The issuance of a sovereign (state) Eurobond in international markets in general for each country, but especially for countries with small economies and which do not have a high frequency of outflows for financing in international markets such as the case of Albania, is an important event special.
The Deputy Minister of Finance and Economy, Adela Xhemali in an interview for ATSH says that the importance lies not only in meeting the need for funding to ensure the normal functioning of the state budget and its operations, but also as a direct test for the entire economy of the country, its well-being and its perspective.
So, she says, the success of its realization is of particular importance to the country.
"In the conditions in which the country is located as a result of two events (shocks) with significant negative impact on the country's economy, the importance of the implementation of the issue, certainly takes on even more weight, considering the terms of this funding which are particularly favorable for the situation in which the international financial markets were in recent months ", declared Xhemali.
The amount provided, she says, is in line with what was originally planned in the 2020 budget, ie before the two shocks, plus the additional need for funding from the negative effects on the economy and public finances from the two shocks, especially from the pandemic.
"More specifically, at the beginning of November 2019, when the procedures were formally initiated in the MFE to enable this entry into the markets, a value of 500-600 million euros was planned, while after the shocks the value increased to 650 million. "Euro, and this was the final value that was issued, despite the fact that the" book "with the demands of investors at one point reached 3.3 billion euros, so despite the fact that the opportunity to issue an even higher amount was complete", emphasizes the deputy / Minister Xhemali.
We emphasize, she continues, that in the domestic market the resources to provide the necessary financing are limited, and if all the necessary government funding were provided in the internal market, this would limit the business lending space.
"In addition, providing only the necessary financing in the domestic market would be associated with higher refinancing risk and increasing pressure on interest rates, which would limit the achievement of strategic debt management objectives in terms of risks but also costs ", declared Xhemali.
Asked whether the increase of debt at this level poses a risk to the country, Xhemali says that an uncontrolled and improperly managed increase of public debt would create an unsustainable ground for public finances.
But, absolutely, she points out, we are not in a situation like this.
"The Ministry of Finance and Economy has managed and enabled a stable level of debt, which has followed a downward trajectory in the last five years, and which has marked ever-improving indicators," explains the Deputy Minister.
Inevitably, she says, this period that our country is going through, as well as in all countries in the region and beyond, will be followed by an increase in public debt.
"But we must emphasize that, as in normal situations, the institution pays special attention to good debt management, resources from which this debt is provided and the terms by which it is provided, to meet the primary objective we have in this area, and that has to do with meeting the needs of the state budget for financing, as well as the needs to service the current debt at the lowest possible cost and maintaining acceptable levels of exposure to risks ", declares Xhemali.
Properly managed, the Deputy Minister pointed out, this increase in public debt and fiscal deficit will be temporary (short-term), and we will return to the downward trajectory enabled by serious public finance consolidation reforms aimed at sustainability. of the latter in the long run.
Albania managed to secure a financing of 650 million euros through the issuance of a Eurobond in the international financial markets, with an interest rate set by the market at the level of 3.625% (fixed coupon of 3.5%) and a maturity of 7 years.
This is the fourth time that the Albanian Government issues an instrument in international markets, an exit which has proved an increased interest and confidence of investors in the debt instruments of our country./ATA