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2024, budget expenditures in relation to GDP, at the lowest level since 2010

2025-05-06 07:28:00, Ekonomi CNA

The country's economy is expanding at a pace above the average of the past decade, positively affecting the growth of budget revenues. But on the other hand, the inability to fulfill the budget program in the area of ??expenditures is making the redistribution of income inefficient.

Official data show that last year, budget expenditures in relation to GDP reached 28.9%, marking the lowest level in the last 14 years, since 2010 (see chart below).

Albania marked a regression in relation to itself in the ability to implement the state budget law in the area of ??expenditures, but also had the worst position in the region.

Public spending in all Western Balkan countries increased in 2024, reaching an average of 38.6% of GDP, up from 36.8% in 2023. Montenegro recorded the highest spending increase at 45.9% of GDP, mainly due to increases in minimum pensions and capital spending.

Bosnia and Herzegovina ranked second for the highest level of spending with 45.3%, while Albania ranked on the other hand with the lowest level of public spending in the Region with only 28.9% of GDP followed by Kosovo with 30.1%.

The World Bank recently analyzed that countries in the Region increased budget expenditures mainly from social payments, with pensions dominating most of the growth.

Montenegro recorded the most significant increase, 1.7 percentage points of GDP, from the increase in higher minimum pensions, followed by Bosnia and Herzegovina. North Macedonia, Serbia and Kosovo experienced more moderate increases, while Albania had the lowest increase in pension spending.

Bosnia and Herzegovina and North Macedonia allocated significant portions of their budgets to pensions, with both countries spending nearly a fifth of their GDP on social benefits in 2024.

Ensuring the long-term sustainability of state pension systems remains a key challenge for most G6 countries, given rising spending pressures, informality and ageing populations.

Meanwhile, with the exception of Montenegro, public wage expenditure continued to increase as a percentage of GDP. North Macedonia and Serbia recorded the highest increases with 0.7 and 0.6 percentage points of wage expenditure relative to GDP, respectively, while Albania, Kosovo and Bosnia and Herzegovina saw a moderate increase of 0.2–0.3 percentage points.

Despite gradual wage increases in the public sector, Albania's wage bill remains the lowest as a share of GDP at 4.5%, significantly below the regional average.

Most G6 countries are experiencing a recovery in capital spending. The regional average increased from 5.2% of GDP in 2023 to 5.4% in 2024.

Serbia led the region with a 0.9 percentage point increase, reaching 7.3%, followed by Montenegro and Kosovo, which saw increases of 0.7 and 0.6 percentage points, respectively. Bosnia and Herzegovina also recorded a moderate increase of 0.4 percentage points, while Albania remained in the same position./ Monitor.al