BANK OF ALBANIA
Governor Sejko attends IMF and WBG Spring Meetings 2019
Publication date: 15.04.2019
On 12-14 April 2019, 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 2019 by a joint delegation of the Bank of Albania - represented by 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 Anila Denaj, Deputy Minister, Mr Erjon Luçi and other MoFE officials; and, the Albanian Deposit Insurance Agency - represented by the General Manager, Mr Genci Mamani.
In its Communiqué, IMF's International Monetary and Financial Committee states that: “…The global expansion continues, but at a slower pace than anticipated in October.
Growth is projected to firm up in 2020, but risks remain tilted to the downside. These include trade tensions, policy uncertainty, geopolitical risks, and a sudden sharp tightening of financial conditions against a backdrop of limited policy space, historically high debt levels, and heightened financial vulnerabilities. Other long-standing challenges also persist.”
During the IMF-WBG Spring Meetings, Governor Sejko had several important meetings with prominent personalities of international finance. Amongst others, from the IMF: Mr Tao Zhang, Deputy Managing Director of the IMF; Mr Domenico Fanizza, Executive Director for Albania; Mr Poul Thompsen, Director of the European Department; Mr Jan Kees Martijn, IMF Mission Chief for Albania; and representatives of the Monetary and Capital Markets Department. From the World Bank Group, Governor Sejko met with: Mr Cyril Myller, Vice President for Europe and Central Asia, Ms Linda van Gelder, Country Director for the Western Balkans Region of the World Bank Group in Vienna, Mr Patrizio Pagano, Executive Director for Albania; Mr Mario Guadamillas, Practice Manager at the World Bank for Europe and Central Asia, etc.
Governor Sejko informed the interlocutors on the latest developments in the Albanian economy, focusing on the outlook of economic growth, as well as on banking sector developments.
The economic growth in Albania continued its positive development trajectory, underpinned by the accommodative monetary policy implemented by the Bank of Albania. This policy stimulus - transmitted through the low interest rates and the forward guidance tool - has been adequate for fostering the development of the economy, the stability of markets and for the return of inflation to target.
Maintaining inflation at 3% is the main target of the Bank of Albania. In this regard, Governor Sejko stated that, according to the Bank of Albania's forecasts, inflation is expected to return to target within 2020. The Bank of Albania stands ready to take the necessary measures in order to comply with its main objective. The monetary policy will remain accommodative in the medium-term horizon, although the monetary stimulus will be adjusted to the risk factors and developments in Albania.
Regarding the developments in banking system in Albania, Governor Sejko presented an overview on the measures taken by the Bank of Albania to guarantee a stable, liquid and well-capitalised sector. Lately, this sector has been subject to restructuring, with the entrance of new actors and the merger of some banks. The Governor emphasised that these changes are made in compliance with the applicable legal framework and the Bank of Albania remains committed to exercising a prudential supervision for a sound banking activity. Banking sector restructuring is a positive development, which is expected to increase competition and establish the necessary conditions for boosting lending in Albania.
As at the end of 2018, banks’ balance sheets improved, banking activity expanded, NPL’s ratio reduced and lending continued to trend upward. All these indicators contributed to further enhancing banking sector’s ability to support economic growth in Albania and to withstand risks.
The role of the Bank of Albania as the Resolution Authority was another topic addressed by the Governor. This role continues to be consolidated through the development of the sub-legal framework, for the implementation of the Law "On recovery and resolution of banks in the Republic of Albania”. In more concrete terms, the Bank of Albania has been working on the following aspects: drafting resolution plan; establishing the new financing resources for the management of financial crisis; and identifying all the necessary elements of the readiness to counter them. In addition to the deposit insurance scheme, all these steps support the Bank of Albania to enhance its role in guaranteeing a safe financial system.
In addition, Governor Sejko introduced the active contribution of the Bank of Albania in the European integration process of Albania. This substantial contribution has helped in the European standards’ approximation on aspects related to the activity of the Bank of Albania, and has supported Albania’s commitments in the framework of this process.
At the conclusion of these meetings, the representatives of the international institutions commended the Bank of Albania for its contribution in the macro-economic development of the country and its financial stability. They highlighted that the Bank of Albania should continue with the steps undertaken for reducing non-performing loans, boosting lending and encouraging the use of the national currency.
External environment remains challenging against the backdrop of a lower global economic growth and narrower space for the contribution of macroeconomic policies. Hence, the continuation of structural reforms and improvement of business climate remain the main contributors to the long-term outlook of the country.
Also, IMF and WBG representatives pointed out the importance of the continued coordination of monetary policy with fiscal policy. This coordination strengthens the macroeconomic stability of Albania and the long-term economic growth.
The interlocutors commended the very good relationships between the authorities of Albania with those of IMF and WBG. Governor Sejko thanked the representatives of the IMF and WBG for the support and assistance provided to the Bank of Albania and other institutions of the country. The assistance and expertise provided to the Bank of Albania has been important for the further development of its professional capacities and the management of new challenges.
In the framework of these Meetings, Governor Sejko also participated in the plenary session of the IMF's International Monetary and Financial Committee and the Executive Forum organised by the World Bank Group for policy-makers and senior officials.
Governor Sejko met also with a number of representatives from the field of finance and academia. The meetings focused on promoting Albania, attracting foreign investments, and the institutional development of the Bank of Albania.