BANK OF ALBANIA
Interview with Gent Sejko, Governor of the Bank of Albania with Albanian Radio-Television
Publication date: 24.12.2016
RTSH: Mr Governor, how would you assess the performance of the Albanian economy during this year?
Governor Sejko: The positive growth trend continued in 2016. During 2016 H1 the economic growth was 3.1%. There are no final figures out yet, but the economic growth is expected to be between 3.3 and 3.5%.
RTSH: Within the target ?
Governor Sejko: Of course, within the target and our forecast. As a matter of fact, the Bank of Albania has been a little conservative in its forecasts, but economic growth has progressed well. The important fact is that the economic growth trend has been positive therefore for two-three years in a row we have had a continuous economic growth.
This economic growth was a result of increased consumption and domestic private investments. The Bank of Albania has followed an accommodative monetary policy, which has also affected the funding sources of this economic growth.
RTSH: Did the Albanian economy face any weakness during 2016? Which was its biggest weakness?
Governor Sejko: The low level of exports' diversification could be considered an essential weakness of the Albanian economy. Albania exports mainly minerals and oil and because of this, it is highly sensitive to the price of these exports. Inflation declined to 0.2-0.3% in the beginning of the year, in February and March. This decline was due to the impact on the price of the products that we export. The level of economic perception is another weakness of the Albanian economy. The perception is way more negative that the economic reality in Albania.
This perception has an impact attributable directly to foreign and domestic investments. Informality is another negative factor for the Albanian economy. Initiatives to fight informality have provided positive effects in relation to income. Thus, income increased however informality in Albania remains high.
RTSH: Mr Governor, Bank of Albania together with the Government launched a national plan of measures to reduce non-performing loans portfolio. It should be mentioned that during this year the non-performing loans portfolio did not reduced, on the contrary, it slightly increased. Why did this happen, can this be considered a failure of the measures plan? Why did this plan fail?
Governor Sejko: The plan did not fail, on the contrary, the plan was well-studied and it affected all the elements and factors that would have their impact in the improvement of the non-performing loans ratio. Non-performing loans are not created during a single year. They are created and have increased over the years. Of course there are many elements of the plan of measures that will be implemented in 2017. The Parliament recently adopted the law on bankruptcy. Other laws that address the issue of non-performing loans have been adopted as well. We expect another write off of non-performing loans from the banks' balance sheets, which will lead to the reduction of non-performing loans. We also expect to have a sufficient positive restructuring of the non-performing loans portfolio.
RTSH: What does the Bank of Albania expect for 2017 for this year there are the elections and every time there is elections, the politics often disrupts the economic balances.
Governor Sejko: We do not expect major fluctuations or deviations from our forecasts despite the fact that this is a year of elections. There are positive and negative elements, related to the election year. The increase of public investments is one of the elements that affect economic growth. On the other hand, there are negative elements, which might be a lower income. However, these elements may offset each other in their balance thus not have any impacts. It is important that the electoral process is carried out correctly and there are no political issues. If we will be able to have a normal election year, likewise it has been before in Albania, if we will be able to complete it successfully, the economic forecast will certainly not change. We expect the economic growth to be higher next year than this year.
RTSH: Mr Governor, what about the former Dajti hotel building?
Governor Sejko: The former Dajti hotel building will be part of the Central Bank, since there are employees who work in other premises rented for this purpose so the former Dajti Hotel building will accommodate them all.
RTSH: Is there any deadline?
Governor Sejko: We believe that the building will be reconstructed in a two-three years. I think that the reconstruction will start in the beginning of the coming year. There are many problems and challenges since that building is extremely damaged and we aim to make it as good as it was before, to preserve its authenticity, without changing from the original.