Governor Mehmeti unveiled the activities carried out by the CBK during 2020

The Governor of the Central Bank of the Republic of Kosovo, Mr. Fehmi Mehmeti, at the year-end press conference, said that despite the difficulties faced by the country, the CBK has managed to implement its objectives, ensuring a stable financial system, which not only managed to cope with the unfavorable economic developments in the country, but also became one of the main pillars of support for businesses and individuals who faced financial difficulties due to the pandemic crisis.

In accordance with the new conditions that were created after the outbreak of the pandemic, the CBK was proactive in reacting quickly in order to maintain the normal functioning and stability of the financial system and, at the same time, to put the financial system at the service of economy.

In this way, according to Governor Mehmeti, in the first days of the restrictive measures, the CBK activated the Work Continuity Team, which had the task of monitoring and providing instructions that ensure the smooth running of the CBK and the financial system in general.

The regular functioning of the payment and cash supply system throughout the country was ensured at all times, including areas which have been isolated for a longer period of time.

“The contribution of the banking sector in supporting the economy was very important in terms of continued lending, despite the increase in the level of risks faced by banks. During January-October 2020, the value of new loans issued by the banking sector was 1.2 billion euros, while the total value of active loans in the banking sector in October 2020 was 3.2 billion euros, which represents an annual increase of 7 percent. Currently, even after taking all these not very common measures for a banking sector and an economy which is in a phase of recession, the banking sector of Kosovo continues to have a high level of stability and is willing to play its key role in the recovery process. The economic recovery package just approved by the Assembly of Kosovo foresees a very important role for the banking sector. A very important part of this package is based on credit guarantee schemes and interest rate subsidies, which will facilitate and improve the flow of bank financing to the country’s economy. Total assets of the banking sector have continued the growth trend during this year, reaching the value of 5.05 billion Euros in October 2020, which represents an annual growth of 10.3 percent. The banking sector continues to enjoy high public confidence, which is also expressed by the continuous growth of deposits. In October 2020, the total value of deposits was about 4.1 billion euros, representing an annual increase of 8.7 percent. The growth rate of total deposits is mainly dictated by household deposits, a category that dominates the structure of total deposits in the banking sector with a share of 67 percent in total deposits, which in 2020 marked an increase of 7.3 percent. ”Interest rates on loans continued the downward trend, dropping to 6.3 percent from 6.5 percent that were in the same period last year, which indicates a continuous facilitation of access to bank financing,” said Governor Mehmeti.

In this conference, Governor Mehmeti awarded the prize “Young Economist”, where based on the evaluation of the professional commission for the evaluation of these works, the winner was Qendrim Shkodra with the topic “Kosovo’s Economy in Pandemic Time, the Impacts of COVID-19 on the Local and International Economy”.

According to CBK forecasts, Kosovo’s economy in 2020 is expected to decline by 7.2 percent in real terms, which represents the heaviest blow to the economy in 20 years.

Measures to restrict movement from other countries also had a significant impact on the decline in economic activity in Kosovo, where from the data recorded until September 2020, the expenditures of non-residents in Kosovo, most of which are from the diaspora, were 470 million euros, which represents a decrease of about 60 percent compared to the same period last year.

But the diaspora has continued to help the economy even in times of pandemics.

The value of remittances received until October 2020 was 796.5 million euros, which represents an annual increase of 12.9 percent.

In terms of foreign direct investment, their value by September 2020 amounted to 250.6 million euros, compared to the value of 216.4 million euros recorded until September 2019.