, the fiscal easing relied also on the taxation policy, as a number of taxes were reduced directly or indirectly. budget expenditure surged 13. 3 %, mainly due to public investments during this period. fiscal revenues fell 0. 2 %, mainly due to contraction in the tax component. for the first five months of the year, budget deficit stood at all 38. 3 billion, about 1. 1 times higher than a year earlier, affecting, therefore, the increase in the public debt to gdp ratio, to 62. 4 %. the bank of albania continues to draw the attention on the need for fiscal measures, which would guarantee the long - term stability of the public debt, boost financial markets'confidence in our public finance, and cut long - term costs of debt service. this objective should be the main medium - term priority of public finances. data on the external sector of the economy reveal that the net foreign demand contributed positively to economic growth in the first quarter. the current account deficit narrowed, in annual terms, settling at 9. 8 % of gdp during this period. foreign trade data for april point to further narrowing of the annual trade deficit by about 5. 3 % in annual terms, thanks to the bis central bankers ’ speeches rising exports. meanwhile, for the first time since september 2012, total imports increased about 3. 6 % in this month. as pointed out earlier, the current account deficit constitutes a structural deficiency of the albanian economy. its adjustment would mitigate one of the potential sources of risks to the albanian economy and financial markets, and broaden the space for implementing stimulating macroeconomic policies in the future. monetary indicators were in line with the real - economy developments and our analysis reveals that the monetary inflation pressures are weak. annual increase of money supply accelerated in april, reversing the deceleration trend that had started in july of last year. the broad money aggregate, m3, picked up 5. 2 % from 4. 6 % in march, mainly reflecting the higher demand for funding by the public sector. by contrast, the private sector's weak demand is reflected in the sluggish credit performance. lending to the economy slowed down further in april, marking only 0. 9 % annual growth. besides the weak demand, lending deteriorated also due to banks ’ prudence in lending, materialised in relatively tight standards. this phenomenon is regionally dispersed and is dictated, to a large extent, by the developments in the euro area's financial markets. the main feature

stated, i would like to clarify that the exploration of the potentials that the different regions have to offer and the identification of their level of use is also essential in terms of the banking system ’ s activity, in particular of the geographic expansion and financial intermediation. another major reason motivating the bank of albania to organize these meetings relates with the establishment of a more effective communication channel between the bank of albania and the public. we believe that the direct contact with various social groups in different geographic regions ( that is to each and every family ), in addition to the traditional means of communication, press conferences, monetary policy or financial stability reports, is a very efficient tool and frequently determinant. i would like to dwell today on some matters of interest to the entire audience. first i would like to make a brief outline of the bank of albania ’ s latest analysis of the economic and financial situation in albania : in brief, three are the main developments of greatest interest to the audience : with regard to the international developments, the economic and financial situation has been very complex in the last months. inflation has turned into a point of concern in most foreign economies, mainly driven by the high prices of raw materials, oil and food. in addition, economic activity in developed economies has experienced sharp turns. euro area economy is at present in front of many questions, while the us and some asian economies have shown slow rates of economic growth. credit crisis has caused many reputable international institutions to experience large financial losses and its contamination process is still present. recently, the two us mortgage giants, freddie mac and fannie mae, which were on the verge of collapse, were subject to an unprecedented and costly rescue plan designed by the us treasury department. all these issues have triggered uncertainties in the markets, causing the future forecasts to be more challenging and the participants ’ exasperation to peak. i would consider the immunity shown by our economy in terms of price stability as the most outstanding development. albania ’ s economic activity is progressing in line with our previous expectations. a few days ago, instat published the inflation figure for august 2008, according to which annual inflation marked 2. 5 %. following a 12 - month period of inflation rates standing at around 4 - 4. 5 %, in line with our forecasts, it is assessed that inflation will fluctuate in the next few months at around 3 %, which is our quantitative objective. worth to note, however, is that the risk for