In this regard, the Budget for 2010 provides several incentives that are conducive to a stronger productivity performance, particularly concerning SMEs and research and development. Beyond capital deepening, improved prospects for productivity growth also require a heightened awareness that inefficient work practices, including over manning, slow down output growth and threaten the sustainability of employment and income levels. The concept of value for money that is increasingly determining consumer behaviour should be given equal importance in the workplace. There also exists potential for creating a more congenial business climate to reinforce Malta Enterprise’s investment promotion strategy. In a recent survey of corporations, a reduction in bureaucracy topped the list of measures that were considered necessary to further enhance Malta’s attractiveness as a location for foreign direct investment. 3 Education policies, too, can play a role by strengthening the country’s human capital, particularly by promoting greater synergies between educational institutions and industry. In assessing the role of productivity, it is well to reflect on the words of the Nobel laureate Paul Krugman, who said “productivity is not everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker”. 4 … and sound public finances The third policy priority is to achieve sustainable public finances. The process of fiscal consolidation must resume in earnest once the recovery materialises.

Ardian Fullani: Brief overview of key topics and the appropriate macroeconomic policy response Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the joint press conference of the International Monetary Fund (IMF) mission with the Ministry of Finance and the Bank of Albania, Tirana, 3 November 2010. *  *  *  Dear Mr. Minister, Dear Mr. Bell, Dear media representatives, It is a pleasure for me to appear before you today following a week of intensive and fruitful discussions to present the Bank of Albania’s position. Allow me first to underline that the meetings held broadly confirmed the conclusions provided in our last monetary policy report and the Bank of Albania’s outlook regarding its future performance. In what follows I will provide a brief overview of our opinions, dwelling upon the key topics of discussion: current and expected economic developments; risks and related concerns, and; the appropriate macroeconomic policy response. The Albanian economy had a positive performance in the first nine months of 2010, expressed in positive growth rates and improved key parameters of macroeconomic stability. In turn, the recovery has been reflected in contained and downward inflation rates, improved current account deficit, lower budget deficit and relative sustainability of public debt figures. These developments contributed to fully restoring confidence in the banking system, lowering the interest rates and the risk premiums, enhancing the exchange rate sustainability and improving the liquidity and financial sector’s balance sheet indicators.