Finance Minister stressed the importance of coordinated efforts among government, banks, local authorities, and farmers to develop a successful rural entrepreneurship aligned with the “Albania 2030” vision.

Building on the success of previous sovereign guarantee funds, the government is launching a new 3 billion lekë guarantee scheme dedicated to agriculture. This scheme will cover up to 70% of loans for farmers and SMEs, limit interest rates to 2%, and support sectors like agro-processing, agritourism, fisheries, and modern greenhouses.

“This guarantee fund is more than just a financial tool; it’s a real opportunity to create a new model for rural and economic development,” Malaj said.

He urged banks to increase lending to agriculture, which remains underfinanced despite its vital role in the economy, and called on farmers and businesses to actively utilize the support.

Malaj expressed confidence that with the state assuming significant risk, banks will be encouraged to lend more, helping modernize and expand agricultural activities.

Finance Minister concluded that the government remains committed to improving the financial and regulatory environment to support investments and make Albanian agriculture more competitive, especially in the context of EU integration.

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The country’s manufacturing has been hit hard by crisis that has substantially affected the domestic and external economic environment as reflected in a sharp decline in exports.

For the sector to recover, it has to improve and update technological processes in use so that it can enhance productivity and competitiveness in the international markets.

Under the decision, the sovereign guarantee fund represents the government’s commitment to cover payments and guarantee for loans to support equipment and machinery purchase, automation of production lines and creation of structural conditions to deliver on full and closed loop Made in Albania manufacturing.

The guarantee fund will also provide liquidity for purchase of raw materials for manufacturing companies.

Based on the government’s support plan, a borrower should submit an application for loan application no later than October 31, 2024, while the deadline will be at the discretion of the Borrower, but in no case exceeding the deadline of seven years in the case of loans for investment and not exceeding in any case the term of three years in the case of loans for the purchase of raw materials.

Under the government decision, the borrower should be registered at the National Business Center, must not be in default on loans and should have settled all tax liabilities by the time of application. The borrower should not be in default on loans with delays of more than 60 days. The value of the loan to be provided under the sovereign guarantee fund may vary in accordance with the request submitted by the entity, but in no case the loans granted under the Guarantee Agreement will not be higher than 100 million lek.

This government instrument to support the footwear and clothing industry is designed to provide more positive and relief terms than the previous guarantee funds approved by the government during the pandemic.

The sovereign guarantee fund will cover around 70% of the bank loans due to be provided by the banking system with a margin of 1.5 or 2%, for a “grace period” of about 9 months.

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The Ministry of Finance and Economy presented a new strategy and action plan for 2021-2027, which reflects the recommendations set forth by the European Commission on its 2020 Progress Report.

The measures designed to meet access to the finance are considered critical to strengthening the competitiveness of SMEs and startups. Increasing grant schemes for SMEs and designing new financial tools, such as loan guarantees, venture capital and crowdfunding. This requires a change in the legal framework.

“In order for the enterprises to fully tap their manufacturing potential, the support should reach out target groups besides innovative startups, combining various intervention types (infrastructure, funding, information, training and consulting services), which address the needs of the aspiring entrepreneurs and SMEs,” according to the strategy.

In order to improve their competitiveness, increase production capacity and access to the market, Albanian small and medium enterprises are currently receiving financial supported from the Investment Development Agency (AIDA) through the Competitiveness Fund, Creative Economy Fund (Craft), Fund Start-up, Innovation Fund.

Most recently, AIDA has presented Access to the Finance platform, a unique portal providing information on grants and loans.

The enterprise register included 166,386 active enterprises at the end of 2020, up by 2.5% compared to the previous year.

Around 90% of active enterprises are small enterprises with 1-4 employees and their contribution to employment is estimated at 26.4%.

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