PRESS RELEASE
Questions and Answers at the Governor’s Press Conference, 29 January 2014

Question- I have a question regarding the development of lending to economy. As you mentioned, till the end of November lending was on a negative territory, and, neither the simulating monetary policy, nor the other macro prudential measures implemented by the Bank of Albania were sufficient to at least return credit growth to a positive territory. Which are your expectations for 2014? Do you see any element that would bring hope for a better quantitative performance of lending to economy?  Also, is there any room for other interventions by the Bank of Albania, beyond the further easing of the monetary policy? That is, are there any ways that the Bank of Albania may encourage further the lending to economy?

Answer-The question is real and at the same time it represents a broad debate worldwide nowadays. Lending to economy has become a global problem and is considered as the Achilles' tendon to policy makers.

Bank of Albania has implemented a set of measures to encourage lending to economy. Moreover, in collaboration with the banking sector and the Government, we aim to turn this process into a national program. This initiative corresponds to the new agreement with the International Monetary Fund and the World Bank. At the same time, a more active move by international financial institutions, such as the European Bank for Reconstruction and Development and the European Investment Bank, is needed in this direction.

In the forthcoming period, we expect to collect the benefits of our simulating monetary policy and the macro prudential measures. Thanks to these measures, interest rates lowered for both yields and lending to economy rates. These developments show that the transmission in economy is functioning better. Obviously, the direction of banking system and markets still has problems, for already known reasons, which relate to the global situation and demand. That is a complex situation.

At the same time, it should be mentioned that during this year the European authorities will conduct the next assessment of the financial soundness of banking groups. The outcome of these assessments may provide subsequent effects in this regard.

However, I would like to highlight that the latest measures we are undertaking in collaboration with the Government, the World Bank and the International Monetary Fund, for a micro analysis of the problem, will be another positive development, either to write off non-performing loans, when recovery is insignificant, or to restructure the loan.

It is important that banking system is solid and well capitalised, not only performing above the average rate of the region, but also of the euro area, despite the problems that the global economy is going through, and the dependence on their parent banks. I think that the situation will be more positive. There is, obviously, room for more optimism, more work to do and, as I said, year 2014 is the year to realise the duties.

We have a lot of homework to do; however, on a positive note, the necessary measures are being taken, the respective energy is being provided for this element (credit growth), which I do not consider as a mere figure, I see beyond it, that is the structural reforms that should be taken to expand the market.