Ardian Fullani: Albania - optimistic, flexible and adaptive to challenges
Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Opening of "Klik Ekspo
Group" Fair, Tirana, 25 November 2008.
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Honourable Prime Minister,
Honourable Ministers,
Honourable Ambassadors,
Dear Mr. Uldedaj!
Dear entrepreneurs!
Dear ladies and gentlemen!
I feel privileged to be here with you tonight and at the same time, be a friend to the Albanian
entrepreneurship.
The times we are living through require the special attention of economic and financial
forums, in particular when the latter bring together the governmental bodies, the banking
system and the private entrepreneurship. The global table of discussions on macro-finance
and future policies is the present focus; hence, I consider this forum as a follow-up of this
prevailing philosophy of the time we are living in.
Set in a comprehensive context, the economic developments in the recent months have
been characterized by the vague situation the monetary and financial markets and
institutions have been going through - which in the last couple of weeks has been followed
by other developments. The most recent data show that the economies of developed
countries - the USA, Euro area, England and Japan - have recorded decline in economic
growth.
However, most emerging economies have shown higher immunity to the consequences of
the global crisis. Economic activity has been buttressed by domestic factors, which is
the main reason to justify the immunity in addition to the incomplete financial integration with
the developed countries.
Although Albania has been "a net importer" of global developments, its economy has
shown high level of resistance and absorption. In the third quarter the present year, the
Albanian economy continued to maintain its previous course. The available data on the first
nine-month period show that the economic growth has been in line with the projections.
Macroeconomic balances remain stable and the banking system continues to be sound.
Economic growth at home has maintained its upward tendency. Services and trade sector in
particular have provided the main contribution to the economic growth.
CPI inflation continued to fall in October to 2.7 percent. Developments in core inflation
indicate that the macroeconomic balances at home and the monetary conditions have been
adequate to ensure an inflation rate close to the Bank of Albania target. The achieved
stability has been also prompted by the inflationary expectations of economic agents which
have been anchored at around 3 percent. These developments attest to the fact that the
central bank's measures have been effective in terms of containing the inflationary
pressures. The fiscal policy pursued during the entire year 2008 has observed the targets set
in the Medium-term Budget Programme for 2008-2010; consequently, it has not yielded any
repressions in economy and performance of prices.
The Albanian banking system continues to operate under optimal parameters, in line with the
standards of prudent banking supervision. The latest data indicate that the domino effect
induced by the developments in the international financial market has been handled with
satisfactorily. In addition, the Bank of Albania has supplied and continues to supply the
interbank market with the required amount of liquidity.
As I have mentioned in my previous statements: There's no such thing as a free lunch!
Meaning that emphasis should be put on the far-sighted perspective characterizing the Bank
of Albania in the recent years. I do not refer here only to price stability, but also to the
greatest challenge: banking system stability. The Supervisory Council of the Bank of
Albania has constantly amended the regulatory basis creating incentives for more qualitative
lending, while other decisions have aimed at providing more banking system transparency to
the public, more efficient internal control and better management and governing structures.
Regardless of what has been stated above, the future is of prime importance. For many
reasons that I have also mentioned in my previous statements, end-year 2008 and almost
the entire year 2009 will in a global context be hard, full of challenges and we will be walking
through unknown paths. Overcoming this economic crisis requires time. Its solution will
materialize through the resetting of a number of internal and external economic balances, the
re-arrangement of many supervisory institutions and the re-design of the regulatory
framework on many financial market segments.
Put in this general setting,
the idea that our small economy would resist this global
economic tsunami with no consequences at all sounds as unrealistic. However, this
issue is even more intricate. Detecting the risks we may plausibly be faced with is not
enough. I think our top priority is the design and implementation of preventive and remedial
measures, which would reduce the materialization level of these risks. When I say "our", I
mean the state with its entirety of institutions and mechanisms.
Our main challenge - involving the central bank, the banking system, the government, other
decision-making and executive authorities, business community and the public in general -
is to maintain the aggregate demand, the production potentials and the financial
resources in economy at unchanged levels. These are our top national priorities.
Put differently: keep the real economy going; make sure economic growth does not shrink;
ensure your business maintains the same rates and that employment grows instead of
reducing. This, dear participants, is may otherwise be referred to as ensuring the
stability of the country's economic growth. On behalf of the institution I represent, I would
like to assure you that the Bank of Albania - being one of the main economic and financial
decision-making authorities at home - remains entirely committed in this context.
The times we are going through require all the development strategies, economic policies,
measures and rules to undergo a strict cost/benefit analysis. In this context, although the
crisis is not outlined yet, we have already drawn the first lessons from it. Public and private
authorities need to consider these lectures as future opportunities. Mistakes can teach us
how to better serve the future.
We should have an optimistic view of the future and at the
same time make sure our stance is realistic and consistent.
Time is ripe for Albania to start producing more goods and services than before.
Despite the admirable progress in this context, the gap is still wide. Agriculture and industry
remain two important branches of the economy operating far from their potential.
Additionally, other sectors that have revitalized during the transition years require more
orientation and tuning. These measures will enable better diversification of the Albanian
economy, augmenting its stability with the passing of time. Other challenges I believe relate
to the country's external position, implying the reduction of current account deficit and the
provision of alternative resources of foreign currency inflows.
Therefore, I think that the role of the state needs to be more pronounced, not only in terms of
completing the legal and regulatory basis but also of concluding a number of important
structural reforms, in particular those related to the land, ownership titles, pensions, to the
support of the small and medium-size business, to the further improvement of business
environment and the ongoing upgrade of national infrastructure. The further strengthening
of safety nets, in the context of a stable fiscal and financial position, is an obligation whose
accomplishment would reduce both the real and perceived risk of the Albanian economy,
hence Time is
creating incentives for the growth of domestic and foreign investments.
ripe for the state budget to involve the participation of private entrepreneurs in strategic
investment projects through joint financing programmes.
The banking system plays a vital role. Banking loan has played a key role in Albania's
economic development. It has been a source of profit in your business and it has to remain
so in the future as well. In my recent communications with my counterparts and in the various
meetings with senior officials of foreign banks' main headquarters I have truthfully presented
our country's economic situation and I have required from them to keep their interest in the
Albanian economy unchanged.
I avail myself of this opportunity to address to the Albanian entrepreneurship. You have to
keep being active and focused on formulating and implementing your future business plans.
This would be the only way for you to remain well-capitalized, lucrative and credible to the
banking system. In the current economic conditions, private entrepreneurship should be a
supporter and promoter in the formulation of domestic strategies at home, in the region and
broader, and in their implementation process. All conditions are in place for the Albanian
business to go beyond the official regional borders, hence, becoming a factor in ensuring a
stable regional activity. This also means a real integration into the targeted standards.
Concluding, I would like to highlight that the small countries like Albania, should be optimistic,
flexible and adaptive to challenges. Only in this way, they may find themselves able to sail
into the international waters.
Thank you.