Rising interest rates deter businesses from borrowing

Rising interest rates are clearly being reflected on the country's financial system and the currency exchange rate. The value of new loans has fallen in the first quarter of the year to 63,7 billion leks, 2 billion leks less than a year ago. Meanwhile, businesses are borrowing less as a result of higher costs.

The value of new loans for businesses fell to 37,9 billion leks as opposed to 42,7 billion leks a year ago. Businesses are spending this money to improve their cashflow, pay suppliers, taxes and workers' salaries.

On the other hand, individual loans saw a slight increase to 21,5 billion leks in the first quarter of the year, but it's much more lower than a year ago.

According to the Bank of Albania, people are opting for loans in euros, especially when it comes to purchasing a home and this is due to the lower interest rate on loans taken in the European currency.