Business loans could help entrepreneurs, large or small, to build or expand their operations that could eventually benefit not only the shareholders but also the workers and the consumers as a whole. An instalment loan could help us buy a property or consumer goods that would otherwise be inaccessible or unaffordable. While debt can bring about many attractive benefits, it has just one major drawback. That is, debt is a liability that needs to be paid back, with interests, sometime in the future. This means that someone who borrows money needs to use his or her future income to pay for interest and principal at some future time. This being the case, a prudent person or enterprise must take due care in ensuring that there is sufficient future income to meet the future payment liability arising from the debt obligation. Global financial crisis: More government debts 8. Earlier I referred to the fact that the industrial nations’ total debt stabilised at around 115% of GDP in the 1970s. Now, let us see what had happened in these countries since then. During the last three decades, both the private sectors and governments in the developed countries repeatedly borrow money at a rate much faster than their economic or income growth. As a result, the average ratio of total debt to GDP of the developed economies increased to about 290% before the eruption of the Global Financial Crisis in 2008.
More concretely, business should understand that bank is an integral part of its activity, if it is willing to be successful for a long-term period. Finally, I would encourage more institutionalised links of the banking system with various business organisations. Maybe it is time that Association of banks establishes regular contacts with business representations, contacts that would certainly upgrade the relations between business and bank to a higher level. Also, I use the opportunity to renew the Bank of Albania commitment to participate in this initiative by offering its expertise in projects, round tables, forums, debates, etc., which will aim at improving the business climate as well as increasing and channelling more efficiently the bank credit. Thank you. 4/4