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Opinion / Editorial

Why did the lek loan increase?

Why did the lek loan increase?

According to the Bank of Albania, at the end of November 2020, the total credit granted to the economy amounted to almost ALL 600 billion or EUR 4.88 billion. The new loan recorded an annual increase of 5 percent, compared to November 2019, or 244 million euros more. The easing measures taken by our central bank created calm financial markets and stimulating money conditions for entrepreneurship. Loan interest rates for households and businesses anchored at low levels, with a stable exchange rate of the lek against the euro and the dollar. Overall, lending to the private sector increased by an average of 6.7 percent during 2020, supported by the increase in lek loans. Credit in our currency reversed the negative ratio of previous years, passing for the first time to more than half of the total loan (50. 2 percent in ALL). This addition gives encouraging signs for the increase of the effectiveness of the monetary policy of the Bank of Albania. And with it the increase of financial stability of the country. The banking sector, with its 12 commercial banks, has made a positive contribution to coping with the crisis. The increase in lending has helped liquidity businesses and households in temporary difficulties, as well as supported the continuation of investments. The postponement of loan installments for six consecutive months (March-August 2020) for certain categories of borrowers and the restructuring of loans for other categories, has shifted part of the burden and stress of borrowers on the balance sheets of the banking sector. However, the increase in the number of infected in the cold months of December 2020-half of January 2021 and the partial reinstatement of restrictions have somewhat slowed down consumption and economic activity. Nevertheless, we closed 2020 with a much smaller economic downturn than the European Bank for Reconstruction and Development predicted with 9 percent of national output. We fell 6 percent, or 360 million euros less. With the arrival of half a million Pfizer vaccines in the coming months, our central bank expects a gradual increase in consumption in January-April 2021. And hence the progressive increase in economic activity. Taking hand in hand with key countries for our economy, such as Italy and Greece, we are also expected to grow economically in the first half of this year by at least 3 percent, compared to January-June 2020, to continue with a much stronger increase in July-December 2021, when life will slowly begin to return to its normal dimensions. And with it the consumption. Our central bank, with its policy of encouraging lek lending, is concretely helping to return the country to normalcy. It eased the money policy and increased the amount of money in circulation and in the banking channels, aiming at the normal functioning of the financial market. Which he did, albeit in the midst of a thousand difficulties. The financial stability of our country, even though we are going through the most challenging economic period after 1997, has not been affected and this is evidenced by the most conservative institution in world finance, the International Monetary Fund. By easing monetary policy, The Bank of Albania managed to alleviate the cost of paying the public debt (a debt today over 10 billion euros), as well as to help increase lending and stimulate consumption and investment. The central bank temporarily facilitated the implementation of the operating regulations of the banking sector, encouraging the timely postponement of the payment of loan installments and their restructuring. From this move was placed in the moratorium over 40 percent of the loan portfolio. So, for over 800 million euros in loans, installments and interest were not repaid for 6 months. This eased the financial burden on businesses and families in temporary difficulties with over 68 million euros. Also, over 25 thousand bank clients have benefited from the loan restructuring, increasing the sustainability of their long-term business plans and strengthening the relationship of trust with commercial banks, to obtain new loans in the future and to develop. In parallel, the Bank of Albania suspended the distribution of dividends to the banking sector during 2020, in favor of capital growth and the stability of this sector. It eliminated the costs of using the infrastructure of electronic payment systems to and from the central bank, aiming to expand the use of these instruments and reduce the cost of transactions. All these measures and facilities led to the growth of lek credit, which is a guarantee for the development of our economy and the fairer transmission of monetary policies by the Bank of Albania. to take out new loans in the future and to develop. In parallel, the Bank of Albania suspended the distribution of dividends to the banking sector during 2020, in favor of capital growth and the stability of this sector. It eliminated the costs of using the infrastructure of electronic payment systems to and from the central bank, aiming to expand the use of these instruments and reduce the cost of transactions. All these measures and facilities led to the growth of lek credit, which is a guarantee for the development of our economy and the fairer transmission of monetary policies by the Bank of Albania. to take out new loans in the future and to develop. In parallel, the Bank of Albania suspended the distribution of dividends to the banking sector during 2020, in favor of capital growth and the stability of this sector. It eliminated the costs of using the infrastructure of electronic payment systems to and from the central bank, aiming to expand the use of these instruments and reduce the cost of transactions. All these measures and facilities led to the growth of lek credit, which is a guarantee for the development of our economy and the fairer transmission of monetary policies by the Bank of Albania. It eliminated the costs of using the infrastructure of electronic payment systems to and from the central bank, aiming to expand the use of these instruments and reduce the cost of transactions. All these measures and facilities led to the growth of lek credit, which is a guarantee for the development of our economy and the fairer transmission of monetary policies by the Bank of Albania. It eliminated the costs of using the infrastructure of electronic payment systems to and from the central bank, aiming to expand the use of these instruments and reduce the cost of transactions. All these measures and facilities led to the growth of lek credit, which is a guarantee for the development of our economy and the fairer transmission of monetary policies by the Bank of Albania.