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Opinion / Editorial

Why does the IMF value the central bank?

Why does the IMF value the central bank?

In the closing press release of October 12, 2021, the mission of the International Monetary Fund, which stayed in Albania for about two weeks, concluded that “The easing monetary policy of the Bank of Albania remains appropriate, as long as inflationary pressures remain. Inflation has remained within the target and expectations are stable, well anchored. We expect the recent rise in headline inflation, driven by international food and energy prices, to be transient. A shift in the central bank's approach to monetary policy tightening should be data-driven, based on clear indicators of expansion and persistent inflationary pressures. Exchange rate flexibility has served Albania well and should continue its role as a buffer. The banking system has remained stable and liquid (with paper money) "(https://www.imf.org/en/News/Articles/2021/10/12/mcs101221-albania-2021-article-iv-consultation-concluding -statement). Why the IMF appreciates the work of our central bank. First, despite the magnitude of the pandemic crisis and the galloping rise in prices of fuel, electricity and food in world markets, as an economy we have managed to maintain financial and monetary stability (of money, lek). This is evidenced by low inflation (with the exception of August 2021 and September with 2.4 and 2.5 percent, respectively, but still under control) and a stable lek-euro exchange rate. Second, non-performing loans are at their lowest level in the last 20 years, at 7.8 percent of the total. Bank of Albania, since March 11, 2020, the day we closed from the pandemic until today, provided enough paper money in commercial banks, for any entrepreneur or citizen in need. Third, credit to citizens and businesses has been on the rise and has reached pre-pandemic levels. The presence of paper money at all times and commercial bank counters, as well as the ability to get credit at any time you need, reduced to a minimum the number of bankruptcies of small and large businesses. Our central bank, constantly monitoring the current situation with inflation affected by the increased prices of the main goods we import (Italy, where we get the main imports, has increased the price of energy by 40 percent and has made all the goods it produces more expensive) , is ready and has the right mechanisms, to protect us from the severe consequences of imported inflation. This institution is confident that today's inflation of 2.5 percent can be kept under control and within the space-legal obligation of the central bank, from 2 to 4 percent. This certainty gives us the guarantee that, despite the tremendous pressure from import prices, our economy will be able to keep inflation (average prices) under control. The measures taken by the central bank have given their result, guaranteeing the preservation of the monetary and financial stability of the country, as well as the alleviation of the crisis costs for Albanian businesses and families for more than a year and a half now (March 2020-October 2021 ). Fourth, a number of reforms undertaken by the central banking authority have played an important role in successfully coping with this situation, with a direct impact on maintaining the financial stability of the country. Ongoing timely coordination and advice and expertise received from international institutions, such as International Monetary Fund missions, the World Bank, etc., have ensured good coordination of economic, monetary and financial policies. The IMF missions have consistently assessed as the appropriate and effective response to the crisis, the combination of fiscal stimulus by the government with the easing monetary (money) policies pursued by the Bank of Albania. The lek lending easing policies continue and have changed the ratio of loans granted, in favor of loans in the national currency. Our central bank encouraged commercial banks to restructure their loan portfolios for sustainable businesses facing temporary difficulties during the pandemic. It imposed a six-month moratorium (non-payment) March-August 2020 on trade credit installments, which benefited half of the entrepreneurs who had borrowed in the banking sector and 15 percent of citizens (the others decided to continue paying installments regularly ). The Bank of Albania ensured the health of the banking sector, encouraging the increase of banks' capital and strongly supporting the growth of lending, with all its regulatory means. That is why the IMF values ??our central bank, seeing it as the most professional and secure guarantor we have in our economy, to control the risk posed to us by imported price increases. It imposed a six-month moratorium (non-payment) in March-August 2020 on trade credit installments, which benefited half of the entrepreneurs who had borrowed in the banking sector and 15 percent of the citizens (the others decided to continue paying installments regularly ). The Bank of Albania ensured the health of the banking sector, encouraging the increase of banks' capital and strongly supporting the growth of lending, with all its regulatory means. That is why the IMF values ??our central bank, seeing it as the most professional and secure guarantor we have in our economy, to control the risk posed to us by imported price increases. It imposed a six-month moratorium (non-payment) in March-August 2020 on trade credit installments, which benefited half of the entrepreneurs who had borrowed in the banking sector and 15 percent of the citizens (the others decided to continue paying installments regularly ). The Bank of Albania ensured the health of the banking sector, encouraging the increase of banks' capital and strongly supporting the growth of lending, with all its regulatory means. That is why the IMF values ??our central bank, seeing it as the most professional and secure guarantor we have in our economy, to control the risk posed to us by imported price increases. which benefited half of the entrepreneurs who had borrowed in the banking sector and 15 percent of the citizens (the others decided to continue paying installments regularly). The Bank of Albania ensured the health of the banking sector, encouraging the increase of banks' capital and strongly supporting the growth of lending, with all its regulatory means. That is why the IMF values ??our central bank, seeing it as the most professional and secure guarantor we have in our economy, to control the risk posed to us by imported price increases. which benefited half of the entrepreneurs who had borrowed in the banking sector and 15 percent of the citizens (the others decided to continue paying installments regularly). The Bank of Albania ensured the health of the banking sector, encouraging the increase of banks' capital and strongly supporting the growth of lending, with all its regulatory means. That is why the IMF values ??our central bank, seeing it as the most professional and secure guarantor we have in our economy, to control the risk posed to us by imported price increases.