i to basel ii system. bis central bankers ’ speeches in view of integrating the albanian banking system with the european one, we have intensified the cooperation with counterparts in other countries. bank of albania ’ s membership into vienna initiative 2. 0 steering committee was particularly important in this regard. this initiative is a platform of cooperation, which brings together the european commission and other institutions of the european union, international banking groups that operate in central, eastern and south - eastern europe, as well as authorities from home and host countries. its main objective is to promote coordination between home and host country authorities, to avoid disorderly deleveraging. given that the albanian banking system is dominated by cross - border banking groups, decisions from the vienna initiative 2. 0 have considerable effects on it. therefore, our participation in the decision - making process is very significant. albania is the only non - eu member country participating in vienna 2. 0. as such, it also represents the interests of other non - eu countries that are not represented in the steering committee. for all these reasons, i believe the involvement of the bank of albania in vienna initiative 2. 0 is an important institutional achievement. the normal functioning of the banking system relies on a safe and effective payment infrastructure, which, in albania, is operated by the central bank. over 2013, the bank of albania focused its efforts on improving aips and aech systems. moreover, in order to render the financial markets infrastructure complete, we are working to establish the central system for the settlement and registration of securities. this system will provide possibilities for the further development of the secondary market and will guarantee the settlement of transactions in this market, conform to international standards. in 2013, the approval of the law “ on payment system ” was finalised. this law provides a special legal framework for regulating, licencing and overseeing payment systems by the bank of albania. it aims at minimising the systemic risk, which is related to the participation in payment and security settlement systems, and risks related to the insolvency of participants in the system. the passing of this law implies the liberalisation of the payment systems market through the establishment of private payment systems. furthermore, to encourage the use of electronic payment instruments and reduce the use of cash in the economy, the bank of albania has adopted the regulatory framework for using these instruments, by reflecting the principles of the relevant eu directive. the successful accomplishment of the main objective for maintaining price stability and the objective for safeguarding the financial

sectors of the economy. furthermore, imports of goods were 1. 8 % lower from a year earlier, as a result of the weak domestic demand. these developments materialised in the correction of the trade deficit by 13. 5 % in annual terms. moreover, the balance of services deteriorated significantly, due to the fall of net exports in tourism. main foreign currency inflows during 2013 were in the form of net foreign investments. these foreign inflows were sufficient to cover the current account deficit and provided the premises for a stable exchange rate. during 2013, the gross foreign currency reserve hiked by about eur 42. 5 million, settling at eur 2, 015 million, sufficient to cover 4. 6 months of imports and bis central bankers ’ speeches 170 % of the short - term foreign debt. in spite of improvements, the balance of the external sector remains fragile. i would like to reiterate our appeal for taking the measures to boost the competitiveness of albanian products and create a favourable climate to attract foreign investments. during 2013, the government pursued an expansionary fiscal policy, providing a positive impulse to economic activity. in annual terms, budget expenditure increased 4. 7 %, whereas revenues fell 0. 5 %, from a year earlier. government ’ s fiscal behaviour increased the budget deficit to all 65. 4 billion, standing 42. 7 % higher than a year earlier. last year ’ s fiscal expansion increased the public debt and public finance ’ s fragility, adding thus concerns over fiscal sustainability in the medium and long run. considering the public debt as one of the biggest structural weaknesses of the albanian economy, we have called for measures to be taken for ensuring the long - term soundness of public finances, and eventually welcomed such measures. in this context, we think that there is still much to be done, especially with regard to adopting a transparent and efficient fiscal rule. financial markets were characterised by good liquidity conditions and low inflation risk premia. this enabled a fast transmission of monetary policy signals to the interbank and deposit markets. also, the increase in deficit and public debt was absorbed by the liquidity generated in the domestic financial market. against the backdrop of a high demand for investment in government securities, their yields dropped significantly for all maturities. all these developments created premises for credit interest rates to decline in 2013. monetary indicators were largely in line with the real - economy developments. the annual money supply growth slowed down during the year. this slowdown reflected