During the presentation of the report for 2020, in the Committee on Economy, the Governor of the Bank of Albania Sejko listed the measures taken which have produced a positive effect. "Through them, we managed to reduce the financial cost of the crisis to families and businesses; avoiding its transfer to the financial sector and maintaining a calm monetary and financial environment, thus creating the premises for a speedy recovery with the normalization of the situation. As a result, the impact of the crisis on the economy was smaller than expected, proving the positive effect of measures taken by public authorities, as well as the flexibility and resilience of the economy and our financial system," said Sejko.
Focusing more specifically on the measures taken by the Bank of Albania in response to the situation, the governor mentioned: lowering the key interest rate to a historical minimum of 0.5%; increasing liquidity injections; temporary regulatory facilitation in promoting installment deferrals and loan restructuring; suspension of dividend payments in the banking sector; removal of interbank transaction fees in our payment systems; as well as engaging in a frequent and transparent communication with the public, on the measures taken, their effect and expectations for the future. As a result, the impact of the crisis on the economy was smaller than expected, proving both the positive effect of the measures taken by public authorities and the flexibility and resilience of the economy and our financial system.
Focusing on the country's economic performance for 2020, Governor Sejko said that the volume of economic activity shrank by 3.3%. The economic downturn reflected the simultaneous contraction of almost all components of aggregate demand and all sectors of the economy, but the crisis hit more particularly private consumption and trade flows, where both exports of goods and services declined. On the other hand, consumption and public investment increased, partially offsetting the decline in private demand.
Further, regarding the banking sector in the country, the governor stressed that it is well-capitalized, solid and with good indicators of liquidity and financial health. He underlined that this sector has helped mitigate the consequences of the pandemic strike, taking over part of its financial burden, as well as maintaining at the same time all indicators in healthy parameters. Low interest rates and ample liquidity were accompanied by an average growth of 6.7% of the loan portfolio during 2020, supporting the continued investment and growing needs of the economy for working capital. Assets of the banking sector increased by about 7%, and the non-performing loan ratio dropped to 8.1% at the end of December, a level close to the historical minimum of the last decade.