fatos ibrahimi : business development opportunities in albania speech by mr fatos ibrahimi, first deputy governor of the bank of albania, at the forum on business activity, with governors and managing board of the black sea trade and development bank, tirana, 20 june 2011. * * * distinguished participants, it is a great pleasure for me to take the floor at this forum organized by the black sea trade and development bank, which this time has on focus the promotion of development opportunities in albania. allow me say that the time of holding this forum coincides with the need to ensure the economy ’ s revival at home, after weathering the direct impacts of the global economic and financial crisis. the economy ’ s revival needs to become more sustainable, promoting the development of sectors that provide a competitive advantage by developing specific public policies and taking the public - private investment partnership to a new level. allow me to dwell in more details on the contribution that the financial system and the banking sector can provide to support valuable business projects. the development and good financial position of the financial system in general and the banking sector in particular is a prerequisite for carrying out a successful financial intermediation activity. in fact, over the last decade, the banking sector has experienced a rapid development. well - known european banking groups have entered the market, bringing about knowledge and best technologies, as well as enhancing competition in the interbank market. also, the banks with albanian capital have expanded their network and have properly utilized the advantages of better recognition of the domestic market. as a result of active business development policies, the banking sector has experienced a steady growth of deposits and credit expansion. it suffices to say that at end - 2004, total loan accounted for only 7 % of gdp, while today it accounts for approximately 40 %. about two - thirds of loans are extended to the private sector, while the rest to households and individuals. in business sector, loans are extended to the most important and fast - growing sectors, such as trade, other services, transport and construction. almost all business loans are extended to private sector, though recently an increase in loans for public sector ’ s projects / investments is registered. on the other hand, the expanded banking network and better use of new technologies have enabled the pursuit of more competitive policies, attracting a high number of depositors and providing valuable services to citizens. deposits continue to represent the main source of banking sector financing, an element that highlights its stability. interest rates on loans and deposits

non - performing loans, assess them correctly according to possibilities of their repayment and pursue proper policies, in order to recover the loan value within an appropriate time. second, during this phase, it is necessary to strengthen the banks ’ internal audit systems, not only related to credit risk but also to provide a higher standard of management. third, banks should assess their expectations about the performance of their activity and take measures to strengthen their capital position in advance, in case of need. the bank of albania deems that in the periods ahead the albanian banking sector and the economy need to determine and pursue more suitable development policies, which should include : setting realistic development objectives ; setting more competitive prices for banking products and services ; and increasing lending in the national currency. about overall economy, a more sustainable development should be ensured, relating mainly to better control on trade deficit, supporting the sectors that actually contribute or may contribute to increasing exports in the country. public authorities should strengthen their commitment to developing the non - bank financial market, which gradually leads to reduction of economic dependence on the banking sector condition and improves access to financing of a higher number of private entities. in this way, a greater opportunity would be provided to the financial system to finance projects in the agricultural sector, which has a high potential for ensuring competitive advantages in the albanian economy. allow me to conclude by emphasizing the bank of albania ’ s willingness to contribute, through its policies on monetary and financial stability, to maintaining a better climate of sound development of the financial and banking activity, as a condition for a greater financial support to business development in the country. i think that this forum will make a valuable contribution to setting some concrete development policies and projects, about which, i believe that the black sea trade and development bank will offer its own support and expertise. wishing success to the proceedings of this forum, i thank you for your attention! bis central bankers ’ speeches