Data show total revenues in the first four months of 2011 reached 103.7 billion lek, registering a slight decrease of 0.8 percent compared to the same period in 2010
TIRANA, May 30 – Low revenues and increased spending during the beginning of this year will probably force the government to review the budget again mid-year, lowering its revenue, spending and GDP growth targets for 2011. Ministry of Finance sources quoted by local media this week say the reviewed budget, which foresees cuts for some sectors, will be ready early in June and approved by Parliament by next July. “The budget is totally dependent on the revenue level. If the slow pace continues, cuts in spending seem inevitable,” say Ministry of Finance sources– adding that they will also wait for revenues at the beginning of June before taking the decision. Latest Ministry of Finance data show that the government’s budget deficit rose to a record– 15.8 billion lek (158 million USD) in the first four months of this electoral year, up from around -1.3 billion lek a year ago; mainly due to higher expenditure and a slowdown in total revenues. Data show total revenues in the first four months of 2011 reached 103.7 billion lek, registering a slight decrease of 0.8 percent compared to the same period in 2010. The situation was a result of lower tax revenues which, in the first four months of this year, dropped by 5 billion lek to 94.6 billion lek. Meanwhile, total expenditure rose by 12 percent to 119.5 billion lek. The Ministry says total revenues in the first four months of 2011 were 4.4 percent below its target, while tax revenue registered 5.8 percent below expectations. Bank of Albania governor Ardian Fullani warned last week that the slowdown in revenues needed measures to ensure the planned level of budget deficit. Back in mid-2010, lower tax and customs revenues forced the government to make significant budget cuts in mid-year, reducing spending by 25 percent and lowering its GDP growth for 2010 to 4.1 percent– down from an expected 5.5 percent at the beginning of this year. The new changes were aimed at preserving the country’s public debt at 59.5 percent of the GDP for 2010 and lowering it to 54 percent by 2013– when government’s term in office ends. The cuts also lowered the budget deficit to 3.1 percent of the GDP, down from a record 7 percent in 2009. The 2010 budget changes, which came immediately after a wage and pension increase of 2 to 12 percent, cut spending by some 39 billion lek (390 million dollars) for the rest of 2010. The 2011 budget, considered the biggest ever at 4 billion USD will continue supporting wage and pension increases, and keeping deficit in check. The 2011 budget, worth 409 billion lek (4.08 billion USD) and with revenues at 362.2 billion lek, will take budget deficit to 46.8 billion lek, up from 38.1 billion lek in 2010 or 3.5 percent of the GDP. With budget revenues expected to grow by 11 percent, 2 percent more than under the revised 2010 budget, the government projects that the Albanian economy will grow by 5.5 percent in 2011, up from an estimated 4.1 percent in 2010. This projection is almost double that of international financial institutions’ expectations.
