Electoral investments, higher expenses

Recent data from the Finance Ministry show that government expenditures on public projects during the last two months were twice higher than last year’s.

According to the Finance Ministry, public investments during February were 14.1 billion lek, almost twice compared to last February’s 6.8 billion.

Most of the money comes from inner sources, taxes and loans that government takes from Treasury Bills in the local market. Expense increases on the verge of local elections are also signaled by another indicator.

On the first two months of 2010, the government had realized 6.7 percent of the promised investments. This year’s first two months saw an investment realization of 17.1 percent.

But investment expenses are not the only indicators. Further data show that other budget expenses are much higher than one year before.

In total, budget expenses for February were 58 billion lek or 26% higher than last year’s February.

Budget expense increase during electoral campaigns is a tradition held by governments with an electoral effect. But on a high inflation situation, budget expense increase can stimulate price hikes.

This concern was confirmed some days ago by the Albanian Bank, who increased the interest rates and the Governor sent a clear message to the government: “This decision precedes a calm and cautious period”, Fullani declared.

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