Albania’s general budget gap more than doubles y/y in Jan-Oct 2013

By bne IntelliNews November 26, 2013

Albania’s general budget deficit surged by 111.7% y/y to ALL 54.5bn (EUR 388.6mn) in January to October 2013 as revenue fell, while expenditures increased, finance ministry data showed. In our calculations, the deficit accounted for 3.8% of the projected full-year GDP, up from 1.9% a year earlier.

Total budget revenues declined by 2.7% y/y to ALL 265.8bn, which was exclusively due to shrinking tax revenues (down 5% y/y). Within this, the combined revenue from indirect taxes fell by 6.7% y/y as VAT revenues decreased by 7.6% y/y with VAT on domestic consumption down 8.7% y/y and VAT, collected by the customs, dropping 7.3% y/y.

Moreover, revenues from customs duties and excise fell by 9.4% y/y and 3.5% y/y, respectively. Lower revenues from indirect taxes signal for a continued stagnation of the domestic consumption. By contrast, revenues from personal income tax advanced by 6.3% y/y in January to September 2013.

On the expenditure side, total budget spending increased by 7.1% y/y supported by a 5.7% y/y rise in current expenditure and a 20% y/y increase in capital expenditure. In our view, higher spending on public investments could be partly explained with the pre-election expenditures as Albania held parliamentary elections on June 23.

General Budget, Jan-Oct, ALL bn    
   2012 2013 % y/y
Total revenues  273.2 265.8 -2.7
   VAT  97.1 89.7 -7.6
   Corporate profit  13.9 12.5 -10.0
   Excise  30.7 29.6 -3.5
   Personal income  22.6 24.0 6.3
   National  23.9 23.1 -3.3
   Customs duties  5.0 4.5 -9.4
Total social contributions  48.3 50.3 4.2
   Social insurance  41.2 42.5 3.2
   Health insurance  6.0 6.2 3.8
 Non-tax Revenues  19.6 19.0 -3.1
Total expenditures of which: 299.0 320.3 7.1
   Current 252.2 266.7 5.7
   Capital  44.7 53.6 19.9
Balance -25.7 -54.5 111.7
Balance (% of GDP forecast) -1.9 -3.8  
Source: Ministry of finance       
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