PRESS RELEASE
Interview with Gent Sejko, Governor of the Bank of Albania, Monitor magazine

1. Governor, this is your third year at the helm of the Bank of Albania management. Would you say today that you have accomplished all the objectives for the past year? How did the Albanian economy perform?

Year 2016 was certainly a positive one for both the economy and finances. This conclusion is not just an opinion, but a natural outcome based on the available information. Overall, I believe that the Albanian economy has moved forward in the right direction, and has strengthened the fundamentals for sustainable development in the future.

Let me highlight some of the key developments:

• First, economic activity in Albania grew further. In figures, economic growth is expected to range 3.3%-3.4%, for the year 2016, compared to 2.6% in 2015. Beyond figures, I think that year 2016 showed two important developments: (i) expansion and strengthening of economic growth drivers; and (ii) distribution of growth effects to a broader segment of the Albanian society. Regarding growth drivers, similar to the previous year, economic growth in 2016 continued to be driven largely by the increase in private investments; meanwhile, unlike in the previous year, this year's growth was supported also by the increase in household consumption and the improvement of foreign trade, over the second half of the year. The expansion of economic growth drivers contributes to a consolidating positive development trend. Regarding growth effects, year 2016 was characterised by a rapid increase of employment and a reduction of unemployment. Data as at the third quarter show that employment increased on average by 6.8%, while unemployment declined by 2.6 percentage points.
• Second, in 2016, some of the main economic balances in the Albanian economy improved. For example, after increasing for three years, the public debt to GDP ratio fell in 2016, in a meaningful and important shift toward fiscal consolidation. Year 2016 recorded also progress in terms of fulfilling our price stability mandate. Although in the first quarter we faced strong shocks from foreign markets, the firm reaction of the monetary policy, its credibility in the financial market and the improvement of economic activity contributed to the return of inflation to target. Also, the banking sector is sound, capable to withstand shocks and accomplish its financial intermediation mission.
• Third, during 2016 Albania made progress in reforming the financial system and building institutional capacities in terms of formulating and implementing policies. I would like to underline that, in 2016, a set of laws and regulations were approved, which strengthen our monitoring and administration capabilities. To mention a few: the law on bank recovery and resolution increases our regulatory capability in terms of withstanding capacities to various shocks; the revision of the bankruptcy law and the law on private bailiff helps to improve lending in Albania; law on the functioning of savings and loan associations aims at consolidating them and establishing adequate relations between them and the rest of the financial system. Also, in 2016, the organic budget law was amended aiming at increasing the stability of public finances and establishing a fiscal rule by law.

I think this picture shows the positive trend of developments over 2016. Yet, the Albanian economy remains far from its full utilisation of production capacities. Such capacities should be further expanded, through ambitious structural reforms. The Albanian economy continues to face cyclical weaknesses and structural problems. For us, as policy makers, many challenges remain. Anyhow, two elements are crucial: direction and speed; both these elements are moving in the right direction.

As a central institution in the economic and financial life of the country, the Bank of Albania has considerably contributed to these developments.

Our accommodative monetary policy has contributed to reducing financing costs, increasing the credit portfolio in the Albania lek, improving the liquidity situation in the economy and expanding consumption and investments. This policy has laid the foundations for achieving our price stability objective and has established the premises for strengthening financial stability in Albania. The latter was also supported by the supervision and prudential regulation of the banking sector by the Bank of Albania. We instigated all the legal initiatives I mentioned above and we have guided the drafting process for two of them. Also, we have worked to expand and increase the efficiency of payment systems in Albania, support the European integration processes, and strengthen processes and procedures related to the decision making of the Bank of Albania.

In reflection to above, I think that, yes, the Bank of Albania has accomplished - all in all - its institutional objectives for 2016.

Related to my personal objectives, I think that there is still work to be done. As I have previously had the chance to emphasise, my personal challenge is to see a contemporary central banking philosophy firmly embedded in the daily activity of the institution in general, and its employees in particular. This is not easy. It is an everyday challenge, where the human element is at the centre. This is a challenge, which needs a differentiated work according to the characteristics of particular departments and individuals. This is the only way we may cultivate a new way of thinking, which, in turn, will contribute to strengthening the institutional culture, rendering the Bank of Albania more capable of facing actual challenges.

2. Recent figures published by INSTAT show that inflation in January increased for the first time, to 2.8%, close to the Bank of Albania's target. What were the underlying reasons of this increase?

Inflation in Albania has been on an upward trend throughout the last nine months of 2016, and this trend has continued also, as confirmed so by the data for January. Of course, the 2.8% rate recorded in January was the highest in the recent years and close to our target; obviously it is an interesting development.

Maintaining price stability, understood as an inflation rate around 3%, is in the focus of our work; therefore, I will dwell somewhat longer on the causes and implications of this increase.

After the supply shock in the first quarter of the previous year, inflation recorded an upward trajectory in the rest of it. This performance reflects the combined impact of a set of factors: (i) the economic growth and better capacity utilisation drove to the increase of employment and the return of business? profit margins to normality; (ii) the external shock effects decreased in the rest of the year, and most importantly, they did not affect the costs structure of the Albanian economy; and (iii) the economic and financial agents' expectations for inflation did not fluctuate strongly.

Our monetary policy has either directly or indirectly supported these three factors. The Bank of Albania further increased the monetary stimulus over 2016, through the policy rate cut, a stronger forward guidance and the supply of the interbank market with needed liquidity.

In this context, inflation not only performed in compliance with our expectations, but was also a logical outcome of the policy implemented by the Bank of Albania.

On the other hand, our analyses suggest that the rapid increase of inflation in January, although in the right direction, is not an indicator of the speed of inflation's return to target. In other words, notwithstanding the rapid increase, our perspective on the expected economic developments has not changed: our forecasts suggest that the stable return of inflation to target will occur during 2018. This implies that the current monetary policy stance is the right one and our forward guidance to financial markets remains unchanged.

3. The Bank of Albania has implemented an accommodative monetary policy, which is reflected in the price of credit and deposits in the domestic currency; on the other hand, it is noted that the exchange rate has performed on the opposite direction to the accommodative monetary policy. What do you think were the reasons? How is this affecting the exports and the overall economy?

It is true that the Albanian lek showed appreciating trends against foreign currencies over 2016, emphasising the trends observed in 2015.

Before commenting any further, I find it appropriate to explain that, in compliance with our policy, the exchange rate is entirely and freely determined by the market, reflecting the demand to supply for foreign currency in the market.

From this point of view, the dominant factor in the exchange rate behaviour over 2016 was the increase of supply in foreign currency. From our analyses, this was partly due to the high levels of foreign direct investments, the higher income generated during tourist season, possible shifts of portfolio and efforts to reduce informality.

Anyway, the point of view of the Bank of Albania is that monetary conditions in Albania are simulating. It means that the monetary policy, through its transmission mechanism, supports the expansion of aggregate demand and the strengthening of economic growth.

4. Recent developments in foreign markets show that central banks have started to review their course of action regarding the interest rate. We refer here to the decision of Federal Reserve or the discussions of the European Central Bank. In view of these developments in international markets, will the Bank of Albania change its monetary policy rate? Are you optimistic about inflation's return to target, according to your forecasts?

Our monetary policy is exclusively formulated to accomplish the price stability objective. Nevertheless, that does not mean we do not monitor developments in our trading and financial partners. It is not uncommon that these developments affect considerably the Albanian economy and financial system, as well as domestic prices.

Regarding developments in foreign markets, the recent incoming information shows inflationary pressures are picking up in the euro area, while the Federal Reserve has already started the tightening cycle of the monetary policy, although in a rather controlled way.

Regarding the relative degree of the Albanian economy and financial system's exposure, I think that ECB's monetary policy is quite relevant in the Albanian environment. Our analyses suggest that the increase of inflation in the euro area is considerably determined by the increase in food and energy prices; these items are not directly and entirely under the control of monetary policy indicators of overall inflationary pressures in economy. For this reason, I think that the ECB will continue to be prudent and not tighten the monetary conditions, for as long as there are no clear signs of a visible economic progress.

Taking this fact into account, obviously, we will continue to monitor the situation. The reaction of the ECB and, above all, the consequences for Albania will be the focus of our analyses. I would like to inform the public that while external conditions remain a factor, it is neither the only one, nor the most crucial factor in determining inflation in Albania. Hence, the monetary policy implemented by the ECB is not automatically or mechanically translated into the monetary policy of the Bank of Albania.

5. It is noted that, despite the consecutive policy rate cut, lending is not yet at expected levels. What can you say about the performance of lending?

The effects of our monetary policy on lending, I believe, are evident. First, credit interest rates in the Albanian lek, over 2016, averaged 0.7 percentage points lower than in the previous year. Second, the lek credit portfolio increased by 10.2%, during 2016, while the foreign currency credit portfolio fell by1.2%, and total credit portfolio increased by 3.2%. Third, I would like to emphasise a fact that is frequently disregarded, that is, our accommodative monetary policy contributes to the decrease of debt servicing for existing credits. In other words, it not only helps to increase credit, but also eases the financial situation of borrowing enterprises and households. In this context, the impact of the monetary policy in facilitating lek lending has been incontestable.

It is true, however, that credit growth remains relatively fragile. I would like to explain a few things about this phenomenon:

First, the reasons of credit performance and its perspective

• On the one hand, the low credit growth reflects a relatively low demand for credit, or at least, a low qualitative demand. This is somewhat understandable given the current development stage of Albania. Enterprises and households first attempt to use their internal funds, before turning to bank loans. These funds are present in the Albanian economy. The payment of arrears by the Albanian Government during the period 2014-2015 was a large injection of liquidity in the economy. Also, the recovery of private consumption and the high foreign direct investments during 2016 drove to the increase of liquidity for enterprises. This is noticed in the increased level of enterprises' deposits by around 20%. Many Eastern European and other countries have experienced economic growth without credit growth in the early stages, and that is something happening in Albania as well.
• On the other hand, credit supply appears tight. Our quarterly lending surveys show that banks apply tight lending standards, in terms of collateral, credit term, credited sectors, and risk assessment. This is due to the reason that credit risk in Albania was high and the risk appetite by European banking groups was low. The Bank of Albania, aware of this fact, initiated the plan of measures to reduce the level of non-performing loans, by directly helping the improvement of bank credit supply.

In light of the above considerations, the Bank of Albania deems that the current performance of lending is not an obstacle to economic growth. Nevertheless, the further expansion of economic activity will gradually be followed by the increase of credit demand. The capability of the banking sector to serve this increased demand will determine the performance of both credit and the economy.

Second, the Bank of Albania is concerned not only for the growth of credit, but also for its quality. This implies that our initiatives and instruments to promote lending will always aim to maintain a proper relation between these two objectives.

6. The central bank has continuously drawn the attention on the exchange rate risk that accompanies lending in foreign currency. Which are some of the measures you have taken to reduce euroization in the economy?

Due to the importance that euroisation has in general, I will answer this question in greater detail.

The high use of foreign currency in the financial system transactions is a phenomenon known as "euroization" or "dollarization", depending on the dominant foreign currency. By category, we have euroization of "assets" when entities prefer to have their savings/investments in foreign currency; and euroization of "liabilities" when entities prefer to borrow in foreign currency. Euroization may further increase if the foreign currency is used as a payment instrument for transactions in the economy. If measures are not taken to reduce it, the euroization may drive to undesirable structural changes, where prices in general start to be indexed with the foreign currency. Overall, the experiences of different countries related to dollarization/euroization show that it is a consequence of high inflation periods, considerable depreciation of the national currency against foreign currencies, macroeconomic misbalances, financial crises, etc. From the economic and financial point of view, a high euroization level in the banking sector may be accompanied by:

(a) a decrease of effectiveness of the central bank's monetary policy. This happens due to the shrinkage of two main channels of its transmission, such as lending in the domestic currency and use of the exchange rate as an automatic instrument of the financial and economic stability. The second relates to the increase of opportune costs related to the amount and use of foreign currency reserve; 

(b) the increase of risks to financial stability. In more concrete terms, it is about the exposure of market actors and their clients to the exchange rate risk; the lack of effective instruments to address a stress situation in the financial system arising from high exposure to financial activity in foreign currency.

Overall, for the economy, the high use of foreign currency may hamper the efforts of authorities in formalising the economy, the implementation of effective fiscal policies, the necessary reforms for transparency and other aspects.

Some foreign and Albanian researchers classify Albania as a country with a high level of euroization. In this regard, Albania, again, is similar to other regional countries and reflects, among others, the exposure to foreign currency flows due to the important economic relations with the EU and euro area countries. I would rather not enter into greater details of the underlying reasons of such euroization levels, but I would like to emphasise that it is a complex and challenging phenomenon to be dealt with, where the impact of various measures may materialise only gradually and in the medium or long run. Notwithstanding the difficulties, I think it is necessary to decisively react against the phenomenon. It will help to increase the resilience of the Albanian economy, mainly through the decrease of its exposure to risks and improvement of necessary economic and financial policies to counter these risks.

For this purpose, the Bank of Albania, the Ministry of Finance and the Albanian Financial Supervision Authority have started discussions for a strategic approach to address this phenomenon, according to the respective areas of competence. In this regard, a Memorandum of Understanding is being compiled, whereby the signing authorities will commit to act to reduce the use of foreign currencies, and promote the use of the domestic currency in the Albanian economy. The Bank of Albania, as the monetary and supervisory authority of the banking activity, is working to identify some measures that will aim at increasing the cost of foreign currency use in the transactions of the banking sector, strengthen the stability of the banking sector against liquidity stress in foreign currency, and improve the requirements on the awareness of foreign currency borrowers against the foreign exchange risk. Once the final conclusion is achieved, the Bank of Albania will carefully see to it that their implementation stages at banks are gradual.

7. After the crisis of 2008, the business of banks has become somewhat more difficult, because of the strengthening of supervisory rules, auditing, etc., while the return on equity for shareholders has fallen. How much are banks in Albania updated with these developments and will there be a consolidation in the future or the will the market expand further?

Amendments to the regulatory and legal framework for the banking activity at international level after 2008 are important. They reflect the analysis and conclusions on the reasons and consequences of the international financial crises, including the ways to prevent them in the future. Among these amendments, we may specify those on: improvement of supervisory superstructure, improvement of the framework that assesses and prevents systemic risks (macro prudential policy and its instruments), more accurate assessment of risk-bearing assets in banks, and improvement of the capital quality and quantity. Absolutely, their spectrum is broader.

These measures, which have started to enter into force gradually, have affected the banking activity at home. For example, you know that the higher capital requirements in European banks, following the relevant stress tests, are partially realised through the reduction of risk-bearing assets of European banks. Another way was the reduction of their affiliates' exposure to securities of non-EU countries' governments and private entities' debt instruments in these countries. This impact was more notable in Albania in the period 2012-2013, but the phenomenon is present nowadays as well. In parallel, the efforts to consolidate capital positions may have urged some European banking groups to restructure their network throughout Europe (that is outside the EU as well), by reducing those in countries where the potential for generating income is lower and the need to inject additional capital by the banking group is high. Unlike some regional countries, Albania has not been affected by this phenomenon, so far. The European banking groups appeared ready to support their affiliates in Albania with capital, whenever it was necessary (mainly in the period 2013-2015). Nevertheless, as you also emphasised, capital has become more expensive; the past experience in this regard may not be interpreted as a guarantee for the future.

Against this backdrop, the Bank of Albania has focused its supervisory activity in the following aspects:

a) Safeguarding banking sector stability. Given the current situation, the important activities relate to: verification of bank standards for the early identification of non-performing loans; provisioning them adequately; undertaking concrete regulatory actions to reduce the level of non-performing loans; reasons of stress-tests, which aim at identifying the adequacy of financial capacities (capital, liquidity) to withstand hypothetical situations of financial stress; compilation and assessment of bank recovery plans, which identify the ways banks will adapt their business to withstand a potential stress situation;

b) Adoption of international standards to ensure our banking system is stable, and our supervisory activity comparable to the standards required by the European System of Central Banks. In this regard, the activity of the Bank of Albania is focused on the improvement of the legal and regulatory framework related to the instruments on the management of hypothetical stress situations in the banking and financial activity. In the main laws that regulate the banking activity, the Bank of Albania has endeavoured to strike a balance between the objective to improve the banking system resilience through better regulation on one hand, and the need to avoid the overregulation and unnecessary costs to the banking industry, on the other.

c) Preliminary identification and assessment of risks. The Bank of Albania is mainly focused on: development and improvement of methodologies for the identification and assessment of systemic risk; stress-tests against hypothetical shocks that expose the banking activity to market, credit and liquidity risks; establishment of a macro-prudential policy framework and the way for the development and implementation of the respective instruments.

In practice, we monitor closely the banking sector?s exposure to internal and external risks, and we try, through a regular communication and collaboration with the banking industry, to improve and implement the legal requirements effectively.

8. Governor, since you appointment at the Bank of Albania, you have initiated insistently a reform that aims at reducing the level of non-performing loans. What has been achieved so far, and what remains to be done? While the bankruptcy law still may not be implemented, what are the steps that the Bank of Albania is implementing to prevent the increase of non-performing loans? How is the restructuring process going on?

I stated, after assuming office, that the reduction of non-performing loans will be one of the challenges of my work. For that reason, in collaboration with other national decision-making factors and our international partners we undertook a set of legal interventions dubbed as the "Plan of measures to reduce the non-performing loans".

I would like to emphasise that the plan was fully fledged only in 2016. First, the Supervisory Council of the Bank of Albania approved the regulatory amendments, which were agreed in 2015. Now there is more clarity in the interpretation and meaning of some important concepts related to lost loans write off from the balance sheet, the supervisory treatment of real estate taken in ownership due to the judiciary processes on the execution of collaterals for non-performing loans, facilitation and selling of non-performing loans and the faster reflection in the Credit Registry.

Second, the Parliament approved the legal package concerning bankruptcy and bailiff processes and completed the second and most important pillar of this plan. Now, I think we have everything set up properly and the environment in 2017 allows us to intervene more intensively.

In parallel with the approval, communication with the banking industry is intensified to encourage the lost loan write off, the preparation of strategies to reduce non-performing loans and the compilation of recovery and resolution plans for large borrowers. In addition, the successful implementation of the justice reform will release the synergy that will further increase the successful joint action plan for the reduction of non-performing loans.

From a quantitative and chronological point of view, I would like to emphasise that in the last two years the non-performing loans indicator recorded the highest reduction (since 2008, this indicator increased continuously peaking at 22.8% at the end of 2014). At the end of 2016, the fall of non-performing loans was materialised in the relative indicator, down at 18.3%, also in absolute value shrinking by around 19%. Data for January 2017 show the falling trend continues.
The trend has continued constantly and at added intensity at the end of 2016.

Related to restructuring, currently we are reviewing the guidelines on credit restructuring, including in these guidelines the best international principles for such processes, in particular the complex one with many participants from both the borrowers' side and lending institutions. Also, we plan to compile, in collaboration with World Bank's experts, a framework cooperation scheme among banks, as they will have to coordinate with each other to find adequate and stable solutions to the common borrowers.

9. The Albanian Government has undertaken a set of reforms. What do you think have been the effects of these reforms on economic growth?

I think that a final evaluation of these reforms' effects will need its time.

First, this relates to the time dimension of the reform action. Many reforms may be painful at the beginning but later the positive effects materialise. Second, not all reforms have been directly aimed at expanding the potential of economic growth. Some of them have aimed at strengthening economic and financial balances of the country, or reducing its weaknesses.

Nevertheless, I think that all reforms in the economy have been in the right direction and the positive outcome will be increasingly materialised in the long run.

10. A recent FIAA report shows that the business climate in Albania is worsened considerably. Meanwhile, Bank of Albania's business and consumer surveys show a significant improvement. Why this inconsistency?

Allow me to emphasise that these two surveys have different objectives and nature. For this reason, their results are not comparable and it is difficult to conclude on consistency or inconsistency.

To inform the public, our Business and Consumer Confidence Surveys are constructed according to the standard harmonised methodology of the European Commission. In these surveys, a sample of 1200 consumers and 1200 businesses is selected randomly and represents the consumer and business that operate in Albania, taking into account geographical distribution, size of business, and distribution within the producing sector. The representative sample of businesses does not differentiate the origin of business? ownership, which is businesses with both domestic and foreign capital are included. On the other hand, the FIAA report for Albania - "Study of Business Environment" - attains its results through 70 interviews only with businesses having foreign capital.

Also, beyond the difference of the interviewed sample, our survey is designed to analyse the cyclical movements of the economy, that is, the performance of sales, output, employment and direction of the Albanian economy development. Conversely, FIAA report is designed to identify the problems the firms face during their activity in Albania. I think they are completely two different things.

11. What are the expectations for the economic growth of this year? What do you consider as the most risk-bearing factor against the stable economic development, considering that 2017 is an electoral year? What are the spaces of the Albanian economy to return to its potential?

The Bank of Albania has also stated previously that the outlook for economic growth in 2017 remains positive. In terms of economic growth, we expect a slight improvement in 2017 and a substantial improvement over 2018. The preconditions for this outlook are in place: the monetary and financial environment is favourable, business and consumer confidence is up, financial balance sheets are sound and the external environment will be somewhat more positive compared to 2016. If the Albanian economy performs according to this baseline scenario, all the premises are in place for the return to potential in 2018.

Nevertheless, economic developments always are subject of uncertainties. You mentioned one of them: parliamentary elections. I would also add the potential risks that may arise from the external economic and geo-political environment. Anyway, it should be noted that the political stability is an important factor to guarantee the overall economic and financial balances of the country.

Regarding your concern about the possible impact from parliamentary elections, I think that the Albanian experience has examples of two situations: election period and post-election period with high impact on the economy, and the contrary. Personally, I think that a quiet election and post-election process would be beneficial to the country.

12. How sound is the banking system and what is the outlook for 2017?

Currently, we assess that the banking system situation is stable. In 2016, the banking system recorded good capitalisation, liquidity and positive financial performance. The whole activity accelerated the annual expansion pace at 6.8%. The annual growth rate of credits and deposits recorded 2.5% and 5.4%, respectively. Deposits in lek provided a considerable positive contribution to the growth of banking sector deposits in the last quarter. Non-performing loans ratio fell at 18.2% at the end of the year. Almost all banks showed improvement. The non-performing loans provisioning and capital coverage improved.

Our expectations are more positive for 2017. The activity of the banking system is expected to reflect the acceleration of economic growth. This should be reflected in the increase of credit and other forms of intermediation by the banking sector. We expect the process for the reduction of non-performing loans to continue, as a result of the effect of some legal and regulatory actions for this purpose, and the improvement of economic growth. We asses that the level of non-performing loans remains high and needs to be at focus of the Bank of Albania and the banking system, with a view to addressing and reducing their level in 2017. At the same time, banks should monitor their exposure to market risks, that is the exchange rate and interest rate risk.

13. At the end of 2016, the law was adopted on the establishment of a resolution fund in case they show difficulties. Will there be additional costs to the banking sector? Which are the steps to be followed for the concrete implementation of this Law during this year?

The adoption of the law "On the recovery and resolution of banks in the Republic of Albania" by the Parliament in the last days of December 2016 constitutes a rather important reforming effort to guarantee the stability of the banking system. Answering your question, I would like to explain that the law stipulates it will enter into force six months after the publication in the Official Journal, meaning that this law will assume full legal effects in July of this year. From this point of view, we are committed in two directions for its rigorous implementation: 1. establishment of the relevant organisational unit; and 2. compilation of the by-laws.

The Supervisory Council of the Bank of Albania in its last meeting approved the establishment of the Resolution Department, as a new unit that is part to the organisational structure of the Bank of Albania. The new Department shall conduct its resolution function separately from the supervisory one. It will have separated and independent reporting lines, thus complying with the standard of the relevant European Union Directive.

In parallel with the establishment of the unit, we are working on the compilation of the relevant bylaws. This will provide for the full implementation of obligations laid down in the new law on the treatment of banks when they encounter serious financial difficulties. It should be emphasised that the banking sector should use this period to take the necessary actions to adapt to the new legal requirements.

The Bank of Albania with regard to preparing the resolution authority for the implementation of obligations stipulated in the new law will continue to collaborate and receive assistance from World Bank experts for the preparation of bylaws as well as the training of human resources. We should keep in mind that it is a new regime of intervention and the treatment of possible crisis in the banking sector is considerably complex, not only at national but also at European and international level.

Regarding the establishment of the resolution fund, as you already know, it is envisaged to be 0.5% of total liabilities, which is calculated as the spread between the assets and capital of all banks. The resolution fund will be established with the contribution of all banks and will be managed by the Albanian Deposit Insurance Agency. The law does not stipulate a specific timeframe for depositing the contributions. Anyway, this contribution should start to be collected within the first six months from the entry into force of this Law. The Bank of Albania, during this period, shall compile the methodology on the calculation of contributions and the way of its payment. This resolution fund is foreseen to be completed for a 10-year period from the entry into force of this Law.

The most important thing that provides an answer to your question relates to the fact that this Law was broadly consulted with the banking system. The system itself has shown a high level of understanding and collaboration. I believe that this relationship shall also continue during the implementation of the Law. I would like to ensure the Albanian public that this Law better guarantees the deposits of the public and makes banks more responsible clarifies further the rules on the intervening actions of the Bank of Albania. Finally, I would like to say that it is an action that further strengthens the financial stability of Albania.

14. The Albanian Government concluded the three-year arrangement with the IMF. What happens now? What is your opinion regarding the further relations of the Albanian Government with the IMF?

The conclusion of the three-year arrangement with the IMF concludes an intensive collaboration chapter with the IMF. I think that the conclusions on the positive effects of this arrangement are known to the public. Also, it is clear that it is the Government of Albania that will decide on the future modalities of the relations with the IMF. The political reality implies that this is a question that may be reopened only after the elections and with the new Government.

However, regarding the actual status, Albania will have normal monitoring and consulting relationships with the IMF, like all the other countries, in the framework of Article IV.

I am confident that honouring our commitments for structural reforms, with a view to promoting economic growth and economic stability, for further consolidation and implementing prudential monetary and macro-prudential policies will replicate the largest part of profits that Albania has had from the arrangement.