Macedonian economy appears to be recovering, with growth of about 2 percent likely by the end of this year, is the main assessment of IMF team, headed by Wes McGrew, which stayed in Skopje for the last six days so as to assess economic and financial conditions and discuss economic policies with the authorities.
 
– Meanwhile Macedonia’s external balances have improved significantly as exports have started to pick up while imports remain subdued. The current account deficit is on course to narrow further and is expected to be around 6 percent of GDP. Macedonia can look forward to a more robust recovery next year, McGrew said at press conference Wednesday held at the Ministry of Finance.
 
McGrew commended the banking system in Macedonia, pointing out it had weathered the economic difficulties well and remained in healthy shape, emphasizing that Macedonian banks were well-positioned to support growth through expanded lending, as the economic recovery progressed and demand for loans increased. He welcomed the gradual easing of NBRM monetary policy in response to improved confidence and a rebound in international reserves, pointing out that further easing would follow if external balances and international reserves continued their favorable trend.
 
– Prospects for continued stability and a gradual return to growth in Macedonia are good. However, uncertainties and risks in the external environment remain considerable, with respect both to growth of trading partners and to global financial conditions. This calls for continued caution in economic policies, McGrew said, emphasizing that IMF stands ready to support Macedonia in whatever way is most helpful, if necessary.
 
IMF assessment on recovery of the Macedonian economy was also supported by Vice Prime Minister and Minister of Finance, Zoran Stavreski, and NBRM Governor, Petar Gosev.
 
– In 2010, Macedonia will realize the projected growth of 2% of GDP, based on improvement of the external demand as a result of 1% growth of the European economy and the expected moderate, but realizable, recovery of the domestic demand, which will be significantly evident in the second half and at the end of this year. At the beginning of this year, revenues were lower than the projected ones, as well as compared to the revenues last year, however, from month to month, they pick up, showing better performance for the first time in April compared to the same period last year. I expect for such trend to continue by the end of the year, Stavreski said, announcing cautious policy on the expenditure side and its revision, if necessary, so as to maintain reasonable budget position.
 
He emphasized that the Government will continue implementing disciplined fiscal policy and will realize the projected budget deficit of 2.5% of GDP for this year. During the first four months this year, as Finance Minister pointed out, total budget deficit was 1.1% of GDP, which was in line with the expectations, providing for not exceeding the 2.5% budget deficit by the end of 2010.
 
Governor Gosev said that the recovery was happening, adding that it did not depend only on the policies in Macedonia, but also on the recovery throughout the world, especially in the countries Macedonia cooperated the most.
 
– NBRM policies will be to continue with cautious and careful steps, and we will soon announce whether there will be further easing of monetary policy, Gosev said, adding that international reserves were at satisfactory level.
 
According to him, the fact that there will be further reduction of current account deficit is encouraging.
Asked whether the crisis in Greece could spill over to the Macedonian economy and banking, McGrew said that IMF was not concerned whether crisis in Greece would affect Macedonia, adding that Macedonian banks, including those with Greek capital, were well capitalized and, as a result, Greek crisis could not affect them.
 
– There may be certain impact on trade with Greece, although economic disruptions of in other European countries will slightly impact Macedonia as well. However, I see no significant possible crisis to spill over to the banking sector in Macedonia, McGrew said.
Governor Gosev agreed with McGrew’s statement, underlining that banks in Macedonia opertae pursuant to the Macedonian laws and are strictly supervised by the Central Bank.
 
Vice Prime Minister Stavreski rejected, for the time being, the possibility for Supplementary Budget, adding that should need arise, such possibility would be taken into consideration. He stated precisely that announced issue of Eurobond by the end of the second quarter in 2010 did not necessarily have to be realized, should interest rates and conditions not be favourable, saying that since the beginning of the year, EUR 70 million was used from last-year Eurobond. Stavreski expects for the Eurobond to be issued this year to be with lower interest rate that last-year 10% interest rate.
 
Asked why Macedonia borrowed at private investors through Eurobond, rather than by concluding an arrangement with the IMF which is with more favourable interest rates ranging from 1.5% to 3.5%, Stavreski said that many countries throughout the world did the same.(МИА)
