The association wants an end to what it calls “the contradiction between a banking system with plenty of liquidity and a real economy with sharp absence of liquidity.”
TIRANA, June 4 – Albania’s business community represented by Konfindustria has expressed its concern over lack of liquidity the country’s top production companies are facing despite the banking system being better capitalized compared to other Western Balkan countries.
In a statement, Konfindustria’s general administrator Gjergj Buxhuku described the situation as unacceptable and appeals to government and the Bank of Albania to intervene to put an end to what he called “the contradiction between a banking system with plenty of liquidity and a real economy with sharp absence of liquidity.”
Konfindustria says the Albanian banking system has benefitted in the first five months of this year Euro 700 million of capital inflows mainly from Greece where panicked Albanian migrants seem to have transferred their deposits home fearing a possible escalation of the crisis there.
A further deterioration in lending would have severe consequences for Albanian industries which have been suffering from both low internal and external demand due to the escalation of the euro area crisis.
However, in its latest survey the Bank of Albania says a sharp drop in demand for new loans has also influenced the situation with lending which slightly decelerated in early 2012.
Latest Bank of Albania data show total credit to both businesses and individuals decelerated to 11.24 percent during the first quarter of this year, down from 13 percent in the final quarter of 2011 compared to the same period a year ago. Lending to businesses also decelerated to 16.6 percent in the first quarter of 2012 y-o-y, down from 17.9 percent at the end of 2011. Specific problems in the sector where businesses operate, the situation with bad loans, and the general macroeconomic situation are the key factors contributing to tougher lending standards for businesses. Most credit to businesses is taken in Euro, accounting for 60 percent of the total, while the national currency lek has a 30 percent share.
