gent sejko : bank of albania – strengthening governance and recent other challenges introductory statement by mr gent sejko, governor of the bank of albania, presenting the annual report 2015 to the parliamentary committee on economy and finance, tirana, 29 march 2016. * * * honourable chair of the parliamentary committee on economy and finance, honourable members of the committee, it is my special pleasure to present, in this hearing session with the parliamentary committee on economy and finance, the annual report of the bank of albania for 2015. in 2015, the bank of albania has worked to successfully fulfil its objectives stemming from the law “ on the bank of albania ”, as well as all the other obligations arising from relevant sublegal acts and relations with our international partners. i would like to start my presentation, focusing on the activity of the supervisory council of the bank of albania. 1. decisions of the supervisory council at the beginning of 2015, the management team of the bank of albania was rendered complete. thus, thanks to the support of the assembly of the republic of albania, the vacant positions in the supervisory council were completed, the governor, the second deputy governor and inspector general of the bank of albania were appointed. during 2015, the council met 15 times and approved 98 decisions. of them, 63 consisted in acts approved for the first time, and 35 in amendments to existing acts. eight meetings focused on the monetary policy decision, whereas four meetings focused on decisions about issues pertaining to supervision and financial stability. the decisions have been communicated to the public through press conferences, full publication of relevant reports and explanation, on a case by case basis, in accordance with requests by various media outlets. all the reports compiled by the bank of albania on the monetary policy and financial stability have been fully submitted, within the envisaged legal time frame, to the assembly of the republic of albania and its committee on economy and finance. in line with the above said, and in accordance with earlier public statements, the strengthening of governance has assumed a key place in the supervisory council decisionmaking process. from this perspective, i will now briefly focus on : establishment of the audit committee the establishment of the audit committee is an important development with regard to strengthening the internal control at the bank of albania, especially the supervisory capacities of the supervisory council. the meetings held in 2015 discussed the organisation and functioning of the control [ internal audit ] department, the audit universe and annual plan, main findings, risk assessment and effectiveness of the internal

risk and inflation premia. in the interbank market, trading volume increased and interest rates fell, showing lower volatility. in the primary market, yields fell further, especially on securities with longer term to maturity. the yields curve moved downward and its slope was reduced. interest rates continued to fall in the deposits market, while, in august, interest rates on credits fell as well. in spite of this, credit performance was weak during these months. following the persisting deceleration over the first half of the year, private sector credit contracted in july and august. as at end - august, it stood 2. 0 % lower than a year earlier. credit performance reflected the weak credit demand from both businesses and households, as well as the tight standards of the credit supply. in the last months, a positive factor observed, and encouraged by the bank of albania was the write - off of non - performing loans having no hope of recovery from banks balance sheets. beyond its statistical effect in the short run, cleaning the banks ’ balance sheets is part of a complex process of non - performing loan portfolio management. if implemented efficiently and actively, in the long run, this process may establish the premises to release lending capacities in the economy and recover healthy credit increase. the monetary indicators analysis attests to weak monetary inflation pressures in the economy. annual growth of monetary supply decelerated significantly, to 2. 7 % in august. the deceleration was driven by the weaker performance of foreign currency inflows and lower demand for borrowing from the private sector. on the other hand, increased lending to the public sector through the banks supported the growth of money in the economy. bis central bankers ’ speeches economic growth is expected to be weak for the rest of the year, in the presence of sluggish foreign demand and absence of the fiscal stimulus. meanwhile, available data insofar do not signal recovery of consumption or investments in the near future. below - potential growth of the economy will condition contained consumer price rise in the period ahead. in the absence of unexpected supply - side shocks, one - year ahead annual inflation is expected to range between 0. 4 % – 3. 1 %, with 90 % probability. taking into account the above forecasts, the stimulating nature of the monetary policy will continue in the quarters ahead. the bank of albania will continue to supply the banking system with adequate liquidity for the smooth functioning of financial markets. * * * at the end of discussions, the