12th December 2020, Skopje – Public Debt Management Strategy defines the limits for the three levels of debt – general government, guaranteed and total public debt in the coming five years, as well as the debt structure, all to the end of prudent debt management. According to the Public Debt Management Strategy, prepared by the Ministry of Finance, and in accordance with the fiscal consolidation policies which are to be implemented, public debt is to be reduced to below the Maastricht criterion, i.e. to 58.8%, by 2025 inclusive. General government debt, as per the Strategy, will account for up to 53.7% of GDP, following its stabilization and reduction to 51% in 2025.

In order to keep sustainable level of public debt, without thereby disrupting the fiscal sustainability, limit on the total public debt in the medium and the long run is determined in the Strategy, which is not to exceed 60% of GDP. The Strategy also indicates that, as a result of the economic crisis caused by COVID-19, limit discrepancies might occur during the crisis and the post-crisis period, as is the case in almost all European economies which increased the debt by more than 10 percentage points. However, it will stabilize in 2024 under the fiscal consolidation measures, dropping below the limit in 2025.     

As regards the debt structure, foreign currency-debt limits, as well as amount of fixed interest rate debt, are defined. In the period 2021-2025, according to the first criterion, minimum threshold of EUR-denominated debt in the total portfolio of foreign currency denominated general government debt is determined at 85%, while with respect to the interest structure, the minimum threshold of fixed interest rate debt is determined at 60%.

It is noted in the Strategy that larger amounts fall due for repayment in the coming medium-term period: EUR 500 million in 2021 for the Eurobond issued in 2014, EUR 450 million in 2023 for the Eurobond issued in 2016, as well as EUR 500 million are to be provided in 2025 for the purpose of refinancing the Eurobond issued in 2018. The Strategy is also aimed at preventing larger portion of the liabilities to became due all at once, at the same time ensuring evenly distributed maturity of debt-related liabilities. In the period 2021-2025, average time to maturity of central government debt is expected to increase from 5.7 years at the end of 2020 to 5.9 years in 2021, followed by slight reduction in the period from 2022 to 2025 as a result of amortization of concessional loans.

The Strategy is aimed at maintaining sustainable debt level via prudent public debt management. It envisages financing the needs of the state with the lowest possible cost, identifying, monitoring and managing the risks public debt portfolio is susceptible to and development and maintenance of an efficient domestic financial market.

Ministry of Finance continues working on optimizing the debt portfolio to the end of reducing both the refinancing risk and the interest costs.

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