Because I say so!

Because I say so!
This article has been written for Albanian Free Press newspaper and www.afp.al

By Sonila Meço

It would be logical to ask the Prime Minister of the country today to expand the economy with the same amount of expenses that he made during the election campaign. By expenses, I mean every legal and illegal amount which was used for it. But, it seems that the government has tried to operate with the economy the same way it did with the campaign’s expenses: inject legal and illegal money in it.

Next year’s budget resembles a precious algorithm, which can create a scheme that was tested in the election campaign. And this has an extraordinary importance for each Albanian who wants to know how his money is spent.

The budget is the most important document of the government. For PM Rama, it is the most realistic document which aims at providing economic growth and employment, a document which doesn’t increase taxes and offers concessions for families in need. Meanwhile, for the chairman of the Democratic Party, the 2018 budget will be the budget of money laundering, where organized crime has extended beyond cannabis to the traffic of cocaine and heroin.

The government operates based on mandates, while Albanians suffer their consequences over 1, 2 or 3 mandates. For instance, what the government decides today for the 1 billion euro project, has an impact on future generations of Albanians, on the stability of public finances for a long time and it threatens public debt. What’s more, this is a country where corruption, abuse, crime and state capturing are mentioned in international reports. In other words, this government is asking us to trust it with our money, to use it in projects where it has totally failed.

“Why should we trust this budget?”, the public asks. “Because I say so”, the PM responds.

Let’s look into his answer.

First, we shouldn’t trust the PM when he says that people will not face any burdens. The most basic example relates to the fact that thousands of new businesses will be included in the VAT scheme. Another example is the fact that Albanians will have to pay more taxes for their properties as of January 2018, because tax on their property will no longer be fixed, but it will vary depending on the value of the property.

Secondly, we cannot trust him when he says that the budget helps households in need, because through a very simple calculation, he convinces us about the contrary. No increase in social allowances and no plans or schemes for households in need. While damaging the poor with the new tax package, he does a favor to a small number of rich businesses. Four and five star hotels are exempted from tax on profit for a ten year period. They also benefit from a 6% reduced VAT rate. Is this a reduction of inequality or a wider gap between the rich and the poor?

Thirdly, we cannot trust a Prime Minister who assures the Albanian people that there will be increases in pensions and salaries, while he made the same promise four years ago, but he didn’t deliver it. Next year’s budget includes 1 extra billion lek for salaries, 4.5 billion lek less than the current year. The increase in the pension fund is lower than the current year, from 2,5 billion to 1,8 billion lek.

Fourthly, the assurances that the PM gives are not based on the Constitution, but on the will of the Council of Ministers. It’s no longer Parliament which decides about taxes, but the PM.

Fifthly, why should we trust the PM that the economy will grow during this term in office, while the representatives of the World Bank in Albania said that: Economic growth will be lower once projects such as TAP and Devoll are completed? According to the World Bank, economic growth in 2017 will be 3.8%. In 2018 it will be 3.6%, while in 2019 it will be 3.5%.

Sixthly, how can we trust the PM when he talks about a responsible budget, when real economic growth is not sustained by the money of a healthy economy? For instance, companies which are building with their own capital, without loans from banks. So, banks are not the main source of financing. In other words, companies’ cash flows are really high, while the business climate in Albania has deteriorated compared to a year ago.

Let us move on to the most important point, something which leaves room for all sorts of suppositions. IMF, World Bank, independent experts and opposition in Parliament, are attacking PPPs as a project which is a threat for the future of the country. In most cases, from the UK to Chile, PPPs (Public-Private Partnership) have failed.  Expensive, ineffective in funding infrastructure because it affects public debt, while offering long-term state guarantees for private companies that they are going to make a profit. For the World Bank, Albania no longer has the means to control efficiency and the government must work in order to improve the economic environment, rather than funding special projects through the 1 billion package. In other words, it is telling the government to improve economy by offering businesses a chance to function normally.

What procedures are followed for the selection of companies that will be included in the PPP? Who will make sure that they are not fictitious companies? How is the country protected from the recycling of dirty money?

In a country which many people want to leave, those ones who stay must know that they live in a prime ministerial republic, where the economy, justice, media and parliament are theater. The PM takes care of the PR, while no one knows where energy for this theater to function is found.

Note: The views expressed in this article are the author's own and do not necessarily reflect Albanian Free Press’ editorial policy

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