The Savings Bank - Challenge of 2001

Publication date: 20.03.2001


Banking performance and the privatisation of state-owned banks in Albania. - That is the topic that Minister Angjeli and I would like to discuss amongst colleagues. We are mostly concerned about the banking system reform, and especially, the privatisation of state-owned banks that comprises a key element in this process.
It is for the third year successively (2000 included) that the macroeconomic situation of the country is perceived within the frames of mid-term development program. The application of this program has ensured
macroeconomic stability providing premises for long-term development, compilation of development strategies for specific sectors of the economy, the strengthening of institutions and the ability to focus on
aspects of highest priority. I would like to mention some of the banking system's latest developments that I appoint as of great importance: developments in the Bank of Albania's monetary policy, credit expansion
to economy, and the improvement in the overall situation of commercial banks.

During 2000, Bank of Albania took all the necessary measures to facilitate the transition from direct to indirect
monetary policy instruments. It is an already a well known fact that our central bank does not rely on the credit ceiling or the minimum interest rate on time deposits in domestic currency. Both instruments have
become obsolete'. The role of the reference or the core' interest rate is currently taken up by the Repo rate fixed in Repo auctions. Owing to its prudent policy, the Bank of Albania has proved to be successful in its endeavours to replace the former direct monetary policy instruments with indirect ones. This success was promoted by the
relatively favourable economic environment in the country, and the sound co-operation with the Ministry of Finance in terms of administering the process of internal financing of the budget deficit.

The achieved macroeconomic stability and the need to ensure an economic growth, enabled the Bank of Albania to relent its monetary policy for the third year successively by the continuos cutting of interest rates on the whole economy. These factors are estimated to affect the increase of banking credit to economy. I am aware of the fact that everyone present in the room would be reacting with an ironic grin as many times as it is taken up the
discussion on credit to economy'. However, I can not neglect the fact that the credit stock during 2000 results three times as that of 1999; that the newly posted credits almost equal the credit supply at the end of 2000,
as lost loans were insignificant.


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