FinMin: Budget to be reviewed in June

TIRANA, May 30 – Finance Minister Ridvan Bode admitted this week the 2012 will undergo a review next June when cuts in several sectors are expected to be made for the third year in a row.
“It is known that 2012 is a very difficult year because of developments in the Eurozone and its impacts in the countries of our region. Development in Italy, Greece will not pass without impacts even in the Albanian economy,” Bode told reporters.
During the first four months of 2012, government revenues rose by 2.5 percent but failed to meet targets by 5.4 percent or 6 billion lek. The expected cuts will probably cut investments in all sectors, but mostly education and health.
In early 2012 government has been facing difficulty to keep budget deficit in target considerably cutting public investments. The budget deficit during the first four months of this year dropped to 11.5 billion lek, down from 15.9 billion lek a year ago, only thanks to investments which were cut by 30 percent.
Despite financial difficulty and unsuccessful efforts to agree on a loan deal with the World Bank, government says it will raise wages and pensions by 4 to 5 percent starting from next July.
Government expects revenues to increase by 7.8 percent and the economy to grow by 4.3 percent for 2012, which is twice higher compared to what international financial institutions forecast. Experts have earlier noted that a mere 1.75 percent growth in government revenues for 2011, the lowest in the past 11 years and failure to meet revenues targets by 4 percent even after mid-year budget cuts in 2011 is the clearest sign government has drafted an overoptimistic budget for 2012 and will be forced to make sharp cuts during the year as global crisis impacts become tougher and the Eurozone is expected to face mild recession.