Financial Sector Assessment Program - Albania : Public Debt Management
Government debt continues to expand, reaching over all 872 billion, approximately 62 percent of gross domestic product (GDP), as of end-September 2013. Domestic debt grew sharply in the first half of 2013, emanating largely from poor tax revenue pe...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/02/19768097/albania-financial-sector-assessment-program http://hdl.handle.net/10986/19295 |
| Summary: | Government debt continues to expand,
reaching over all 872 billion, approximately 62 percent of
gross domestic product (GDP), as of end-September 2013.
Domestic debt grew sharply in the first half of 2013,
emanating largely from poor tax revenue performance,
together with the accumulation of a large stock of unpaid
bills and arrears. External debt creditors comprise
multilaterals, bilateral creditors, and private creditors.
The concentrated nature of the investor base and the high
domestic debt stock limit the choices available to debt
management, particularly with regards to extending the
maturity of the domestic debt. Public debt management in
Albania follows an organized process but will benefit from a
number of technical changes. The domestic borrowing plan has
been revised frequently due to unexpected flows in the
treasury account. In an environment of volatile treasury
balances, cash flows safety nets or minimum cash buffers
should be implemented. A number of initiatives are
recommended to improve the transmission of price signals in
the primary market - overall this will provide incentives
for secondary market development. To support the development
of the secondary market the General Directorate of public
debt management should modify its issuance program and focus
on key maturities on the yield curve. It is suggested that
the issuance program takes a small step in this direction by
limiting the number of tenors and focusing on for example,
two, five, seven, and ten-year treasury bonds as well as
increasing the frequency of 5 and 7-year maturities from
quarterly to bi-monthly. This will provide more frequent
price discovery in the primary market that will support
portfolio valuation. |
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