Albania among countries with highest debt in Europe

Albania ranked 11th in Europe in 2021 for the high level of public debt, in proportion to the size of the economy.

According to the Ministry of Finance, public debt in 2021 was 78.5% of the Bruto (PBB) Interior Production.

Eurostat's other data rank Albania after Greece, Italy, Portugal, Spain, France, Belgium, Cyprus, Montenegro, Austria and Croatia (see the graph at the end). While in the region, Albania is second, behind Montenegro.

Other countries in the region have lower debt levels, Serbia and Northern Macedonia, with from 58% of GDP, Bosnia to 36%, and Kosovo has among Europe's lowest debts, with 22% of GDP.

All countries rapidly increased debt in 2020, with the aim of enlivening the economy after the effects of pandemic. In Albania, debt increased by nearly 10 percentage points, and it continued to remain high and 2021. Although the debt rose higher among that Europe, the economy's support for pandemic was lower in Europe, with less than 1% of GDP, according to International Monetary Fund data (FMN).

A country's ability to pay its debt is dependent on its competitiveness. The lower it, the lower the payment capacity. Albania ranks from the Global Economic Forum as the country with the lowest competitiveness in Europe.

Both the World Bank and the IMF have often advised the Albanian government to be cautious about fiscal spending and consolidation. World Bank, in the latest report for Central Europe and Asia” The war in Rajon” has been strong in terms of Albania's high debt level and has warned that its refinance could be in jeopardy and that the government could be forced to reduce its capital spending, Monitor writes.

“In the basic scenario, public debt is expected to drop slightly to 78.1% of GDP in 2022 and significantly in the medium term. However, the fiscal balance could deteriorate further, if the international environment is unfavourable, forcing the government to cut capital spending to prevent an increase in the debt report to GDP”, the bank warns.

Debt in Europe

According to Eurostat, at the end of the fourth quarter of 2021, the government's debt report to GDP in the eurozone was 95.6%, compared to 97.5% at the end of the third quarter of 2021. In the EU, the report also dropped from 89.9%. 88.1%.

For the eurozone, the government's debt to GDP report is due to GDP growth and a slight decline in nominal debt in absolute terms, while for the EU, nominal debt continued to rise easily but was exceeded by growth in GDP.

Compared to the fourth quarter of 2020, the government's debt report to GDP dropped from 97.2% to 95.6%) and to the EU (from 90.0% to 88.1%). The decrease came due to GDP growth exceeding government debt growth. /Monitor/