Governors, Ministers of Finance and Heads of Tax Administrations of the region countries have been together for two consecutive days in Montenegro and discussed the problems and challenges facing the institutions they manage in general and economies of their countries in particular.
The Governor of the Central Bank of the Republic of Kosovo, Bedri Hamza participated by being one of the panellists contributing to the comprehensive and very actual debate at the Summit of Ministers of Finance, Governors and Heads of Tax Administrations of the region that was held in Becic, Montenegro.
The main subjects of the summit of this year entitled "Regional Financial Stability in Altered Global Circumstances" organized by the NIN magazine in cooperation and support of the Ministry of Finance and the Central Bank of Montenegro and other sponsors that were discussed by panellists, Governors of Central Banks of the Region were: possible consequences of the new policies of the FED and the ECB as well as monetary policy; Interest rates and exchange rates of national currencies of the Western Balkans; Quantitative easing in the countries of the region - benefits and costs; Very low rate of inflation - to cheer or cause for concern; Euro as coin - advantages and disadvantages; The future of the Eurozone and the possible consequences for the region; Stress-tests and systemic risk in the banking sector - eight years after the failure of Lehman Brothers; Banking supervision - prevention better than cure, as well as new models of regional cooperation.
At the opening of this panel, the Governor of the Central Bank of Montenegro Mr. Milojica Dakic spoke about progress and developments that are characterizing the banking system in the country, on this occasion he mentioned key indicators of developments in the country, mentioned the real sector of the economy, foreign investment as an important component that is helping to the sustainability of the economic system.
“Meetings of this nature in the context of the Summit will continue to be a bridge of regional cooperation and will continually have the support in addition to other institutions of the country also of the Central Bank of Montenegro”,- said among others in his speech Mr. Dakic.
Being part of discussions in the panel of Governors “Key challenges of monetary policy and banking supervision of 2016", Governor Hamza thanked the organizers of the Summit for the excellent organization stating that meetings of this level and elaboration of topics that are being debated are always beneficiary in general to all participants and countries that they are representing at this event.
Further on talking about the recent achievements of the financial sector and the efforts that are being made to continue with the progress made up to now, as well as being related to the topics of discussion and conversations in this panel, among other things he stated: In Kosovo we have an economic growth that is among the highest in the region, which ranges from 3.8-4% on average", which as growth appears high, but for an economy like ours based on its level of economic development is not enough. We are facing high trade deficit. We also have a high unemployment rate and foreign investments are not enough.
Later on Governor Hamza focused on the domestic banking system, which is composed of 10 banks, of which eight of foreign capital and two local, while the three largest banks are from EU countries and as Governor Hamza said these banks have brought good experience of modern banking. The system is liquid, well capitalized, has made credit scoring results in an increase of 9.7% compared with a year ago, a 6.3% increase in assets and more than 4% increase in deposits. Positive indicators are also marked to the continuous decline in the interest rate of loans which are approaching those interest rates of countries of the region. Again, according to the Governor Hamza, Kosovo ranks first with the lowest non-performing loans rates which this year marked the figure of 5.6% which is a good indicator of the soundness of the system.
The governor also said that lending rate may rise further but that belongs to the businesses which shall compete with detailed plans and good business plans in order to be attractive for the relevant bank which will provide loans. While being related to the topic that had to do with use of the euro in Kosovo and Montenegro, the Governor emphasized the advantages and limitations of the country's economy in this case. Among the indicators that limit Kosovo to use specific monetary instruments of euro are: inability to intervene in the interest rate, as according to him we do not have a base rate reference like do other banks in their monetary policies, as well as cannot intervene in price stability. Inevitably we are in the road to the Eurozone and will learn from the experiences of other countries and strongly believe that the single goal of ours is to be part of the Euro system, we will meet the requirements and challenges arising prior to our journey to the Eurozone said Hamza.
Of the same opinion was also the governor of Montenegro, who said that neither us nor Kosovo are looking for benefits on this journey but only seek to become a member similarly to other countries. While asked in the debate on the subject of low level of non-performing loans that Kosovo has, Governor Hamza stressed that the reason for such a performance is the fact that we are dealing with a new banking system built on the basis of a modern banking system regulations, dominated by banks operating in the country which have brought besides their capital monetary, experiences and best practices of modern banking. The Central Bank also has consistently adopted the modern regulation which is based on a conservative supervision based on risk; there is also worth to mention that a result has seen in the increase of efficiency of courts in the execution of enforcement issues by private law enforcement officers. Also banks on their side are more cautious in assessing the issuance of a loan by considering the business plan for that loan.
Since the introduction of the crisis, CBK has constantly done stress tests based on examples of countries that have experienced the crisis. Unusually large role is played by the regulations and legal framework aligned with the EU. The banking system in the country has received continuous international assistance which has helped build a supervision based on modern and strict regulation. The peak of non-performing loans has been in time of crisis somewhere up to 8.7% which was also lower compared to most countries in the region that faced a double-digit figure of these loans.
On the panel debate of Governors except the host Mr. Milojica Dakic, attended also the governors of Kosovo, Macedonia, Bosnia and Herzegovina as well as Croatia and Slovenia. While on the first day of the Summit has also attended their session the panel of Ministers of Finance of Montenegro, Serbia, Bosnia and Herzegovina, Kosovo and representatives from Croatia. On this occasion Minister Hoti spoke about developments and steps undertaken by the Ministry of Finance and the Government of Kosovo to create a good environment and climate for local businesses or potential investors. The topic of the panel was "Sustainability of public finances without sacrificing economic growth."
On the same day, developed its work the Panel of Tax Administration and Tax Authorities in the region their topic of discussion was "Reforms on tax administration and fights for the grey economy." Becic’s Summit is the largest activity organized in the region where every year the participants, the main actors of countries' economies discuss the challenges facing their countries and examine the possibility of increasing the performance aiming to bring development to the economies of their countries.