Skopje, 16 September 2022 

After a decade of low inflation, since last year there has been a trend of significant acceleration of inflation globally. First of all, the pandemic, and this year the military conflict in Ukraine, through various channels, cause an increase in global inflationary pressures. Inflation is growing in all economies, and especially in less developed economies, with more than half of them having inflation higher than 10%. In the Central and Southeastern Europe region, the average inflation is around 15.5%. Inflation in our country also accelerated, given the high import dependence of our economy, especially in the energy sector, as well as the high share of food and energy in the consumption basket. Although the key factor for the inflation growth is food and energy prices, their long-term and constant growth is transmitted to the prices of other goods and services and affects inflationary expectations, especially short-term ones. In such circumstances, central banks must take actions to reduce inflation, while also taking into account the current downside risks to the economic prospects. That's why almost all central banks are taking actions, including the FED and the European Central Bank. This way of conducting monetary policy will affect the inflationary expectations and will contribute to the stabilization of medium-term price movements. This was pointed out by Governor Anita Angelovska Bezhoska at the panel discussion within the Constituency meetings.

In addition to the Governor, at the panel discussion under the title "The price to pay: How to reign in inflation?" Views of Central Banks and Ministries of Finance" chaired by Pierre Wunsch, Governor of the National Bank of Belgium, Amir Yaron, Governor of the Bank of Israel, Dimitar Radev, Governor of the Bulgarian National Bank, Mihai Precup, Secretary of State in the Ministry of Finance of Romania, and the opening address was given by the Governor of the Dutch Central Bank, Klaas Not, as well as the Director for the European Department of the IMF, Alfred Kammer.

The participants discussed about the challenges for policy makers in conditions where inflationary pressures affect all segments of the economy, emphasizing the importance of good coordination between monetary and fiscal policy to successfully deal with the challenges, having in mind that in this way the adverse effects on the most affected sectors and parts of the population can be directly mitigated

"The increase in energy and food prices is large and lasts for a long period. These challenges in price movements are not new for policy makers, but given the high uncertainty about the future dynamics in conditions of geopolitical turmoil, great vigilance is required. In such circumstances, balanced and coordinated decision-making of monetary and fiscal policy is of great importance. Structural reforms can also play a role in reducing inflation through measures that enable an increase in aggregate supply. In emerging economies, this implies further measures to improve the business environment, strengthen green investments and increase digitization. The latest measure of the National Bank, which makes changes to the reserve requirement, is precisely to support investments in renewable energy sources, which affects this structural problem" - the Governor said.

The Dutch Constituency of the International Monetary Fund and the World Bank Group, in addition to the Netherlands and our country, also includes Bosnia and Herzegovina, Bulgaria, Georgia, Armenia, Israel, Cyprus, Luxembourg, Moldova, Romania, Ukraine, Croatia and Montenegro. This year's meeting under the title "From crisis to recovery" is being held from September 14 to 16 in Sarajevo.