PRESS RELEASE
Question and answers following the Governor’s presentation of the Annual Report 2016 of the Bank of Albania to the Parliamentary Committee on Economy and Finance

Question: The current political situation continues to have some sort of tension. Do you, perhaps have a message for this situation and the impact it is expected to have on the economy, taking into account that businesses have appealed all the time about the growing uncertainty of this atmosphere?

Governor: We have highlighted at the last press conference, that the Bank of Albania has calculated its macroeconomic forecasts keeping into account that this is an election year. We will monitor further developments, but in principle, in case of a prolonged political tension, obviously, this would not help and would affect the level of investments and initiatives, and primarily the consumer confidence and the confidence in the investments made. At the moment, we cannot l not give a precise figure. We are monitoring the situation and we are looking at the potential impact from the political situation. Currently, we have noted no divergence of the macroeconomic parameters that we are monitoring, like: the level of lending, economic growth, etc. Always referring to the figures of the first quarter, the Bank of Albania finds that there are no fundamental shifts. I stress it again that in case of a prolonged political tension, this will obviously be reflected in the economic climate as well. We will monitor the situation and will publish our assessment in our reports.

Question: Do you have any signal from enterprises that may show interest, but also are hesitant, sceptic, about the current situation?

Governor: We, as the central bank conduct a survey on consumer and business confidence, the economic sentiment indicator. This indicator has been quite positive in the first quarter. This maybe does not match with the current situation, but it will be reflected when we have data on this situation. For the first quarter, the economic sentiment indicator was positive.

Question: Do you have any appeal for the political class?

Governor: I wish for stability.

Question: When you are talking about revising economic growth, are you expecting a downward revision?

Governor: In case of a prolonged political tension, of course there will be a downward revision of economic growth.

Question: Pardon me for insisting, but it has been two months... How long will be this prolongation that you think will happen, since for another 2-3 months there will be the election effect, which means 5 months in total at a minimum?

Governor: We will see how the political situation will evolve. I am confident that things will turn in the right direction.

Question: The reduction of the use of the euro. You have signed a memorandum with the MoF and the FSA. This is very technical, but could you explain in simple words what there is to be done?

Governor: It is technical. Simply put, we want to have a higher use of lek in the Albanian economy. Euro is widely used in the territory of the Republic of Albania, and many prices are quoted in euro; also, there is a high level of exposure in euro in the financial system. First, the Bank of Albania aims to increase the use of the lek to increase the efficiency of our monetary policy, thus to have a good monetary policy pass through, as the main instrument of the Bank of Albania to safeguard price stability. The second objective relates to financial stability. We want to have higher lending in the domestic currency, to prevent the exchange rate risk when the loans are returned, thus creating financial stability in the financial system. For these two reasons, the Bank of Albania aims to, let's say, 'combat euroisation', meaning a gradual decrease of euroisation and an increase of the use of the Albanian lek in the economy. This is our legal role.