Albania’s general budget deficit widened by 71.5% y/y to ALL 60.5bn (EUR 430mn) in January to November 2013 as revenue fell, while expenditures increased, finance ministry data showed. In our calculations, the deficit accounted for 4.5% of the projected full-year GDP, up from 2.7% a year earlier.
Total budget revenues declined by 3.1% y/y to ALL 292.2bn, which was exclusively due to shrinking tax revenues (down 4.5% y/y). Within this, the combined revenue from indirect taxes fell by 5.7% y/y as VAT revenues decreased by 7.3% y/y with VAT on domestic consumption down 6.3% y/y and VAT, collected by the customs, dropping 7.5% y/y.
Moreover, revenues from customs duties fell by 8.6% y/y, while excise only receipts remained flat y/y. Lower revenues from indirect taxes signal for a continued stagnation of the domestic consumption. By contrast, revenues from personal income tax advanced by 4.1% y/y in January to November 2013.
On the expenditure side, total budget spending increased by 4.7% y/y supported by a 4.9% y/y rise in current expenditure and a 7.5% 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.
We note that the government projected the budget deficit to widen to 6.6% of the GDP in 2014.
|General Budget, Jan-Nov, ALL bn|
|Total social contributions||52.7||54.9||4.2|
|Total expenditures of which:||336.8||352.7||4.7|
|Balance (% of GDP forecast)||-2.7||-4.5|
|Source: Ministry of finance|
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