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30th April 2022, Skopje – Fitch Ratings has affirmed North Macedonia’s credit rating at ‘BB+’ with a negative outlook. The Agency noted the favourable governance, as well as the credible and consistent micro-financial policy underpinned by the longstanding peg to the euro.

Affirmed credit rating is especially significant for the Republic of North Macedonia in times of global crisis. The negative outlook reflects the risks the country faces following the pandemic shock and the effects of the war in Ukraine.

As pointed out in the report, the negative impact will be partly balanced by private consumption, cushioned by government support measures and wage increases, and investment.

The Agency envisages 2.8% growth of North Macedonia’s economy in 2022, as a result of the problems of global manufacturing supply chains, the fallout from abrupt energy supply disruptions and the gas import dependence from Russia. Fitch expects a pick up to 3% in 2023, reflecting easing of geopolitical risks and energy price pressures, as well as gradual fiscal consolidation with continued emphasis on public investment.

Fitch forecasts that 2022 budget deficit will increase in relation to the one in 2021, reflecting government response to price and energy crisis, higher minimum wages, higher pension spending and government support for key sectors in the economy. To manage the crisis, the Government introduced set of 26 measure amounting to EUR 400 million as support to the living standard of the citizens and the companies’ liquidity. Fitch forecasts the general government deficit to decline to 4.8% in 2023, as temporary measures, such as lowering VAT rates and support for the electricity sector, are withdrawn.

They consider that the requested IMF PLL programme would support authorities’ commitment to fiscal consolidation, thus reducing the fiscal deficit and supporting debt stabilisation. The Agency forecasts general government debt to reach 55.2% of GDP by the end of this year and 56% of GDP in 2023.

Standard & Poor’s Credit Rating Agency has also affirmed North Macedonia’s credit rating at ‘BB-’, with a stable outlook. 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.

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