Govt to wait for October performance before reviewing budget

TIRANA, Sept. 28 – While public finances continue underperforming even after last July budget cuts, government representatives say they will wait to see the revenue progress for another couple of months before intervening for a second time. Selami Xhepa, an MP of the ruling Democratic Party told reporters this week October will be the test month for the public finances, ruling out the possibility of making budget cuts at this moment. According to him, the global crisis impacts, especially from neighbouring Greece and Italy have reduced revenues during this year. Arben Malaj and Anastas Angjeli, two former Finance Ministers of the opposition Socialist Party have suggested that the falling revenues should be immediately reflected in another budget review, considering the mid-year budget cuts as non-realistic. The ex-ministers suggests that government should be more realistic when drafting the 2012 budget and take into consideration crisis effects from the neighbouring countries. Finance Ministry data show total government revenues during the first eight months of this year reached 206 billion lek, (USD 2.06 billion) 1.5 percent less than planned under the mid-year reviewed budget and only 2.2 percent up y-o-y. If this trend continues, government revenues won’t be able to meet even the 5.9 percent growth target set last July after the budget was cut by 18.3 billion lek in an effort to keep rising public debt and budget deficit levels in check. Government had initially predicted government revenues would rise by 11.5 percent this year after growing by 8.6 percent in 2010. Big business tax director dismissed Jovan Jano, the director of big tax payers department at the General Directorate of Taxes has been dismissed because of poor revenues in the tax sector. Sources say he has been replaced by Defrim Manoku, the deputy director at the General Tax Directorate. Tax revenues during the first eight months of this year failed to meet government targets by 2.3 billion lek (23 million dollars), although registering a 4.1 percent increase y-o-y. The situation was a result of poor performance in the VAT and excise taxes which provide 50 percent of total tax revenues and are indirect indicators to measure consumption.