Currency rate endangers debt
25/08/2011 15:55
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The devaluation of the Albanian Lek towards Euro has not deteriorated
only the family budgets that have their mortgages in this currency, but
has also been burdening the government for a long time.
Official data from the Ministry of Finance show that only during the first six months of this year, ALL devaluation towards foreign currencies upped Albania’s debt with 38 million USD.
And this is the lowest increase, because in the last two years, the currency rate effect increased Albania’s obligations in much higher levels.
In 2009, the historical devaluation of ALL towards Euro increased the public debt with 2.5% of the GDP.
Albania’s debts towards foreign countries on that year increased with 250 million USD, only due to the ALL devaluation.
The effect of the currency rate in the public debt now has become a concern that the government must take in serious consideration, since the tax revenues are collected in ALL, while the debts must be paid in foreign currencies, mainly in Euro.
The current debt level is standing on the edge of maximal limits. Another fluctuation of ALL towards Euro would make our debt cross the legal limit of 60% of the GDP, as set by the Parliament.
The government is strongly exposed to the dangers of currency rates, due to the policies that were followed in the last years by orienting Albania’s loans to foreign markets.
By the end of June, the external debt reached 3.1 billion USD. Compared to 2005 it has increased with 2.2 times.
According to official data from the Ministry of Finances, Albania has today a total debt of 7.5 billion USD and 42% of this comes with foreign currencies, mainly in Euro.
Only a few years ago, the burden of the external debt was under the level of 30%.
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