Finance Ministry data show government revenues for the first ten months of 2012 reached 273 billion lek, up only 2 percent compared to the same period last year, but down 6.4 percent or 18.6 billion lek compared to targets
TIRANA, Nov. 17 – At a time when government has projected a record 360 billion lek (Euro 2.5 billion) in revenues for 2013, performance in the first ten months of this year shows this will be a difficult and almost impossible target to achieve. Finance Ministry data show government revenues for the first ten months of 2012 reached 273 billion lek (Euro 1.9 billion), up only 2 percent compared to the same period last year, but down 6.4 percent or 18.6 billion lek less compared to targets set in the 2012 budget. The slowdown in revenues has also affected public investments. At 44 billion lek for the first ten months of this year, public investments were 15.3 percent lower compared to the same period in 2011 and 12.2 percent lower compared to the 2012 targets. The budget deficit in January-October 2012 was at 25.7 billion lek, down 19 percent compared to the same period last year but 54.4 percent higher compared to the target.
The Finance Ministry data reconfirm the stagnation of domestic consumption, which is the key driver of the Albanian economy at a time when exports’ growth has considerably slowed down due to escalating crisis in the Eurozone and especially top trade partners Italy and Greece.
The value added tax, which accounts for around 38 percent of total tax revenues, and indirectly measures consumption, grew by only 1.7 percent in the first ten months of 2012 but was down around 6.8 percent or 7 billion lek compared to the set targets. The excise tax imposed on the so-called luxury goods was down by 6.1 percent compared to the first ten months of 2011, revealing that Albanians have cut down on fuel, tobacco, coffee and beer consumption in these times of crisis.
What’s worse, businesses continue suffering with the profit tax for the first eight months of 2012, down by 16.1 percent.
The pension scheme deficit continues widening as it rose to 32.4 billion lek in Jan-Oct. 2012 compared to 29.3 billion lek a year ago.
During the first ten months of 2012 government also spent around 31 billion lek in interests rates, up 1.6 percent or 482 million lek compared to the same period last year as the public debt stands at the legal ceiling of 60 percent of the GDP. Estimated at over 800 billion Lek currently, the public debt costs the Albanian government 3 percent of the GDP or 50 billion lek (euro 357 million) in interest payment annually.
Privatization revenues reached 782 million lek, more than double compared to the first ten months of this year.
An expected staggering amount of Euro 850 mln from the privatization of oil firm Albpetrol postponed government plans to review downward its overoptimistic revenue target of a 7.8 percent growth rate. The latest government intervention to the 2012 budget was made though a normative act cutting 2.5 billion lek (Euro 17.5 mln) in grants to local government units to pay off debts water supply companies under their administration owe to distribution power operator CEZ Shperndarje. Government also awarded cash-strapped state-owned power corporation KESH a Euro 40 mln guarantee in order to secure power imports for the remaining of the year as CEZ has been unable to fulfill its legal obligation of covering its grid losses with imports.
In its review to the 2013-2015 macroeconomic framework approved by government on July 1, the 2012 GDP growth forecast has been lowered to 3 percent, down from 4.3 percent in the initial budget and the public debt raised to 59.9 percent of the GDP, only 0.1 percent below the legal threshold.
Lower domestic consumption, stagnating exports, some of the key industries in crisis, lending and deposits growth rates slowing down and government revenues far below targets are some of the symptoms of the ailing Albanian economy in the first half of 2012. Poor performance in early 2012 when the economy officially shrank by 0.2 percent and a 2 percent growth rate in the second quarter of 2012 indicate the Albanian economy will suffer severe impacts from the crisis in the Euro area and problems at home where domestic consumption, the key driver of growth, remains sluggish.
