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| The joint conference of the IMF mission with the Albanian authorities |
In Albania, a mission of the International Monetary Fund declared today that the country does not meet the conditions for the implementation of the fiscal amnesty proposed by the government. According to the Fund, the amnesty favors big tax evaders by offering them immunity from criminal prosecution. On the other hand, the tax administration is estimated to be still weak, while the country has strategic deficiencies in the fight against land clearing and the financing of terrorism, VOA reports.
The idea of the Albanian government to implement a broad fiscal amnesty is not finding the support of international institutions of weight. After almost two weeks ago, the Delegation of the European Union in Tirana reiterated that it had serious concerns about the project, implying that in its current form, the proposal is unacceptable to them, today the International Monetary Fund was more clear in its opposition to this initiative: "The bill is likely to harm tax morale. Fiscal amnesty can be considered a "get out of jail" card for big tax evaders because it includes a substantial tax forgiveness, in addition to the complete waiver of interest and penalties and the granting of effective immunity from prosecution and further inspection by law enforcement as to the source of the funds to be amnestied. The government should replace the fiscal amnesty with a voluntary declaration program that does not exempt them from all tax obligations," explained IMF mission chief Yan Sun.
But she specified that a voluntary declaration program would also require the fulfillment of certain conditions. Firstly, to have "a modern, competent, well-informed tax administration with the appropriate means of control and law enforcement" and secondly "an effective framework for the fight against money laundering and the fight against the financing of terrorism, which is in able to mitigate the risks of voluntary declaration".
It was the head of the mission, Ms. Sun, who made it clear that Albania is far from meeting these prerequisites, which are not met in many developing and low-income countries. "In the case of Albania, while the General Directorate of Taxes has made progress, its audit and investigation capacity still remains weak, its performance in revenue collection is low, while many assessments from audits remain uncollected, there insufficient automatic access to third-party data, especially financial account information. Albania still has strategic deficiencies in the fight against money laundering and terrorist financing", declared the head of the mission of the Monetary Fund.
The Minister of Finance, Delina Ibrahimaj, did not comment on the IMF's assessment of the fiscal amnesty, at the joint conference at the end of the mission. While after the government meeting, she stated that the consultations are continuing: "This is a draft law, still in public consultation, with all our international partners, with all stakeholders, and we do not yet have a date for its approval. We are working to draft all the by-laws in parallel, in order that whenever we reach a final law, we will have all the infrastructure ready for the procedures required by the state administration for its implementation".
But despite the alarm bells about the dangers that the amnesty carries, the chairman of the socialist parliamentary group Taulant Balla repeated today that there is no withdrawal from this project: "We will approve the fiscal amnesty"
It remains unclear where this determination of the Albanian socialists comes from, as long as the project, providing for immunity from criminal prosecution, requires a qualified majority of votes for approval in the parliament.
Amnesty includes the voluntary declaration of an asset with a monetary value of up to 2 million euros, which is legalized against a tax of 7-10 percent, without any criminal liability. Until now, none of the authorities has given an explanation of how an asset of up to 2 million euros can be invested with savings from work. Strong questions have also been raised about the ability of the institutions to prevent members of criminal networks from benefiting from this initiative, despite the limitations defined in the draft law.
The government's initiative has encountered strong opposition from the American Chamber of Commerce, many experts in the field, as well as from opposition representatives, whose vote is necessary for voting in parliament.
Developments in the Albanian economy
and the necessary withdrawal of supporting policies", stated the head of the mission.
The growth rate of 3.7 percent is higher than the last forecast of the Albanian government. Minister Ibrahimaj explained that the third quarter is expected to be characterized by strong growth, while in the last quarter, growth will shrink. "Expectations for economic growth in the fourth quarter remain surrounded by higher uncertainties, mainly depending on how international economic developments will go. A slowdown in economic growth is likely to occur for the last quarter due to heightened uncertainties, erosion of real income from inflation and tightening of financial conditions", she said, adding that just like the IMF and the government of has revised upward the forecast for 2022, to 3.7 percent from 3.2 percent.
For 2023, the Monetary Fund estimated that it expects economic growth to "slow to around 2 percent in 2023, reflecting tighter financial conditions, the slowdown in Europe, and the necessary withdrawal of supportive policies." While Minister Ibrahimaj said that the government has revised down its forecasts to 2.6 percent from 3.9 which was the initial estimate. However, she specified that depending on the developments in the external environment, this rate may fall below 2 percent, but excluding the possibility of falling into recession.
Despite global economic uncertainties and uncertainties for the future, the Monetary Fund did not suggest austerity measures by the authorities, but called for an increase in revenues “which are among the lowest in the region as a percentage of GDP. Taking into account the likelihood of high inflation in 2023, the collection of more tax revenues would create space for further targeted and temporary assistance to the needy, without increasing the budget deficit".