Economic and Monetary Policy in Albania

Abstract

This paper analyses Albania’s monetary policy in terms of the Albanian economic policy and monetary market, determining the effects of monetary policy and its consequences for some of the key macroeconomic indicators. The analysis concludes that the policy of the Albanian Central Bank, is applied in an unequal monetary market, since the money market is divided almost equally between foreign currency and the local currency, the Albanian lek (ALL). Fiscal consolidation is still necessary to safeguard debt sustainability. Rebuilding the fiscal space is particularly important because the Albanian economy lacks other stabilisation tools, and an independent monetary policy in particular. More effort should be made to shift budgets towards a more growth-oriented composition. In last year’s dialogue between the EU and the Western Balkans and Turkey, special attention was paid to the importance of fiscal rules and frameworks in improving fiscal governance.