29th October 2022, Skopje – Fitch Ratings has affirmed North Macedonia’s credit rating at “BB+” with a negative outlook, supported by favourable governance, a credible and consistent policy mix underpinned by the longstanding peg to the euro. Credit rating “BB+” with a negative outlook is confirmed in the most recent report of the Fitch Credit Rating Agency.
What is particularly important for Republic of North Macedonia is that the credit rating resulting from the implementation of sound policies, has been retained amid great impact of the global price and energy crisis.
Under its report, Fitch staff stated that the EU accession process helps anchor policy and support exports and FDI inflows, thus balancing the adverse impact from the war in Ukraine.
As per the Agency, the intensification of the energy crisis and the expectation of contraction in the Eurozone will impact Macedonian economic growth, which will be kept in the positive zone, whereby North Macedonia’s economy will recover to 3.2% in 2024, reflecting some easing of geopolitical risks and energy price pressures, improving external demand and gradual fiscal consolidation..
Agency forecasts net FDIs to increase to 4% of GDP in 2022 due to continued investments in the energy and auto sectors.
As per Fitch, Government reforms, as well as IMF support via the Precautionary and Liquidity Line (PLL) will provide for strengthening the fiscal consolidation, thus reducing the fiscal deficit and stabilizing the debt. The approved new Organic Budget Law will help strengthen the country’s fiscal framework, for example, through the introduction of fiscal rules and a fiscal council.
Fitch has revised down its forecast 2022 general government deficit, thereby referring to the measures undertaken by the Government in response to price and energy crisis equaling EUR 750 million. Agency staff project the general government deficit to decline in 2023 by removing certain energy support measures. The Agency also forecasts general government debt to reach 55.2% of GDP by the end of this year and 56% of GDP in 2023.
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.
Standard & Poor’s Credit Rating Agency also affirmed North Macedonia’s credit rating at ‘BB-’, with a stable outlook.