Skopje, 3 October 2023 (MIA) - The financial stability of the Macedonian economy is strong and has deeply strengthened in the past years. Banks are well-capitalized, they are profitable, the level of non-performing loans is quite low, so we don’t really have any concerns about the stability of the financial system of this country, European Bank for Reconstruction and Development (EBRD) Deputy Director for Country Economics, Strategy and Policy, Peter Sanfey, told MIA.  

Sanfey is confident that inflation will continue to fall in the coming months, noting that the National Bank has responded prudently by its measured approach to raising the policy rates, which is probably the best way to get inflation down.

“We had a very significant increase in our investments in 2022, and we are continuing to engage in a range of projects across many sectors of the economy along with policy advice,” EBRD’s Sanfey told MIA at the 9th Annual Research Conference hosted by the National Bank in Skopje last week.  

Below is the full conversation along with video material: 

Rising inflation is a global challenge. The authorities in most of the economies are coping with it. What are your expectations about the duration and impact of this challenge? 

This has been a very difficult challenge for the global economy in the last year or two. We’ve seen inflation rising really across almost all economies. But I’m quite confident that the inflation rate has peaked, now it is on a downward trend globally, and I think that reflects concerted and timely action by central banks around the world and also by governments. So, I’m confident that inflation will continue to fall in the coming months.  

In response to soaring inflation, we are now witnessing the most synchronized episode of monetary tightening in history. North Macedonia’s central bank is no exception. What is your take on the monetary policy of the National Bank of North Macedonia in response to the inflationary challenge?

I think the National Bank of the Republic of North Macedonia has responded appropriately to inflation challenges. We should remember that North Macedonia is a small open economy, and is therefore vulnerable to inflationary shocks that hit the global economy. But the National Bank has responded prudently by its measured approach to raising the policy rates, which we know is probably the best way to get inflation down, and we are starting to see the success of that now, inflation is back in single-digit levels, and I’m quite confident it will continue to fall in the coming months. 

The stability of the financial sector is of crucial importance for economic development. What is your opinion about the financial stability of the Macedonian economy?

I’m pleased to say that the financial stability of this economy is strong, and I think has deeply strengthened in the past years. We see banks are well-capitalized, they are profitable, the level of non-performing loans is quite low, so we don’t really have any concerns about the stability of the financial system of this country. 

What kind of support can we expect from the EBRD in the coming years?

You can expect the EBRD to continue to be a very strong partner of North Macedonia in the coming years. We have been actively investing in this country for about three decades. We had a very significant increase in our investments in 2022, and we are continuing to engage in a range of projects across many sectors of the economy along with policy advice, and having an excellent cooperation with the authorities in North Macedonia. 

What will be key to future sustainability of the country's macroeconomic stability?

I think the key to really strengthening sustainability will be advancing on reforms that will move this country closer to its ultimate goal of joining the European Union.  

Lidija Velkovska 

Photo: MIA / Frosina Naskovikj