volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 E C O N O M I C J u n e B U L L E T I N 2 0 0 7 B a n k o f A l b a n i a PB Bank of Albania Bank of Albania 1 volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 If you use data from this publication, you are requested to cite the source. Published by: Bank of Albania, Sheshi “Skënderbej”, Nr.1, Tirana, Albania Tel.: 55-4-22220; 25568; 25569 Fax.: 55-4-22558 E-mail: [email protected] www.bankofalbania.org Printed by: Bank of Albania Printing House Printed in: 60 copies 2 Bank of Albania Bank of Albania volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 C O N T E N T S Review of monetary policy in the first semester of 2007 7 Interview by Mr. Ardian Fullani, Governor of the Bank of Albania to Voice of America during the Spring Meetings of the World Bank and the International Monetary Fund, Press office, April 19, 2007 51 Speech by Mr. Ardian Fullani, Governor of the Bank of Albania At the presentation of the 2006 Annual Report of the Bank of Albania before the Economy and Finance Commission of the Parliament of the Republic of Albania Tirana, 25 April 2007 5 Speech by Mr. Ardian Fullani, Governor of the Bank of Albania At the seminar “Catching-up in South East Europe: The Role of the Financial Sector”, “Tirana International” Hotel, May 2007 71 Speech by Mr. Ardian Fullani, Governor of the Bank of Albania At press release with the IMF Mission and the Ministry of Finance at the end of the IMF Mission in Tirana. Tirana, 8 May 2007 7 Speech by Mr. Ardian Fullani, Governor of the Bank of Albania At the award ceremony by the President of the Italian Republic, His Excellency Giorgio Napolitano with the Order of the Star of Italian Solidarity Tirana, 7 June 2007 75 Interview by Mr. Ardian Fullani, Governor of the Bank of Albania To “Klan” magazine. Tirana, 2 June 2007 77 Speech by Mr. Ardian Fullani, Governor of the Bank of Albania At the press conference on the decision of the Supervisory Council of the Bank of Albania on raising the key interest rate by 0.25 per cent. Tirana, 27 June 2007 82 New Law “On Banks” and its compliance with the supervisory regulatory framework. Obligations for regulatory changes in the implementation of the Directives of the European Union. June 2007 84 The new Law No. 9662, dated 18 December 2006 “On banks in the Republic of Albania” 10 Lending activity: The absence and the advantages of a crucial development factor 108 Bank of Albania news over April-June 2007 128 Legal events over April-June 2007 11 Bank of Albania management, 0 June 2007 15 List of all entities licensed by the Bank of Albania 16 Banks and branches of foreign banks 16 Non-bank institutions 19 Foreign exchange bureaus 140 Unions of savings and credit associations 146 Savings and credit associations 147 Representative offices of foreign banks 157 2 Bank of Albania Bank of Albania volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 T A B L E S Review of monetary policy in the first semester of 2007 Table 1 Some main economic indicators in annual terms (in percentage) 10 Table 2 Some main indicators of regional countries 12 Table Indicators of rail, sea and road transportation 17 Table 4 Annual growth rates of fiscal indicators during the first 5-month period (in percentage) 18 Table 5 Labour market indicators (in thousands of people) 20 Table 6 Annual inflation rates by main groups 25 Table 7 Realization of the Bank of Albania quantitative objectives 1 Table 8 Intermediation cost in ALL 41 Table 9 Main macroeconomic indicators 4 Statistical annex Table 1 Annual inflation rate (in percentage) 47 Table 2 Contribution of basket constituent groups to total inflation 47 Table Performance of monetary indicators (in billions of ALL) 47 Table 4 Performance of NFA indicators by main groups, May 2007 (in millions of USD) 48 Table 5 Performance of Net Credit to the Government by main groups 48 Table 6 Performance of some main indicators 48 Table 7 Outstanding credit indicators as a share to total 48 Table 8 New credit indicators as a share to total 48 Table 9 Distribution of credit by sectors of economy (in percentage to total) 49 Table 10 End-month interest rates and their change compared with previous periods (in percentage points) 49 Table 11 Interest rates and their change in the lek deposits and credit market (in percentage points) 49 Table 12 Interest rates of deposits denominated in foreign currency (in percentage points) 50 Table 1 Interest rates of credit denominated in foreign currency (in percentage points) 50 Lending activity: The absence and the advantages of a crucial development factor Table 1 Loan structure according to allocation in economy (in % to total portfolio) 110 Table 2 Some macroeconomic indicators 111 Table Number of licenses for banks (after 1997) 11 Table 4 Banking system financial indicators 11 Table 5 Credit structure by currency (in % of credit portfolio) 114 Table 6 Credit distribution by economic sectors (in % of credit portfolio) 114 Table 7 Deposits structure by currencies (in % of credit portfolio) 115 4 Bank of Albania Bank of Albania 5 volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 C H A R T S Review of monetary policy in the first semester of 2007 Chart 1 USD/EUR spot exchange rate and the nominal effective exchange rate of the euro and the dollar 12 Chart 2 Price performance of one crude oil barrel (in USD) 1 Chart Sales growth and contribution by sectors (in percentage) 14 Chart 4 Contribution of industrial sub-sectors to the annual growth of industry 15 Chart 5 Energy sources and uses by constituent items in GWH 15 Chart 6 Annual growth of construction cost index, house price index and sales index (in %) 16 Chart 7 Contribution of sub-sectors to the annual growth of services (in %) 17 Chart 8 Annual change of total agricultural production by sectors (in %) 18 Chart 9 Annual change of imports and exports of unprocessed agricultural products (in %) 18 Chart 10 Main fiscal indicators for January-May (in billions of ALL) 19 Chart 11 Contribution of main items to the annual growth of income (left) and of expenses (right) for the 5-month period (2004-2007) (in %) 19 Chart 12 Cumulative financing of budget deficit, January 2002 - May 2007 (in billions of ALL) 20 Chart 1 Number of unemployed (left) and unemployment rate (right) 20 Chart 14 Current deficit and balance of payments as a share to GDP 22 Chart 15 Total imports and exports and imports by three purposes of use (in millions of EUR) 2 Chart 16 Annual inflation (in percentage) 24 Chart 17 Contribution of main items to annual inflation (in percentage) 24 Chart 18 Annual inflation of “Processed foodstuffs” and “Unprocessed foodstuffs” 25 Chart 19 Annual inflation rates of “Housing” and “Administered prices” 26 Chart 20 Annual inflation rates of “Durable consumer goods” and “Services” 26 Chart 21 Annual inflation rates of “Non-foodstuff consumer goods” 27 Chart 22 Annual rate and linear trends of core and total inflation (in percentage) 28 Chart 2 Annual rates and inflation linear trends of tradable and untradable goods (in percentage) 29 Chart 24 Performance of core inflation rate 1 Chart 25 Annual growth of monetary aggregates 2 Chart 26 M and credit to economy annual growth (in billions of ALL) 2 Chart 27 Annual growth of real M (left) and of net Government borrowing in real terms Chart 28 Share of deposits in foreign currency and of currency outside banks to M Chart 29 Contribution of demand for money constituents to M annual growth 4 Chart 0 Performance of lending activity 6 Chart 1 Annual growth performance of credit by currency 6 Chart 2 Composition of businesses and households’ portfolio by purpose of credit use 7 Chart Net foreign assets of the banking system (in millions of USD) 8 Chart 4 Gross financing of budget deficit (in billions of ALL) 8 Chart 5 Short-term (left) and long-term (right) interest rates 9 Chart 6 Interest rates in the interbank market and BoA’s standing facilities 40 Chart 7 Securities’ yield in the primary market 40 Chart 8 Interest rates of up to 1 year maturity term in Albania and the Euro area 41 Chart 9 Annual changes of ALL in nominal effective terms (NEER) 41 Chart 40 Daily performance of ALL/EUR and ALL/USD 42 Chart 41 ALL exchange volatility in quarters 42 4 Bank of Albania Bank of Albania 5 volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 6 Bank of Albania Bank of Albania 7 volume 10 volume 10 number 2 number 2 June 2007 Economic Bulletin Economic Bulletin June 2007 REVIEW OF MONETARY POLICY IN THE FIRST SEMESTER OF 2007 1 GOVERNOR’S SPEECH The first semester of 2007 marked a positive performance of the Albanian economy in terms of being in line with the projected economic growth rate, of further consolidating the macroeconomic stability and carrying on with the structural reforms in economy. The economic development has been along the lines of the projected framework in the country’s economic development programme, observing the main objectives of the three-year programme and achieving a further milestone towards the economic and financial integration with the regional and international markets.