KLSH: Finances show incompetence with budget liquidity management

2024-12-04 07:21:00, Aktualitet CNA

The government borrows to finance budget expenses that are not covered by income, but in recent years there is always liquidity in the budget accounts, which is not being managed in the right way, the High State Control points out in an audit carried out in Ministry of Finance.

During 2023, after receiving the Eurobond, the total liquidity surplus of all currencies is in the range of 75-131 billion ALL. Most of the surpluses accumulated during the year are in foreign currency, namely euros, fluctuating between 18-100 billion ALL.

The receipt of the Eurobond has increased the liquidity surplus in the euro currency by 224.27% compared to the liquidity situation in the euro on the previous date. While the surplus of liquidity in the local currency has fluctuated throughout the year 2023 in the range of 4-50 billion ALL. The data show that free liquidity in the accounts of the 2023 budget has reached 20% of the general budget expenditures in a given month.

By maintaining liquidity in euros, losses from the exchange rate of at least 2.8 million euros have been created.

KLSH notes that liquidity management is found to be problematic due to several factors. The Ministry of Finance lacks specialized structures for the good administration of general government funds.

The lack of operational instruments, which are applied unilaterally by the Bank of Albania and with exclusive conditions, have been found.

Another reason is the accumulation of funds during the last part of the budget year. Frequent changes to the budget with normative acts and not detailing the budget plan in time are creating liquidity.

It has been verified that monetary assets in euros are presented with significant liquidity surpluses and the possibility of their investment in the deposit to benefit from interest income has not been used, at the same time when holding these currencies is associated with costs.

In addition, performing conversions through SWAP exchange instruments throughout 2023 has resulted in significant losses due to the difference in spot-forward rates, not utilizing the opportunities to perform unilateral foreign currency to currency conversions native.

KLSH notes that the conversions carried out through SWAP instruments turn out to have been carried out in the opposite direction to the stipulations in the agreement between the Bank of Albania and the Ministry of Finance and Economy, where in its article 5 it is provided that "In order to manage liquidity in foreign currency and flows of external debt service, the Ministry can request the realization of SWAP contracts with the Bank".

The concept of performing these conversions consists in covering the needs for payments in foreign currency using the local currency and not the other way around, argues the High State Control./ Monitor magazine.