PRESS RELEASE
Questions and Answers at the press conference of the Governor on the monetary policy decision of the Supervisory Council of the Bank of Albania, 27 July 2011

Question - The Government of Albania has decided to cut its expenditures by ALL 18.3 billion. Is this sufficient to keep the budget deficit within the projected balance by the end of the year?

Answer - The Bank of Albania's policies are for open, transparent and constructive communication with the public and in the presence of the media we have been vocal as well as successful in collecting comprehensive information from the market and the real economy for a successful coordination of policies, combination of the fiscal policy with the monetary policy. Furthermore, we deem that the reduction of expenditures is fully in line with economic developments in Albania, to ensure controlled budget deficit and public debt within projections, always compliant with the legal framework. We are closely following the developments on the macro and micro level and, as mentioned in the report, we think that this is an appropriate and timely measure. One message conveyed through this measure is also that expenditures should be made on the basis of revenues. I think this is a positive measure that provides grounds for keeping budget deficit at stable levels.

Question  - Today, you called on Albanians to increase consumption.

Answer - This is in line with the opinion of the Bank of Albania and my personal view that the time has come and conditions are met to increase consumption in order to promote sustainable development. Moreover, this should happen by including a very important element, actually required not only in small and emerging economies such as Albania, but also in advanced economies: more optimism in economic developments, based on real conditions of their development and controlled budget. Proper monetary stimulus as well as encouragement of the banking and financial system to be most active in boosting consumer demand in a new reality are key factors in this regard. We need to be more careful; at the same time, more investments are also needed to enhance Albania's competitiveness in the global market.

Question - Given that the first half of the year is past now and we have a clearer view of economic developments, do you find the budget objective,  the 5 % economic growth rate, plausible?

Answer - I think that it is crucial to pay due attention to the information that comes from the economy, plan in realistic terms and be aware that all the economic stimuli exist in our economy for growth rates accordant with the demand and sustainable economic development. The Bank of Albania deems that all the conditions exist to reach last year's growth rates; moreover, all the conditions exist to reach, in the medium run, higher growth rates, perhaps 5% growth rate.

Question - Will the Bank of Albania find it difficult to keep inflation within the target and how will end-2011 look like as regards inflation?

Answer - As mentioned in the report, I think that all the conditions and indicators are in place for the inflation to be, by yearend, within the Bank of Albania's target band. It is a target approaching the reference point.