. during this year, with the assistance of the world bank, the drafting and completion of the regulatory framework for foreign reserve management was carried out successfully, reviewing the bank of albania ’ s policy on the management of such reserve, the management criteria and terms, as well as the decentralization of decision - making competences during this process. internal audit in 2006, 44 audits and 3 verification procedures were carried out. the inspectors presented 269 findings and 197 recommendations out of these audits, which were carried out at the bank of albania and at its five district branches, the printing house included. 11. bank of albania balance sheet during 2006, the bank of albania assets further increased, totalling all 255. 5 billion, about 14 percent higher than at end 2005. the constituent groups, both foreign currency and domestic assets, have reflected growth, while the first group occupies about 68 per cent of total assets, the same level as that of the previous year. on the liability side, foreign currency liabilities fell slightly ( from 8 to 7 percent of the total ) in comparison with the previous year, whereas domestic liabilities increased by 16 percent. currency in circulation is the indicator that bears the main weight in this growth ( about 45 percent of the growth ), followed by the “ due to the government ” item ( about 29 percent of the growth ) and “ due to banks ” item ( about 26 percent of the growth ). in general, the accounting balance sheet of the bank of albania and the income and expenditure statement reflect some basic developments that have occurred in the economy, where the bank of albania plays an important role. the revenues realised during 2006 outstripped the level of the previous year only by about 5 percent. the main impact on this growth was given by income on foreign currency interests ( about 20 percent more than in 2005 ). this reflects the performance of interest rates in foreign exchange markets. this effect absorbs the reduction of “ income from all interests ” item ( about 7 percent less than in 2005 ), which reflects an average interest rate below that of 2005, irrespective of the upward trend at year - end. on the other hand, interest expenses outstrip the previous year level by about 25 percent, reflecting the positive phenomena of the increased level of deposits and liquidity position in the banking system. foreign currency interest expenses have been outstripped by 64 percent compared to the previous year, whereas all interest expenses have increased by 14 percent. other ( operational and amorti

2. 5 % for 2012, between 1. 1 % and 2. 1 % for 2013 and between 0. 6 % and 2. 2 % for 2014. compared with the september 2012 ecb staff macroeconomic projections, the projection range for 2013 has been revised downwards. in the governing council ’ s assessment, risks to the outlook for price developments are seen as broadly balanced, with downside risks stemming from weaker economic activity and upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices. turning to the monetary analysis, the underlying pace of monetary expansion continues to be subdued, taking into account developments over several months. most recently, the annual growth rate of m3 increased to 3. 9 % in october, from 2. 6 % in september, while m1 growth accelerated to 6. 4 % from 5. 0 % over the same period. these developments are partly due to a specific transaction leading to an increase in overnight deposits belonging to the non - monetary financial sector. at the same time, deposits from households and non - financial corporations also rose in october. overall, more observations are needed to distinguish between shorter - term volatility and more lasting factors. unlike in the case of monetary developments, there has been little change in credit growth. the annual growth rate of loans to the private sector ( adjusted for loan sales and securitisation ) remained at – 0. 4 % in october, unchanged from september. but this development reflects further net redemptions in loans to non - financial corporations, which led to an annual rate of decline in these loans of – 1. 5 %, down from – 1. 2 % in september. the annual growth in mfi lending to households remained unchanged at 0. 8 % in october. to a large extent, subdued loan dynamics reflect the weak outlook for gdp, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. furthermore, in a number of euro area countries, capital constraints, risk perception and the segmentation of financial markets restrict credit supply. in order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential to continue strengthening the resilience of banks where needed. the soundness of banks ’ balance sheets will be a key factor in facilitating both an appropriate provision of credit to the economy and the normalisation of all funding channels. decisive steps for establishing an integrated financial framework will help to accomplish this objective