Artan P쳮aska
apernaska@tiranatimes.com
But government and others should mind monetary risks
The worst may be over concerning the banking system in Albania, believes Adrian Fullani, the governor of the Bank of Albania (BoA). As the problems of the last months of 2008 continued into the first months of 2009, the global financial crisis produced a series of effects on the banking system in Albania. The press conference of the Governor of the BoA on the 9th of July and the multidimensional analysis of the financial and economic situation of the country that he elaborated there were reported largely in the press on the 10th of July and on the following days. The BoA’s Report for 2008 was also headmost in the papers during the whole week. Some newspapers emphasized the positive notes of the analysis of the current situation and some others covered the negative notes. “The economic crisis is not yet over. The economy is yet at risk,” stated Sot. “Crisis continues” was the lead for Libertas. “The crisis, its effects on unemployment” was the headline for Koha Jon뮍
Other newspapers accentuated a softer stand. “2009: positive but slow economic growth” was Agon’s headline. “The banks are showing themselves elastic, but economic growth will be very low” stated Tema. “The banks have been stabilized, but bad credits remain” was the lead from Shqip. Better than any other newspaper, Shqip (10.07.2009) separates the purely financial domain and the analysis relating to it, from the large economic domain.
The Good Notes
The positive view of the BoA mainly concerns the banking sector. This sector is progressively pulling out of the gap into which the global financial crisis was pulling the Albanian banking system. Previous reports from the bank have highlighted that the fundamentals of the Albanian banking system have been sitting and are sitting on sound pillars, but that the sector was experiencing difficulties created by the international banking sector downturn.
During the months of September – December 2008, the banking sector experienced the first trimester with a reported loss since 1999. From January until May 2009, unaudited data speak of a loss nearing 2 million US Dollars (USD), but this is small compared to profits amounting to 75 million USD in the previous year, writes Shqip. The newspaper explains that, expecting losses for 2009, the central bank, Bank of Albania (BoA), prevented second-level banks operating in Albania from distributing profits made in the country in 2008.
According to analyses made by the BoA, the positive news is that the problems that the banking system met at the close of 2008 are on the way to being resolved; the faith of account-holders is being restored and the banks remain well-capitalized and resistant. But the banks will continue to face economic problems in 2009.Tthe press recalls late data on bad credits which are shown on the increase, amounting to 8.9 % of the credit’s portfolio in May 2009 (all banks included).
BoA expects to see a decline of financial results in 2009, but analyzes this as due to a “fall in the volume of banking activities with high norms of profit, and especially from increase of reserve funds for meeting with possible losses in the sphere of bad credits.”
The Bad Notes
But while the banking sector heads towards stabilization, overall economy might face during the whole of 2009 worse difficulties than the government thinks and some analysts expect. Though a slow and low-grade economic growth may still be expected, the press highlights a lot of problems that may hurt the economy and welfare of Albania. Unemployment is one of these. “Fall of revenues. Low economic growth” and “Crisis will increase unemployment” were the headlines for, respectively, the Korrieri and Panorama.
But Shqip’s headline, “The government should mind the deficit and the privates mind the exchange rates,” points to other problems that the Albanian economy will have to face. The Albanian government should fit expenditures with revenues, while businesses and individuals should take measures against the high variability in exchange rates towards the national currency, the Albanian Lek, advises BoA. “The realization that the public expenditures should fit to the level of factual realization of revenues.” declared its Governor, Adrian Fullani. “All economic actors, public and private, should evaluate their sensibility and resistance towards possible unfavorable movements in exchange rates and take necessary protective action,” stated the Governor.
The elections did not destabilize the economic stand
The analysis carried out by the BoA took into consideration not only purely economic factors, but also late developments like the performance of the economy during and after the electoral period. This last analysis is what Koha Jon롨as picked for one of its titles: “The elections did not destabilize economic performance”.
It is the first time in the history of the transitional period that the parliamentary elections have not worsened macroeconomic indices. Inflation, budgetary deficit and other indices have not been worsened by internal factors. BoA estimated that the electoral situation did not affect the sustainable development of the banks in the country, writes the newspaper.
Interest rates continue to increase
The analysis, voiced by the Governor of the Bank of Albania (BoA) and picked by the local press, speak also of a trend of increasing interest rates. Under the title, “Interest rates continue to grow contrary to the trend in other countries”, Tema writes that the banking system in Albania is not managing to follow the direction of developments in other countries and in some cases is even performing contrary to them.
The paper highlights that, while a number of European countries are reducing interest rates, banks in Albania are not passing on the decrease of interest rates observed in the international financial markets to interest rates for those in Albania with accounts in foreign currencies, like Euros or US Dollars. Interest rates in Albania in credits expressed in foreign currencies, like Euros or US Dollars are considered still very high. BoA advises lower interest rates not only for credits in Euros and USD, but also for credits in Albanian Lek. BoA also encourages crediting in the national currency, in order to avoid exchange risks.
Be it for business or for private purposes, a good number of bank accounts in Albania are held in foreign currencies. A good number of credits are also expressed in foreign currencies.
