TIRANA, Nov. 22 – The opposition Socialist Party (SP) expects the country’s economy to grow by 0 to 1 percent in 2010 and 0 to 2 percent in 2011, twice less than the IMF projections and almost three times less than government expectations. The data were announced last Monday during a meeting the Economy Council of the Socialist Party held last Monday to discuss the 2011 budget.
SP deputy Mimi Kodheli, also the deputy chair of the parliamentary economy committee, reiterated the stance of the biggest opposition party, that the 2011 budget is electoral and has shortcomings in allocating funds to priority sectors.
The SP insists the 2011 budget cannot be implemented based on 5.5 percent GDP growth considering the situation in 2010 when government was forced to make budget cuts to keep high public debts levels in check and cut budget deficit. The economic growth projection was also lowered to 4.1 percent, down from an expected 6 percent under the previously approved budget.
The opposition described the budget cuts in mid-2010 when revenues were cut by 27 billion lek (270 million dollars) and expenditure by 39 billion lek as “management failure and corruption.”
The opposition says the 2011 budget is based on increased taxes, the flat tax which it says is a big burden to common people and those in need, a rise in excise taxes, but total revenues at 0.1 percent lower than the revised 2010 budget.
The reason the SP believes the GDP in 2010 will grow by a maximum of 1 percent is the ongoing global and regional crisis, the high inflation rate, the rising bad loans, the drop in consumer and business confidence and the quality and accuracy of statistics.
The SP says that under the current growth rates government expects for 2011, the budget deficit could further grow and as a result the debt cost will be higher while the current account deficit remain at a double digit figure.
SP’s Mimi Kodheli says the drafting of the 2011 budget should have taken into account the global and regional financial crisis, lower public debt and budget deficit rates, be based on reliable statistics and keep the economy out of monopolies. She also said that the budget should have increased spending on education and health at a regional level, support rural development and agriculture and respect the autonomy of local government units.
The opposition Socialist Party is worried government’s optimistic draft budget will be used for electoral purposes ahead of the May 8, 2011 local elections and raises doubts on the transparency of its figures following expected changes in some taxes.
The 2011 draft budget was discussed in principle on Thursday parliamentary session.
2011 budget
Under the government decision approved last week, the 2011 budget, made up of the state budget, the local government budget and the special funds covering social securities, health insurance and the compensation of ex-land land owners, foresees 362.2 billion lek (3.6 billion dollars) in revenues and 409 billion lek of expenditure, taking the deficit to 46.8 billion lek, up from 38.1 billion lek under the revised 2010 budget.
Government expects a 4.1 percent growth in 2010, 5 percent in 2011, 6.1 percent in 2012 and 0.1 percent more in 2013.
Meanwhile, the International Monetary Fund (IMF) expects the Albanian economy to grow by 3 percent this year and 3.5 percent in 2011 under the new estimates raised this month, yet, almost twice less compared to government’s GDP projections.
While government says the 2010 public debt will be at 59.5 percent of the GDP, IMF’s prediction for 2010 is 62.8 percent, 2.8 percent more than in 2009. The 2011 government expectations are to lower it to 59 percent of the GDP, before dropping it to 56 percent in 2012 and 54 percent in 2013.
