Skopje, 17 October 2022

The National Bank has so far adequately responded to the current challenges, which results from global crisis, by taking measures for the gradual normalization of the monetary policy, in order to maintain medium-term price stability. This is of particular importance at a time when the global economy encounters several major challenges - the highest inflation in the past few decades, the Russian invasion of Ukraine, the tightening of global financial conditions and the persisting threats of the pandemic. Monetary policy should respond decisively to price pressures, while taking into account the unfavorable prospects for economic growth and risks to financial stability. This requires a decisive but at the same time, vigilant and balanced monetary response. These are the main conclusions of the meetings held by the Governor of the National Bank, Anita Angelovska Bezhoska and the Vice-Governor, Ana Mitreska, with senior representatives of the International Monetary Fund (IMF), within the Annual Meetings of the IMF and the World Bank held in Washington, USA. 

The delegation met with the IMF Deputy Managing Director Bo Li, with meetings also being held with the Director of the IMF European Department, Alfred Kammer, IMF Executive Director, Paul Hilbers and Alternate Executive Director, Luc Dresse, as well as with the Head of the IMF Mission, Bergliot Barkbu. The IMF will continue to support the National Bank for further improvement of the system for foreign exchange interventions and stress testing, which was discussed during the meeting with the Monetary and Capital Markets Department.

The Governor of the National Bank indicated that since the end of last year, the National Bank has started normalizing the monetary policy through its monetary operations, while since April, the policy rate has been increased in several occasions. This was also supported by additional measures, i.e. changes to the reserve requirement instrument aimed at reducing Euroization, as well as by systemic measures, i.e. by introducing a countercyclical capital buffer of 0.5%, which further intensifies the buffer mechanisms in the banking system.  The IMF assessed that the monetary policy that the central bank conducts is appropriate, taking into account the global supply factors that affect domestic inflation. However, given the spillover effects and rising inflation expectations, these meetings also emphasized the need for prudent domestic policies. At the same time, the emphasis was placed on the stability of the banking sector, which is in good condition and can support the domestic economy, while having the capacity to deal with possible major shocks. This is another pillar of support for economic recovery and maintaining overall macroeconomic stability.

At the meeting with the IMF Deputy Managing Director, Bo Li, the approval of the Precautionary Loan Line (PLL), which is in its final stage, was also discussed. It is an instrument that provides liquidity to overcome certain shocks and challenges during crisis episodes. This instrument is awarded to countries that have sound economic fundamentals and practice sound macroeconomic policies. In the process of approving the PLL, several segments of the central bank's operations were assessed, including the monetary policy, the balance sheet position, the supervision of the financial sector, as well as the adequacy of the statistical data. For all segments, the National Bank obtained high rates.