28th January 2023, Skopje – Standard and Poor’s Credit Rating Agency affirmed North Macedonia’s credit rating BB- with stable outlook, thus speaking in favor of the policies it implements even in times of crises. Republic of North Macedonia has been awarded credit ratings BB- with stable outlook on continuous basis, being retained even in times when the country faced the health and the economic crisis, followed by the price and energy crisis, being particularly noteworthy.
As per Standard and Poor’s, the stable outlook reflects that the proactive policymaking by the Government of the Republic of North Macedonia, as well as its moderate government debt levels, will offset the multiple risks arising from the conflict in Ukraine.
Under its report, Standard and Poor’s noted that the crisis will impact the economic growth during this year as well, whereby growth is expected to revert to its pre-crisis trend in the medium term. As per Standard and Poor’s, strong private consumption underpinned by the accommodative monetary policy, wage increase and remittances, will remain to be driving forces of growth. Along with consumption, investment will also be a key driver of growth, particularly from government investments such as the Corridor 8 and 10d highway project. Progress as regards the EU accession process is also expected to positively contribute to the country’s economic outlook. Recovery in FDIs is forecast, whereby inflation is expected to decline as price pressures ease.
As pointed by Standard and Poor’s representatives, fiscal consolidation is expected to continue. Effects from the crisis will continue in 2023, however, compared to 2022, lower budget deficit of 4.1% of GDP in 2023 is expected against the government’s draft target of 4.6%. As per the Agency, strict adherence to the recently adopted Organic Budget Law, which outlines a set of fiscal rules and the establishment of an independent fiscal council should help North Macedonia’s fiscal consolidation efforts. Stabilization of the general government debt is also expected in the medium run, coupled by the positive effects, which are to be generated from the tax reform.
S&P also stressed the significance of the continuation of the structural reform efforts, the strengthening of the institutional framework, accompanied by consolidated sustainable fiscal policies. Efforts for accessing the EU will contribute to strengthening the institutional framework.
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.