TIRANA, Nov. 4- High interest rates have increased the cost of borrowing for the government which for 2008 reaches 39.7 billion leks ($ 467 million.) within one year the extra interest payments that the administration has to do have reached $ 104 million. Most of these payments are reserved for the internal debt, around 29 billion leks. Foreign debt payments go around 4.3 billion. Outside repayments have taken around 6.4 billion for 2008, while foreign debt ahs been scheduled to increase considerably. Next year only the Durres-Kukes road will need 85.4 billion leks in debt. High interest rates have been the major factor after the rising debt costs. Governments have been usually reliant on debt form internal sources such as BoA and commercial banks. Market interest rates have been quite high. Referring to the table of interests of T-bills issued by the Finance Ministry and auctioned by BoA, a classic form of public debt, rates vary between 8-9%. The majority of internal debt of the government is controlled by second level banks for which the interest payments are secure revenues. They posses around 70 percent of all debt while individuals and other sources have only 7.39%. The expenses to cover interest payments are going to rise and the explanation offered by the Finance Ministry is that it will happen due to the changing in interest rate norms for T-bills and government bonds. 1 year maturity options of this sort have increase dby 1.42 points compared to the average of last year. All new loans in the process of ratification also contribute in higher costs. Some of these loans will start having their effect on state finances exactly in 2008. New loans will be effective with Alfa Bank, IDA, EBRD, EIB, etc.
Debt rescheduling
The expenses to reschedule inherited debt for 2008 will reach 1,783.62 million leks. Budget data reveal that rescheduling agreements are planned with ex-Yugoslavian state companies, private entities form UK, Austria, the Netherlands, etc. the principal payments to be done reach 577.84 million leks and interest payments 206 million leks.
