PRESS RELEASE
Questions and Answers at the Press Conference of the Governor of the Bank of Albania on 27 November 2012

Question: What is your comment on next year's draft budget?

Answer: From a preliminary view, next year's draft budget projects figures that depend on revenues and spending, and on their well-management. However, as in any economic plans, there are risks. In this context, the Bank of Albania considers that it is important to preserve long-term debt figures and costs. Out of the context of present day discussions, I avail myself of this opportunity to highlight Bank of Albania's position and my personal stance on having a controllable and low level of debt, low inflation and a flexible exchange rate. This implies that our vision should go beyond this balance, in order to ensure Albania's long-term stability and the sustainability of the main figures.

According to the Bank of Albania, setting a fiscal rule is a necessary solution, though it cannot be considered to be the magic key. I, therefore, make an open invitation to Albanian politics to discuss and decide on a fiscal rule, which will be a very important instrument to ensure Albania's long-term debt sustainability and provide the necessary incentives to the economy. This solution should also provide some room for flexibility, implying cases of interventions and excess in extraordinary situations. This fiscal rule will be a guarantee for domestic and foreign investors with respect to its transparency.

Question: Governor Fullani, what is your comment on the Albanian fiscal policy following Government's approval of a law yesterday that removes the debt ceiling?  Do you consider this a right move?

Answer: I think my answer to the first question was more than you asked. However, I will once again quote from the statement I made earlier: ' ... Preliminary information suggests that the fiscal stimulus may be upward in the next year, complementing the foreign demand as a short-term contributor to next year's economic growth. However, the overall effect of fiscal stimulus will depend on the private sector and financial market's response and stimulus, while its long-term effect will depend on additional costs it will bring about on the budget".
I re-underline that it is very important to shift away from journalistic rhetoric and sit to discuss and decide on setting a fiscal rule. This fiscal rule won't be the golden key, but it provides institutional opportunities to have the necessary flexibility in hard times and realize revenues in calm times, in order to be guaranteed for the future. At the same time, this rule would guarantee the necessary flexibility and transparency for domestic and foreign investors. Having been a journalist for the last seven years, I think you would have very well answered this question yourself.

The central bank considers all the information made available by the internal and external market. Based on this information and the vague international developments, without ignoring the need to boost economic activity, we think that the long-term maintenance of parameters is pivotal. The latter contributes not only to enhancing agents' credibility both inside and outside Albania, but also to ensuring a stable economic growth. We should, therefore, find a long-term solution and discuss together to decide on a fiscal rule.
Concluding, I would like to end this conference by making a wish for this day and tomorrow. Happy Independence Day! I wish you a nice celebration of this day, promising that we will commit more in the next 100 years!