Albania Financial Forum IV

Publication date: 23.06.2016


Albania Financial Forum IV, organized by the Bank of Albania and the International Monetary Fund, opened on 23 June 2016, under the auspices of the Governor of the Bank of Albania, Mr Gent Sejko. The discussions of this year's forum focused on the issue of reviving credit growth, to support a more stable economic growth.

The forum was attended by the Governor of the Bank of Albania, the Minister and the Deputy Minister of Finance, the Minister and the Deputy Minister of Economy, senior representatives from the Bank of Albania, the Albanian Financial Supervision Authority, executive managers of the main banks operating in Albania and representatives from the parent banks, IMF and World Bank heads missions and local representatives, as well as representatives from the European Central Bank (ECB), the European Banking Authority (EBA), the European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC), etc.

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A tradition already, this forum serves as a platform to exchange ideas and present positions on various problems related to the banking and financial sector in Albania. The broad participation reflected the organizers' goal to promote active discussions among the participants and to assist in a multilateral and detailed approach to the theme of the forum.

In his presentation, Gent Sejko, the Governor of the Bank of Albania, focused on Albania's macroeconomic outlook, highlighting that Albania's economic recovery continues in line with expectations and that forecasts for 2016 and 2017 are for higher growth rates. More specifically, he noted that: 'Recovery is expected to strengthen in the medium term and private domestic demand is expected to lead GDP growth in the short to medium term. Moreover, export growth is expected to provide additional stimulus over the long term.'

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However, for growth to be steady it must be support with adequate bank lending; otherwise, without enough credit economic recovery and its stability may not last for long. In addition, Governor Sejko highlighted the engagement of the Bank of Albania to create a favourable environment to promote lending to the economy. 'To support credit growth, - he noted, - we as a central bank have tackled affect both sides of the equation: the supply side and the demand side.'

On the demand side, the Bank of Albania has continued to implement an expansionary monetary policy, which, according to its analyses has been transmitted continuously to the economy. As a result, credit in the domestic currency, as a result of the significant lowering of the interest rate, has shown visible growth over the years.

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On the supply side, the Bank of Albania has undertaken a series of regulatory actions aimed at credit restructuring, write-off of non-performing loans from the balance sheet, extension of real estate ownership deadline in banks' balance sheets, etc. Furthermore, it has undertaken countercyclical measures to boost lending, by asking addition capital for the banks that increase investments of their funds abroad and easing the capital requirements for banks with higher credit growth.

In this regard, Governor Sejko urged the banking system to be more farsighted and flexible in its lending policies. 'You should foster cooperation and improve partnership with local businesses, actively seek prospective sound lending cases, tailor lending (and banking) products to specific businesses / sectors / country risk profile, and romote early restructuring to viable businesses, based on clear and transparent guidelines.' -the Governor said.

In conclusion, Governor Sejko invited the participants to actively promote Albania, as the perception is more negative than the reality in Albania. The promotion of Albania and the reflection of its reality would contribute positively to both reducing the perceived risk of the country, and facilitating the work of banks in the lending activity.

Forum participants discussed at length about concerns and issues that are considered as obstacles to reviving sound lending to the economy. In the end, respective conclusions were drawn.

More specifically, the first conclusion relates to the necessity of economic and financial stability in Albania. The strengthening of macro-financial balances is a guarantee for sustainable growth, creating, therefore, the necessary premises for bank credit growth in the near future.

National authorities should place special significance on fulfilling all the objectives set out in the inter-institutional plan to reduce non-performing loans. After the successful implementation of all measures related to the regulatory acts, it is important to advance swiftly on the final adoption of the legislative package, part of this plan.

Further improvement of the business climate is assessed as another important aspect to concentrate efforts in the future. While progress has been made, in the period ahead, authorities are committed to take further action in this regard.

The high level of non-performing loans is considered as one of the important factors that contribute negatively to bank credit supply. For this reason, a special emphasis was placed on a thorough study of contemporary international practices, which have been successful in stimulating bank lending in many countries.

Another important conclusion relates to the need for improving further the communication strategy on the part of all stakeholders involved in this process, in order to promote the initiatives taken and the potentials of the country.

At the end of the forum, on behalf of the Bank of Albania and of the International Monetary Fund, Governor Sejko thanked the participants for their contributions and reiterated the vital role of credit in economic development.

Governor Sejko presentation

Speech by Minister Ahmetaj ( Albanian version)

Presentation by IMF Mission Chief Tuladhar