households'income, by 1 / 5 bis - central bankers'speeches offsetting the increase in the cost of living for most of them. however, the observed shortages in the labour market are turning into an increasingly large obstacle to the expansion of activity and are fuelling domestic inflationary pressures. in line with these developments, consumer prices have risen sharply in 2022, recording an average inflation rate of 6. 7 %. in 2022, inflation rose initially on the back of the rapid surge in prices of import items, in addition to an ever increasingly strong aggregate demand and an overall upswing in costs of production. however, inflation trend recorded a turning point in october 2022, declining progressively onwards at 4. 7 % in may 2023. this performance reflected the dynamics of prices in global markets, the first effects of our monetary policy's reaction, - which i will elaborate on in more detail below, - and the appreciation of the exchange rate. also, the relatively low inflation rate in albania was also backed by the contained electricity prices for households and some businesses, thus transferring the increased cost in energy imports to the public sector's balance sheets. year 2022 marked progress in terms of improving the external position of albania as well. more specifically, the albanian exports grew by 42 % over the past year, driven by the rapid growth in tourism income. this growth led to the reduction in both the trade deficit and the current account deficit. in parallel, external debt of albania declined while its sustainability indicators improved. the improvement in the balance of external trade, the high levels of foreign direct investments coupled with the stability of the domestic financial markets, drove to the strengthening of the lek exchange rate during the past year. these trends seem to have continued in 2023 as well. at the same time, the albania's budget deficit declined to 3. 7 % of gdp in 2022 from 4. 6 % of gdp in 2021, while public debt reduced to 64. 6 % of gdp from 74. 5 %. this improvement reflected the fast growth of public revenues, the reduction of the budget deficit in response to the fiscal consolidation policy, as well as the strengthening of the exchange rate. last, but not least, financial markets have been relatively calm and the banking sector has performed positively, despite the elevated trend of interest rates and the higher uncertainty that has characterized the market actors. in particular, the banking sector appears robust, with good indicators of liquidity, profitability and capitalization. this

to resolve differences of views that would threaten a workout and to achieve an acceptable compromise. to this end, we are ready to listen to any involved party, irrespective of size or national affiliation. in taking on this role, we are following the example of the bank of england in offering to act as an “ honest broker ” or impartial mediator to help to bring negotiations to a satisfactory conclusion. i should emphasize however that we do not get involved in the detailed negotiations on the workout. that is the job of the lead bank, the steering committee and the company and its advisers. similarly, it should be the task of these parties to make every effort to resolve disagreements before they are brought to the attention of the hkma. in other words, the hkma should only become involved as a last resort. some people have suggested that the hkma should become involved earlier and play a more visible role in workouts. there is a risk however that this would detract from the role of the lead bank and the financial advisers and reduce the impact of the contribution that the hkma can make familiarity can breed contempt. the hkma has been involved in about 10 cases since the hkab guidelines were issued. typically these will involve situations where a small minority of banks, sometimes only one, are refusing to sign a restructuring agreement or are threatening to take action, such as realize security, which would cause the workout to collapse. our practice in such cases is to listen to both sides and to understand their respective positions. where a small number of banks are holding out against the majority view, we will ask them to explain their position and to weigh the costs of their behaviour against the potential benefits. where the position of the minority banks seems to lack sound justification, we will usually try to persuade them to accept the majority view or at least make every effort to work towards a compromise. at the very least, we would request the banks to reach decisions on restructuring proposals within a reasonable period of time and try to adhere to the deadlines which are set for these decisions. the hkma ’ s role in the workout process is, i believe, consistent with the monetary authority ’ s principal function under the banking ordinance, which is to “ promote the general stability and effective working of the banking system ”. the banking system can only work effectively if there is an effective means of restructuring corporate debt. it is not however our practice to use our powers under the banking ordinance to force banks to take decision on