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Albania's external debt continues to remain divided between the four main sectors of the economy.
The sector that holds the largest share is the General Government, which holds almost half of the external debt, around 4.75 billion euros. During the last quarter, the state debt decreased significantly, as more liabilities were repaid than new financing was obtained. This indicates a clear strategy for slowing down borrowing and meeting existing liabilities, aiming to gradually reduce dependence on long-term debt.
After the government, the second largest group is Other Sectors, i.e. non-financial businesses, manufacturing companies, service companies and other economic structures. This group has reduced its external debt during the quarter, repaying loans and trade liabilities.
The movement is interpreted as a signal of stabilizing business balance sheets, less dependence on foreign financing and more caution towards borrowing costs. However, a slight increase in intercompany loans is observed, indicating that foreign investors continue to inject capital within their group of companies in Albania.
The banking system is the third largest sector by weight with 21.8%. Banks have somewhat increased their external liabilities, mainly through the increase in deposits and currency held by non-residents. This indicates a higher interest of foreign entities to hold funds in Albania, but also a more flexible dynamics of the banks' balance sheets. On the other hand, the decrease in short-term interbank borrowing suggests that the stability of liquidity in the domestic market remains sustainable.
Meanwhile, the Monetary Authority, i.e. the Bank of Albania, has a much smaller role in external debt, with obligations related only to IMF SDRs and remaining unchanged. This makes this sector more stable and less affected by market fluctuations./Scan
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