Public debt and Economic Growth, Case of Albania

AuthorFatbardha Kadiu
PositionUniversity of 'Aleksander Moisiu' Durres, Department of Public Administration
ISSN 2410-759X Balkan Journal of Interdisciplinary Research Vol 1 No 1
Acces online at IIPCCL Publishing, Tirana-Albania May 2015
Public debt and Economic Growth, Case of Albania
Dr. Fatbardha Kadiu
University of “Aleksander Moisiu” Durres
Department of Public Administration
Aer many debates in the recent days about the considerable increase of public debt in Albania,
mainly aer the change in law where as borrowing from third parties won’t be necessary to pass
through the parliament, there exist many comments if the debt caused positive or negative eects
on the economic development of our country. e purpose of this paper is to determine if there
exist a correlation between economic growth, where the economic growth will be considered as
the increase in GDP, and the public debt. rough this paper I will tend to dene an economic
model which can eect positively on the economic growth of our country. e results of the linear
correlation model of GDP for a period of time 1991 – 2012 as a dependent variable and the public
debt as an independent variable on the same period of time.
Key words: Public debt, Economic growth, Gross Domestic Product .
From the global crisis now the government debt is a top priority for many countries. Not
only Albania but even Europe Commission is reconsidering the limit of government debt
as a percentage of GDP. Our budget is already suering from a considerable increase of
the government debt aer the government expenditure on the Durres-Morine road.
ere are many factors that eect the economic development of a country in dierent
directions as: scal policy, government expenditure, monetary policy, foreign direct
investments international trade agreements etc.
Despite all this the economic development in long run remains a variable that depends
on government budget debt. As we now new low scal policy is not a free lunch (National
Tax Journal, March 1999, 113-28). e eect of recent scal policy in Albania was the
rate on 10% in revenue taxes. On the other hand the need for government to build high
standard infrastructure made for the decision makers a tough choice. e last statistics
of government debt reaches 59.3 % of the GDP in Albania. Even it is within the limit of
European Commission Standards (60% OF THE GDP) any economist and citizen known
that this is a burden in the future period. e government debts in this paper refer to
the public guaranteed debt. It includes the long-term obligations of public debtors as
national government, public agencies, autonomous public bodies or private debtors that
are guaranteed by public entity.
In order to determine the impact of government debt upon the economic growth we
used GDP data for 1991 to 2012 and the same interval for the economic growth. e
approach was to determine not the rate of government rate from year to year but the

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