Kosovars drown in loans

Credits receiving family economies in Kosovo, according to Kosovo Central Bank data, have marked the highest annual growth rate of 14.7 per cent.

The value of citizens' loans to ten commercial banks in Kosovo has reached over 2.2 billion euros, out of them about 800m euros, are family loans, while 1.4 billion euros are loans to companies.

“Bank sector reform accelerated annual growth to 10.4 percent. By December 2016, the total value of loans amounted to 2.23 billion euros. During 2016, credit credit has increased as a result of increased loan demand, as well as improved credit offerings from the banking sector through lowering interest rate, increasing the approved loan amount and lowering interest rates”, says the latest report by the Central Bank of Kosovo.

High credit level for family economies, by the recognition of economic issues, it is considered a result of the poor standard of citizens' lives, but it can also be considered a reflection of economic growth in the country.

The executive director at the Kosovo Banks Association, Petit Balija, tells Radio Free Europe that increasing credit requirements for family economies have contributed many factors.

The growth of the credit portfolio is continuing this year as in the past year, at a total rate of over 10 percent. In this year, there is increased lending in favour of businesses, but it is true that even the family economy has increased their consumption by engaging in various investments”, Balija says.

“One of the reasons is that the interest rate in deposits is quite low, and many of the citizens find their means more reasonable to invest than keeping them in deposits. We are also hoping that this is an indicator of Kosovo's economic growth that reflects also on the growth of the credit portfolio”, he points out.

Commercial banks operating in Kosovo present various loan bids. Offers include consumer loans, those for housing, schooling, businesses, production, but also for different holidays.

According to the recent Central Bank data of the Republic of Kosovo, the effective interest rate for credit is 8.5 per cent, depending on the bank and the type of credit.

However, to Kosovo Business Alliance Chairman Agim Sahini these interest rates for credit are still high.

Raising loans for Sahin family economy considers it disturbing, as according to him, families do not have enough budgets to meet much of their needs.

All categories for loans have increased in Kosovo, even in businesses and for families. The increase in loans by families shows a poor performance of the Kosovo citizens' standard that they cannot live without loans, shows poverty growth and this is not a good sign for Kosovo”.

This for us is concern that households in Kosovo do not have their own budget, nor inherited ones, and all are oriented to banks, which continue to have high interest rates and have the most expensive services in Europe”, Sahin says.

Different, Except the loans citizens have in commercial banks, a large portion of the customers owe their debts to microfinancial institutions operating in the country.

Crediting is binding on creditors to repay debts in time, including interest rates. On the contrary, they face fines.

But in cases of failing to pay off debt, banks have legal opportunity to start Breath - Taking procedures Who was taken hostage by the lender during the loan-taking procedures.