Debt, Albania is stable

“Moody’s” and “Standard and Poors” did not change Albania’s ranking in the report that they published a few days ago, which was B1 and B+, with a predicament as stable.

But their reports to the Ministry of Finances say that this predicament is threatened if the government will not keep the budget deficit under control, for not allowing a further debt increase.

Both companies believe that the Albanian government will not reach the predicted deficit of 3.5%, and according to Moody, the figure could go to 4.6%.

However, Standards and Poors value the fact that the budget has foreseen investments to 5% of the GDP, which, according to them, is a guarantee that allows the government to cut them for not increasing the debt.

Besides the deficit increase, other factors could damage Albania’s ranking in the international debt market, such as the failure to implement the planned legal and institutional reforms, and the deterioration of the foreign economic relations, the greatest risk of which is the further increase of the current deficit.

Another risk factor that seems to have less chances to occur, is the one related with Albania’s ambitions to integrate in the EU.

Both companies say that by abandoning this ambition, Albania would immediately deteriorate its ranking in the debt markets.

Both companies expect Albania to face a difficult 2012. Moody’s predicts that the economic growth will be 2.5% for this year, while in the next year it will fall to 1.5$. A positive note of the report is the fact that the political situation has calmed down and that the opposition has returned in Parliament.

An appeal for decreasing the debt was made a few days ago by the IMF, which warned Tirana to be cautious, because the future is full of surprises.

The World Bank suggested the government to consider halting the big infrastructure investments, due to the difficult economic situation and the deterioration of the public finances.

 The government showed that they have no intentions to decrease the public debt until the end of their mandate, in 2013, and they are even giving more spaces to themselves for taking another debt.

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