dimitar bogov : we will need foreign loans also in the coming years interview with mr dimitar bogov, governor of the national bank of the republic of macedonia, in utrinski vesnik, conducted by ms nina nineska - fidanoska and published on 22 august 2013. * * * mr. bogov, in june, lending grew by only 3. 7 percent, which is considered a very low rate. few months ago, businessmen called for an annual credit growth rate of 8 to 10 percent. is there a chance to reach that goal and when? it is usually considered that credit growth should be two times the nominal growth of the gross domestic product. this means that if we want to achieve long - term real gdp growth of some four to five percent and inflation of two to three percent, then certainly i would say that credit growth of 10 to 15 percent is normal and desirable. but we were in a period of slower economic growth, so that the credit growth rate was relatively low in the last year. this year it continued, and in june we had an annual credit growth rate of 3. 7 percent. it is low, but in line with our projections. for the entire year we expect credit growth of 7 percent and we believe we will achieve that rate. in june and july we already have a more intensive monthly credit growth compared to the previous months and we expect that trend to continue. for the next year, we are more optimistic, and in our projections we expect credit growth of up to 9 percent. in july, the national bank of the republic of macedonia made changes in the reserve requirement and also reduced the key interest rate to 3. 25 percent, which is the historically lowest level. when do you expect the effects? we made some changes, so that we reduced the reserve requirement ratio for denar deposits and we increased that for the foreign currency deposits. our goal is to stimulate denar saving at the expense of the saving in foreign currency, which in this way will become more expensive, while saving in denars will become cheaper. shortly after that, we reduced the key interest rate to 3. 25 percent, thus sending a signal to the banks that there is room for greater lending activity. even that small amount of loans does not go to the companies, but mainly to the citizens. why is that so and when will it change? in 2009, soon after the outbreak of the global economic crisis, banks here immediately stopped lending to households

, while they continued to lend to companies. it allowed banks to clean the loan portfolio of the households, i. e. to eliminate the bad loans in the meantime. therefore, now they have room to re - start lending to the households, and they are doing it. the process of cleaning the credit portfolios of the companies, however, was left out at that point, so it began more intensively last year, and continued this year. therefore, we have a small increase in bad loans, which reached about 12 percent. i think this process will slowly wind down. then, together with the reduction of the risks that banks see in the real sector, and which will come to the surface now after the positive signals from the european economy, lending to companies will become a little more intensive. in one of its reports nbrm has pointed out that one of the limiting factors for higher credit growth are some conservative strategies in the local banking groups. what specifically did you mean? yes, we pointed out the conservative strategies. and it is no secret that here we primarily think of the problems that some of the banks present in macedonia have in their home countries. banks in slovenia and greece are in serious problems, even though their banks in macedonia are among the best, by both the quality of corporate governance and the credit risk management, and also the level of capital and liquidity they have is the highest in our bis central bankers ’ speeches banking system. so, their banks in macedonia have no impediment to normally work and grant loans. but don ’ t they grant loans normally? well, some of them are quite restrained. we constantly talk to them and they promise to be more active in the market. which of them are restrained? stopanska banka has been quite restrained in recent years, but it always had positive rates of credit growth. it has never cut lending. but i must say that nlb tutunska banka registered a reduction in the credit growth last year, and this year it continues. i had serious discussions with the supervisory board from ljubljana, where we claimed that such behavior is inappropriate and could adversely affect the reputation of the bank. they promised to reconsider their policy, particularly as there is no reason for nlb tutunska banka not to grant loans in macedonia. the bank does not rely on funding from the parent bank, it is fully financed from its own resources here in the country, it has one of the best