By Gjergj Erbara/*
The Albanian government used emergency measures to cut its expenditures by four per cent for this year to keep its budget deficit unchanged despite disappointing revenues.
The Albanian government used emergency measures to cut its projected revenues and expenditures for 2015 after the first part of the year showed sluggish growth in tax receipts, putting in doubt the current strategy that aims to revive economic growth by cutting public debt.
Using a ‘normative act’ – a government decision with the power of a law that ensures rapid passage through parliament – the left-wing government cut its planned expenditures and revenues by 116 million euros, almost four per cent of its 2015 budget, in order to keep the overall deficit unchanged.
The normative act was signed on 29 July but was kept secret and not published on the government’s official webpage. It was discovered by local media only after it appeared in the country’s Official Gazette on Tuesday.
The government leaded by the Prime Minister Edi Rama has already been criticised for backtracking on its transparency standards, especially when its decisions concern the budget or tax policies.
Ministry of Finance statistics published earlier this week showed that tax revenues were 96 million euros lower than the expectations for the first half of this year.
Rama said last week that he is studying the causes of the bad performance but has come to no conclusions yet.
“We are in the process and near to finishing an in-depth analysis on the causes of the revenue shortfall compared to the forecast,” he said.
However, the International Monetary Fund representative in the country told Top Channel TV that he thought that there are administrative problems in the tax collection agencies.
“There are some external factors, like low oil prices, low [money] interest rates or low inflation. But some others has to do with the applicability of the law and tax regulations. So, there is a problem in the administration. Taxes are not low in Albania but the performance of the revenues is not strong,” said the IMF representative in Albania Jens Reinke.
The IMF has yet to give its approval to a review of its current three-year agreement with Albania.
The government has promised to counter tax evasion through a mass campaign starting in September and by toughening legal punishments of tax cheaters. However, many experts have noted that the country’s revenue problem lies mostly in the customs administration service, which is responsible for collecting the majority of taxes in the country and has achieved poor results during the last several months.(Balkan Insight)