PRESS RELEASE
Deputy Governor Minxhozi attends the summit on “Financial and Monetary Stability of the Region as the Euro Area Records a Low Economic Growth” in Bečići, Montenegro

On 14-15 June 2024, the First Deputy Governor of the Bank of Albania, Ms  Luljeta Minxhozi, attended the annual summit of the countries of the region held in Bečići, Montenegro, which  brought together executives of central banks from Montenegro, North Macedonia, Bosnia & Herzegovina, Croatia, Kosovo, and Serbia, as well as ministers of finance and tax directors from these countries.

This year’s summit “Financial and Monetary Stability of the Region as the Euro Area Records a Low Economic Growth” addressed the latest developments in the regional economies. Four main panels were held during this summit focusing on topics such as: reforms and  modernisation of the tax administration - its purposes, achievements and challenges; assessing public investment managements; preserving the stability of prices and the banking sector during uncertain times; fiscal policy as a precondition for increasing the economic stability during a low-growth period in the Euro area.

The First Deputy Governor Minxhozi participated in the panel of governors on “Safeguarding the Stability of Prices and Banking System in Uncertain Times.”

At the beginning of her address, Ms Minxhozi valued the importance of participating in such activities as it gives the central banks of the region the possibility to share their viewpoints and experiences, as well as to exchange their opinions on resolving current issues.

The Deputy Governor Minxhozi said that Albania was affected by the rise of both domestic and imported inflation. However, our country has recorded a low level of inflation compared to the countries of the region. Inflation recorded a gradual and continuous decline over 2023. It dropped to 4% at the end of previous year, from 7.4% at the beginning of 2023, while standing at 2.7% in the first quarter of 2024, affected by the drop of inflation in international markets, the appreciation of the exchange rate and the normalisation of our monetary policy stance. This trend was concentrated on food and oil prices at first, spreading further to other components of the basket as well.

Despite the relative success resulting from the decline of inflation, central banks continue to fight against it. Since the beginning of 2024, these institutions are carefully considering the right moment to start monetary easing; as the European Central Bank throws the first step, by reducing the policy rate.

The Deputy Governor Minxhozi highlighted that several factors must be taken into consideration in this situation:

First, our country is integrated in the overall global economy and specifically in the economy of the euro area, since imports hold a high weight in the basket of consumer goods.  As a result, the global risks to inflation are quite important to the price stability of our country.

Second, factors such as: tight labour markets owing to the demographic changes in industrialised and developing economies; the increase of geopolitical tensions, not least affecting international trade routes; and the further escalation of conflicts in the eastern border of the European Union, are some of the risks to inflation, as well as to the financial growth and stability.

In the long-term perspective, a series of challenges facing the monetary policy are related to issues such as climate changes, innovations of financial technologies and demographic changes.

Concluding, Deputy Governor Minxhozi highlighted that it is important to coordinate monetary policies with considerate fiscal policies, supported by structural reforms. In particular, the establishment of a more stimulating environment for promoting domestic and foreign investments, coupled with the investments in human capital and infrastructure should be encompassed in the priorities of structural reforms.