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Public debt at the end of 2021 is estimated to be at record levels at 80.1% of Gross Domestic Product.
The figure was published by the Ministry of Finance in the Macroeconomic Framework 2023-2025, while the final data from this department for the last quarter of 2021 have not yet been made public, following the indicators of the country’s public debt.
According to the government draft, the level of debt is expected to reach over ALL 1.34 trillion, almost ALL 124 billion more than in the year of the 2020 pandemic, where this indicator increased significantly to 77.8%, to then continue to expand further for due to the issuance of Eurobond of 650 million euros at the end of last year.
Keeping the public debt under control despite the two shocks that the economy received from the 2019 earthquake and the Covid pandemic that put the state budget in difficulty has been a constant request of international institutions such as the World Bank and the International Monetary Fund, as its expansion according to them poses a risk to the economy and would force the government to limit investment spending.
Despite the recommendations, the government a year ago through a normative act broke the fiscal rule by increasing the level of budget deficit to ALL 120 billion, and consequently the public debt with the argument that such an intervention was necessary in conditions of urgency and need within pandemic.
Through this change, the Ministry of Finance violates the Law on Budget Management, which provides for an annual reduction of the debt level until it reaches the limit of 45% of Gross Domestic Product, thus delaying the consolidation of public finances.
This year, the government has pledged that the public debt trajectory will return to decline and expect it to drop to 78.9% by the end of the year.
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