The strengthening of the Lek further increased the Bank of Albania's losses for 2023

2024-04-03 10:11:00, Ekonomi CNA

The strengthening of the Lek further increased the Bank of Albania's losses

The strengthening of the Lek in the foreign exchange rate deepened the loss of the Bank of Albania last year.

According to the audited financial statements of the central bank, the net loss for the financial year 2023 reached the value of 27 billion lek, an increase of 53% compared to 2022.

During 2023, the Lek recorded the strongest historical appreciation in the exchange rate with the Euro and most other foreign currencies. At the end of 2023, the annual decline of the Euro exchange rate against the Lek was at the level of 9.1%.

The devaluation of currencies caused a further decrease in the value of foreign currency reserve assets held in foreign currency. For 2023, losses from the exchange rate reached 36 billion ALL, increasing by 140% compared to the previous year.

However, if we refer to the result of comprehensive income (which includes items that are not classified as part of the profit or loss of the financial year), the year 2023 marked an improvement compared to the previous year.

The total comprehensive loss decreased to the value of 15.5 billion lek, approximately half of the comprehensive losses reported at the end of 2022.

This improvement came as a result of the increase in the fair value of debt securities during the past year. In 2022, the rapid rise in interest rates and yields caused a sharp depreciation of debt securities held by the central bank.

During 2022, yields, especially for local currency instruments, declined. This led to an increase in the price of financial instruments and consequently improved the overall income result of the Bank of Albania.

Despite this, the Bank of Albania closed the year 2023 for the first time in its history with negative capital, in the amount of about ALL 16.7 billion. The main reason was the deepening of the negative balance in the item of unrealized revaluation reserves.

The balance of this item at the end of the year was negative for almost ALL 57 billion, increasing by 76% compared to the previous year. The main reason was precisely the strengthening of the Lek and the devaluation of foreign currencies and monetary gold in the foreign exchange reserve of the Bank of Albania.

According to the notes of the financial statements, on December 31, 2022, the Bank of Albania recorded in the item "reserve for covering the insufficiency of assets" the debt title issued by the Ministry of Finance with a nominal value of ALL 6.02 billion, since the total of the share capital and liabilities The bank exceeded its assets in the amount of ALL 3.433 billion.

For 2023, no new addition to this item has been reported, although the negative capital position has deepened.

However, last year the Bank of Albania stated that the losses on the balance sheet are transitory consequences of the interest rate normalization process and do not in any way affect the ability of the central banks to fulfill their mandate.

Governor Sejko stated that the impact of these policies on the balance sheet of the Bank of Albania also produces negative costs, but they are transitory, because they stem from accounting principles and not the final loss of assets. According to him, these costs will be recovered gradually over time./ Monitor.al