education system is 65.800 lek and it will rise to 72.000 lek in 2021. The average gross salary for teachers will grow to 75.550 lek from 68.800 lek in 2020.
In the context of salary increase, not only in absolute value, but also in percentage, with the new pay rise we are announcing today, the wages of primary care doctors have been increased by 56.8% since 2013, as the charter on the monitor shows.
As far as the salary of the hospital doctors is concerned, the salary increase since 2013 is estimated 61.6% .
The primary care nurses’ salaries have been increased by 68.3% since 2013, whereas the salaries of the hospital nurses have been increased by 63.4% since 2013.
The primary education teachers’ wages have been increased by 21.6% and the secondary education teachers’ wages have been increased by 21.3% since 2013.
It is worth pointing out and comparing the salary increase with other countries in the region. If we compare the salary increase with the education and health system of North Macedonia, we would notice a slight difference if we are to consider the new pay rise due to enter into force on Jan 1, with the difference being positive for Albania in terms of wages in the education system estimated at 60.758 lek compared to around 54.676 lek in North Macedonia, while the doctors’ salaries are slightly lower compared to their salaries of their colleagues in North Macedonia.
Once again, it is worth noting that this is a proactive approach to properly reward the work of both education and health workers. But first, let me go back for a while to the investments that are a fact during whole years of Rama government in office. Investments in the country’s health and education systems in 2013 were estimated at an absolute value 35.4 billion lek per year, down from 57.7 billion lek per year in 2020 and here it is worth mentioning the investments in infrastructure, improvements of health centers, ambulance system, or education, where investments in infrastructure include the reconstruction of at least 274 schools, in addition to the previous salary increase.
We think that the decision on the pay rise for doctors and teachers will be approved in this week’s cabinet meeting.
PM Edi Rama: I would like to point out another element we will further elaborate in the coming days. We are talking about simply the net salaries, whereas there are a series of other financial elements that are completely different from what they used to be previously and they include overtime payment and bonuses for doctors, who serve outside their area of residence, as well as other elements we will detail in the coming days, so that we build a correct relationship with the public opinion in terms of providing facts, which are the victims of our era, both on health care and education system.
Before you ask your questions, the Minister for Reconstruction will provide an additional overview.
Minister Arben Ahmetaj: Thank you Mr. Prime Minister,
I believe it is important to share with reporters and the citizens the fact that the salary increase policy is not merely a financial policy, but it is associated with the social viewpoint, competitiveness and, above all, with what taxation puts on the payroll, whether the minimum wage, whether the wages of the highest part of the bonuses, whether in the private sector or in the public sector.
No wonder that we are also providing the progressive tax comparisons; I would like for a moment modestly draw your attention and say that the progressive tax is not a virtual reality in the pockets of the Albanians citizens, but a very significant fact that makes more money available to citizens so that they can increase consumption, cover education and health care cost.
As the Prime Minister puts it, fact is today’s most unfortunate victim. Indeed, I would like to take this amount and prove it for every citizen, by their name, surname and job position, if you will.
The Premier referred to the salary fund, when it comes to the useless words of “the theatre of absurd” and the distorted political market with the constant question “where the money ended up?”
Loo where the money ended up, namely in salaries for the public administration, with 71 billion lek or twice as much higher for the public sector only, excluding the state-owned companies.
In the meantime, I would also like you to look at the difference between the two periods, that of before 2013 and the period of the two terms in office of Rama government. 18.2 billion lek is the fund that Rama government has set aside to cover the constant pay hikes for employees in health care system, education and the public administration. So, beyond any useless political debate, these are the facts you can look into and certify if the charters here are unconvincing.
In the meantime, to materialize the effect of the progressive tax, I would ask you to focus on another very interesting slide for the citizens. If you look at it in red and as we referred to before, it is the fund we have added to the ongoing wage increases, which is 18.2 billion lek, or $ 182 million. Look at the yellow color, it is 16.635 billion lek for the public administration only, so to put it in the civic narrative, these salaries used to remain in the budget and were used to help big business and the wealthy before 2014.
So, our social policies and the progressive tax system help the needy and the middle-class. The amount of 16.6 billion lek was taken away from the low-income and middle-income citizens and was transferred to the pockets of the wealthiest people of this society. But our policy makes the difference, so it is a left and social policy in its essence and I would love to show you another figure in the coming days.
The progressive tax under the Rama administration over the past 8 years has redistributed around $960 million to the citizens. Do you want to verify it? Let’s then embark on a political, social and financial exercise. What do I mean by this?
Since the first year of its application, the progressive tax returned to taxpayers around $90 million. Around $960 million has been redistributed to Albanian taxpayers and these are not virtual and unfounded figures, but it is money resent to the pockets of the Albanian citizens. Where did you send the money? The amount of $960 million was not collected by the state budget to be distributed then to the wealthiest people of this society, as it would have been the case should we were not to switch to the progressive tax system and maintain the notorious flat tax. Instead, this amount ended up in the pocket of the needy and vulnerable social categories. Here you see another slide to simply show the salaries and how the minimum wage has been increased. On my left, the gross minimum wage has increased by 18.18% compared to 2014, but if we are to include the effects of the progressive tax then you will see that the minimum wage has been actually increased by 31.31% and if you are to refer to the promise made by Prime Minister since day one, you will find out this is a promise kept. These are the true facts. In the meantime, we made a comparison with the public sector and the private sector to show that competitiveness has followed the same logic, indicating the same effect of the progressive tax, ie it is the average monthly gross increase and then the effect of progressive tax. Here is another slide, which the Premier referred to nominally, and it shows the effect of the effects of annual saving on income, earnings and employment thanks to the progressive taxation on the public administration employees, including doctors, nurses, policemen, teachers and everyone paid by the state budget. The effect in annual savings is estimated around $166 million only thanks to the progressive tax, in addition to the 18.2 billion lek or $182 million that Rama government has allocated to cover their salary rise. These are facts and let’s debate over the figures we are providing as this is data provided by the treasury and certified by the state budget. The average wage in the public sector, with the most recent salary increase, which for many could be worthless, but it is very important to the public sector employees. Here is the difference between the average gross wage and the effect of the progressive tax to show the success of the progressive taxation system. This is also the reason why Rama government and the ruling majority considers tax progressive as a division line and that’s why we told you last time that the way how those seeking to take office for third time will reintroduce the notorious flat tax rate by doing the same thing to practically take away a total of $46 million from the needy people, from teachers, policemen to transfer it to rich people who represent only 8% of the total population. On the other hand, the progressive tax is our flagship policy. This is all I wanted to share with you and I am available to answer your questions.
– For an Albanian citizen to travel to the EU member states, it takes just buying a train or plane ticket and can freely travel within the allowed duration of stay. However, the EU has most recently launched a new procedure, due to enter into force soon. Have you been notified in your capacity as Prime Minister and Minister of Foreign Affairs and is this move a step backwards as Albanian citizens will now face this difficulty?
PM Edi Rama: I believe you, not only me, are now figuring out the way how the EU works. Such a system was said to be applied in 2016 and now it has been postponed until 2023.
However, it is not about going back at all. It is all about a EU security system applied to all non-EU members, whose citizens seek to travel to the EU member states without visa. As such, we join a club of nations like the United States, Switzerland, Great Britain, Japan, the citizens of which, according to the ETIAS system, should fill an online application, which takes just few minutes and it is not a visa application, before they travel to the EU member states. You just fill the application and you receive an online confirmation shortly afterwards whether you are allowed to enter the EU countries or not, if you have criminal records. This has nothing to do with citizens without criminal records, or individuals who are not involved in organized crime activities or terrorism. Such a system will be applied to the citizens of every country who can travel without visas to the EU member states and it is not about reintroduction of a visa regime, as interpreted by all of those seeking to spread the most unpleasant smell from the Lalzi Bay-based “digital manhole”. It is first and foremost a measure launched previously and nobody knows when it will become applicable. For example, Turkish citizens should apply for a visa in order to travel to the EU member states, but Turkish citizens are not obliged to fill the application under the ETIAS system. Russians need a visa, but not to apply under ETIAS system. The system is applicable to those who can travel freely without visas. It is merely a filter designed to boost security as part of the EU measures to counter terrorism and organized crime.
– Will other sectors of the country’s economy be damaged because of the decision to increase the salaries for doctors and teachers? Secondly; under the new amendments to the Electoral Code, the government is not allowed to increase salaries four months ahead of the elections. You said that the decision to increase the salaries of doctors and teachers will enter into force on Jan 1, 2021, whereas the four-month period prior to elections actually starts on Dec 25. While you announce the new pay rise for these two categories, oil workers in Ballsh have staged a hunger strike. Have you been considering a support package for them?
PM Edi Rama: First of all, I didn’t understand your first question. How could other sectors possibly damaged because of the pay rise for doctors and teachers? Nobody has to worry about that, because no such damage can happen. I know Albania has a problematic relation with the others’ thing, I mean when someone else receives something more than others or someone leads a successful career. In the worst case scenario, this is a psychological damage, not a financial one, caused to one who envies the other. But I do not believe that there will be an Albanian who envies doctors and teachers, who deserve much more. But I believe there is no Albanian who envies doctors and teachers, who deserve much more.
As to the four-month period to the elections, this is the state budget. The law bans extra measures and not the state budget measures. We are drafting the state budget and the pay rise will become effective on Jan 1 and will continue to be applied in the following months despite the electoral campaign. I know there could be political stakeholders who would wish for us to order suspension of salary payments for four months, but this is impossible.
As to the oil workers, it is a private company that has been awarded the privatization contract in a criminal way and these all are the consequences of a criminal privatization process, and I have been personally committed to help and support those people there by doing all sorts of the most amazing acrobatics and begging them – I will write a book about what we and I personally have done all over these years – so that the enterprise resume operations normally. It was just a week ago I purposely traveled to meet and discuss the matter with the President of Azerbaijan. It was yesterday and today afternoon I will be informed about fresh developments in this respect with the company, which after being rewarded to receive the crude oil was supposed to make the refinery operational. We have done whatever we could in this regard. Blaming us and holding us accountable would be an exaggeration. We have done utmost efforts, but it is the case of an enterprise, which from the very onset, if there was any reason to privatize the refinery, that should have been one to recover it through investments. The privatization was a criminal process and no serious investments we ever carried out to renew and regenerate that enterprise. It is simply a mismanaged and misused refinery.
I’m very worried, but it definitely important to do something and not make comments. I am very worried, I feel very sorry for the people there. I am informed all the time, but I do not think there is a need for hunger strikes to raise my awareness, as I am very aware of that refinery. Hunger strikes are staged when nobody cares about you. We not only listen to them, but we have followed them continuously, the contacts with them have been constant. We have intervened several times, being able to streamline the process. The problem of that refinery stands in its very essence. But the essence is rotten. That refinery requires a big investment in order for it to recover and operate in the long run, or it requires a different policy approach, about which we are working with the EU and it is a policy to maintain a balance, in the sense of social depreciation with employees, while the refinery is eventually closed once and forever. But we are not at this stage, we are not mulling the option to shut down the refiner, but we are seeking a solution option and I am telling you that we are in constant communication with contacts with whom a solution can be found.
–The European Union has already announced a fund of EUR 20 billion for the Western Balkan countries to recover. How much of this funding is expected to be absorbed by Albania and where will you direct it.
A question for Minister Ahmetaj; The minimum wage is expected to increase to 30.000 lek, but the business associations somehow oppose the decision to increase the minimum wage, claiming that the move would incur financial effects on them. Are you communicating with business?
PM Edi Rama: I don’t want to assume the competences of the official you addressed your question. The Minister will certainly provide his opinion and the Finance Minister too. However, I would like to tell all those who raise their voice about this that they should that they should thank the government that is giving you the opportunity by law to do what, in fact, many of them should have done themselves and not the opposite. Those workers are after all the foundation for the profits, earnings and success of every private company and it is really an exaggeration to claim that a minimum wage of 30.000 lek would have financial effects. Of course the decision will have its financial effects, but not ones that would hurt business owners and their families who would go bankrupt if it was not for their employees. It is called the minimum wage and it is the minimum their employers can, should and will do by paying the employees 30.000 lek. Yet there is another “big and” that we have been provided with facts about unreported employment with employees and companies paying workers cash-in-hand, and a large part of these effects are actually not effects on the coffers of the business owners. Such a discussion would be an exaggeration.
The Minister of Finance will certainly hold a process of communication and a hearing. We have nothing against companies. However, private companies cannot sew their coats with their employees’ skin.
As to the EUR 20 billion in EU funds, I would suggest you all to be more skeptical when it comes to the billions of the EU. There are seven deep seas between saying and doing when it comes to the billions allocated by the EU and the rest of the world. I will host the EU Enlargement Commissioner tomorrow and I am looking forward to meeting him, because he is the main promoter of this EU package for the Western Balkans and I will hear in detail what it is about, because once is supposed a fund of EUR 6 billion and then another package of EUR 9 billion. It just soared to EUR 20 billion. But it still remains to be seen what all is about. However, I would like to reiterate and tell people that they should always bear in mind that there are seven deep seas between saying and doing. It would suffice to illustrate this by the EUR 1.2 billion pledged at the Donors’ Conference. Of course they will deliver, but every country follows a set of different and complicated procedures.
We are rebuilding schools with state budget funds and we are using state budget funds to address a problem that was not created by us. If we were not forced to embark on the reconstruction programme, we would have had a lot more resources to support fight against COVID, we would have had more opportunities to press ahead with many other development projects, but, alas, we found ourselves in a situation with at least 15.000 families waiting for their homes to be rebuilt. We are about to complete construction of the school buildings,, whereas the EU is about to start construction of a number of schools now, because they apply other procedures. I am very pleased to see that it is about billions to support the Regional Schengen, the project I have strongly supported over all these years and if you are to read the preliminary text, the EU is ready to commit billions of euros because a new horizon has been opened with the Regional Schengen.
We will talk specifically, but I provided this explanation, not to underestimate or downplay the EU assistance, which is very welcome, but because I know very well that now that uttered this amount of 20 billion, I’m convinced that if we are to take a look at the Facebook comments now, you will see people asking “where did you send the amount of EUR 20 billion?” So, to put it clear, the funds allocated by international partners are not cash money delivered into money bags, suitcases or canoes. Every single cent provided by the international partners is delivered through meticulous procedures with our partners carrying out all the procedures, feasible studies, the designs, tender procedures and they pick the companies to award contracts and supervise them till final product is delivered.
Reconstruction Minister Arben Ahmetaj: I would like to make a comment regarding your question, because the Premier already noted that there are two lanes when it comes to the minimum wage; the official reported minimum wage for the social insurance purposes. What has happened since this ruling majority and this Prime Minister took office is that the minimum wage is being increased 30.000 lek from 22.000 lek it was in 2013. And I am doing a simple and quick calculation. Whoever complains about cost he or her might be right. Why? First of all, there are workers who officially receive the current minimum wage of 26.000 lek, though their number is relatively small compared to the official payrolls, and second, the number of companies paying their workers less than 30.000 lek is very small. And last but not least, the minimum wage has to do with competitiveness. Are we saying that we are going to another value situation in the Albanian economy, what will we be proud of? Will we take pride of the low minimum wage? No. We will be proud if we compete with those skills either in the technical aspect, or in the digital aspect, or in the factorial aspect.
– Given that the government has decided to increase salaries of the health workers, I would like to ask two questions about health sector. You Mr. Prime Minister, in your remarks at the graduation ceremony of 1600 medicine students on Feb 20 stated that Albania faces no shortage of physicians and the four-year ban on doctors specializing programs was a disaster as it created a huge vacuum. According to the World Health Organization, Albania is the country lowest number of doctors per 10,000 inhabitants, with just 12 doctors per 10,000 inhabitants. We have more doctors than Africa, but less than Pakistan. Are you concerned about this shortage of physicians in Albania and do you think that should their salaries were to be increased earlier, then most of them wouldn’t have left the country?
In the past five years, until May 2020, the state budget has paid around EUR 100 million for the public-private-partnership contracts. The state budget will pay another 270 million euros in the coming years. I want to ask you how efficient investments in health sector have been and how valuable were they taking notice that the country is struggling to cope with the COVID-19 pandemic consequences?
PM Edi Rama: It is not true that the majority of doctors have left Albania, like it or not, because figures are there and they speak for themselves. Second, our health system faces no shortages of physicians as of today, like it or not. Don’t mix and confuse things that have nothing to do with each other. Like it or not, Albania has today a genuine health system, although it still faces many problems and needs and this is what all they who judge our health system, including the World Health Organization. But this was not the case seven years ago, when Albania lacked a health system. Albania had doctors who used to fight as in wartime from dawn to dusk, Albania had nurses who didn’t know where they would end up a day later, because parties were the ones that kept the nurse shirts, especially a political party that had become a kind of a garment factory for the nurse shirts that were then distributed according to the party membership document everyone had to keep in their pocket. Whenever you came to the Mother Teresa Hospital – just to remind you some facts that you keep in your archives – it was difficult to decide whether it was a local fruit and vegetable market, a second hand clothing market, a parking lot, because nobody would ever think that it was a university hospital centre. And if you were to enter a hospital building or ward you were unable to decide who was a patient, who was the doctor or the nurse and who was the family and relative of the patient, because no uniforms were available. While people used to gather behind the hospital’s surrounding walls showing prescriptions to the camera and rushed to purchase basic medicines as hospitals lacked them. And this is not a story from the National Liberation War, but it has all happened just seven years ago, when people were forced to bring sheets, blankets and heaters when hospitalized.
So when it comes to health system, I’m ready to explain how much problems we still face, even a lot more than the ones you mention, but we now have a true health system. If COVID was to happen seven years ago or if health system was to be like it was seven years ago, Albania would have made the world headlines.
As to the public-private partnership contracts, I would invite you all to realize that they are all investments conducted by private companies and settled in tranches by the state budget. It is not money transferred to the private firms. You need to understand this, because it is very important. They are private investments that are settled in tranches.
If such investments were not to be made, we wouldn’t be able to deliver all these services. It is as simple as that and therefore we would be in the same inherited situation when doctors would use the surgical pliers dating back to the Albanian-Chinese relations to help young mothers deliver their babies, when sterilization would be a virtual reality and the post-surgical infections would continue to be the highest in Europe just because of the lack of the sterilization process. But this is no longer the case.
Could you name a single new hospital that has been built in the past 30 years?
New hospitals are being built for first time in Albania.
Me poshte vijon pjesa e dyte e komunikimit te KM Rama, Ahmetajt dhe Denajt javen e kaluar:
Like never before in the past 30, 40, 50 even 100 years, the country’s health system has been transformed in terms of the hospitals’ infrastructure and equipment over the past seven years.
Mother Teresa University Hospital now houses a modern drug-storage facility meets international standards on drug storage and safety requirements, while no medicines were to be found in our hospitals few years ago. The quantity of medicine supplies were bought according to the demands of the customers of the cabinet members of that political party and these supplies were never used by hospitals. Instead the medicine supplies were left to rot in some warehouses along with second-hand clothing and the rotten wooden planks over the years. So, I would suggest that we refrain from seeking to reveal deficiencies of the health system, because this system is healing the maladies on the people’s bodies and the system’s maladies. You can ask doctors and they will tell you everything.
Minister of Finance and Economy Anila Denaj: I would like to provide some facts. Let’s start with the long-term specializing programs in medicine. Two specializing program cycles took place in the period between 2005 and 2013 with a total of 627 quotas, whereas six cycles have been conducted since 2013 with a total of 1420 quotas. Secondly, as many as 600.000 uninsured non-elderly people were recorded in 2013 and they had to pay in exchange of any medical treatment. The situation is not the same. The patient wait times have been reduced significantly as people had to wait around six months to undergo a coronary angiography or a magnetic resonance imaging. The patient wait times have been reduced.
This is not the first time that government announces decision to increase teachers’ and health workers’ salaries. The monthly salaries for doctors have been increased by 21% and 26% for nurses over the past few years, and the teachers’ salaries have been increased by 10% and 7% respectively in 2017 and 2019. These are facts.
– Mr. Prime Minister, a figure of $46 million was mentioned a little bit earlier and that is supposed to have been taken away from the needy social categories under the previous government’s flat tax system to be transferred to the wealthiest people, who represent some 8% of the population. So why the progressive tax system needs to be reviewed when, as you said, the progressive tax has redistributed millions of dollars to the needy people? Why the progressive tax should be reviewed, as you already suggested in your remarks at the last week’s press conference?
Will the government also increase pensions since it is increasing salaries?
Third, the latest European Commission’s Progress Report was unveiled a few hours ago and the document noted that Albania has yet to create the Constitutional Court, while it criticizes the anti-defamation package, the fight against corruption and the organized crime, as well as the tense political situation in the country. When the political tensions will end, while President Meta warned a day ago that he would confront you in every square across Albania if the June 5 agreement is affected, but the new amendments to the Electoral Code were already adopted by Parliament yesterday? Thank you!
Reconstruction Minister Arben Ahmetaj: I think you confused the progressive tax and the 9% profit tax rate. The proposed 9% flat tax rate would badly affect ordinary workers and citizens, as well as small and medium businesses to practically favour big businesses that will see their profit tax significantly decrease to 9% from a current 15% rate. This move alone would grant $46 million to big businesses. This is the amount that the state budget allocates each year to cover unemployment and social assistance benefit. With the proposed 9% flat tax, this whole amount to support social assistance scheme will be granted to big businesses. On the other hand, a flat tax system would deny ordinary workers around $120 million a year, while the progressive tax system redistributes this whole amount to employees and the ordinary citizens. A review of the progressive tax system has been proposed by the Prime Minister to review the part concerning the middle class of the society. Why? This is because the middle class has been expanded thanks to the economic development in the past 8 years and we will review the system to lower the income tax rate on middle class.
Minister of Finance and Economy Anila Denaj: I want to make a comment about the question whether the government will hike pension payment. We have actually implemented a successful pension reform with its core principle stipulating who pays more in social insurance contributions, they will be granted higher pension payment and the move is designed to combat informality in the country’s labor market.
PM Edi Rama: Yes, the government will set aside $26 million to increase pensions next year.
As to the EC Progress Report, the Enlargement Commissioner will be visiting Albania tomorrow and we will have enough time to talk about it.
Regarding Ilir Meta, I would say he has nothing to do with any issue concerning the country’s socio-economic development. Quite the opposite, he could be seen as a problem to the country’s economy, but not as element of our fiscal package.
–Last week you signed a very important agreement with the United States Department of Energy on construction of the Skavica hydropower plant, as well as a memorandum on economic cooperation promotion. Which are the funding options and deadlines for construction of the Skavica HPP?
Second question concerns the EBRD latest report cutting the 2021 GDP growth projection to 4.5 percent, down from an earlier 12% growth projection. How the government will plan the state budget to spur economy?
PM Edi Rama: Fortunately, given the experience over the past years, I can tell you that our government growth projections are closer to the reality and I generally believe in this trend. We have never said that Albanian economy will grow 12% next year. I do not even know where such a growth projection comes from and I think that we will expect a 6% growth next year.
As for the new state budget, the draft will be announced in the coming days, because it has been finalized and will be approved by the Council of Ministers next week. The 2021 draft state budget will then be forwarded to Parliament and there we will have enough time to discuss.
Regarding Skavica HPP, the funding options are an issue we are dealing with now and once the final conclusions are drawn, we will also have the final funding option. You will definitely be the first to find out.
– Mr. Prime Minister, is Albanian politics holding formation of Constitutional Court hostage by sending to the Justice Appointments Council (KED) candidacies that fail to meet the required criteria?
The joint sessions of the governments of Albania and Kosovo was followed by strong-worded statements in Serbia, first by the Serbian Defence Minister, Foreign Minister and most recently by President Vucic, reacting to your statements that the Regional Schengen is the only formula that would grant Kosovo diplomatic recognition by Serbia.
PM Edi Rama: It is not the politics to send candidacies to the Justice Appointments Council. I don’t know why you put it this way.
Meanwhile, regarding the natural disaster I found to be in permanent action in the government of Serbia, in the form of a cabinet member, I can say I am still waiting for the President of Serbia to apologize on behalf of the Republic of Serbia for that natural disaster. I understand that he might be powerless over that disaster, but let him keep that disaster for himself and for Serbia. Meanwhile, our Foreign Ministry has further continued with the process and the ambassador of Serbia has been summoned, or will be summoned, to verbally inform the Serbian state that no loose mouth individuals in the Serbian government can hurt the government of Albania, or the integrity of a cabinet member or the Prime Minister of Albania, that if it was for Edi Rama only, you know that these kinds of natural disasters stimulate my spirit of debate and I don’t mind debating at all, but the natural disasters we have here in the country are enough for me, in conditions of permanent virulence, in the form of presidents and former presidents. So I can face them, but I cannot face a natural disaster from the Serbian government. Let the one who has it keep it and apologize to Albania.
As far as Kosovo is concerned, I am very pleased that Kosovo is part of the Regional Schengen and time will show in terms of further confirmation of Kosovo and not only in economic terms, who was right when talking about the Regional Schengen, although being under attack by all sorts of debauched mouths and a whole host of natural disasters, be them in Pristina or Belgrade. For me, it is the most reliable certificate of this vision and this conviction, as one from Belgrade says I am fighting for a greater Albania, another from Pristina says that I am fighting for a greater Serbia.
– Mr. Prime Minister, will the salary increase solve the problem of dispatching doctors to district hospitals? I am referring to the case when doctors and doctors refused to take the bonus of over 1 million lek to serve in regional hospitals because they lack infrastructure. Will this issue solve the fact that a doctor in Tirana works in a private hospital, works in a private clinic and refuses to work in a regional hospital?
And the second question; what will you do with the concession contracts which despite receiving the money from the state budget have not carried out the volume of works set out in the contract? I am referring here the Tirana incinerator that has received a total of 977 million lek under the 2018 and 2019 state budget, whereas the estimated volume of work is around 10% in the first year and 20% in the second year. What will happen with these contracts? Thank you!
PM Edi Rama: I don’t know why you have jumped to the conclusion that doctors are refusing to be transferred to regional hospitals.
–I referred to the data showing that three doctors only preferred working in regional hospitals in the country’s districts other than their hometown. It would suffice to go to the local hospital in the town of Rreshen where no gynaecologist is available.
PM Edi Rama: Your information is wrong.
–I hope I am wrong.
PM Edi Rama: Hope dies last, but I would invite you not to remain hopeful regarding this case, because I can confirm your information is wrong and hope for other things you don’t know, because the bonus program has worked and the truth is that we now have a completely different system with specialist doctors attached to regional hospitals. Specialist doctors are being awarded the bonus, which will remain into force despite the salary hike.
We also have the system of assistance from specialists to regional hospitals on certain days, so there is no shortage of specialist doctors to provide health care to citizens in the regional hospitals. The regional hospitals now face other problems we are working on currently.
As to the second question, it is actually a question you shouldn’t ask me, but the relevant institutions tasked with conducting assessments and legal processes based on their evaluations. But what I constantly notice is that you, I don’t mean you personally, but also you as a mediator with the public often drown even in a tablespoon of water of political factors, which have turned the word “concession” into an inappropriate word and I’m not sure you all understand that public, private partnerships are investments. These are simple investments granted today by the private sector because the government cannot afford funding these investments for now and it will repay them on time and in addition, you also receive the service.
So we were unable to make the whole historical transformation of medical materials and instruments used in our hospitals, by transitioning from the surgical forceps dating back to the Albanian-Chinese marriage-era to modern instruments imported from Germany, which are sterilized with the use of German technology and which are now available to doctors, just like their colleagues in Germany, we did not have. But what is important is that for this qualitatively transformed service, just like it is the case with the dialysis therapy centres, the medical labs, just like it is the case with the Arbri Road and the check-up program, the waste treatment, with citizens having to pay not a single cent.
As far as the waste treatment is concerned, this is a responsibility of local government authorities, but we are not charging citizens to cover the investment cost, just like it was the case with the concession of scanning process of containers at the Albanian custom points, the typical concession contract that should be avoided as a method used when the state had to control the goods, and not citizens, exporters and importers that were forced to pay the concession costs.
This is a malignant concession contract, whereas the concession contracts we have awarded are to the benefit of the people and services. Why do we have to wait another 20 years or even another 10 years or even another year to deliver the right service to people when they have to undergo dialysis therapy?
The dialysis therapy was a kind of an earthly hell for the patients who had to be accompanied by family members or relatives, because it was impossible for them to do it alone as they had to wait three days in Tirana so that they could undergo the dialysis therapy. Why? They undergo such a therapy today as decent people under optimum condition and they don’t pay a single penny for the service. These are our private-public partnership contracts.
I have realized that the more Albania experiences a colossal transformation of its relation with environment thanks to the investments in the gangrenous landfills in Sharre, Tirana, Elbasan, Porto Romano in Durres, and Fier, the more intense are the attacks on us. The true waste is to be found in the mouth of those who have embarked on such an offensive against the incinerators, while the truth is that we have primarily saved the children in all the areas I just mentioned, saving them from the diseases that have been haunting them and we have raised the environment protection wall there and we have ensured protection of the environment of the country, the underground water and thousands of other waste-borne diseases due to those gangrenous landfills. While these ones who choose to live with the waste and ugliness in harmony, and this is the main problem, it is not that it doesn’t impress them, but the problem is that the love Albania be polluted, the love Albania to be chaotic, they love Albania where everyone can build illegally whenever wishing to do so. This is all.
– You have confirmed the decision to scrap profit tax and VAT on small businesses starting next January. Have you calculated the move’s impact on the state coffers? And a second question about the sovereign guarantee fund; the deadline for the first and second guarantee funds has expired, yet the effects of the pandemic are still present. Are you considering possible plans for a third sovereign guarantee fund? Thank you
PM Edi Rama: Both guarantee funds are working just fine. Secondly, the effects, the pandemic could last, I don’t know how long, actually nobody does, but nobody is now hindered from working, nobody is hindered from exercising their activity and finding a way to do the best for themselves. It is important that everyone shows utmost care so that we are not forced o reintroduce the lockdown even for a weak that could turn out to bring about disastrous detrimental effects. As far as the small business, the law to scrap profit tax and VAT on small businesses was adopted in July and it has a significant impact on the state budget, but we strongly believe that its impact on employment generation and the household economy. Therefore, the state agrees to tighten its budget and provide small business a fresh impetus to further develop. The Finance Minister may say that the effect of the decision on the state budget is higher, but it is estimated at around $40 million.
Finance and Economy Minister Anila Denaj: And this has been all compensated by the fiscal good governance policies we are certainly pursuing on a system-based process and not just with people.
I would like to provide further explanations on the sovereign guarantee fund. We have extended the term of the first sovereign guarantee and it will remain unchanged since the first guarantee was offered to help businesses pay their employees and no limits will be imposed, but the second guarantee fund would certainly take more time as it was launched to support business investments and designing business and investment plans takes its time. We are open and we are closely working with the banking sector to handle any demand forwarded by business community. In the coming days, we can further discuss whether a third or a fourth sovereign fund will be needed.
PM Edi Rama: We strongly believe that further easing profit tax and VAT burden on small business is a move that will tremendously help in the efforts to formalize economy and small business will no longer be misused by big businesses for their transactions to avoid taxation.
In the meantime, with the fiscalization process, i.e. digitization of every transaction due to begin early next year, we believe that we will retrieve more than $40 million from big business.
We believe and we are confident this scheme will work.
Thank you!
