Skopje, 1 June 2021

The current monetary strategy for the maintenance of the stability of the domestic currency relative to the euro is the most optimal for the Macedonian economy, taking into account its characteristics as a small and open economy. This assessment of the National Bank is also shared by the International Monetary Fund, which every year assesses the compliance of the exchange rate with the fundamentals of our economy or quite simply, assesses whether the level of exchange rate we have is an obstacle to greater competitiveness of our economy. The conclusion is that the exchange rate is not an obstacle and that the greater competitiveness should be ensured through structural policies. The greater flexibility relative to the exchange rate would have rapid transmission effects on prices, could also have adverse effects on financial stability and hence, we stand firm on the appropriateness of the current monetary strategy.

This, among other things, was emphasized by the Governor of the National Bank, Anita Angelovska Bezhoska, in yesterday's edition of the show "24 Analysis" on Television 24. In the context of the monetary strategy, she highlighted the importance of the foreign reserves which are at an appropriate level, and she also referred to the importance of the access to foreign exchange liquidity in euros from the European Central Bank, which for the first time was provided to the National Bank last year.

In the show, Angelovska Bezhoska also referred to the latest macroeconomic forecasts of the National Bank and to the expectations for gradual recovery of the Macedonian economy with growth of 3.9% this year and return at the pre-crisis level during the next year, if there is no materialization of the risks, which are primarily associated with the further course of the health crisis. Moreover, she also stressed the importance of the external environment, which is significant for the recovery of the domestic economy.

In the context of the expectations for this year, in addition to the importance of the export activity, the Governor also underlined the importance of the realization of capital investments, for which she emphasized that they can be a catalyst for positive changes, as well as that they can have a multiplier effect, including with an impact on the labor market.

Angelovska Bezhoska also referred to the expectations for foreign direct investments. 

“Last year, foreign direct investments slowed down, taking into account that also in a global context there was a reduction of foreign direct investments. For this year, the international institutions predict stabilization of these financial flows and we expect a recovery of investments. More specifically, the future developments on the international markets are crucial for the foreign direct investments. "Now, the financial markets are favorable and the interest rates are low, and last year, when we faced the crisis, there was a tightening on the international markets and then the lending rates grew as well." - the Governor said.

Regarding the inflation, Angelovska Bezhoska pointed out that it remains moderate, in accordance with the latest assessments and forecasts, whereby she pointed out that the National Bank constantly monitors the developments, and that the prices of primary commodities in world markets are of major importance, as most of the consumer basket accounts for food and energy.

“The assessments of the European Central Bank suggest that the factors that contribute to greater variability of the inflation rate this year are mainly temporary and a reduced inflation rate is forecasted for the following year. We are monitoring the developments and if there is a need for intervention to maintain price stability, we will take all necessary measures." - Angelovska Bezhoska said.

In the show, the Governor also referred to questions about the banking sector, whereby she also discussed the initial indicators for the first quarter of this year, which point to its stability.

Regarding the failure of Eurostandard Bank, the Governor once again emphasized that its operating license was revoked after all possibilities available to the central bank were exhausted.

"For any governor or central bank, there is no harder decision than the decision to close a bank. Such a decision is made once maximum efforts are made and all possibilities for a more favorable solution for the bank are exhausted, especially taking into consideration the depositors’ interests. Such was also this case.” - Angelovska Bezhoska said.

At the same time, she also mentioned that the commercial banks are private institutions that decide by themselves on each loan.

“Central banks do not give loans, do not decide, nor those loans are subject to approval by the central banks. This bank was under tightened controls and the level of risk it is exposed to was checked. The decisions on the loan were made by the credit committees, and if the amount of the loan is higher, the decision was made by the Supervisory Board.” - said Angelovska Bezhoska in an interview for Television 24.

In the show, the Governor also referred to the data on lending activity and deposits, as well as to the expectations for their further growth in the period ahead.

The show is available at https://www.youtube.com/watch?v=2zP6K_PydPU&lc=UgwOA43kS-YJfr1FJtF4AaABAg