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A new source for economic growth

By   /   16/12/2013  /   Comments Off on A new source for economic growth

The country needs messages of normality like the one that Greenspan gave to the American President after September 11, in order to “consume, consume, consume”. Albanians today do not messages like those of the former democrat Prime Minister that we’re the second country in the world after Germany in terms of economic growth or messages like the socialist Prime Minister of 20 years ago who said that there was only 6 days worth of bread for Albania. It’s realism and positive psychological effect that will take people to the state of optimism and economic growth. Starting from 2014. Now is the time for this!

By Alfred Peza

After September 11, 2001, US President George Bush called Alan Greenspan, head of Federal Reserves, to seek an advice that he should give to the Americans and the world on the ruins of the twin towers, the place where a few hours earlier used to be the World Trade Center. “If I were You, I would offer three advices”, -responded the wizard of finances. “They are: Consume. Consume. Consume”. It was this optimism conveyed by the highest political leadership, the strategists of public communication and media; the elasticity of the largest world economy and the “invisible hand” of Adam Smith what mostly led to a quick recovery of the American and global economy, after what may be considered as the biggest terrorist attack in the history of humanity.

I remembered this detail as we were discussing last Monday in the parliamentary group of the Socialist Party about the 2014 state draft budget, in the presence of Prime Minister Edi Rama too. This made me go back to the famous book “The Age of Turbulence” by Greenspan, where he writes that “it’s the psychological effect that leads people to a state of panic and economic fall.” Besides technical discussions and final details of the new state Budget, the government also drafts strategies of public communication to make the citizens aware of the decisions that are being taken, the effects that they will have on the economy of the country in general and on their families and businesses in particular. When the people are clear about the economic situation, the finances of the country and its perspective in the year to come, they are able to make a clearer projection of their expectations and their perspective.

The theorists of economy say that “economic falls are like hurricanes, they vary from an ordinary level to a very high level. The ordinary falls are part of the economic cycle: they happen when business stocks are higher than demand and companies immediately cut production until excess stock is sold. The 5th category crisis happens when demand itself collapses, when consumers cut expenses and businesses stop investments”.

The biggest risk that Albanian economy faces today is the stoppage of investments as a result of the stoppage in the chain of payments by the business sector. This, as a result of the fact that “Berisha” government left a long list of debts behind by not paying businesses about the works that they carried out. According to “Deloitte” company, the amount that the state owes to domestic and foreign actors of the Albanian economy amounts to 24.6 billion ALL or 240 million USD. The Minister of Finance, Shkelqim Cani said that most of this figure is dominated by the debt toward road infrastructure, which amounts to 65% of this sum. 17% of the debt is owed to the pharmaceutical sector and for medical equipment. Education occupies 8.4%, mainly consisting in the construction of new schools. All of this constitutes 90% of the debt, while 10% of the amount consists on payments of different natures.

The payment of this debt which will be provided for in the 2014 state budget, will act as oxygen for the business sector, which, unable to have sufficient liquidity, it has increased the level of bad loans in Albanian commercial banks to 25%. This and other measures being undertaken by the government will give way next year to new investments, revival of the business and economic growth in the country. This will certainly bring more relaxed markets and economic and financial relations in the entire pyramid of society, more expenditure by Albanian consumers and as a result, the country will go back to normality and to the previous economic growth. In order for this to be achieved as soon as possible, people need optimistic messages from the political class in general and governing majority in particular.

The country needs messages of normality like the one that Greenspan gave to the American President after September 11, in order to “consume, consume, consume”. Albanians today do not messages like those of the former democrat Prime Minister that we’re the second country in the world after Germany in terms of economic growth or messages like the socialist Prime Minister of 20 years ago who said that there was only 6 days worth of bread for Albania. It’s realism and positive psychological effect that will take people to the state of optimism and economic growth. Starting from 2014. Now is the time for this!

* The author is an MP of the Socialist Party in the Parliament of Albania, journalist, analyst, former director in important national media, in newspapers such as “Koha Jonë”, “Korrieri”, “Shekulli”,  “Klan” magazine, “Ora News”, Tv “Klan”, “Vizion Plus” tv networks, etc.

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