PRESS RELEASE
Questions and answers at the press conference, 5 February 2025

Governor:  Recently, the Supervisory Council of the Bank of Albania has approved a program aimed at facilitating the financing of small and medium-sized enterprises. This program is the result of ongoing discussions and requests from businesses, particularly from the Investment Council and other stakeholders. We have therefore analysed the possibility of financing and supporting small and medium-sized enterprises with loans from the banking system over the course of one year.

Access to finance, particularly in the agricultural sector, has been significantly limited for many reasons, not only due to interest rates.  In this context, the Bank of Albania has decided to prioritize the agricultural sector, agritourism alongside all other SMEs, by introducing a program worth ALL 25 billion. This will ensure that every small and medium-sized enterprise can benefit from loans up to ALL 25 million.

I would like to emphasize that the Bank of Albania will provide liquidity support in the same way it does with banks. However, banks will pay a lower interest rate for financing these enterprises, and there will be a maximum limit on the interest rate they can be financed at. So, interest rates will be 2% if covered by government bank guarantees and at a maximum of 3.5% for loans assessed under the risk criteria of commercial banks. Thus, the interest rate will be sufficiently lower than the current interest rates offered to borrowers in their daily activities. The loan will be provided in local currency, with the credit risk assessment conducted by commercial banks, similar to the evaluation process for other businesses.

The Bank of Albania will not carry this amount on its balance sheet, and these loans will be recorded in the balance sheets of commercial banks. The Bank of Albania will continue to the transactions for a maximum duration of five years in relation to the financing of small and medium-sized enterprises and we expect to provide a significant impact on the development of small and medium-sized enterprises, mainly by supporting agricultural and agritourism activities.  Further details on the program will be provided tomorrow in a meeting we will hold with the Albanian Government, commercial banks and stakeholders representing small and medium-sized enterprises, where we will discuss more concretely this program, the eligibility that small and medium-sized enterprises will have and other development opportunities in this field between commercial banks and the enterprises themselves.

Question: In recent days, there has been a slight strengthening of the euro currency.  What are your comments on this?

Governor: We noticed that there was a slight appreciation of the exchange rate. Such exchange rate fluctuations are natural.  We have a free-floating exchange rate regime, meaning that the exchange rate appreciates or depreciates based on market supply and demand. In recent days, the increased level of spending by the Albanian Government in the foreign exchange market may have had an impact here as well, but overall there has been a correction. The behaviour of the exchange rate, as we have emphasized through our constant communication with market operators, is a consequence of supply and demand. Without further analysis on the exchange rate, I would say that the Bank of Albania intervenes in the foreign exchange market based on clearly defined criteria, in accordance with legal and regulatory requirements. Any purchase we make are for the purpose of increasing the level of foreign exchange reserves of the Bank of Albania. Only during 2024, the Bank of Albania has withdrawn around EUR 1 billion from the market for the purpose of foreign exchange reserves, mainly to stabilize the exchange rate. This was done primarily and solely with the aim of containing the inflation rate and safeguarding price stability. The Bank of Albania does not aim to maintain or influence the exchange rate for specific interest groups. If this were not the case, an interest group would assume that exporters would benefit, but importers would lose, and vice versa. Therefore, all interventions of the Bank of Albania throughout 2024 have been carried out with the primary objective of maintaining price stability and preventing market speculation arising from exchange rate effects.

The exchange rate remains unpredictable. We will continue to monitor developments regarding the exchange rate. The Bank of Albania will continue to closely monitor the market in relation to the evolution of exchange rates and will react as always, in compliance with legal and regulatory requirements.

Question: What are the regulatory amendments that were adopted today and how do they strengthen the protection of consumers?

Governor: In today's meeting, the Supervisory Council approved two further amendments to the current regulations “On consumer loan and mortgage loan" and "On the transparency of banking and financial products and services".  These amendments fully complete the package of amendments undertaken by the Bank of Albania to protect consumers.

First, over the past year, we have made some changes to how we handle cases where non-bank financial institutions exit the market. The Bank of Albania has set forth regulatory criteria for managing market exit cases. Next, we have adopted amendments to the regulation on credit risk management related to consumer loans for non-bank financial institutions. As we have already communicated and emphasized, the requirements that borrowers must meet for consumer loans in non-bank financial institutions have increased, concerning age, creditworthiness, total term of a loan, and number of consumer loans. Thus, all these criteria will therefore make consumer loan more difficult, but also safer, and will better protect borrowers that have a consumer loan with financing from these non-bank financial institutions, as well as from banks.

Meanwhile, the regulatory amendments approved today concern a further reduction in interest rates on consumer loans from banks and non-bank financial institutions. Additionally, they are also related to a restriction on the commissions applied by these institutions regarding consumer loans. Other amendments relate to transparency in the relationships that borrowers have for consumer loans with banks and non-bank institutions. These relate to advertising activities in addition to the entire activity of product promotion and contractual and communicative relationships that financial institutions operating in the Republic of Albania have, in order to be as transparent and as clear as possible in relation to the consumer. Today‘s regulatory amendments will also lead to a reduction in the price of consumer loans. So, there will be a further reduction in the price of consumer loan with today’s changes, while at the same time achieving higher transparency regarding commissions and all other elements related to consumer loans.