Debt cost increased

Official Government data show that more than half of the debt was taken after 2007, especially in the 2008-2009 period. Different to the first development loans, which were granted by donators, with soft interests, the recent debts are mainly commercial, with market interest rates and shorter paying term.

As consequence, the budget now must calculate how to pay it. Official government predictions show its payment program. During the last year, the government spent 0.6% of the National GDP only for the debt.

But in the next three years, this will mount to 1.3 of the GDP in 2014, or from 76 million USD that it actually is, it will rise to 200 million USD.  This includes only the principal, without the interest that the government pays.

If the interests will be added, the state budget in 2014 will rise to 756 million USD, or 4.9% of the GDP. This is bigger than the entire public investments predicted for that year, and equal to the total state administration wages. Albania has a small budget, due to low taxes and high evasion. As consequence, the increasing debt installments are a big test for the budget, especially now that the government is obliged to limit the expenses for not allowing a possible dissipation of public finances.

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