, the intensity of the fiscal consolidation in 2017 is foreseen to be somewhat lower than in 2016. the bank of albania deems that the expected economic developments and the sustaining 1 / 5 bis central bankers'speeches policies constitute an acceptable and consistent starting point for drafting the budget for 2017. economic activity at home is expected to mark an improved growth over the next two years. the monetary stimulus will support boosting domestic demand, keeping financing costs down for private consumption and investments. in parallel, the fiscal policy is expected to pursue a consolidating trend, as illustrated by the improvement by 0. 2 percentage point in the primary balance - to - gdp ratio and the forecast for the reduction by 2. 7 percentage points in public debtto - gdp ratio. the bank of albania has supported and continues to support the fiscal consolidation policy, deeming that – in balance – it contributes positively to the country ’ s long - term and stable growth. the continuation of the consolidating trend in the fiscal policy reduces risk premiums, mitigates the effect of the public sector on domestic financial markets, and increases the space for lending to the private sector. 2. fiscal projections and public finance stability based on the macroeconomic backdrop and measures regarding the fiscal package, described above, the draft - budget 2017 envisages : - public revenues amounting to all 436 billion, or 27. 3 % of the gdp. this forecast implies an increase by 6. 9 % from the expected revenues level for 2016 and reflects mainly the broadening of the taxable base, in response to the expected economic growth. on the other hand, the effect from changes to the fiscal package is relatively small ; - public expenditures amounting to all 467. 2 billion, or 29. 3 % of the gdp. this projection implies an increase by 6. 5 % from the expected level of expenditures level for 2016 ; - the budget deficit amounting to all 31. 2 billion, or 2 % of the gdp. this level of the deficit stands 2. 4 % higher than that expected for 2016. in terms of financing, the deficit is envisaged to be financed at around 60 % from domestic resources and 40 % from external resources ; - a reduction of the public debt, from the expected 71. 8 % of gdp, at the end of 2016, to 69. 1 % of gdp at the end of 2017. this projection is in conformity with a requirement of the organic budget law ( obl

of electoral years, these requirements help to discipline the fiscal policy, improve public finance stability, and enhance the interest of investors, both domestically and internationally, in albanian debt instruments. 3. public sector borrowing and domestic financial market the draft - budget 2017 envisages domestic borrowing amounting to all 19. 8 billion. the liquidity situation in the domestic financial market and the low interest rates provide the premises for accommodating the aimed borrowing level. however, the ministry of finance and the government of albania should give due attention to the even distribution of borrowing and budget expenditures, in order to reduce domestic markets ’ volatility. also, the ministry of finance should constantly monitor the absorption of borrowing in domestic financial markets, in order to enable the constant re - calibration of debt instruments with market requirements. * * * concluding, the bank of albania would like to present some suggestions, which – in our opinion – would contribute to the process of drafting and implementing the budget in the future. 4. suggestions and recommendations 4. 1 forecasting, uncertainty and risk management the forecast on the revenue of the budget – like any other economic forecast – is surrounded by uncertainties and risks. the proper acknowledgment and understanding of this fact necessitates measures to identify and quantify them, and paves the way to effectively manage the possible consequences. 3 / 5 bis central bankers'speeches in line with our previous suggestions, bank of albania deems that the drafting and implementation process of budget would benefit from the establishment of alternative budget scenarios, which would be implemented in the event of large deviations from the forecast. the bank of albania, in the light of priority to comply with budget deficit and fiscal consolidation objectives, suggests that the implementation of the budget 2017 should regard the following : - in the event the budget revenues are less than the planned level and the difference is higher than the contingencies foreseen in the budget, then the government should take additional measures to comply with the budget deficit levels. this implies the reduction of budget expenditures commensurate to the level of unrealised income. - in the event the budget revenues are above the planned level, and the difference stems from faster than projected economic growth, such revenues should be saved, by proportionally reducing the budget deficit. - in the event the budget revenues are above the planned level and the difference stems from the improved fiscal management, such revenues may be spent, affecting neither the budget deficit nor the fiscal consolidation