Interest on 12-month bonds marked a slight increase in this week’s auction, after a period of several months of decline. According to data from the Bank of Albania, the weighted average yield increased to 1.69%, from 1.63% in the previous auction.
The government increased the sale of the entire announced amount of ALL 9.7 billion, while the total demands in the auction reached about ALL 10.5 billion. At the moment, the market is not showing liquidity constraints and is responding to the high demand for government borrowing, albeit with a slight upward correction in yields.
After the outbreak of the Covid-19 crisis, the budget deficit increased rapidly and reached almost ALL 40 billion at the end of the second quarter. After the last budget review, in July, the deficit for this year is projected to reach ALL 133 billion or about 8.4% of Gross Domestic Product.