Lowered bank interest rates
12/06/2013 00:00
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Saving money in bank deposits now is not as lucrative as before.
Official data show that interest rate have dropped. The last Bank of
Albania auction showed that 1-year maturation deposits for treasury
bonds had dropped to 5.59%.
This is the lowest level of all time, and compared to the last year, saving in treasury bonds today you profit 25% less. The interest rates have dropped for other deposits too. Bank of Albania says that deposits in Albanian Lek has reduced from 5.6% to 5%.
This phenomenon is not by chance, but it was encouraged by the Bank of Albania when they lowered the basic interest rate to the historic minimum of 3.75%, in order to discourage savings and orient consumption. But numbers show that this has had no effect.
“This is a typical situation of uncertainty from the business and consumers. In these cases uncertainty does not act in fulfilling the economic facilities, so that the dropped money circulation level can be necessarily accompanied by an aggregate demand in the growth of consumption or investments”, declared the economy specialist, Selami Xhepa.
But why are consumers and businessmen scared and keep saving money even with low interests?
“Uncertainty has two main elements. We have had an economic crisis for a long time, and it also affected by the global recession. Secondly, we have an electoral situation and an unstable political reality. Both of them affect the situation”, Xhepa declared.
The Bank of Albania is unable to encourage economy, and the government cannot intervene to increase the demand, because they are endangered by the high debt. In these conditions, experts say that they need other interventions.
“The structural reform of the banking system would presuppose a cleaning of the banking financial balances, a review of the risk management rules from the banking system itself, which are an important part of the structural reform that will continue by increasing the efficiency of the monetary policy. The usage of other quantitative elements can also be reviewed, a stronger support of the Central Bank to the banking system, so that the economic r ecession can be prevented”, Xhepa declared.
The consumption and credit decreased the economic growth to the lowest level since 1997. The economy is expected to be difficult this year too, with a growth lower than 2%.
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