PRESS RELEASE
Q&A with Governor Fullani at the press conference on BoA Supervisory Council decisions on Monetary Policy, 27 April 2011

Question: The Ministry of Finance has proposed recently to increase the corporate profit tax rate. This increase is envisaged to be commensurate to the companies' profit. Referring to results of the past two years, if this proposal is approved, commercial banks would some of the businesses potentially affected by it. What is the opinion of the Bank of Albania on this matter and what would be the implications of this measure on the business and development plans of commercial banks?

Governor: The Bank of Albania is not aware of such proposal. The Bank of Albania deems that harmonization of the fiscal policy with the monetary policy has been the key to the success and achievements made over the past years, especially since 2008, which corresponds to the global crisis period. In the light of this experience, I would consider that, in the future as well, policies need to be well studied and take into account the international experience, in particular, regarding the new economic growth model. Priority should be given to the furthering of structural reforms to boost Albanian economy competitiveness, make it more attractive to foreign investors and provide relevant stimuli for long-term development. This would translate into low costs, enhancement of competitiveness, and creation of space to develop a competitive economy. In addition, it would contribute to maintaining standards of an economy that produces, exports, and invites foreign investors to utilize the country's capacities.

Question: You said that a main cause for price increase were imports that are now more expensive. What is the extent of the impact of the Albanian Lek depreciation in this regard?

Governor: Lek depreciation, in Bank of Albania's view and as reported today, in its nominal value is 1 per cent. This means that the lek has been and continues to be in balance compared with the previous two years. We need to be clear that the Bank of Albania has continuously reminded the public that the free and floating exchange rate regime adopted by Albania has been one of the main buffers against inflationary pressures from outside and a rather effective signal on parameters of the Albanian economy. This regime and the special approach of the Bank of Albania to ensure a flexible rate, has made it float towards effective parameters. All decisions by the Bank of Albania, including today's decision on reducing the remuneration of the banks required reserves, have contributed to maintain a flexible rate in balance in order to provide the necessary stimuli to the Albanian economy in the mid-term horizon.