The Albanian Parliament approved Normative Act No. 3 on the revision of the 2024 budget during a plenary session. The Minister of Finance, Mr. Petrit Malaj, who stated that the Normative Act reflects revisions in both revenue, presented the Act to the deputies and expenditure lines in the annual budget.
Through the Normative Act, budget revenues are increased by approximately 27.3 billion ALL and budget expenditures are increased by the same amount, while the budget deficit remains unchanged.
Minister Malaj emphasized that the Normative Act ensures additional funding for priority sectors such as infrastructure, agriculture, education, healthcare, and defense and security, thus supporting the needs of the economy. The approval of the Act, he said, is crucial for the well-being of citizens and the continuation of necessary reforms, which guarantee healthy public finances and a strong and stable economy.
Minister Petrit Malaj speech:
Dear Speaker of the Parliament,
Dear Deputies,
Dear Citizens,
At the beginning of my speech, as the first one from this hall and before you, allow me to express that as Minister of Finance, I am committed to further promoting the spirit of cooperation for the purpose of drafting laws that will primarily aim at the economic progress of the country and the enhancement of social welfare.
The Normative Act on the State Budget, which we bring today for discussion and approval, serves this purpose.
Before I delve into the detailed changes we anticipate implementing, allow me to give a brief overview of the key macroeconomic indicators.
The Albanian economy has performed in line with the Ministry of Finance’s projections for 2024, and we currently forecast a real growth of 3.7% by the end of the year, while the Gross Domestic Product (GDP) for the first quarter of 2024 was 3.6%.
This is a positive forecast that is expected to continue for the remainder of the year, with tourism being undoubtedly one of the main components contributing to this economic development. Other parameters have also shown positive results. Inflation is clearly within the target, standing at 2.4%, indicating that it no longer poses a macroeconomic barrier. The unemployment rate reached its lowest level in 2023 at 10.7%.
Wages have also seen a significant increase, both in the private and public sectors. In the first quarter of 2024, compared to the first quarter of 2023, we have observed a real wage increase of 10.8%.
In 2023, the Rama government undertook a major reform after more than a decade to increase wages in the public administration, which we continued this year, ensuring an average wage of over 900 euros for public administration.
This is a fulfilled promise of the Rama government, as a commitment to be as competitive as possible in the labor markets, as well as a leading country in terms of wage levels in the region.
Total revenues for the first seven months of 2024 amounted to 402 billion ALL, with a realization of 103% or approximately 116 million euros more than the 2024 plan. Comparing this with the first seven months of 2023, there is an 8% increase in total revenues or around 303 million euros more than the same period last year. This revenue surplus is mainly observed in tax revenues administered by the tax authorities and customs, local government tax revenues, as well as contributions from social and health insurance.
Regarding debt indicators, by the end of 2023, we recorded a positive primary balance of 0.7%, while the ratio of public debt to GDP decreased by 5.5% compared to the end of 2022, reaching 58.9%.
Our projections for the end of 2024 are that the public debt will reach 58.2%, which means a decrease of 0.7% compared to the end of 2023.
Dear Deputies,
The budget revision for 2024, which the government approved on August 28 in the form of a Normative Act, primarily focuses on reflecting in the annual budget several revisions not only in revenue but also in budget expenditures. These revisions aim to improve the parameters of budget execution for 2024, with updates to the consolidated indicators for the period 2024-2026.
Specifically, this Act ensures:
• An increase of approximately 27.3 billion ALL in budget revenues, with tax revenues alone rising by 19.2 billion ALL;
• An equal increase of 27.3 billion ALL in budget expenditures;
• Maintenance of the budget deficit unchanged at 57.3 billion ALL.
• As we have discussed in the special committees, beyond the debates, which I consider productive, some of the urgent issues addressed through this Normative Act include:
• The need to advance important investments in infrastructure, agriculture, education, and healthcare;
• Timely implementation of the new Electoral Code, where the element funded by this Normative Act pertains to the registration of voters outside the Republic of Albania;
• Additionally, this Normative Act addresses the need to further support the agriculture sector;
• On the other hand, through this Normative Act, we as the Ministry of Finance aim to accommodate the additional needs of the Ministry of the Interior, related to both the food compensation for police officers and the extra hours they have worked during the tourist season.
It is important to emphasize that accommodating these priority needs was supported by the positive situation achieved during the first half of 2024 regarding revenue collection by the tax and customs administration, as well as the revenues realized by local government. Therefore, all proposed changes are supported by a range of real factors and expected projections, which ensure their full implementation.
Dear Deputies,
The Normative Act also aims to make changes in the area of expenditures by allocating more funding to the most priority sectors, such as:
• Additional funds amounting to 450 million ALL for the Ministry of Education and Sports, mainly related to personnel expenses due to salary increases in this sector, as well as funding for community projects or rewarding elite athletes in the country. I would like to emphasize that public spending on education accounts for about 3.2% of GDP. In 2024, we allocate around 78.9 billion ALL, whereas in 2013 this figure was only around 44.1 billion ALL. Compared to regional countries, Albania is among the countries with the highest percentage of education expenditures relative to total public spending.
• Additional funding of 250 million ALL for new projects in the Ministry of Health and Social Protection, aimed at financing investment projects for the construction or reconstruction of hospitals and health centers nationwide.
Regarding expenditures in the health sector, for 2024 they have doubled compared to 2013. Specifically, we are allocating 72.2 billion ALL today, whereas in 2013 this figure was only 35.4 billion ALL. Even compared to the expenditures during the 2020-2021 period, which coincided with the pandemic, spending in this sector is higher in absolute terms. Additionally, regarding social protection expenditures, Albania ranks among the countries with the highest percentage in the region relative to total public spending.
Through this Normative Act, we have:
• Increased funding by 900 million ALL for the Ministry of Agriculture and Rural Development, with 500 million ALL going directly as support for farmers in implementing the new support/grant scheme for investments, which aims to create initiatives for increasing investments in the agriculture sector, and 400 million ALL for new projects mainly related to investments in the irrigation-drainage sector.
Agriculture in 2024 is funded with approximately three times more funds compared to 2013. Today, spending in the agriculture sector reaches 14.2 billion ALL, with support for farmers expected to be 3.4 billion ALL, or four times more than in 2013.
Among other things, this Normative Act provides additional funds for infrastructure, water supply and sewerage networks, security, and protection.
• Increased additional funding of 5 billion ALL for the Albanian Development Fund projects, which consist of new projects in development programs, local and regional infrastructure, as well as the “100 Villages” program.
• Increased funding for new Road Transport projects, with an additional 4.75 billion ALL for projects related to the Elbasan-Lekaj, Fier-Kthesa Patos-Frataj, and Berdicë-Unaza Lindore roads.
• Additional funding of 2 billion lek for new projects in the Water Supply and Sewerage sector, for projects such as “Construction of the Hudënisht Administrative Unit sewage system, Pogradec”, “Optimization of the Vora water supply and surroundings”, as well as additional investments in water supply in tourist areas.
• As previously mentioned, we have additional funds for the Ministry of the Interior to address the needs for food compensation for police officers for the 12-month period, along with extra hours during the intensive tourist season. The food contribution is around 1 billion ALL, while the additional hours to be paid through this Normative Act amount to around 300 million ALL.
• We also have additional funds for the Ministry of Defense, to settle outstanding obligations of existing enterprises in this sector, as well as to pay compensation carried over for families affected by natural disasters.
• The Normative Act also provides additional funding for the National Agency for Cybersecurity in the amount of 1.5 billion ALL, as part of the implementation of ‘Platforms with advanced technology using artificial intelligence in the field of cybersecurity, for government systems and infrastructures in the country.’
• Through this Act, with an additional fund of around 250 million ALL, we also finance the Central Election Commission for the project of registering voters in the diaspora.
These are some of the main funding areas addressed through this Normative Act, but of course, it also addresses other needs of independent institutions.
In conclusion, I would like to reiterate the importance of approving this Normative Act for the well-being of all citizens and for continuing the necessary reforms, which guarantee healthy public finances and a strong and sustainable economy. I invite all deputies to vote for this Normative Act, as it is of special importance for providing a crucial injection into the needs of the economy.
Thank you!