Sovereign-guaranteed debt fell by 13.5% in 2024, little use by private companies

2025-03-25 07:43:00, Ekonomi CNA

The value of the debt of public and private companies guaranteed by the Albanian state declined last year.

According to data from the Ministry of Finance, guaranteed domestic debt at the end of 2024 decreased to 14.16 billion lek, down 13.5% compared to the previous year.

The domestic debt guaranteed by the Albanian government consists largely of loans guaranteed to public energy sector companies in the country. The value of these loans at the end of 2024 fell to 10.98 billion lekë, down 6.7% compared to the previous year.

Given that the debts of energy sector companies are mainly denominated in euros, the decline in this segment was mainly due to the effect of the exchange rate. The euro-lek exchange rate closed 2024 at 98.15 lek, down 5.5% compared to the previous year.

A larger decline was experienced by guaranteed debts of private enterprises. According to the Ministry of Finance, sovereign guarantees in favor of private businesses last year fell to 3.18 billion lek, 31% less compared to the previous year.

This debt belongs to four sovereign guarantee schemes for business approved by the Albanian government, namely the state guarantee for salaries, approved in 2020, the state guarantee for financing the recovery of commercial activity from the pandemic, also in 2020, the state guarantee for financing entities that wholesale basic food products, approved in 2022, and the state guarantee for guaranteeing the borrowing of entities in the processing industry, approved in April 2024.

The vast majority of the guaranteed debt belongs to the second scheme, that of the state guarantee for financing the recovery of commercial activity from the pandemic, of 2020. The debt guaranteed by this scheme accounted for almost 92% of sovereign guarantees for private enterprises.

The other two sovereign guarantee schemes, for 2022 and 2024, appear to have found very little use by businesses.

According to preliminary data from the Ministry of Finance, at the end of 2024, the domestic public debt was worth 788.4 billion lek, a nominal increase of 6.3% compared to the previous year. However, in real terms, the domestic debt marked a very slight increase, to 31.6% of GDP, from 31.3% a year earlier.

Overall, public debt fell to 54.73% of GDP last year, further down from 57.5% a year earlier. Since 2021, public debt has fallen by almost 20 percentage points to GDP. The decline in this ratio is mainly due to the reduction in external debt, as a result of the strengthening of the lek in the exchange rate, but also partly to the reduction in the budget deficit in recent years and satisfactory economic growth./ Monitor