Ministry of Finance Is Hiding Foreign Debt

In its half-year report of 2017, the Ministry of Finance claims that public debt has fallen to 66.82% of the GDP, from 70.96% at the end of 2016.


However, news outlet Monitor reports that according to sources in the Ministry of Finance the debt level of 66.82% is not realistic, as it didn’t include the foreign debt stock that has been approved but has not yet been transferred.

Counting all the debt covered by the agreements signed by the Albanian government with international financial institutions would bring up the level of public debt to 77% of the GDP, the highest debt level ever reached by Albania.

For example, the World Bank has given the Albanian state a $150 million credit to revitalize the energy section, but has only transferred $13.7 million. Even though the credit was given in 2015, not all the money has been transferred and therefore not included in the actual foreign debt figures.

So what seems to be a decrease in the foreign debt as a percentage of the GDP, hides the debts that the government has already taken upon itself.

If we look at the actual development of Albanian foreign debt, the 4.14% drop from December 2016 to June 2017 does not fit into the trend. From 2014 to 2015, foreign debt increased with 2.58%, whereas it decreased from 2015 to 2016 with 1.69%.

Lowering foreign debt is one of the requirements and recommendations of both the European Commission and the International Monetary Fund. Apart from interventions into the taxation system, both these institutions emphasize that serious and far-reaching economic reforms are still needed.