Finance Minister Shkelqim Cani on Tuesday said the government was negotiating with the IMF and World Bank for loan of $1 billion (€726.5 million) to cover its budget deficit.

“We are negotiating terms with the World Bank and the IMF for $300 million a year for the next three years, for a total loan of between $900 million to $1 billion,” Cani said.

According to Cani, in order to secure the loans, Albania will have to raise extra revenues through tax hikes. However, he dismissed talk of austerity measures similar to those Greece had to undertake as part of its IMF bailout.

“This not a Greek variant because we are not touching public sector wages and are increasing pensions a bit; we also removed taxes on small business and lowered their income tax rate from 10 to 7.5 per cent,” he added.

“But the negotiations require that our fiscal package produce an extra 180 billion lek (€128 million) per year,” the minister added.

In 2014, the government plans to run a budget deficit of 95.6 billion lek (€680 million), in order to tackled the cost of unpaid work to contractors accumulated by the previous centre-right government.

The total budget for 2014, which parliament is likely to approve by year end, is 460 billion lek (€3.27 billion) with expected revenues totaling 364 billion lek (€2.59 billion).

The budget deficit for 2014 will therefore reach 6.9 per cent of GDP.