“Support should target those most in need, who would be affected more by the increase in energy prices. This is the key goal. We do not advise broad-based subsidies because they are not equal. Those who consume more will be able to benefit from the budget. We therefore seek targeted support, such as low-income households. A large subsidy does not stimulate energy conservation, but its misuse at a time when we have constraints. Support should be targeted,” the head of the IMF mission in Albania, Sun said during a joint press conference with the Minister of Finance and the Governor of the Bank of Albania, at the conclusion of Article IV consultations of the agreement.

Sun also spoke about the DP’s proposal to reduce VAT on basket items.

“IMF is against temporary changes in the tax system. The changes have eroded the tax base. Aim and orientation should be support for those most in need. Reducing VAT will not translate into lowering prices. Beneficiaries will be those who do not need fiscal support,” Sun added.

The Minister of Finance and Economy, Delina Ibrahimaj, reiterated her position that the reduction of VAT on basket items would not translate into a reduction in the price.

The Minister Ibrahimaj also stressed that in the medium term strategy will be a reduction in tax exemptions.

“We are finalizing the medium-term strategy which provides for the reduction of tax exemptions in order to increase efficiency. VAT for most businesses was reduced, but did not reflect a reduction in prices for products and services for consumers,”Ibrahimaj said. //a.i/