"The effect of the exchange rate on the decrease in borrowing, only 0.7%" - Malaj: We have taken measures against possible fluctuations
The depreciation of the euro against the lek this year has had a minimal effect on reducing public debt, which is projected to follow a downward trajectory through 2026 to 53.6 percent of GDP, and also in the medium term.
During discussions in the Parliamentary Committee on Economy, the Minister of Finance detailed the real effect of the exchange rate on this trend.
"The exchange rate effect for 2025 was 0.7%, the result of the decline in public debt comes as a result of government policies. Debt should come from a decrease from year to year and the budget deficit should not be higher than capital investments."
But when asked what happens to this debt if hypothetically 1 euro goes back to the level of 140 lek, the Minister emphasized that the situation will again be under control.
"If the exchange rate were to go to 140 lek, the exchange rate would not move 140 within a day, week or year, but hypothetically if it were to go to 140 lek, there is a 6.2 billion lek contingency fund in the state budget that mitigates exchange rate and interest rate risks. Debt taken out for capital investments is debt that is used for investments in infrastructure, digitalization, and transportation in a way that translates into economic growth."
Regarding concession contracts, the Minister emphasized that they are not accounted for in the public debt figure, while underlining that the cost paid by the state budget for concession contracts is currently calculated at 1.7% of the allowed 5%, to be further reduced to 1.3 percent in 2026-2027.
The basic borrowing need during 2026 is calculated at 55.3 billion lek, of which 45 billion lek from domestic borrowing while financing through external sources is 10.3 billion lek for 2026. The budget deficit for 2026 is planned to be 2.3 percent of GDP, remaining at the same level as that expected for 2025.
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