Per capita debt set to further increase in 2017
TIRANA, Jan. 9 – Albania’s per capita debt is expected to further increase in 2017 as the debt stock rises and the country’s resident population continues to slightly contract, but the cost of debt will slightly drop reflecting lower interest rates, according to Open Data research center.
Referring to INSTAT and finance ministry data, the research center expects Albania’s per capita debt, a measure of the state’s indebtedness, to increase by 2.4 percent to 382,650 lek (€2,817) in 2017 when the debt stock is projected to rise to 1.1 trillion lek (€7.5 billion), about 70 percent of the GDP, and the resident population slightly drop to 2.88 million.
The country’s per capita debt has risen by 52 percent in the past seven years as public debt climbed to record high levels of 72 percent of the GDP compared to more comfortable levels of 60 percent in 2010.
Meanwhile, every Albanian is estimated to pay 14,569 lek (€107) in debt interest rates for 2017, an amount slightly lower compared to 2016.
Albania’s public debt slightly dropped to below 70 percent of the GDP in the third quarter of the year while debt servicing also slightly fell as interest rates on both domestic and external debt were down due to key interest rates at a record low, according to the finance ministry.
The strengthening of Albania’s national currency against the Euro is expected to further reduce the cost of Albania’s external borrowing for 2017. Europe’s single currency has hit a six-year low against the Albanian lek, trading at an average of 136 lek for the past few weeks, negatively affecting the country’s exports, already on a downward trend due to a slump in international commodity prices affecting the country’s key oil and mineral exports.
Albania’s public debt, currently hovering at 70 percent of the GDP is considered a huge burden for the current stage of Albania’s economic development with its high servicing costs affecting much-needed investment in key infrastructure, health and education sectors.