PRESS RELEASE
Questions and answers at the Governor’s press conference

Question 1: Yesterday, you hosted a very important closed-door financial forum. I would like to know whether you have any issue from that meeting to share with the public, particularly in the context of your latest message, i.e., challenges or problems hindering lending to economy.

Answer: It's true, yesterday's forum was very important, both for being the second meeting held in Albania and for the time when it was held. As already known, rapid developments characterise the current situation in the country and abroad. The meeting focused on the situation of the stimuli needed for the country's stable economic growth and financial stability.
Today you will have a press statement on this meeting, however, I can share with you some of the main issues discussed yesterday.

Bank of Albania's representatives made a brief overview of Albania's economic and financial situation, specifically the monetary and fiscal policy, price stability, macroeconomic stability, and banking system stability. Participants introduced measures that could to be taken by the government during this year and over the medium term. These measures aim to provide all the stimuli needed for continuing structural reforms to boost lending and economic growth in the country. This set of measures is part of the program we have signed with the International Monetary Fund and the World Bank.

This round table brought together representatives of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the European Central Bank, the European Banking Authority, senior representatives of the Albanian banking system, representatives of the main banking groups and their subsidiaries, including international investment funds, which are interested in Albania's financial condition. I would like to say that these investors take a high interest in Albania even because next year, Albania will roll over the debt. There is also a very high interest because of Albania's stable financial and macroeconomic situation, and the security the Albanian banking system offers.

The Bank of Albania's opinion expressed in the forum was that we should strive for finding all the economic stimuli to boost lending and growth in the country. This requires serious commitment by all domestic and foreign actors to finding stimuli and providing them in due time. All these is under the program with the International Monetary Fund and the World Bank, which, in addition to suggestions and remarks on implementing structural reforms, has a portfolio, whose funds will enable clearance of arrears to businesses. 

The Bank of Albania has always been clear in this regard, considering the clearance of arrears as the best injection to Albanian economy under the present conditions. We deem that this step will impact properly on credit recovery and economic development. Also, under the arrangement with the International Monetary Fund, Albania will benefit other funds to enable continuation of structural reforms. Some of these reforms are short-term, others are medium and long-term.

All the attendees of the forum, both representatives of the banking groups operating in Albania and of international financial institutions, were committed to fulfilling this this objective. 

Question 2: I've got two questions. First, the International Monetary Fund's report highlighted several added risks to the banking system, such as non-performing loans or government's high borrowing from the domestic market. Has the Bank of Albania any plan of measures to mitigate these effects? Second, recently, energy price rise has sparked off debate. What's the Bank of Albania's attitude toward this? Is it right to raise the energy price during this time of crisis?

Answer: Concerning the first, Albania enjoys complete macro-financial stability. The Bank of Albania guarantees that the banking system is resilient to internal or external pressures, since it is well-capitalised, liquid and profitable. This is essential. This assessment is stated in the International Monetary Fund's reports and, on its basis, we are building the new relationship with the International Monetary Fund, as a medium-term partnership arrangement. If these prerequisites were not met, we would not know whether the International Monetary Fund would be willing for a new arrangement with Albania, let alone for such a flexible arrangement as the one we have signed with the Fund. 

Thus, guaranteeing Albania's macro-financial stability, we have signed an arrangement with the International Monetary Fund and the World Bank, and benefit from this arrangement.

Concerning your second question, not only has the Bank of Albania agreed on the endorsed programme but it has also been the promoter of observing the conditionality deriving from it. As I said earlier, fiscal consolidation is necessary. Correction is an issue we have raised throughout this time. At the same time, the necessary stimuli should be given for the country's stable economic growth. Albania needs to be ready and prepared to capture its economic potential, in order to attract foreign and domestic investors for ensuring stable economic growth.

Question 3: You have always spoken about structural reforms. What do you suggest, which are the most urgent sectors that the government should give priority and start reforms with regard to exports, considering that raw materials account for more than half of our exports? So we are still under a low level of processing.

Answer: A number of short and long-term structural reforms are projected under the above-mentioned programme. First of all, it is about fiscal consolidation and finding ways to boost lending. Other very important elements relate to social security reforms, improvement of the business climate and pension reforms. The Bank of Albania has evidenced and has given its advice on growth of agricultural production, both in quantitative and qualitative terms, in order to increase related exports. I think that the economic programme has accurately identified a number of structural reforms, whose implementation will provide the necessary stimuli to revive our economy.