Crisis Reduces Liquidity

TIRANA, April 6 – Companies have withdrawn a lot of money from their deposits at the banks, thus reducing their liquidity.
Unlike what the Minister of Finance recently said, it is not the individuals fearing the crisis and lacking trust in the banks.
Individuals increased deposits at banks by 25 million Euros in February, according to data from the Central Bank of Albania.
Companies have allegedly needed cash to pay for their activities and interest on their loans from the banks.
The total figure of the banks’ liquidity in February fell by 50 million Euros.
For the first time bank assets had no increase on an annual basis.
Crediting the businesses continued in February, with an increase of 34 percent, which spoke of the needed funding from businesses. The loans taken in February were about 100 million Euros. They were primarily used to pay the overdraft and short-term credits.
The country’s economy is also suffering the first effects of the global financial crisis with a fall in remittances.
One business association has insisted that the government should undertake protective measures to help them survive the crisis.
The government insists, on its side, that there are no crisis effects and only panic is bringing about a local crisis.
Albanian authorities oppose that the effects of the global crisis have already covered the tiny Balkan country.
Last week the Central Bank of Albania warned the government against increasing budget expenditure as this could put the macroeconomic stability of the country at risk. The BoA called for a tighter fiscal policy saying the government has no room to offer further fiscal stimulus.
The Albanian government stresses that the reforms undertaken by the current government are the main factor for the country’s good level of immunity of the crisis.
Authorities have only acknowledged that Albania was experiencing few budgetary difficulties, also calling for more FDI in the country where authorities would make the utmost so that the projects and investments in Albania turn into success stories.
The opposition, on the other side, says Albania has been hit by the downturn in the global economy and the government should recognize the risks that come with this. They mention the fall in remittances and commercial exchange.