. public spending for the first ten months of the year resulted 0. 2 % less than a year earlier, reflecting the low increase in the budget revenues. the latter increased at low annualised rates during the year, resulting at the end of october only 2 % higher than a year earlier. the bank of albania deems that though the cautious consumer behaviour has not made any direct impact on economic growth over this period, it has helped keep risk premia on track and has led to low long - term interest rates, thus contributing to boosting private investments. looking forward, we deem that the fiscal policy should retain its orientation toward fiscal indicators sustainability, supporting albania ’ s economic and monetary stability and being an important pre - requisite for a stable and long - term growth. bis central bankers ’ speeches foreign demand continued to support the growth of exports and economic activity throughout 2012. trade deficit narrowed by 7. 9 % in the third quarter, reflecting mainly the good performance of exports. the latter increased by 17 % in the third quarter, retaining the previous quarters ’ positive trend. on the other hand, imports performed poorly, reflecting the low demand for consumption and investment. in the third quarter, imports recorded positive annual growth of only 0. 7 %. performance of monetary indicators attests to moderate pressures on monetary inflation. the annualised broad money growth rate decelerated to 6. 8 % in september. reflecting the sluggish domestic demand, economic agents ’ demand for money has been low. the weak demand for money has been associated with a constantly falling contribution of funding from public and private sectors to increasing the monetary supply throughout 2012. private sector ’ s contribution continued to slow during this month ; its annual growth rate reached 4. 2 %, recording one of the lowest historical levels. latest financial market developments have reflected the easing monetary conditions and low or downward premia of inflation and liquidity risks. interbank rates have been downward, following the monetary policy signals. also, upon resolving the structural problems in the primary market, the treasury bill yields dropped sharply on all maturities. in a tranquil financial market and lacking additional shocks in the future, the previous monetary policy easing is expected to be passed on to other financial market segments. under these conditions, raising the monetary stimulus in the economy would further boost aggregate demand, without affecting the price stability in the medium term. developments in lending and financial markets reflect households ’ and businesses ’ reluctance to make long - term commitments. however, the low degree

the medium run, the macroeconomic policies should be prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. the fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. though remaining within the projected level for 2009, the budget deficit by about all 30 billion constitutes a much higher amount than in the same period of the previous year. under these conditions, the bank of albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. the demand for monetary assets increased during the last months. money supply rise by about 8 percent is based on money creation in the economy from the public sector and from private sector borrowing, mainly in all. loan portfolio grew moderately, by all 7. 5 billion or about 5 times less than as of the same period of the previous year. reduction of bank funds source and increase of uncertainty in the country influenced the significant deceleration of credit growth rates. however, credit to economy increased along the first months of the year, while the banking system has signalled no further tightening of the lending terms in the third quarter of the current year. the private sector ’ s demand for lek - denominated loans is faced with an increasing willingness from banks, thanks to stabilization of liquidity situation and easing of monetary conditions at start - 2009. restraint of foreign currency money supply has resulted to contraction of foreign currency component of money structure, even on the demand for money side, bringing about shifting of money supply structure towards the lek. in the first half of 2009, the financial market situation was influenced by increased uncertainty and revaluation of risk premiums that associated the liquidity constraint, consequent to deposit outflows and lending activity reduction. ongoing intervention of the bank of albania in the money market, combined with measures that aimed at relaxing the market and encouraging the interbank market activity, as well as the maintaining of sound financial system indicators, made the end of the period record stabilization of liquidity positions and of interest rates. the latter displayed different behaviour, according to maturity term. short - term