Total debt service, which includes payments plus repayments of principal to creditors cost Albania around 56 billion lek (Euro 393 million) in 2013, but dropped to 4.9 percent of the GDP compared to 5.01 percent in 2012
TIRANA, Feb. 25 – Albania’s official public debt, excluding government arrears of around 5 percent of the GDP, climbed to 64.6 percent at the end of 2013, up 3.1 percent compared to 2012 and 5.2 percent compared to 2009 just before the onset of the global financial crisis, according to Finance Ministry data.
Domestic debt, mainly composed of government securities, rose to 38.04 percent in 2013, up from around 35 percent in 2012. Meanwhile, the external debt stock remained unchanged at 26.75 percent of the GDP at the end of 2013.
Albania’s total debt stock climbed to 884.5 billion lek (around 6.2 billion Euros), up 56.5 billion lek (Euro 400 million) compared to 2012,
Total debt service, which includes payments plus repayments of principal to creditors cost Albania around 56 billion lek (Euro 393 million) in 2013, but dropped to 4.9 percent of the GDP compared to 5.01 percent in 2012.
What’s particular about Albania’s debt maturity in the past four years is that short term debt share has been reduced by 9.6 percent from 2010 to 2013 while the share of long-term debt has increased by 7.15 percent.
Short-term debt which includes 3, 6, 9 and 12-month T-bills accounted for 47 of total stock compared to 49 percent in 2, 3, 5, 7 and 10-year Treasury bonds.
Publicly guaranteed debt, which mainly includes loans to cash-strapped KESH power corporation accounted for 3.82 percent of the GDP at the end of 2013.
Public debt, which is expected to climb to a record 72 percent of the GDP in 2014, will remain Albania’s key barrier to growth with total debt service expected at 66 billion lek (Euro 462 million), more than three quarters of planned 84 billion lek in investments for 2014.
Public debt, including government arrears at 5 percent of the GDP, is estimated to have climbed to 70.5 percent of the GDP in 2013, and is expected to further climb to 72 percent of the GDP before going on a downward trend starting 2015, according to the 2015-2017 macroeconomic and fiscal framework.
Albania’s per capita debt is expected to climb by 9.3 percent to 314,271 lek (Euro 2,200) in 2013, according to Open Data research centre.
As the debt levels rises and the population shrinks, the per capita public debt has been continuously increasing in the past few years. The biggest increase was registered in 2011, when the per capita debt climbed to 273,831 lek (Euro 1,925) up 22 percent compared to 2010. The situation was a result of a nationwide census showing the Albanian resident population had shrunk by 11.3 percent to 2.8 million over the past decade.
Sluggish domestic consumption, poor private investments, underperforming government revenue, public debt having climbed to around 70 percent of the GDP, non-performing loans at around 25 percent are some of the key wounds of the Albanian economy.
The Albanian government expects the country’s economy to moderately grow over the next four years and public debt to slightly drop. In its new 2015-2017 macroeconomic and fiscal framework, the Socialist Party-led government expects the country’s growth to drop to 0.7 percent in 2013, down from 1.2 percent in late December 2013 when it approved the 2014 budget. The forecast which is lower even compared to what international financial institutions expect comes after Albania registered a 2.3 shrink in the third quarter of 2013, the sharpest quarterly shrink in the past five global crisis year.
Debt holders
Bank of Albania data show Raiffeisen Bank, the country’s biggest bank, has lowered its exposure to Albania’s domestic public debt by around 14.5 percent since the onset of the global crisis in 2008. Raiffeisen’s share at the end of the fourth quarter of 2013 dropped to 22.55 percent of the total domestic debt stock, compared to 29.5 percent in 2012, 34 percent in 2011 and around 37 percent at the end of 2008.
However, Raiffeisen’s withdrawal has been compensated by other commercial banks which have increased their share to 40 percent of total domestic public debt, up from 37.45 percent in 2012, 34.85 percent at the end of 2011 and 34.6 percent at the end of 2008. The Bank of Albania share has also slightly dropped to 12.27 percent, down from 12.48 percent in 2012, 14.3 percent at the end of 2011 and 17.75 percent at the end of 2008.
Meanwhile, non-banking financial institutions increased their domestic debt share to 12.66 percent at the end of 2013, up from 6.16 percent in 2012, 3.7 percent in 2011 and 2.46 percent in 2008.
Individuals also increased their domestic debt share to 12.5 percent, up from 12.92 percent in 2011 and 8.33 percent in 2008.
External borrowing by the government of Albania consists of multilateral and bilateral official credits, syndicated bank borrowing, and a Eurobond. The most important multilateral creditors to the government are the World Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Council of Europe Development Bank, and the Islamic Development Bank. The most important bilateral creditors are Germany (through KfW Development Bank), Italy, and Austria.
