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Credit line from EBRD will support private sector recovery in Albania
To restart Albania's private sector activity, the European Bank for Reconstruction and Development (EBRD) has extended a US$ 10 million (ECU 8.7 million) direct credit line to two private sector banks: a US$ 6 million (ECU 5.2 million) loan to Banca Italo Albanese (BIA) and a US$ 4 million (ECU 3.5 million) loan to Tirana Bank (TB). The credit line will help to support Albania's private sector recovery after the political, social and economic crisis in 1997 that followed the collapse of several pyramid schemes.
"Albania is making good progress in its recovery from the deep political and economic turmoil which paralysed the transition process and the emerging private sector," said Philippe Leclercq, Head of the EBRD's Resident Office in Tirana. "The EBRD's priority is to support small and medium-sized private enterprises by relying on efficient local financial intermediaries."
The banking sector in Albania is at a very early stage of development and is still dominated by two state-owned banks. However, private joint-venture banks supported by foreign sponsors have started to make their mark.
The credit line will enable BIA and TB to fund hard currency medium-term lending, mainly to small and medium-sized enterprises (SMEs), in order to increase working capital and to provide pre-export and investment financing. As a medium-term objective, the project aims to help the private joint-venture banks to take a more active role in Albania's credit market.
The EBRD credit line has been designed to complement existing World Bank projects and SME credit lines funded by bilateral donors. Foreign investment financed under the credit line may benefit from political risk cover provided by the Albanian Guarantee Agency (AGA), a government risk insurance agency promoted and funded by the World Bank.
The Bank selected BIA and TB to receive this credit line because of their local incorporation, capitalisation, substantial ownership by reputable international banking groups and management quality. BIA and TB have a paid-in capital of US$ 12.5 million (ECU 10.9 million) andUS$ 4.6 million (ECU 4 million) respectively.
To date, the EBRD has approved nine investments in Albania, totalling ECU 71 million, with a total project cost of ECU 272 million.
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