However, the lek loan price has not fully reflected our monetary policy, indicating the presence of high risk premia and containing the monetary stimulus transmission to the economy. These risk premia are also reflected in other lending terms, unrelated to the loan price, and appear tighter as compared to their historical performance. *** Under the Bank of Albania's baseline scenario, the economy will improve slightly during the current year. Increase in exports and a better performance of consumption and investments will continue to support the aggregate demand. The monetary policy will support the domestic demand, by maintaining macroeconomic stability and ongoing injection of monetary stimulus in the economy. Also, payment of arrears will help improve the balance sheets of firms and the private sector, and is expected to improve business borrowing. Excluding the payment of arrears, the 2014 budget has projected a fiscal adjustment needed against the backdrop of a rapidly increased public debt. Reflecting the weak economic and monetary dynamics in the country, inflationary pressures are expected to be weak. After four quarters, inflation is expected to vary 0.7%–3.8%, with a 90% probability of occurrence. This will require maintaining a stimulating monetary policy even in the medium term. *** At the end of discussions, the Supervisory Council decided to keep the key interest rate unchanged, at 3.0%. Given the expected inflation developments, the Supervisory Council deems that the monetary policy will remain stimulating in the medium term.

While we welcome the measures announced at the Eurozone summit in July, further resolute measures to strengthen the banking sector, credibly restore debt sustainability in the Eurozone periphery, and lift long-term growth potential through structural reform are necessary to restore market confidence in the short term and contribute to global growth and stability in the long term. The Fund should be pro-active in proposing solutions and mediating their adoption. We believe that progress in structural reforms will be key to restoring growth in the mediumand long-term. Although each crisis is different, our efforts during the Asian crisis that brought about a relatively fast recovery may provide a useful lesson for countries facing current difficulties. From our experience, the determination to undertake and stick with structural reforms, particularly in the financial sector, was a crucial factor that led to an improvement in confidence, competitiveness and growth. The fund’s response i) Global Financial Safety Nets (GFSN) With substantial downside risks to growth in the global economy and heightened volatility in financial markets, the Fund should assess the adequacy of its resources against expected financing needs. At a minimum, there should be no reduction in Fund resources during this time. In this regard, countries in our constituency which are participants of the New Arrangements to Borrow fully support the extension of the activation period to March 2012. We also regard as particularly relevant the Fund’s work to develop a more coherent response to systemic events, including short-term liquidity provision to crisis bystanders.