Albania's general budget deficit narrows 43.7% y/y in Jan-Aug 2014

By bne IntelliNews September 23, 2014

Albania's general budget deficit narrowed by 43.7% y/y to ALL 30.9bn (EUR 392mn) in January to August 2014, data from the finance ministry showed. The improvement was mainly due to a 12.5% y/y increase in budget revenues.

In our calculations, the deficit accounted for 2.2% of the projected full-year GDP, down from 4.2% in the same period a year earlier.

The increase in budget revenues was supported by a 12.2% y/y rise in tax receipts. Within this group, revenues from VAT increased by 16.3% y/y to ALL 81.6bn, with VAT on domestic consumption up by 23.3% y/y and VAT, collected by the customs, rising by 14.4% y/y. Revenues from corporate income tax (CIT) increased by 13.9% y/y and receipts from excise duties advanced by 8% y/y. By contrast, revenues from personal income tax declined by 8% y/y in Jan-Aug. Total social contributions were up 5.7% y/y in the observed period.

On the expenditure side, capital expenditure decreased by 44.2% y/y to ALL 26.9bn. In our view, this sharp drop could be attributed to the higher base effect, since the high level of public investment in H1 2013 was influenced by the election cycle. Current expenditures dropped by 1.1% y/y to ALL 214.6bn reflecting lower expenditures on operation and maintenance (down by 19.8% y/y).

The fiscal data also showed that Albanian government has started in March 2014 clearing arrears towards private with total payments estimated at ALL 25.9bn as end-August 2014.  

Last year Albania's general budget deficit widened by 42.7% y/y to ALL 65.4bn, as revenue fell while expenditures increased. In our calculations, the gap equalled to 4.9% of the projected full-year GDP, up from 3.5% a year earlier. The government expects the budget deficit to widen to 6.5% of GDP in 2014.

General Budget, Jan-Aug, ALL bn    
   2013 2014 % y/y
Total revenues  210.2 236.4 12.5
   VAT  70.1 81.6 16.3
   Corporate profit  10.3 13.9 35.4
   Excise  23.0 24.9 8.0
   Personal income  19.4 18.3 -6.0
   National  18.0 21.7 20.7
   Customs duties  3.6 3.7 3.1
Total social contributions  39.8 42.0 5.7
   Social insurance  33.6 36.6 8.8
   Health insurance  4.9 5.4 11.0
 Non-tax Revenues  16.1 14.8 -8.6
Total expenditures of which: 265.2 267.3 0.8
   Current 216.9 214.6 -1.1
   Capital  48.2 26.9 -44.2
   Arrears   25.9 -
Balance -54.9 -30.9 -43.7
Balance (% of GDP forecast) -4.1 -2.2  
Source: Ministry of finance       

Related Articles

Albanian opposition party splits after disastrous election performance

Members of Albania’s main opposition Democratic Party (DP) that have been excluded from the party by its leader Lulzim Basha plan to establish a new political movement, local media reported on ... more

Albania's new government to make drastic job cuts in public administration

The new Albanian cabinet plans to drastically slash the number of employees in the public administration to make it more efficient. Prime Minister Edi Rama recently ... more

Dozens of ethnic Greeks arrested in Albania's Himara

Tensions in Himara, a coastal city in southern Albania, have risen after dozens of members of the Greek minority in the area were detained. The arrests were reportedly made after residents were ... more