TIRANA: Albania sees its budget deficit falling to 3 percent of GDP next year and economic growth edging up to 4.3 percent despite the debt crisis in its chief trading partners Italy and Greece, according to the budget bill passed by parliament on Saturday.
The 2012 growth forecast is much more optimistic than an IMF estimate of just 1.5 percent or a World Bank forecast of 2 percent.
For this year, the government forecasts 4 percent economic growth and a deficit of 3.5 percent of GDP. The deficit would be lower than in most European countries.
The budget passed with the 74 votes of Prime Minister Sali Berisha's ruling coalition just after midnight after a full day of heated debate.
The opposition Socialist Party voted against. Its leader Edi Rama, meeting Greece's former premier George Papandreou, said the government must be transparent about economic data to avoid difficulties.
Albania's annual economic growth has halved to around 3 percent over the past three years due to the global financial crisis and economic downturn, while its public debt is the highest in the Balkans at 59.4 percent of GDP.
Around 1 million Albanians work in Greece and Italy, a valuable source of remittances now under threat from the euro zone debt crisis. Remittances have fallen from around 1 billion euros at their peak in 2007 by 7 to 10 percent each year.
"We are not ignoring the crisis around us, but we shall do everything to preserve the macroeconomic indicators and give money every month to Albania's 800,000 families," Berisha told parliament.
The budget sees state wages and pensions rising in mid-2012, but taxes will not increase. The past two years saw Albania rein in spending in mid-year budget reviews due to falling revenues.
The draft sees revenue of 355.8 billion Albanian leks (ALL) (2.544 billion euros) in 2012, up 8 percent on expected 2011 revenues, or 25.5 percent of gross domestic product (GDP).
Expenditure for 2012 will be around 397 billion ALL, or 28.5 percent of GDP.
Despite government assurances that the budget takes into account the worsening outlook for the euro zone, the International Monetary Fund says the predicted 8 percent rise in revenues is optimistic.
The World Bank has warned that the crisis in the euro zone will hurt Albania's trade, foreign investment and remittances. There are also warnings over the fact that one third of assets in the Albanian banking sector are Italian and Greek controlled.
Albanian Finance Minister Ridvan Bode identified lower levels of lending as an added risk to the economy, but said the banking system was otherwise solid, liquid and capitalised.
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