Interview with the General Administrator of Konfindustria, Gjergj Buxhuku: The sharp drop of the euro, especially in the past two weeks, acts as a premise for financial speculation
“The incentive against the euro favours foreigners who take their profits abroad”
The latest incentive of the Bank of Albania to stimulate the use of the domestic currency, lek at the detriment of the European currency, euro, doesn’t only have its supporters, but also its opponents. One of them is the General Administrator of the business organization known as Konfindustria, GjergjBuxhuku. In a special interview for the Albanian Free Press, he provides his arguments as to why he suspects that this is a case of financial speculation. “Certain companies have ties with officials working for the Bank of Albania, they launch a campaign for the weakening of the euro and in a matter of 2 to 3 months, they send their earnings at a low cost and make a profit from the appreciation of the lek”, he said. Buxhuku says that this measure damages domestic production and the pockets of Albanian people…
Interviewed for Albanian Free Press by Eglantina Nasi
Mr. Buxhuku, in a recent statement issued by the business organization that you chair, Konfindustria”, you have said that you are against the measures launched by the Bank of Albania as part of the process of “deuroization”. Where do you base your position?
Yes, it’s true, we have raised our concern that the strong fall in the value of the euro, in particular, against lek, in the past two weeks, is acting as premise for financial speculation.
Why do you consider it to be like this?
Because now is the moment when foreign companies convert lek into foreign currency, euro or US dollars, and they’re interested on purchasing them at a low price, because there would be extra profits in store for them. Given that this is the period when they prepare their financial statements, they send their profits abroad. I don’t know if this is done due to incompetence or intentionally. But, this is a cause for concern, because the more the value of a foreign currency is weakened at a time when they convert their earnings into foreign currency, the more their boost their profits. I don’t know if the weakening of the euro comes as a result of the incompetence of the Bank of Albania, or whether they want to enable foreign companies to transfer higher earnings to the holding companies.
What other reasons do you have to be against the incentive of the Bank of Albania for the “deeuroization”?
There’s also another reason why this strategy launched by the Bank of Albania does not convince me. They say that they aim at restricting the use of the euro or other values, favouring the use of lek, through administrative measures and not through market economy measures. They say that they are doing this because they want to be able to implement their monetary policies. But, these policies are implemented in strong economies. In countries with a weak economy, they are an extra cost, which does more harm than good. It’s like a car which has a very poor performing engine. The more you press the gas pedal, the more gas you spend, because the car doesn’t perform any better. This is why monetary policies can only be implemented by strong economies. All other economies, starting with us, cannot implement these sorts of economies. You can do whatever you want, you can strengthen lek, you can weaken the euro, the effect on the economy is weak.
How do you see the application of such measures for the so called “fight against euro” in respect to domestic companies, which mainly operate in lek, and in respect to domestic production?
If 1 lek is appreciated artificially, imports will become cheaper and competition for domestic products will increase, because goods coming from abroad will be cheaper and this will be a blow for domestic companies. Another negative effect is the one on citizens, because it is well known that most of them receive their incomes in euro, in the form of remittances or in some other way. What happens? The more euro is weakened (in an artificial way), the more their purchasing power is affected. This means that they are affected directly. So, it’s not only businesses that export and produce the ones to receive a blow, but also individuals.
At the end of this analysis, what solution would you suggest in order for the measures against the euro not to damage domestic economy and the citizens?
The solution is very simple. Do not intervene, because the currency represents, above all, confidence. Let the market operate based on its rules. Let the market decide freely, because a central institution, such as the central bank of a country like Albania, cannot intervene in an arbitrary way, without a scope or aim, by copying in a childish way policies that are applied by powerful countries, which have a powerful economy. Even these economies do this with great caution, because what scares me in the end in the short term, is the fact that we are dealing with a pure financial speculation, for the motive that I mentioned above. Certain companies have ties with officials working for the Bank of Albania, they launch a campaign for the weakening of the euro and in a matter of 2 to 3 months, they send their earnings at a low cost and make a profit from the appreciation of the lek.
Konfidustria: BoA must intervene as soon as possible
The business organization, Konfindustria, has reiterated its request addressed to the Bank of Albania to firmly intervene as soon as possible in the monetary market in order to avoid any possibility for financial speculation based on the artificial weakening of the euro and other currencies. The Bank of Albania is also required to demonstrate professionalism in the so called campaign of “deeuroization” of the Albanian economy, which it has launched by applying administrative tools and ignoring free market rules. “Konfindustria expresses its concern about the fact that the depreciation of the euro and other currencies against lek coincides with the start of the campaign of the Bank of Albania for the restriction of the use of the euro and the start of the process in which foreign companies purchase foreign currency in order to transfer dividends abroad”, the statement says.