World Bulletin / News Desk
The World Bank has given Albania a $100mn loan to support state budget, as a reward for fulfilling 10 conditions required to empower the country’s financial system.
The Financial Sector Development Policy Loan (DPL) to Albania is a fixed spread IBRD loan with an eight-year grace period and repayment of 31 years, the World Bank said in a press release published on its website late on Monday.
The new loan builds on the work and results of previous World Bank policy-based lending operations that have supported a wide range of reforms to restore the country's macro-financial stability, rekindle economic growth, improve management of public finances, and reform pension and energy sectors.
"The reforms supported by this operation aim at addressing the current vulnerabilities of the financial sector and enhancing its resilience," said Ellen Goldstein, World Bank country director for the Western Balkans. "These reforms will enable the right environment for banks and nonbank financial institutions to expand credit to the private sector, which in turn will boost economic growth."
The loan operation envisages three key points: adopting policy measures to reduce NPLs and enhance the financial safety net; strengthening regulation, supervision, and resolution regime of banks and savings and credit associations (SCAs); and strengthening the regulation and supervision of investment funds.
"The actions undertaken by the government and the financial sector authorities supported by the new operation include significant improvements in the legal framework, such as a new Bankruptcy Law, a Bank Resolution Law, a new law on Savings and Credit Associations, and amendments to the Law on Audit, the Deposit Insurance Law, Collective Investments Undertaking Law, the Civil Procedure Code, and the Private Bailiffs’ Law," the World Bank said. "Some of these key reforms were part of the National Action Plan for the Reduction of NPLs, endorsed by the government and the Bank of Albania".
"These reforms not only mitigate the risks faced currently by the banking sector, but also introduce important changes that will have a long-term benefit for businesses and lending activities in the country," according to Michael Edwards, World Bank task team leader of the project. "The new bankruptcy law, for instance, is expected to substantially improve the effectiveness and speed of handling insolvency cases, and also establish credible restrictions for problematic borrowers," he added.
The 2008 global financial crisis slowed down Albania's economic growth significantly and increased vulnerabilities in the financial system through the rapid escalation in public debt and arrears and sharp increase of the percentage of bad loans in the banking sector. The government reacted by starting significant legal, regulatory, and supervisory reforms to lower risks in the financial sector.
- See more at: https://seenews.com/news/world-bank-approves-100-mln-loan-to-back-reforms-in-albanias-financial-sector-561464#sthash.rtgG53Yo.dpuf
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