The more realistic forecast for the 2012 budget is also a result of this year’s underperformance in tax collection with total government revenues during the first nine months of this year growing by only 1.1 percent compared to the same period last year
By Ervin Lisaku
TIRANA, Nov. 7 – Facing high public debt levels, poor performance in revenues and spillover impacts from the crisis in neighboring Greece and Italy even after mid-year budget cuts, government has been forced to adopt a more conservative budget for 2012 when the country celebrates its 100th independence anniversary.
Admitting the conservative spirit of the new budget, Prime Minister Sali Berisha said in a special government meeting last weekend that preserving the country’s macroeconomic stability by keeping public debt and budget deficit levels under control would be the key objectives of the 2012 budget.
Berisha guaranteed his Democratic Party-led ruling coalition would increase wages and pensions again next year, being one of the few countries that continues to follow this practice in global crisis times .
The new 2012 budget foresees revenues at 353.8 billion lek, and expenditure at 294.9 billion lek with a deficit of 41.2 billion lek. Compared to the reviewed 2011 budget last July, expenditure is projected at only 4.3 billion lek more while revenues are projected to increase by 10 billion lek or only 2.9 percent, the lowest projection government has made during the past six years. The deficit is expected to remain within the 3 percent target.
The 2012 projections are even lower compared to the initial 2011 projections when government expected a budget of 409 billion lek.
For the second year in a row, government was forced to make mid-year budget cuts in order to meet targets. In July 2011, government cut the budget by cut spending by 18.3 billion lek (USD 183 million, Euro 130 million) for the rest of the year while in July 2010 the budget was cut by around 39 billion lek 390 million dollars severely affecting investments especially in the priority health and education sectors.
Berisha had earlier warned that all government agencies would face 5 percent cut in their operating expenditure in 2012. “Institutions starting from the Council of Ministers will face a 5 percent cut in their operating expenditure”
The more realistic forecast for the 2012 budget is also a result of this year’s bad experience with total government revenues during the first nine months of this year growing by only 1.1 percent compared to the same period last year, but remain 2.5 percent below the revised targets.
The International Monetary Fund has also suggested that it is better that the year start with a more realistic and mature projection in order to make its implementation easier.
The southern Albania axis, part of the Corridor 8 project with Italy, Macedonia and Bulgaria, will be the focus of the 2012 infrastructure investments under the 2012 budget.Prime Minister Sali Berisha has said the Tirane-Elbasan and the Levan-Tepelene highways along with the Fier by-pass and the Kardhiq-Delvine segment will cut distance from Tirana to Saranda, Albania’s southernmost town, to two and a half hours.Investments in the Arbri road linking Tirana to the northeast region of Dibra and neighboring Macedonia, the Shkodra-Hani i Hotit highway and the Shkodra bypass are also on the agenda of next year’s budget along with secondary roads all over the country. Prime Minister Berisha says the 2012 budget will also continue to support tourism, the olive and nut tree national projects as well as digital infrastructure. After receiving the government approval, the 2012 will be discussed in Parliament and receiving the final approval by next December. Under the newly reviewed 2012-2014 macro-economic and fiscal framework, government expects the annual GDP to grow between 4 to by 5 percent until 2014, up from 5 percent in mid-2011, which is twice higher compared to what international financial institutions such as the IMF and EBRD predict for Albania.
