I sincerely hope that we in Malta can similarly find the inner strength and conviction to put aside our differences and unite on these vital issues that are clearly our common concern. BIS Review 83/2001  5
Private sector credit is oriented towards funding the working capital and consumption, illustrating the private agents’ reluctant behaviour to make investments and banks’ high prudence to lend. Furthermore, deposits in the system have shifted towards longer maturity terms, thus illustrating the Albanian consumers’ disposition to save. Latest developments in financial markets have reflected contained liquidity and inflation premiums. In the interbank market, short-term interest rates were downward, following successive cuts of the key interest rates. Furthermore, government security yields in the primary market were slightly up. This increase is mostly due to the interaction of demand and supply factors in this market and does not signal for risk premiums increase in the economy. Interest rates in the deposit and credit markets followed the Bank of Albania’s easing monetary policy over the last six months, while its transmission is expected to be more complete in the future, conform to the time lag that characterises the monetary policy transmission mechanism. Projections for the expected economic outlook in the future sustain our earlier assessments for positive, but below potential, growth of the Albanian economy in the period ahead. However, risks about this scenario have increased, mainly as a result of unfavourable developments in the global economy and financial markets. Overall, the economy in our trade partner countries is expected to be sluggish and lending terms in the euro area are expected to be tight for the period ahead.