Unlike the experience of many other countries, loan portfolio of the economy increased over the past year; banking supervision framework was improved and financial stability was further strengthened. Although non-performing loans increased, the Albanian banking system, responding to strengthened prudential regulations of the Bank of Albania and our initiatives to enhance the transparency of its balance, remains solid, with adequate capital and liquidity to support the economic development. *** I will proceed with a more detailed analysis of the foregoing issues, focusing on Bank of Albania’s main directions. ***  1. Economic and financial highlights for 2011  GDP expanded by 3.1% in 2011. Likewise in 2010, external demand was the main driver to economic growth, though its impact pursued a moderating trend due to the slowdown in partner countries’ economies. On the other hand, domestic demand remained relatively sluggish. Consumption and private investments remained under the impact of consumers and private businesses. These significant aggregate demand components did not reveal any strong signs of recovery over the past year, despite the improving financial conditions. The sluggish consumer spending reflected the continuation of consumers’ high propensity to save and the heightened uncertainty surrounding the future. On the other hand, the presence of spare production capacities and tight lending conditions gave rise to a slow performance of private investments. Judging from the distribution of  2  BIS central bankers’ speeches  credit flows, these investments were mainly allocated to industry and services sectors, which benefited the most from the external demand performance.

There must also be a concerted effort by project developers to make project delivery more cost-efficient, productive and financially viable to mitigate risks for investors While considerable attention has been focused on increasing the supply of infrastructure financing, we also need to think about how we can “get more for less” by optimising the project delivery value chain. Improving project implementation processes McKinsey has estimated that productivity of the infrastructure value chain could be increased to achieve 40% savings, if project sponsors globally adopt proven best practices. This would translate to an average of $ per annum in infrastructure cost savings over the next 18 years. Such best practices may include having processes in place to select projects that best address infrastructure needs, finding innovative ways to structure and execute these projects, as well as maximising the use of existing capacity. This is not just a regulatory or public sector issue. On the part of project developers, greater attention has to be paid to productivity improvement across the entire value chain. Put simply, project developers must find ways to deliver projects on time and on budget, boost asset utilisation and undertake proper maintenance. If investors have confidence that there is “less leakage” from cost overruns, this will help to reduce financial buffers and in turn the required hurdle rate. There are various ways in which sponsors can enhance their delivery of projects. They could invest in project design at an early stage to avoid costly subsequent changes.