Sovereign guarantee and lending program for SMEs - Bank of Albania and government join forces to support agriculture
In order to increase lending to the agricultural sector, the Bank of Albania and the government will offer two financing instruments for small and medium-sized enterprises, a sovereign guarantee and a 25 billion lek program.
At a roundtable discussion organized by the Bank of Albania with representatives from the Government, banking system leaders and representatives of agribusiness companies, Governor Gent Sejko listed some of the obstacles this sector faces in financing.
"The agricultural sector has the weakest performance among the major sectors of the Albanian economy, a performance dictated by several structural problems, including: land fragmentation, low level of mechanization, as well as poor horizontal and vertical integration between farmers, the market and other sectors of the economy. The Bank of Albania has made available a fund of 25 billion lek intended to support lending to micro, small and medium-sized businesses. This program, which will be implemented through commercial banks, offers opportunities for a significant reduction in the cost of credit for these businesses, which can reach up to 2%, but in any case, will not exceed the level of 3.5%, creating opportunities for them to invest in physical assets, capital equipment or technological platforms, which serve to increase productivity."
Meanwhile, Prime Minister Edi Rama emphasized that the sovereign guarantee will cover 70% of the principal of loans granted to small and medium-sized businesses in agriculture.
"We have a combined product between the new financing line of the Bank of Albania and the support that the government will provide, achieving, in fact, that through the Sovereign Guarantee it will cover 70% of the loan principal. Combined with the bank's program, we can tell you today to all those who expect more financing, require more financing, you need more financing, in the agricultural sector, that the interest rate will be really very attractive."
Rama stated that by 2023, the aim is for agricultural exports to reach 1 billion euros.
Despite private sector credit growing at a rate of 16% in 2024, credit to the agricultural sector continues to account for less than 2% of total bank credit to businesses.
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