Government increases the Gross External Debt

Tirana Times
By Tirana Times June 11, 2019 16:12

Government increases the Gross External Debt

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  • The Bank reported that the GED stock growth was mainly in terms of long-term debt of the central government as well as borrowing between companies in the form of direct investment. Total withdrawals or fluctuations in new debt from loans during the first quarter of 2019 were 73 million euros.

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TIRANA, June 11- External debt of the Albanian economy as a whole continued to grow in the first quarter of 2019 due a government’s borrowing. The Bank of Albania recently reported that Albania’s Gross External Debt (GED) amounted to 8.411 billion euros during January-March, an annual growth of 6 percent.

46 percent of Albania’s total GED is owned by the central government, while the rest is distributed among the Banking System with 17 percent, other Sectors own 36 percent, and the Monetary Authority owns 1 percent. The central government sector holds the main weight on the GED’s stock. At the end of March 2019 its liabilities were valued at 3.86 billion euros and are mainly presented as long-term loans, bonds and receipts.

Referring to the end of 2018, the central government’s external debt increased by about 31 million euros. The surplus of long-term loans expanded by about 35 million euros, while bonds fell by 4 million euros. The Bank of Albania argued that the exchange rate effect of the main currencies was positive and at the amount of 39 million euros, meanwhile, the revaluation differences (other changes from reclassification) amounted to 5 million euros.

The debt stock of the Monetary Authority or the Central Bank marks 58 million euros, with no significant moves during the first quarter of 2019. The Authority’s liabilities consist only of Special Drawing Rights allocations, because the long-term loans granted by the International Monetary Fund were settled during the first quarter of this year. (Special drawing rights are supplementary foreign-exchange reserve assets defined and maintained by the International Monetary Fund.)

At the end of March 2019, the gross external debt of the Banking System recorded about 1.434 billion euros and is mainly presented in the form of “loan” and “deposit currency,” about 13 percent and 86 percent of the total, respectively. Over the quarter, this sector has increased the debt level by about 7 million euros in terms of increasing long-term liabilities. Referring to the level of year-end 2018, other sectors have increased their external liabilities by about 26 million euros to the level of 3.060 billion euros.

Main moves reflect the expansion of long-term liabilities in the form of “trade credits” with 18 million euros, and liabilities in the form of loans between related companies in a direct investment relationship “direct investment-intercompany loan” with 32 million euros.

The Bank reported that the GED stock growth was mainly in terms of long-term debt of the central government as well as borrowing between companies in the form of direct investment. Total withdrawals or fluctuations in new debt from loans during the first quarter of 2019 were 73 million euros. Public sector withdrawals amount to 35 million euros and private sector has 38 million euros. New government debt obligations represent 48 percent of total withdrawals over the period. The external debt service (principal and interest payments) for the first quarter 2019 marks 88 million euros.

Of these, about 49 million euros are payments of the central government, 30 million euros of other Sectors, 8 million euros of the Banking System, and 0.3 million euros of the Monetary Authority. The debt service has been for principal settlement at 74 percent and 26 percent for repayment of interest. The government holds the main share in principal repayments by about 30 million euros or 45 percent of the total principal value, as well as in the remission of interest payments for the period by about 20 million euros or 85 percent of the total value of the principal interest rates paid by the economy.

Tirana Times
By Tirana Times June 11, 2019 16:12