1 2 Contents Welcoming address 1 Professor Dhori Kule Dean of the Economics Faculty, University of Tirana Complimentary speech 3 Professor Shkëlqim Cani Governor of the Bank of Albania FIRST PANEL: “THE MARKET ECONOMY: TIME TO ESTABLISH RULES & COMPETITION” 7 Institutional Development of a Market Economy in Albania: Some Observations Based on the Experience of the Financial Services Volunteer Corps 9 J. Andrew Spindler Executive Director, Financial Services Volunteer Corps Improving the business environment in Albania 15 Franco Pasacantando Executive Director for Italy, Portugal, Greece, Malta, Albania and San Marino at the World Bank How the business environment in our country is and will be improved 19 Professor Kastriot Islami Minister of Finance 3 Comments on: "Improving Business Environment in Albania" 23 Professor Shyqyri Llaci Economics Faculty, University of Tirana Professor Vasilika Kume Economics Faculty, University of Tirana Albania’s Informal Economy: An Impediment to Economic Development? 27 Jan-Peter Olters IMF Resident Representative in Albania Comments on "Albanian Informal Market" 51 Professor Fatmir Mema Economics Faculty, University of Tirana Ph.D Zef Preçi Adviser of the President of the Republic of Albania Assessing Monetary Policy in Albania Using an Interest Rate Rule 59 Hossein Samiei Financial Division Chief, European I Department, IMF LUNCHEON SPEECH 69 Few words about the distinguished guest, Mr. Dervish 71 Professor Shkëlqim Cani Governor of the Bank of Albania Complementary speech 73 Kemal Dervis Member of the Parliament of the Republic of Turkey SECOND PANEL: “POTENTIAL CHANNELS OF FOREING EXCHANGE CONTENTS INFLOWS - FROM UNCERTAINTY TO AN EXPORT - ORIENTED ECONOMY” 79 Sustainability of current account balance 81 Professor Ahmet Mançellari Economics Faculty, University of Tirana Ph.D Selami Xhepa Albanian Center of International Trade 4 Comments on: "The sustainability of current account deficit" 111 Ph.D Erjon Luçi Head of Research Department, Bank of Albania Ph.D Evelina Çeliku Deputy Head of Research Department, Bank of Albania Role of Remittances in the Social Economic Development of the Country 117 Assoc.Prof.Dr. Esmeralda Uruçi Head of Public Relations Department, Bank of Albania Ph.D Ilir Gedeshi Center for Economic Studies Comments on: "Role of remittances in the social economic development of Albania" 135 Kliti Ceca Deputy Head of IT Department, Bank of Albania Constructing the path of the albanian exports for the future 141 Professor Bardhyl Ceku Economics Faculty, University of Tirana Comments on: "Constructing the future path for Exports" 159 Sokol Qeraxhiu Head of IT Department, Bank of Albania Comments on: "Foreign trade agreements: the benefits and drawbacks" 165 Professor Sherif Bundo Economics Faculty, University of Tirana Professor Beshir Ciceri Economics Faculty, University of Tirana “Capital Account Liberalization - What should Albania do?” 169 Professor Shkëlqim Cani Governor of the Bank of Albania Diana Shtylla Research Department, Bank of Albania 5 THIRD PANEL: “ECONOMICS OF TRANSITION” 193 Albania: The Future Path To Sustainable Development 195 Geoff Nicol Team Leader on the Project "Consulting Services for Macroeconomic & Fiscal Analysis" Luiza Jano Director of the Macroeconomic Department at the Albanian Ministry of Finance Ph. D Ardian Harri Albanian Long-Term Expert on the Project "Consulting Services for Macroeconomic & Fiscal Analysis" Comments on: "Albania: The future path for sustainable growth" 251 Sybi Hida Head of Fiscal Analysis, Budgetary Policies and Investments Sector, Budget Department, Ministry of Finance, Albania The Size of the Public Sector 257 Professor Dhori Kule Dean of Economics Faculty, University of Tirana Professor H.-Dieter Wenzel University of Bamberg, Germany When is Transition Over? Theory versus Reality in Albanian Case 277 Professor Ermelinda Meksi Deputy Prime Minister Auron Pasha Executive Director of IDRA Comments on: When is the transition over? Theory versus reality in the albanian case 295 Professor Genc Ruli President of Contemporaneous Studies Institute FOURTH PANEL: “MONETARY POLICIES IN THE REGION” 301 Inflation, exchange rates and the role of monetary policy in Albania 303 Marta Muço Anteon Corporation Peter Sanfey EBRD Anita Taci EBRD 6 Comments on: “Inflation, exchange rates and the role of Monetary Policy in Albania” 323 Professor Lavdosh Zaho Economics Faculty, University of Tirana Erald Themeli Deputy Head of Monetary Policy Department, Bank of Albania Monetary Policy in Greece on the Road to EMU 331 George S. Tavlas Director Advisor, Economic Research Department, Bank of Greece Theodoros Papaspyrou Advisor, Bank of Greece Turkish Economy and Monetary Policy Framework 337 Yusuf Bora Enhos Deputy Director of General of Foreign Relations Department, Central Bank of Republic of Turkey Monetary policy in Croatia - the challenge of slowing down the lending boom 343 Vedran Šošic Research Department, National Bank of Croatia Monetary Policy Efficiency and Currency Substitution under a Currency Board Arrangement in BiH 349 Dragan Kovacevic Vice Governor, National Bank of Bosnia Hercegovina Should Bank of Albania adopt the IT regime? 359 Professor Sulo Hadëri Economics Faculty, University of Tirana Gramoz Kolasi Head of Monetary Policy Department, Bank of Albania Comments on: “An approach on monetary policy: Selective Balkan’s countries experiences” 377 Marian Gjermeni Head of Monetary Operations Department, Bank of Albania Conclusions 381 7 8 WELCOMING ADDRESS Dhori Kule Dear ladies and gentlemen, representatives from the Albanian government, international central banks and financial institutions I have the great pleasure to welcome you in the Fourth International Conference of the Bank of Albania, organized together with the Economics Faculty of the University of Tirana, a conference focusing on the performance and challenges of the economic policy in Albania. During the two days of this conference, as organizers, we have paid a special attention to including in its content a rich social program and a proper logistic organization. Hoping to achieve what we aimed at, I would like to invite the Governor of the Bank of Albania, Mr. Shkëlqim Cani, to address the opening speech of the Fourth International Conference of the Bank of Albania: “Albanian Economy: Performance and Policy Challenges”. 9 10 COMPLIMENTARY SPEECH Shkëlqim Cani Dear Ladies and Gentlemen, I am really glad to greet the honorable guests of this conference, friends and colleagues of mine, those who have continuously assisted in our previous conferences and those participating for the first time this year. It is a great pleasure for me, that in the name of the organizers of the conference “Albanian economy: Performance and policy challenges”, to express gratitude and respect to the dear friends of Albania and Albanians, who are present here today and who have contributed and have marked the performance of our economy. I do hope that such meetings also serve as public deeds, delivering a message of gratitude for those contributions, which in a certain way have helped the Bank of Albania in organizing scientific-thinking events regarding subject matters that focus on the Albanian economy. Dear colleagues and collaborators, In these 13 years, Albania has been “on track” of progress. The economy is finally development-oriented. As actors of our times, we all are inclined towards the best, towards the future. 11 Living in a society that is trying to build up a safer future; having institutions that tend to establish outstanding models; establishing a democratic popular mentality oriented towards a positive attitude of a variety of ideas, is a success for the country and for the economy. The Albanian society, state and mentality have in overall evolved simultaneously. Maybe this is related to our early tradition; maybe imposed by the challenges of our survival through the years; maybe this is related to our greatest desire to see our country and ourselves among the most developed. One thing is for sure: that progress relies on an economy that is developing. Nevertheless, this speech does not focus on how much and in what way the Albanian economy has grown, what its directions have been and how often it has got stuck. What I would like to underline, is that the Albanian economy has recorded significant and tangible growth, evident to everyone. This growth has is becoming a strong support to our future projects and challenges. This growth strengthens the belief that all of us are trying to give ourselves and our country the best offered by the current development, and that we really do deserve more. In order to win ever more, one should really try hard; should use efficiently what he has earned and at the end should also have the generosity to leave something to the other generations. Thus, one may ensure the development track. We have already laid the foundations of an overall economic development. Whether this development is rapid or slow, secure or fragile, peaceful or full of wonders is another issue. What matters is the fact that we have planned for our economy an ambitious future. Attaining this requires many efforts; requires a clear economic vision; requires courageous decision-making; requires a wide vision while treating problems and real strategies for economic development. And this is what I would most expect from this conference. My dear friends, We are gathered here today to speak about an argument that is not unknown to every one of us. What we are going to say, the way 12 we are going to approach the future of our problems, and the real chances for further progress, all of these, I am sure will be useful. Together with our co-organizers of the Economics Faculty, University of Tirana, have tried our best to achieve this. Therefore, I would like for this Conference to further serve the mutual economic co-operation and development. Upon concluding my speech, with the hope to have transmitted all my gratitude to your presence here, I would like to extend my very best wishes to this conference, success to the honorable speakers, and an enjoyable stay in the beautiful city of Saranda to all of us.