5th October 2024, Skopje – In its latest report, Fitch ratings affirmed the sovereign ‘BB+’ credit rating with stable outlook. According to Fitch, such rating is supported by a record of credible and consistent macroeconomic policies that underpin the longstanding de facto exchange rate peg to the euro, more favourable governance indicators than peer medians, and an EU accession process that acts as a reform anchor over the medium term.
The Agency expects growth to average 3.5% in the coming years, while implementation of a credible medium-term strategy to consistently reduce deficits will be key to stabilize the debt trajectory. It also projects the budget deficit to moderately reduce to 3.5% in 2026, based on the expectations for arrears to normalize, as a result of which the deficit was revised under the Supplementary Budget.
According to Fitch, fight against shadow economy by process digitalization is key element of fiscal policy, also noting the Government’s plan for a greater use of electronic invoicing.
Debt, according to Fitch, will exceed the limit specified under the Organic Budget Law. As noted in the Report, the authorities will finalize EUR 500 million loan with Hungary at below-market rates to meet the revised budgetary needs. Greater reliance on domestic issuances in 2025-26 is expected, alongside a pipeline of concessional financing, including from the World Bank and European Bank for Reconstruction and Development. The Agency does not anticipate a further drawdown of the Precautionary and Liquidity Line (PLL) from the IMF.
Growth will be driven by investments, in particular infrastructure investments in 8/10d corridors. Fitch views as positive the support North Macedonia receives from the EU as part of the accession process.
Affirmed credit rating speaks in favour of the new Government’s policies aimed at ongoing fiscal consolidation and stabilization of public finances, which are to continue in the coming period as well as reflected in the adopted Fiscal Strategy and Public Debt Management Strategy, as well as the 2025 Budget, which is in the process of preparation.
Fitch revises the country’s credit rating twice a year. In April 2024, it also affirmed country’s credit rating at ‘BB+’ with stable outlook, maintained since 2019.
Country’s credit rating, as well as the policies it implements, are also revised by Standard&Poor’s twice a year.
Credit rating of a country, assigned by credit rating agencies, 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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