TIRANA, Dec. 10 – The country’s central bank has warned the current level of public debt at 72.6 percent of the GDP is high and continues remaining a barrier for the country’s development.
Speaking at a hearing on the 2016 budget with the parliamentary economy committee this week, Bank of Albania governor Gent Sejko called for political consensus to reduce public debt, which is expected to slightly drop to 71 percent of the GDP in 2016.
“The sustainable reduction of public debt would require the continuous preservation of a consolidating fiscal policy for many years to come. First of all, this requires bipartisan will and political consensus, a philosophy which I invite everybody to adopt,” said Sejko.
“Fiscal authorities should continue showing due diligence so that the budget deficit and the public debt remain at the targeted levels,” he added.
The governor suggested that possible higher than expected income in the 2016 budget should be used to reduce public debt and increase public investments.
Albania’s public debt rose to a historic high of 73.7 percent of the GDP at the end of the third quarter of this year, calling into question whether the government will achieve its year-end target of 72.2 percent.
Latest data shows the public debt stock at the end of Sept. 2015 rose to more than 1 trillion lek (€7.5 billion), up 10 percent compared to the same period last year, despite its servicing cost remaining almost unchanged due to lower interest rates.
Total debt servicing which includes interest payments plus the repayments of principal to creditors, cost the Albanian government about 41.5 billion lek (€293 mln), up only 0.5 percent compared to the same period last year, and almost the same to public investments.
The Albanian government and the IMF expect public debt to increase to 72.2 percent of the GDP at the end of 2015 before embarking on a downward trend that will reduce it to 65.8 percent at the end of 2018.
