This article has been written for Albanian Free Press newspaper and www.afp.al
Authoritarian populism is the tendency of many Balkan countries. There are many analyses that explain the way of functioning and the features of respective leaders, but what interests us the most in this article is one single feature: “To meet its goals, populism generates a dangerous phenomena, it invades public space, contaminating it with partisan and arrogant speeches and establishing dividing lines between the citizens (even when this is not necessary). For this reason, public space is always under the effect of adrenaline and stupid lies. And the almost pathological obsession to control media helps this objective a great deal.
Here, I have decided to make a fact check from internal and external sources, cited and easily verifiable. With this, not only we will realize that the people in power are within the definition of authoritarian populism, but we will also see the threats that we face from the way information reaches the public and the topics that the public is served in order to conceal great truths.
Let’s take a look at the economy: Budget revenues last year were 100 million euros short. This means that the budget has less money, although taxes are high. The electoral promise for the opening of 300 thousand jobs in 2013 now resembles to promises made in another planet. We’re poorer, but the rich have gotten richer. We have inequality and high rate of emigration, ranking second per number of population, while on the top of the list is a country in war. Economy grows in percentage, but there is no wellbeing… etc, etc.
Is this similar to an opposition speech in parliament? Alright, I am a journalist and it’s my job to do a fact check. Then, the opposition can continue its protest in the tent and the government can continue to live in a parallel universe:
Taxes
In June last year, the government reviewed its plan for the collection of revenues, decreasing it by 1%. At the end of the year, revenues collected were 100 million euros less than projections or 2.3%. What’s more, tax debt has increased at a fast rate in the recent years. Businesses have tried to survive in an environment where taxes grow continuously, where demand is going down and crediting is low. By making a simple fact check, according to official figures from the taxation department, debt to this institution was 147 billion ALL in 2016 or 1.07 billion euros. This amount is owed by over 780 thousand businesses and individuals all over the country. Monitor magazine has published a full analysis based on which debt stock until the end of 2016 mainly consists of tax debts incurred 2-5 years ago. Figures show that even last year, up to 31 December 2016, there has been a record figure of tax debt, which in total for this period amounts to 45 billion ALL or 330 million euros and this figure accounts for almost 31% of the total tax debt incurred throughout the years.
Meanwhile, Albania is the country with the highest tax rate in the region, according to a study conducted by Al-Tax. And to make this a greater paradox, the country paid less tax than any other country of the region expressed as percentage of GDP in 2016. Tax rate in Albania is 36.5%, going up by 6% compared to 2014. In Macedonia, this rate is 13%, in Kosovo it’s 15%, in Croatia it’s 20.9%, in Bosnia and Herzegovina and Bulgaria it’s 27%. International Monetary Fund and World Bank also say that Albania pays less tax than all the countries of the region. To understand how much this contradiction affects the economy, we must stress that tax revenues in Albania account for the largest part of the budget. But, by applying high rates of tax, the economy has not been boosted; on the contrary, it has been shrunk.
Employment
A few days ago, the minister of Finance would boast when declaring that employment had grown by 178.000 new jobs without offering any further analysis. But let us make a fact check, because this would be enough to dismiss the minister’s declarations. Small and medium sized businesses in Albania employ 1/3 of employed people in the country. This also includes agriculture. The government trumpeted its policies which encourage professional education. And it makes sense to have more qualified workers by encouraging the development of professions which do not require higher education. This would also bring added value to the economy. But INSTAT’s official data indicate that the average enrollment of young people in professional school is not any higher than in the period 2004-2005 and several times smaller than the beginning of ‘90s. Regardless of the high quality of skilled workers, the market is unable to accommodate this labor force.
Meanwhile, small and medium sized businesses that employ the majority of the population, account for only 1/10 of the economy’s turnover. Taxes for this category continue to be high.
While the international market becomes more and more attractive for qualified workers, this creates other problems for the “optimistic” panorama of the minister of finance. But let us continue with these fact checks to see if the private sector has been able to employ 178.000 people or if the public sector has expanded so much that we didn’t know. We still don’t know if there’s been any taxation incentives which would help private enterprise increase its contribution in the national economy. So, it is impossible to believe that domestic businesses have undertaken investments that would open up so many jobs. This assertion is also based on another fact; on the low crediting that the banking sector is making to the economy.
Thus, projections for tax revenues are not met and foreign investments are low (the last report of the Association of Foreign Investors in the country also helps us in this fact checking process), investments by domestic businesses have shrunk and they will continue to remain as such at least until after the elections. So, why is the honorable minister so optimistic? Is it because so many people have been employed in the criminal activity of cultivating cannabis? Maybe so and if the government could, it would use it as an employment figure.
We must admit that the economic situation in Albania requires more than the commitment of a political side, more than a term in office and more than a philosophy. Here, we need a strategy which goes beyond a four year term in office. We need the humbleness of several state leaders of the largest economies of the continent, such as it was the case with former French president Sarkozy, who in 2007, called the prominent economist Jacques Attali to lead a bipartisan commission of 300 specialists to revive the French economy.
3% economic growth
The statistics show it, but is it generating wellbeing? Has this growth reduced poverty? What does the fact checking process indicate? We can no longer be fed with the idea of economic growth, even if the minister takes this figure to 6%. How is the economy helping society? Can they tell us that? How much added value has this fantasy employment created? An economy that grows without adding any value may be useful to a majority in parliament, but it is useless to an Albanian who spends his days doing nothing because he doesn’t have a job. World Bank reports and data from INSTAT continue to speak of inequality, impoverishment of the majority of people and the enrichment of a handful of people. Poverty cannot be reduced by that increase in employment (which has not been verified) or by the 3% economic growth, but by the value that the economy has benefited. The perception that economic growth in Albania has not generated wellbeing is confirmed by yet another report, the one issued by the World Economic Forum. In this report, Albania ranks in the orange zone, which means that economic growth has only benefited a few, while economic growth has not led to more wellbeing for the majority of people. What’s more, data shows that the ratio between the growth of GDP and inclusive growth has deteriorated in the past five years in Albania. Thus, the model on which this government built its philosophy of economic revival, generated an urban model which made the poor poorer and the rich richer. Inequality also appears on the wealth generated these years. 1% of businesses control over 90% of the country’s turnover. Wealth is concentrated on a few businesses and on the relations that the government has with its clients through procurements and suspicious concessions.
By the way…
Now we have the 1 billion euros project of concessions. Again, with an impressive assurance, in the last months of the governing mandate, amid a hostile political atmosphere accompanied by accusations for failed concessions and misused public money, the minister of Finance explains that by securing 1 billion euros worth of investments by businesses, public debt will not increase. It’s true that the money in question will be paid by the business sector (God knows where businesses will find this money, because in every international report, they appear frustrated). But the government will pay back this debt through the state budget which is supplied through our taxes. Note! The minister of Finance has declared so many times in parliament that concessions will not be paid by taxpayers, but by the budget. But, the budget is actually supplied through the taxes paid by the citizens and not aliens or other creatures. Thus, another debt besides the public debt which now accounts for 71% of GDP.
TAP, an economic miracle
They have told us so many things about the TAP pipeline, about the great investment and a new geopolitical approach, but what is the real impact in the economy? The project will only last two years and it seems quite impossible for its effects to be felt in the wellbeing of the population.
In 2013, the government took office with the philosophy of Robin Hood, more taxes for the rich and less taxes for the poor, but this philosophy didn’t seem to reduce inequality, fight poverty or generate wellbeing. Fewer investments, more nonperformance loans and less wellbeing. The minister of Finance may not agree with this. But here’s a fact check: Albanians spend almost half of their household budget on food. According to the latest study made by INSTAT, this amount has increased by 2%. Thus, Albanian households spend 48,7% of their budget on food, the region spends between 33 and 37% and Kosovo spends 43%.
As if this was enough…
And part of this misuse of public money is also the unlawful procedure which is used to hire law firms which defend the state in the numerous cases of arbitrage and this was initially announced by the former Justice minister, Ylli Manjani. History offers a painful statistic about the big costs that the poorly handled arbitrage cases have on the state budget. Journalist Lindita Cela has carried out a detailed investigation at Report.al, revealing that in the past three years, the State’s Advocate has spent more than 6 million euros to contract foreign law firms in suspicious and illegal procedures, based on paperwork drafted by former ministers of Justice of that period. Thus, besides the invoice issued by the court, which the Albanian state must pay through the taxpayers money, we also have the costs of suspicious procedures used to hire foreign law firms.
So, these fact checks help us to realize the truths about the Albanian economy, truths which are concealed by the political crises, by media which focuses on the dinners that Rama has with Meta or the quality of music or sunflower seeds at the Freedom Tent. Perhaps it would be better if the opposition announced these truths in that tent rather than play music CDs and hold speeches. It could start and end with the topic of the economy, a poor economy that feeds both the poor and the rich, the guardian of which are often criminals, traffickers, clients and the state. Forgive me, I made a small mistake there. Let’s repeat that last one: criminals, traffickers, clients and those who have an authoritarian power today.
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