gent sejko : albania's participation process in the single euro payments area address by mr gent sejko, governor of the bank of albania, at the hearing of the european affairs committee of the albanian parliament on the preparation of albanian institutions regarding albania's participation process in the single euro payments area ( sepa ), tirana, 17 july 2024. * * * honourable chair, honourable members of the committee, first of all, thank you for the invitation and the opportunity to share with you the work we have dedicated to the first step towards the economic integration in the european union. this step regards to the official submission of albania's application to the european payments council, for participating in the single euro payments area, also known as sepa. the application was sent in june, as scheduled in the action plan. given the multi - dimensional importance of sepa, i extend my gratitude for the attention expressed by this committee in the process of albania's membership into sepa. its successful finalisation will benefit from the support of all the public institutions involved in the integration processes. before delving into more details regarding the application process, allow me to briefly summarise its history and context. the work for albania's participation in sepa has started in 2021, when the bank of albania became part of the regional project " payments modernization in the western balkans ". this project originates from the agreements achieved under berlin process and aims at developing financial and economic relationships among western balkan countries, while simultaneously integrating the region into the european union. in november 2023, the european commission, to encouraging the efforts made by the countries to expand their economic integration with the european market, included the accelerated participation in sepa in their priority agenda of regional enlargement. previous assessments of the world bank experts showed that albania was noticeably prepared to start the application, since it fulfilled almost all the criteria. in particular, it was assessed that albania had made a significant progress regarding the alignment of its payment legislation with that of the european union. the commitment to start the application for membership in sepa was re - highlighted in the ministerial as well : " the western balkans toward the single euro payments area ( sepa ) ", which was held on 28 february of current year, where albania expressed its dedication to submit the application by june. the bank of albania has led and coordinated the work for submitting the application. however, to accomplish this task, the contribution and cooperation of other public institutions,

parallel, the key economic and financial indicators : public debt, external debt, 1 / 3 bis - central bankers'speeches and the non - performing loans ratio, have improved considerably. in particular, inflation is three times lower than in 2022, down to 2. 2 %, while indicators of the banking sector soundness stand at positive levels. all of these factors, have enabled – among other things – the improvement of albania's credit risk rating by international institutions. the enhanced interest of foreign investors for albania has been another positive development as well. our country has welcomed an ever increasing number of visitors in recent years, ranking third in the world for the fastest growth in tourism in 2023. likewise, foreign direct investments have picked up progressively from year to year, confirming albania's attractiveness as a compelling destination for investments. the bank of albania has actively contributed to this progress by addressing elevated inflation in a timely manner and carefully supervising the banking sector. in addition, investments for developing the payment system, innovation, and the digitalization of financial services have played a key role in strengthening economic stability and the development of the financial sector. we believe that albania's outlook remain positive. however, global trends trigger a complex environment, which poses challenges and opportunities for the future. next, i will briefly address some of them : first, one of the biggest challenges for the albanian economy is improving productivity and achieving a competition level comparable to that of european advanced countries. despite the improvements achieved so far, albania still has to work for reaching an economic structure oriented toward high - value - added sectors. second, the ageing population and the elevating shortages of the labour force is a complex challenge with consequences on the albanian economy as well as on the european and global economies. this process affects both the labour market and the long - term prospects for economic growth and the sustainability of the pension system and public debt. third, another challenge is the impact of climate change on vital sectors such as agriculture and tourism, which are sensitive to it. these two sectors, in addition to directly affecting the economic activity and employment, represent also a great potential for the development of the albanian economy in the future. an integrated approach coupled with a strategic vision is needed to addressing these challenges. in this context, i believe it is important to undertake certain steps : first, investments in the modernization of physical and digital infrastructure, the development of scientific research, the updating of managerial philosophy and practices, and the improvement of business climate in