Debts at the end of the year, debts at the beginning of the year

Albanian finances closed 2017 by borrowing from the public. But, it seems that 2018 has started the same way. What we’re talking about here are the so called “treasury bills auctions”, which are organized by the government to borrow from the public in the final days of 2017 and in the first days of the year which has just started. Let us recall that on 29 November of last year, the ministry of Finance and Economy held auctions for 3 month and 1 year treasury bonds offering interest rates of 1.31% and 2.77%. This shows that the government was in need of money from the public. This seems to be the case this year too, while it has scheduled a public auction to take place tomorrow, where 3.5 billion lek worth of treasury bills will be sold. “On Tuesday will take place the 10 year treasury bonds auction at the Bank of Albania. The value of bills that will be emitted will amount to 3.5 billion lek. Emission date is 11.01.2018; maturity date is 11.01.2028”, financial experts explain, adding that the initial interest rate which is offered amounts to 6.9% and this interest rate is paid every six months, on 11 July and 11 January. Meanwhile, based on expectations, interest rates in the action may be higher than this. Let us recall that in the last treasury bond auction, which was held in October last year, average interest rate on government 10 year maturity bills was 6.45%.

High interest rates, people are opting for treasury bonds

 The relatively high interests that the government is offering in its auctions for treasury bonds, has attracted many people into investing in them, considering them as a good investment opportunity as opposed to bank deposits. Let us recall that in tomorrow’s auction, the interest rate that will be offered by the government is 7% and this compares to none of the interest rates that banks offer on deposits. Based on the data issued by the Bank of Albania, in the month of November last year, interest rate on deposits (1-60 months) was 0.91% as opposed to 0.93% the previous year. Meanwhile, the biggest interest rate is offered on 5 year deposits, at 3.1% a year.

Properties of former Ponzi schemes to be sold at auction

 At the beginning of this year, it looks like the government is also planning to sell the remaining properties of former Ponzi schemes. This is announced by the ministry of Finance and Economy. According to this ministry, an auction will be held today after the failed attempt to sell 14 such properties in October last year. This time, the initial joint value amounts to 142.6 million lek. Most of these properties include former enterprises, apartments and lands belonging to VEFA company, which operated in Albania during the ‘90s. The most important asset of this auction is a 14.030 square meter area of land, which includes the former sauce company in Fier, which will be sold for a value of 84.1 million lek.

Interest rates on deposits falling, interests on government bills rising

 While interest rates on deposits and on bank savings are dropping from one year to another, interest rates on government bills are increasing. So, government bills interest rates ended the year with an increase. According to the Bank of Albania, in the last auction of 2017, 12 month maturity bonds were emitted at an interest rate of 2.77% as opposed to 2.63% in the previous auction. This can also be said about the 3 month maturity bonds, which also registered a slight from 1.22% to 1.31% in the last auction. This shows a positive tendency which acts as a very good investment opportunity for their savings.

BoA: Bond interest rates in Europe remain low

 Interest rates in money markets in the Eurozone have not changed in the third quarter, remaining at low levels. This fact is confirmed by the Bank of Albania, according to which, in European financial markets, interest rates on government bills have remained at the same levels as previous quarter. “Differences between interest rates on bonds issued by governments aiming to make a fiscal consolidation (Italy, Spain and Greece) and bonds issued by the German government, have not changed, remaining at relatively low levels”, the Bank of Albania explains in its last monetary report, adding that the progress of the interest rate on the sovereign debt of the countries of the region emitted in international markets indicates a positive perspective of these countries.