20th February 2021, Skopje – Standard & Poor’s Credit Rating Agency has confirmed North Macedonia’s credit rating at BB-, with a stable outlook. This Credit Rating Agency expects for Macedonian economy to get back on the track of growth this year and overcome the shocks from the crisis caused by COVID-19 pandemic. What was also noted were the government efforts in strengthening the public finance system, such as the Organic Budget Law, which anticipates major reforms regarding budget planning and implementation control.
Keeping the same credit rating on a continuous basis, despite the effects from the COVID-19 crisis is of exceptional significance, since it sends a positive signal to investors about the ongoing developments, thus clearly speaking in favor of their confidence in the policy actions taken in our country.
Agency representatives pointed out that after a sharp fall in the second quarter of 2020, North Macedonia’s economy rebounded by the end of the year. They noted that the industrial production in December 2020 registered a positive result for first time since the beginning of the crisis in February 2020.
The Agency cited the recovery of export activity, as well as public and private consumption as the driving force for the growth in 2021, while their expectations are that in 2021, the growth will stand at 3.6 percent. “Standard & Poor’s” representatives also noted that Republic of North Macedonia was integrated in the global supply chains, especially in the automotive industry. The recovery of automotive industry, as well as the economies of the country’s largest trading partners like Germany, will contribute to the recovery of North Macedonia’s economy as well.
Growth is expected to be underpinned by domestic consumption as well. As the Agency stated, the anti-crisis measures the Government undertook in 2020 provided for keeping the jobs, at the same time acting as a buffer against the crisis impact on the economy.
Moreover, S&P expects sizable government infrastructure investments in the period 2021 – 2024, aimed at improving infrastructure in the field of transportation, healthcare and education with investments up to EUR 3.2 billion or almost 30% of the projected Gross Domestic Product for 2021. They also noted the Government’s efforts to improve the execution of capital expenditure plans.
Standard and Poor’s expects for the budget deficit to narrow to 4.9% in 2021 and to continue to decrease gradually each year in line with the government’s projections. They also praised Government’s efforts to strengthen the fiscal framework, thereby pointing out the Organic Budget Law, which anticipates the introduction of fiscal rules and establishing a Fiscal Council.