fehmi mehmeti : the financial sector is liquid and supports the economy in kosovo speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the conference with the head of the imf mission for kosovo, mr gabriel di bella, pristina, 4 november 2022. * * * dear di bella - head of the imf mission for kosovo dear media first of all, allow me to thank the international monetary fund for the continuous support it has provided to kosovo, and in particular to the central bank of the republic of kosovo, in carrying out its duties in maintaining and preserving a stable and continuously growing financial system. during the meetings held with representatives of the international monetary fund, we informed them about the latest developments and data of the financial system in kosovo. the financial system in kosovo has continued to be liquid and well capitalized, where double - digit growth has been recorded in all indicators being one of the important factors in the economic growth and development of the country. in total, the means of the financial system in the country, on 31 august, 2022, have reached the total value of 9. 3 billion euros, with an annual increase of 10 percent. in the meantime, the means of the banking sector have continued the growth trend even during 2022, reaching the value of around 6. 4 billion euros in august 2022, which represents an annual increase of 11. 1 percent. in august 2022, the total value of deposits is worth 5. 2 billion euros, which represents an annual increase of 11. 8 percent, while the growth of deposits continued during the month of september, with a rate of 12. 7 percent. the banking sector continues to be stable, increasing lending activity and playing a very important role in crediting the country's economy during this year as well. the value of the credit portfolio of the banking sector at the end of august 2022 was in the amount of 4. 2 billion euros, with an annual increase of 18. 6 percent, while the average loan interest rate was 6. 0 percent. non - performing loans have continued with the downward trend and today the rate of non - performing loans is at the level of 2. 1 %, which is a significantly better indicator compared to countries in the region or even beyond. the banking sector continues to be well capitalized and liquid. the capital adequacy indicator for the banking sector stands at 16. 1 percent, which is significantly above

it makes sense for macroeconomic surveillance to have a clear focus on the euro area countries with large current account deficits, significant losses of competitiveness and high levels of public and private debt. as regards fiscal surveillance, ambitious benchmarks are needed when establishing an excessive deficit and in setting the adjustment path towards a country ’ s medium - term budgetary objective. such benchmarks need to be even more ambitious if a country ’ s debt exceeds the reference value of 60 % of gdp or there are fiscal sustainability risks. finally, the gap between the eu and national level must be closed. new procedures will not be sufficient if they are not solidly anchored at national level. binding commitments by member states to swiftly implement strong national budgetary frameworks are essential. major improvements are needed regarding the quality and independence of fiscal and economic analysis and the production of fiscal statistics. all these aspects should be contemplated as mandatory features in the foreseen directive on national fiscal frameworks. bis central bankers ’ speeches in the ecb ’ s view, the proposals meanwhile agreed do not go far enough. regarding the final result, we are encouraged by the fact that the european parliament has shown some ambition in its approach, particularly as regards greater automaticity and the broader and timelier use of sanctions. the room for halting or suspending procedures against those member states breaking the rules must be reduced. some other points of the parliament ’ s proposals also deserve a positive mention like the strengthening of the commission ’ s role in the procedures and an earlier and more gradual application of financial sanctions within the macroeconomic surveillance framework. it is also positive the support in the same framework for a clear distinction between member states belonging or not to the euro area. the requirements of avoiding negative imbalances must be more demanding for members of the monetary union. this type of distinction, making full use of the treaty ’ s new article 136, has to be applied in different domains, drawing the appropriate lessons of the crisis for the functioning of the monetary union. we hope that the ongoing negotiations over the legislative package will permit the texts to be significantly improved along these lines. the ecb is encouraged that the amendments proposed by the european parliament go in the direction of the significant strengthening of economic governance that we have called for. however, there are some important areas in which the texts should not be weakened. in particular, softening the stability and growth pact by introducing further exceptions or treating in a special way specific expenditure items, such as public investment, would create