with the central bank. also, in the presence of the exchange rate depreciation, such policy has brought about easing monetary conditions, serving the promotion of the economic activity. however, the pass - through of easing monitoring policy on interest rates of banking products has been limited, due to liquidity constraints of the banking system and weakened demand of the public sector for funds. on the other hand, the banking system itself has been reserved with regards to lending, as a result of the increased risk in the economy and performance of loan portfolio quality. the alleviation of these problems would help to more fully transmit the monetary policy and enhance its effectiveness. the country ’ s external position continues to be characterized by a high and upward current account deficit. during the first three quarters of the year, the deficit was fully covered by capital and financial account inflows, resulting in increased foreign exchange reserves of the bank of albania. however, the inflows have been significantly favoured by privatization receipts and by public sector borrowing. both these items are limited in time and size, making necessary a steadier correction of the external position of our economy. this correction should aim at covering the trade deficit with stable funding resources, in the form of foreign direct investments and promoting export industries in branches that may constitute a competitive advantage for albania. however, short - term developments in foreign trade for october to november show a somewhat different performance compared with the first nine months of the year, testifying a modification of the trends observed earlier. thus, the country ’ s exports fell in annual average terms by about 7. 4 percent, recording a slowdown in comparison with the average decline by about 19 percent during the first nine months of the year. on the other hand, imports recorded an annual average decline of 17 % per cent over these two months, compared with the average annual decline of 7 percent recorded in 2009. these developments contain encouraging signs for sustainability of the balance of payments in the short run fiscal policy had an expansionary nature during most of the year, being materialized in a budget deficit of 6 percent of gdp. the increase of budget deficit reflects both the action of automatic stabilizer in the form of decreased revenues, and the intended countercyclical character of fiscal policy, through increased wages and capital expenditures. the country ’ s economic activity slowdown has dictated a slow pace in budget revenue growth, especially after the first quarter of the year. in late november, the annual growth of budget revenues was only 2 percent, almost

progress with regard to strengthening other economic and financial equilibriums. safety nets in the financial system have been strengthened. the institutional framework that shapes the coordination, design and implementation of measures for safeguarding financial stability has been improved. the legal framework that disciplines contract enforcement has been improved. credit risk has been lowered and non - performing loans have been reduced, although their level remains high. after peaking in 2015, albania ’ s public debt appears to be set on a downward trend. also, our external position remains stable and current account deficits have been financed by high levels of foreign direct investments. turning to the latest developments, the bank of albania deems that the recent economic 1 / 2 bis central bankers'speeches and financial indicators have been in line with our projections. this performance reconfirms our scenario of expectations for the outlook. the bank of albania expects economic activity to improve in the medium - term horizon. this improvement will enable the return of the economy to equilibrium, the further improvement of indicators in the labour market, and the return of inflation to target. the outlook remains positive, but its guaranteeing requires prudent economic policies and further structural reforms. such policies and reforms should be, in essence, a continuation of the philosophy that has guided the initiatives and steps we have undertaken in the recent years. to sum up, the bank of albania judges that : the actual economic policy combination, based on an accommodative monetary policy and fiscal policy stance set on public debt reduction, should be maintained. the monetary policy should maintain the accommodative stance in the medium - term horizon, whereas the intensity of the monetary stimulus should adapt to the needs of the country ’ s development. the business climate at home should be further improved. the bank of albania considers that the attraction of foreign investments as well as the support and stimulation of domestic investments should be at the focus of decision makers. structural reforms should be accelerated and albania ’ s competitive advantages should be enhanced further. in conclusion, i would like to once again thank the imf mission for the useful and constructive discussions. 2 / 2 bis central bankers'speeches