TIRANA, Nov 2 /ATA/ – The Bank of Albania has urged the government to reform the pension system, improve the distribution of public spending and strengthen fiscal risk management, warning that adverse demographic trends and changing financing conditions could put further pressure on public finances.
Presenting the central bank’s recommendations on the 2027 draft budget to parliament’s Committee on Economy, Employment and Finance, Deputy Governor Natasha Ahmetaj said a more even distribution of budget expenditure throughout the year, particularly public investment, would improve the efficiency of public spending.
“The Bank of Albania stresses the need for more consistent planning and execution of budget expenditure throughout the year, particularly public investment. This would enable a more efficient use of public resources,” Ahmetaj said.
She warned that emigration, population ageing and a declining working-age population were expected to increase pressure on social security and health insurance schemes, posing further challenges to the sustainability of public finances.
“Adverse demographic trends, including emigration, population ageing and a shrinking working-age population, are expected to place additional pressure on social security and health insurance schemes, further challenging the sustainability of public finances. This highlights the need for reform,” she said.
The central bank is encouraging changes to the pension system to ensure a sustainable balance between benefits and the scheme’s financial capacity, Ahmetaj said.
She also called for consideration of adjustments to the public pension scheme, a broader contribution base and the development of supplementary pension arrangements. Demographic data should also be incorporated more systematically into fiscal planning, she added.
Ahmetaj further stressed the importance of strengthening fiscal risk management amid economic uncertainty, urging closer monitoring of the impact of economic developments and changing financing conditions on public debt and budget indicators.
“Strengthening mechanisms to identify and manage fiscal risks is important in an economic environment characterised by uncertainty. Particular attention should be paid to debt and financing costs,” she said.
“Less favourable economic developments and changes in financing conditions could affect budget indicators and the trajectory of public debt, and their potential impact warrants particular attention,” Ahmetaj added.
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