TIRANA, Jan. 27 – Albania’s public finances failed to meet targets by about 20 billion lek (€141 million) in 2015 when the budget was revised three times, including twice in December, according to a report by the finance ministry.
Data shows the value added tax and excise duties, the two key taxes accounting for almost half of total government revenue, had the key negative impact on the underperforming 2015 revenues which failed to meet the target by 5 percent even under the revised December budget.
VAT, which is levied at a fixed 20 percent rate on almost all goods and services and accounts for almost a third of total government revenue, failed to meet the target by 5.6 billion lek (€40 mln) while excise duties undershoot the target by 13 percent or about 5.9 billion lek (€42 mln). The performance of these key taxes indicates sluggish domestic consumption, the key driver of the Albanian economy.
The poor performance in revenue collection also affected government spending, especially public investments which were cut by 1.8 billion lek (about €13 mln).
The critical situation in the country’s hydropower plants due to prolonged lack of rainfall during the past few months forced the Albanian government to make a second review to the 2015 budget by awarding a 1 billion lek (Euro 7.1 million) fund on energy imports late last December. The fund was awarded as loan transfer to state-run power corporation, increasing state-lending to the energy sector to 2 billion lek (14.3 mln).
The decision made on Dec. 28 through a normative act which has the force of law for temporary measures, came few days after the 2015 budget was revised downward for a second time in mid-December following underperforming revenue even after a previous mid-year budget cut and a nationwide campaign against informality.
Underperforming revenues even after a mid-year budget cut and an aggressive nationwide campaign against informality forced the Albanian government in mid-December to cut the budget of several central government institutions by 2.5 billion lek (€17.8 mln) including key institutions such as the Prime Minister’s office, the ministries for economic development, transport and health.
