Monetary Program of 2004 its cohabitation with fiscal policy

Publication date: 16.12.2003


The Albanian economy during 2003 seems to have returned to its potential growth rates, leaving behind the deceleration of 2002. Various indicators generally point out that the economic growth forecast for 2003 - of about 6 percent - is a real opportunity. Developments such as: stability in the agricultural production, the positive performance in the branches of services, industry and transport, the increase of the trade transactions volume verified in the first 6 months of the year, the greater number of tourists, the stable and favorable energy situation, stability of remittances and other factors, are reliable arguments in achieving the economy growth objective. 2003 is believed to mark another year of the consumption price stability. As in the 3-4 previous months, the Bank of Albania's expectations speak about an annual inflation rate within the target interval of 2 - 4 percent.

According to the latest data, the 12-month difference of consumption price index by the end of November 2003, marked the figure of 3.4 percent, while the annual inflation, calculated as the average of the last twelve months,
reached the level of 2.24 percent, reinforcing thus its clear downward trend. The Bank of Albania - in its recent analyses - has been underlining the fact that its monetary policy has been a careful, financial, budgetary policy, where special emphasis has been given to the budget expenditures control versus the realized revenues ratio. Consequently, the government's liquidity needs, up to the present moment, have been completely covered by the banking system, and therefore, the Bank of Albania financing was unnecessary. Under these circumstances the fiscal pressures on the monetary policy are weak.