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IMF: Stable Denar is key anchor for macroeconomic policies

The de-facto peg of the denar to the euro has served the country well for decades, by acting as a key anchor for macroeconomic policies. We know the NBRNM remains strongly committed to preserving this peg.

Skopje, 22 June 2020 (MIA) – The de-facto peg of the denar to the euro has served the country well for decades, by acting as a key anchor for macroeconomic policies. We know the NBRNM remains strongly committed to preserving this peg.

This was stated in an interview with MIA by the IMF Mission Chief for our country, Bergljot Bjornson Barkbu and the IMF Resident Representative for the Western Balkans, Stephanie Eble.

According to them, the metrics that the IMF uses show that the country has entered the corona crisis with a strong position of foreign exchange reserves and that the level of reserves will be adequately maintained, which supports the stability of the denar.

The National Bank has played an essential role in responding to the crisis. It has effectively used its room for maneuver to support the economy while preserving financial stability, said Bjornson Barkbu and Eble.

Furthermore, they shared the IMF’s assessment that the cuts in the policy rate and the reduction in central bank bills have helped limit the rise in borrowing costs and provide additional liquidity to the economy. At the same time, they point out that monetary policy actions have been supplemented with financial sector measures that encourage banks to restructure loans and thereby provide temporary relief to borrowers that have been affected by the pandemic.

In the interview with MIA, Bjornson Barkbu and Eble briefly addressed both our banking system and its readiness to respond to the shock of the corona crisis. They point out that over the past years, the system has strengthened its capital position and that the core Tier 1 capital ratio at end-2019 was 14.8 percent, as well as that non-performing loans level is relatively low. At the same time, they point to the IMF’s assessment that the banking system could withstand a severe macro-financial shock.

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