Skopje, 30 July 2021 

The National Bank Council held its regular session and adopted the latest Quarterly Report. As emphasized in the Report, during the second quarter, there was a visible stabilization of the epidemiological situation and relaxation of the restrictive measures, whereby the indicators of the global economic activity are also favorable. The main sources of uncertainty and risks globally remain associated with the development of the pandemic and the immunization process.

The latest macroeconomic indicators of the domestic economy are generally moving within the expected frames. The estimated GDP data for the first quarter of 2021 show a decrease of 1.9%, which is a deepening of the annual fall, which was also expected in the April forecast. On the other hand, the available high frequency data for the economic activity for the second quarter show positive movements, given the stabilization of the third wave of the pandemic, as well as the started immunization in the country and the gradual withdrawal of the restrictive measures, which contributed to the recovery of the economy. Regarding the inflation, the average annual inflation rate in the first half of the year was 2.4%, expected dynamics given the growth of the world prices of primary products. The great volatility of the prices in world markets remains the main source of uncertainty about the future movements of domestic prices.

The latest available data on the balance of payments indicate performances in current and financial transactions that are in line with the expectations of the April forecast. In the second quarter of the year, the National Bank intervened on the foreign exchange market with a small net purchase of foreign currency, indicating favorable developments on this market segment. Gross foreign reserves data for the second quarter indicate a growth pace that is better than expected, whereby they are still maintained in the safe zone.

The credit activity of the banking sector during the second quarter of the year registered rapid quarterly growth, which is common for this period of the year. Moreover, the accommodative nature of the monetary policy, as well as the solid solvency and liquidity position of banks, are factors that continue to have a stimulating impact on the credit supply. On an annual basis, the credit growth at the end of the second quarter reached 5.1%, which is above the forecasted annual growth according to the April forecast. At the same time, there was rapid growth of the deposit base, as the main source of funding for the lending activity of the banks. The annual growth of total deposits at the end of June amounts to 6.7%, which is a solid growth and is in line with that expected with the April forecast.

At its session, the Council made a decision the rate of the countercyclical capital buffer for exposures in our country and for exposures to other countries to remain 0%. The countercyclical capital buffer is one of the macro-prudential instruments introduced at global level after the global crisis, whose purpose is to contribute to the reduction of the excessive credit growth in conditions of an expansion of the financial cycle, i.e. to help in dealing with the procyclicality in the financial system. The maintenance of the level of the countercyclical capital buffer at the level of 0% is based on the indicators of the moderate credit growth, the resilience of the banking system and the performances of the domestic economy that point to its recovery.

The Council also discussed and adopted amendments to the Decision on the manner and the terms under which residents that are not authorized banks may open and hold accounts abroad. The amendments repeal the limit of Euro 2,500 per month per person for the inflows from the accounts with a payment institution or an e-money institution abroad.

At its session, the Council also discussed the National Bank External Quality Assessment Report 2021, prepared by an expert team from De Nederlandsche Bank. The Report assesses that the compliance of the operations of the internal audit of the National Bank with the International Standards of the Institute of Internal Auditors is at the highest level of three compliance scales.

The Council has also discussed other matters within its jurisdiction.