Treasury bonds interest rates plunge
13/10/2012 00:00
Linda Rama: Between Family, Work and Albania’s Future 18/08 14:30
Recent official financial data show that the Treasury bond value is
falling rapidly. In the last auction, the 1 year interest bond fell with
6.78%, the lowest since December 2011.
The causes are mainly related with what is happening in the financial market, where the bank liquidity is growing with a high pace. Scared by the crisis, the individuals are more prone to save their money. The Deposits reached the historical record of 9.3 billion USD this February, 10.1% more than one year ago.
Although the banks have more money now, they hesitate to give loans to the private sector, due to the insecurities caused by the crisis. The data show that the loans’ growth was 2.5 times lower than that of deposits. In these conditions, the government has turned into the safest and preferred client where banks can use their money, even for lower profits. Secondly, the interest fell even because of the government’s request.
The Ministry of Finances concentrated the entire loan in the first half of the year, by keeping a high demand in the market. After exhausting it to the limit and the demand fell, the interest rates fell from 7.5% to 6.78%.
This will decrease the profits of the citizens who invested their savings in treasury bonds and increased the cost of the debt that the government pays with the citizens’ taxes.
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