Budget 2014 is trying to stop the plunge of public revenues, which have been dropping for years. The government is expected to collect 364 billion ALL or 40 billion ALL more than this year. This is 26.1% of the Gross Domestic Product. “We see a growth of the revenues in this package, and that is […]
Budget 2014 is trying to stop the plunge of public revenues, which have been dropping for years. The government is expected to collect 364 billion ALL or 40 billion ALL more than this year. This is 26.1% of the Gross Domestic Product.
“We see a growth of the revenues in this package, and that is equal to the average of the past 10 years”, declared the Minister of Finances, Shkelqim Cani.
Almost half of this category comes from direct tax increase on citizens and business. This is the first thing that has been disliked by the budget.
“There are no investments because nothing remains to businesses, because citizens have not saved”, declared the Democratic Party Parliament Member, Ridvan Bode, former Minister of Finances.
The government is increasing more to spend more, 455 billion ALL in total. This is the highest level of the Gross Domestic Product, since the electoral year of 2009.
But regardless of this pace of spending, different from other times, the budget freezes wages and investments are down to 5% of the Gross Domestic Product.
“This budget could have played an active role for the government. It hits the encouragement of investments and growth of the consumption request”, Bode declared.
There are two reasons for increasing salaries and reducing investments. First of all, the new majority has decided other priorities for the economy.
“We have our priorities for developing infrastructure, agriculture, education and health. We will orient the priorities according to the government program”, declared the Socialist Party Parliament Member, Anastas Angjeli, a few days ago at the Parliamentary Commission.
The Minister of Finances says that they will pay 35 billion of debts in 2014.
The payment of all debts to small business is a strong electoral promise of the Socialist Party, also demanded by the internationals. But this comes with increased taxes and increased debt. The government is obliged to take a 91.6 billion ALL debt.
“Yes, we will take new debts to pay the old ones, because there is no other way”, Cani declared.
This is one of the highest deficits in history, that can be compared with 2009, which shocked the state finances, although the debts at that time was lower. Part of the deficit was made by privatizations.
The record breaking deficit will make the budget face high risks. The government financed today a free debt, due to the drastic fall of interests. But some experts warn that this could be a trap. If interests will return to average levels again, with this deficit, the state will have a strong shock, turning into a menace for the economy. Especially now that the government has another problem… refinancing the 300 million EUR eurobond, which with the devaluation of Standard and Poor’s will open new dangerous scenarios for the country’s finances.
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