ECONOMY

Albania’s extra budget

TIRANA (Reuters) – Albania’s parliament passed an extra budget of 28 billion leks (-220 million) late on Thursday to keep the country’s 6 percent growth on track, fund road construction and prop up the crisis-ridden KESH power utility. This is the second year in a row that the ruling Democratic Party government has passed an extra budget, thanks to growing revenue. The central bank has already raised official interest rates to 5.75 percent to ward off inflation risks. Half the money came from surplus revenues from taxes and customs, and half from the -120 million sale of landline monopoly Albtelecom to Turkey’s Calik Group, said Finance Minister Ridvan Bode. «Most of the additional budget will be used for infrastructure investment, with 90 percent earmarked for roads,» Bode told parliament. Some -60 million would go to the building of a key road linking Albania’s port of Durres to the border of Kosovo, the ethnic Albanian province seeking independence from Serbia. Barring temporary unfavorable weather conditions, such as the prolonged draught crippling Albania’s electricity supply, Bode said «the Albanian economy will continue growing, and economic growth at the level of 6 percent of GDP is guaranteed.» Albania has suffered power cuts of up to 18 hours a day in the last two winters. It is currently facing power cuts ranging from four to 14 hours a day because state power utility KESH cannot produce and import enough to cope with demand. «This budget allocates 5 billion leks to help KESH improve its financial position,» Bode said. «Five billion is enough to help it increase its capacity and continue its program of investments.» Bode predicted that a new flat tax of 10 percent on personal income would bring in 2.3 billion leks in the second half of 2007. Rising excise taxes for beer and wine would bring in another 1.7 billion leks as would rising national, port and real estate taxes.