TIRANA, Sept. 22 – Albania’s public finances failed to meet their revenue target even last August after the 2015 budget was revised downward in late July on underperforming revenue affected by a drop in international oil and base metal prices.
Latest data published by the finance ministry show government revenue increased by 5.1 percent to 248.5 billion lek (€1.75 billion) in the first eight months of this year but failed to meet their target by 1.1 percent or 2.78 billion lek (€19.6 million).
The value added tax, levied at a fixed 20 percent rate on almost all goods and services and accounting for one-third of total government revenue, continues underperforming. VAT, which is also an indirect indicator of the country’s domestic consumption, was down by 1.7 percent 80.2 billion lek (€566 mln) in the first eight months of this year.
Lower imports of fuel and tobacco in the first eight months of this year also affected the excise tax which was up by 4.4 percent to 26 billion lek (€183 mln) year-on-year, but yet failed to meet its August target.
The underperforming revenues, which have also forced the Albanian government to undertake a nationwide campaign against informality, also affected public investments which rose by 6.4 percent to 28.6 billion lek (€202 mln) in the first eight months of this year but were down by about 10 percent compared to the target set for this period.
The tight spending policy has allowed the government to keep the budget deficit in check during the first eight months of this year. The deficit in January-August 2015 dropped to 16.3 billion lek (€115 mln), down 47 percent compared to the same period last year, but 24 percent compared to the target government had set.
The poor performance in the first half of this electoral year forced the Albanian government to revise downward its overoptimistic 2015 budget while the International Monetary Fund has postponed its new loan tranche as part of a three-year Euro 331 million loan.
Under a normative act, the Albanian government was forced to cut spending by €114.6 million to 456.4 billion lek (€3.2 billion) on lower royalty collected from oil production, lower imports of fuel and tobacco and a rising number of VAT-free imports of machinery and equipment.
The Albanian government and the IMF have recently revised Albania’s 2015 GDP growth to 2.7 percent down from an initial 3 percent on lower international oil prices affecting exports and spillover impacts from the crisis in neighboring Greece.
