gent sejko : statement at the joint press conference with the imf mission chief for albania and the albanian minister of finance, 20 november 2018 statement by mr gent sejko, governor of the bank of albania, at the joint press conference with the imf mission chief for albania and the albanian minister of finance, tirana, 20 november 2018. * * * dear media representatives, in the last two weeks we have been engaged in discussions with the imf mission, which visited albania in the framework of periodic article iv consultations. such discussions focus on the current performance of the economy and financial markets in albania, their outlook, as well as the adequate economic policies and necessary structural reforms that should be implemented and monitored with a view to guaranteeing sustainable development for the country. i must say, with pleasure, that we share similar views on development trends, challenges that lie ahead, and the respective measures for tackling them. let me now present in brief the opinion of the bank of albania on these issues. the positive trend of albania ’ s economic development continued throughout the current year. from the perspective of aggregate demand, economic growth was supported mainly by the expansion of consumption, investments and albanian exports. from the perspective of production sectors, economic growth reflected mainly the expansion of the industry and services sectors, driven to a large extent also by the rise in electricity generation. from the perspective of underpinning policies, economic activity expanded, favoured by the following : the accommodative monetary policy and the favourable financing conditions, in both domestic and foreign markets ; the fiscal consolidation, which has reduced the impact of the public sector on the domestic financial markets ; and the structural reforms programme, which, irrespective of the short - term costs, have started to yield initial results. economic growth has contributed to the overall improvement of albania ’ s economic and financial balances. in line with our previous statements, the following is notable : inflation edged up slightly, despite the containing effect of the sharp appreciation of the exchange rate, suggesting that the improvement of the cyclical position of the economy is beginning to be reflected in higher wages and other production costs ; albania ’ s external position has improved, reflected in the narrowing of the current account deficit ; budget deficit remains low and public debt has trended down ; lastly, albania ’ s financial system is stable. the albanian banking sector shows stable or improving capital, liquidity and profitability indicators. our analyses and stress tests suggest that the sector is res

. production growth was mainly driven by the industry and services sectors, whereas the construction sector continued to suffer from low demand for residential properties. performance of private consumption and investments was sluggish. in line with the performance of the economy, available income of albanian households were assessed as growing at lower rates in this period. the sluggish consumption has reflected mostly higher inclination of albanian households towards savings. private consumption was more supported by consumer credit in 2011. nevertheless, banks report feeble demand for consumer credits, while consumers continued their hesitation for large purchases in 2011. moreover, investments in the economy are restricted by the ultimate demand, existence of spare capacities in production and added prudence by banks in lending. bis central bankers ’ speeches in this context, monetary policy easing of the second half of 2011 is expected to be reflected in better lending terms to albanian businesses and households to support their consumption and investment. i have often reiterated that their performance will condition economic growth in the short and medium run. fiscal policy has been stimulating in 2011, though this stimulus has fluctuated over the quarters. as indicated by the expenditures and budget deficit performance, the fiscal stimulus was stronger in the first quarter and moderate in the second and third quarters. data for the fourth quarter point to its acceleration. budget deficit in the first 11 months was all 38 billion, reflecting mainly public spending. their annualised increase rate for the first 11 months was 5. 6 %, with added contribution by capital expenditures during october – november. on the other hand, fiscal revenues continue to have slow annual increase, at 0. 7 % for this period. foreign demand continued to contribute to aggregate demand growth in the economy, albeit less than in earlier periods. its performance was affected by the unfavourable economic situation of our main trade partners. in october, exports were up 16. 3 %, recording slower annual growth rates. on the other hand, under the effect of high prices in international markets, annualised imports rates remained high and were materialised in albania ’ s trade deficit expansion, which in october was 11. 6 % higher than a year earlier. monetary sector ’ s analysis indicates contained inflationary pressures of monetary nature in albania ’ s economy. broad money expansion was 10. 6 % in october, lower than the average rates of 2011. in real terms, monetary supply growth rates were stable and are deemed to be in accordance with economic agents ’ demand for real money. during the last months, public sector demand decelerated, whereas private