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The government sets a "historical record": zero lek public investments in the month of January

The government sets a "historical record": zero lek public investments

The Albanian government has not spent any lek on investments during the month of January this year.

According to the government's fiscal traders, reported by the Bank of Albania, the value of capital expenditure was ALL 0. At least since December 1997, this is the first time that the monthly capital expenditure item in the budget marks the level of 0.

In fact, the trend of the value of public investments in the month of January is decreasing for the third year in a row. From almost two billion ALL in 2021, capital expenditures for the month of January decreased to 649 million ALL in January 2023. Meanwhile, this year capital expenditures have touched the lowest possible level, at zero.

Parallel to the halting of capital expenditures, the budget for January reported a significant increase in current expenditures, by 10% compared to the same period last year.

As expected, even for January, the state budget resulted in a surplus, for a value of 15.8 billion ALL, increasing by 2.9% compared to January 2023.

The inability to distribute capital expenditures in a relatively balanced way is a historical trend for the state budget in Albania. But, this tendency is being emphasized even more in recent years. In 2022 and 2023, the entire annual budget deficit was spent in December.

The strong concentration of budget expenditures and mainly capital expenditures in the last months, if not in the last month of the year, has implications not only in the performance of the government's fiscal indicators, but also in the private sector's balance sheets and in important market indicators. financial.

During the past year, the accumulated record budget surplus affected the stagnation of bank deposits in Lek, at least until November. Also, the high government surplus created a significant liquidity gap in the banking sector and dictated the need to increase the use of liquidity instruments provided by the Bank of Albania, mainly reverse repurchase agreements.

The tightening of Lek liquidity in the financial sector is estimated to have had its own effects on the foreign exchange rate. In part, the unprecedented strengthening of the Lek against the Euro during 2023 was also influenced by this factor.

The existence of a significant mismatch between the timing of public borrowing, through the periodic issuance of debt securities, and the timing of public spending results in large liquidity surpluses in government accounts and increased interest expenses. This issue is also highlighted in the reports of the State High Control.

According to the normative act of the month of February, the capital expenditures of the state budget for this year are predicted in the amount of 135.6 billion lek or 5.6% of the Gross Domestic Product. The value of public investments is expected to increase by 14% compared to 2023./ Monitor

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