Skopje, 20 February 2021 

S&P Global Ratings affirmed its BB- sovereign credit ratings on the Republic of North Macedonia. The outlook is stable. The Agency also addresses the monetary policy, the Denar exchange rate stability, the level of foreign reserves and the situation in the banking system.

Expressing their views on the National Bank monetary policy and measures during the corona crisis, Standard & Poor's concludes that the relaxed monetary policy underpins the economy. They also expect the denar-euro exchange rate to remain intact. Furthermore, the absence of short-term capital flows significantly reduces the risks to the Macedonian economy. The Report further states that the level of foreign reserves is adequate and that at the end of 2020 it was higher compared to the end of 2019, which is important for the denar stability. Standard & Poor's further assesses that significant for the denar stability is that the National Bank has recently set up a Euro 400 million repo line with the European Central Bank, if there is a need for that.

In the view of Standard and Poor’s, our banking system is stable, particularly referring to the low nonperforming-loan ratio. The Report also notes the revocation of the license of Eurostandard Bank, indicating that it does not have any systemic repercussions. Additionally, the overall rise in the deposit base in 2020 underpins that confidence is maintained. They emphasize the importance of maintaining the confidence.

The Agency expects that the Macedonian economy has the capacity to weather the pandemic-induced shock Presenting their forecasts and views on the Macedonian economy, Standard and Poor’s indicates that North Macedonia's EU accession aspirations could remain an anchor for institutional improvements and structural reform progress which could be ground for raising the ratings in the period ahead.