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|
|Total social contributions||48.3||50.3||4.2|
|Total expenditures of which:||299.0||320.3||7.1|
|Balance (% of GDP forecast)||-1.9||-3.8|
|Source: Ministry of finance|
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