TIRANA, April 19 – With credit failing to return to positive growth rates, informal borrowing continues remaining widespread especially among Albanian households.
A survey conducted by the country’s central bank has found that 61 percent of Albanian debtor households have borrowed informally from friends and relatives as well as local groceries where they buy on credit usually in interest-free borrowing.
The situation is more formalized among businesses with only 10 percent of enterprises reporting informal borrowing in the second half of 2015.
The latest survey unveiled that 31 percent of households and 54 percent of businesses had at least one debt to pay off at the end of 2015.
A third of the debtor households reported deterioration in their ability to repay loans in the second half of 2015 affected by a decline in household income and rising cost of living. The situation for the first half of this year remains pessimistic as about three-quarters of debtor households expect their repayment ability to remain unchanged.
Businesses described relations with banks as rather tough and almost half of them said they do not plan to borrow in the first half of this year.
Some 1,212 households and 714 businesses nationwide were surveyed for the report.
The country’s central bank has recently cut the key rate to a historic low of 1.5 percent in a new effort to boost sluggish lending whose recovery remains hampered by the high level of non-performing loans and poor demand by both households and businesses.
The early April move came after lending contracted by an annual 2.2 percent last February and inflation rate hit a 13-year low of 0.2 percent, significantly below the central bank’s 3 percent target, sparking deflation concerns.
Almost half of the Albanian population lives on less than $5 a day, worse than almost all regional countries, according to a World Bank report.
