BQK Governor: This year economic growth 6.6 %, membership challenge in Green Carton

While it says that easing anti-COV ID measures during 2021 led to a steady economic growth in the country.

Mehmeti estimates that fellow countrymen who came to Kosovo this summer have spent over 630m euros, while showing the remittances have reached 651m euros.

Governor Mehmeti in an interview for Kosovo Press, says the government has a serious approach to Kosovo's membership in Green Carton, but that initially the challenge remains the large number of unregistered vehicles in Kosovo.

Besides Karton, another challenge remains to use the internet platform for electronic payment “Paypal”, because it does not recognise Kosovo state.

Speaking of economic growth, Mehmet says that in 2020, Kosovo had a 3 per cent economic downturn due to measures to prevent the spread of COVID-19.

The measures undertaken for preventing the CO VID-19 pandemic, both worldwide and Kosovo, impacted or obviously affected economic activity in Kosovo, so 2020 in real terms, according to data, we have a 3 per cent economic downturn. However, relaxing measures during the year 2021, not only in Kosovo but also in countries from where the diaspora comes, led to a steady economic growth in the country. And our predictions are that economic growth in Kosovo will be 6.6 per cent, even though it is subject to revision, given how, by the end of the year, the issue involving pandemic, considering that the source of the crisis in Kosovo and on a global level is pandemic and not other economic factors. It's all connected to pandemic”, Mehmet stressed.

According to him, remittances from fellow countrymen have scored 24 per cent growth, while their expenditures by July were 140 per cent more than the previous year.

The reduction in the restrictions of the movement of fellow countrymen from countries coming to Kosovo turns out to have many fellow countrymen coming and to have a significant increase in non-resident spending, which we call the diaspora spending, which with the July data we have available, marks 630m euros or an increase if we compare it on annual bases, turns out to be 140 per cent. But even if we compare it to 2019, we have an increase of about 7 percent. Remitists continue to be on the rise, mark 651m euros, or with an annual increase of 24 per cent”, he stressed.

The diaspora's arrival, according to Mehmet, also affected the increase in import of goods to over 40 per cent, while adding that exports value has also increased to 476m euros, or 63 per cent more.

“This has also made it an increase in domestic demand in Kosovo, which has led to an increase in imports in percentage rates of around 43.4 per cent, reaching a 2.9 billion euros. But we also have increased exports, in percentages about 63.4 per cent has increased exports that have reached 476m euros. This has further deepened the trade deficit that has reached 2.44 billion euros, or an annual increase of 40 per cent”, Mehmet points out.

The governor has also talked about rising prices in the country, while saying inflation has scored growth from 0.2 per cent to 1.6 per cent, while foreign investment, Mehmeti says they have reached 271m euros.

“As far as inflation was from 0.2 per cent year-on-year has gone up 1.6 per cent, and even foreign direct investments have scored growth from 201 million as of 2020, totaled 271 million. But, mostly, we have increased foreign direct investment in the real estate sector, percentaged by about 80 per cent in this sector. Meanwhile, foreign direct investment in financial services remains the same as last year”, he says.

Anni that credit interest rates mark 6 per cent, and the economic crisis caused by the pandemic, during 2021 alone, commercial banks have issued new 974m euros.

If we look at the banking sector as the main component of the financial sector, despite the risks expected during the pandemic period, during the course of 2021 alone, it has managed to release new loans 974m euros, which has caused the total credit to be 3.5 billion euros or an annual increase of 12 per cent. Assets continue to grow. Assets in the banking sector have scored 5.6 billion euros, or an annual increase of about 15 per cent... and the banking sector continues to have high public credibility, and as a result, we have increased deposits that have managed to total 4.5 billion euros with a 14.5 per cent increase. On the other hand, the interest rate in credit has dropped to 6 per cent, which has allowed access to finance” to ease, he says.

On the other hand, non-forming loans (bad loans), even after the completion of the mortorium, which has been a period of restructuring, the money still remains low, thus marking 2.6 per cent.

Governor Mehmeti has also shown the way banks win in the first half of this year, which has scored 55m euros.

With the June data, around 55m euros is bank profit. Banks continue to maintain that profit rate they actually have over the years, and it's actually not the result of increasing interest rates, but as a result of better spending management or reducing spending that banks are doing. Now, one thing that we have not only as Kosovo, but also on a global level that also comes out of crisis something good. Since in concrete cases, we have been very cautious in moving to digitisation of the banking sector. But the pandemic caused this process to accelerate. Now the movement towards digitisation has made low costs, increased efficiency for clients, but also for banks”, he says.

As for the insurance sector, Mehmeti says this sector has managed to consolidate and be profitable. On the other hand, the governor adds that to join Kosovo in Green Carton, the number of unregistered vehicles that has reached 30 per cent must be reduced.

Mehmeti has also said they are awaiting completion of the BEC board, which has not been operational for 15 months now.

“Continues to have an increase in damages, an annual basis somewhere around 24 per cent, not because there is more damage than in the past, but as a result of the rough surveillance that we like the CEC are doing this sector. This sector has finally managed to consolidate and be profitable... we're already awaiting completion of the Board, and I believe that when the BQC Board is complete, it's been on a working board for 15 months, and that we can test this regulation and move towards the liberalisation of the insurance market in the mandatory insurance segment... The government has made the decision and a working group is formed, which will only deal with the question of the Green Carton, and within this group, this team is among the institutionals and participates in the CEC and the MPB. And other relevant acts that should be part of this group, which I believe will soon be addressed, given that we are seeing that we have a serious approach of government in this regard. Therefore, initially the issue of unsanitized or unregistered vehicles should be addressed, which is very high in Kosovo and then started with application to the Bureau Council”, he stressed.

Mehmeti added that access to Kosovo's electronic wage system in “Pypal” requires inter-institutional co-ordination, while stressing that the BQK has taken initiative in this direction, despite that the internet platform “Paypal”, does not recognise Kosovo as a state.

Kosovo as a new state has had and continues to have difficulty accessing internet platforms. This is also an obstacle we haven't had in a while. Then, we still don't have our own state domain. Despite that, many internet platforms have included Kosovo on its lists as a state, but some have not included that in this case it is also “Paypal”, then we have Samsung Pay, Google Pay. We as the Central Bank have made efforts to bring this payment system to Kosovo, both Paypal and Google Pay, and Samsung Pay. And so on. We've made approval of a recording regulation involving non-bank financial institutions, which handle electronic money”, he points out.

As for microfinancial and non-bank financial institutions, Mehmeti also says there are institutions that have the NGO statute, while adding that these function as financial institutions based on legislation in force.

Mehmeti says with full responsibility, there is no problem with law enforcement that concerns the area related to the regulation and supervision of these financial institutions.

While stressing that the question of the NGO statute should be addressed in the future, which should be adjusted to the NGO law.

In this sector, loans have reached up to 220m euros, with an annual 5-7 per cent increase, despite interest rates in this sector remain high.

Governor Mehmeti said it is a sector that seeks to improve even more in the legislative sense, given this, the CEC has also passed a draft law on payment issues, electronic money and other issues that are of interest.