Total government revenues during the first ten months of this year rose by only 1.4 percent to 267.6 billion lek year-on-year, remaining 3.6 percent less or 10 billion lek down compared to government projections
TIRANA, Nov. 15 – Government revenues continued underperforming even in October 2011 when they rose by only 3.4 percent but were 12.8 percent down compared to new targets set last July when the budget was cut. Latest Finance Ministry data show total government revenues during the first ten months of this year rose by only 1.4 percent to 267.6 billion lek year-on-year, remaining 3.6 percent less or 10 billion lek down compared to government projections.
Last July, the government cut its revenue growth expectations to 5.9 percent compared to an overoptimistic figure of 11.5 percent under the initial 2011 budget.
The situation is mainly a result of poor progress in tax collection, with revenues reported 3.7 percent up year on year, but 4 percent down or around 10 billion lek less compared to the target for the first 10 months of this year. VAT and excise tax revenues, which account for 50 percent of total tax revenues and are indirect indicators to measure domestic consumption, have grown by only 1.8 percent and 2.3 percent, respectively during the Jan-Oct period.
Annual comparison shows the 1.4 percent increase in total revenues during the first ten months of this year is the lowest in the past decade and even worse compared to the 2009 recession when the country’s economy still managed to grow by 3.3 percent and revenues rose by 5.7 percent.
Meanwhile, total expenditure during the first ten months of this year has been at 3.7 percent less than planned or 11.5 billion lek lower. In October, the budget continued registering a surplus for the second month in row registered a surplus of 457 million lek, compared to projected deficit of 28 million lek.
In its latest review, the government expects the country’s GDP to grow by 3.9 percent in 2011 and 4.3 percent in 2012 compared to 5 percent and 5.1 percent respectively last July when the budget was cut by 5 percent.
Revenue expectations have also been lowered to around 330 billion lek compared to 344 billion lek under mid-year budget review. Meanwhile, expenditure has also been cut by 14.2 billion lek to 376.6 billion lek.
While the deficit has been left unchanged at 3.5 percent of the GDP, expenditure on pension contributions has been raised by another 1.5 billion lek to 86.4 billion lek for 2011.
Public debt is expected to be at 59.3 percent of the GDP for 2011 and 59.4 percent in 2012.
Government is expected to make new changes to the 2011 budget for the second time this year under a normative act at the end of next December, cutting another 14.2 billion lek after the budget was cut by 18.3 billion lek (USD 183 million, Euro 130 million) in an effort to keep rising public debt and budget deficit levels in check.
