Albania Sees Economy Growing Over 6.0%/Yr in 2010-2013, Plans Tax Cuts

Finance Minister Ridvan Bode on Wednesday presented to parliament the macroeconomic framework for the 2010-2013 period, the ministry said in a statement.

Albania ended 2008 with an economic growth of a real 7.2% and targets a 6.3% growth this year. Its economy grew by a real 6.0% in the first quarter of 2009.

After halving income and profit taxes to a flat 10% rate in 2009 and 2008, respectively, the cabinet led by Prime Minister Sali Berisha will aim to cut Albania's flat value added tax (VAT) of 20% for the education and heath sectors and slash some national fees during its second four-year term of office, the statement said. It did not elaborate.

Berisha's new cabinet, which parliament endorsed on Wednesday, will also try to raise budget revenue by 10% a year and cut budget deficit to 3.0% of the gross domestic product (GDP) through 2013. Albania targets a budget deficit equivalent to 4.2% of the GDP this year, lower than the 5.7% gap it had last year.

The cabinet will aim to keep average annual inflation at 3.0% in the next four years, as it did in the last several years. Average annual inflation accelerated to 3.4% in 2008 from 2.9% in 2007, remaining within the band of 2.0% to 4.0% set by the central bank.

The 2010-2013 macroeconomic framework projects a jobless rate of 11% at the end of 2013. Albania's official unemployment rate fell to 12.7% in the fourth quarter of 2008 from 13.2% in the same quarter of the previous year.

Berisha’s Democratic Party, which won half of the 140 seats in the unicameral Albanian parliament in the June 28 elections, formed an alliance with left-wing Socialist Integration Movement (LSI) of Ilir Meta in July. The alliance controls 74 seats in parliament.