PRESS RELEASE
Questions and answers, Governor Sejko at the joint press conference with the IMF mission, MoF and MEDTTE

Question: Minister Cani stated that EUR 150 million [of the Eurobond] will be allotted for [replacing] domestic borrowing. How much will this contribute to the growth of lending to economy?

Governor: A part of the Eurobond is destined to close the existing Eurobond and the remainder to refinance the budget deficit. Our primary concern is maintaining the debt ceiling; this is agreed with the Ministry of Finance under the IMF's monitoring.

The Bank of Albania considers the issue of the new Eurobond as a positive development, in line with our monetary policy. The Eurobond provides for the banking system's liquidity to be injected into the economy, that is, surplus liquidity is free to be used in the Albanian economy. The other impact relates to the interest rate. If the Eurobond were not issued, the cost of funds to economy would have probably been higher.

The key interest rate cut, in line with Bank of Albania's accommodative monetary policy, aims at lowering the cost of funds, in order to channel the liquidity flow to the credit channel. Hence, the Eurobond contributes not only to keep the debt level under control, but also to enhance the credit channel effectiveness.

Question: When you speak about a calm economic setting that would contribute to economic growth, and about more transparency, what do you mean, in concrete terms?

Governor: About the economic setting, I would like to recall what I said in the statement I just read: during the first half of 2015, the economy posted growth, as previously stated, at 2.8% in the first quarter and 2.5% in the second quarter. In the meantime, the Bank of Albania, and the IMF, foresee similar growth rates for the second half of the year, for the remainder of 2015.

The reforms undertaken by the Bank of Albania seek to stimulate more lending, to support various projects in the economy, which, in turn, would contribute to economic development. In this regard, we are optimistic, irrespective of the difficulties, obstacles, current situation and existing economic climate. We are optimistic that the reforms and measures we have undertaken, in alignment with the fiscal consolidation policy will be effective and the economy will maintain positive growth rates, not only in the second half of 2015 but also in 2016. 

I would rather not get into detail about concrete figures, as this is a matter of forecasts. However, I would like to reiterate what I said at the last press conference. If we have a positive trend for 2015, and the trend persists in the next year, this will reflect the result  of the reforms, both on the supply and the demand side. The central bank, as the regulatory and monetary authority, pays attention to the supply side, through the accommodative monetary policy.  We are, therefore, trying and will do our utmost to see credit growth continue, and be healthy. This effort will certainly take into account the financial stability issue, fulfilling our role as the supervisory and regulatory authority, for a sound banking system. We should undertake reforms to ensure such a business and economic setting for banks to be healthy and contribute to economic growth in Albania.