total assets and risk - rated off - balance sheet items, while loan portfolio quality is at satisfactory levels. year 2008 coincides with increased prudential policies of the bank of albania in terms of adopting a more conservatory approach. the passing of the new banking law, the 2007 developments once credit bubble exploded in the usa and high lending rates over 3 - 4 last years were assessed with prudence by the bank of albania. therefore, in early 2008 the bank of albania organised the first open forum with the banking system, submitting through an open communication, a new packet of prudential regulations for being discussed there, aiming at consolidating the financial stability of the country. the bank of albania ’ s supervisory council gave way to the approval of the whole proposed packet, thus creating an effective vaccine, which has produced appropriate antibodies or has provided the immunity i mentioned earlier in my speech. which are these modifications that have increased our resistance so much? • in compliance with the new law, there were approved new criteria for calculating, supervising and reporting large exposures of banks to parent banks and connected subjects, aiming at managing the risk deriving from concentrated exposure to them. • in order to achieve a more effective management, a new regulation was drafted, strengthening the internal audit in banks and branches of foreign banks. it regards the internal audit as a part of the general governance of banks. it ensures the platform for creating an efficient internal audit system, as the main factor in management and administration of banks and branches of foreign banks. • a special importance was given to transparency of banking and financial products and services. this is another aspect where we intervened during 2008. the new requirements standardise the way and form of supplying customers with information about banking products and services. special emphasis was laid on obligatory publication of effective interest rates for deposits and loans. through this information bank customers may get acquainted with calculation of loan effective interest rate, elements of credit and deposit contract, marketing of products and services, maintaining of customer data and confidentiality, dealing with customer complaints and establishment of specific structures relating to such complaints. • part of the new package was also the standardization of obligatory information the banks and branches of foreign banks should disclose about the main business of banks, their organisation and management, financial performance and position, risk management and accounting policies. • taking into consideration the international situation and aiming at a better diversification of risk deriving from the concentration of bank investments in international financial markets, the bank of albania ’ s supervisory council

the balance of payments with a positive result for 2008. foreign reserves of the bank of albania increased by about euro 192 million or by 0. 9 percentage points of gdp. in macroeconomic terms, the high deficit on trade account signals high levels of consumption and investments in the economy, financed from foreign savings in the form of capital inflows. in a longer - term analysis, albania ’ s current account deficit is a normal phenomenon in the context of the country ’ s development level. especially positive is the fact that the major share of the country ’ s imports is represented by imports of machinery and equipments and that of intermediate consumer goods. however, current account deficit widening is an element that should be constantly monitored, since its financing sources are not always steady and necessary corrections for the current deficit compliance with the available funds for its financing are frequently difficult. macroeconomic policies should be prudent to ensure longterm sustainability of the balance of payments, as one of the principal aspects of the macroeconomic stability and long - term growth of the country. fiscal policy and indicators fiscal policy is one of the main instruments for stimulating and controlling the economic activity. due to its weight, the public sector is a significant generator of the economic activity and a determinant of the financial conditions of the economy, of interest rates, of the exchange rate, and its liquidity. during 2008 fiscal policy was more expansionary, thus being reflected in enlargement of the budget deficit and of the public debt. during 2008 budget deficit to gdp reached 5. 7 percent, being expanded by about 2. 2 percentage points in a per annum basis. public debt level amounted to 55. 6 per cent of gdp, from 52. 2 per cent in the previous year. budget revenues and expenditures increased respectively by 15. 3 and 22. 6 percent during 2008, accounting for 27. 3 and 32. 9 percent of gdp. improvement of public debt management in terms of extending maturity time - length and diversifying the financing sources is a positive highlight, which has helped to refinance the debt and control its cost impact on debt indicators. however, the bank of albania deems that the fiscal policy should not distract attention from maintaining long - term stability of fiscal indicators and minimizing their impact on financial markets. fall of budget deficit during 2009 and the commitment for drop of public debt in the long run should be constant priorities of the fiscal bodies. in line with that, the bank of albania deems that more endeavours