The survey published in the latest Bank of Albania financial stability report for the first half of 2011, revealed 24.8 percent of Albanian households and 42.8 percent of businesses has a debt to pay mostly informally but also to banks
TIRANA, Nov. 24 – One in four Albanian households and one in two businesses admits to having at least one unpaid debt, according to a survey carried out by the Bank of Albania during the first half of 2011. The survey published in the latest Bank of Albania financial stability report for the first half of 2011, revealed 24.8 percent of Albanian households and 42.8 percent of businesses has a debt to pay mostly informally but also to banks.
Compared to the second half of 2010, the Bank of Albania reports a 6.7 percent rise in household borrowing from banks and a 4.4 percent increase in informal lending.
Purchase and repair of real estate is the main reason for households’ borrowing needs at 41.6 percent, followed consumer spending at 28.6 percent of cases and business development at 10 percent.
Households remain safe from Euro’s strengthening against the national currency, as an overwhelming majority of loans, some 96 percent, have been taken in lek.
However, what remain concerning is that 36 percent of the surveyed households have to pay off their debts in 12 months and more than a quarter of them reports severe financial difficulty.
The situation for businesses appears even more grim with 26 percent of them declaring that their debts are unaffordable. The situation reflects a drop in domestic consumption and the low level of investments. More than half of businesses say they don’t plan to borrow for the second half of 2011, with the number of companies wanting to borrow more dropping by 1.3 percent to 10.2 percent at the end of June 2011.
Some 30.8 percent of businesses borrow for long-term investments and 36.3 percent to cover their daily expenditure.
