Foreign Debt Still High
Albanian Daily News
Published September 13, 2017
The foreign debt that Albania has inherited from the past, but also the amount of loans that it takes out on a regular basis increases from one year to another, making its payment more difficult for governments that come and go. This phenomenon is confirmed by the Bank of Albania, according to which, in the first half of the year, debt has seen an increase of 23 million euros. However, it must be said that during the second quarter of the year, foreign debt marked a significant drop of about 129 million euros.
According to experts, this decline was due to the increase of domestic public debt (money that the government secured through domestic sources, by borrowing from the public through bond auctions), but at the same time, it also had to do with the pre-election period in the country, which was associated with a temporary suspension of borrowing contracts with other countries. However, even these factors have not been able to enable a decrease of Albania’s foreign debt from one year to another, taking its total figure at the end of June 2017 to 8.85 billion euros. Meanwhile, it’s the government that borrows the largest part, while banks and companies are responsible for a smaller part of this debt.
Albanian government seems to have incurred most of foreign debt. This is stated by the Bank of Albania, according to which, the government has incurred around 43% of the total debt. “17% of foreign debt is spread out among banks; 17% among other sectors; 1% was incurred by the monetary authority and 22% is spread out among companies which are in direct investment relations”, bank experts say. Meanwhile, experts argue among others that the accumulation of this indicator continues to be concentrated in the form of “investments” which make up for 70% of its stock. “Meanwhile, ‘direct investments’ expressed in the form of loans between companies and ‘portfolio investments’ make up for 30% of the total of foreign debt”, they add.
While Albania’s foreign debt is growing, it seems that this is not the case with its payments to lending countries. “Payments of the loan amount and payment of the interest rate for all sectors of the economy during the first half of 2017 amounted to 114.9 million euros and they have registered a decline compared to the previous period”, the Bank of Albania explained.