ability to withstand unprecedented shocks, without engendering a steep increase in taxes or massive spending cuts. in this light, both the tax framework and the spending structure of the budget and their rate of realisation throughout the year, are of primary importance. as regards the tax framework, the bank of albania has continuously emphasized that it needs to increase its sustainability and predictability. in parallel, designing a simple and standardized tax framework, as well as eliminating informality, would benefit the overall efficiency of public finances. in this regard, we support the government's effort to enhance formality, assessing that the long - term benefits of this process surpass the short - term costs. at the same time, we encourage to accelerate the steps toward adopting the medium - term strategy of public revenues. this strategy should serve as an anchor and guide to our tax system, by re - assessing the priorities and instruments of this system and by enhancing the predictability in the medium and long run. 4 / 6 bis - central bankers'speeches more specifically, the bank of albania demands the revision of an amendment proposed in the draft budget " on revenue taxation, " which aims to revoke the amendment enacted in the tax legislation regarding the accounting treatment for loan losses and their inclusion in the list of expense deductions. these improvements were an essential element in the national strategy for the reduction of non - performing loans, which was approved by the albanian government and the bank of albania in 2015. this strategy was crucial for significantly decreasing the non - performing loans in the banking sector and for maintaining a low ratio of these loans in the future. as regards the spending structure, the bank of albania deems that maintaining a direct relation between current and capital expenses is crucial to the efficiency and flexibility of public finances. in more concrete terms, the need for capital investments is apparent for emerging economies like albania, in order to improve the physical capital stock that underpins the development of the country and the process of convergence with the eu standards. moreover, maintaining a positive current balance enhances the flexibility needed to withstand shocks, so long as pubic investments have a higher discretionary degree in the realisation compared with current expenses. to this end, we deem that one of the positive aspects of the albanian public finances is the high level of investments and their positive current balance structure. more specifically, capital expenses for the past five years have remained at an average of 5. 5 % of gdp, accounting for 18 % of overall public expenses, on

the bank of albania suggests the periodic review lending activity pension scheme, health insurance scheme and other social insurance schemes, with the aim to maintain these schemes on a stable trajectory and affordable for the state budget. on the management of public - private partnership programmes the public - private partnership programmes ( ppp ) present potential risks to public finances. in this context, the bank of albania welcomes the heightened attentiveness in the draft budget toward potential ppp risks. we also welcome the strengthening of the role of the ministry of finance and economy in conducting a preliminary analysis of these projects and continuously monitoring them. however, in line with our previous position, the bank of albania suggests : including an overall upper limit on the ppps total value. this regulation would supplement the control of the level of potential risk that ppps would have on the soundness of public finances. the integration of contracting and selecting of ppps process with strategic program of investments, as identified in the long - term development programs of the country. finally, continuously improving the professional capacities of units that manage the assessment, contraction and monitoring of these projects, particularly regarding legal and financial obligations that they pose to the budget. * * * honourable chair, dear ladies and gentlemen, thank you for your attention! 6 / 6 bis - central bankers'speeches