Identifier
Created
Classification
Origin
09TIRANA279
2009-05-06 13:47:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tirana
Cable title:
ALBANIA MOVES CLOSER TO FINANCING ITS DEFICIT
how-toVZCZCXRO7715 OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG DE RUEHTI #0279 1261347 ZNR UUUUU ZZH O 061347Z MAY 09 FM AMEMBASSY TIRANA TO RUEHC/SECSTATE WASHDC IMMEDIATE 8091 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY RUEAIIA/CIA WASHDC PRIORITY RUEHVEN/USMISSION USOSCE PRIORITY 2486 RHEFDIA/DIA WASHINGTON DC PRIORITY RUCNDT/USMISSION USUN NEW YORK PRIORITY 0811 RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY RUEKJCS/SECDEF WASHINGTON DC PRIORITY
UNCLAS TIRANA 000279
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: ALBANIA MOVES CLOSER TO FINANCING ITS DEFICIT
REF: TIRANA 217
UNCLAS TIRANA 000279
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: ALBANIA MOVES CLOSER TO FINANCING ITS DEFICIT
REF: TIRANA 217
1. (SBU) After two months of difficult negotiations, the GOA on May
5 signed a loan agreement with Alpha Bank and Deutsche Bank to
syndicate a 250 million euro loan to finance a large part of its
2009 budget deficit (reftel). The agreement, required by Albanian
law, spells out interest rates and fees the GOA is willing to pay,
and must be approved by Parliament before the syndicating banks can
seek investors to cover the loan. To reduce interest costs, the
loan will be disbursed in two tranches, 95 million euro in May and
up to 155 million euro in June. The interest rate will be 965 basis
points above EUROBOR (about 11 percent currently).
2. (SBU) Since Albanian law requires Parliamentary approval of all
government loans, including interest rates, fees and terms, Deutsche
Bank and Alpha Bank cannot negotiate with potential investors.
Given the tight global financial markets, it is possible they will
not be able to find investors for the full 250 million euro amount,
although Ministry of Finance sources are optimistic that a total of
150 - 200 million euro will be covered.
3. (SBU) Opposition media have attacked the loan, calling the 11
percent interest outrageous and saying that the cost of this loan
adds to the already exorbitant cost of the Durres-Kukes road. In
addition, Central Bank Governor Fullani, an increasingly vocal
opponent of the Prime Minister, has tightened capital requirements
of local banks, making it very difficult for them to underwrite a
significant portion of the loan.
WITHERS
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: ALBANIA MOVES CLOSER TO FINANCING ITS DEFICIT
REF: TIRANA 217
1. (SBU) After two months of difficult negotiations, the GOA on May
5 signed a loan agreement with Alpha Bank and Deutsche Bank to
syndicate a 250 million euro loan to finance a large part of its
2009 budget deficit (reftel). The agreement, required by Albanian
law, spells out interest rates and fees the GOA is willing to pay,
and must be approved by Parliament before the syndicating banks can
seek investors to cover the loan. To reduce interest costs, the
loan will be disbursed in two tranches, 95 million euro in May and
up to 155 million euro in June. The interest rate will be 965 basis
points above EUROBOR (about 11 percent currently).
2. (SBU) Since Albanian law requires Parliamentary approval of all
government loans, including interest rates, fees and terms, Deutsche
Bank and Alpha Bank cannot negotiate with potential investors.
Given the tight global financial markets, it is possible they will
not be able to find investors for the full 250 million euro amount,
although Ministry of Finance sources are optimistic that a total of
150 - 200 million euro will be covered.
3. (SBU) Opposition media have attacked the loan, calling the 11
percent interest outrageous and saying that the cost of this loan
adds to the already exorbitant cost of the Durres-Kukes road. In
addition, Central Bank Governor Fullani, an increasingly vocal
opponent of the Prime Minister, has tightened capital requirements
of local banks, making it very difficult for them to underwrite a
significant portion of the loan.
WITHERS