The Report on the Republic of Macedonia for 2018, which was published today by the Executive Board of the International Monetary Fund (IMF), is the final sublimate of the assessments of the regular annual review of the Macedonian economy conducted in November last year within the Mission under Article 4 of the IMF's Articles of Agreement. The Report assesses the monetary policy setup as appropriate. Moreover, the Report notes the monetary relaxation during 2018 in support of total activity in the economy, and amid simultaneous maintenance of stable expectations of economic agents and their confidence. At the same time, the Report concludes that the relaxation of the monetary policy throughout the year reflects the favorable developments on the foreign exchange market, the small output gap and the moderate inflation. In its report, the IMF confirms that the external position of the economy is generally in line with the medium-term fundamentals and that the foreign-exchange reserves also in the next period will be maintained at an appropriate level.
The IMF assesses that the banking system remains stable and that banks are highly capitalized, liquid and profitable. The Report indicates that the share of non-performing to total loans has decreased and that there is an adequate collateralization of non-performing loans for dealing with credit risk, but risks need to be closely monitored. According to the IMF, further efforts to gradually increase deposit denarization, combined with appropriate macro-prudential measures on the credit side, can positively affect for further strengthening of the financial system resilience. The Report also indicates multiple constructive recommendations for further strengthening of the financial stability framework, that were determined within the recently completed Financial Sector Assessment Program (FSAP) in the Republic of Macedonia.
Regarding the macroeconomic developments, IMF expects the economic growth in the country to accelerate to 2.8% in 2019, supported by recovery of the investment activity and to 3.4% over the medium term. According to IMF, the increased global protectionism and the tightening of the international financial conditions are the main negative risks to the macroeconomic prospects in the country. On the other hand, the Report indicates as a positive risk the acceleration of the process of structural reforms and opening of the negotiations for accession to the EU and NATO.
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National Bank of the Republic of North Macedonia