Skopje, 20 May 2023 (MIA) - Inflationary pressure in the Macedonian economy mainly reflects global factors, particularly given the high weight of food and energy in the consumption basket. The increased uncertainty, caused by the external shocks, exerted some pressures for currency substitution. Monetary policy has been appropriately tightened, and continued vigilance remains key going forward, also in view of a wide, albeit narrowing inflation differential with the euro area, according to the joint conclusions of the Economic and Financial Dialogue between the EU and the Western Balkans and Turkey, which aims to prepare countries for future participation in the coordination of the EU's economic policies (European Semester).

According to the National Bank, the conclusions note that the banking sector indicators on capital adequacy, liquidity and profitability remained sound despite the phasing out of pandemic related support measures and the stress from the energy crisis. While counter-cyclical buffers are being raised, the central bank may implement further macroprudential measures if necessary to address potentially rising risks in real estate sector lending. The conclusions point out that further measures would warrant consideration, and the central bank's independence should be preserved.

As part of the Economic and Financial Dialogue between the EU and the Western Balkans and Turkey, held on the basis of Economic Reform Programme 2023-2025 submitted by candidate countries, EU institutions provide their review and assessment of the reforms in different spheres of the economy and the financial system. This year, the average realization of the recommendations for our country is 48.6 percent, which is an improvement compared to last year (43.1 percent). Within recommendations from the scope of the National Bank's operations, the recommendation regarding continued vigilance over inflation and readiness to tighten monetary policy if necessary to maintain medium-term price stability, is the only recommendation for our country, which is assessed as completely implemented. The recommendation to further improve the regulatory framework for the banking system is assessed as significantly implemented. 

Vice Governor Emilija Nacevska represented the National Bank at the EU dialogue. She noted that policymakers face major challenges in managing multiple and overlapping crises. Central banks have replaced long-standing loose monetary policy with tight monetary policy. At the same time, the country's central bank started gradually adjusting the monetary policy, in accordance with the new challenges.

Nacevska pointed out that despite the various crisis situations, the stability of the denar's exchange rate, which is the anchor of both price and financial stability, has been successfully maintained.

Photo: National Bank