A sustainable financial system, oriented to new long-term horizons and prudential to risks, serves to channel savings into the most competitive sectors of the economy. *  *  *  In the following, I would like to address the above-listed topics in more details, focusing on key points of the Bank of Albania’s work. 1. Economic and financial developments in 2010  According to INSTAT data, the Albanian economy is estimated to have grown by 3.9 % this year. Compared to 2009, economic growth is more balanced in terms of sectorial distribution and demand components. During 2010, the Albanian economy was characterised by gradual improvement of the aggregate demand and further consolidation of the macroeconomic stability. Economic development was followed by price stability, while the public debt and current account deficit narrowed. Economic growth relied mainly on foreign demand and increased Albanian exports, while domestic demand was sluggish. The latter decelerated due to public finances consolidation and budget deficit reduction in 2010, while consumer spending and private investments were affected by insecurity about the future and presence of spare capacities. Fiscal policy was oriented towards fiscal consolidation in 2010, following the stimulating nature in 2009. Fiscal consolidation accelerated especially in 2010 H2, following the approval of the revised budget. This consolidation was present on both, income and expenditure sides. Budget revenues increased by 8.4% y-o-y, reflecting the economic growth, expansion of taxpayers’ base, and privatisation receipts. On the other hand, budget expenditures decreased by 4.5%, attributable to reduction of government capital expenditures.

A detailed analysis on them can be found in our Annual Report *  *  *  Dear Madam Speaker, Dear Members of Parliament, Turning back to our analysis on economic and financial developments in the country, during and after the crisis, I would like to highlight a structural weakness of the Albanian economy  BIS central bankers’ speeches  5  that has accompanied it throughout the transition: high current account deficit and still low degree of our economy’s competitiveness in global markets. Today we live in a global world, with integrated capital, product and labour markets. As a developing country, Albania is facing (and will continue to face) a rising competition, not only in the region but also beyond it. In our opinion, the long-term sustained development of the country and reduction of our structural weaknesses, imply necessarily increase of competitiveness of the Albanian economy. Ongoing structural reforms should be driven by ambitious goals and a realistic time horizon. Structural reforms should aim at creating a more attractive climate for foreign and domestic investments, encouraging employment and further growth of welfare, providing:   A sustainable macroeconomic environment;    An efficient and reliable financial system;    A legal, complete and transparent functional framework;    A modern infrastructure;    A qualified and competitive workforce in terms of cost; and    A clear perspective for a faster integration into the European Union, which will open the way to convergence funds.