BANK OF ALBANIA
Governor Sejko holds a closure meeting with the representatives of the International Monetary Fund mission
Publication date: 19.06.2023
On 19 June 2023, the Governor of the Bank of Albania, Mr Gent Sejko, had a closure meeting with the International Monetary Fund (IMF) Mission team, led by Ms Anke Weber, the IMF Mission Chief for Albania.
The meeting focused on the analysis regarding the latest economic and financial situation in Albania, the projections for the future, as well as on the policies pursued.
Governor Sejko highlighted that the Albanian economy is expected to grow in 2023, proving the sustainability of the financial sector, as well as the flexibility of the private sector. He emphasized that economic growth is expected to be driven by the growth of private consumption and exports in terms of aggregate demand, and by the expansion of the services and construction sector in terms of sectors. In regard to the banking sector, the Governor stated that its activity has progressed steadily, with indicators of profitability and capitalization at appropriate levels able to provide support for the financial stability of the country.
The IMF Mission Chief, stated that overall, the banking system has shown resilient to successive shocks, with sound capital and liquidity positions. She advocated for continuous monitoring of bank credit, exchange rate and interest rate risks.
In this view, Governor Sejko underscored that inflation has been the focus of the Bank of Albania's, while the implemented monetary and economic policies have helped to maintain a relatively low level of inflation compared to countries in the region and reduce uncertainty. Also, the consolidation of the fiscal policy and the appreciation of the exchange rate have helped to reduce inflation and enabled a slower growth of financing costs in the economy.
Meanwhile, the IMF Mission Chief praised the work and results achieved by the Bank of Albania in terms of strengthening the monetary and financial stability of the country. In particular, Ms Weber focused on the importance of returning inflation to the target and stated the support for the Bank of Albania's measures to continue with the normalization of monetary policy.
Discussions in this meeting also focused on the exchange rate in Albania and the appreciation of the national currency, lek. The Governor said that Albania has always operated under a free-floating exchange rate regime during its transitional periods and development, such regime has provided it with an important instrument for coping with shocks and safeguarding price stability. In this context, the Bank of Albania does not target a certain level of the exchange rate, though it pays special attention to its performance.
Mr Sejko added that the foreign exchange market has functioned smoothly in the last two years, showing neither disorders nor speculative phenomena, which suggests that the strengthening of the exchange rate of the lek is a phenomenon determined by the real economy, and not by the financial market. Data in the balance of payments show a considerable growth in: foreign direct investments; tourism revenues; total exports; in remittances, compared to the previous year.
The IMF Mission Chief stated that the appreciating trend of the exchange rate is in line with the growth in exports and the structural improvements in the external balances of the Albanian economy. In this context, she underlined the usefulness and benefits that the Albanian economy has from the free-floating exchange rate regime and emphasized that, in accordance with this regime, the intervention in the foreign exchange market should be conditioned to the market disorders, while maintaining the role of the exchange rate as shocks absorber.
Concluding, Weber thanked the Albanian authorities for the hospitality and the close cooperation provided during the visit.