BANK OF ALBANIA
IMF staff Agress with Albanian Authorities on Key 2007 Budget Parameters
Publication date: 14.09.2006
An IMF mission is visiting Tirana September 11-14, 2006, to discuss with the authorities the 2007 budget. There is broad agreement on the key parameters for next year's budget and its underlying macroeconomic and fiscal policy assumptions. Revenue projections will be based on the 2006 projected outcome while any additional non-budgeted revenue can be allocated in a supplementary budget. The priority spending areas will remain health, education, and infrastructure investment, and adequate expenditure contingencies will be built into the budget to safeguard its execution.
An IMF mission, led by Mr. István P. Székely, the IMF mission chief for Albania, is visiting Tirana September 11-14, 2006, to discuss with the authorities the key parameters for the 2007 budget. The mission has met with the Prime Minister, the Minister of Finance, the Bank of Albania Governor, members of parliament, advisers to the Prime Minister and other senior government officials, as well as with representatives of the international community and the media. The mission will also meet with the Minister of Education and the leader of the opposition.
The mission and the government has reached broad agreement on the key parameters for the 2007 budget, including net domestic borrowing, the overall cash balance, revenue projections, and priority spending areas, as well as on the underlying macroeconomic and fiscal policy assumptions.
Revenue projections for 2007 will be based on the 2006 projected outcome and will not include future improvements in revenue administration. As in 2006, any extra revenue from further improvements in administration and proceeds from any strategic privatization that might materialize in 2007 can be allocated in a supplementary budget. In the second half of 2007, tax reduction policy initiatives might be undertaken at a measured pace, in order to ensure the sustainability of the revenue improvements achieved so far, based on any extra revenue collected.
The priority spending areas will remain health, education, and infrastructure investment. The 2007 budget will also set aside sufficient funds for capital maintenance in order to safeguard investments already made. Budget contingencies will be on the same scale as this year. Such contingent expenditures, which will be assigned for wage increases in the health and education sectors and pension increases, will be released on a quarterly basis in accordance with revenue performance. To further safeguard the proper execution of the budget, cash management will be strengthened and a performance-based bonus-penalty system for allocation of investment will be introduced.
An IMF review mission will visit Tirana October 25 - November 6, 2006, and it is expected that the second review under the current combined Poverty Reduction and Growth Facility and Extended Fund Facility will be presented to the IMF's Executive Board in January 2007.
On Wednesday September 13, at 15.00, a joint press conference together with the Minister of Finance, Mr. Ridvan Bode, and the Bank of Albania Governor, Mr. Ardian Fullani, will be held at the Ministry of Finance to discuss the progress of the mission.
István P. Székely K. Ann-Margret Westin
Mission Chief Resident Representative