The Financial Stability Committee held a session attended by all financial regulators
Skopje, 1 May 2020
The financial system is prepared to deal with the corona crisis. The prudent regulations of financial regulators, largely harmonized with the European regulations, has contributed to the system being able to cope with the shock caused by the COVID-19 pandemic.
These are some of the conclusions of yesterday's session of the Financial Stability Committee. The session was chaired by the Governor of the National Bank, Anita Angelovska Bezhoska, and was attended by the Minister of Finance, Nina Angelovska, the President of the Securities and Exchange Commission (SEC), Nora Aliti, the President of the Council of Experts of the Agency for Supervision of Fully Funded Pension Insurance (MAPAS), Maksud Ali and the President of the Council of Experts of the Insurance Supervision Agency (ASO), Krste Shajnoski.
The Committee begun its work with the participation of all financial regulators, in accordance with the Memorandum of Understanding concluded recently, during which the measures taken so far to maintain financial stability, as well as the achieved and expected results were analyzed in detail.
Governor Anita Angelovska Bezhoska first referred to the measures taken so far by the National Bank, which pertain to the banking system, and which aim to maintain and further strengthen its stability, as well as to create preconditions for banks to continue with their necessary credit support to the economy despite the numerous challenges they face with. Emphasis was put on regulatory changes that allow greater flexibility for banks in restructuring loans in order to ease the financial burden on borrowers. The measures aimed at releasing banks' liquidity and directing them to support the economy were also pointed out, by reducing the amount of offered CB bills and the possibility of releasing the reserve requirement for the restructured and approved loans to the affected sectors. Temporary relaxation in terms of regulatory reporting and supervisory access for banks was also explained, which allows them to focus more on the needs of citizens and companies.
As the Governor pointed out, in carrying out each of the measures, the National Bank analyzes its impact on each bank individually, as well as on the banking system as a whole, so that the measure is simultaneously in support to the Macedonian economy and maintenance of the financial stability.
"The latest stress test shows that the resilience to shocks of both, banks individually and the banking system as a whole, has increased since last year. The system is safe and sound, with high and stable liquidity and solvency."- said Angelovska Bezhoska.
The Minister of Finance, Nina Angelovska, pointed out that the coordination between the National Bank and the Ministry of Finance is very important for the quality management of the current situation. In the part of measures that affect the financial system, activities with the financial corporations and leasing companies have been undertaken, by introducing a measure for reducing the borrowers’ annuities up to 70% of the annuity. This measure was taken in order to protect their sustainability and further operation of the market, as well as to protect the borrowers. The measures taken by the real sector are aimed at maintaining and increasing liquidity through two lines of interest-free loans, tax exemptions, financial support measures, as well as regular activities - such as rapid servicing of VAT refunds to companies.
"The VAT refund to companies for April alone is Euro 38 million, which is 23% more than the same month last year. The VAT refund from the beginning of the year is Euro 145 million, which is 16.7% more than the same period last year. Rapid VAT refunds are extremely important for maintaining the liquidity of companies, especially in these conditions of health and economic crisis Also, the increase in liquidity is acted upon through the interest-free loans from the lines "COVID 1" and "COVID 2" of the Development Bank of North Macedonia, in the total amount of Euro 13.7 million, which are of great importance because they target micro, small-size and medium-size enterprises. Commercial banks will soon be offering a line of cheap loans in the amount of Euro 51 million. Furthermore, there is the measure for deferred payment of advance payments of corporate income tax and personal income tax for sole proprietors. The financial support measure of Denar 14,500 per employee for April and May, the amount of which is estimated at about Euro 100 million, besides the basic purpose for payment of wages and keeping the jobs, represents, as well, an additional large liquid injection in the economy “- said Angelovska.
The President of the SEC, Nora Aliti, referred to the activities undertaken by the SEC in order to ensure continuity in the capital market functioning and stabilization of the stock price on the stock exchange. "The total turnover realized on the Macedonian Stock Exchange as of April 28 is around Euro 78 million. Compared to the main stock indices in the region, the main stock exchange index MBI 10 has the lowest decrease of 6.92%, compared to the value of the last trading day in 2019." - said Aliti.
She also pointed out that in order to increase transparency, the SEC asked the listed companies to act in accordance with the prefix "more than" clear compliance and "more than" disclosure, after which the companies have already started to publish on SEI Net, not only the timely reports, but the management’s assessments of the impact of the corona crisis on the company's operations in the first quarter and the future financial operations, as well.
It was emphasized at the meeting that the impact of COVID-19 pandemic on world financial markets is expected to have only short-term effects on pension funds, given that they are long-term investors. "Our pension funds are still in the accumulation process and their gradual recovery and stabilization is expected, which would lead towards good investment results that will offset the performance caused by the current market shocks," said the President of the Council of Experts of MAPAS, Maksud Ali.
He noted that more than 95% of the members of the second pension pillar are under the age of 50 and that the short-term adverse effects of the corona crisis are expected to be neutralized in the forthcoming period. As Ali stressed, no significant changes and movements are expected in the structure of pension fund assets, which could significantly affect financial stability.
The President of the Council of Experts of ASO, Krste Shajnoski, emphasized that the insurance sector remains steady, with identified advantages and risks that need to be monitored in order to maintain this trend. As Shajnoski pointed out, so far ASO has adopted two packages of measures. The first package, among other things, required insurance companies to take all possible measures to maintain their capital and solvency in order to fully protect the rights of policyholders.
"The adopted amendments to three rulebooks and one decision provide additional regulatory space in the insurance companies operations, which will inevitably have a positive effect on the insurance end user in terms of the premium liabilities payment dynamics and timely and real payment of claims. With the regulatory amendments, inter alia, it is possible for the insurance companies to provide liquid assets for normal functioning and regular payment of claims."- said Shajnoski.
At the session, it was concluded that the measures that are being taken additionally guarantee the maintenance of the financial stability. All financial regulators have expressed readiness and determination for further coordinated monitoring of the situation, and they are ready whenever necessary, to take further measures and activities, within their competence.