Albania’s general budget deficit widened by 96.5% y/y to ALL 22.8bn (EUR 162.1mn) in the first four months of 2013, finance ministry data showed. In our calculations, the deficit accounted for 1.6% of the projected full-year GDP, up from 0.9% a year earlier.

Total budget revenues edged up by 0.3% y/y to ALL 106.7bn, which was exclusively due to non-tax revenues that surged by 30.6% y/y. On the other hand, tax receipts dropped by 3% y/y to ALL 94.6bn. The combined revenue from indirect taxes fell by 5.9% y/y, as VAT revenues decreased by 6% y/y with VAT on domestic consumption down by 5.7% y/y and VAT, collected by the customs, dropping by 6.1% y/y. Moreover, revenues from customs duties and excise fell by 9.5% y/y and 5% y/y, respectively. Lower revenues from indirect taxes signal for a continued stagnation of the domestic consumption. By contrast, corporate tax revenues increased by 1.6% y/y and revenues from personal income tax also advanced by 7.6% y/y in Jan-Apr 2013.

On the expenditure side, total budget spending increased by 9.8% y/y supported by a 5.6% y/y rise in current expenditure and a 45% y/y increase in capital expenditure. The latter accounted for 36.5% of the full-year plan, which was higher that the 25.5% share a year earlier. In our view, higher spending on public investments could be partly explained by pre-election expenditures as Albania will hold parliamentary vote on June 23.

The government expects the budget gap to account for 3.4% of the GDP in 2013, higher that the 3% target set for 2012.