Fullani discusses economy, says Albanian is secure, strong

SARANDA, Sep. 28 – Ardian Fullani, Governor of the Bank of Albania, spoke at a regional meeting held in Albania’s southernmost town of Saranda last week, paying special attention to communications and inflation.
“It is widely accepted that chances for long-term success become a reality if one is capable of communicating in proper language, with proper actors and on due time. The central bank should constantly communicate simply and transparently, with all market stakeholders, including the broad public, in order to be efficient and forward-looking. This is a necessary premise to guarantee institutional credibility, real independence and a sound accountability,” said Fullani.
He said that the Bank of Albania had noticed that the market should develop better and faster. He was of the opinion that there were no objective reasons that would weaken the financial market efficiency and, in consequence, the transmission of monetary policy to the economy.
He also invited the banking system to become part of this process of communicating with businesses countrywide.
Fullani also spoke on BoA’s monetary policy decision-making.
Consumer price stability was the primary target of the BoA, he said. Recently the risk for an inflationary environment was present.
INSTAT data showed that the annual inflation in August 2007 was 4.2 percent, somewhat above the upper limit of the targeted band of two to four percent. He ranked the following causes for this, including:
1. The energy crisis, which will continue beyond what the business may envisage in its plans at the beginning of each calendar year.
2. Another problem was an international conjuncture of raised prices, which exerts its impact on our market of goods and services. Fuels and cereals are more vulnerable by this conjuncture. The needs of our economy for these two articles are increasing, while the domestic resources are limited, making Albania dependant on imports, and in consequence on international market prices.
3. In general, the economic demand is estimated to have been high at end of 2006 and in the major part of 2007, he said. The increased demand at a certain period of time causes inflationary pressures on the economy.
4. The central bank remains determined to keep inflationary expectations anchored around three percent.
Fullani also spoke of financial stability.
“I would like to assure you that the Albanian banking system is in a sound financial position, capitalized and profitable. Consolidation of the banking system through mergers and acquisitions, aiming at attracting internationally well-known investor with non-contestable experience in banking business is the prevailing philosophy in this regard,” he said, adding that maximum prudence should be shown in extending loans.