How is Albania's external debt divided? BoA: The government bears the largest weight, while the private sector expands its liabilities
Albania's external debt continues to remain divided between the four main sectors of the economy.
The sector that holds the largest share is the 'General Government', which holds 43.3% of the external debt, around 4.48 billion euros. During the first quarter, the state debt decreased, as more liabilities were repaid than new financing was obtained. This indicates a clear strategy for slowing down borrowing and meeting existing liabilities, aiming to gradually reduce dependence on long-term debt.
After the government, the second largest sector is occupied by other sectors, namely non-financial businesses, manufacturing companies, service companies and other economic structures. This group has 31.1% of the external debt, with a value of about 3.21 billion euros. It has increased its external debt during the quarter.
The movement is interpreted as a signal of stabilizing business balance sheets, less dependence on foreign financing and more caution towards borrowing costs. However, an increase in intercompany loans is observed, indicating that foreign investors continue to inject capital within their group of companies in Albania.
The banking system is the third largest sector by weight with 23.5%. Banks have increased their external liabilities, by a value of around 2.43 billion euros, mainly through the increase in deposits and currency held by non-residents. This indicates a higher interest of foreign entities to hold funds in Albania, but also a more flexible dynamics of the banks' balance sheets.
Meanwhile, the Monetary Authority, i.e. the Bank of Albania, has a much smaller role in external debt, with liabilities related only to IMF SDRs amounting to around 214 million euros. This makes this sector more stable and less affected by market fluctuations.
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