encourage consumption in greece, spain, italy, portugal, usa, etc. who will finance this consumption? just as banks refuse to provide new loans to overindebted customers, investors are not willing to finance increased spending of budgets. in the economics there is a saying that “ there is no free lunch. ” in the end someone has to pay the bill. the time has come for the developed economies to pay the bill and now there is no other choice but austerity. this is a time of painful structural reforms, revision of the generosity of social care in accordance with the possibilities of the economy. as for macedonia, as a result of many years of prudent fiscal policies, we had room for stimulus in these few years. but this room in the medium term will be exhausted and we will have to save more. bis central bankers ’ speeches macedonian companies lend to their parent companies in the euro area what are the expectations for the deposits in 2013? can we expect further growth, especially of denar deposits? households ’ saving is likely to continue at the usual growth rate of at least 10 percent per year, mostly in denars. it is harder to predict the trend with companies. this year there were significant capital outflows in the form of dividends and loans from foreign - owned companies to their parent companies abroad. obviously, macedonian companies are still profitable and they financially help their parent companies in the troubled euro area countries. it negatively influences the deposit potential of companies. it is uncertain whether this trend will continue next year. why do you always connect the issue of the exchange rate policy with devaluation? is it possible to open a debate in the country, on the economic model, the effects that it provides and the exchange rate regime and its efficiency vis - a - vis the economy? currently, we have a real exchange rate of the denar. demand and supply are balanced. nbrm very rarely intervenes in the foreign exchange market. as a result of the credibility of the denar and the national bank created over the past 15 years, we have completely eliminated the speculative demand for foreign exchange. but experience has shown that immediately when the change in the exchange rate is mentioned, a speculative demand for foreign exchange appears and disturbs the balance on the foreign exchange market. this would cause pressure on the exchange rate, higher inflation and ultimately much higher interest rates than the current ones. who would benefit from that? you take a selected sample of countries with flexible exchange rate

that have higher economic growth than macedonia and you offer it as evidence that such policy gives better results. i will find another sample of countries with flexible exchange rate that have lower growth than macedonia. it is not economic analysis, it is manipulation. i am still waiting for someone to offer a plausible analysis of how the change of the exchange rate regime will boost economic growth. except naive statements in the media, so far no one has offered such an analysis. in the economic literature, it has long been concluded that the exchange rate regime does not affect economic growth. do you think that macedonia has an efficient economic model and exchange rate regime if it records economic growth rates which do not exceed 3 – 4 percent, and everybody agrees that it is necessary to have growth of over 8 percent? it is very naive to link economic growth only with the exchange rate regime. economic growth is a very complex phenomenon that depends on about a hundred of factors. competitiveness of an economy does not depend only on the exchange rate. take the global competitiveness index of the world economic forum. it takes into account more than one hundred indicators for measuring the competitiveness of countries. if someone believes that macedonia will realize an 8 percent growth rate only if the exchange rate regime is changed, i am left speechless. the change in the exchange rate is used as an instrument for improving the competitiveness only when the country has failed to improve other factors and there is no other choice. but it is only a short term solution that will quickly exhaust the effects, because devaluation will bring high inflation and in the end only the nominal exchange rate is changed, and the real exchange rate will remain the same. and then again demands for a new devaluation. look at the history of the european monetary union. what was the exchange rate policy of greece, italy, spain, before the introduction of the ecu ( the predecessor of the euro ). instead of structural reforms, they constantly corrected their weaknesses with a devaluation of the exchange rate. when they entered the euro area it was no longer possible and it has led to what we see today. they require internal devaluation of about 30 percent to restore lost competitiveness. by contrast, countries such as austria, the netherlands ( denmark, which still has its own currency ) have always led policy of a fixed exchange rate pegged to the german mark. to be competitive, they had to increase their bis central bankers ’ speeches efficiency with structural measures. therefore these countries have no problems