Front Matter Page

© 2000 International Monetary Fund

June 2000

IMF Staff Country Report No. 00/72

Former Yugoslav Republic of Macedonia: Recent Economic Developments

This Recent Economic Developments report on Former Yugoslav Republic of Macedonia was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with this member country. As such, the views expressed in this document are those of the staff team and do not necessarily reflect the views of the Government of Former Yugoslav Republic of Macedonia or the Executive Board of the IMF.

International Monetary Fund

Washington, D.C.

Front Matter Page

INTERNATIONAL MONETARY FUND

FORMER YUGOSLAV REPUBLIC OF MACEDONIA

Recent Economic Developments

Prepared by Aliona Cebotari, Paulo Drummond, Rachel Glennerster, Philippe Marciniak, (All EUI), Toshitaka Sekine (PDR), and Hugh Young (FAD)

Approved by the European I Department

April 25, 2000

Contents

• I. Introduction

• Text Tables

• 1. Basic Economic Indicators, 1996–99

• II. Real Sector Developments

  • A. Demand and Supply

  • B. Prices

  • C. Labor Market

  • D. Wages

• Figures

• 1. Economic Activity Indicators and Inflation

• 2. Employment and Wages

• Text Tables

• 2. Selected Real Sector Indicators, 1992–99

• III. Monetary Developments

  • A. Recent Developments

  • B. Instruments of Monetary Policy

• IV. Banking System Soundness and Recent Lessons

  • A. Introduction

  • B. Market Structure

  • C. Banking System Operations and Recent Developments

  • D. Banking System Soundness and Vulnerability

  • E. Macroeconomic Effects of Banking System Fragility

  • F. Banking Supervision and the Legal Environment

  • G. Dealing with Unsound Banks

  • Attachment I: Banking Definitions

  • Attachment II: Measuring the Systemic Risk of Interbank Exposures

• Figures

• 3. Commercial Bank Liquidity and Foreign Exchange Composition of Foreign Exchange Reserves

• 4. Interest Rates

• 5. Foreign Exchange Market

• Text Boxes

• 1. Frozen Foreign Currency Deposits

• 2. Deposit Insurance Fund

• 3. Development Bank

• 4. Assessment of Interbank Exposures

• Text Tables

• 3. Summary Balance Sheet of Banks

• 4. Banking System Liabilities

• 5. Banking System Assets

• 6. Banking System Income Statement and Profitability

• 7. Credit Exposure

• 8. Banking System Soundness

• 9. Credit and Off-Balance-Sheet Activity

• V. Enterprise Sector Transformation and Financial Performance

  • A. Transformation of Socially Owned and State Enterprises

  • B. Financial Performance of the Enterprise Sector

  • C. The Macedonian Stock Exchange (MSE)

• Figures

• 6. Illiquid Enterprises

• VI. Fiscal Policy and Developments

  • A. Overview

  • B. Fiscal Policy Developments in 1998

  • C. The 1999 Budget and Developments

  • D. The 2000 Budget

  • E. The Structure of Public Expenditure and Revenues

  • F. The Extrabudgetary Funds

  • G. Structural Fiscal Issues

  • H. Special Revenue Accounts

  • I. Total Government Debt

• Figures

• 7. General Government Operations, 1996–2000

• VII. External Sector Developments

  • A. Current and Capital Accounts Developments

  • B. External Debt and Reserve Adequacy

  • C. Exchange and Trade Regime

• Annex I: Unemployment in FYR Macedonia

• Annex II: Pricing of Oil Derivatives

• Annex III: Did Privatization Increase Profitability in FYRM0?

• Annex IV: Tax Summary as of April 1, 2000

• Text Boxes

• 5. External Competitiveness

• 6. Real Effective Exchange Rate Indices

• Figures

• 8. Balance of Payments Developments, 1998–99

• 9. External Trade Developments, 1995–99

• Text Tables

• 10. External Assistance Pledged at the May 1999 Consultative Group Meeting

• 11. Debt and Reserve Indicators

• 12. Selected Labor Force Indicators, 1996–99

• 13. Structure of Unemployment, 1996–99

• 14. Pricing of Oil Derivatives, 1999–2000

• 15. Levels Estimator and Selection Bias

• 16. Net Profits by Sector, 1995–97

• 17. Difference Estimator

• Statistical Appendix

• 18. Gross Domestic Product at Current and Constant Prices by Economic Activity, 1995–99

• 19. Gross Domestic Product by Aggregate Demand Components, at Current and Constant Market Prices, 1995–99

• 20. Price Indices, 1995–99

• 21. Employment, According to Administrative Sources and the Labor Force Survey, 1996–98

• 22. Nominal and Real Net Average Wages by Sector, 1995–99

• 23. Monetary Survey, 1995–99

• 24. National Bank Accounts, 1995–99

• 25. Deposit Money Bank Accounts, 1995–99

• 26. Interest Rates, 1995–99

• 27. Privatization by Model of Transformation, 1995–99

• 28. Main Indicators of Enterprise Sector Activity by Type of Ownership, 1996–98114

• 29. Summary of Central Government Operations, 1996–2000

• 30. Summary of General Government Operations, 1996–2000

• 31. Summary of Special Fund Operations, 1996–2000

• 32. Special Revenue Accounts and Expenditure Financed from Special Revenue Accounts, 1998–99

• 33. Expenditure Financed from Special Revenue Accounts by Agency and Economic Category, 1998–99

• 34. Outstanding Domestic Debt of the Central Government by Type of Debtor, 1996–99

• 35. Balance of Payments, 1995–99

• 36. Commodity Composition of Exports and Imports, 1995 Nov. 99

• 37. Destination of Merchandise Exports, 1995-Nov. 99

• 38. Origin of Merchandise Imports, 1995-Nov. 99

• 39. Exports and Imports by Final Use, 1995-Nov. 99

• 40. Services Account, 1995–99

• 41. External Debt Disbursements, 1995–99

• 42. External Debt-Service Obligations, 1995–99

• 43. External Debt Stock, 1995–99

• 44. Official Gold and Convertible Foreign Exchange, 1995–99

• 45. Exchange Rate Developments, 1995–99