the country ’ s productive capacity. consumer spending is low, primarily due to households ’ uncertainties about the future, but also due to their slowing income. the two other aggregate demand components also show limited ability in providing stable economic growth impulses : public spending is limited, due to lack of fiscal room because of a higher public debt, while albania ’ s exports suffer the sluggish demand from the international markets and the low degree of diversification. finally, business investments are downward, reflecting businesses ’ restricted room for boosting their sales and banks ’ tighter lending standards. bis central bankers ’ speeches the economy is a complex and interdependent mechanism. all the afore - mentioned factors have led to a sluggish labour market and elevated pressures on public finances. they have also increased vulnerabilities to many businesses and the non - performing loans in the banking system. in bank of albania ’ s opinion, this situation requires pursuit of stimulating macroeconomic policies. economic theory and practice suggest that the maintenance of macroeconomic balances is a prerequisite to pursue these policies. i have reiterated that these balances do exist in the albanian economy. they constitute a strong point for its future outlook. inflationary pressures remain weak, external balances of the economy are improving and the albanian financial system is healthy. but the macroeconomic balances should be maintained and further strengthened in the future. this objective is a preliminary filter and every macroeconomic incentive should pass through it. every macroeconomic stimulus should also consider another vital equilibrium : that of financial stability in the country, otherwise it is at risk of becoming unproductive. the global crisis has significantly elevated a country ’ s exposure to risks related to financial stability. therefore, this equilibrium should remain a constant priority and in concert with stimulating development policies. the healthier we are financially, the broader the spaces available to stimulate the development of the country. having said the above and availing myself of the presence of the three main stakeholders responsible for designing and implementing the macroeconomic policies, let me now share with you bank of albania ’ s opinion about promoting the country ’ s development in the short term. the bank of albania, being an independent institution, responsible for the monetary policy and for the supervision and regulation of the banking system, has taken concrete actions to boost demand in the economy. we have lowered the key interest rate to record lows and are considering other spaces available in this regard. we have also supplied the banking system with the liquidity needed

, as well ) relates to reducing uncertainty in the economy. this uncertainty is multidimensional and affects the private sector decisions intricately, hence making consumers and businesses reluctant to spend and invest. the uncertainty is not only related to domestic developments, but a significant part of it also originates from there. several above - mentioned incentives – concrete - term recommitment to preserving the soundness of public finances and enhancing balance - sheet transparency in the albanian economy – are the appropriate steps in this regard. other incentives to reduce uncertainty would be to : • strengthen the contingency plans and relations with international financial institutions ; • enhance transparency and consistency of development programs, both at national and intersectoral levels ; • strengthen the legal, regulatory and fiscal framework, and minimise their volatility ; • improve the business climate in its relations with the tax administration and the judicial system. taking these steps would be a significant progress towards development. 3. third pillar : structural reforms the third pillar of development, i. e., the structural reforms in economy, should be stronger and deeper. sticking to today ’ s agenda, i would like to say that these reforms would open the way to a healthier and more competitive economy, with a balanced development across sectors. our resolution and success in implementing these reforms would determine the long - term development of the albanian economy. 4. fourth pillar : convergence with the european union i think that the identification, design and implementation of the structural reform package by closely cooperating with the specialised international institutions would be productive. currently, albania meets all the conditions for a fast convergence with the european union. i also think that the european integration is the best way to withstand the current crisis and guarantee stable economic growth in the long term. the bank of albania, being an integral part of the vienna ii initiative, is greatly committed to the process of reshaping the financial structure supporting the development of south - eastern europe. thanking you for your attention, i am open to further discussions. bis central bankers ’ speeches