First, the sustainable and long-term development of Albania’s economy requires further  improvement of our financial system. Further development of the financial system will contribute to increasing savings, facilitate financing of the private and public sectors and improve the structure of financing with capital and of financing with borrowed funds. Among other things, further development of financial systems will become increasingly indispensable in the context of the European financial market, which is showing lower focus and higher risk premia for financing emerging economies than in the past. In this regard, the Bank of Albania and public authorities should continue working to improve the credit environment, among other things, by strengthening contract enforcement, implementing new legal and sublegal procedures related to collateral execution, and completion of the remaining duties under the national programme for the reduction of non-performing loans. The signing of a Memorandum of Cooperation in the field of banking supervision, between the European Central Bank and the Bank of Albania, will facilitate the exchange of information and enhance the security of European banking groups that operate in Albania. Likewise, the completion of the restructuring and consolidation process of the banking sector, which has had and will continue to have our attention, is an additional guarantee in this regard. In parallel, the development of other segments of the capital markets should be further encouraged, yet with prudence, so as to avoid missteps, and in harmony with supervisory and regulatory norms and standards for the banking sector. Second, the structural reform agenda should be accelerated.

These projections are conditioned by a series of factors. First, they assume that the external economic and financial setting will remain favourable to support Albania’s economic growth. Second, they do not envisage potential shocks, which, if materialised, would cause our economy or inflation to diverge from the expected trajectory. Third, the projection for the return of inflation to target assumes that the exchange rate will be more stable in the periods ahead. Based on the above, we judge that the balance of risks remains skewed to the down side. In accordance with these projections, the Bank of Albania deems that the current policy mix is adequate. The fiscal policy is and should remain committed to lowering the debt level and diminishing fiscal vulnerabilities. On the other hand, the monetary policy should maintain the accommodative stance. The convergence of inflation toward the target implies that the intensity of the monetary stimulus will be diminishing over the medium-term; yet, it does not imply a change in the nature of the monetary policy. Lastly, our philosophy as well as the supervisory and regulatory measures will continue to balance the needs for promoting development vis-à-vis guaranteeing the stability of the banking sector and safeguarding the savings of Albanian citizens. But, our duties as policy makers go further than this. With a view to accelerating the pace of development and enhancing its sustainability, the structural reform agenda needs to continue. Let me now list some priority aspects.