At the peak of the crisis, Kosovars' savings total 4.75 billion euros

Kosovo Central Bank Governor Fehmi Mehmeti says that only during 2021 have a new 1.8 billion-euro loan been issued, which, according to him, indicates the support of Kosovo's economy from the banking sector.

And on the other hand, President of the Afarism of Kosovo(OAK) Skender Krasniqi has criticised Kosovo Central Bank leaders that this financial institution in the past two years has not supported businesses in the pandemic, nor now in this time of crisis caused by the war in Ukraine.

Mayor Krasniqi has called on the Government and the Assembly of Kosovo to take measures against the Central Bank, as he says the BEC is not supporting businesses, nor are citizens in this time of crisis.

The state must issue more money in circulation, which is not happening. There must be more circulation. Banks give money to support businesses and pay needs for salaries. The Kosovo Central Bank is operating as if there is no crisis, not even in time of COVID-19, nor now. That's why we've asked the Government and the Parliament to take action against the Central Bank, because the CEC hasn't supported businesses, nor has the citizens at this time. All countries have made available to them credit for circulation, which is not really happening by the Central Bank. All the CEC has done for more than two years, it's being delayed with interest for three months of loans. So he has not supported businesses or citizens. Since there are more tools, there are no lower credit rates, and we are the only country in the region to have at least the worst (not performing) loans, meanwhile, we have the highest credit rates in the region”, he points out.

Governor Mehmeti says the priority of the CEC remains for banks to continue to maintain the high degree of sustainability.

According to the CEC, by March 2022, the total credit value amounted to 3.93 billion euros, while for deposits of 4.75 billion.

The “alone during 2021 has issued 1.8 billion euros of new loans, and this indicates the support the banking sector has given to the country's economy. Therefore, our priority remains to keep banks at high levels of sustainability, so the credit risk continues to be on the central bank's focus even during 2022, especially focusing on credit risk management practices”, Mehmeti said.

University professor Albulen Kastrati points to the reasons for increased deposits to 7.3 percent. It says that the annual increase in deposits is due to the opening of the economy after the pandemic and increased remittances in 2021 to 1.15 billion euros.

“With legal mandate banks are the only financial institutions that have the right to accept citizens' deposits. So whatever the amount of deposits that flow into Kosovo's economy will definitely go through the banks. The reasons for increased deposits to 7.3 percent annual growth in the first point is the opening of the economy, the return of people to work, the increase in income, but an important role of course has played an increase in remittances in 2021 to 1.15 billion. The highest historical level of remittances. In part, increased foreign direct investment” may have played a role, she said.

Professor Kastrati has also talked about winning commercial banks and the reasons for the realism of such large profits.

Kosovo's high bank profit “concerns relatively high interest rates on credit, though this trend in the past ten years is halved, on the other hand banks have replaced falling interest rates in loans through increased profits or fees in transfers, in payments, and for what kind of deposit service because these have increased considerably. Then there's the credit of commercial banks that manage well with bank risks, have conservative approaches, loan only good recipients so called financial culture. The other reason banks make good profits is because the borrowing culture in Kosovo is good, even the best in the region, because our citizens largely return loans by a rule”, she says.

According to Kastrati, even loans have increased by an accelerated trend, the annual increase in credit stock is 18 per cent, which is the fastest increase ever recorded in the banking sector in Kosovo.