Savings, interests plunge

The price of one-year-termed treasury bonds in the recent auction of Bank of Albania have dropped with 5.11%.

This is the lowest level of all time, and people who save in interest bonds will profit 30% less than last year.

But the treasury bonds are not the only savings method that has become less lucrative. Interest rates have fallen even in banks.

According to Bank of Albania, the interest rates for one year deposits dropped to 4.59 in June, and on the same period of last year, this sum was 5.5%. The dropping of the interest rates favors the state budget by decreasing the cost that the government is paying for the debt.

In the first six months the Albanian government paid 1 billion ALL of interests less than the plan, while the saving from interests could reach 6 billion by the end of the year.

Although this is good news for the state finances, the decreased interests for the government’s debt is consequence of the private sector crisis. The interests are falling because the debt for the government is the only way in which banks invest money collected by citizens, since the loan for the private sector is in full stalemate.

In June, the total loan increase was 0.8%, but for the business it was a negative number again. For as long that banks will not credit the private sector, the economy’s profits from the interest rate plunge will be minimal. For most of the families, those who don’t have savings, the shrinking of interests has a cost, because it reduces the incomes.

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