Euro devaluation has damaged the government’s budget revenues, but it has reduced the debt.
Albania’s public debt was 69.9% of the GDP, almost half of it foreign debt, most of which the government has taken in Euros, through Eurobonds or loans issued by international markets.
But compared to 2017, Euro was devaluated with 6%, which has reduced the public debt with 1.5% to 2% of the GDP. Basically, the government now has to pay less to pay the same debt.
Despite the lower tax revenues, Euro devaluation has reduced the government’s burden. But this situation is not stable. If Euro would get stronger, the effect would be the opposite.
This is why the IMF and EC have asked the government to keep reducing the public debt until the public obligation burden falls to levels that don’t put the economy in danger.
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