The IMF supports the CBK regarding the new assessment of the financial sector


The Governor of the Central Bank of Republic of Kosovo, Fehmi Mehmeti thanked the International Monetary Fund for the ongoing support to Kosovo and especially to the CBK in achieving its primary objective to promote and maintain financial stability.
At the closing conference of the IMF mission team for Kosovo, Governor Mehmeti stated that the financial sector continues its positive performance.
“The financial sector continues to grow steadily, and in this context, if we look at the banking sector, there has been an increase in all financial indicators, such as credit growth, with an annual growth of 12%, the deposits 6%, and the assets 6%. In the regulatory context, capital adequacy ratio increased to 16.1%, which is above the required minimum. In addition, the liquidity ratio of 33% is above the required minimum of 25%.

These data show that banks are well capitalized and liquid. There are positive developments regarding the interest rate, with the interest rate for businesses and households of 6.3%, whereas the interest rate for businesses only is 5.35%, and the interest rate on mortgage loans ranges from 4 % up to 5%. This indicates facilities for access to finance and at the same time the increase of the financial intermediation level. We have positive developments in other sectors, such as insurance, pensions, microfinance institutions and non-banking financial institutions. In the meetings, we had with the International Monetary Fund, the financial stability and financial sustainability in Kosovo was highly appreciated. The Central Bank of the Republic of Kosovo is confident for the IMF ongoing support and the successful cooperation between the CBK and the IMF in the future," Governor Mehmeti declared.
On the other hand, Stephanie Eble, Head of the International Monetary Fund Mission in Kosovo, has promised further support to the Central Bank of the Republic of Kosovo and the first step will be the financial sector new assessment.
“Kosovo's banking system is stable and has the potential to improve its access in lending. Lending penetration, although still low compared to the region, has been steadily increasing as the result of the interest rates decrease, credit guarantee through the Credit Guarantee Fund and the contract execution enforcement, by removing structural lending barriers through strengthening of the Law on Enforcement. With the implementation of the World Bank and the IMF recommendations in 2012, Kosovo has requested a new financial sector assessment to prepare the new medium-term reform strategy, which is expected to start the compiling next month”.
On the other hand, Minister of Finance, Bedri Hamza stated that the IMF has welcomed the Government's plans to prioritize the rule of law, health and education, and if the budget for these sectors increases, the outcomes should improve.
At this conference, it was stated that economic growth for this year is estimated to reach about 4%, being the highest in the region, while the highest economic growth is expected during the next year.