Debt for paying wages
05/01/2012 00:00
Linda Rama: Between Family, Work and Albania’s Future 18/08 14:30
The Government has borrowed 11 million USD from private banks, with a
maturity period of three years. The Bank of Albania held an auction
yesterday, in which the Ministry of Finances had planned to borrow with a
8.65% interest, but in fact they were obliged to pay it with 9.06%, or
0.41 more percentage points.
This is the second sum that the government has borrowed from the inner market for covering the expenses of the first days of 2012. In the previous auction held on December 29th, the government took a 34 million USD loan through an extraordinary procedure, which the banks disbursed on January 3rd.
Sources for Top Channel declared that the money borrowed in these auctions will be used for the administration payments and other government expenses, since the closure of the 2011 budget left the state pockets dry.
But the government’s high demand and urgent need made the bonds’ interest rates to increase. In both auctions, the government asked more money than what the banks offered.
The Ministry of Finances demanded 4 billion ALL in the first auction, but the banks offered 3.5 billion. This increased the bonds’ interest rate with 0.3% in two days, by increasing this way the burden that the government pays with the citizens’ taxes.
The same happened with the auction held one day ago, with the government asking 1.5 billion ALL and the banks offering only 1.17 billion, increasing the bonds’ interest rates from 8.65% to 9.06%.
Experts say that the beginning of the year is not a good period for the liquidity, and the interest increase was expected. But according to them, this situation is temporary and the bonds are expected to remain with low interests. The government plans to borrow 18 billion ALL from the inner market during 2012, and experts say that this is easily affordable with the current liquidity situation in banks.
Top Channel
