Page 140 - SE Outlook Regions 2023

uncertainties in the forecast brought about by the degree of
improvement in tax efficiency and the degree of improvement in the
balances of the energy sector.”

The World Bank has warned of fiscal pressures in the Western Balkans
as growth slows. The average fiscal deficit in 2022 is expected to
increase by 0.4 pp as a share of GDP compared to 2021.

The development bank forecasts that Albania’s public debt will decline
to 68.9% of GDP in 2022, and “more significantly” over the medium
term.

However, this is based on the assumption that the primary balance will
turn positive in 2024; if the fiscal balance deteriorates, this may force
the government to cut public spending to prevent a hike in the
debt-to-GDP ratio.

“Given Albania’s growing reliance on external financing, interest rate
and refinancing-related risks remain elevated. Contingent liabilities in
the form of guarantees to cover energy purchases also represent a
significant risk,” the World Bank said.

4.2 Budget and debt - Bosnia & Herzegovina

Neither the state-level government nor the government of the Bosnian
Federation have yet adopted their budget plans for 2023. In previous
years, it was usual practice for Bosnia to use budgets for previous year
until the politicians reach an agreement and adopt a new plan.

The budget for 2022 was adopted in June 2022 due to the constant
political blockades of the parliament and the governments. The
adoption of the budget was delayed mainly due to the refusal of
representatives of Republika Srpska to participate in the work of
state-level institutions.

The revenue in the 2022 budget plan was set at BAM1.07 (€547mn), up
by 8% y/y. The spending was set at BAM1.89bn, up by 5% y/y.

The state-level government has set the debt repayment at
BAM819.19mn, up by 1% y/y. Indirect tax revenue is seen at
BAM865.5mn, which is an increase of 11% from 2021.

The Federation’s budget for 2022 was also adopted with a delay – at
the end of March. The entity’s budget for 2022 amounted to BAM5.6bn,
up by 2% y/y.

Only Republika Srpska adopted its budget plan for 2022 on time – in
mid-December 2021 – as the long-ruling SNSD has a stable majority

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