Average yield of Albania’s public debt declines to 4.37%
Interest rates of debt securities of the Albanian government recorded the lowest historical level for 2016.
According to the Ministry of Finance, the average yield of the debt instruments fell at the end of last year at 4.37%, from 5.31% at the end of 2015.
The fall of the interest rates of government debt securities is in fact a continuing trend which started in 2009.
The easing of the monetary policy and the cycle of low interest rates in the economy has favored first of all the government, which is the largest borrowing agent in Albania.
The fall peaked in the last two years, when further decline of interest on deposits and the weakness of private lending sector has led to a drastic reduction in yields on treasury bills and government bonds.
Interest rate cut has had a balancing effect on the debt burden on the state budget.
At a time when the principal debt has increased rapidly, to the extent of 73% of GDP, the burden is eased somewhat by a declining interest rate that has kept debt service costs at affordable levels.
At the same time, the government has continued to extend the average maturity of the debt to take advantage of favorable interest rates and to reduce the risk of refinancing.
The average maturity at the end of last year amounted to 753 days, from 706 days that it was at the end of 2015.
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