Debt reaches maximal limit

Two months earlier, the Committee of Strategic Planning, under the direction of Prime Minister Sali Berisha, changed the budget plan and the macro-economic mid-term framework to the new variant. The public debt by the end of 2012 went to 59.9% of the GDP, only 0.1% under the legal limit.

This debt increase is not only because of the government’s debt, but it is also related with another factor: the unrealistic predictions of the budget.

By the end of this year, when the government approved the state budget for 2012, the government officially predicted an economic growth of .3%, despite the strong oppositions of the IMF, which considered it as a deeply unrealistic evaluation and that was also confirmed in the first trimester. Accoridng to INSTAT, the GDP growth during the first three months of the year was negative, to 0.2%, by overthrowing the government predictions since the beginning, which was obliged to reduce the official prediction to 3%. Since the debt indicator is calculated as a report of the GDP, the economic growth reduction automatically increases the public debt and the government has only one way to stop it: decrease the predicted annual loans.

But the document approved by the Strategic Planning Committee, the government has decided to leave the loan plan unchanged to 41 billion ALL, or 3% of the GDP, as predicted in the beginning of the year. With the official threat to go beyond the legal debt limit of 59.9% of the GDP, the dangers could be several, starting from the devaluation of the Albanian currency, the unsafe economic increase and the repeating of a scenario similar to that of one year ago, when the government was obliged to increase the debt to create subventions for KESH.

The only hope for not destabilizing  the finances is the success of the privatizations.

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