DIFK signs a Loan Agreement with EBRD for the €10 million standby credit line

News Prishtina – 19 December 2013 DIFK signs a Loan Agreement with EBRD for the €10 million standby credit line

Guaranteed by the Republic of Kosovo, today, DIFK has sign a Loan Agreement with EBRD for the standby credit line of €10 million to be used only in emergency in line with law on deposit insurance. The credit line represents an important step in the development of the Kosovan deposit insurance system in reaching international standards for effective deposit insurance schemes.

The credit line will provide immediate funds to DIFK – if and when required – to fulfill its mandate in compensating its depositors serving as contingency financing mechanism. A “standby” financing is substantially more cost effective than a loan.

Effective deposit insurance systems are a crucial part of well-functioning financial sectors. By providing depositors with insurance for their deposits, the DIFK supports Kosovo’s financial stability by increasing depositor confidence in the banking sector.

DIFK is an independent public institution with the objective to protect small depositors from loss and supports Central Bank of the Republic of Kosovo (CBK) in meeting its objective to foster sound, solvent, and efficient functioning of a stable, market-based financial system. Reporting to CBK, DIFK main mandates is to insure and compensate depositors and to manage Deposit Insurance Fund.

Besim Beqaj, Minister of Finance of the Republic of Kosovo, said: “We are very happy to sign the first project for the Government of the Republic of Kosovo with the EBRD. I am confident this will be the first of the many more joint undertakings in support of the development in our country.”

Claudio Viezzoli, EBRD Director, Western Balkans, said: “The Deposit Insurance project is very important as it supports the development of the local banking market infrastructure. Almost exactly one year after Kosovo’s membership in the EBRD we are proud to sign this project, which will mark an annual business volume of our Bank in the country in 2013 of €22 million through ten projects.”

Violeta Arifi Krasniqi, Managing Director of DIFK, added: “The project is very important for DIFK as it advances the deposit insurance system to international principle for effective deposit insurance by obtaining a backup funding for liquidity purposes. It also formalizes our relationship with the EBRD and we believe it is only the start of our cooperation”.

Kosovo became a member of the EBRD on 17 December 2012 and on 1 May 2013 the Bank adopted its first full country strategy. However, private sector projects in Kosovo were eligible for EBRD support since 1999 via dedicated externally managed regional funds and projects and via the Bank’s regional facilities for the Western Balkans. Within this scope, since 1999 the Bank had signed some 39 projects in Kosovo with a cumulative EBRD investment value of approx. €90 million.