The Government is working responsibly and prudently and this rebalance is an appropriate and timely financial plan of policies that would be undertaken for this year to complete the cycle of economic recovery and the standard of living, said Minister of Finance Fatmir Besimi, presenting the Proposal for amending The budget for 2022, which was adopted yesterday by the Government.

Besimi said that even in a scenario of prolonged crisis in the world market of energy and primary products, the fiscal projection by the end of the year provides additional intervention to protect the standard of citizens and the liquidity of companies.

With the supplementary budget, the economic growth is projected at 3,2 percent, which is a decrease of 1,4 percentage points. in terms of macroeconomic projections when the Budget was created, and the inflation rate at 7,2 percent, which is an intensification of price growth compared to 2021. The deficit is planned at 42,7 billion denars, or 5,3 percent of GDP , which is by 9,1 billion denars more than the initial budget. Deficit and repayment of external and domestic debt in the amount of Denar 11,8 billion, or a total of Denar 54,5 billion, will be financed through Denar 59,3 billion in international and Denar 21,6 billion in domestic debt. market.

The total revenues are planned at the level of 245,8 billion denars and are about 6,9 billion denars or 2,9 percent higher than the initial budget projections. The planned level of tax revenues is five percent higher than the Budget. The amount of total planned expenditures, on the other hand, is 288,5 billion denars or about 16,1 billion denars (5,9 percent) more than the initial projections with the plan for 2022.

As Besimi explained, the disruption of global supply chains as a result of the pandemic proved to be longer-term and contributed to price pressures on primary products such as food and energy, and the war in Ukraine "added fuel to the fire". Since the beginning of the year, the conflict has created additional pressures on primary products, due to the significant role of Russia and Ukraine in European and world supply chains, as one of the largest exporters of energy and cereals. said Besimi.

Given the projections for our largest trading partners, said the Minister, as well as the fiscal measures taken to protect the standard of citizens and support companies, the expectations for our economy are that the recovery of the economy last year will continue in 2022, but at a slower pace. However, Besimi emphasized, the expectations are that in 2022 the economy will return to the pre-crisis level.

Pointing out that the growth projections correspond to the latest projection of the International Monetary Fund (IMF) for the country, Besimi said that demand is expected to be the main driver of growth, with private consumption projected to grow by 3,3 percent. The impact of price pressures on household income will be neutralized through the increased minimum wage, increased pensions, but also through other government measures to mitigate the effects of the price shock. Real growth of five percent is projected for gross investments. In addition to capital budget expenditures, an appropriate contribution is expected from private investment, primarily as a result of support for private sector development and strengthening competitiveness.

The supplementary budget made changes in relation to the initial projections on the revenue and expenditure side of the Budget.

- The total revenues with the supplementary budget are planned at the level of 245,8 billion denars and are about 6,9 billion denars or 2,9 percent higher compared to the initial projections of the Budget. Tax revenues are planned at a level 5 percent higher than the Budget. This is primarily due to the increase in the tax base for certain types of taxes, as a result of increased consumption, increase in average wages, higher profitability of companies, as well as based on expectations for improved tax revenue due to reduced the shadow economy, intensified tax control and simplification and digitalization of tax procedures, and further realization of the goals and priorities of the Strategy for tax system reform 2021-2027, said Besimi.

The total expenditures, as he added, are planned at the level of 288,5 billion denars or higher by 5,9 percent, ie about 16,1 billion denars more than the initial projections with the plan for 2022. That is, 24,2 billion denars are the additional expenditures, of which 4,2 billion denars for the increase of pensions are realized by PDIF, and four billion are cuts in the Budget. The deficit is planned at the level of Denar 42,7 billion, ie 5,3 percent of GDP, which is Denar 9,1 billion more compared to the initial budget.

- Expenditures for payment of salaries are projected at the level of 33,2 billion denars, which includes the effects of control of new employment, optimization of public administration, as well as the effect of harmonizing the salaries of employees with budget users with the minimum wage. Expenditures on goods and services are planned in the amount of about 23 billion denars. Maximum optimization has been done here, but the increased energy prices have also been taken into account in order for the smooth performance of public services. This includes NATO obligations and the procurement of books in education, said the Minister of Finance.

With the supplementary budget, the current transfers are planned at the level of 189,7 billion denars or about 19 billion denars higher than the plan for 2022. That, as Besimi said, funds are needed for economic measures to support citizens and the economy.

They provide additional financial support of 4,7 billion denars to protect the standard of living of the citizens and the liquidity of the economy in conditions of prolonged crisis on the world market of energy and primary products. More targeted measures in the future for protection of the standard of the citizens, stressed Besimi. Also, additional subsidies and transfers for direct financial support in the agricultural sector by providing additional 3,2 billion denars, in order to stimulate yields and amortize the price pressures on basic food products. Transfers to the local self-government units have been increased to increase the salaries of the employees in the kindergartens, as well as for the employees in the primary and secondary schools by 15 percent starting from September 2022. Pensions are further increased, according to the new calculation methodology, according to which the adjustment of pensions is done according to the movement of the cost of living index in the amount of 50 percent and the same according to the increase in the average salary of all employees.

- A larger amount is planned for the program for subsidizing salary support contributions and it is intended to encourage employers to pay higher salaries in order to improve the economic standard of employees in the private sector, ie the additionally planned amount includes the effect of subsidized contribution to the difference in wages to the minimum wage in accordance with the law. For the beneficiaries of the right to guaranteed minimum assistance, additional financial support in the amount of 2,4 billion denars has been provided, said Besimi.

Capital expenditures are planned at the level of 32,2 billion denars and are about six billion denars lower than the plan for 2022. According to the Minister, despite this, their amount is at an all-time high, and projects for the construction of roads, railways, gas pipelines will continue.

Besimi announced that in the medium term, despite the risks and uncertainty, fiscal policy will continue towards further consolidation and restructuring of public expenditures by gradually reducing the budget deficit and public debt, stimulating economic activity through capital expenditures and infrastructure investments, as well as on the conditions for doing business and creating new jobs.

"I sincerely hope that the second half of the year will be marked by a more predictable global macroeconomic environment and that we will be able to focus much more strongly on development challenges, in the interest of current and future generations," Besimi said.

In the first four months of this year, the total revenues of the Budget were realized in the amount of 78,9 billion denars or about 33 percent of the projected, ie they are higher by 15,8 percent compared to the collected for the same period last year. All types of tax revenues increased compared to the analyzed period last year and increased by 21,2 percent compared to the same period last year. There is also an increase in income from social contributions by 6,2 percent.

The total expenditures in the period January-April 2022, on the other hand, were realized in the amount of 83,6 billion denars or about 30,7 percent of the projected. Compared to the same period last year, they are higher by 9,2 percent. During this period, the Minister pointed out, the obligations of the budget users, the legal rights of the citizens and the due obligations to the domestic and foreign creditors were settled in a timely and uninterrupted manner. Funds were also allocated for anti-crisis measures, of which Denar 5,3 billion financial support for ESM to deal with the energy crisis and maintain a lower price of electricity for regulated consumers. In that period, a deficit in the amount of Denar 4,6 billion or 0,6 percent compared to the projected GDP for 2022 was realized.

International organizations, in line with the latest developments, have conducted a downward revision of the projections for global growth. Thus, the IMF expects the global economy in 2022 to grow by 3,6 percent, or 0,8 percentage points less than the January projection. EU economic growth is projected at 2,9 percent, while the German economy, the largest in the EU and most important for domestic exporters, is projected to grow by 2,1 percent in 2022. Inflation in the euro area, after the expected acceleration of 5,3 percent in 2022, in the coming period is projected to slow down and move around two percent.