Developments in neighboring Greece’s economy will not affect the Greek-owned banking institutions in Albania, but economy and credit likely to suffer.
Tirana Times
TIRANA, April 28 – The Bank of Albania is closely monitoring the economic situation of neighboring Greece and taking appropriate actions to keep Albania’s economy and banks protected, the central bank’s governor said this week.
Governor Ardian Fullani said developments in neighboring Greece’s economy will not affect the Greek-owned banking institutions in Albania, as these are held to the highest European standards.
But he added the situation in Greece may affect the process of issuing Albania’s Eurobond, worth 400 million euros, as the process includes risk assessment elements, including the situation in the neighboring country, which is Albania’s second largest trading partner and a host to a large number of Albanian immigrants.
Governor Fullani made his comments following a meeting of the central bank’s supervisory board.
He added that the recent narrowing of the deficit due to an increase in exports and reduction imports is an encouraging development but requires long-term sustainability based structural reforms.
Fullani’s predecessor, Shkelqim Cani, said in an interview with private television station Alsat this week that the crisis might lead to tighter credit by the banks for the consumers as capital from Greek mother banks will be affected. But he added there is little reason to believe there will be any problems with the system in general.
“The Albanian system is safe, so Albanians should not fear for their deposits,” he said. “But Greek banks will find it harder to give loans because the mother banks will keep the capital in their country.”
He added the biggest consequences of the Greek crisis will not be seen in the banking system but in the Albanian economy.
“Immigrants are having difficulties. They find less work, so they bring less money to Albania, and the purchasing power goes down,” Cani said.
Governor Fullani also acknowledged that tight credit conditions have been a problem, but that is by no means related only to the Greek crisis.
Experts say the low levels of credit expansion reflect in part the decline of demand for consumption and investment as a result of the weak economy.
But the Bank of Albania says future credit performance will be an important factor on the economy’s recovery.
Bank of Albania has for several months urged Albanian commercial banks to lend more. It repeated in its latest statement that it stands ready to help the banking system with the necessary measures to reactivate the credit markets.
A recent central bank statement said, “the banking system can and should make more of an effort to transmit monetary policy by providing more credit to the economy.”
