Skopje, 25 January 2025

Standard & Poor’s Credit Rating Agency affirmed North Macedonia credit ratings at BB- with a stable outlook. The agency highlighted the government's commitment to extensive reforms aimed at boosting economic growth, strengthening administrative capacities, combating corruption, and reinforcing the rule of law.

In the report the agency notes that stimulating economic growth is a central objective, with the government targeting up to 5% growth through large-scale infrastructure projects. Plans also include efforts to boost investment, improve tax collection, and enhance pensions and wages to support citizens. They highlight the necessity of implementing stronger fiscal consolidation.

Parliament recently approved the 2025 budget, projecting a 4% GDP deficit, a slight improvement from the 4.5% target in 2024. Revenues are expected to increase by 13% year-on-year, reaching 35.7% of GDP, driven by higher tax collection, economic growth, and social security contributions. Expenditures are forecast to grow by 10.3% year-on-year, totaling 40.0% of GDP, primarily due to higher public sector salaries, social transfers, health care costs, and infrastructure investments. Notably, capital expenditures are allocated MKD47.2 billion (4.2% of GDP), with significant funding directed toward major infrastructure projects, including Corridors 8 and 10d. Pressure on meeting the projected budget deficit, as noted by Standard & Poor's, may arise from factors like lower growth rates than expected, reduced tax collection, the informal economy, and rising investment costs.

The agency notes that North Macedonia continues to post one of the lowest growth rates in the region, recording 2.6% in the first three quarters of 2024. This weak performance reflects a combination of sluggish external demand, particularly from Germany, and limited investment activity, both of which have constrained growth in recent years. For 2025, the agency expects growth to improve modestly to 2.9%, underpinned by consumption and increased public and private investment, particularly in infrastructure.

Inflation is expected to remain elevated, averaging 3.5%, supported by rising food prices and base effects.

The agency believes that implementing structural reforms could lead to significant progress for the country, supported by improved fiscal performance, reduced debt, and robust economic growth.

Standard & Poor's evaluates the country’s credit rating twice a year. The credit rating is also reviewed twice annually by Fitch. This serves as an important indicator for investors, determining the risk level of investments.

Ministry of Finance

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