External debt climbs to Euro 4.85 bln

TIRANA, Sept 24 – Albania’s external debt stock reached 4.85 billion Euros at the end of the second quarter of 2012, up 798 million year-on-year and 158 million euros compared to the first quarter of the year. Bank of Albania data show general government accounts for half of the total external debt stock with 2.2 billion euros or 46 percent of the total, all of which is long term. Banks rank second with 812 million euros followed by other sectors with 944 million euros.
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 proved successful but Albania withdrew from issuing another Eurobond as the sovereign bond crisis in the Eurozone significantly increased yields.
After slightly dropping to 57 percent of the GDP in the first quarter of 2012, Albania’s public debt has risen by 2 percent to around 59 percent standing just one point below its legal threshold of around 60 percent of the GDP.
At the end of the first half of 2012 public debt stock climbed to 801 billion lek (Euro 5.7 billion), up from 772 billion lek at the end of 2011. Domestic debt represented 56.6 percent of the total debt stock. External debt accounted for 43.4 percent in the first quarter of 2012 compared to only 39 percent in 2009 before Albania made its Eurobond debut.
Public debt at around the legal ceiling of 60 percent of the GDP, and bad loans at 20 percent are the key threats to the Albanian economy which since 2009 has stuck into moderate 3 percent annual growth rates, international financial institutions have warned.
Estimated at over 800 billion Lek currently, the public debt costs the Albanian government 3 percent of the GDP or 50 billion lek (euro 357 million) in interest payment annually.
What puts the Albanian public debt more at risk is that it accounts for more than double the annual revenues, while interest expenditure has risen to 3.4 percent of the GDP, compared to an average of 1.3 percent in the SEE 6, the IMF has warned.
In its review to the macroeconomic framework, government expects public debt to remain at 59.9 percent of the GDP for the 2012-2014 period, only 0.1 percent below its legal ceiling