Debt dangers

But this argument seems far-fetched for two reasons. First, Albania has a small budget, not only in value, but also in national production. Even in its best producing year, the revenues did not pass 27% of the GDP. This causes the public debt to be 2.3 times higher than the revenues collected by the budget, an indicator that EBRD sees as the most deteriorated in developing economies.

Secondly, the efforts for keeping the debt in high levels have raised its cost of service. The government is now spending 13 ALL for every 100 ALL collected in its budget only to repay the debt and its interests, an indicator that can be compared to the countries which today consider budget bankruptcy as an alternative, and it can get even worse when Albania will enter the period when it will have to repay the loans taken in the first years of transition.

By frequently changing debt programs, the government gives a message of insecurity to the public. The government’s vow to lower public debt was mainly addressed to foreign investors. The failure to keep this promise marks a negative precedent to our country, which will be a big burden when the government will need to reenter foreign markets for another debt, as it did in the last year.

Debt administration is a very delicate matter that combines not only the economic side, but also the political dimension. The official data that the government will leave in 2013 to it successor are the same to those that this government found in 2005, when it came to power. A possible political rotation will give the successors, from whatever party they might be, the moral right to behave with our finances in the same way as its predecessor, by keeping Albania’s economy under the burden of high debt levels.

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