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Kosovo / Governor Mehmeti presented CBK measures for overcoming less damage to the economy from the COVID / 19 pandemic

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The Governor of the Central Bank of the Republic of Kosovo, Fehmi Mehmeti, accompanied by Deputy Governors Sokol Havolli and Lulzim Ismajli, presented to the media the measures taken by the CBK after the presentation of the Covid Pandemic 19.

Governor Mehmeti said that some institutions are taking care of preserving the health and saving of citizens, the CBK is working hard to preserve the health of the economy or save the economy with as few consequences as possible, which is necessary to preserve the well-being of our citizens during and after the crisis.

He said that as part of measures to prevent or slow down the spread of the virus, similar to other countries, Kosovo is applying a very high degree of closure, allowing the functioning of only economic sectors that provide the necessary goods and services. for citizens.

"This has affected the cessation of activity in many sectors of the economy, leaving businesses without income, as long as the liabilities of these businesses continue to be active, which jeopardizes their solvency and may push them to failure. At the same time, the employees of these businesses risk being partially or completely left without income, thus negatively affecting the purchasing power of consumers. In these conditions, when the demand for credit falls and also the uncertainty for the future increases, it is expected that there will be a decrease in lending by financial institutions, thus reducing a very important source of financing for consumption and investment. Another important channel for the Kosovo economy to be hit by the pandemic crisis could be the external sector. Kosovo has a very high dependence on remittances, receiving an amount of over 10% of GDP on an annual basis. The decline of economic activity in developed countries is undoubtedly expected to affect the reduction of this very important source for financing consumption in our country. Despite the steady flow of remittances to Kosovo, they had declined during the last global economic crisis, ie in 2009, 2010, 2011, so it remains to be seen how the effects of the pandemic crisis will manifest in economies where "Our diaspora is concentrated to have a more concrete assessment of the behavior of remittances during this year", declared Governor Mehmeti.

One of the sectors that is expected to be hit by the Covid Pandemic 19 is export, thus affecting the further increase of the effects of the crisis on the economy of Kosovo, while the inability to carry out economic activity under normal conditions, and uncertainty about future developments. , is expected to have a direct impact on the decline in foreign direct investment.

Kosovo / Governor Mehmeti presented the CBK measures to overcome with less damage to the economy from the pandemic COVID / 19 1

Meanwhile, the category which is expected to maintain more stability during this period are public spending, the flow of which in the economy is expected to mitigate to some extent the negative effects of the aforementioned channels.

The package approved by the Government of Kosovo a few days ago is expected to provide a necessary injection of funds into the economy. However, the conditions that the country's economy is going through will not leave public finances unchallenged.

"In order to mitigate the consequences of this crisis for our economy, we as the Central Bank of the Republic of Kosovo have been proactive in undertaking a range of measures aimed at ensuring the normal functioning of the financial system and mitigating the impact of the crisis on our economy. We have also been constantly monitoring developments at the regional, EU and international levels, and have been in regular communication with our international partners, such as the IMF, the World Bank, the EBRD, and our chambers of commerce. Kosovo, and we all share the same concerns about the situation created, and in particular about the consequences that may have in case of prolongation of this situation. And of course, within the constitutional mandate of the CBK, we have coordinated actions with all institutions of Kosovo in order to deal as effectively as possible with the situation created ", said further the Governor.

He presented to the journalists the measures that the CBK has taken, starting from ensuring the proper functioning of the payment system throughout Kosovo, including the affected areas, which have been isolated for a certain period of time.

The country's economy is constantly supplied with enough cash and I want to assure the citizens once again that all banks have sufficient liquidity and that there will be no problem with the supply of cash.

"The CBK has started with the regular disinfection of all the money with which it supplies the market, as a protective measure for the users of cash. However, given that the money has multiple circulation from the first moment it leaves the bank, we ask citizens to strictly follow the hygiene instructions issued by health institutions after each cash transaction. or by card. Liquidity levels in the banking sector on March 31, 2020 remain at a satisfactory level of 35.3% marking a slight increase of 0.3% percentage points compared to March 16, 2020. Also, deposits are very stable, on March 31, 2020 have reached amounting to 3.88 billion euros, marking an increase of 9.3 million euros compared to March 16, 2020. Realizing the difficulties faced by some businesses and employees, the CBK, together with lending institutions, have decided to allow a non-payment period for loan installment payments starting from March 16, 2020 to April 30, 2020 and depending on developments in the situation this period may be extended. This is intended to alleviate the financial burden for all borrowers who are having difficulty earning revenue as a result of the pandemic crisis. Temporary suspension of loan installment payments will be reviewed on a case-by-case basis by banks in order for these benefits to go only to those affected by the current crisis. In case of approval of such a request by the bank, the penalty interest related to the loans will not be applied in this period. During this period, no measure of deterioration of credit rating will be applied to borrowers, "said the Governor, adding that the CBK through its credit registry measures has taken all appropriate legal measures to prevent the classification of loans, not to require additional provisions and not to be classified as non-performing loans in the Credit Registry.

He once again clarified that banks in no case should increase fees for performing services.

According to the CBK forecasts, in 2020 Kosovo's economy will stop the economic expansion that was characterized by an average annual growth of 3.6 percent in the last ten years.

Assuming that the economic shocks in Kosovo's economy will be felt more in the first and second quarters and partly in the third quarter of the year, our preliminary forecasts suggest a real economic downturn in the range -2% to -4% for 2020. .

The Central Bank of the Republic of Kosovo, fully implementing the recommendations of health institutions, immediately managed to restore all its functions to full normalcy and 100% functional.

The CBK has established a Continuity Team and an Inter-Institutional Committee has been established between the CBK, the Treasury and the Banking Association to ensure the normal functioning of the financial system in the country.

 

 

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