The Governor of the Central Bank of the Republic of Kosovo, Mr. Fehmi Mehmeti, presented to the media the developments in the economy and the financial sector.
At the year-end conference, Governor Mehmeti said that despite all the difficulties that was facing, the CBK has managed to implement its objectives this year as well, ensuring a stable financial system, which in recent years has managed to successfully cope with the crises caused by the Covid 19 pandemic and now also the Russian aggression in Ukraine, but also to be one of the main pillars of support for businesses and individuals, and thus also the country's economy.
He said that the economy of Kosovo started the year 2022 with a very good perspective, as the country was passing through a year, where, according to the estimates of the Kosovo Statistics Agency, the real growth rate of the Gross Domestic Product in 2021 was 10.75 percent.
However, according to Governor Mehmeti, during the year 2022, the change in global dynamics, as a result of the war in Ukraine, which was accompanied by an increase in inflation, a change in monetary policies and an increase in interest rates and a slowdown in the growth of world trade as a result of supply chain disruptions, was also reflected in the economic activity in Kosovo.
"According to CBK's estimates, GDP in 2022 is expected to record a slowed growth of 3 to 4 percent, mainly due to the contraction of domestic demand and the increase in imports, while exports have had a positive impact. Based on the data recorded until September of this year, the expenditures of non-residents in Kosovo, most of which are from the diaspora, amounted to 1.48 billion euros, which represents an increase of 26.1 percent compared to the period the same as last year. Also, the year 2022 marked a faster rate of growth for remittances sent by the diaspora to Kosovo, which reached 1 billion euros by the end of October 2022, which represents an annual increase of 5.5 percent. The increase in domestic demand in Kosovo during this year was reflected in a higher value of the import of goods, which until September 2022 marked the value of 4.15 billion euros or an annual increase of 24.6 percent. On the other hand, the export of goods marked the value of 688.0 million euros, marking an annual increase of 27.1 percent. On the other hand, the export of services until September 2022 marked the value of 2.05 billion euros, marking an annual increase of 32.8 percent, which occurred mainly as a result of the increase in the visits of our compatriots and tourists to the country. The import of services was also characterized by growth, which until September 2022 recorded a value of 901 million euros", said Governor Mehmeti.
Regarding foreign direct investments, their value until September 2022 reached 567 million euros, compared to the value of 395 million euros recorded until September 2021.
"The average inflation until November 2022 marked the rate of 11.5 percent compared to the annual average of 3.4 percent for 2021. Meanwhile, the inflation rate for the month of November 2021 alone was 11.5 percent, which shows that we are facing an increasing trend of the general price level. The increase in the rate of inflation in Kosovo mainly reflects the increase in prices in international markets, which in Kosovo is transmitted through the increase in the prices of imported goods. As for the financial system, it is very important to emphasize that Kosovo has managed to build a sound financial system, which not only proved capable of coping with the crises caused by the pandemic and Russian aggression in Ukraine, but also took a very important role in supporting the economy to face the crisis with the smallest possible consequences. In total, the assets of the financial system, on October 30, 2022, were worth 9.43 billion euros, with an annual increase of 10.2 percent", said Governor Mehmeti.
The banking sector, as the main component of the financial system in the country, also this year, is playing a very important role in supporting the country's economy by continuing the pace of credit growth and maintaining the level of sustainability.
Until October 2022, the value of new loans issued by the banking sector was 1.59 billion euros, representing an annual increase of 13.6 percent, while the total value of active loans in the banking sector until September 2022 was 4.27 billion euros, which represents an annual increase of 18.4 percent, compared to the same period last year.
"It is worth highlighting the good quality of the credit portfolio with a rate of non-performing loans of only 2.0 percent in October 2022. The coverage of non-performing loans with loan loss provisions remains at a high level of 151.2 percent, which proves adequate levels of provisions in the banking sector. In total, the assets of the banking sector have continued the growth trend during this year, reaching the value of 6.46 billion euros in October 2022, which represents an annual increase of 12.4 percent compared to the same period last year. The banking sector continues to enjoy high public confidence, this confidence is also expressed by the continuous increase in deposits. In October 2022, the total value of deposits was around 5.3 billion euros, representing an annual increase of 14.2 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 participation of 67.6 percent in total deposits, which until October 2022 marked an annual increase of 11.5 percent".
The average interest rate on loans in October 2022 was 6.2 percent, which is higher compared to the rate of 6.0 percent recorded in October 2021. Meanwhile, the average interest rate on deposits marked an increase from 1.3 percent as it was in October 2021 to 1.5 percent in October 2022.
Financial health indicators for the banking sector continued to show a high level of stability in all aspects.
The banking sector continues to have high capital adequacy indicators of 15.8 percent at the end of October, which continues to be significantly above the minimum regulatory level of 12.0 percent.
The liquidity position of the banking sector remains at a high level. The ratio of liquid assets to short-term liabilities in July was 34.5 percent, which is higher than the required regulatory minimum of 25.0 percent.
Until November 2022, 15.8 million transactions with a total value of over 14.7 billion euros have been processed. Compared to the transactions of the previous year, the volume of transactions has increased by nearly 21.6 percent, while the value of transactions has decreased by 3.5 percent.
During this year, we have a significant increase in the number of POS transactions, but also those in bank ATMs, which until November 2022, have reached 23.5 million with an increase of 42.0 percent, while the number of ATM transactions was 18.1 million or an increase of 7.7 percent compared to the same period last year.
We also have positive developments in the insurance sector, where the assets of this sector in September 2022 marked the value of 259.0 million euros, or an annual increase of 10.0 percent.
Also, the pension sector during this year was characterized by growth, compared to the previous year. The total value of pension sector assets in September 2022 reached 2.3 billion euros compared to 2.2 billion in September 2021, which corresponds to an annual increase of 4.2 percent.
As for the sector of microfinance institutions and non-banking financial institutions, until October 2022, the assets of this sector reached the value of 386.1 million euros, marking an annual increase of 12.6 percent. In total, the active loans of this sector in October reached the value of 276 million euros, or an annual increase of 18.4 percent.
CBK has continued its commitment also in the function of protecting the rights of consumers of financial services, thus directly serving the protection of citizens' interests. Until November of this year, the number of complaints reviewed by the CBK reached 810 complaints.
"As far as internal developments are concerned, CBK has continued also during 2022 with the advancement and development of its professional capacities in all areas of its operation. Despite the created situation and not very favorable conditions in the international markets, the Central Bank of the Republic of Kosovo has managed to maintain its financial stability and good performance of the institution, generating a positive financial result. CBK remains committed to continue its activity in the service of the stability and development of the country's economy, by creating conditions for the development of a stable financial infrastructure, in line with contemporary developments in this field, including the development of new segments of the financial system such as the capital market, which requires extensive inter-institutional cooperation", said Governor Mehmeti.
The victory in the international arbitration against the financial institution Iute Credit, according to him, has clearly proven that the CBK has been and remains confident in the legality of its decisions, not only in relation to this institution, but also in relation to every institution that carries out financial activity in the country. During last years, 14 licenses/registrations of financial institutions were revoked and all the cases in the courts had a positive outcome for the CBK.
In this conference, the traditional prize for "Young Economists" was awarded. Where the professional committee has evaluated the three best papers from young researchers; student Njomza Jupa from "Haxhi Zeka" University in Pejë, student Anisë Murseli from "Yale University" in the USA and student Rozafa Hajdari from "Haxhi Zeka" University in Pejë.