The Albanian government borrowed 500 million EUR from international markets, which will be paid for seven years with an annual interest rate of 3.5%.
This means that in seven years, the Albanian government will pay the 500 million principal plus 122.5 mln of interest rate.
What’s the difference to other loans?
This is the third time that Albania borrows from international markets. The last times were in 2010 and 2015. Both times it was a 5 year Eurobond, with the interest rate respectively 7.6% and 5.75%. The current one has the lowest interest rates ever.
The reasons for this are due to the lower interest rates in international markets, and because of the action was undertaken by the Central Bank, which has injected thousands of Euros to stimulate the economy. Another reason is the increased trust of foreign investors to the Albanian economy.
Is it an automatic growth of the national debt?
No. The public debt is controlled by the Parliament, which determines the debt limit to the government. The limit for 2018 is 256 million EUR, or 2% of the GDP. But the government received 500 million EUR, 244 of which will be used to pay a past debt, with higher interest rates.
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