Ardian Fullani: Promoting investment in Albania
Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the 3d International
Conference on "FDIs in Albania", organised by the Albanian Investment and Development
Agency (AIDA) and the Islamic Development Bank (IDB), Tirana, 11 June 2012.
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Your Excellency Mr. Sali Berisha,
Dear Mr. Khalid Al Aboodi,
Dear Minister of Finance,
Dear ladies and gentlemen!
It is a special pleasure for me to address this joint conference with the Islamic Development
Bank, dedicated to the promotion of investment in Albania. Allow me first to extend my
thanks to Dr. Ahmed Mohamed Ali Al Madani, President of the Islamic Development Bank,
for his utmost contribution to lobbying and supporting Albania's interests in the Arab and
broader world.
The Bank of Albania assesses that Albania's macroeconomic stability has been and remains
a fundamental condition steering economic agents' investment, consumption or
savingsrelated decision-making, not only for the present but also for the future. It is this very
fundamental equilibrium in the economy that paves the way for Albania's long-term economic
and financial development.
Let me recall to you that, in present days, macro-financial situation represents the "passport"
the entire economic and financial credibility of a country is built on. In an integrated market
that is ever-increasingly being affected by the globalization process, macroeconomic stability
exerts the same impact on foreign investors as well. It is for this reason that our monetary
policy, our role as the supervisory authority for the banking sector in Albania, and our
contribution to the communication between the public authorities at home, have been based
on and have reflected this fundamental principle.
The Bank of Albania has succeeded in guaranteeing a favourable macroeconomic
environment in the recent years. I would like to remind you that the stability of the Albanian
economy has been achieved under the constant pressure of the global crisis, which has
severely hit our main trading partners.
Thanks to the efforts of the Bank of Albania, successful monetary and fiscal policy mix,
stimulating policies in the tax area and ongoing improvement of the business environment,
the Albanian economy has recorded satisfactory growth rates ranging 3-4% in real annual
terms. This growth has been achieved amidst an environment characterized by stable prices
and a balanced exchange rate. Albania's financial stability has, in no single moment, been
put into question, and the banking system, which enjoys buoyant liquidity situation, continues
to increase financial intermediation in the economy.
Allow me now to elaborate on these issues. The primary objective of the Bank of Albania is
to maintain consumer price stability, which in quantitative terms is expressed as the annual
increase in prices in the 2-4% range and targeting the midpoint of 3%. The Bank of Albania
has successfully achieved this objective.
Different surveys show that economic agents report stable expectations for a low inflation.
This consistent profile of our monetary policy has proved particularly useful in the last few
years. We have had greater flexibility to implement a prudent easing monetary policy that
promotes investment and consumption at home. Over a several-month period, the Bank of
Albania has made a number of decisions for cutting the key interest rate in the economy, the
one-week interest rate on repurchase agreements, to its record low of 4.25%. It is a pleasure
to note that the degree of pass-through to the economy is satisfactory and in accordance
with the time lags in the monetary transmission mechanism. During this easing cycle, the
annual increase in the inflation rate has remained under control and lek's exchange rate has
been stable.
As a result, foreign direct investment and other portfolio flows have been stable, financing the
major part of economic agents' current demand for foreign currency. Macroeconomic stability
is not an exclusive task of the central bank's activity, but it reflects broadly the sharing of the
same principle and harmonization of actions with fiscal policy.
Financial system's stability, and the banking sector's stability in particular, is the second main
pillar of our activity. I can state that, in the recent years, we have devoted most of our
capacities to meeting this objective.
The challenges have been numerous considering that banking activity reflects not only the
stability of the institution itself, but also the overall economic conditions. However, in close
cooperation with the banking industry, we have succeeded in taking some measures that
have enhanced the banking system's resilience.
As a result, despite the slower credit growth rate and lower credit quality, the banking sector
continues to generate profit and remains well capitalized and liquid. In March, capital
adequacy ratio stood at 15.9%, while liquid assets accounted for almost one-third of total
sector's assets. The banking sector has expanded its activity driven mainly by the
performance of public deposits, which continue to grow at buoyant rates.
We are, however, aware of the risks exposed during this period characterized by numerous
unstable developments in global and regional economy. Therefore, our supervision has
placed great emphasis on identifying the various risks to banking activity, improving the
banking sector's ability to manage these risks and strengthening the legal and operational
framework to address them in case of their materialization.
In the wake of the global economic crisis, many countries are redesigning their economic
development agendas and models. Throughout many years, the Bank of Albania has
initiated, encouraged and supported this discussion by engaging in an open communication
with the public authorities, business community and academic circles.
Our opinion is that economic development policies should contribute to setting a better
balance between the development priorities of the sectors of the economy, by supporting
agriculture and production. One of our immediate objectives is enhancing the economic
capacities that improve the competitiveness of our products and benefit more from foreign
demand. To this purpose, the development and further perfection of financial infrastructure,
as well as the qualitative improvement of technology, are, among others, a priority. We must
ensure a well-educated labour force, able to adapt to the international labour market, in
addition to the local one. Therefore, the education-related policies on the younger generation
must, above all, ensure the quality of education and incorporate programmes that assign
greater importance to its practical orientation.
The Bank of Albania is now very seriously committed to its public financial literacy
programme. In this context, we have designed and implemented a series of projects and
cooperation initiatives, covering different age groups and geographical areas across the
country.
It is clear that these objectives cannot be accomplished by the simple wave of a magic wand.
They are even hard to be accomplished in due time and with the capacities of a single
economy. Albania is indeed a small economy but thanks to continuous reforms, it has turned
into an attractive country to foreign investors. Our vision has been and remains open to any
regional initiatives. We are able to become part of joint regional projects, thus providing
evidence for the great absorptive capacity for big investments and serious investors.
Therefore, the formulation of policies for attracting foreign investment, coupled with the
constant improvement of the business climate and relevant legal framework, should be
continuous part of the country's economic development strategy.
Dear guests,
Despite being a small country, Albania represents a vibrant economy with vital people who
are able to undertake wide-ranging business intitiatives.
Moreover, our country shares a considerable part of its official borders with
Albanianinhabited areas, hence providing a different quantitative and geographical dimension to
various potential business initiatives. I believe that Albania is one of the countries currently
being listed among the distinguished European countries, enjoying stable macroeconomic
and financial stability, and economic growth.
We have ample natural resources, fantastic diversity of climate, cultures, social,
ethnographic and geographical features, qualified labour force, admirable flexibility of private
entrepreneurship and an improved legal framework. For these reasons, I avail myself of this
opportunity to invite you to increase your interest in Albania and make it part of your
investment or partnership projects. I am strongly confident that this will not only contribute to
Albania's and the Albanian people prosperity in the future, but it will also represent a safe
investment alternative.
Thank you for your attention and I wish you all great success!