Albania’s general budget deficit narrows 82.3% y/y in Jan-Feb 2014.

By bne IntelliNews March 21, 2014

Albania’s general budget deficit narrowed by 82.3% y/y to ALL 1.7bn (EUR 11.9mn) in January to February 2014, data from the finance ministry showed. The improvement was supported by a 4.9% y/y increase in budget revenues coupled with a 9% y/y drop in expenditures. In our calculations, the deficit accounted for 0.1% of the projected full-year GDP, down from 0.7% in the same period a year earlier.

The increase in budget revenues was exclusively on account of a 5% y/y rise in tax receipts. Within this group, revenues from VAT increased by 17.5% y/y to ALL 18.3bn, with VAT on domestic consumption up by 47.9% y/y and VAT, collected by the customs, rising by 8.1% y/y. Growth in VAT revenues was sufficient to offset falling revenues from excise (down by 21.6% y/y) and personal income tax (down by 7.3% y/y). Revenues from corporate income tax stagnated in the period.

Total social contributions picked up 1.2% y/y in Jan-Feb period.

On the expenditure side, capital expenditure declined by 71.9% y/y to ALL 2.6bn. On the other hand, current expenditure advanced by 2.7% y/y to ALL 51.4bn, pushed up by higher social insurance outlays (up by 10.2% y/y)

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 deficit accounted for 4.9% of the projected full-year GDP, up from 3.5% a year earlier.

We note that the government expects the budget deficit to widen to 6.5% of the GDP in 2014.

General Budget, Jan-Feb, ALL bn    
   2013 2014 % y/y
Total revenues  49.9 52.4 4.9
   VAT  15.6 18.3 17.5
   Corporate profit  2.4 2.4 0.3
   Excise  4.7 3.7 -21.6
   Personal income  4.9 4.6 -7.3
   National  4.1 4.8 16.2
   Customs duties  0.7 0.8 6.0
Total social contributions  10.4 10.5 1.2
   Social insurance  9.4 9.2 -1.8
   Health insurance  0.7 1.3 87.6
 Non-tax Revenues  4.8 4.4 -7.6
Total expenditures of which: 59.4 54.1 -9.0
   Current 50.1 51.4 2.7
   Capital  9.3 2.6 -71.9
Balance -9.5 -1.7 -82.3
Balance (% of GDP forecast) -0.7 -0.1  
Source: Ministry of finance       

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