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Voxpress:

Public debt shrank in 2023, falling for the second year in a row

2024-03-06 10:42:13Biznes SHKRUAR NGA REDAKSIA VOX

Public debt shrank in 2023, falling for the second year in a row

The stock of public debt in relation to the Gross Domestic Product (GDP) has decreased after the pandemic, but the decrease was also reflected in the net value last year.

In 2023, the debt stock in value reached 1.36 trillion ALL or 90 million euros less than in 2022. Net liabilities in percentage recorded an annual decrease of 0.7 percent for the second year in a row. This was the sharpest decline in the value of debt over the past three decades.

During the last years, the public debt in relation to GDP has been decreasing, but the value was increasing. Usually the results of obligations are measured by GDP since the more the economy grows, the more the country's capacity to repay increases.

But since Albania does not translate the growth of the economy into more receipts in the budget, the decrease in the value of the debt eases the state budget and creates more space for other expenses.

Last year public debt reached 59.2% of GDP, the lowest level since 2008. The debt reduction was largely helped by the failure to realize public spending according to plan. The Ministry of Finance used part of the surplus for debt repayment.

At the beginning of this year, the government approved the first changes in the budget by increasing the general revenue plan with 10.6 billion ALL, where about 40% of the amount was reallocated for public investments and debt reduction.

During the period from 2017 to 2019, the Central Government Debt has been on a downward trajectory, marking a decrease of 4.4 pp. During 2020 and 2021, the Central Government Debt increased, reaching the level of 73.1% of GDP at the end of of 2021.

The increase in the level of debt during the last two years has come as a result of the higher needs for financing in these years as a result of the situation created after the earthquake of 2019, the Covid-19 pandemic, as well as the need to stimulate the recovery of the economy after the big drop it had in 2020.

The revision of the projections for the nominal increase in economic growth has also brought a revision of the debt to GDP indicator, when for 2021 the Central Government Debt was estimated at the level of 73.1% of GDP, from 78.1% which was according to the forecasts of the Ministry of Finance and Economy with initial GDP.

In relation to GDP, the debt suffered a rapid decline in 2023 as a result of the increase in budget revenues much more than expenses. The decline in debt value helps the budget reduce the cost of debt service.


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