TIRANA, June 14 – Budget revenues during the first four months of this year continued not meeting government targets despite slight increases compared to the same period last year. This situation, including high levels of public debt currently at 60 percent of the GDP and budget deficit at 7 percent, has forced the coalition government led by Prime Minister Sali Berisha to announce a 20 percent budget cut for all institutions next July.
However, Prime Minister Sali Berisha says wages and pensions will increase as promised by up to 10 percent for 820, 000 citizens starting from July 1.
A report by the Finance Ministry has recently shown budget revenues during the January-April period reached 100.5 billion lek (1 billion dollars) increasing by 3.1 percent year-on-year but failing to meet set targets by 7.6 percent (70 million dollars).
The situation was a result of lower revenues in tax and customs offices, local governments, and social security and health insurance contributions, according to the ministry’s report.
Data show officials failed to collect 4 billion lek in tax and customs revenues during the first four months, 3 billion lek from local government bodies (municipalities and communes), and 2 billion lek in social contributions despite slight increases of up to 3.4 percent compared to same period last year.
Customs revenues in January-April fell by 4.5 percent, reaching 32.8 billion lek (320 million dollars), down from an expected 360 million dollars. Meanwhile, the customs administration had the best performance collecting 34.2 billion lek, only 0.8 billion less than it expected.
Fiscal deficit
Fiscal deficit during the first four months reached 5.3 billion lek (520 million dollars), registering a sharp decrease from the same period of the electoral year of 2009 when the deficit was at a record 9.9 billion lek. The deficit was mostly financed by domestic borrowing with 4.3 billion lek, privatization revenues with 49 million lek (480,000 dollars), and foreign financing with 0.9 billion lek (9 million dollars).
Data show government cut total expenses by 1.6 billion lek (150 million dollars) during the first four months mainly as a result of lower capital expenses which fell by 5.6 billion lek.
Value added tax income during the January-April period increased for customs offices but registered a sharp fall in tax administration. Income of VAT, which measures the circulation of goods inside the country, fell by 8.7 percent in January-April for the customs administration.
The total VAT revenues for the first 4 months of 2010 reached 35 billion lek, 1.6 billion more than the same period last year but 1.7 billion less than expected.
Meanwhile, excise tax revenues reached 10.3 billion lek, 1.2 billion more than the same period last year but 0.9 percent less than planned. Customs data show there was a decrease in oil, coffee and beer whose imports fell by 7.4 percent, 23.9 percent and 4.6 percent respectively.
Despite lower quantities of imports, revenues increased because of increases in excise rates for coffee, alcoholic drinks and cigarettes whose rates rose from 27 to 50 percent in September 2009.
Small businesses suffering
Small businesses are suffering the effects of the global economic crisis which has affected their sales and number of employees.
Finance ministry data on personal income tax showed that the number of employees in the private sector increased 0.9 percent in the first two months of 2010. However, within this figure, VAT subjects had an increase in the number of contributors by 6.6 percent while small businesses’ contributions of personal income tax fell by 11.9 percent (which was accompanied by a decrease in average wages of 11.6 percent because of contributions).
Data show road circulation taxes were at 1.5 billion lek or 3 percent less than in January-April 2009. Import of used cars also fell by 12.8 percent compared to the same period last year.
The Albanian economy saw a significant decline in its growth rate in 2009, from 7.9 per cent in 2008 to an estimated 3.3 per cent in 2009, but remained one of the few European economies which did not suffer a recession.
The European Bank for Reconstruction and Development (EBRD) says Albanian GDP will grow by 1.4 percent this year while the IMF expects 2.3 percent in 2010 and 3.2 in 2011.
