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Economic aid funds in relation to GDP, on a downward trend

Politiko 2025-05-28 08:30:59

Economic aid funds in relation to GDP, on a downward trend

While Albania officially has 42% of the population at risk of poverty, spending on economic assistance in relation to GDP has been declining in recent years.

Official data from the Ministry of Finance show that budgetary expenditures for economic aid in Albania in relation to GDP have a tendency to shrink.

In 2024, funds for economic assistance expenditures reached only 1.1% of GDP, significantly less than 1.6% in 2014. The continued decline in budget expenditures relative to GDP for the needy comes at a time when living costs, such as food prices, rent, transportation, etc., have increased significantly, hitting the needy hardest.

In the early 1990s, economic support accounted for a relatively high share of GDP, peaking in 1995 at 1.7% of GDP. This was a period when Albania was experiencing profound economic shocks following the fall of the communist system. In this context, the role of economic assistance as an instrument of social stability was vital.

Data show that after 2014, a phase of continuous decline in economic aid in relation to GDP begins. But on the other hand, Albania is the country with the highest level of relative poverty in the Region and Europe, according to data from the World Bank and Eurostat.

While the country has experienced economic growth, the progressive decline in the percentage of economic assistance in relation to GDP raises concerns about the role of social protection in public policies, which have also been highlighted by international financial institutions such as the World Bank and the International Monetary Fund.

Albania has the lowest levels of economic assistance in the Region. Most Western Balkan countries increased social spending during and after the COVID-19 pandemic, including direct transfers, subsidies for energy bills, or food and heating assistance schemes.

Albania provides economic assistance to around 62,000 families, but the amount of assistance is well below the subsistence minimum (6.85 USD per day) per person.

But if the Albanian government aims to meet EU integration objectives, increasing spending on economic aid is one of the main criteria in the set of economic reforms to make economic growth inclusive./ Monitor

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