Public debt has entered a clear downward trajectory during the first quarter of 2026, dropping to 48.79% of Gross Domestic Product (GDP), the lowest level recorded in the last decade. Preliminary data from the Ministry of Finance indicate that the decline results from both the expansion of the economy and an actual contraction of the debt stock.

At the end of March 2026, the total stock of central government debt, including state guarantees, reached around Lek 1.357 trillion, from Lek 1.401 trillion at the end of 2025, a nominal reduction of around Lek 44 billion within three months.

The decline in the debt/GDP ratio by 4.08 percentage points reflects the combination of two main factors: the expansion of the economic base and the gradual reduction of financial liabilities.

For 2026, GDP is projected to reach around Lek 2.78 trillion, automatically increasing the economy's capacity to cope with the debt stock.

Analysis of the debt structure shows that the largest contribution to the decline was made by external debt. Its weight to GDP decreased to 20.20% in the first quarter of 2026, from 21.49% at the end of 2025.

The decrease is related to several simultaneous developments, including the strengthening of the Lek exchange rate against major currencies, the maturity of some liabilities, and the effect of economic expansion.

Domestic debt also continues its downward trend, reaching 28.59% of GDP, from 31.38% at the end of 2025. State-guaranteed liabilities to strategic enterprises or sectors have decreased to 1.49% of GDP, from 1.73% at the end of last year.

This reduces the exposure of public finances to potential risks that may arise from contingent liabilities.

The improvement in public debt indicators constitutes a positive signal for macroeconomic stability, as a lower debt/GDP ratio improves the perception of financial markets and increases the space for more flexible fiscal policies.

Unlike previous periods when debt reduction came mainly from economic growth, a real contraction of the nominal stock is observed in the first quarter of 2026.

This suggests that fiscal consolidation is relying not only on economic expansion, but also on more careful management of public borrowing.

The downward trend in public debt reinforces the medium-term objective of public finances to maintain fiscal sustainability and gradually reduce exposure to external and domestic liabilities.