Historic plunge of treasury bond interest rate

In the last auction held by Bank of Albania, the bond interests with a
maturity term of one year have plunged to 5.99%. This is the first time
in history when the government takes a one year loan with a lower
interest rate than 6%, although the domestic loans have increased
drastically.

Although this might seem a good news, experts say
that what is happening with the treasury bond interest rates indicates
the crisis that the private sector is feeling. Due to the slowed down
economy and high uncertainties, businesses have suspended almost all
investments through loans while individuals keep consuming less.

According
to the Bank of Albania, the total of loans taken by private subjects
has increased with only 6.5 billion ALL, compared to one year ago. This
is the lowest level since 2000. In these conditions, for more than one
year, the government has been the only client in the market who demands
loans, and the only option of banks to invest their funds.

The
Ministry of Finances has taken three times more loans than the entire
business and individuals in one year. This shows that this year, more
than any other times, the progress of economy is depending on the public
sector. The biggest danger in this is the dissipation of public
finances.

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