Growth of currency outside banks is a phenomenon that has usually accompanied all pre-election periods in Albania, reflecting the increase in public investment, or increased political parties’ expenses for rallies, meetings, trips etc. This trend was also noticed during this year’s election, as Bank of Albania data show that in the period from February to May, money outside banks increased by 2.6 billion lek (21 million euros), reaching 274 billion lek (2.2 billion euros).
Only in May, money outside banks has decreased by about 1 billion lek (8 million euros), but unlike the previous years, this period didn’t display an increase in public spending. According to Ministry of Finance data, capital expenditures were 22 billion lek (180 million euros) for the five-month period, down by almost 20 percent over the same period of the previous year.
The level of money outside banks at end-May was 21.6 percent of the total money in the economy, according to Bank of Albania data, being the highest in the region and Europe as a direct indicator of high level of informality in the economy. Compared with the previous year, this indicator has increased by nearly 1 percentage point and is close to the highest level since 2008, when money withdrawals from banks was high due to the panic that was created by the financial crisis global of that time.
Following a downturn in the coming years, since 2013 the money circulating outside banking channels has steadily increased. By contrast, the total money in the economy has been reduced in the last four months of this year (February-May), an indicator of slowdown in economic activity. Compared to euro area countries, or even the region, Albania has a very high level of currency circulating outside the banking channels.
In the Eurozone according to data from the European Central Bank, the level of money outside banks in September 2017 was as much as 9.2 percent of the total. According to the respective Central Bank data, this indicator in North Macedonia was 7.4 percent at the end of October 2018, down by 0.8 percent from a year earlier. In Serbia the indicator is 6.8 percent of the total, according to data from the Central Bank of Serbia referring to October 2018.
