Albania Public Finance Review : Part 1. Toward a Sustainable Fiscal Policy for Growth

Albania's rapid growth in the decade up to the 2008 global financial crisis propelled it to middle-income status and helped to reduce poverty. The global financial crisis in 2008 slammed the brakes on Albania's largely domestic-demand-driven growth. The government has accumulated sizable arrears in payments for public works and value-added tax (VAT) refunds. In a baseline scenario of no policy reforms, Albania's public debt-to-gross domestic product (GDP) ratio is projected to reach 73.5 percent in 2015 and stay above 72 percent over the medium term. Empirical evidence confirms that high public debt depresses economic activity and significantly increases the probability of default. This report examines closely the opportunities for fiscal consolidation on both the revenue and expenditure sides. Combined effect of structural reforms will reduce Albania's public debt to GDP ratio significantly over the medium term. It can in parallel rebalance its capital spending, particularly in transport, toward maintenance to support growth. Albania needs to strengthen its institutions to reinforce financial discipline and strengthen fiscal policy. Institutional reforms are particularly needed with regard to public financial management (PFM) and introducing a fiscal rule to anchor policy over the medium term.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2014-01
Subjects:	ACCOUNTING, AMORTIZATION, ARREARS, ARTICLE, ASSET MANAGEMENT, BANK BORROWING, BANK LOAN, BANK LOANS, BANKING SECTOR, BANKING SYSTEM, BASELINE PROJECTIONS, BASELINE SCENARIO, BONDS, BORROWER, BORROWING COSTS, BUDGET PLAN, BUDGET PLANNING, BUDGETING, CAPITAL EXPENDITURE, CAPITAL INVESTMENT, CAPITAL INVESTMENTS, CAPITAL SPENDING, CAPITALIZATION, CASH FLOW, CASH MANAGEMENT, CENTRAL BANK, CENTRAL GOVERNMENT, CENTRAL GOVERNMENT DEBT, CIVIL SERVICE, CIVIL SERVICE LAW, COLLATERAL, COMMERCIAL BANKS, COMMERCIAL LOANS, COMMODITY PRICES, CONSUMER GOODS, CONTINGENT LIABILITIES, CONTINGENT LIABILITY, CORPORATE INCOME TAX, CORPORATE TAX RATES, CREDIT GROWTH, CREDIT LINES, CREDIT RATING, CURRENCY, CURRENCY DEPRECIATION, CURRENT ACCOUNT DEFICIT, DEBT BURDEN, DEBT CRISES, DEBT CRISIS, DEBT DEFAULTS, DEBT DYNAMICS, DEBT LEVEL, DEBT LEVELS, DEBT MANAGEMENT, DEBT RATIO, DEBT RATIOS, DEBT REDUCTION, DEBT STOCK, DEBT SUSTAINABILITY, DEBTS, DEFICITS, DEPOSITS, DOMESTIC DEBT, DOMESTIC MARKET, DURABLE, ECONOMIC DEVELOPMENT, ECONOMIC RECOVERY, EMERGING MARKET, EMERGING MARKETS, ENTERPRISE PERFORMANCE, EQUIPMENT, EQUIPMENTS, EUROBOND, EXCHANGE RATE, EXCHANGE RATES, EXPENDITURE, EXPENDITURES, EXPORT COMPETITIVENESS, EXPORT GROWTH, EXPORT SHARE, EXPORTER, EXTERNAL BORROWING, EXTERNAL DEBT, FIDUCIARY ASSESSMENT, FINANCE MINISTRY, FINANCIAL ACCOUNTABILITY, FINANCIAL ASSETS, FINANCIAL CONTROL, FINANCIAL CRISIS, FINANCIAL FLOWS, FINANCIAL MANAGEMENT, FINANCIAL RISKS, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCING REQUIREMENTS, FISCAL BALANCE, FISCAL CONSOLIDATION, FISCAL DATA, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL IMPACT, FISCAL POLICY, FISCAL SUSTAINABILITY, FIXED INTEREST, FIXED INTEREST RATES, FLOATING RATES, FOREIGN CURRENCY, FOREIGN CURRENCY DEBT, FOREIGN DIRECT INVESTMENT, FRAUD, GOVERNMENT BUDGET, GOVERNMENT FINANCE, GOVERNMENT FINANCE STATISTICS, GOVERNMENT GUARANTEES, GOVERNMENT PAPER, GOVERNMENT REVENUE, GOVERNMENT SPENDING, GOVERNMENT SUPPORT, GOVERNMENT SUPPORTS, GROSS DOMESTIC PRODUCT, GROWTH RATE, HEALTH INSURANCE, HEALTH MINISTRY, HOLDING, HUMAN CAPITAL, IMPLICIT SUBSIDIES, IMPORT COSTS, INCOME TAX, INCOME TAXES, INFLATION, INFLATION RATE, INSURANCE, INTEREST COST, INTEREST COSTS, INTEREST EXPENDITURE, INTEREST EXPENDITURES, INTEREST PAYMENTS, INTEREST RATE DIFFERENTIAL, INTEREST RATE RISK, INTEREST RATE RISKS, INTERNATIONAL DEVELOPMENT, INVESTING, INVESTMENT BANK, INVESTMENT CLIMATE, LAND VALUE, LIQUIDITY, LIVING STANDARDS, LOAN GUARANTEES, LOAN QUALITY, LOCAL CURRENCY, LOCAL GOVERNMENT, MACROECONOMIC CRISIS, MARKET CONDITIONS, MARKET CONFIDENCE, MARKET STRUCTURE, MATURITY, MINISTRY OF FINANCE, MONETARY FUND, NATIONAL INCOME, NATIONAL STRATEGY, NET PRESENT VALUE, NON-PERFORMING LOANS, NONPERFORMING LOANS, OPPORTUNITIES FOR CORRUPTION, ORGANIC BUDGET LAW, OUTPUT LOSSES, PENSION, PENSION REFORM, PENSION REFORMS, PENSION RIGHTS, PENSION SYSTEM, PENSIONS, PERSONAL INCOME, PERSONAL INCOME TAX, PORTFOLIO, POVERTY REDUCTION, PRIVATE CREDITORS, PRIVATE INVESTMENT, PRIVATE INVESTORS, PRIVATE SECTOR, PROBABILITY OF DEFAULT, PRODUCTIVE INVESTMENTS, PROPERTY RIGHTS, PUBLIC BORROWING, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC FINANCE, PUBLIC FINANCES, PUBLIC FINANCIAL MANAGEMENT, PUBLIC INVESTMENT, PUBLIC SECTOR DEBT, PUBLIC SECTOR DEFICIT, PUBLIC SPENDING, PUBLIC WORKS, RE-CAPITALIZATION, REAL GROWTH, REAL INTEREST, REAL INTEREST RATE, REGULATORY AUTHORITY, REMITTANCES, RETURNS, RISK MANAGEMENT, RISK SHARING, ROAD NETWORK, RULE OF LAW, SANITATION, SHORT-TERM DEBT, SOCIAL INSURANCE, SOVEREIGN DEBT, STRUCTURAL REFORMS, SUSTAINABLE FISCAL POLICY, T-BILLS, TAX ADMINISTRATION, TAX BASE, TAX COLLECTION, TAX EVASION, TAX POLICY, TAX RATE, TAX REVENUES, TELECOMMUNICATIONS, TOTAL TAX REVENUE, TREASURY, TREASURY SYSTEM, VARIABLE INTEREST RATES, ZERO COUPON,
Online Access:	http://documents.worldbank.org/curated/en/2014/01/19230254/albania-public-finance-review https://hdl.handle.net/10986/17279
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