The Governor of the Bank of Albania, Gent Sejko, held an online meeting with the IMF mission where he scanned the Albanian economy during the pandemic.
Sejko said in the online meeting that Albania was under the strong effect of the pandemic, but with the relaxation of the measures in the second quarter, the premises were created for the reduction of the effect of the pandemic and to be accompanied by a recovery.
The IMF on the other hand through its chief in Albania, Yan Sun offered support for 2022 inflation in Albania to return to target.
The two representatives of the institutions agreed that the coordinated fiscal, monetary and financial stimulus has been and remains a crucial element in mitigating the negative consequences of the crisis.
During the meeting, Governor Sejko said that the Albanian economy has been under the strong effect of the pandemic during the first half of the year, which has given its impact on consumption, investment, employment and public debt. However, the pandemic found the financial and banking sectors well-capitalized and liquid, and these parameters continued to remain healthy.
Further, the Governor added that the relaxation of social distancing measures during the end of the second quarter, as well as the monetary and financial stability of the country, have created premises for the pandemic effect on the economy to progressively decrease, accompanied by a gradual recovery of economic activity in the following period.
In response to this crisis, Governor Sejko stressed that the Bank of Albania has increased the monetary stimulus, by lowering the key interest rate and increasing liquidity injections, aiming to reduce financing costs and increase the monetary mass in the economy. Also, in cooperation with the banking industry, the Bank of Albania has undertaken changes in the regulatory framework, which have facilitated the temporary postponement of the payment of installments and the restructuring of bank loans to customers in difficulty.
The International Monetary Fund assessed that the monetary policy stance has been and remains appropriate, providing the necessary incentives to stimulate economic growth and return inflation to target by 2022.
Governor Sejko stressed that the Bank of Albania will remain committed at the same time in further strengthening the financial system, in cooperation with other relevant regulatory agencies, as well as in further aligning our supervisory and regulatory framework with the standards of the European System of Central Banks and the principles of the Basel Committee.
The International Monetary Fund stated that the recovery of the Albanian economy in the short term remains challenging, as a result of the negative effects of last year’s earthquake, as well as those of the global pandemic COVID-19. However, the Albanian economy is expected to resume recovery in 2021.
The Bank of Albania and the International Monetary Fund agreed that the coordinated fiscal, monetary and financial stimulus has been and remains a crucial element in mitigating the negative consequences of the crisis.