a lower contribution to the economic growth during 2010. public expenditure reduced by about 5 % year - on - year, while the budget deficit reduced by about 4 p. p. of the gdp. the bank of albania has always highlighted that fiscal stability is a fundamental precondition for a long - term economic growth. in this context, we deem that respecting objectives on budget deficit and public borrowing during 2011 will yield a positive contribution to the country ’ s economic development. maintaining relative levels in budget deficit will eliminate a direct negative effect on economic growth, while relatively low levels of public borrowing will have an impact on the control of long - term interest rates and reduction of risk premia in financial markets. these developments were manifested during the second half of 2010 and are expected to stimulate domestic demand during 2011, as well. external sector of the economy continued to be characterised by a positive, though falling, contribution of foreign demand to economic growth. the correction pace of the trade deficit was slower in this quarter. trade deficit reduced by 1. 2 % compared to two - digit correction rates recorded in the first half of 2010. this situation of the trade deficit is determined mainly by the acceleration of imports, which marked a year - on - year increase of 10. 8 % in the fourth quarter of 2010, recording a growth for the third consecutive quarter. on the other hand, albanian exports increased by 48. 8 % year - on - year, maintaining high rising rates. the bank of albania holds that the albanian economy will find it difficult to maintain the same growing rates of exports during 2011 ; among other things, this projection reflects temporary factors that influenced on 2010 growth and is in line with the global economy situation and basic statistical effects. nevertheless, external demand is expected to generate positive contribution to the economic growth during 2011, as well. bis central bankers ’ speeches monetary indicators, financial markets and inflation performance of monetary indicators continues to generate controlled monetary inflationary pressures on the domestic economy. money supply increased by 12. 5 % in december 2010, reflecting a good performance of deposits in the banking sector during the second half of the same year. our assessments indicate that monetary expansion is in line with the private sector demand for real money. a good progress of the economic activity and falling risk premia are also reflected on the upsurge of demand for loans by the private sector. satisfactory parameters of the banking system in terms of liquidity and capitalisation have enabled additional support to the private sector with bank loans. in december,

under control, contributing to keeping a steady macroeconomic environment in the country. at the same time, the commission also evaluated the reliable monetary policy followed, highlighting particularly the measures taken by the bank of albania in terms of gradually changing its monetary policy strategy towards explicit inflation targeting regime, aiming at enhancing transparency and credibility of its monetary policies. the report highlighted also the positive developments in the banking sector of the country and assessed the progress achieved regarding the establishment of the loans register, free movement of banking and financial services, freedom of establishment of foreign banks and further liberalization of capital movement. on 27 january, 2006, the executive board of the imf adopted the three - annual agreement with albania, at sdr 17. 045 million. the main targets of the new program have to do with the maintaining of macroeconomic stability, as a prerequisite for economic growth, and the improvement of financial institutions. under reserves advisory and management program ( ramp ), during 2006 the world bank ’ s group provided consulting and technical assistance to the bank of albania for foreign reserve management. during 2006 the bank of albania established constant contacts with the ebrd, mainly in terms of providing information and statistics for the development of the albanian economy in general and financial sector in particular. the transition report 2006 assessed positively the maintaining of inflation within the bank of albania ’ s target and the consolidation of the banking system over 2006. the bank for international settlements ( bis ) is another institution with which the bank of albania kept close contacts during 2006. the bis has been particularly active in providing technical assistance to the bank of albania, through workshops and training courses organised by the institute of financial stability, which promotes the international financial stability through information sharing and cooperation in financial system supervision area. during 2006 the bank of albania enhanced the mutual relations with the central banks of the region and beyond it. personally, i have paid official visits to many central banks of the region and europe, discussing about latest developments in the albanian economy and further extension of mutual cooperation and technical assistance that these banks can provide to the bank of albania. in june the governor of the bank of greece, mr. nicholas c. garganas paid a two - day official visit to albania. it took place in the light of mutual relations between both institutions, laying special emphasis on sharing of information and experience in banking supervision area. enhancing relations with central banks of the region reached the peak in the round table of october 2006 held in tirana, where the governors of the central bans of