Gov’t saves Euro 26 mln on interest rate spending

TIRANA, Nov. 19 – The Albanian government has saved around 3.8 billion lek (Euro 26.6 million) in spending on interest rates during the first three quarters of 2013 on lower T-bill yields despite public debt hovering at around 62 percent of the GDP during this period, according to a report by the Finance Ministry. Data show the Albanian government spent around Euro 31 billion lek (Euro 215 million) on interest rates in the first nine months of this year, up 5.8 percent compared to the same period last year, but down 11 percent compared to the target set for the first nine months of the year.
The Finance Ministry says government saved 1.9 billion lek from spending on external borrowing and another 1.9 million lek from spending on internal borrowing. Yields on 12-month T-bills, which are the key instrument of domestic public debt, have dropped to 3.73 percent, slightly down from 3.78 percent in the previous auction, but almost half of a record 6.6 percent in January 2013.
Albania’s public debt was officially reported at 62 percent of the GDP at the end of the third quarter of 2013, although it is expected to climb to 69 percent of the GDP by the end of the year.
“The public debt, without including unpaid government bills to businesses, is expected to jump to 68 to 69 percent of the GDP at the end of 2013. If unpaid government bills, estimated at 4 percent of the GDP, are taken into account, public debt stands at 72 percent of the GDP,” says Finance Minster Shkelqim Cani. Government and the IMF estimate unpaid government bills and arrears at around 55-60 billion lek (Euro 382 to 416 million).
Finance Ministry data show Albania’s total public debt climbed to around 872 billion lek (Euro 6.1 billion) at the end of the third quarter of 2013, with domestic debt accounting for 35.55 percent of GDP and external debt at 26.41 percent.
Total debt service in the first three quarters of 2013 climbed to 38.6 billion lek or 2.74 percent of the GDP. Total debt service in 2012 climbed to 52.16 billion lek (Euro 270 million), up from 48.7 billion lek in 2011, accounting for 3.88 percent of the GDP, up 0.12 percent compared to 2011.
Albania’s public debt, a sizable part of which is domestic, has a large short-term component, implying risk of rollover,” warn the international financial institutions. 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.