BANK OF ALBANIA
Governor Sejko attends IMF and WB Spring Meetings 2023
Publication date: 17.04.2023
On 12-15 April 2023, Mr Gent Sejko, Governor of the Bank of Albania, attended the Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) in Washington D.C., USA.
Each year, the Spring Meetings bring together central bank governors, ministers of finance of member states, senior officials of international financial institutions, and representatives of academia, business and civil society.
Albania was represented in the Spring Meetings 2023 by a joint delegation of the Bank of Albania - represented by the Governor of the Bank of Albania, Mr Gent Sejko, the First Deputy Governor, Luljeta Minxhozi and other BoA senior officials; the Ministry of Finance and Economy - represented by the Minister of Finance and Economy, Ms Delina Ibrahimaj, and other MoFE officials.
In its Communiqué, IMF's International Monetary and Financial Committee states that:
“The global outlook faces increased uncertainty. So far, the global economy has shown resilience, and the worst macroeconomic outcomes contemplated in the fall have not materialized. Nevertheless, the growth outlook remains subdued and downside risks have increased. Successive shocks, including Russia’s war against Ukraine, in the context of tightening monetary policy stances needed to bring down inflation, are weighing on the recovery and macro-financial stability, as shown by recent banking and financial-market stress episodes. Inflation has moderated somewhat, but underlying price pressures remain sticky. Debt vulnerabilities are elevated, while food and energy insecurity persist, affecting vulnerable countries and people the most. In addition, inequality is increasing, climate shocks are intensifying, and fragmentation risks are rising.”
During the IMF-WBG Spring Meetings, Governor Sejko had several important meetings with prominent personalities of international finance. Amongst others, from the IMF: Mr Ajay Banga, the World Bank’s President Candidate; Mr Federico Giammusso, the IMF Executive Director for Albania; Mr Alfred Kammer, Director of the European Department at the IMF; and Ms Yan Sun, IMF Mission Chief for Albania. From the World Bank Group, Governor Sejko met with: Ms Antonella Bassani, Vice President for the Europe and Central Asia at the WBG; Mr Matteo Bugamelli, Executive Director at the World Bank Group; and Ms Xiaoqing Yu, Country Director for the Western Balkans Region, WBG. The next IMF Mission Chief for Albania, Ms Anke Weber was presented during the meetings as well.
Another important meeting was held with the Deputy Governors of the Bank of Italy, Mr Luigi Federico Signorini and Mr Piero Cipollone. Discussions in this meeting mainly focused on the developments in payment systems, technology and infrastructure innovations, as well as the related challenges, as the Bank of Albania aims to further modernise payment systems in order to efficiently accommodate these developments and in a secured manner.
In these meetings, Governor Sejko informed the IMF and WB representatives on the latest developments in the Albanian economy. In this regard, the Governor highlighted that the Albanian economy was able to withstand the consecutive shocks: the earthquake, the pandemic, and the economic consequences caused by the war in Ukraine during 2022, which are persisting.
The Bank of Albania has guaranteed the monetary and financial stability of the country, by rising the policy rate to fight inflation, pursuant to its main objective. Thorough analyses and forecasts based on the latest information, and oriented to preserve the proper balances of risks to the Albanian economy, have guided these decisions.
Despite the challenging situation, the economic policies implemented by the Bank of Albania helped: to maintain a relatively low inflation level compared with regional countries; to reduce uncertainty; and safeguard the financial stability, in Albania. Inflation has started its downward curve, reaching at 5.3% in March. It is expected to continue on this downward trend over the course 2023, and return to target within the first half of 2024.
As regards financial markets, Governor Sejko stated that they remain calm, despite tighter financing conditions. The banking sector is liquid, well-capitalised and profitable. Not least, the liquidity and capitalisation indicators of this sector are satisfactory and the capital adequacy ratio recorded 18.1% at the end of 2022.
Answering to the IMF and WB representatives' interest regarding the exposure of the Albanian banking system to the latest bankruptcies of European and US banks, the Governor pointed out that the Bank of Albania has closely monitored international markets and has concluded that the domestic market is not affected by these risks. In addition, results from the stress test and the analyses rendered show that commercial banks are quite sound. Undoubtedly, the Bank of Albania remains vigilant to guarantee the risk criteria set out and the regulatory supervision standards.
He added that lending to the economy was supported by favourable financing conditions in Albania. The banking sector continues to offer favourable lending conditions, as credit grew by 14%, on average, in 2022. At the same time, credit portfolio quality has maintained its soundness, as shown by the non-performing loans ratio, which remains at the lowest levels in the last decade.
The high-level representatives of the IMF and WBG commended the positive role and the policy implemented by the Bank of Albania, which has contributed to the macroeconomic development and financial stability of Albania. They concurred that Albania has been able to withstand the consecutive crises, even better than expected, and the Bank of Albania has played a key role in this regard. Also, they encouraged the Bank of Albania to continue monitoring the situation, as well as coordinating the policies of Albanian authorities by undertaking the necessary measures in a timely manner.
Last, they emphasized that the coordination of the monetary policy with fiscal policy in Albania, and the monetary policy stance, in the euro area and the world is of a crucial importance. The fiscal consolidation and convergence with the monetary policy of the euro area help both the Bank of Albania's monetary policy and the macroeconomic development of the country.
Governor Sejko thanked the representatives of the IMF and the WB for their technical assistance provided to the Bank of Albania, mainly in the field of resolution, payment system, statistics, banking supervision, and financial inclusion.
Also, the Governor participated in a closed-door meeting with the Ministers of Finances and Central Banks Governors in the Central, South and Southeaster Europe (CSSEE) countries to discuss about the perspective and challenges of policy in Europe.
In the framework of these meetings, Governor Sejko attended the plenary session of the IMF's International Monetary and Financial Committee.