BoA to preserve macroeconomic situation, says Fullani

TIRANA, Dec. 8 – Bank of Albania Governor Ardian Fullani said at the 7th Annual Conference of the Bank of Albania entitled, “Monetary Policy Strategies for Small Economies,” that the bank would continue to keep a close eye on preserving the achievements in the country’s macroeconomic situation.
Fullani acknowledged that since the beginning of the transition, most of the programs have been designed and implemented under the guidance of IMF conditional support programs, as is the same with the current policy setup, which he hoped would be the final step following which Albania receives IMF financial support, “implying that our economy is matured and that Albania is on the right track.”
The Albanian authorities should have full ownership of the medium-term development programs of our country, said the governor.
During 2007, the Bank of Albania further deepened its cautious research into all aspects characterizing the present and future monetary policy, he said.
In the last three years, the Bank of Albania has been involved in an intensive process of assessment, analysis and conclusions for the future of monetary policy.
Albanian institutions have been assisted by different European and regional central banks, other international financial institutions and academia trying to identify the most suitable monetary policy regime to be adopted.
“We believe the inflation targeting regime provides the best policy choice for the future. A relatively long history of low inflation, constant soundness of the macroeconomic situation, stable and sound banking systems, free floating exchange rate, a suitable institutional framework, and fiscal consolidation are important factors that have convinced us of the potential success of an inflation targeting regime,” he said.
The governor invited the Albanian Government to reach a consensus on the key objectives of both policies, monetary and fiscal, adopting the convergence criteria as a strategic goal.
“This means a monetary policy focused on maintaining price stability and a prudent fiscal policy which will ensure that Albania’s deficits and debt ratios are sustainable and at low levels to increase its attractiveness to international investors. Put differently, pursuing a monetary policy focused on price stability and a prudent fiscal policy will no doubt reduces Albania’s risk premium. The benefit of this achievement will be felt throughout the economy,” he said.
Next year, the governor said the bank would broaden and deepen the base of participants in the government securities market; reduce the inter-bank market risks; establish the delivery versus payment system; enhance the inter-bank market efficiency; and introduce the prime rate.
“Without macroeconomic stability there is neither growth, nor foreign investment or reallocation; consequently there is no development,” said Fullani.