Anita Angelovska-Bezoska: Ministerial Dialogue on the Economic
Reform Programmes of the Candidate Countries
Speech by Ms Anita Angelovska-Bezoska, Governor of the National Bank of the Republic of
Macedonia, at the Ministerial Dialogue on the Economic Reform Programmes of the Candidate
Countries, Brussels, 25 May 2018.
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Dear Ministers,
Dear representatives of the European Commission, European Central Bank and Eurostat,
It is my great pleasure to join you on the regular Ministerial Dialogue. At the beginning, let me
express our gratitude to the ECB, European Commission and Eurostat for their assessment of
our Economic Reform Programme that outlines the ongoing, as well as forthcoming
mediumterm reform priorities aimed at more competitive, flexible and resilient economy. Herewith, we
appreciate the positive assessment of the monetary policy as well as the recommendation to
continue "to conduct monetary policy consistent with the exchange rate peg, using available
scope within this framework in line with safeguarding price stability" which is completely in line
with central bank views on monetary policy strategic framework.
In light of today's thematic discussion on fiscal sectors reforms, we would like to express
our support for the Ministry of Finance's reforms oriented towards strengthening Public
Finance Management system that besides improving the effectiveness of the use of
public resources, will also foster the ongoing fiscal consolidation process. We believe
that the numerous reforms enshrined in the medium-term PFM Reform Program, such as
strengthening macro-economic forecasting infrastructure, strengthening commitment control,
enhancing fiscal transparency and introducing fiscal rules will help prevent potential fiscal
slippages and be conducive to further strengthening of fiscal discipline.
Continuation of prudent fiscal policy leading to stabilization of the public debt will
provide room for prolonged accommodative monetary policy, i.e. keeping the main policy
rate at its historically lowest level for an extended period, thus providing further
stimulus for economic recovery. This is even of crucial importance considering the
implemented exchange rate targeting strategy in our case. Reestablishment of fiscal buffers may
be needed in the context of the new forthcoming global cycle of lower liquidity and higher interest
rates. In addition, budget forecasts underpinned by sound macro assumptions will be an
important input in the medium-term macro-forecasting process of the central bank with positive
effects over forecast quality thus further enhancing the quality of the monetary policy decision
making.
Allow me to take this opportunity to also point out that last year's monetary policy
objectives have been achieved, despite the political uncertainty present at that time.
Monetary policy remained accommodative, amid moderate inflation of 1.5% in the first four
months of 2018, strong external position and gradual stabilization of market expectation. In March
2018, the main policy rate was reduced to 3%, which is historically lowest level. Deposit and
credit growth of the banking sector continued, with revival in the lending to the corporate sector,
accompanied with a decline of the NPL ratio in the first quarter of 2018 to 5.1%, due to claims
collection. Current account deficit in 2017 additionally reduced to 1.3% of GDP, reflecting the
positive contribution of the foreign capital companies on the export side, which indicates further
strengthening of the economic fundamentals.
Regarding the recommendation from the last year's dialogue, the central bank prepared
draft strategies for NPLs management and strengthening the use of local currency, both agreed
with the Ministry of Finance and currently subject to consultation with other relevant stakeholders.
In both areas, as already being confirmed in the assessments and final conclusions, we have
already achieved tangible results; however the adoption of these comprehensive strategies will
put in place additional mechanisms to deal with these issues.
In light of the challenging time that we have faced in recent years, we need to point to the
maintenance of price and financial stability as important pillars of the macroeconomic stability, as
well as the need to continue strengthening the fundamentals and resilience of the economy.
Implementation of structural reforms and strengthening institutional capacities, including sound
public finances, should remain main priorities for faster income convergence and EU integration.
Thank you!