In parallel, this process should be treated at its roots, to establish a transparent and stable mechanism that addresses factors, which contribute to the increase of public sector liabilities toward private companies, and avoids their increase in the future. Furthermore, the Bank of Albania will amend the regulatory framework to urge banks to support borrowers’ request for credit restructuring, from the moment the credit is considered as good. If the banks realise this in an effective manner, they will have a lower cost as regards requirements for credit risk provisioning. This element would enable banks to address more prudently and proactively their best clients, who may be showing their first signs of credit repayment problems due to factors that are beyond their control. As an element to keep this action in check, the regulatory framework will envisage that this loan stay temporarily under this category (or in the substandard category), and will immediately fall in a lower category, if the loan quality deteriorates after restructuring. After broad consultations with the banks, the Bank of Albania has drafted the relevant instructions that will guide them in the debt restructuring process. BIS central bankers’ speeches  5  Similarly, the Bank of Albania finds that a part of the non-performing loans, mainly the loss loans, remain in the balance sheets of the banks owing to different interpretation by the banking industry and the tax authorities about the commencement and completion of the legal proceedings against a debtor.
In the view of this process, we stand ready to adapt them to the economic and financial developments, or support them with other measures. The stability of the financial system shall be at the foundation of each action of the Bank of Albania in this regard. Finally, I would like to remind all the representatives of the private sector, whether in production or financial industry, that under the effects and impact of the crisis, the public authorities, lawmakers, fiscal and monetary authorities, have made important changes in terms of philosophy, objectives and decision making, far from traditional considerations. These temporary changes aim at mitigating the crisis effects, stabilising the economy, consumption and private investment. The package I introduced today is a good example to illustrate this change. It is necessary, therefore, for the private sector to adopt such a temporary adjustment. Ms. Lagarde, Managing Director of the International Monetary Fund, appealed that in the current situation, the goal of the private sector cannot be only profit; it must also be to add value, create jobs, develop the new ideas that drive an economy forward and provide stability. Boosted employment and higher income from employment means more consumption and investments, higher consumer demand for goods, services and lending instruments. The private and financial sector should be accountable to the real economy: a private sector that supports employees and consumers, and a financial sector that adds values instead of destroying them.