Bank of Albania urges pension reform amid demographic shifts
As the Albanian government debates a new pension scheme reform, the Bank of Albania has issued a warning regarding the current system. In its opinion on the 2025 budget, the Bank highlighted the risks posed to public finances by an aging population and an emigrating workforce.
Why is this important: The Deputy Governor emphasized that demographic and economic shifts make the pension system unstable and unsustainable. “Population aging is a long-term social concern, and we have flagged the instability of the pension scheme,” Minxhozi stated. She stressed the importance of redesigning the system to align with EU standards, ensuring sustainability and economic growth. The Bank stands ready to contribute ideas but does not propose direct solutions. Failure to act, Minxhozi warned, could hinder economic development in the medium term.
Currency devaluation concerns: Another pressing issue raised by the Bank is the rapid devaluation of the euro. Minxhozi expressed concern about the economic damage that could result from the swift depreciation. “The pace of the euro’s decline is troubling. We are conducting thorough analyses and exploring measures to slow this trend,” she explained.
Budget vote outcome: Despite these warnings, the Economy Committee approved the 2025 budget in principle, but only with the votes of the ruling majority. The opposition, represented by Tabaku and Spaho, voted against. A hearing on pension reforms with the Minister of Economy and the Director of the Social Insurance Institute (ISSH) is expected soon.
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