The World Bank experts have arrived in Tirana once again to negotiate
with the government about the additional loan package for supporting the
budget.
Top Channel has learned that both parties are holding an intensive dialogue and there is no concrete conclusion yet. However, the talks could take another week, with the government to decide if they will accept the loan with the World Bank’s conditions, such as specific reforms and limiting the budget expenses.
The Ministry of finances, in its economic and fiscal program, admits that the bank’s loan would ease the budget’s burden and the request for a loan in the interior market, decreasing this way the dangers for financing the deficit. In the first two months of the year, the government had to face the increase of the interest rate each time that they took loans in the market. The interests reached 7.32% in the recent auction of 1-year-long treasury bonds, from 6.73% that they were in December.
Budget deficit, government admits difficulties for loans
The difficult situation in the financial market and the developments that are expected during this year has set off the alarms at the Ministry of Finances for the budget deficit.
In the new fiscal framework, planned last month, the Ministry notes that the dangers for the government’s loan have increased due to the crisis.
The official document says that the “the prediction for the deficit financing of 2012 is based on the scenario that the debt crisis in the neighboring countries is about to continue even during this year, by affecting the private bank strategies in Albania”.
The Ministry experts state that these factors will significantly affect the deficit financing for 2012, and the progress of treasury bonds. In this year’s budget, the government’s loaning in the domestic market is predicted to mount to 18.8 billion ALL, or 7 billion ALL less than last year.
But even with this decrease, the Ministry of Finances still underlines that the market is very skeptic, which demands its constant monitoring, with the purpose to avoid problems in the financing of the budget deficit and guarantee the necessary liquidity for the treasury.
The government will have to secure 41 billion ALL in total for financing the budget of this year, 22.3 of which will be received from the foreign market, mainly through donators.
But since the bureaucratic procedures from foreign donators have several delays and are not guaranteed at 100% within the budget year, the government could increase the interior loan.
“We think that in case of a deficit financing only through the interior loaning, same as last year’s, the challenges for managing the debt will be big”, the Ministry experts note.
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