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Euro depreciation diminishes government's "success" on public debt

2025-11-22 12:21:00, Ekonomi CNA

Euro depreciation diminishes government's "success" on public

The International Monetary Fund, based on Article IV of the Mission, has emphasized that by the end of 2025 the Albanian government is expected to have a public debt of around 54% and by the end of 2030, that is, when the Albanian government's project is to enter the country into the EU, the public debt will reach around 50%.

In fact, these are percentage figures provided by the IMF and appear to be decreasing compared to past governments.

But it's enough to do some simple calculations to understand how much the debt would be if the government had made more favorable policies and been more careful with public debts.

When the Socialists came to power in 2013, the debt was around 68%. We recall here the deep global economic crisis, the blow that the economy took in 2008-2009 in Greece, in Europe, which came as a result of the global crisis originating from the USA, and in the end Albania was a "sandwich" or let's say "hamburger meatball" between Italy and Greece.

After the economic shock in Greece and Europe, remittances fell in 2010 and the euro exchange rate at that time went to somewhere around 125 lek and up to 140 lek in 2012.

A public debt handed over by the democrat government in 2013 at 68% of Gross Domestic Product. Today, the Albanian government, according to the IMF, is heading towards a debt of 54%.

But let's remember that today the euro is exchanged for about 97 lek.

So, it is between 30 and 45 lek less than when the socialists took power, and with a simple calculation, the foreign exchange rate is about 30-40% cheaper, if we take it on average.

So, debt is traded about 30-40% cheaper than it was traded in 2011-2012 or in 2013 when it was 68%.

If the debt were traded at this value at that time due to the exchange rate decrease and the pace that the government would follow were those of yesterday regarding public debt, today Albania would not have a debt higher than 40-45%.

It could have been even lower, but considering three important moments such as the 2019 earthquake, the 2020 pandemic, and Russia's war with Ukraine in 2022, which brought strong economic blows, it must be said that the government should have at least a debt of around 40-45% today.

If these three factors were not present, the debt would have to be even lower, considering that the exchange rate is lower than during the previous government.

We must also take into account the fact that the money received by the Albanian state on the foreign market is much more than before 2013, where the first Eurobonds were for 250 million euros, while now it is going to 700-750 million euros and more.

What the IMF says, 54%, is good news for reducing public debt, but in fact, with the exchange rate and the depreciation of the euro, it shows that the government has not been in its proper role and policies and with a clear and genuine strategy to have a lower and more stable public debt.

So, the government has not reduced the debt with its savings or repayment policies, but rather the devaluation of the euro has reduced it to the maximum./ CNA





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