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The Albanian government will grant a sovereign guarantee of 4 billion ALL in the next 4 years for farmers in order to support domestic production.
Economic expert, Romina Radonshiqi says that the sovereign guarantee can help the farmer if the interest on the loan will not be high, according to her in this way the sovereign guarantee will reduce informality in agriculture:
“This sovereign guarantee has positive effects for the development of agriculture, but first there must be a good market study regarding the terms of the sovereign guarantee, the interest rate, who benefits and how this guarantee is obtained. But we should also not forget to pay attention to the protection of domestic production, where imported agricultural products are not expensive. more competitive than the local ones ”.
Agriculture is the right wing of the economy in Albania, as it accounts for 20% of GDP, which translates into a high number of employees, approximately 37% of the population have agreed to work in agriculture, despite this, this sector is not sufficiently credited by banks.
“If we were to ask banks why this sector is so under-credited? They will give a series of reasons, this first aspect is the collateral, the fragmentation of land makes this sector viewed with a high risk by the bank. They require a guarantee and as a suggestion in this case is a sovereign loan where the guarantor is no longer the assets, but the state. Will it work then? It remains to be seen as sovereign credit was applied during the pandemic for businesses, but the interest goes to 3.5. A high interest rate made this loan not to be embraced as businesses when they went to the bank received the loan with lower interest rate“, Says the economic expert, Klodian Muça.
But how can a sovereign guarantee work for our farmer?
“The sovereign guarantee was introduced, but the state left open how much the interest on the loan will be, consequently the farmer will again be in the hands of the bank. Need a lower interest“, Says the expert.
Albania is also considered an agricultural country, in our country there is still no Cooperative Credit Bank to finance the agricultural sector.
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