Prime Minister Edi Rama and the Minister of Finance and Economy Delina Ibrahimaj communicated with the media via a press conference on treasury securities, informing the public on reopening the Bank of Albania’s service windows to ease access of individuals in all central bank branches throughout the territory of the Republic of Albania. The Premier welcomed the decision “as a positive step towards establishing direct contact between the central bank and the citizens, as well as a significant signal the bank sends to all those who wish or may consider investing in long-term treasury bills or notes.
* * *
Prime Minister Edi Rama: It is a special reason for today’s press conference, because it is a moment when we deem it necessary to inform the public via the media about the best moment for everyone to invest in the government’s treasury securities.
You know this is a phase when the yields on the treasury bills and notes are being increased and it is precisely for this reason, regardless of the already well-known reasons that are related to the overall crisis, the increased yields provide an advantage for all of those who invest in the treasury bills and notes with practically a zero risk rate. To this end, the Bank of Albania has reopened its service windows to ease access for individuals to all central bank branches throughout the territory of the Republic of Albania, a positive step towards the direct contact between the citizens and the central bank, as well as a significant signal the bank sends to all those who wish or may consider investing in long-term treasury bills or notes.
This is the topic of this joint press point with the Minister of Finance and Economy, who will also provide a more detailed outline on this operation launched by the Bank of Albania, but also this opportunity created for the citizens under the current situation and every individual wishing to invest in treasury bills by paying a much smaller bank commission or charge compared to the charges applied by the commercial banks and depositing these funds with the central bank.
It is a complex moment of the economy in general. Our economy is not immune too, as we are part of the very same space currently being under the pressure of the war and an aggression whose impact is being materialized on us through the energy price crisis, which we have successfully weathered by far, I would say, since the electricity price for the households and small businesses hasn’t been increased even by a single cent, and through the war-driven inflation, which, although it is impossible to totally eliminate as we have succeeded in eliminating the increased prices by subsidizing the whole invisible part of the electricity bills, yet the inflation rate has been somehow kept better under control and the rate is therefore lower compared to other countries in the region, by maintaining the electricity prices unchanged.
I am giving the floor to the Minister, who will provide more details on the topic we are talking about and we can then answer any questions about it.
Minister of Finance and Economy Delina Ibrahimaj: Honourable Prime Minister, honourable media representatives! I would like to thank you all for coming here today to discuss a topic close to my heart and this is the reason and the purpose of this press conference, so that we can pause for a moment and talk about ways how to better raise the population’s awareness and provided details for the individuals to invest in the government treasury securities. It is a topic that hasn’t been widely tackled recently, in the last decade, given that the central bank’s key interest rate has been much lower compared to the current rate of 2.75%.
During this year we have been talking a lot about the increased electricity prices, the increased inflation rate that have affected our population, as well as all the government measures aimed at protecting the national Albanian economy so that we can minimize the war impact on our economy. However, we haven’t actually tackled a crucial element, namely the element concerning the interest rates. Since the start of the war, central banks around the world, starting with the U.S. Central Bank or the Federal Reserve, followed by other central banks and the European Central Bank most recently, started to increase their key interest rates, impacting this way all the rates of the financial system.
The Bank of Albania, too, since the beginning of this year, has repeatedly increased its key interest rates. Albania’s central bank applied a 0.5% key interest rate in the beginning of this year, but this rate has already jumped to 2.75%, as I already noted. This constant increase has also led to increased yields on the government securities.
As a matter of fact, the reason we are here today and we have come together to talk about encouraging individuals to invest in government treasury securities is precisely this, given that the profitability of investing in these securities since the rates have risen exponentially, is much higher today than a year ago.
The individuals are now provided the investment opportunity that now offers much higher returns than other investment opportunities existing in the markets and they have the opportunity to invest in several treasury securities practically with zero risk as they are issued by the Albanian government and guaranteed by the Albanian government.
By government securities, we mean the treasury bills and treasury notes. I am convinced that the public is too familiar with these two terms, with which they have come across so often, yet they have always labelled or targeted them as too technical and too difficult to invest in them.
This is the reason why today we are launching this awareness raising campaign to explain and tell individuals how to invest in treasury bills, how they can invest in treasury notes and the profits they can earn by doing so. The central bank will help us in this campaign, with the Bank serving as the government’s fiscal agent and has opened its service windows in six locations; namely in Tirana, Elbasan, Shkodër, Lushnje, Korça and in Gjirokastër in a bid to auction treasury securities and best inform the citizens over the procedures they should follow so that they can be informed and reap benefits from their investments in these government instruments.
Two different procedures are applied to the treasury bills and notes, but right now, compared to a year ago, investment in these instruments is really profitable. If the yield on the three-month T-bills was 1% in 2021, the yields have jumped to 2.78% now. The yields on the 12-month T-bills were very low last year, compared to 5.74% today. Meanwhile, the government offers much longer-term securities and it has been working to increase the maturity of its securities over the past years and it has succeeded in doing so.
Last year, for the first time we issued a 15-year T-note and the market yield was very high. The 15-year T-notes are traded at an 8.39% rate now, recording a significantly higher yield rate from around 5% last year.
On the official website of the Ministry of Finance, a specific section has been launched and it is operational starting today to explain the benefits and the ways to invest in the treasury securities. In the meantime, we will also conduct firsthand visits in every location where the central bank services for the securities have been reopened, in a bid to raise awareness of the citizens not only to invest in T-bills and notes, but also for a better financial education.
We are working to build a strategy to improve the population’s financial education, which is set to become a national strategy, because it is very important that the individuals, and young people in particular, cultivate an increased financial culture, develop a money management culture, because it is the only way for them to take care of their household finances and become successful investors of their money.
