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2022 a good fiscal year, but the government negatively affected the economy

2023-04-07 09:30:09Biznes SHKRUAR NGA REDAKSIA VOX

2022 a good fiscal year, but the government negatively affected the economy


2022 a good fiscal year, but the government negatively affected the economy, its consumption fell by 4.8%

The year 2022 is among the few years where the fiscal yield, budget revenues have increased at a double-digit rate compared to the year 2021 by about 12%.


The high prices of goods have influenced the increase in budget receipts from consumption taxes, but on the other hand in 2022 the government had a negative contribution to the economy.

According to data from INSTAT, the consumption of public administration in the country's economy decreased by 4.8 percent. According to the chart below, the decline was systematic for all quarters.

GDP with the expenditure method has as an important component "Final consumption of the public administration". According to the methodological explanations, "Final consumption of public administration" represents the value of non-commercial services performed by public administration for the benefit of the community.

The expenditure method is one of the ways to calculate the Gross Domestic Product (GDP). It calculates GDP by adding the expenditures of different sectors of the economy. The Public Administration component of GDP is a part of this calculation, and includes expenditures made by governments at all levels.

The Public Administration component includes all government spending on goods and services, as well as pension, social security and unemployment payments.

The Public Administration component of GDP using this method includes spending on items such as public education, defense, health care, infrastructure, and public safety.

For 2022, the data from the expenditure method in GDP show that the contribution of the Public Administration was negative and that the government injected less money for public services than in 2021.

The main role seems to have been the items of capital expenditures, where government injections in 2022 were about 12 percent lower than in 2021.


Debt servicing and interest costs have reduced the government's capacity to spend on productive items.

Historical data shows that, usually, the government has a higher expansion in the economy where there are elections, since during these periods there is more likely to be indexation of salaries, pensions and opening of investment funds.

In total, final consumption in the country increased by 5.36%, from 5.06% last year. The negative contribution of the government affected the low growth of consumption in the country. Population consumption expanded by 7.17% in 2022, from 4.7% last year. In contrast, government consumption fell by 4.85%, after increasing by 7.77% in 2021./Monitor/


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