“The Government hasn’t got full control over the deficit and this is based on concrete data. This year, the deficit has been estimated at 46 billion lek but based on evident data it will reach 66 billion lek as a result of exchange rate effects,” says Ermelinda Meksi, the new BoA Supervisory Council member
TIRANA, Dec. 12 – As Albania faces crisis impacts, with public debt and its cost rising, revenues at a standstill, budget deficit at high levels, the Bank of Albania has lowered the key interest rates by 0.5 percent in two separate interventions during the past two months in an effort to increase consumption, private lending and lower the cost of T-bills. Ermelinda Meksi, an opposition Socialist Party MP who has just recently relinquished her mandate to become a BoA member of the Supervisory Council, describes the BoA decision at the end of November as the right move at the right time, citing the above-mentioned reasons.
“This measure was argued as a stimulus to the economy, through low-cost lending. It was high time this measure was taken. Albania did not follow the United States example by lowering the key interest rate starting from 2009,” Meksi told Scan TV in a recent interview.
Speaking of the revenue performance and the new 2012 budget, Meksi casts her doubts about the newly approved budget describing it as remaining overoptimistic.
“If we look at the trend in previous years, the revenue performance has been at 34 billion lek less than the initial forecast. In 2011 revenues are expected at 329 billion lek while the forecast for 2012 is at 356 billion lek. There has been no explanation what factors have been taken into account for this extra 27 billion lek forecast at a time when in 2011 the government collected only 6 billion more in revenues. The extra debt cost is worth 6 billion lek. In this way, you have to borrow to pay off the debts. No doubt, the government has borrowed to handle pay and pension rises as well as investments raising the budget deficit,” says Meksi.
The former MP of the biggest opposition party also expresses her concern over the government’s failure to keep budget deficit under control.
“The government hasn’t got full control over the deficit and this is based on concrete data. Last year the budget deficit was forecast at 38 billion lek, but was not kept in check and rose to 46 billion lek. This year, the deficit has been estimated at 46 billion lek but based on evident data it will reach 66 billion lek as a result of exchange rate effects.”
According to Meksi, Albania’s public debt will exceed the 60 percent legal limit this year because of the widening budget deficit and exchange rate effect with the national currency, lek, losing considerable ground against the Euro and the US Dollar.
