fatos ibrahimi : development of small and medium - sized enterprises in albania speech by mr fatos ibrahimi, deputy governor of the bank of albania, at the meeting of launching the " program on the development of the small and medium - sized enterprises ", tirana, 20 january 2009. * * * your excellency mr. ambassador, honourable mr. ministers, honourable participants, it is a special pleasure for me to attend this event and i avail myself of the opportunity to greet on behalf of the bank of albania this joint recent initiative, between the ministry of economy and the italian collaboration. the financial support of small and medium - sized enterprises has a particular importance for the development of this project and for the release of managing abilities of the economic units. the financing of small enterprises, for the small developing economies, is a worthy opportunity to increase both the employment and the economic activity based on the initiative, ideas and producing capabilities of small groups or of distinguished individuals, who owns the courage and knowledge to generate material goods and to increase the welfare of the society. the small and medium - sized enterprises in albania, over the transition period, have been growing with quick steps, hence showing up as a distinguished characteristic of the whole albanian transition, having survived to the domestic economic difficulties as the fall of pyramid schemes or other problems related to the reforms and the process of completing the institutional and legal framework. the contribution of small enterprises to the growth of service, construction, trade and agriculture sectors, where micro - enterprises compose the largest part of this group, has been obviously significant for the short - term and stable revival of the albanian economy. these enterprises have provided a substantial input to the decrease of unemployment and to the rise of productivity in the aforementioned economic activities, with a considerable impact for the quick growth of the albanian economy. the domestic economy is noticeably improved over the last decade and the progress made over an expanded period of these last years reflects a positive and relatively stable macroeconomic environment. the growth rhythms of real gdp, are assessed as plausible, and in general higher compared to the other countries of the region. the consumer price level as well, has resulted in compliance with the target of the central bank for the price stability. “ the calmness ” of the external factors that struck the supply reaction and the domestic macroeconomic stability, provided the inflation rate be normalised within the targeted limits. the developments occurring in the exchange rate already are perceived as stable compared to its high fluctuations characterising the ’ 90s. in the

still elevated from a historical perspective and still well above levels deemed consistent with price stability. 2 / 4 bis - central bankers'speeches on the other hand, overall inflation was until recently below the euro area average but in recent months has tended to exceed it. this reflects some base effects of sharply declining energy prices in other countries with lower subsidies than ours, but as we shall see there are some domestic factors at play. overall inflation in malta is set to ease further in the coming months. the disinflation process is largely being supported by the resolution of supply chain bottlenecks and the lagged impact of tighter monetary policy on imported inflation. furthermore, as pandemic - related re - opening effects fade out, imbalances between the demand for and supply of consumer services are also correcting. nevertheless, there are a number of domestic factors that are working in the opposite direction. these include a still dynamic economy buoyed to some extent by the support to demand arising from the energy subsidies. the weak pass - through of higher monetary policy ratesto deposit and lending rates in malta is another factor supporting robust credit growth, especially on the real estate market. this state of play may be good for economic growth in the short - term. however, it also means that the power of a key policy tool that is geared towards dampening demand and hence inflationary pressures is severely diluted in malta, where the direct transmission of tighter monetary policy to the domestic economy is impaired. at the same time, the indirect inflationary effects through import prices are strong. this means that for the disinflation process to accelerate, more ambition is required to address impediments to the reallocation of resources across sectors and lift the supply potential of the economy. the timely absorption of eu funds under nextgenerationeu is therefore key, as are enhanced incentives that support digitalization and upskilling. the fiscal stance is also set to shape the path of inflation going forward. in this regard, misalignments between fiscal and monetary policies are to be avoided to the extent possible. fiscalsupport must be targeted and temporary. both the imf and the commission are expecting a gradual reduction in energy subsidies. earlier this week the commission provided us with more clarity regarding the forthcoming fiscal rules, with an agreement expected in december, asthe stability and growth pact ( sgp ) escape clause will be deactivated before the end of the year. from my experience the rating agencies main focus boil