Ardian Fullani: Recent economic and financial developments in Albania
Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the joint press conference
with the International Monetary Fund (IMF) Mission and the Ministry of Finance, Tirana,
14 July 2010.
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Honourable participants and representatives of print and visual media,
The visit of the International Monetary Fund Mission is characterised by fruitful and intensive
discussions. They were focused on the recent developments at home, their perspective in
the near and far future and the role of structural and macroeconomic policies to encouraging
and ensuring the sustainable development of the country.
At the end of these discussions, we conclude that we share a common opinion as regards to
the role and importance of prudent policies, which should have at their hart the maintenance
of the basic economic balances, as an essential prerequisite for the stable and long-term
growth.
Likely positive is the fact that the principal decision-taking institutions remain committed to
perform concrete steps in due time to ensure this development.
The Bank of Albania has already adopted this position and transparency, as a guidance of its
decision-taking process in both the monetary policy and banking supervision fields. The
respective explanation has composed the essence of our communication with the other
players of the economy and with the public at large.
Allow me to deal in more details the issues discussed during these days, by summarising the
opinion of the Bank of Albania in this regard.
The economic developments of the last months carry encouraging signals, but also they
show some weakness of the Albanian economy and the compromises that policy-makers
should realise and accept to accomplish their targets.
The Albanian economy, during the first half of 2010, has performed in line with our
projections, being characterised by a positive, but slow growth of the economic activity.
This growth is considerably grounded on the quick increase in exports, by denoting the
improvement of the world economy, the more competitive position of the exchange rate, also
the efforts of businesses and industries which carry out their activity in this sector to find new
markets and the use of their competitive advantages.
On the other hand, the domestic demand slowed down, mainly reflecting the still high
uncertainty and the difficulties in the financing of the economic activity. As regards to the
basic balances of the economy, this period is followed by controlled downward inflationary
pressures, as well as correcting trends in the external position of the country.
The economy financial health is improved, the confidence on banking system is recovered
and the risk premiums have been declining.
Economic developments during the first half of year have imposed the need to discus the
review of fiscal policies and projections for the rest of year. The realisation of public revenues
and the need to preserve the fiscal stability and public confidence imposed the
indispensability to take precautions which guarantee the control of both budget deficit and
public debt.
The Bank of Albania, always requesting the accomplishment of these measures, considerers
the envisaged fiscal precautions in the reviewed budget as the right step in this direction.
The accomplished real management of the fiscal situation and the adoption of a prudence
philosophy regarding the implementation of budget for year 2010 are considered as the
needed steps for the long-term fiscal sustainability and for the strengthening of
macroeconomic balances.
Among others, a lower pressure of public sector on the domestic monetary markets
establishes more adequate conditions for the lending to private sector, through the reduction
of risk premiums and the control over long-term interest rates.
Bank of Albania remains ready to further support these developments by other steps of the
monetary policy, which shall aim the transmission of a careful monetary stimulus to the
economy. At the same time, we shall make the right efforts in order the banking system
transmits timely and successfully this incentive, thus augmenting the lending of private
sector.
Finally, allow me to emphasise that the current situation and the next developments of the
country are expected to remain at positive lines, but they also impose the needed attention to
avoid the possible risks that may hit the economic stability, also threat the potentiality of the
long-term growth.
In particular, the Albanian external position shall remain at the focus of our attention. In the
short-term it will measure and conditions the economic incentives, which might be
successfully absorbed from the Albanian economy. In the long-term, we repeat our call that
the encouragement of foreign direct investments or of the other forms of long-term capital
inflows is the right way for the long-term development of the country. Altogether with the
domestic structural reforms, public authorities should pay an increasing attention on this
target, to release the development potentiality of the Albanian economy.