State guarantees, public companies in "sieves" before the benefit/ 75% belongs to energy

2024-01-19 07:25:00, Ekonomi CNA

State guarantees, public companies in "sieves" before the benefit/ 75%

The increase in the stock of state guarantees that have been given to public enterprises and other institutions has caused the government to have a new approach for the future.

In the Economic Program of Reforms 2024-2026, it is accepted that in the future the institutions that seek to benefit from this instrument will be subjected to a more extensive analysis.

Specifically, the document underlines that the stock of guaranteed debt (disbursed and unpaid), as well as guaranteed loans signed and expected to be disbursed, constitute the budget deficit resulting from the contingent liability of these guarantees.

"The possibilities of the guarantees required are considerable and therefore we include additional funds in the relevant budget categories, such as interest expenses and the debt repayment item, which may be needed to pay if the guaranteed loan obligations are not paid by the borrowers .

Such assessments are usually made based on the beneficiaries' historical behavior or their current known financial conditions. Under these conditions, an accumulated obligation of the borrowing entities to the Ministry of Finance and Economy has been created. In order to enable the collection of these obligations, which derive from both types of instruments, guarantees or lending, the Ministry of Finance and Economy has recently completed some legal changes to engage a specific specialized structure with the collection of arrears" it is stated in program.

The same underlines that a reinforced analysis is foreseen in the granting of guarantees and new operations in lending, which is expected to influence a better performance of borrowers towards their obligations.

"MFE is seeking to strengthen the capacities of analysis and assessment of risks and budgetary impacts arising from guarantees and loans. Assistance in this regard is intended to be provided through the GDRM program of the World Bank, which is continuously supporting debt management activities and which is expected to help develop a comprehensive framework for granting guarantees and lending, supported by an evaluation methodology of formalized focused on managing potential risk in the future portfolio," the document states.

According to the figures mentioned in the program at the end of September 2023, the guaranteed debt portfolio is estimated at 44.4 billion ALL or 416 million euros (1.9% of GDP), marking a decrease of 7.8 billion ALL compared to the end of 2022 Guarantees in the domestic market account for about 38.9% of the total stock of guaranteed debt or 17.3 billion ALL, while guarantees given in favor of foreign creditors represent 61.1% of the stock of guaranteed debt or 27.1 billion ALL.

"From the total stock of guarantees, over 75% of the total state guarantees belong to the energy sector, reflecting the government's policies in terms of supporting the energy sector, especially during the most recent crisis that this sector faced. In the medium term, the level of the guaranteed debt is planned to be kept below the level of 5% of GDP," the program states./ Monitor magazine.