Per capita debt climbs to Euro 2,210

TIRANA, Feb. 6 – 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 is a result of a nationwide census showing the Albanian population had shrunk by 11.3 percent compared to 2010, according to a study carried out by Open Data research centre.
The per capita debt in 2012 is expected to slightly increase to 287,648 lek. The Open Data centre expects the per capita debt to climb to 314,271 lek (Euro 2,210) in 2013, based on Finance Ministry data and a scenario of a 0.5 percent increase in population.
An earlier study conducted by Open Data Albania research centre has shown that the per capita government debt has more than doubled during the past 10 years climbing from around 105,000 lek (USD 1,000) in 2000 to 224,000 (USD 2,240) in 2010.
After dropping to 54 percent of the GDP in 2007 and 2008, Albania’s public debt rose to 59.5 percent in 2009 due to the costly loans for the construction of the Durres-Kukes highway linking Albania to Kosovo. In late 2010 Albania issued its first-ever Eurobond of 300 million euros with a maturity of up to five years and an interest rate of 7.5 percent.
One month after setting new targets to the debt level, government has made a new review raising the 2013 target to 63.8 percent, up from 62.6 percent. Finance Ministry data show public debt climbed to 827 billion lek or 61.48 percent of the GDP at the end of 2012.
The debt service and the pension deficit will cost the Albanian government around 140 billion lek in 2013, which is around 40 percent of the total 360 billion lek in revenues government expects to collect for 2013, according to Finance Ministry data in the 2013 draft budget.
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. Estimated at around 900 billion lek, 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 6, the IMF has warned.