Albania’s general budget gap widens 71.5% y/y in Jan-Nov 2013.

By bne IntelliNews January 10, 2014

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    
   2012 2013 % y/y
Total revenues  301.6 292.2 -3.1
   VAT  107.1 99.3 -7.3
   Corporate profit  15.2 13.6 -10.7
   Excise  33.1 33.2 0.1
   Personal income  25.0 26.0 4.1
   National  26.2 25.5 -2.5
   Customs duties  5.5 5.1 -8.6
Total social contributions  52.7 54.9 4.2
   Social insurance  45.2 46.7 3.3
   Health insurance  6.4 6.7 5.1
 Non-tax Revenues  21.8 20.2 -7.2
Total expenditures of which: 336.8 352.7 4.7
   Current 281.7 295.6 4.9
   Capital  53.1 57.1 7.5
Balance -35.3 -60.5 71.5
Balance (% of GDP forecast) -2.7 -4.5  
Source: Ministry of finance       
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