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The government has money, but is not spending it/ The budget accumulates a 500 million euro surplus in June

2024-07-25 10:18:00, Ekonomi CNA

The government has money, but is not spending it/ The budget accumulates a 500

The Ministry of Finance expected the budget surplus to reach 21.3 billion ALL in June this year, but the latest data show that the positive balance has reached a value of 51.4 billion ALL (500 million euros) or 141 percent more than the budget plan.

The accumulation of the surplus, more than the increase in income, has been helped by the non-realization of public investments according to the budget plan. This whole situation has helped the government to maintain a liquid account of 500 million euros.

This is not good news for the economy anyway. In the first half of 2024, the budget surplus in value was 11 percent higher than in the same period of 2023, while the rate of revenue growth fell to 7 percent from 14.5 percent in the 6-month period. the first of last year.

In January-June 2024, capital investments were only 26.5 billion, which is 19.6 percent of the annual plan of 135 billion ALL.

By maintaining the budget surplus beyond all forecasts, the government is negatively affecting economic growth according to the latest monetary policy report from the Bank of Albania.

Also, the government's surplus is affecting the reduction of banks' exposure in the purchase of government debt, exerting pressure to lower interest rates.

Net borrowing in the foreign market for the first three months of the year was about ALL -2.6 billion, influenced by the repayment of foreign debt to a greater extent than the inflows in this period.

Developments in government borrowing, along with fiscal surplus figures, factored into high liquidity surpluses, available for spending in the months ahead.

In the second six months of the year, the government has available 110 billion ALL or more than 1 billion euros in public investments alone. The concentration of the investment fund at the end of the year has become a long-term practice for the government, but for the Bank of Albania this situation becomes the reason for the strengthening of the lek in most of the year.

By using the budget surplus at the end of the year, the effectiveness of the use of public funds decreases and the lack of transparency increases. Public entities already report only on the funds spent and are unable to report on the realized products and the progress in time of the cost for each of the public investment products./Monitor