25th January 2025, Skopje – S&P Global Ratings affirmed North Macedonia BB-/B ratings, with stable outlook. The Agency noted Government’s commitment to comprehensive reforms to accelerate economic growth, strengthen administrative capacities, combat corruption and reinforce the rule of law.
As indicated in the Report, stimulating economic growth is a central objective of the Government, targeting up to 5% growth through large-scale infrastructure projects. Efforts are made to boost investments, improve tax collection and increase pensions and wages to support citizens. However, quicker fiscal consolidation is needed.
Adopted 2025 Budget, as noted in the Report, targets 4% GDP deficit. Revenues are expected to increase by 13%, reaching 35.7% of GDP, driven by higher tax collection, economic growth and social security contributions. Expenditures are forecasted to grow by 10.3%, accounting for 40% of GDP, primarily due to higher public sector wages, social transfers, healthcare costs and capital expenditures, being allocated Denar 47.2 billion, accounting for 4.2% of GDP. Risks to the fiscal outlook, according to S&P, could be lower GDP growth, lower tax collection, informal economy and overruns in infrastructure projects.
Growth rates recording 2.6% in the first three quarters of 2024 reflect sluggish external demand and limited investment activity. For 2025, the Agency expects 2.9% growth, stabilizing to around 3% by 2027, underpinned by gradual recovery in external demand and an uptick in investment activity.
Inflation is expected to average 3.5%, supported by rising food prices.
Substantial progress in implementing structural reforms, improved fiscal performance, sustained decline in debt and robust economic growth can contribute to credit rating upgrade.
Both Standard&Poor’s and Fitch revise the country’s credit rating twice a year. Credit rating is a key indicator for the potential investors when making investment decisions, reflecting the investment risk level.
