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The International Monetary Fund (IMF) has expressed concern about the risks associated with the creation of the Albanian Development Bank.
In the latest IMF mission statement, it is stated that the establishment of the Albanian Development Bank will add further complexity to the financial sector in the country.
The IMF believes that rigorous governance and operational provisions will be essential to prevent risks to fiscal and financial stability. According to the IMF, the activities of this bank should be limited in time and target market failures to avoid stifling private investment.
The Law “On the Albanian Development Bank” was approved in March, and its establishment is expected to take place next year. The participation of the Albanian State will not be less than 51% of the registered share capital at any time. The initial capital contributed and subscribed by the Albanian State will be 10 billion lek and will be repaid in installments within a four-year period. The first installment of 1 billion lek must be repaid within 2026 and the Government has foreseen it in the 2026 budget.
In addition to the Albanian State, shares in the Development Bank may be owned by international financial institutions, such as European development and investment banks and funds, recognized international and domestic financial institutions, as well as by other entities determined by decision of the Council of Ministers.
According to the law, the Development Bank will be able to collect savings mainly from individuals who are not fully served by the banking system. This provision was subject to revisions in the Albanian Parliament, as in the version proposed by the government, it did not set any restrictions regarding entities, leaving open the possibility of collecting savings from businesses or other entities.
The law also places a limit on the amount of savings that the Development Bank can collect from the public. The amount of these funds received by the Albanian Development Bank must not exceed 2% of the Gross Domestic Product.
The law provides that the activity of the Development Bank will be financed by accepting repayable funds from the public, especially from individuals who are not fully served by the banking system, in the form of savings products, through a special entity of the Albanian Post.
Savings products collected from the public will be guaranteed by state guarantees and used for promotional activities.
The types of products, their characteristics, including value limits, will be determined by a joint order of the Minister responsible for Finance and the Minister responsible for the Economy, respecting the monetary limits set in the law regulating deposit insurance. This means that the guaranteed amount will be limited. According to the legal framework in force, bank deposits are insured up to the amount of 2.5 million lek, while those of savings and loan associations up to 2 million lek.
The intermediary entity for the collection of repayable funds from the public will be a separate entity of the Albanian Post. The Council of Ministers will determine by decision the main conditions of the relationship between the separate entity and the Albanian Development Bank.
The special entity of the Albanian Post and the Albanian Development Bank will sign a cooperation agreement, which regulates the main aspects of the functioning and administration of the collected funds and the distribution of products, at least the operational procedures for the distribution and administration of financial products; the applicable interests for the financial products offered; the obligation for information and transparency towards the public on the products.
The law also provides for the use of credit lines from international financial institutions and other financial instruments guaranteed, on a case-by-case basis, by state guarantees, as sources of financing, while respecting the principles set out in the law governing state borrowing. The issuance of securities guaranteed by state guarantees shall not be subject to the provisions of the law governing capital markets.
The activity of collecting savings products, through a separate entity of the Albanian Post, is supervised by the Bank of Albania. However, the separate entity of the Albanian Post will not be subject to licensing.
The law also stipulates that the Albanian Development Bank will report to the Bank of Albania for statistical purposes and for the Credit Registry. The Bank of Albania will also determine the methodology for supervising the activity of collecting savings products, as well as statistical reporting.
The Albanian Development Bank will have as its main objective the promotion of economic, social and environmental development, mainly through financing and supporting enterprises in underfinanced sectors of the economy, as well as the inclusion in the financial system of the public, which is not fully served by the banking system.
It will have the right to carry out promotional financing activities, such as lending to small and medium-sized enterprises, as well as domestic startups, to promote growth, productivity, competitiveness and expansion in international markets./Monitor
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