Skopje, 19 May 2023

“Medium-term fiscal forecasts for the countries of Central, Eastern and Southeastern Europe point to fiscal consolidation, which supports the monetary policy in the efforts to reduce and stabilize inflation”, said the Vice Governor Ana Mitreska, at the 22nd monetary policy meeting of the Bank for International Settlements (BIS) for the countries of Central and Eastern Europe. According to recent assessments, it is expected that the fiscal consolidation in the region will be based on expenditure reduction, which will contribute to improving the fiscal profile and further reducing price pressures. In the current conditions, the appropriate monetary and fiscal coordination is extremely important, as a support to the overall stability of the economies. Globally, the monetary and fiscal combination is currently assessed as appropriate, taking into account that in 2022 in 72% of the countries, both policies are tightened, which is appropriate setup with inflationary pressures and risks.

“During the pandemic, budget deficit and public debt increased significantly, due to the undertaken measures for support of the economic activity and protection of the vulnerable groups. From then onwards, they have been decreasing, but remain above the pre-pandemic levels, Mitreska said. In such circumstances, as she emphasized, there is a need for commitment to a focused and credible consolidation, and thus reduction of debt levels and building of fiscal room. This is especially important in the context of more tightened financial conditions and downward risks for the economic growth, which requires a prudent fiscal policy which will reduce the pressure on the financing requirements in the countries of this region and will facilitate their access to international markets.

The BIS monetary policy meeting for Central and Eastern Europe was attended by representatives of the central banks of the wider region, and by representatives from the Bank for International Settlements and the European Central Bank.