The actual realization of the 2023 budget fulfilled the expectations for the reduction of the debt and the budget deficit, the Minister of Finance, Petrit Malaj said during the presentation of the budget at the Economy Committee in the presentation of the actual budget.

He said that the 2023 budget aimed to continue consolidating the country's economic recovery after facing three major shocks: such as the November 2019 earthquake, the global pandemic, and most recently, the impact of the 2022 global crisis, which brought new challenges such as high inflation and increased cost of financing.

At the same time, prudent fiscal policies, undertaken both in terms of revenues and budget expenditures, ensured the stable reduction of the public debt stock, which will continue in the medium term, Malaj said.

Malaj also noted that the country's economy has shown considerable resilience in the face of these successive shocks. Economic activity has continued with positive and stable growth, including growth in employment and wages, despite facing a challenging economic environment characterized by uncertainty and tighter financing conditions. So far, the main economic and financial foundations, as well as the macroeconomic stability of the country, have resisted relatively well and it is expected that the economy will continue the positive trend in the medium term.

He said that economic growth for 2023 exceeded initial expectations, reaching the level of 3.94% on an annual basis. According to the latest estimates, real Gross Domestic Product (GDP) grew by 2.5% in the first quarter, followed by stronger growth of 4.3% in the second quarter, and increases of 4.5% and 4.2% in the third and fourth quarters, compared to the corresponding quarters of 2022.

This growth was supported by both domestic and foreign demand. The main contributions to growth from domestic demand came from both consumption and investment, which increased in real terms by 3.2% and 1.0%, respectively, compared to 2022.

Meanwhile, in 2023, total exports increased by about 9.5% and total imports by about 0.2%, therefore, net foreign demand had a positive contribution of about 3.4% to economic growth in 2023, reflecting a very positive tourist season.

The debt indicator marked the level of 57.5% of GDP and the deficit indicator marked the level of 1.3%. Malaj said that the labor market has continued to improve significantly during 2023.

Employment grew by an average of 1.6% per year, supported mainly by higher employment in the service sector. At the same time, the unemployment rate continued the downward trend of recent years and decreased to 10.7% in the fourth quarter of 2023, from 11.0% at the end of last year (for ages 15 and older).

This represents the lowest unemployment rate ever recorded. Also, the average salary has increased by 13.7% compared to the previous year, resulting in Lek 75,025 at the end of 2023.

The evidence shows that there is a general growing interest in entering the labor force, also driven by the upward trend in wages, thus underlining the positive trends in the labor supply.

Inflation has reflected the last external supply shock over the past year, due to the war in Ukraine, becoming one of the main macroeconomic issues for the country’s economy, as in many other countries of the world, Malaj noted.

“However, it is important and in favor of the developments and perspective of the economy that inflation in our country has been significantly lower than in the countries of the region, as well as the average of the countries of the European Union, with an average rate of 4.8% from 6.7% resulting in 2022,” said Malaj.

The public debt during 2023 was generally characterized by a positive performance, being in line with the macro-fiscal objectives, the planned budget, and the objectives of the Medium-Term Debt Management Strategy (MSDS).