TIRANA, Nov. 2 – The 2011 budget, worth 408 billion lek (4.08 billion dollars) will lower public debt levels to 59 percent of the GDP and keep budget deficit at 3.5 percent, Prime Minister Sali Berisha said on Tuesday during a meeting of the Strategic Planning Committee where next year’s budget was discussed before being approved by government on Wednesday.
Government considers the need to lower the country’s high public debt levels a necessity because of the global financial debt crisis, and a tool to lay the foundations for the consolidation of Albania’s macro-economic framework after 2013.
Praising the country’s boom in exports which increased by 60 percent year-on-year during the first nine months of this year, and the 13 percent rise in revenues, Berisha said the best proof of Albania’s stability was the 300 million euros it borrowed last week from international financial markets in the country’s first-ever Eurobond issue at a favourable 7.5 percent interest rate. Some 200 million Euros bonds will go to pay off a costly syndicate loan government took last year to syndicate loan taken last year to fund the Durres-Kukes highway while the remaining 100 million euros injected in the domestic market.
The PM says the 2011 budget, Albania’s biggest ever, will give a priority to the construction of the Tirana-Elbasan highway, a new Parliament building, and a new stadium. The wage and pension increase, education, health agriculture and EU integration reforms are also listed as top priorities.
“By the end of 2011, there will be no citizen living in extreme poverty, there won’t be citizens with daily income of less than 1.25 dollars,” said Berisha in an earlier government meeting discussing the budget.
Under an earlier government decision on the mid-term 2011-2013 budget in July 2010, the 2011 was projected to increase to 358.77 billion lek before climbing to 394 billion lek in 2012 and 432.7 billion in 2013.
However, government and International Monetary Fund projections on both the GDP growth and the public debt levels differ considerably.
While government says the 2010 public debt will be at 59.5 percent of the GDP, IMF’s prediction for 2010 is 62.8 percent, 2.8 percent more than in 2009. The 2011 government expectations are to lower it to 58.5 percent of the GDP, before dropping it to 56 percent in 2012 and 54 percent in 2013. However, IMF experts expect the public debt levels to increase to 65 percent in 2011, 66.9 percent in 2012 and 68.1 percent in 2013.
According to Finance Ministry data, Albania total public debt is worth 730.6 billion lek under the reviewed 2010 budget and is expected to increase to 858.5 billion lek by 2013.
Internal debt accounts for a majority of 446.8 billion lek in the 2010 budget.
GDP growth
The International Monetary Fund (IMF) expects the Albanian economy to grow by 3 percent this year and 3.5 percent in 2011 under the new estimates raised this week, yet, almost twice less compared to government’s GDP projections.
According to IMF’s new World Economic Outlook report published last month, Albania will return to 5 percent GDP growth rate only by 2015
Meanwhile, government expects a 4.1 percent growth in 2010, 5 percent in 2011, 6.1 percent in 2012 and 0.1 percent more in 2013.
Last July, the Democratic-Party led coalition cut the 2010 budget by 39 billion lek (around 380 million dollars) in an effort to lower budget deficit to 3.1 percent and keep public debt at 59.5 percent by the end of this year. The 2010 budget foresees 333.6 billion lek (3.3 billion dollars) in revenues and 371.7 billion lek in expenditure cutting deficit to 38 billion lek, down from 49.7 billion in the previously approved budget.
