Albania’s public debt second highest in region

TIRANA, April 5 – Albania’s public debt, currently at a record 59.5 percent of the GDP, is the second highest in the region after Greece, posing great risk to the country’s macroeconomic stability.
This is confirmed by statistics published by Open Data Albania which says that Albania’s public debt, which in 2009 was worth 680 billion lek, at 59.5 percent of the GDP is better only compared to neighbouring Greece’s 115 percent. The public debt levels for Macedonia, Bosnia and Herzegovina, Croatia, Serbia, Montenegro and Turkey vary from 23 to 45 percent of the GDP.
The cost of the public debt from 1993 to 2011 is estimated at an average of 4 percent of the GDP. The external debt accounts for 40 percent of the country’s total public debt.
Albania’s debut sale of 300 million euros of five-year bonds at a yield of 7.5 percent at the end of last October lowered the country’s external debt cost by 20 percent one month later, the Finance Ministry says.
Xhentil Demiraj, the ministry’s public debt director, says the payment of the costly 200 million euro syndicate loan through the Eurobond has brought positive effects lowering the debt cost by 10 million dollars at the end of 2010.
Under the 2011 budget, government will spend 3.6 percent of the GDP on interest rates and 0.8 percent on principal payments, up from 3.4 percent and 0.5 percent respectively in 2010.
As far as macro-economic developments are concerned, the 2011-2013 mid-term budget government has approved foresees to lower the country’s high public debt levels currently at 59.5 percent of the GDP to 54 percent by 2013. The GDP growth rate is also expected to increase to 6.2 percent, up from 5.5 percent in 2011 and 6.1 percent in 2012.
Inflation rate is expected to remain at 3 percent, meeting the central bank’s target band of 3 Ѡ1 percent.
Meanwhile, the GDP per capital is expected to climb to 495,000 lek (4,950 dollars) by 2013, up from an expected 3,844 dollars in 2010. The unemployment rate in the next three years is expected to drop to 9.8 percent, down from 13.6 in 2010.
The IMF has suggested that lowering budget deficits to 2.5 percent in 2011 would also have a positive impact on public debt and achieve the Albanian fiscal policy’s goal of bringing it down to 54 percent by 2013.
The 2011 budget, worth 408 billion lek (4.08 billion dollars) will lower public debt levels to 59 percent of the GDP and keep budget deficit at 3.5 percent.