fehmi mehmeti : the financial sector was the main pillar of support for businesses and individuals speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the year - end press conference with journalists, pristina, 24 december 2021. * * * distinguished media representatives, first, let me thank you for your presence at this conference at the end of the year and for the continuous and effective cooperation that we have cultivated over the years in order to properly inform the public about the activity of the cbk, as well as economic and financial developments in the country. communication with the media is an extremely important part of cbk ’ s activity. through your proper reporting, we have managed to keep the public well informed about developments in the financial system and the economy of the country, influencing the behaviour of the public in relation to the conditions created in the economy to be rational. therefore, i would like to take this opportunity to express my appreciation for the sacrifice and professionalism shown during this year as well. * * * despite the difficulties we faced, i am happy that the central bank of the republic of kosovo managed to achieve its goals this year as well, providing a stable financial system, which not only managed to withstand the unfavourable economic developments in the country, but also to be one of the main pillars of support to businesses and individuals, and thus to the country ’ s economy. * * * now, let me present to you a summary of the developments that characterized the country ’ s economy and financial system during this year, based on the latest data available for relevant sectors. * * * kosovo ’ s economy started 2021 with a rather uncertain perspective, given that we were leaving behind a very difficult year, in which restrictive measures against the spread of the pandemic had caused a real economic decline of 5. 3 percent, which was the biggest blow to the economy in the last 20 years. however, easing the measures of movement of citizens inside and outside the country, which resulted in a large number of diaspora visiting kosovo during the summer months, together with the supportive policies of the government of kosovo and the central bank of the republic of kosovo for the economy, made 2021 to be characterized by very positive developments for the country ’ s economy, which, according to the latest estimates of the cbk, is expected to mark a real growth rate of about 9. 9 percent. according to data recorded until october this year, the expenditures of

, which shows that we are facing a trend of growth in the overall price level. the increase in the inflation rate in kosovo mainly reflects the increase in prices in international markets, which, in kosovo, are transmitted through the increase in prices of imported goods. * * * regarding the financial system, it is very important to note that kosovo has managed to build a sound financial system, which not only proved capable of withstanding a very unfavourable economic environment during 2020, but also plays a very important role in supporting the economy to cope with the crisis with the smallest possible consequences. * * * over the past year, seeing that the country ’ s economy was entering a crisis, and that businesses and citizens started facing financial difficulties, the cbk, based on international best practices and in cooperation with lending institutions in kosovo, took a number of measures to help the economy cope more easily with the challenges of this crisis. initially, we took the measure to apply the moratorium on loan repayments without any punitive measures for all borrowers who have been adversely affected by the pandemic. this moratorium has temporarily relieved the borrower of the loan repayment burden, thus improving their liquidity position to finance other needs. following the end of the moratorium period, the cbk has published guidelines for loan restructuring in order to establish the criteria on which the loan restructuring process should be 2 / 5 bis central bankers'speeches based for borrowers who have encountered financial difficulties as a result of the pandemic. loan restructuring guidelines have made it possible to ease the credit burden on borrowers without implicating any deterioration in their classification in the credit registry of kosovo. guideline for credit restructuring has been extended until the end of march 2021, in order to be implemented more widely for businesses in financial difficulties. the measures taken by the cbk were assessed as very adequate both by the local public and by international financial institutions, such as the international monetary fund in article iv report on kosovo and the world bank. * * * despite the increased risks due to the economic difficulties that businesses have inherited from the pandemic period, the banking sector continued to increase lending and maintain the degree of stability. until november 2021, the value of new loans issued by the banking sector was about 1. 6 billion euros, representing an annual increase of 21 percent, while the total value of active loans in the banking sector until november 2021 was 3. 7 billion euros, representing an annual increase of 14. 7