Albania’s general government debt, including state guarantees, stood at ALL 872.2bn (EUR 6.23bn) at end-September 2013, unchanged from the previous quarter, data from the finance ministry showed. According to IntelliNews calculations, the debt accounted for 61% of the projected full-year GDP.

Domestic government debt edged up by 0.1% on the quarter raising its share in the total to 57.4%. External government debt was flat q/q and accounted for 42.6% of the total.

The state guarantees totalled ALL 53bn, comprising 6.1% of the overall general government debt.

The gross central government debt (i.e. central government debt excluding guarantees) edged down by 0.1% y/y to ALL 818.8bn as of end-September. In terms of debt composition, the share of government securities was 59.9% at end-September, marginally down from year earlier. Loans accounted for 34% of the gross central government debt. As regards to debt maturity, the share of short-term debt dropped by 1.8pps to 30.4% at end-September 2013.  

The IMF, the World Bank and the EBRD have repeatedly warned that the Albanian economy faces increasing challenges from its high public debt that is exceeding its statutory limit of 60% of GDP. The international institutions believe that the relatively high level of indebtedness is putting pressure on the country’s economic growth prospects, while limiting the room for fiscal manoeuvres. According to the updated economic and fiscal program of the Albanian government, the public debt is expected to increase by 1.9pps this year and equal to 63.8% of the GDP.

Albania's central bank has recently called for the introduction of new fiscal measures in order to ensure long-term sustainability of the public debt. The bank believes this will boost confidence in the financial markets and will support reduction of the long-term costs of debt service.