overall economic climate, impacting on the improvement of the global economic activity, reduction of risk premiums and stability of global financial markets. however, the global economy and the european one continue to reflect economic vulnerabilities, which are transmitted to low inflationary pressures. this situation conditions also the pursuit of a stimulating monetary and fiscal policy by keeping interest rates at the historical low and by high liquidity injections. back to the domestic economy, we should state that the new economic data were insufficient during october. performance of inflation and of monetary and fiscal indicators, external trade data and consumer and business indices confirm that the albanian economy continues to record positive growth rates. this growth is sustained by maintaining steady levels of the consumer demand and fiscal stimulus given during 2009. however, available data from the economy speak for an economic activity slowdown during the current year. foreign demand for albanian products has decreased, being illustrated by export slowdown along this period, while investments have declined. the steady trend of core inflation and low non - traded inflation rate also indicate the presence of low aggregate demand - induced inflationary pressures in the country ’ s economy during january – october 2009. this performance has contributed to absorption of shocks generated from traded inflation, due to weakening of national currency ’ s position in the domestic foreign - exchange market. inflation during 2009 has fluctuated around the lower limit of the bank of albania ’ s target. headline inflation in october was 2. 3 percent, recording a slight rise in comparison to september, but resting below the record of the previous year. average annual inflation recorded 2. 1 percent, resting at the same level with that of september. parallel to demand factors, inflation performance is influenced even from the development of several supply factors, such as slight downward trend in the labour cost per unit, reduced import and producer prices, statistical effect of administered prices, thus creating an overall environment with reduced inflationary pressures. fiscal policy during the third quarter of 2009 has revealed signs of mitigating its expansionary nature. revenues have recorded a slight rise related to the previous months, while there is noticed a reduction in realised expenditure pace. in annual terms, during the first nine months of the year the budget revenues have recorded a growth of 6 percent, whereas the budget spending has increased by 22 percent. the budget deficit remains at comparably high historical levels, but within the budget limits reviewed lately. to a great extent, this deficit reflects the high level of public capital expenditures during 2009. public expenditures and fiscal policy

ardian fullani : economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the decision of the supervisory council of the bank of albania, tirana, 25 november 2009. * * * in its meeting of november 25, 2009, the supervisory council of the bank of albania analysed “ the monetary policy report for november 2009 ”. after becoming acquainted with the latest economic and financial developments at home, and following the discussions related to their expected performance in the future, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 5. 25 percent. the supervisory council assessed that this interest rate is in line with bank of albania ’ s goal to keep inflation close to the target over the medium run. * * * economic and monetary developments over the latest months are featured by low inflationary pressures. annual consumer - price inflation for october recorded 2. 3 percent, being almost in line with its performance over the last quarter. the steady and low inflation rate has been conditioned by moderate pressures from domestic economy, due to : • economic activity slowdown during this period ; • low exchange rate pass - through of exchange rate depreciation on lek prices of import goods ; and • stabilized inflationary expectations. easing of monetary conditions by the bank of albania, through key interest rate cut in october and continuation of liquidity injecting operations have provided appropriate impulses for promoting the economic activity in the future. these impulses, as always, are administered under the conditions of an expected inflation performance close to the threepercent target of the bank of albania, and stabilized expectations of economic agents for it. the key interest rate cut by 0. 5 percentage point by the bank of albania at end - october aimed at strengthening the domestic demand and reviving the lending activity. its effect on the economy is not fully reflected yet, due to the short period of time and the time lags in transmitting the monetary policy. however, its pass - through to the money market, which constitutes the first link in the transmission chain, is a premise for its reflection to credit cost in a second round. in the meantime, our liquidity injecting operations have been successful in guaranteeing the backup of economy with funds, mainly short - term ones. allow me to make a more detailed description of the economic and monetary developments during this period. * * * at global level, the economic activity has been supported by improved