Gerjali: Increase in banking rates, shock for private sector

The International Monetary Fund has asked the European Central Bank (BQE) to continue increasing interest rates by mid-2024, in an effort to control inflation in European Union countries.

But some economists are of reconciliation to increase these rates in order to reduce inflation, and others see credit rates as disturbing.

For economist Arian Sahiti, this increase would be necessary.

This normally has an impact on us in Kosovo, because we follow Eurbor. So the impact would be on those who will get new loans and those who are existing. On the other side of the large measures of the impact would be positive, because the large amount of money on the market is stopped and when there is no large amount of money on the market, then prices tend to decline. As a result, if products are not sold anyway, they will drop prices”, he said.

But for economics expert Safet Gerjaliu, the call for increased credit rates is very disturbing.

He said that for the private sector, this will be a big challenge.

The “in the first order needs to be understood that in Kosovo, we are not serious and many processes are being neglected. Secondly, the International Monetary Fund's request to the European Central Bank has been very disturbing, requiring that interest be increased in loans to fight inflation, while Kosovo in this direction is ahead of many challenges, because on one side we have inflation that is very disturbing on the other side we have Europe, which appears to be unable to survive recession. For the private sector, the future will be challenging, because today in Kosovo we have around 7% bank tickets, if continued in this direction, these interest will have growth trends and there will be a private sector strain of”, Gerjaliu said.

The average interest rate in loans in commercial banks, according to the Central Bank of Kosovo, is 6.5 per cent.

Euribor, meanwhile, has grown in a few months from 0.45 to 3.8%.