Triggered by the increase of real estates prices, the steady appreciation of the lek, workers’ remittances and the rapid growth of credit and budget expenditure during the present year, the high current deficits have become a dominant phenomenon in the external sector of the economy. Their automatic and abrupt adjustment would prompt the correction of exchange rates to the rapid and strong depreciation of the lek, drop in private and public consumption and reduced economic activity which could generate crisis in the external sector and spread to economy, hence, jeopardizing the financial stability at home. Availing myself of this opportunity to address to the audience I would like to explore this issue further. Skipping the theoretical arguments, I would note that the high current deficits mainly originate from the consumers’ behaviour. In plain words, what I am trying to say is that in a general economic level we consume more than we produce. This extra consumption, which is mainly financed by borrowing, is mainly driven by our expectations for higher income in the future. That is, in a household level, there is deficit, triggered by the insufficient income to cover household consumption. The international financial crisis and the negative consequences on the global economic and financial activity stem from household consumption beyond the sources (providing additional financing from banking loans) and the rise of real estates prices. This consumption approach was followed by the increase of current deficit and long-term liabilities for households.
Empirical studies of the Bank of Albania show that the cease of these flows would put our consumption model and the long-term balance of the external sector of the economy in the difficult position. Our concern related to the household budget stands in the fact that the behaviour model we adopt at a household level can also affect the behaviour model of given regions. The Albanian economy has by and large made evident progress, detaching itself from the IDA country group. Macroeconomic indicators have for a relatively long period been positive and stable. However, beyond the nationwide average indicators, detailed statistics by regions indicate that welfare in mountain areas has progressed at slower rates relative to the other regions. According to World Bank assessments, an average resident in the mountain area has 12% less per capita real consumption than the average resident in Tirana, while in 2002 this figure was 9%. According to the same source, the average rural coast resident has 34% higher per capita consumption than the average mountain rural resident. Generally, poverty has a strong positive relation with the family size and a negative relation with age and education. In contrast, the District of Kukës has great potentials for more prosperity in this area. First, your district is distinguished for its rare natural beauty and diversity from the mountain and ethnographic tourism viewpoint.