Albania’s business community has welcome the package of reforms aimed at boosting lending, saying that it is now up to the banks to take the initiative in fulfilling the financing needs of the private sector
TIRANA, March 6 – Albania’s central bank has officially introduced its package of measures aimed at boosting lending and accelerating the execution of collateral. Speaking in a forum with bank and business representatives this week, governor Ardian Fullani said the package of reforms focuses on three key pillars, the legal pillar including changes to Civil Code to accelerate the execution of collateral, the monetary policy pillar aimed at increasing lending and consumption and the macro-prudence pillar unfreezing financial resources in banks and channeling them toward lending.
The prudential pillar involves the reduction of demands for banks’ liquid assets and the increase of risk coefficients and the structure of investments to increase lending.
Albania’s business community has welcome the package of reforms aimed at boosting lending, saying that it is now up to the banks to take the initiative in fulfilling the financing needs of the private sector.
“There are three main pillars. The first pillar is that of rules and the legal aspect. This is mainly focused in the execution of collateral and the measures that must be taken so that banks execute the collateral in time and develop the trading market by making it more efficient and further developing it. Secondly, there will be important measures of the monetary policy to make it as efficient as possible. This will make the transmission policy mechanism more efficient. The third and most important thing is the macro-prudence pillar,” said Fullani.
New proposed amendments to the Civil Code, requiring a qualified majority of 2/3 of votes are expected to accelerate the execution of collateral which has become a barrier for banks and led to non-performing loans climbing to a record 22 percent. Low inflation pressures have allowed the Bank of Albania to cut the key interest rate by 1.5 percentage points to a historic low of 3.75 percent since Sept. 2011 in an effort to stimulate the economy but the moves have been poorly reflected in lower loan interest rates and an increase in investments.
Les Nemethy, a well known financial expert, says that businesses must be prepared to have reliable projects because banks no longer finance businesses as they did five or ten years ago.
“Company owners often don’t have a real strategy and this is scaring for those who lend and entrepreneurs must do anything because the problem is not the money but the way to convince others if you are going to invest the money in the right way.
