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. * * * 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,

overvaluation of their currencies. another risk in the short term might be the contagion of financial crises from abroad, which would combine with fragilities and thus prompt financial and economic difficulties in these countries. the long - run challenges for transition countries are related to the simultaneous maintenance of competitiveness and nominal convergence. what is next for the new eu member states is certainly achieving emu membership and all of them agree that the stability and opportunities of the single currency are their goal. while achieving this seemed easier a few years ago, the prospects are somewhat worsened in the light of the recent developments. the record high oil prices and the high food prices additionally augmented the inflationary pressures in these countries. the high inflation in most of the transition countries makes them breach the first of the four maastricht criteria. what is even worse, the forecasts for the next several years for most of the countries show they will probably not meet the source : ebrd transition report 2007 : november update and nbrm calculations. data for 2007 are estimates. source : ebrd transition report 2007 : november update. data for 2007 are estimates. inflation criterion. this is particularly troubling for the countries on a fixed exchange rate regime or currency board, which do not have the exchange rate flexibility as an instrument for handling inflation. another part where there might be trouble is the exchange rate criterion. now it is the floaters that could have bigger difficulties, particularly if the current developments continue and capital keeps to flow in these countries, thus making pressures for nominal appreciation. as far as the budget deficit criterion and the interest rate criterion are concerned, it appears that in these areas there will be less difficulties in fulfilling the maastricht criteria, under the assumption there will be maintenance and strengthening of fiscal discipline. of course, not all is bad and unreachable as far as maastricht criteria are concerned. these countries are not giving up and they stand ready to increase their efforts in order to achieve their goals. while it appears that most transition countries have postponed their euro - zone entry a little bit due to the abovementioned difficulties, there are also two remarkable success stories from the transition countries. we already have slovenia which has been in the eurozone since last year. in addition, we have slovakia which got a positive opinion by the european commission on fulfillment of criteria and is getting ready to adopt the euro in the beginning of next year. the remarkable success of the central and