TIRANA, Dec. 15 – Underperforming revenues even after a mid-year budget cut and a nationwide campaign against informality have forced the Albanian government to revise the 2015 budget downward for a second time in a row in few months. Under a normative act, which has the force of law for temporary measures, the Albanian government has cut the budget on central government institutions by 2.5 billion lek (€17.8 mln) to 264.1 billion lek (€1.88 bln) affecting the budgets of some key institutions such as the Prime Minister’s office, the ministries for economic development, transport and health.
Public investments have also been revised downward by 2.5 billion lek (€17.8 mln) to about 60 billion lek (€426 million).
The finance ministry argued the intervention into the budget with the sluggish performance of government revenue during January-November 2015 and slow progress in public investments.
The poor performance in the first half of this electoral year forced the Albanian government to cut its 2015 spending by €114 mln while the International Monetary Fund postponed its new loan tranche as part of a three-year €331 million loan.
Government revenue failed to recover even last October despite an ongoing nationwide campaign against informality and a mid-year budget cut having revised targets downward.
The finance ministry says government revenue in the first 10 months of this year failed to meet the target by 10.9 billion lek (€78.5 mln), in a similar situation compared to last September when a warned aggressive nationwide campaign formalized thousands of business but closed down thousands of others not affording to pay taxes.
Underperforming revenue resulting in a mid-year budget cut have forced the Albanian government to draft a more realistic budget for 2016 when it expects revenue to increase by 5 percent and spending to drop by 1 percent in a bid to reduce the deficit and public debt, currently standing at about 73 percent of the GDP.
The Albanian government expects the economy to accelerate to 3.4 percent in 2016, up from 2.7 percent in 2014, which would be the highest growth rate since 2010 after sluggish growth of 1 to 2 percent in the past three years.
