Construction hits budget

18/10/2011 08:15

Since 2009, the construction sector in Albania has failed to get past
the crisis. First were the banks, and then the lack of construction
permits which put this sector in a difficult situation.

“Shqip” newspaper writes that although the economic situation has changed in general, with the banks being more tolerant and permits released, the construction sector is still facing very hard difficulties, if not on the brink of collapse, at the point that it is affecting the state budget.

What is happening with the biggest economic sector in the country, which contributes for 14% of the GDP, can be clearly seen in the numbers of the Ministry of Finances, related with the tax payment, specifically with the VAT.

Confirmed data for the first 7 months of 2011, based on VAT, show that this is the weakest sector, although it’s in the top 5 biggest industries in our economy.

The contribution of this sector in the VAT has plunged with 35%, compared to the first 7 months of 2010, or with 15 million USD.

The private sector has fallen to the point that 20 construction companies have closed, adding more unemployed on the job market.

The director of the Construction Association says that it remains a problem the lack of bank loans, and that they want the government to interfere with the mortgage guarantees.

“Banks do not credit us, because the 35% deficit showed in the VAT also shows the shortfall”, declared Ilir Hebovija.

The construction sector received the biggest hit in 2010, when the government decided to interrupt the public investments with a value of 400 million USD, due to the financial crisis.

If this wasn’t enough, the constructions saw this year another expense cut of around 180 million USD, again for the public works.

The Constructors Association also complains for the money that the state owes to them, more specifically, the Ministry of Public Works and Transportation.

INSTAT reported that the construction activity had an increase of 4.8% in the first trimester of 2011, compared to the first trimester of 2010, and 11.8% compared with the fourth trimester of 2010.

Things are looking bad even for the service sector, such as banks and phone companies, where the VAT contribution has decreased with 24%.

According to the Ministry of Finances, this was caused by the reduction of the phone call fees, the tax that is finally paid by the consumer.

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