support growth and employment. these reforms have high financial costs and their benefits materialise in the medium and long run. in the meantime, actual economic policies are oriented towards maintaining the fragile macroeconomic and financial equilibriums and are obliged to focus on overcoming the difficulties of the moment caused by the crisis that has stricken not only our region, but also our european trading partners. the priorities of the moment do not sustain, or better say, render it more difficult to undertake and immediately implement structural reforms in the economy, at least for those that require financial resources and support. nonetheless, definite solutions for short - term problems will come in the framework and context of economic benefits and convergence. consequently, choices related to defining economic priorities, education, employment, existing vacuum in human and financial capital, fiscal policies, structural and legal reforms should be guided by the vision and objectives for the next 20 years. while long - term solutions and short - term problems in the economy interact with and condition each other, it is indispensible to adopt domestic and external anchors, which would support economic and development policies. assessing the existing situation at 360 degrees, bis central bankers ’ speeches in a global context, taking into account the decision - making time and approach, i deem that the country needs and deserves to enter as a partner into a new and flexible agreement with the international monetary fund. from the overall perspective, the albanian economy enjoys economic and financial stability. our economy continues to produce positive growth rates ; it has a stable financial system, low but contained inflation, relatively stable exchange rate and low interest rates to finance the public debt. moreover, macroeconomic policies have been in line with the scope and recommendations of imf programmes. signing under these conditions enables a dignified agreement and minimises the costs that accompany the implementation of reforms at present by albanian authorities. at the same time, from the point of view of foreign investors in general and those in the banking sector in particular, this development would contribute to reducing risk premiums for the country. the experience of other countries has shown that the intervention of the imf has helped sovereign ratings return to their previous positions. the spread has narrowed immediately, hence reducing the nervousness and hesitation of agents to invest in these markets. in the national and international arena it seems that the highest risk is related to ensuring the monetary assets to meet immediate needs arising from acknowledging government liabilities to businesses, and medium - term needs to cope with liabilities or enable reinvestment of liabilities arising

development. ) although in an unfavourable external environment characterised by added uncertainties in our trade partners, the albanian economy continued to grow during the second quarter of 2011. in the absence of direct data, the bank of albania deems that economic growth during this period is similar to the one recorded in the preceding quarter, thus remaining below albania ’ s potential growth rate. economic activity relied on the public sector and external demand, although more moderately than in the first quarter of the year. in the meantime, the private sector demand appears sluggish, also conditioning our projections for economic growth for the rest of the year. private investments continue to be slow, compared with their historical rates and the country ’ s needs for quantitative and qualitative production capacities. this bis central bankers ’ speeches the expected easing of funding terms during the second half of the year as well as the decline of perceived uncertainty by businesses and individuals are expected to be accompanied by the somewhat more positive performance of private consumption and investments in this period. stimulating nature of fiscal policy during the first half of the year is reflected in a positive contribution of public expenditures to economic growth. for the first seven months of the year, public spending increased by 5. 9 % in annual terms. moreover, performance of fiscal revenues was slow, reflected in their annual growth of 2. 3 % during this period. this behaviour of income and expenditures is materialised in a higher budget deficit than a year earlier. fiscal impulse to the economy was consistent throughout this period. it showed tendencies of moderation during the second quarter, which are expected to strengthen further during the rest of the year, in conformity with the revised budget of 2011. contribution of foreign demand to economic growth was lower during the second quarter of the year. trade deficit in the second quarter was 20 % higher compared to a year earlier. our exports shrank by about 2. 8 % year - on - year for this period, a reflection of reduced exporting of energy, which is a volatile component in exports. despite this development, the core basis of exports continues to maintain more sustainable growth rates. on the other hand, imports continued their annual growth, albeit at a lower rate compared to the first quarter of the year. aggregate demand performance triggered economic activity growth but was inadequate to fully utilise albania ’ s output capacities. developments in the labour market seem sluggish and do not have premises for emergence of stable inflationary pressures. signals from economic information are confirmed also by the monetary