BANK OF ALBANIA
Governor of the Bank of Albania, Mr. Ardian Fullani, meets with representatives of the International Monetary Fund
Publication date: 03.12.2004
The Governor of the Bank of Albania, Mr. Ardian Fullani, held his first official meeting with the representatives of International Monetary Fund Mission, EU1 Department, headed by Mr. Julio Escolano, a mission which is paying a two-week visit in Albania. As usually, the object of this mission is to assess the implementation of the agreement signed between the Albanian authorities and IMF as well as to re-evaluate the effectiveness of all previous agreements, aiming at considering the adaptability of signing a new agreement with Albania.
In the beginning, the Governor of the Bank of Albania, Mr. Fullani, presented a detailed exposé on the latest developments of the country's economy, including the financial sector, where emphasis was mainly dedicated to the Bank of Albania expectations for the rest of the year 2004 and behind.
On the primary objective of the Bank of Albania, he stated that we are relatively confident that inflation will be kept under control, being close to the bottom value of the targeted range. Hence, the Bank of Albania estimates that further performance will be maintained within this range, while we are closely following the negative impact that oil price may have in this respect, as well as a possible Lek depreciation in the future. This price performance as well as monetary developments in general have created the necessary premises for an easing monetary policy, which is reflected in several successive reductions of the base interest rate. As estimated, this policy of the Bank of Albania was followed in a relatively satisfactory way from the financial market, creating real premises for a borrowing cost reduction in the country.
On the gross domestic production (GDP), he concluded that estimations of the Bank of Albania suggest that the objective towards an increase of 6 percent is possible to be achieved, despite the problems arising from a poor performance noted in the first quarter of 2004. However, it was agreed that in this context we need more comprehensive data for a more accurate argumentation, and consequently, a more comprehensive opinion in this respect will be given in the beginning of 2005.
On the post-privatization impact of the former Savings Bank, he stated that a "shake" of all the market participants was caused by the entry of Raiffeissen Bank in the market, raising in general the banking system aggressiveness. This was reflected not only in the quality of infrastructure and services provided at the counter but also in the best-functioning of certain segments of the money market. In addition, a recovered pulse of the credit to the economy is expected to be experienced, evidencing perhaps improvements on the credit balance structure, in the favour of Lek credit, thus leading to the invigoration of one of the potential channels of the monetary transmission, that of credit. However, this implies a higher diligence from supervisory standards since a rapid growth of credit may be accompanied with the deterioration of their portfolio.
On the reforms of the financial system, he stated that to upgrade it at the highest level, the Bank of Albania is seriously committed to implement all the projected steps. In this moment, the Automated Electronic Clearing House (AECH) system has started to be implemented and there is a positive progress regarding the anti-cash campaign the banking system has recently undertaken, while the process of reviewing the Banking Law in the Republic of Albania is still ongoing.
Concluding his exposé, Mr. Fullani emphasized that the Bank of Albania priorities will continue to be the country's macroeconomic stability as well as the financial sector stability. For this purpose, the Bank of Albania will be during his governing mandate a worthy partner concerning all the negotiations our country will have to make with international organizations, including the IMF and World Bank.
The Chief of Mission, Mr. Escolano, stated that the importance of this mission is much higher than the one of the previous missions, due to the fact that this time there will be an estimation of the effectiveness of the agreements signed until now with the Albanian authorities.
In general, he shared his opinions with the Governor about the general developments of the country and meanwhile he stressed on some major issues which may be briefly summarized: prudential review of the expected growth of GDP; the country's necessity to be evaluated by a specialized agency; further improvement of the financial market; qualitative increase of the macroeconomic statistics, etc.
Both parties agreed that most of these issues will be discussed with more diligence and in detail either at the experts level or in the future meetings these two authorities will have during the visit of the Mission in Albania.