* Albania central bank keeps rates unchanged
* Central bank warns against harmful deficit, debt levels
By Benet Koleka
TIRANA, April 30 Albania's central bank kept its
benchmark interest rate unchanged on Tuesday at a record low of
3.75 percent and urged the government to contain the budget
deficit and public debt.
Central Bank Governor Ardian Fullani said the rate offered
the right stimulus to internal demand and would help the bank
reach its 3 percent inflation target in the medium-term.
"Weak inflationary pressures require the central bank to
continue its stimulative monetary policy," Fullani told
Consumer prices grew on average by 2.5 percent in the first
quarter of this year, Fullani said. Food prices accounted for 90
percent of total inflation in Albania, one of Europe's poorest
Fullani said the government had maintained its fiscal
stimulus during the first quarter. The budget deficit grew by
41.5 percent since the same period last year, he added, without
saying what proportion of GDP the shortfall now stood at.
"The Bank of Albania appeals once again for the safeguarding
of fiscal balances and the control of the budget deficit and
public debt at affordable and non-harmful levels for the
Albanian economy," Fullani said.
Opting for fiscal stimulus to boost faltering growth, the
government has lifted a self-imposed public debt cap of 60
percent of GDP and now the debt is hovering around 63 percent.
"In our opinion, the medium-term priority of fiscal policy
should be to preserve budget discipline," Fullani said.
Albania holds parliamentary elections on June 23, with the
opposition Socialist Party challenging the eight-year tenure of
Prime Minister Sali Berisha's Democrats.
Albania's economy had its most difficult year in 2012 since
the onset of the euro zone crisis. Gross domestic product grew
by just 1.6 percent, far less than rates of six percent recorded
early this century.
(Reporting By Benet Koleka, editing by Stephen Nisbet)