PRESS RELEASE
Questions and answers at the Governor's press conference, on 3 October 2017

Question: About yesterday's statement by the IMF mission, what is your opinion about what the IMF pointed out that public investment through PPPs pose substantial fiscal risks, in the framework of the Government's EUR 1 billion programme, and the recommendation for the Government to have a stable fiscal policy, focusing on tax increases; I understand, however, it could be perhaps a question for the Ministry of Finance. And a second question, what is your opinion about the public investment projects through PPPs that the Government intends to undertake, do they boost lending to the economy, what is their impact?

Governor: The IMF's recommendation was within a normal, standard and professional framework. Indeed, Albania may be in great need for capital investments and has limited financial resources, particularly in the public sector. In this context, the application of public investment through PPPs, when carefully studied, if profitable with clearly defined priorities, certainly they would contribute to economic growth as well as the acceleration of the European integration of Albania. The IMF said that it is not against public private partnerships. The idea is that these projects must be well studied, profitable and successful. If they were successful, their fiscal impact would be within the budget parameters.

In Bank of Albania's view, these projects should be reflected transparently and in line with the international standards. We remain open to see the performance of these projects. This is a major plan foreseen for the next four years and it should be elaborated and detailed in the budget plans of each year. Certainly, project by project and budget plan by budget plan we will see, assess and evaluate their performance, but again, I emphasise that Albania needs capital investments and these projects would contribute to the development and acceleration of Albania's integration in the European Union as well as the economic growth of the country and of the welfare of the Albanian citizens.

Regarding the second question, in the same context, I also think that these projects will have a positive impact. I have pointed out to the mobilisation of the liquidity surplus in the Albanian financial system. The Albanian financial system is well capitalized and with surplus liquidity. Public private partnership projects would be an opportunity to share the risk and divide it among private investors, foreign or domestic, and the financial system. But, this must always be in accordance with the project financing criteria, namely the risk criteria that banks respect according to international standards. So, in general, I would say that these projects have a great positive potential for capital investment; they should be done in a well-studied way, conform to the international standards and the financial industry risk criteria.

Question: Are the structural changes in the financial system a source of concern for the Bank of Albania? What is your comment on IMF recommendations requiring enhanced vigilance?

Governor: The International Monetary Fund made a recommendation that was consulted, agreed and welcomed by us. We cooperate consistently with the International Monetary Fund. In this context, not only the monetary policy, but also the work of the Bank of Albania in terms of safeguarding financial stability is coordinated and harmonised with the consultations of the International Monetary Fund and the World Bank.

Albania has a very stable macroeconomic situation, stable financial stability so far, and it is expected to continue so in the future. Hence, this recommendation is absolutely normal, very welcomed, coordinated and agreed with the International Monetary Fund. We do not see any concerns.

Obviously, we need to increase our supervision capabilities, since the market, the products and the technologies evolve. The Bank of Albania, like any other central bank, needs to perfect, advance, train and consult with a view to enhancing its capacities. Therefore, we see the increase of supervision capabilities of the Bank of Albania as a very positive step. Supervision by the Bank of Albania, as the regulator and supervisor of the banking system, is a determinant element in the process of safeguarding financial stability, including the structural changes you mentioned in your question.

Regarding the structural changes in the banking system, we currently do not have any request. Apart from the National Bank of Greece, we do not have any official information on other structural changes. Certainly, if we had a request submitted, we would apply all the legal requirements and regulations of the Bank of Albania, which are well-designed and provide details on all the possible structural changes.

What I would say and reassure the public is that the banking system is very stable, well capitalized and liquid. We will be very vigilant as regulators, in collaboration with the International Monetary Fund, to strictly enforce the criteria of the law regarding changes to any potential shareholder in the banking system.