ardian fullani : albania – sustaining macroeconomic stability in a challenging external environment speech by mr ardian fullani, governor of the bank of albania, at the seminar “ albania – sustaining macroeconomic stability in a challenging external environment ”, tirana, 4 march 2010. * * * dear mr bell, dear minister, dear participants, it is a great pleasure for me to welcome you to this seminar and to attend its proceeding. this seminar and its topics are very coherent and dwell upon very important issues for the economic development of albania and of all emerging economies. they explicate the topics that the economic authorities are faced with, as a consequence of macro and microeconomic side effects of the global financial crisis of the financial markets and the real economy. generally, the policies undertaken by authorities in the light of the country - specific conditions proved to be successful. fiscal expansion and easing of monetary conditions according to respective needs turned out to be successful in avoiding the turning of the crisis into depression, like that of 1930. in albania ’ s case, these stimuli helped preventing the economic events that characterize the financial crisis and mitigated the adverse effects that the global economy gave on the albanian economy. though the crisis effects continue to exert their influence on the world - wide economy, it ’ s time to reassess the situation and the economic policies. generally, the current period in the world economy coincides with the correction stage, which is reflected in a lower economic growth and new balances in production, trade, services, financial intermediation, exchange rate and household budgets. in itself, these new balances do not represent a new stage or evolution of the crisis. they represent a sustainable equilibrium under new circumstances. distortions in financial markets and lack of rationality in consumer behaviour are assessed as the main triggers of the crisis, because their level during the bubble blowing were not in line with the long - term sustainable equilibrium of the economy. consequently, the idea to continue the economic stimuli, to speed up production, consumption and financial intermediation at the same rates and with the same instruments would be similar to the financial markets stimuli during the pre - crisis period. in other words, pursuing the same policies under current conditions and the new equilibrium would cause major economic and financial imbalances over the medium run, which would damage the economy rather than helping it. precisely from this viewpoint, it is important that we now start to think about and cooperate for finding and implementing policies that would guarantee macroeconomic

the sound parts from the problematic ones. if the current restructuring strategies lack the potential for improving the sick part, then perhaps it is the due time to pass to a new strategy that treats both parts of the business as separate from each other. this would enable an optimal solution in each specific case versus a unified refinancing strategy that was implemented so far. clearing the lending activity would bring about shifting of the new credit from inefficient refinancing to new development possibilities and economic growth, where the savings - investment balance is in equilibrium. this issue relates not only to the performance of the banking system and the financial stability of the country, but also to the ability of the economy to grow in the future. as i have also mentioned in other events, both the macro and micro factors that encouraged rapid economic growth in the recent years, are no longer present in the global and national economy. the new equilibriums we are living with show that the rapid consumption - driven growth models and credit - based growth models will no longer be present in out economy. this is true owing to supply and demand factors, since the rapid consumption - and creditdriven growth has aggravated the savings – investments balance sheets of agents in the economy. consequently, there should be found a new long - term economic growth model, capable of absorbing the financial resources, particularly the foreign ones, and generating an economic growth. the first step in this regard is the identification of the competitive advantages that the albanian economy generates and the acceleration of structural reforms in the albanian economy in the light of these priorities. it is a pleasure that our timely discussion topics and activities are in line with the agenda of this activity. thus the imf provides a valuable contribution to our economy through discussion of these topics. furthermore, through this activity, the imf enhances the transparency throughout the albanian economy regarding the economic development vulnerabilities from the imf viewpoint, thus participating in the country ’ s economic debate. i would like to emphasize the latter, because i find it particularly important with regard to the difference between scientific contribution and that of political economy. the imf comes to albania as a participant in this debate with four scientific papers, whose results are based on available and reliable statistics, identified economic models and conclusions based on wellgrounded assumptions and analyses. each of these elements is clearly explained in the working papers that will be discussed today. these elements altogether make the work replicable ( controllable ), open for discussion, and