BANK OF ALBANIA

PRESS RELEASE
The Governor of the National Bank of Austria Mr Robert Holzmann visits the Bank of Albania

Publication date: 08.10.2024

 

On 7 October 2024, the Governor of the National Bank of Austria, Mr Robert Holzmann paid an official visit to the Bank of Albania.

This visit marks an important step in the further development of bilateral relations between the Bank of Albania and the National Bank of Austria. Under the auspices of Governor Gent Sejko, this visit started with a bilateral meeting at the premises of the Bank of Albania.

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At the beginning of the meeting, Governor Sejko thanked Governor Holzmann for this visit and extended his appreciation for the historical relationship between our countries, in both political and economic aspects. In this context, Mr Sejko pointed out that foreign direct investments of Austria accounting for around 6% of the total foreign direct investments in Albania, in turn contributing significantly to the financial sector, display this strong bond between our two countries. During the meeting, Governor Sejko also appreciated Austria’s support for the integration process of Albania into the larger European Union family and stated his firm confidence on the further economic and technical cooperation between Albania and Austria.

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Next, the Governor presented to his homologue an overview on the latest macroeconomic developments in Albania, the reforms undertaken and the expectations for the period ahead. Governor Sejko emphasised that the Albanian economy, despite the challenging situations experienced, remains on a positive development trajectory. The volume of economic activity grew by 4.1% over the second quarter of the year. Inflation remains at low levels, but is expected to gradually return to the Bank of Albania’s target in the first half of next year, as well as the financial balances of the private and banking sectors are sound. There is also an improvement in the external sector balance, where the level of external debt is at the lowest levels of the decade.

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Focusing on developments in the banking sector, Governor Sejko pointed out that this sector is characterized by liquid and well-capitalized financial balance sheets and is highly resilient to potential shocks. The banking sector is increasingly providing credit to the Albanian economy. Credit to private sector has been picking up continuously. This climbing pace peaked at 16.8% in August, standing at the highest levels in over a decade. The accelerated pace of credit growth is an important indicator of the banking sector's contribution to the expansion of the economic activity of Albania. In addition, thanks to reforms undertaken by the Bank of Albania, there has been an improvement in the quality of the loan portfolio. Consequently, the non-performing loans ratio stands at the lowest historical levels. The Governor stressed that these developments are a reflection of the prudent monetary policy stance implemented by the Bank of Albania and its ongoing supervision of the banking sector.

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Another topic of discussion in this meeting was the euroization of the Albanian economy and its financial system and the challenges it poses. Governor Sejko stated that the euroization of the financial system has a significant impact on the effectiveness of economic policies. To this end, the Bank of Albania, in collaboration with the Albanian government, has undertaken a series of measures aimed at increasing the use of the domestic currency in the financial system and the Albanian economy. The results so far have been encouraging, with an increase in the share of loans in the domestic currency, lek.

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Focusing on the integration process of Albania into the European Union, Governor Sejko pointed out that one of the strategic objectives of the Bank of Albania is the modernization of payment systems, specifically membership in the Single Euro Payments Area (SEPA). In this regard, the Bank of Albania has successfully fulfilled all the legal and regulatory requirements and completed the application process in June 2024. In parallel, the Bank of Albania is working on the Instant Payment project, with close cooperation with the Bank of Italy and the European Central Bank.

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The interlocutors emphasized that most countries in the region, including Albania, are economically tied to the euro area and financially exposed to it. Economic cycles are synchronized with those of the euro are, and financial systems have a high degree of integration and dependency on the monetary, supervisory, and regulatory policies followed in the euro area.

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The attendees also discussed the new Growth Plan for the Western Balkans and the importance of its implementation in the European integration process. Governor Sejko informed his counterpart about the surveys conducted by the Bank of Albania, aimed at businesses, consumers, and banks, which are designed to assist in understanding and evaluating various economic aspects of the country's economic agents. Other topics addressed in this meeting included the impact of the war in Ukraine on the domestic economy and the adoption of Western sanctions against Russia.

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The Bank of Albania, as part of this official visit, also organized a roundtable with representatives of the banking system and senior officials of the Bank of Albania. The recent economic developments, inflation in the region and the EU, and other important issues for the banking system, such as supervisory and regulatory measures imposed by the European Central Bank and the modernization of payment systems, are at the focus of discussions taking place in this roundtable.

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Governor Holzmann, in his comments in the meeting, assessed positively the role and prudent monetary policy followed by the Bank of Albania, which has enabled Albania to have one of the lowest inflation rates and one of the highest economic growth rates in the region. Governor Holzmann also acknowledges the reforms undertaken by the Bank of Albania in the framework of Albania’s integration process in the European Union. The Austrian Governor, coming from a country where tourism plays a crucial role, also pointed out the necessity to focus on sustainability in tourism. Sustainable tourism not only benefits the environment but also strengthens local communities and ensures long-term economic growth.

Concluding this roundtable, Governor Sejko and Governor Holzmann addressed questions from the attendees on issues discussed during the meeting and the current challenges facing their respective central banks.

This visit was the first official one of Governor Holzmann in Albania.