The Ministry of Finance presented today the Third Public Finance Management Strategy, a basic document prepared in cooperation with EU experts, which will guide the policy of public finance management reforms until 2030.
The event was attended by the Minister of Finance, Mr. Ervin Mete, the Ambassador of the European Union in Tirana, Mr. Silvio Gonzato, World Bank Country Manager for Albania, Mr. Emanuel Salinas, the Chairman of the Parliamentary Committee for Economy and Finance, Mr. Eduard Shalsi, among representatives of the Ministry of Finance and other state institutions.

In his speech, the Minister of Finance stated that further strengthening and consolidation of public finances is one of the basic requirements for the country’s path to EU membership.

“The Public Financial Management Reform aims to ensure a public financial system that promotes transparency, accountability, fiscal discipline and efficiency in the management and use of public resources to improve service delivery and economic development,” the Minister said.

Minister Mete highlighted the fact that in the last decade, significant progress has been made in terms of reforms and measures taken during the implementation of the two previous Public Finance Management Strategies, while the country has undertaken a series of important reforms that have brought significant progress in the European integration process.

In this context, according to the Minister, the Growth Plan, recently approved by the European Parliament, will serve as an impetus for reform continuation, accompanied by financial support for their acceleration. Referring to the new strategy, Minister Mete informed that some of its objectives are to:
– Continue to improve fiscal and macroeconomic policies;
– Promote integrated strategic and budgetary planning, and strengthen monitoring and reporting;
– Increase revenue mobilization and further improve tax and customs administration systems;
– Strengthening budget execution management and further implementation of international accounting standards;
– Promote the compatibility of internal public financial control systems with EU practices;
– Integrate elements of the green economy, targeting procedures and practices that direct spending towards green activities.

In his speech, the Minister summarized some of the main economic developments in the country, emphasizing that Albania is going through a very good economic moment, the main macroeconomic indicators have marked significant improvements, where the public debt at the end of 2023 decreased for the first time since 2011 below the 60% level and is expected to continue its downward trajectory in the coming years, while the primary balance returned to positive and a significant improvement in the current account balance was recorded, mainly influenced by the very good performance of the tourism sector and related services, as well as foreign direct investment, which reached its highest level at 1. 5 billion.

“Revenue performance has remained good even in the first months of 2024, during which we expect to reach over 28% of GDP in terms of revenue collection. Also, last year the lowest level of arrears was recorded, at around 1% in terms of expenditure, since the start of monitoring in 2016, within the framework of the reforms undertaken in the implementation of the Public Finance Management Strategy, “said the Minister.

The new Public Finance Management Strategy was published for public consultation at the beginning of last month and is expected to be adopted within the first 6 months of this year, in order to start its implementation phase.

The speech of the Minister of Finance, Ervin Mete, at the presentation of the Public Finance Management Strategy:

“Dear Ambassador of the Delegation of the European Union, Mr. Gonzato,

Dear Manager of the World Bank for Albania, Mr. Salinas,

Dear Chairman of the Economic and Financial Committee, Mr. Shalsi,

Dear participants,

I thank you for your presence at this event of presentation of the Third Public Finance Management Strategy, as one of the basic documents that guide our efforts in terms of reforms in the management of public finances in a timeframe up to 2030, worked out together with the experts of the European Union.

Further strengthening and consolidation of public finances is one of the basic requirements on the way to EU membership. Public finance management reform aims to ensure a public finance system that promotes transparency, accountability, fiscal discipline, and efficiency in the management and use of public resources for improved service delivery and economic development. Recently, Albania has undertaken a number of important reforms that have brought significant progress in the European integration process.

In this context, the recently approved Growth Plan will serve as an impetus to continue reforms, accompanied by financial support to accelerate them. Albania is experiencing a positive economic moment, assessed by the World Bank and the International Monetary Fund, as well as by international rating agencies. Key macroeconomic indicators have improved significantly. The public debt at the end of 2023 fell below 60% for the first time since 2011, while it is expected to continue its downward trend in the coming years.

The primary balance returned to positive at the end of 2023, while a significant improvement in the current account was recorded, mainly influenced by the very good performance of the tourism sector and related services, as well as foreign direct investment, which reached its highest level at 1.5 billion euros.

The good revenue performance has continued even in the first months of 2024, during which we expect to reach over 28% of GDP in terms of revenue collection. Last year also saw the lowest level of arrears in relation to expenditure, at around 1%, since the monitoring begun in 2016, also in the context of the reforms undertaken in the implementation of the Public Finance Management Strategy. In the last decade, during the implementation of the two previous Public Finance Management Strategies, there has been considerable progress in terms of undertaken reforms and measures. Regarding the fiscal framework, the capacity for macroeconomic programming and macro-fiscal forecasting has been strengthened in cooperation with the IMF and the European Union.

Progress has also been made on integrated strategic planning and medium-term budgetary planning. The legal framework for public investment management was revised and projects of national importance were prioritized in a single list.

Significant progress has been made in strengthening local government financial management, mainly through changes in the legal and regulatory framework. The legal framework for debt management was amended to reflect improvements in the preparation of the debt management strategy.

In the area of internal control, improvements and amendments have been made to the Law on Financial Management and Control and the Law on Internal Audit, as well as to the related regulations.

The new Public Financial Management Strategy that we are presenting today aims, among other things, to:

– Continue to improve fiscal and macroeconomic policies;
– Promote integrated strategic and budgetary planning, and strengthen monitoring and reporting;
– Increase revenue mobilization and further improve tax and customs administration systems;
– Strengthening budget execution management and further implementation of international accounting standards;
– Promote the compatibility of internal public financial control systems in line with EU practices; and, one of the innovations of this strategy, which is to:
– Integrating elements of the green economy by targeting procedures and practices that encourage spending on green activities.

The Public Financial Management Strategy, which was published for public consultation at the beginning of last month, is expected to be adopted within the first 6 months of this year in order to start its implementation phase.

Thank you very much!”