PRESS RELEASE
Interview with Gent Sejko, Governor of the Bank of Albania. Top Channel TV

TCH: We have just said goodbye to a difficult year for the Albanian economy. What are the expectations for this year? Will 2016 be a better year for the economy, enterprises and households?

Governor: Indeed year 2015 was a difficult one, but data as of November show that there have also been some positive results in 2015. I would rather not get into technical details and figures, but we expect the GDP growth to be 2.7%, for 2015, in line with the forecasts of the Bank of Albania, and of the International Monetary Fund. For 2016, our expectations are positive. We expect economic growth to be above 3%, driven by the growth of domestic demand and consumption, and of foreign investments. In 2015, we saw a higher level of foreign investments and expect to see the same trend continue in 2016. Also, we expect the economy to improve due to the increased support for financing, crediting by commercial banks.

TCH: The Bank of Albania is committed to a series of monetary policy easing. You have lowered the key interest rate 14 times and the results have been, to some extent, arguable. Are you considering other forms of monetary policy easing, beyond the conventional ones?

Governor: The accommodative monetary policy of the Bank of Albania has given its effects. The lowering of the key interest rate has helped expand the credit portfolio; however, our expectations are more ambitious. We would very much want to see higher than forecasted economic growth, in order for both households and enterprises to really feel the effect of this growth. The Bank of Albania has been constantly analysing and studying all the other alternative ways and forms for promoting investments and fostering economic recovery.  One of these forms is the quantitative easing (QE). For the first time, the QE was applied by the Fed. However, we have a different and specific situation. Our banks have liquidity surplus, in other words, they do not need liquidity. The challenge is to transfer this liquidity from the financial sector to the economy. We have not reached conclusions, yet. We are still analysing the situation. It is too early to draw conclusions. Once we judge that it will be necessary to intervene, whether through the QE (which I see as a little more complicated, because there is no need for it), or other financial mechanisms or instruments to bolster lending and investments, this fact will be made public. But, we have not reached any conclusion yet; we are still in the process of making our analyses.

TCH: This means that one option may be the targeted lending schemes.

Governor: All the options are open and subject to analyses. Targeted lending schemes are also subject to analyses. Certainly, one of the main aims is to boost lending. In parallel, we monitor the development of the economy. If the economy performs well, bank lending performs well and even increases, it will not be necessary to intervene. If we see that economic growth and lending do not perform according to forecasts, then it will be necessary to intervene.

TCH: Together with the Government, you have drafted an action plan for reducing non-performing loans. How is this plan working and what are your expectations?

Governor: This action plan has produced effects. I am happy to say that the level of non-performing loans (NPLs) has dropped from 25% to 20% and we expect their level to constantly fall, as a result of the measures set forth in the action plan. This plan consists in the write offs from the banks' balance sheet, and the restructuring of portfolios that have positive and optimistic projects for the future. In cooperation with commercial banks, we are oriented towards negotiations and healthy agreements with enterprises. We target those enterprises that have positive projections and are worth restructuring and supporting in the future. Likewise, those enterprises that have no hope and no future should be subject to revaluation by commercial banks, with the monitoring of the Bank of Albania; it is better to bring to an end the policy of further losses. This will also require its own time. What we see and judge as a positive development is that this action plan is giving effects and we expect to see these positive effects in 2016, as well.