Government revenues in January-March off $54 mln

TIRANA, April 27 – The Albanian government collected 5.4 billion (54 million dollars) Lek less than it expected in its total revenues plan during the first three months of this year despite lowering its expenses.
Total revenues during the first quarter reached 72.6 billion Lek compared to an expected 78 billion Lek.
Both tax and customs administrations failed to fulfil their tax collection targets in the first three months of this year, according to preliminary data by the Finance Ministry.
The tax and customs administrations collected a total of 42.5 billion Lek during the first quarter of 2010, compared to a government target of 49 billion Lek, fulfilling only 93.6 percent of the plan.
Data show the tax institutions have failed to collect 3.4 billion Lek or 34 million dollars.
Meanwhile, government cut its total expenses by 6 billion Lek which affected investments and the public administration’s wages.
The value added tax (VAT), an indicator which shows the country’s economic performance, failed to meet the government target by 1.6 billion Lek, but increased by 1 billion Lek year on year during the first three months.
However, the government managed to keep the budget deficit under control only thanks to a huge transfer of profit from the Bank of Albania. Fiscal data show the government had planned to transfer only 200 million Lek as non-tax profits from the Bank of Albania’s profit but in fact transferred 2.4 billion Lek (24 million dollars), balancing revenues and keeping the deficit under control.
The local government units continued their negative performance in the collection of taxes, creating a 3.3 billion Lek deficit compared to the government plan.
The profit tax was the only one to fulfil the government expectations, exceeding the plan by 129 million Lek.
The IMF said earlier this year that despite the significant cuts to the 2010 budget that were proposed in the Government’s new Medium Term Macroeconomic Frameworkسome 30 billion Lek or 2.5 percent of GDPشhe ongoing revenue trends imply a 2010 deficit of 5.6 percent of GDP. A budget review in the next months should target reducing the deficit to some 3 percent of GDP, suggest the IMF. This would lower the financing requirement, support the current account adjustment and mark a first step toward bringing within credible reach the government’s appropriate goal of cutting public debt back to 50 percent of GDP by the end of its mandate in 2013. Both revenue increases and expenditure cuts should be on the agenda.