Annual debt limit crossed

Formally, this figure is 6.5 billion ALL smaller than the debt limit authorized by the Parliament for the entire year, but it doesn’t include the unpaid bills. Top Channel has learned that the debt recognized by the Treasury as unpaid has reached 10 billion ALL. This means that on August 31st, the legal debt of the deficit has crossed the limit with 3 billion ALL.

The new government will review the budget in the next month, and chances are that they will be forced to increase the annual limit of the budget deficit. This means that the public debt of our country, foreseen by the government to reach 63.8% of the Gross Domestic Product by the end of the year, will jump at over 64%. But even this is just the formal figure. In reality, the government’s obligations are much higher. Authorities declared recently that besides the official figure there is another 40 billion ALL of bad debt that the government owes to private companies.

This brings the real debt limit to 68% of the Gross Domestic Product. Since 2007, the public debt has increased with 15% of the Gross Domestic Product, if the hidden obligations are taken in account, and it is still increasing with 2.5% each year in average.

The new government has promised to start lowering the debt level during the second year of the mandate, but if the economic growth will turn back to a higher level, the consolidation of these finances will require painful measures, such as cutting spending or increasing taxes. In both cases the burden will be on the shoulders of the Albanian taxpayers.

Top Channel