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6th November 2021, Skopje – Fitch Ratings has affirmed North Macedonia’s credit rating at ‘BB+’ with a negative outlook. In its Report, Fitch noted that, amid pandemic, the North Macedonia’s ratings are supported by favourable governance and human development indicators, as well as a credible and coherent macroeconomic and financial policy mix consistent with the longstanding exchange rate peg to the euro.

The Agency forecasts that growth of the Macedonian economy will reach 4.1% in 2021 and 4.3% in 2022 as a result of the favourable economic conditions in key export markets. Domestic credit availability, continued wage growth and public investment will support domestic demand, however, the recovery will fully depend on the pandemic development and the vaccination rate, Fitch pointed out.

As noted in the Fitch Report, EU accession process helps to anchor policy and support exports and FDI inflows.

The Agency forecasts for the 2021 budget deficit to account for 6.1% of GDP, being lower compared to the government projection of 6.5% of GDP. 2022 Draft Budget is in line with the 2022-2026 Fiscal Strategy, which projects the budget deficit declining to 4.3% and 3.5% of GDP in 2022 and 2023 respectively, before reaching 2.2% of GDP by 2026.

According to Fitch, the adoption of the new organic Budget Law could provide an anchor for fiscal consolidation through the introduction of a revamped fiscal framework, including fiscal rules and formation of a Fiscal Council.

The Agency expects for the government debt to reach 53% of GDP by the end of this year and 55.3% of GDP by 2023. Budget deficit will ease to 3% of GDP by 2023, while net FDI are expected to recover to 3.1% of GDP by 2022, fully financing the current account deficit.

Credit rating of a country gives insight into the level of risk associated with investing in a particular country and it is one of the key indicators the potential investors consider when making decisions.

Credit rating has a positive effect on the decision-making as regards investing in a particular country, further contributing to boosting the economic growth, strengthening the export, increasing the employment and higher wages.

Affirmed credit rating of the countries amid pandemic also contributes to reduction of government debt, thus creating interest savings.

Also available in: Macedonian Albanian

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