The National Bank of the Republic of Macedonia Council discussed several issues related to its operations at its session held today.
Skopje, 28 September 2006
Press release of the NBRM
The National Bank of the Republic of Macedonia Council discussed several issues related to its operations at its session held today.
The Council adopted the Report on Foreign Reserves Management of the Republic of Macedonia for the first half of 2006. In the first half of 2006, the foreign reserves of the Republic of Macedonia increased by Euro 118 million, reaching Euro 1,241 million on June 30, 2006. The increase in the foreign reserves mainly results from the inflow of foreign currency from the privatization of ESM-distribution, the favorable developments in the current transfer balance and the increase in the foreign portfolio investments.
In the first half of 2006, the National Bank improved and adjusted the method of foreign reserves management to the core management principles accepted by the central banks of the developed countries. The foreign reserves portfolio consists of three parts: gold, liquidity portfolio, ensuring current conduct of monetary policy and regular and timely settlement of the external liabilities of the Republic of Macedonia and investment portfolio, providing generation of higher income from the placement of foreign reserves.
The foreign reserves are placed with central banks of the OECD member-states, international financial institutions and commercial banks, residents of the OECD member states.
At its today's session, the NBRM Council also discussed the Quarterly Report II/2006 and was also informed on the recent macroeconomic developments in the Republic of Macedonia. In the January - August 2006 period, the average inflation rate equaled 3.3%, mainly determined by the effect of non-monetary factors. By excluding the variable categories from the index (prices of food products and prices of energy sources), and additionally correcting the effect of the increase in the excises of cigarettes at the beginning of the year, the average inflation rate equals 1.5%.
The foreign exchange market still registers favorable movements, ensuring permanent growth in the gross foreign reserves on the basis of net purchase of foreign currency by the NBRM. The inflows from private transfers from abroad in the first half of 2006 relative to the same period of the preceding year went up by 23.9%, reaching Euro 420.6 million, thus offsetting the effects of the trade deficit on the balance of payments current account. Consequently, the deficit in the balance of payments current account in the first half of 2006 totals Euro 68.4 million, which is by 33.4% lower compared to the same period of the previous year. At the last CB bills auctions, the average interest rate ranges around 5.3%.
The total deposits and total placements of the banks to the private sector still register two-digit growth rates. In August 2006 compared to the same month of the preceding year, the total banks' deposits surged by 26.1%. In August 2006, the annual growth in the total banks' placements to the private sector equaled 26.5%.