PRESS RELEASE
Interview given by the Governor of the Bank of Albania, Mr. Ardian Fullani, to the Voice of America, Washington, on March 4, 2005

1 - Mr. Fullani, besides the positive estimations of the Board on the macroeconomic stability, the sound monetary policies and maintenance of low inflation, the International Monetary Fund emphasizes that the maintenance of high development rates will require important changes in the infrastructure, the strengthening of government and state of rule. What do these changes imply, could you give us some details about them?

It's worthy saying that the climate already existing at the International Monetary Fund and the World Bank, I would say a climate, as we may say in Albanian, of successful history. This is a great consideration expressed towards Albania today. This gives Albania the opportunity to estimate with diligence the causes of achievements, but to take into consideration at the same time what should be done in the future. What it is presumed is the fact that Albania has achieved good macroeconomic results, a strong and stable growth, a fiscal consolidation, as well as a stable growth of the domestic currency value and a significant progress in the structural reforms.

What is very important and needed for the future is specifically the continuation of structural and institutional reforms so that Albania has the opportunity to open a new chapter with the International Monetary Fund and the World Bank. For this purpose, some conditions will be considered: situation of the balance of payments, situation of the channeling of funds from donor countries, fiscal situation and fiscal consolidation, and history with the International Monetary Fund. In this sense, I would like to say that the matter we are discussing today with the Fund is that of reaching an understanding. So, the Fund is not yet today in a role of tutorship but we are playing the role of sharing the same opinion on Albania's economic development.

This is a partnership role, a very important one, and to me is the backbone to which we have to maintain ourselves strongly for the development of our future relationships with the International Monetary Fund. In this view, our goal is to determine what new agreements we will have to sign with the Fund. What is understood today is that Albania is enough mature to reach a new agreement and this agreement would give Albania more flexibility. Of course, this would be achieved only going ahead with strong structural and institutional reforms, but this would give Albania the opportunity for a large participation, made for the first time, in the capital markets.

2 - While you are speaking about a new phase in which Albania is prepared to enter in relation with the International Monetary Fund, let us focus for a while on the economic and financial problems that exist today in Albania. One of the major problems is the development of business using cash transactions. How much this would impede the country's development and the banking system in general?

One of the topics we had discussed with the International Monetary Fund and the World Bank was definitely the development of the banking and financial system. Discussions started with indisputable estimations, very positive ones, on the new management of the Bank of Albania, the prospects and the new vision this management has for the development of the banking and financial system in Albania. Here it is the new thing. It consists in the fact that we will see a closer and better spirit, a more cooperative one, in the banking system and the development of the financial system in Albania. In what sense I say that? That is we have to fight more to further develop the banking system.

3 - How can you withdraw the cash the people have in their hands to channel it through banks ? Have we to do here with a backwardness of banks, or is it the interest of business of being developed by using cash, to evade taxes?

Of course, the situation is very complex and all your sayings are correct. What we attempt to do today as the Bank of Albania is to create an appropriate climate with the business and the private banking system. In what sense this would work? In the sense of absorbing money and not through slogans, through insensate conferences, but through more indispensable instruments: creating the business structures, payment structures, and services.

What we are fighting for today is that the banking system should go to the client, to say to him: "Come to me, not because I am the best but because I give you confidence, not because I guarantee you the transfer of funds but because I will serve you, I will give you an opportunity to manage your money better, and I will give you an opportunity that your life in relation with business becomes easier."

4 - Another problem that relates definitely to the service provided by the banks is the crediting. Crediting shows now low levels in Albania. Is there an opportunity to expand it and what can you do as a central bank to assist commercial banks in the lending activity?

Of course, this is connected also with the first point we mentioned above, with the relationship between banks and businesses that we are establishing to open another opportunity of cooperation, which will make the banking system more useful to serve everyone. Our new philosophy as a central bank is that the banking system be close to everyone, close to the clients, so that all may use it. This did not happen before, to be honest, because of many obstacles, and evidently we have in view here the situation of the law on land, we have in view the tightening regulations of both the Bank of Albania and the banking system, we have in view also a non-efficient environment of the business itself.

While today we have a completely different climate where the relationships between banks and businesses are being developed towards crediting to the economy. This means that banks increased their presence all over the country, banks are being consolidated and banks are looking forward to reaching stable soundness. Banks are reinvesting their capital in technology and basically banks are creating a wide network of payments. Great importance is given to electronic payments, credit cards, because we believe that they will be an important step towards cash reduction in the economy, but also towards the smoothing of the informal economy.