Analysis of the credit for farmers, its effectiveness, and the context of political elections

The government’s program, coordinated with the Bank of Albania to open a credit line of 25 billion ALL in support of agriculture and related sectors, such as low-interest lending and sovereign guarantees, is an important and necessary measure. However, it comes at a moment that may present several challenges and opportunities. Let us analyze this in light of the sector’s needs and the political deadlines.

But is this the right time for the credit?

This financing program can be useful, but the timing of its launch on the eve of elections may affect its long-term effectiveness. We believe that the likelihood of the credit being effective in such a short time frame, and with an approach that comes at the end of the current government’s mandate, may have some possible effects and counter-effects, such as:

• The agricultural sector’s response to new financing may be positive, as farmers are in a critical period before the start of the next planting and production season. This is a good moment to enable them to invest in mechanization, storage, and technology.
• The short time for implementation before the elections—less than 100 days—is not sufficient to carry out a full support program, especially for farmers who are in a difficult position to get informed and included in new credit schemes. Meanwhile, banks and financial institutions may view with suspicion the possibility of engaging such large resources during a politically chaotic period.
• Elections may cause division and political uncertainty, having a negative effect on the trust of farmers and banks in investing in long-term projects. Meanwhile, the government may exploit this period to create a perception of support for agriculture, using this program as a tool for political gain, making the credit more attractive to the rural electorate.

The effectiveness of credit in the context of farmers’ needs

Considering previous analyses of the government’s agriculture program, where we identified a clear need for around €1 billion per year for the development of agricultural sectors and efforts to modernize agriculture, the proposed credit of 25 billion ALL (around €250 million) is a good start but is a small portion of what is needed for sustainable development.

If the program is used as a starting point, it would offer visible opportunities for small and medium-sized farmers. However, to have real effectiveness in the sector, it is necessary for this credit to focus on long-term investments, such as mechanization, product processing, and infrastructure improvement. Otherwise, it may remain as a temporary and unsustainable support measure.

The benefits of these credits depend on farmers’ ability to take advantage of favorable loans, especially for those who are informal and lack complete documentation. This may be a major challenge, as most farmers are still informal and insufficiently organized to benefit from a credit program that requires guarantees and full documentation.

Even though the government is offering a sovereign guarantee for 70% of the principal, banks may continue to be cautious, taking into account the high risk of the agricultural sector and the possibility of delays in loan repayment.

Some farmers may face bureaucratic procedures, which may prevent them from benefiting from the loans. This is a challenge that requires direct support for farm legalization and the creation of a favorable environment for credit.

The days before elections bring uncertainty about the political future, causing many businesses and farmers to be unsure whether they will be able to repay the loans, making credit riskier.

Nevertheless, with full support from the Bank of Albania and the government, this program could encourage banks to develop a sustainable and suitable financial product for agriculture.

Caution! Let us not forget the precedent that occurred in the case of exporters during 2024.

Does this constitute a violation of the Electoral Code, and how much does it align with the scope of the Bank of Albania?

According to the Electoral Code of Albania, there are several provisions that restrict the activities of the government and its bodies during the pre-election period. These include prohibitions on direct financial benefits, distribution of funds through grants or direct financial support to citizens, and setting financial rewards that may influence electoral aid.

For this reason, the government is prohibited from making financial decisions that may be interpreted as electoral rewards, which could influence the election campaign.

However, the Bank of Albania is an independent institution and has a specific role in monetary policy and the support of economic sectors. It has the competence to offer financial instruments, including possible credit lines for specific sectors such as agriculture, without the need for this decision to pass through government approval.

The decision of the Bank of Albania to create a financing line for agriculture may have a legal basis in its competences. But it is important to understand that, to avoid accusations of political favoritism, every decision must be in accordance with the legal framework and must comply with objective criteria and without electoral influence.

The responsibility for overseeing decisions that impact elections also rests with independent institutions, such as the Central Election Commission (CEC), which can assess the compliance of decisions with the law.

Another aspect to consider is the distinction between financial support and electoral rewards.

If the Bank of Albania has prepared this financing line as a measure to assist the long-term development of agriculture, regardless of the election period, this may be considered a technical and economic measure, and not an electoral tool.

In this case, the government should ensure that any decision related to this program does not contain elements of direct rewards linked to the election campaign.

If the Bank of Albania acts in accordance with its internal regulations and no direct political benefits arise from this, it may be legally acceptable. However, if the government is directly involved in the implementation process of this program, further questions may arise regarding its compliance with the Electoral Code.

If there is an element of political influence by the government in the financial support process, used for electoral gain, this could be declared illegal and legally unacceptable.

Despite this, transparency and clear processes to ensure that funds are used for the real needs of economic sectors and not as an electoral tool are essential to avoid accusations of electoral manipulation.

In any case, it is important for the Central Election Commission and relevant institutions to monitor this process to ensure its compliance with the law and the Electoral Code.