What really happened with the budget

“In this problematic and electoral year, we still have a positive balance, which we call primary surplus”, Bode declared.

This statement is in fact a lapse. The current budget doesn’t have a surplus, but a deep primary deficit which goes to 24 billion ALL, or more than 2% of the GDP. And this is one of the most important indicators of the finances in a country, since it shows what is happening with the public debt.

If the government has a surplus, the debt decreases. But a primary deficit makes the debt grow. The debt of Albania is growing with a fast pace now. Mr.Bode in fact refers to another indicator, which was explained later and is the current balance, or as it is known differently, the public saving, which shows what debts the government is taking for development or for paying basic non-productive spending.

“…about 8 billion ALL, because investments are 44 billion ALL compared to 35 billion ALL of total loans”, Bode declared.

This confirmation is partially exact too. It is true that investments are higher than the loan, but the Ministry has not calculated the privatization money. If they are included, the budget has a current deficit. Hence, the government is not funding investments with their tax revenues, but they are using privatization money that will not be paid by a single generation. For this reason, IMF has imposed for years to the Albanian governments a rule that would automatically bring half of the privatizations for paying debts and not leaving a burden to the new generations, a rule that the government violated in 2009. Bode answered to the questions for the political usage of the budget.

“The usage of the budget deficit in the first six months is a known practice that we have made every year”, Bode declared.

Numbers show that always on electoral years, the government concentrates its deficit on the first months of the year before the elections, which are usually in mid year. More than the local administration, this is the reason, together with the shrinking of the economy and the lowered taxes before the elections, that has made the financial indicators unbalanced.

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