External debt rises to Euro 5 bln

TIRANA, Dec. 12 – Albania’s total gross external debt stock reached 5.045 billion Euros at the end of the third quarter of 2012, up 634 million year-on-year and 185 million euros compared to the second quarter of the year. Bank of Albania data show general government accounts for 45 percent of the total external debt stock with 2.2 billion euros, all of which is long term. Banks rank second with 947 million euros followed by other sectors with 965 million euros.
At the end of the third quarter of 2012, external debt stock represented 26.22 percent of the GDP, up from 25.6 percent at the end of 2011 and 17.94 percent at the end of 2008. Albania’s debut sale of 300 million euros of five-year bonds at a yield of 7.5 percent at the end of October 2010 proved successful but Albania withdrew from issuing another Eurobond as the sovereign bond crisis in the Eurozone significantly increased yields.
The Finance Ministry says around 58 percent of Albania’s external debt is in Euro, 30 percent in SDR and ACU and 8 percent in USD. External financing at fixed interest rates accounts for around 74 percent. Estimated at over 900 billion Lek currently, the public debt costs the Albanian government 3.7 percent of the GDP 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 region, the IMF has warned.
Already at the legal limit of 60 percent of the GDP, public debt is expected to climb to 60.5 percent at the end of 2012 and to 62.6 percent at the end of 2013. Public debt service at the end of September 2012 was estimated at 2.59 percent of the GDP, with internal debt interest rates accounting for 1.91 percent of the GDP, principal payments for 0.46 percent and external debt interest rates for 0.22 percent. For 2013, the Finance Ministry expects expenditure on public debt service to increase by 15 percent to 64.1 billion lek (Euro 450 million). Albania’s public debt service dropped to 3.71 percent of the GDP in 2011, down from a record 3.89 percent back in 2010.