A 250 Million Euro foreign loan, economic expert says there will be exchange rate risk
Nga OraNews Përditësimi i fundit 3 Korrik 2015, 18:43
The government is going to be taking out a new loan of 250 million euro from the international market, with the guarantee of the World Bank. Besides lower interest rates, one of the reasons that the government is going to the foreign market for the loan is that the domestic banks will then be able to give loans to businesses and citizens. Not all of the results will be positive though, according to the economic experts, who point out a number of problems with taking on this new debt.One expert, a former member of the Supervisory Council of the Bank of Albania, argues that the government is exposing itself to the risk of the exchange rate, and the need of the economy to generate money. He thinks that this loan will not give the domestic market the opportunity to develop.The country's public debt has now reached over 70%of the gross domestic product, and is considered one of the greatest weaknesses of the public finance. The government has made a commitment to the IMF that they will reduce this debt, but the slowing of economic activity, and the poor performance of revenue collection, are turning this objective into an extremely difficult challenge.
