continuation of economic growth for the rest of the year. foreign demand and public sector demand continue to provide positive contribution to aggregate demand upsurge, although more moderately than a year earlier. private sector demand remains an important factor to determine economic growth in the future. fiscal consolidation measures and the unfavourable situation in global markets and our trade partners will shift the short - term focus of economic growth to the internal demand : private consumption and investments. the capacity of these aggregates to compensate for the slowdown of the two main promoters of the insofar growth, will condition albania ’ s economy performance over the upcoming 2 – 3 quarters. in the longer run, the performance of the albanian economy shall be determined by its competitiveness and productivity as well as expansion of albanian goods and services in foreign markets. this requires intensification of structural reforms at macroand microeconomic level as well as financial and macroeconomic stability in the country. * * * taking into account the information set out above, the supervisory council of the bank of albania deemed that inflationary pressures are downward and remain controlled in the medium run. developments in the albanian economy will continue to generate weak inflationary pressures, as a result of the negative output gap action. on the other hand, pressures generated by developments in global economy are expected to be downward. economic agents inflation expectations remain anchored around the bank of albania target. at the conclusion of discussions, the supervisory council decided to cut the key interest rate by 0. 25 percentage points, down to 5. 00 per cent. this decision serves to comply with the inflation target in the medium run and provides the necessary monetary conditions to stimulate economic activity. the bank of albania remains heedful to future economic and financial developments, with a view to take the right steps for the fulfilment of its mandate. bis central bankers ’ speeches

gent sejko : albania ’ s economy and its interaction with monetary and fiscal policies statement by mr gent sejko, governor of the bank of albania, to the hearing session of the parliamentary committee on economy and finance, about the draft - budget 2017, tirana, 22 november 2016. * * * honourable chairman, honourable members of the committee, the steady and long - term development of albania has been and is a constant priority of bank of albania ’ s work. therefore, accomplishing this objective requires not only applying prudent monetary and fiscal policies, but also their constant and efficient coordination. the approval of the budget and the accompanying fiscal package is decisive for the country ’ s economic development. the budget and the relevant fiscal package outline the short and medium - term priorities for public finance, contribute to the long - term profile of growth and development by supporting with funds the structural reforms, and orientate the private sector development by determining the incentives on consumption and investments. therefore, the bank of albania appreciates the opportunity to be able to present to this hearing session our opinion on the draft - budget 2017. in compliance with our legal mandate and the scope of our expertise, the opinion of the bank of albania on the draft - budget 2017 will focus on the following : albania ’ s development perspectives, intertwined with the monetary and fiscal policies ; fiscal projections and public finance stability ; and, effects of projected public borrowing on the domestic financial markets. at the end, there are some suggestions on possible measures to boost the effectiveness and stability of public finances. 1. the expected performance of the economy and its interaction with the monetary and fiscal policies the albanian economy has shown signs of recovery over the past two years. this performance reflects the recovery of private consumption and investments, whereas the external environment has been and remains unfavourable. the expansion of the private sector activity was supported by our accommodative monetary policy and was favoured by the consolidating fiscal policy implemented during this period. this policy mix has brought financing costs down for the private sector and has improved the liquidity situation in the economy. the 2017 budget takes into account forecasts for the real economic growth at 3. 8 % and an increase in the nominal value of the gross domestic product to 6. 3 %. as detailed in the draftbudget and in the accompanying explanatory notes, such economic growth will be supported by the continuation of the combination of the monetary stimulus with the fiscal consolidation policy. however