Albania is steadily moving toward high-middle-income status. It is developing a fully functioning market economy and advancing toward EU membership.

The World Bank’s new Public Finance Review says reforms must focus on public finances. This will boost growth, create quality jobs, and support vital sectors like education, health, and infrastructure.

Massimiliano Paolucci, World Bank Country Manager for Albania, said: “Growth depends on stronger human capital, better infrastructure, and climate policies, especially with demographic changes.”

Albania can strengthen its economy by raising revenues and spending more efficiently. Tax reforms improved the system, but revenues are below potential due to undeclared wages, informality, exemptions, and weak implementation.

Priority measures include:

• Formalizing short-term rents
• Introducing property taxes based on market value
• Implementing a coal carbon tax
• Aligning tobacco taxes with EU levels

These could generate up to 0.9% of GDP annually. Better tax administration and review of exemptions could add more.

Albania’s budget mainly covers pensions, salaries, and capital investments. Spending on health, education, and social policies remains modest. The report highlights ways to improve efficiency and outcomes for citizens.

Demographic pressures are rising. By 2060, 29–34% of Albanians will be above retirement age. Current pensions cover only 32% of salaries, the lowest in the region. The report recommends expanding contributors, raising benefits, improving equity, and simplifying pension formulas.

Reforms should prioritize the future workforce. Only 10% of children under three attend public nurseries. Eighteen municipalities provide no services. Expanding access and quality will support labor participation, reduce gender inequality, and strengthen human capital.

Implementing reforms, maintaining fiscal discipline, and building financial buffers are key to long-term growth and EU convergence.

/a.c/