Government urged to promote domestic production

TIRANA, May 31 – The Bank of Albania says the Albanian government must promote domestic production in some key sectors of the economy to balance the sharp price fluctuations from global markets. The suggestion has been made by central bank governor Ardian Fullani, who said that processed food and non-agricultural consumer goods have been the largest factor in inflation which, since February 2011, has been above the central bank’s 3ѱ target. Oil prices have been at their highest levels during this year, with diesel and petrol up to 170 lek/litre. Medicine prices have also increased, following a government plan to impose a 10 percent value added tax on them. The central bank says inflation pressures will continue remaining high; but with a falling trend, mainly because of high prices of raw materials in international markets and the depreciation of the Albania’s national currency, lek, against the Euro– which is the currency Albania uses for 70 percent of its imports from the European Union. The World Bank has warned that countries that are major food and fuel importers in global markets are particularly vulnerable to world price changes, as are countries where there is high food and fuel price inflation. Kseniya Lvovsky, the World Bank country manager for Albania, stated, “Albania needs to modernize its agriculture sector and develop new business models. While Albania is a net food importer, it has potential for increasing agricultural productivity and output. Yields per hectare have increased over the past decade, yet still lag behind Europe for many crops.”