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We need to help exporters more now!
Written by Fatos Çoçoli 20 Maj 2023
Many citizens wonder how the value of the euro will go in Albania. They may want to keep euros, or return the euros they have to lek. They feel somewhat indecisive. Not only the money changers in the foreign exchange market, but also the entrepreneurs are interested and at the same time concerned, how the progress of the euro will go further in our market. During this week after election Sunday, the euro decreased in the market of North Macedonia, which has its currency the dinar, as well as in the market of Serbia, which has the currency dinar. In our country, the common European currency increased slightly, by 1.3 percent, compared to May 13, 2023. Many of us wonder how the value of the euro will be during this summer. Should we keep aside lek, or return them to euros? Even more worried and even anxious are the exporters, who lose heavily from the low exchange value of the euro. They cannot increase the price of the products they export, because they immediately lose the markets they have captured. And that's why they look with great concern at the fluctuation of the euro with the lek, this exchange rate with a thousand influencing factors. Really, how will the euro fare in our market? Unfortunately for exporters, the euro will continue to depreciate during the summer, on the supply of more than 2.3-2.6 billion euros from tourism and holidaymakers. The euro can go even 1 euro equal to 100 lek! Who would help our exporters? The government and our central bank met with representatives of exporters' associations and they did very well. They gave some ideas, proposals and opportunities for help. Contrary to what the exporters think, the Bank of Albania, our central bank cannot buy euros in the market, whenever the European currency is exchanged low. The exchange market is free and no central bank undertakes this adventure, however powerful this bank may be. It was tried in 2015 by the Swiss National Bank to help Swiss exporters, but gave up later after losing hundreds of billions of Swiss francs. Our banking system can help exporters by restructuring the loans they have received, to get through this difficult period more easily. Commercial banks have offered to do this, with the encouragement of the Bank of Albania. The government, for its part, has reduced the refund of Value Added Tax for exporters to just three days, to help them have cash, and has frozen the payment of installments of Profit Tax until the end of this the year. Are these measures enough? Can the government do more? can, if he has the courage to deal with the big import companies. This period, since March 2022, has brought extraordinary profits for importers, as the euro has depreciated by 8 percent, while the prices of goods and services provided by imports, in our market, have not decreased even by 1-2 percent! Importers buy goods in euros and sell them in our market in Lek. This 8 percent spread over a period of one year (March 2022-April 2023) is taxable profit. The moral is the same as the extraordinary tax on electricity produced in Albania by private companies and exported abroad, at prices much higher than the cost of production. In our conditions, when exports are decreasing significantly, an exceptional temporary tax is necessary, as long as the euro is very low. The same was done with the extraordinary tax on the profit of private electricity producing companies that exported energy outside of Albania. The tax may be 2 or 3 percent on the invoice value of most companies' imports from June 1, 2023. The entire fund to be collected from this tax, starting from July 2023, should be passed on as a subsidy on a proportional basis , exporters, according to their sales invoices abroad, as long as the euro is at these very low exchange rates. The government, if it takes this step, should make sure that the importers do not raise the prices of the imported goods they sell in the market, by 2 or 3 percent, when the tax will be imposed. Exports are the future of our economy. For the first quarter January-March 2023, they fell by 11.7 percent, compared to January-March 2022. This decline should serve us as a powerful alarm bell. We must help our exporters now, because at the end of September 2023 it will be too late!