The International Monetary Fund has called on Albanian authorities to improve judicial and anti-corruption reforms while stressing the importance of an expedited exit from the FATF grey list, something that will be critical in EU accession discussions.
In a recent report, as the Executive Board concluded its 2022 Article IV consultation with Albania, the IMF took stock of the current situation in Albania regarding reform, issues, and inflation.
“Directors emphasised that advancing structural reforms will be critical in unlocking Albania’s growth potential and welcomed the opening of EU accession discussions which should contribute to reforming progress. In this vein, Directors called for sustained progress in judicial reforms and anticorruption and stressed the importance of an expedited exit from FATF’s grey list.” the statement said.
They also noted that fighting informality would help reign in migration pressures. Albania’s informal economy was estimated at almost 32% of the total economy, equivalent to $17 billion of the GDP. Currently, the country is experiencing a mass migration wave, with some 700,000 people estimated to have left during the last decade.
They also said that “noting the macro-criticality of climate change, they stressed the need for concerted adaptation efforts within the budget framework.”
Directors called for stepped-up efforts to enhance fiscal transparency and credibility, improve public financial management, and strengthen fiscal risk monitoring and management. Public-private partnership and public investment management frameworks should be aligned and fully integrated into the budget cycle, they said.
The IMF also cautioned against the proposed tax amnesty, given governance and money laundering risks.
Under the proposal, any foreign citizen or Albanian can deposit up to €2 million in non-declared money into the Albanian banking system while enjoying legal immunity and a 5-10% tax. A previous version of the law was slammed by the IMF and EU, while this version has been subject to tense discussions between the government, the EU, and various diplomatic missions in Tirana.
The main concern from international stakeholders is that criminals will use the scheme to launder the proceeds of crime, such as drug and human trafficking, without fear of penalty, prison, or any consequence.
A statement distributed by the EU delegation in Tirana in July expressed concerns that the draft would weaken controls against money laundering, causing worry for the EU and member states.
“The commission highlighted serious concerns about the current draft law on fiscal amnesty. It would weaken Albania’s anti-money laundering controls while doing little to enhance the tax administration’s ability to improve future compliance with tax requirements,” the press release said.
“Because non-tax residents, including Albanians living in the EU or the Western Balkans, fall within its scope and are required to import cash in order to benefit from the amnesty, the current draft of the law raises serious concerns for EU member states- and other partners, as well as a substantial reputational risk for the country,” it added.
In terms of the economy, the IMF said the economy has remained strong despite COVID-19 and the war in Ukraine, but that the outlook is subject to considerable uncertainty and social unrest.”
“Risks to growth are tilted to the downside, while those to inflation are on the upside. Further increases in food and energy prices are a key risk, especially if they trigger larger second-round effects and social unrest.
(Alice Taylor | Exit.al)
Source: euractiv.com
