Economic growth, failed predictions

10/06/2011 15:50

The government was obliged to admit that the economic growth will be
lower from what they had predicted in the beginning of the year.
Top-Channel has learned that the Ministry of Finances will present the
reviewed budget to the government, which lowers the economic growth for
2011 from 5.5% to 5%.

Due to the weak economic indicators, also reflected by the lower budget revenues, the government is obliged to make budget interventions for avoiding another public debt increase. Ministry of Finance sources say for Top-Channel that budget expenses will decrease by 16-18 billion ALL.

Although there are no official versions about the budget cuts, voices say that public investments will suffer more. With these expense cuts, the new debt limit for 2011 remains unchanged, specifically 46.8 billion ALL. With the decrease of economic growth, the budget deficit and public budget would have deteriorated, but the government benefited from price increases, which enabled them to leave these indicators unchanged.

This means that although Gross National Product will be lower than the government predictions, it will be unchanged in monetary value, due to high inflation. This leaves space to the government for taking more debts without increasing the deficit towards the Gross Domestic Production.

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