Government reduces expenses
26/05/2012 00:00
Linda Rama: Between Family, Work and Albania’s Future 18/08 14:30
The official data of the first four-month period of this year show that
the state budget has deviated from the predictions, by obliging the
government to start cutting public investments for keeping its finances
under control.
According to the Minister of Finances, the government reduced the investments with twice this March. The investments for this four-month period reach 73 million USD, or 30% less than the same period of last year. The data show that this is the lowest investment figure with the budget money, since 2008, and the cuts seem to be related with two main causes.
The revenues that the government collects from taxes and other financial resources keep growing with a slow and almost inconsiderable pace, if they are devaluated by inflation. In the first four months, the total of the budget revenues was 106.2 billion ALL, or only 2.5% more than in the first four months of last year. But while the revenues are growing slowly, some expense indicators have grown fast, despite the government’s austerity measures. The operative expenses increased from January to April with 30 million USD, while the pensions with 16 million USD, compared to one year ago.
The investment cut was the method that was mostly used by the government for compensating the fall of revenues in the last years. In the beginning of the last year, the initial budget predicted the capital expense to be 6.2% of the national production, but the failure in realizing the revenues obliged the government to reduce them under 5%, for the first time in many years.
The budget investments this year are predicted to be 5% of the national production, a limit set by the Ministry of Finances, as indispensable for supporting the economic increase. But the current pace of the revenues and obligatory growth of some expenses, already compromises the investments.
Chances are that the government will be obliged to review the budget even for this year, after June, for correcting the economic growth of 4.3% that has been predicted, and also for approaching the optimistic revenue plans. In these conditions, the only hope for the public investments to not be hit, remains on the privatization of the four hydro power plants that were removed from the Albanian Power Corporation ownership.
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