Albania’s Parliament approves 2007 Budget Bill

TIRANA, Nov.27 -Albania’s parliament approved the budget bill for 2007 on Monday. The budget plan was endorsed with 72 votes pro and 32 against, and one abstention, in the 140-seat parliament. The 2007 budget bill was also discussed and received the approval of the International Monetary Fund, which nevertheless made comments on the sources of growth. Albania’s consolidated budget includes the budgets of the country’s central and local governments. The budget predicts a real economic growth of six percent and a deficit equal to 4.8 percent of the gross domestic product (GDP). The GDP per capita is reported to be rising in 2006, but it will be also subject to increasing inflation. GDP per capita is expected to increase to $3,122 per capita, an increase of 8.3 percent compared to last year. In general, for the last 14 years GDP per capita has increased, except for the year 1997 when the economy was hit by a severe economic and especially financial collapse, which affected the living standards worst of all. The pyramid schemes cost the Albanian economy more than $1.2 billion.
The government has projected an average annual inflation of three percent in 2007, up from the 2.5 percent target set for 2006. Albania’s government projects 253.5 billion leks in revenue in 2007, equal to 25.8 percent of GDP. A large part of these revenues will be from taxes and customs duties, projected at 174 billion leks, or 17.7 percent of the country’s GDP for next year. The projected revenue is 10.3 percent higher than this year’s plan. The government spending for next year is 300.3 billion leks, 12.6 percent more than in the current year, with capital expenditures planned at 69.7 billion leks and focused on infrastructure, health care and education. In the context of integration and the high priority of Albania’s joining NATO, the defense sector has been allocated generous funding as well.
2007’s budget will still continue to provide significant subsidies to the traditional sectors supported by the government, such as water supply and water control systems, textbooks supply, railway networks and training provision for students. The total amount of subsidies in the budget is estimated to reach 2.625 million leks. Finance Minister, Ridvan Bode, said that the government will exert stronger monitoring control of the subsidized sectors. This is in line with the World Bank recommendations to lower all types of state subsidies, as they have often proven to be ineffective and to disrupt the market.