Albania’s general government debt, including state guarantees, increased by 1.4% on the quarter to ALL 871.9bn (EUR 6.21bn) at end-June 2013, data from the finance ministry showed. According to IntelliNews calculations, the debt accounted for 60.9% of the projected full-year GDP, up by 0.8pps q/q.
Domestic government debt picked up by 1.3% q/q and its share in total debt edged down to 57.3%. External government debt increased by 1.6% q/q and accounted for 42.7% of the total debt, slightly up from 42.5% at end-March 2013. The state guarantees totalled ALL 53.2bn, comprising 6.1% of the overall general government debt.
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.
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