Bank of Albania governor presents the central bank’s annual report to parliament
TIRANA TIMES – TIRANA, April 9
Reducing the budget deficit and public debt will increase confidence in the country’s macroeconomic stability and improve the climate for foreign capital and investments, Albania’s central bank governor Ardian Fullani told a parliamentary commission this week.
Fullani made his comments during the central bank’s annual report to parliament.
Fullani confirmed that 2009 marked a decrease in economic growth rates. He said that the banking system had experienced problems, but added that the worst is now over.
Speaking about the state of the economy, the governor said that Albania survived the crisis quite well and the banking system remains sound and well-capitalized, despite a rise in bad loans.
However, the governor said that last year’s crisis brought a decline in consumption, exports and the deterioration of economic relations with abroad, which have halved the country’s economic growth.
Recent data indicates deposits and lending are both up after bottoming down last year.
“At the end of March, deposits fell to 50 percent of the Gross Domestic Product, compared with 63 percent recorded in September 2008. The withdrawal of deposits during the first three months of the year brought a slowing monetary expansion in the economy,” Fullani said.
Fullani also criticized banks for keeping interest rates and commission fees higher than they need to be.
“I think that BoA has space for all necessary steps to reduce the cost of the banking system. It remains up to the financial system to reduce these costs more effectively. We will take appropriate measures in our administrative process,” Fullani said. “I think that a better comparison with other banks in the region where international banks are operating” could offer some context.
According to estimates, interest rates for loans in Albania are about 2 percent higher than the average of countries in the region, and commissions on loans also apply.
Concern over the high cost banking was also the focus of some of the members of parliament attending the meeting.
Former Deputy Minister of Finance Sherefedin Shehu brought a case where banks through commissions were discouraging the participation of individuals in the securities market.
“Why do banks need to hold twice the commission when individuals buy bonds? This is nonsense,” Shehu said.
