Albania towards the public debt crisis, the government is silent

Local experts have joined international organizations, calling on the Albanian government to be careful about raising the level of public debt.

After the 2019 earthquake, the COVID-19 pandemic and historical spending levels, including dozens of public-private partnerships, Albanian public debt is estimated at somewhere between 80.1% to 86%.

The Albanian government does not officially count PPPs in public debt, which means that the current figure is much higher than warned.

"The government should control with an iron fist every public expenditure and on the other hand improve the business climate that leads to the expansion of the tax base that will lead to an increase in budget revenues and in three to five years, Albania. can be in a better economic position ", said economist Zef Preçi.

Economics experts have urged the government to be careful with public spending to avoid a catastrophic situation. The current government promised to reduce public debt to 60% over the next four years, but that does not seem likely.

"As long as the government does not respect the minimum criterion for each year that the debt is lower than last year, it will not decrease. "While the opposite happens, this objective has no way to be achieved", said Preçi.

The government has increased public debt by about 2 billion euros in the last two years. Most of it was used to fund disaster-related projects.

The government also authorized debt increases to finance several long-term projects, such as the construction of the New Ring Road, the National Theater and the Llogara Tunnel. At the same time, funds are needed for pandemic and earthquake recovery.

Debt expansion is done through a normative act, breaking a fiscal rule set out in the budget law, which does not allow fiscal measures that increase debt as a percentage of GDP.

Over the past year, the government has increased public debt at faster rates than the country's economic growth and wages. House prices have also risen by more than 40% in the last four years, pushing many locals out of the market.

The International Monetary Fund (IMF), in its latest report on Albania in December last year, expressed concern about the country's growing fiscal risks and the lack of accurate data on public-private partnership (PPP) projects.

Arbitral rulings, the new private sector guarantee scheme and support for energy companies are also seen as added risks that increase unreported liabilities. Last week, President Ilir Meta warned the government that the situation had evolved into a "serious crisis".

Meta called on the Ministry of Finance to urgently publish the current level of public debt, including hidden financial commitments stemming from the public-private partnership and the like. The government has not responded.

Source: Euroactiv