Budget deficit lower than estimated

TIRANA, Feb.12- Finance Minister Ridvan Bode said in a press conference on Monday that Albania’s gross domestic product (GDP) will probably show growth for 2006 that exceeds the five percent minimum target set in the budget bill. Average inflation slowed a little and the unemployment rate fell slightly last year, the minister told reporters. Real GDP growth had been forecast at between 5 and 5.5 percent, even by international organizations like IMF. The power crisis in the winter of 2005-2006 forced the International Monetary Fund to lower its real economic growth forecast for 2006 to 5 percent from a previously projected 5.5 percent. “The 2006 economic growth is expected to be higher than the programmed five percent. Still, it has not been finally calculated, but all indicators show it would have a higher-than-forecast rise,” Bode added. For 2005, the country reported 5.5 percent economic growth, lower than the initial forecast of 6 percent and the 5.9 percent growth in 2004. Growth in 2005 was jeopardized by an electricity crisis that gripped the country in the last quarter, causing power cuts of up to 18 hours a day in some regions. GDP per capita rose to $2,903 in 2006, up 11percent from 2005, Bode said. Albania’s budget deficit for last year totaled 28.5 billion leks ($296.5 million/288.8 million euro), compared to a forecast 36.6 billion leks or 4.1percent of GDP. The 2006 budget plan expected GDP to grow in nominal terms to 899.7 billion leks, compared to 836.9 billion in 2005. The country ended 2005 with a budget surplus of some eight billion leks. For last year, the Finance Ministry reported budget revenue of 226.3 billion leks, equivalent to 25.2 percent of GDP, and budget expenditure of 254.8 billion leks, equivalent to 28.32 percent of GDP, compared to 23.9 percent and 27.7 percent of GDP, respectively, in the previous year. Albania’s average annual inflation rate for 2006 is estimated at 2.36 percent, lower than in the previous year, Bode said. The country had average inflation of 2.4 percent in 2005. Last year unemployment fell to 13.8 percent of the workforce from 14.2percent in 2005, he added.