Coupled with free capital flows this recipe is downright dangerous. IMF-ism replaced Communism and the instructions come now from Washington instead of Belgrade. The sequence is simple and inevitable - but, luckily, fully reversible. This is a counter-cyclical Kenseyan reflex. Money is injected to a languishing economy through the budget.
Money supply is reduced sharply.
Where free capital flows are permitted - foreign speculative funds will drive down the exchange rates of the domestic currency versus foreign currencies. Where capital flows are more restricted, domestic corporations will borrow in foreign exchange and invest in high yielding domestic currency deposits and bonds. These effects are mercifully minimal in Macedonia due to its relative insulation from international capital flows. A currency bubble followed the wrong policies of the Central Bank in Macedonia. When it bursts - the whole economy will suffer.