Governor: Despite challenges, Kosovo is maintaining financial stability

Important role in managing Kosovo's financial stability has been the Central Bank of the Republic of Kosovo (BQK), which immediately after the appearance of the pandemic had taken appropriate measures to prevent this crisis from having a negative effect.

BQC Governor Fehmi Mehmeti said that despite problems Kosovo's economic growth in 2021 was 9.9%, while remittances reached 1.14 billion euros.

Even in recent days the problems that have emerged with the beginning of the war between Ukraine and Russia, the CEC is working to preserve financial stability in the country. “The CEC always serves the citizens of Kosovo; we are always ready when there is a need to act”, he said. Given the current situation created, the CEC is closely monitoring recent economic developments in the world, and in case of need, in co-operation with various international institutions, through numerous meetings we have, action will be undertaken at an adequate time.

Central Bank of the Republic of Kosovo Governor Fehmi Mehmeti said that despite the pandemic that has reigned over two years, Kosovo with its capacities and a key role of the CEC has been addressed by financial stability in the country.

We are positively assessed by international institutions, as they are: International Monetary Fund, World Bank, EC etc.”, Governor Mehmeti stressed.

He has suggested that many changes have been made in these two years that have influenced all sectors under BEC supervision.

The banking sector, despite increased risks, has continued to increase credit and maintain the rate of sustainability, where during the course of 2021 alone, the value of new loans issued by the banking sector was around 1.8 billion euros, which represents an annual increase of 22.9 per cent, since the overall value of active loans in the banking sector in December 2021 was 3.75 billion euros, which represents an annual increase of 15.5 per cent. The average interest rate on credit in December 2021 marked 5.8 per cent, which is lower compared to the 6.01 per cent rate registered in December 2020. It is particularly noteworthy that the good quality of the credit portfolio at a rate of non-aligned loans of only 2.3 per cent in October 2021. The banking sector continues to enjoy high confidence in the public, confidence expressed even with continued deposit growth. In December 2021, the total value of deposits was about 4.90 billion euros, which represents an annual increase of 12.4 per cent. The banking sector continues to have high capital efficiency indicators of 15.3 per cent at the end of December, which continues to be markedly above the minimum regulatory level of 12.0 per cent. The position of banking sector liquidity remains high. The liquid means report to short-term obligations in July was 37.4 per cent, which is high above the required regulatory minimum of 25.0 per cent”.

“The performance of insurance companies during 2021 has marked significant improvement compared to past years, both in terms of financial performance and in the context of growth. The increase in insurance sector performance is also due to measures and reforms undertaken by the Central Bank of the Republic of Kosovo. The insurance sector during 2021, in addition to improving financial indicators and capitalisation, there have also been positive movements in corporate governance in insurance companies. Based on the recent preliminary data, reported by the insurance sector of December 31st, 2021, revenues from gross written cuts amounted to many 119.2m euros, or 17.2 per cent higher than in the same period last year. While, the number of written contracts or policemen reached about 1.2 million contracts, marking growth of 40.1 per cent more than the same period in 2020. Non-Life activity insurance continues to have higher participation in a total of grossly written priorities. The grossly written primes from the non-life activity are participating with about 95.9 per cent of the total volume of grossly written cuts at the level of the insurance sector, while Life Task Insurance has a total share in grossly written sector priorities of 4.1 per cent. Given the latest available data, dated September 30th, 2021, the country's insurance sector resulted in positive financial focus of 5.9m euros, compared to 3.4m euros as it was in the same period last year”, he said.

Foreign direct investments in Kosovo until November 2021, according to the CEC, have reached 485m euros. The foreign direct investments increased year-on-year, so we have more investment in the field of real estate. It is more than necessary to change the investment field and have investments, more where development and generation of new jobs”, he said.

The Central Bank of the Republic of Kosovo has revised the tariffs applying to banks for bilateral monetary transactions earlier this year. “Consequently, the fee for depositing euro-designed metal coins has been reduced from 5.00% to 3.75%. This change will be effective from March 1st 2022”, he said.

Governor Mehmet also spoke about internal developments, where he stressed that “The CEC has continued to advance and develop its professional capacities in all areas of its operation, as well as harmonisation of the regulatory framework with contemporary international practices and standards. Also, despite the situation created in recent years, the overall BQC's 2021 financial performance has been very good, achieving positive financial results, the result most enjoyable in the last 10 years”.

In order to preserve further financial stability in the country, interilateral co-ordination in the country is necessary, and support from relevant institutions such as the Parliament and the Government of the Republic of Kosovo./Periscope. com