Treasury bond rates keep rising

The Bank of Albania data show that the one-year-term interest rates have increased from 7.04% to 7.33%, since the beginning of the year. The 6-month-term interest rate fell in February and increased again on March. The 3-months-term interest rate increased from 5.09% to 5.3%. The Albanian government obligations have increased after January, but the two next months were stable.

The bonds received the first hit on January, when the government, after emptying the budget, was obliged to loan for covering the administration payments and other expenses. This increase of the interest rates seemed expected, since the Bank of Albania reduced the interest rate.

For explaining this paradox, bank of Albania declared that this is a temporary phenomenon. But the recent data show that the interest rates are increasing. Bank of Albania lowered the interest rate again this week, but it remains to be seen if the Treasury bond interest rates will get lower. However, the budget situation, according to the recent Ministry of Finances data, does not leave much space to think about a quick interest rate fall.

The budget revenues for the first two months of 2012 have increased with only 0.3%, compared to one year ago. This is the lowest result in the last 10 years, while the government expenses have reached the highest level of this decade. This budget stalemate is expected to have a big impact on the new Treasury bond trend, which also affects the interest rates of bank deposits or loans. However, the Governor declared that after lowering the basic interest rate, there is space for an interest decrease at second level banks.

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