climbed up to the point that, if left to their own accords, firms will soon need to make new investments in order to meet demand. facilitating the pickup of private investment growth will be bank ’ s improved ability and willingness to lend as the banking sector ’ s npls are expected to decline to a low single digit this year. this further strengthening of banks ’ balance sheets will allow banks to lend at lower carrying costs. furthermore, the ongoing preparation for the sector - wide adoption of basel ii at the end of 2008 will help ensure the quality of the new private credits. an additional economic stimulus will come from the fiscal side. with a strong fiscal position, the thai government this fiscal year has opted for the use of a budget deficit to support economic growth. key infrastructure investment projects include the expansion of mass transit network in bangkok, water resource management, and an integrated logistic system. these public investments will partially take up the slack in the first half of the year as well as speed up private investment through a crowding - in effect. of course, there remains the issue of political incidents which can still make things less rosy. this would not be under policymakers ’ control ; the government, however, is doing its best to take necessary safeguard measures in order to assure people of the state of security. ladies and gentlemen, being confident of the medium - term outlook does not mean that we will be complacent. after all, we are in an environment of an ever - increasingly competitive global arena, more integrated financial markets, volatile capital flows, more inter - linkages between economies, and increasing trends toward liberalization. for policymakers, this means that the conduct of policy will become more demanding in the periods ahead. this leads to my third and final point. that is, to ensure that growth and stability are sustained in the long run, we need policy tools and persistent reforms going forward. from a long - term perspective, the critical challenge for the thai economy is how to continuously improve its flexibility, efficiency, and competitiveness. in this respect, a crucial policy effort is a combination of financial and real sector reforms and policies that promote a sound and stable macroeconomic environment. to mention a few, infrastructure building will continue to be strengthened particularly through amendments and introduction of a number of legislation. the financial sector master plan ( fsmp ) will move onto its second phase, with the review of the plan and emphasis on increased competition and consideration on potential entry of new players to further enhance

the many challenges we have faced over this period, the volume of economic activity in albania has grown to eur 24 billion from eur 10 billion, the unemployment rate has shrunk to 10. 7 % from 17. 5 % and the average income per capita has increased to eur 9200 from eur 3500. at the same time, the main parameters of economic and financial equilibriums in albania have been improving. during this period, inflation has averaged 2. 5 %, current account deficit has decreased to 2 % of gdp from almost 11 %, and external debt has been reduced to 44 % of gdp from 70 % of gdp, while public debt has declined to 56 % of gdp from 72 %. in parallel, the banking sector has exhibited stability and improving financial indicators. thus, the non - performing loans ratio has dropped to 4. 6 % from almost 23 %, the capital adequacy ratio has reached an average of 18 %, while the banking sector has continued lending to the economy and displays high liquidity and profitability levels. this substantial progress has not been the product of chance. on the contrary, it reflects the ever increasing maturity and sophistication of albanian business, a framework of consistent macroeconomic policies, which are coordinated and oriented towards stability, the fruits of the structural reforms undertaken during this period, as well as the positive contribution of the banking sector. i will briefly address some of the supportive factors i mentioned above, focusing on the role of both the bank of albania and the banking system. from the perspective of economic management policies, albania has made progress in adopting the best practices in the field, both at the individual level, through their anchoring in the rules, as well as in terms of increasing their consistency and coordination mechanisms. the bank of albania has adopted a modern monetary policy framework, in the form of a flexible regime of targeted inflation, oriented towards price stability, accompanied by a free exchange rate regime. in parallel with the monetary policy, the bank of albania has worked on development of the macroprudential intervention policy and instruments, for improving the regulatory framework of the banking system, as well as advancing our supervision process, aimed at harmonizing them with the european union standards. in addition, the fiscal policy framework, equally important in this regard, has progressed towards the adoption of fiscal rules, which guarantee the long - term sustainability of public finances and increase its effectiveness and predictability. in terms of structural reforms, the bank of albania has