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According to the data of the Ministry of Finance, the public debt marks a historical record, reaches 77.8 percent, revenues fall significantly
Written by Esmeralda HIDA 24 Shkurt 2021
The year 2020 has closed with a record level of public debt. As unemployment rose, incomes fell and health needed more investment the government was forced to borrow more, even beyond forecasts. Under these conditions, debt continued to grow throughout the past year, reaching 77.8% at the end of December. In the data published by the Ministry of Finance through a final report in terms of economic parameters shows that this is a historic level of debt in the last 4 years, even in 2015 when the economy suffered a debt crisis was at lower levels. According to the data, due to the pandemic, the Albanian government has borrowed 900 million euros, an increase of 11% compared to 2019, but also with the initial budget plan 2020. "Rate of 77. 8% is the highest ever recorded for Albanian finances even beyond the record level affected in 2015, when it was fixed at about 72.7% of Gross Domestic Product. In absolute terms, public debt over the past year has increased by about ALL 111 billion, or about EUR 895 million. "These figures, ie overcoming the public debt by about 11 percentage points, or about 900 million euros, best illustrate the impact of the crisis on the Albanian economy and especially on the country's finances," the report said. The immediate increase in historical levels of public debt is immediately noticeable if you look at the tables published by the MFE with data from 2010. The data show that during 2019 the public debt ratio in relation to Gross Domestic Product was fixed at 66.2% , again at the level of risk, but much lower than 2020. So far,
Revenue in stagnation
The state coffers closed with losses in 2019, due to the earthquake, but the decline in revenues continued during 2020 due to the pandemic. The increase in the debt-to-GDP ratio by 11.1 percentage points within a year was driven by two main factors. The first is the expected reduction of GDP in 2020 by 107 billion and the second, the increase of the budget deficit in historical records to a value of 110 billion in 2020. Of course, the budget deficit increased due to the imbalance between revenues accumulated in the state coffers and expenses incurred due to the pandemic. Part of the new debt was mainly used to offset the decline in budget revenues of ALL 20.6 billion, compared to the revised 2020 plan, because revenues fell sharply, especially during the months when the country was in isolation. total. According to ministry data, revenues were ALL 34.7 billion minus compared to the initial plan, while expenditures increased by ALL 44.7 billion. Then we recall here that the freezing of the economy led to a weakening of consumption and a decline in per capita income which indicate a significant decline in employment. The salaries of the laid off were covered by the government itself and the assistance of businesses as well, but debts were often borrowed to subsidize programs in this area and especially to finance health. While it is mentioned as another cause of declining incomes and thus consequently of debt, it is informality in the country. According to the ministry, due to the earthquake and subsequent pandemic there were no checks and many taxpayers operated informally. While it is emphasized here that the informality in the economy became more visible with the reopening of the country where many employees could not benefit from the aid because of this. Tax cuts for some businesses and reductions for some others have also reduced revenues and significantly increased the budget deficit.