No final decision on budget review yet

TIRANA, July 17 – Despite government revenues far below targets, and the economy suffering a slight shrink in the first quarter of 2012, government has not made it clear when it will review its overoptimistic budget and GDP growth targets.
In a recent press conference, Prime Minister Sali Berisha said no final decision on the review of the budget had been made yet, unlike the previous two years when the budget cuts were made in mid-July.
The Prime Minister said he favoured promoting economic growth through investments despite the impact on keeping public debt high rather than budget cuts and tax increases.
The budget cuts will likely be made next September when privatization revenue from the sale of four hydro power plants is expected. Unofficial sources say under the new mid-year review which will be the third in a row, government will lower the GDP growth target to 3 percent down from 4.3 percent and cut the budget by 15 billion lek (Euro 106 million) or 4 percent. Although the cuts seem too small considering the stagnating trend of budget revenues and rising budget deficit, privatization revenues will be a significant tool in hand. Finance Ministry data show total government revenues in the first five months of 2012 decelerated to 2 percent failing to meet the targets by 6.2 percent. Data show government failed to collect 8.7 billion lek (Euro 62 million) in the first five months of 2012. Government is also facing difficulty in preserving the deficit which at -19 billion lek for the first five months of this year stands 3.4 times above the target.