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Ekonomia

The World Bank raises the alarm and warns the Albanian government: High debt levels and refinancing pose a real risk

The World Bank raises the alarm and warns the Albanian government: High debt

The World Bank has raised the alarm, while warning the Albanian government that the financing of public debt, according to her, poses a real risk. The newspaper has provided the latest report of the World Bank for Central Europe and Asia "War in the Region", as this institution has been harsh regarding the high level of debt of Albania and has warned that its refinancing may be at risk and that the government may be forced to reduce its capital expenditures. "Public debt increased further in 2021, reaching 78.4 percent of GDP. The government suspended the fiscal rule for reducing debt to GDP and issued a Eurobond of 650 million euros, taking advantage of the country's stable B + rating. At the current level, high government debt is at significant refinancing risk.

This is when the Public Debt will go down according to the WB

In the baseline scenario, public debt is expected to fall slightly to 78.1 percent of GDP in 2022 and more significantly in the medium term. However, the fiscal balance could deteriorate further if the international environment is unfavorable, forcing the government to cut capital spending to prevent an increase in the debt-to-GDP ratio, the bank warns. Given Albania's growing dependence on external financing, exchange rate, interest rate and refinancing risks remain high. According to the report, higher tax revenues and new debt allowed the government to increase infrastructure spending. The government also increased subsidies to State Energy Enterprises (SOEs) to provide energy supply during the last quarter of 2021. Contingent liabilities from SOEs pose major budgetary risks. According to World Bank charts, public debt is expected to fall to 75.1% of GDP in 2024. Earlier, the International Monetary Fund has often advised the Albanian government to be careful with spending and fiscal consolidation. In its latest report, in December last year, the IMF warned of rising country fiscal risks and a lack of accurate data on public-private partnership (PPP) projects. Court rulings, the new guarantee scheme for the private sector and support for energy companies are also seen as added risks. Contingent liabilities from SOEs pose major risks to the budget. According to World Bank charts, public debt is expected to fall to 75.1% of GDP in 2024. Earlier, the International Monetary Fund has often advised the Albanian government to be careful with spending and fiscal consolidation. In its latest report, in December last year, the IMF warned of rising country fiscal risks and a lack of accurate data on public-private partnership (PPP) projects. Court rulings, the new guarantee scheme for the private sector and support for energy companies are also seen as added risks. Contingent liabilities from SOEs pose major risks to the budget. According to World Bank charts, public debt is expected to fall to 75.1% of GDP in 2024. Earlier, the International Monetary Fund has often advised the Albanian government to be careful with spending and fiscal consolidation. In its latest report, in December last year, the IMF warned of rising country fiscal risks and a lack of accurate data on public-private partnership (PPP) projects. Court rulings, the new guarantee scheme for the private sector and support for energy companies are also seen as added risks. The International Monetary Fund has also often advised the Albanian government to be careful with spending and fiscal consolidation. In its latest report, in December last year, the IMF warned of rising country fiscal risks and a lack of accurate data on public-private partnership (PPP) projects. Court rulings, the new guarantee scheme for the private sector and support for energy companies are also seen as added risks. The International Monetary Fund has also often advised the Albanian government to be careful with spending and fiscal consolidation. In its latest report, in December last year, the IMF warned of rising country fiscal risks and a lack of accurate data on public-private partnership (PPP) projects. Court rulings, the new guarantee scheme for the private sector and support for energy companies are also seen as added risks.

The report lowers expectations for growth

Meanwhile, in the latest report, the World Bank has lowered its forecast for Albania's economic growth this year. The bank already expects the domestic economy to grow by 3.2 percent, or 0.6 percentage points less than the previous ratio. Even for 2023, the economy is expected to grow by 3.4%, or 0.3 percentage points less than the previous estimate. For 2022, the prospects are uncertain and the risks have increased, says the bank in the section on Albania. The war in Ukraine and ongoing sanctions could push energy, food and commodity prices to even higher levels, reducing household purchasing power and consumption.