Albanian economy to grow 2.1% in 2014

Albania's economy is projected to grow by 2.1 percent and its public debt to rise to 74.8 percent of the Gross Domestic Product (GDP) in 2014, according to the 2014 preliminary draft state budget submitted to the parliament for discussion on Monday. The new draft fiscal package involves a change of the taxation model, cutting the income tax rate on monthly salaries below 130,000 lek (1,300 U.S. dollars) and increasing tax on salaries over 130,000 lek. It also envisages a series of measures to ease fiscal burdens on small businesses and increase tax rates on big companies. A final 2014 state budget draft is scheduled to be adopted by the parliament on Dec. 28. "The 2014 state budget has full support and has been prepared in a close consultation process with the International Monetary Fund and World Bank to ensure the restoration of the macroeconomic stability for a long-lasting and sustainable economic development," Finance Minister Shkelqim Cani said as he presented the preliminary draft budget to the Parliament's Chairmanship Conference. He was optimistic about the effects of the new fiscal package, which also includes progress tax. "The progressive tax, which replaces the 10 percent flat tax, will benefit 97 percent of Albanians and turns into consumption of 15 million U.S. dollars," Minister of Economic Development, Trade and Entrepreneurship Arben Ahmetaj told reporters on Monday. "From January 2014, the Albanian government relieves the middle stratum of taxes. The progressive tax is a blessing for the middle and needy strata, as 338,872 employed people will be relieved of taxes from January 1, 2014," he added. The finance minister also presented projections for 2013, according to which, the real growth of the Albanian economy in 2013 is expected to be 1.3 percent, while public debt stands at 69.1 percent of GDP. Albania's central bank cut its key interest rates Monday to a record low of 3 percent, down 0.25 percentage points from the previous 3.25percent rate in November. The decision reinforces monetary stimulus for the country's economy, Governor of the Bank of Albania Ardian Fullani told a press conference, adding the country's inflation stood at 1 percent in November.