The budget deficit in the first four months of this year dropped to 6.3 billion lek (Euro 44.6 million), down from 23.6 billion lek during the same period last in the run-up to the June 2013 general elections.
TIRANA, May 27 – Fuelled by higher income and lower spending, Albania’s public finances registered a significant recovery in the first four months of this years with the budget deficit down by 73 percent compared to the same period in the previous general elections year when public investments hit a record high, according to finance ministry data.
The budget deficit in the first four months of this year dropped to 6.3 billion lek (Euro 44.6 million), down from 23.6 billion lek (Euro 166 million) during the same period last year in the run-up to the June 2013 general elections.
Total government revenue in the first four months of this year reached a historic high of 116 billion lek (Euro 815 million), up 9.1 percent year-on-year fuelled by double digit growth rates in VAT and profit tax.
VAT, which is levied at a fixed 20 percent rate on almost every product and service and is the key tax accounting for one-third of total revenue, rose by 25.4 percent, signaling a recovery in domestic consumption which is the key driver of Albania’s growth.
The profit tax, which starting January 2014 has increased by 5 percent to 15 percent for medium-sized and big enterprises, rose by 23.2 percent in the first four months of this year.
Meanwhile, personal income tax, which starting this year has shifted into a progressive system, was down by 9.8 percent compared to the first four months of 2013 when Albania was applying a 10 percent flat tax regime on personal income and corporate tax.
Excise taxes, the second most important tax after VAT suffered a 12.4 percent shrink in the first four months of this year affected by a boom in imports of cigarettes and fuel in December 2013 when government announced plans to increase taxes on these two products.
Total spending in the first four months of this year dropped by 5.9 percent to 122.5 billion lek (Euro 900 million) affected by a sharp 57 percent drop in public investments which dropped to 11.5 billion lek, down from 26.5 billion lek during the same period last year.
Spending on interest rates rose by only 2.7 percent to 13 billion lek (Euro 91.5 million) despite public debt having climbed to around 70 percent of the GDP including arrears of around 5 percent of GDP. Spending on interest rates on domestic public debt remained unchanged as T-bill yields have almost halved compared to early 2013.
The deficit in the pension system rose to 13 billion lek (Euro 91 million), up from 12.5 billion lek (Euro 88 million) in the first four months of 2013.
Privatization revenue during the first four months of this year is estimated at only 2 million lek (Euro 14,000), down from 229 million lek (Euro 1.6 million) during the same period last year.
