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.
TIRANA, Jan. 7 – Public debt, which is expected to climb to a record 75 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.
Debt service, which includes interest payments plus repayments of principal to creditors cost Albania 57.7 billion lek in 2013, and is expected to climb by 14 percent in 2014 when public debt is forecast to climb to a record high of around 75 percent, according to 2014 budget approved in late December.
The Finance Ministry estimated public debt climbed to 67.7 percent of GDP in December 2013, of which domestic debt accounted for 39.55 percent of GDP and external debt for 28.14 percent.
Public debt is expected to climb to 74.8 percent of the GDP mainly because of unpaid bills and arrears to private companies for public works and services worth 24.6 billion lek (Euro 172 million) and 22.8 billion lek (Euro 160 million) in unpaid VAT and income tax refunds which the government plans to pay in 2013.
“Without the necessary policy and structural reforms, public debt would continue on its upward trend and could adversely impact growth, particularly if interest rates start rising and begin to crowd out private investment over the medium term,” warns the IMF in its latest country report on Albania.
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.
Public debt at over 60 percent of the GDP and non-performing loans having reached around 25 percent are considered the key threats to the Albanian economy.
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.
Public debt declined from 70 percent in 2000 to 54 percent in 2007 in the context of successive IMF-supported programs.
In its 2014 budget, the Socialist Party-led government expects the country’s economic growth to accelerate to 2.1 percent in 2014, up from an expected 1.2 percent in 2013 the budget deficit to further climb to 6.6 percent of the GDP, up from 6.2 percent in 2013, which is twice higher compared to the annual average of 3 percent in the previous years.
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.
