Former Yugoslav Republic Of Macedonia: 2018 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Former Yugoslav Republic of Macedonia

Author: International Monetary Fund. European Dept.

Publication Date:: 29 Jan 2019

eISBN:: 9781484396704

Language:: English

Keywords:: ISCR; CR; baseline projection; staff appraisal; projection; staff's projection; catch-up in capital spending; headline inflation; labor market; monetary policy; foreign exchange; IMF staff calculation; Labor markets

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2018 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Former Yugoslav Republic of Macedonia

Abstract

2018 Article IV Consultation; Press Release; Staff Report; and Statement by the Executive Director for Former Yugoslav Republic of Macedonia

Context

1. More than twelve years after gaining candidate status, FYR Macedonia’s prospects for opening EU accession negotiations are looking hopeful. In the past year, significant efforts have gone into reenergizing the country’s EU and NATO accession bids, particularly with regards to resolving the long-standing name dispute with Greece. In a historic referendum that took place in September 2018, voters overwhelmingly supported changing the country’s name to the Republic of North Macedonia as a step to facilitate the opening of accession negotiations, yet the turnout fell short of the 50 percent needed for the referendum to be deemed valid. Subsequently, the Parliament produced just enough votes to approve the start of the process that entails constitutional changes associated with the name change. The full process of changing the name will require a final round of voting in the Parliament and subsequent passage in the Greek Parliament. If completed, FYR Macedonia could start accession negotiations with the EU in 2019, provided there is adequate progress in priority reforms.

2. After a protracted political crisis, a period of stability has revived reforms. Chronic structural weaknesses —concentrated in the labor market and public institutions—have held back growth and income convergence in FYR Macedonia, like in other Western Balkans neighbors. The government’s reform agenda is appropriately focused on strengthening institutions, supporting employment, and reducing inequality and informality. The challenge is to implement this ambitious agenda without undermining competitiveness, while also creating fiscal policy space to counter adverse shocks. Most importantly, the country is widely viewed as in urgent need of improving rule of law to secure a brighter future.

3. Against this background, the 2018 Article IV consultation focuses on macroeconomic and structural policies that would improve FYR Macedonia’s growth prospects and rebuild policy buffers to navigate uncertain times.

Recent Developments

4. Real GDP growth is rebounding after nearly stalling in 2017. In 2017, political uncertainties constrained investment and private consumption, while exports performed well (Table 1, Figure 1). In the first three quarters of 2018, positive developments in the labor market and robust household credit growth supported private consumption, while investment continued to contract due to postponement of large infrastructure projects and falling construction. Economic activity was also supported by buoyant exports, partly due to the resumption of metal exports, and weak import growth (Tables 3a and 3b). Real GDP growth is expected to reach 2 percent in 2018. Unemployment, including long-term unemployment, has seen a sustained decline in the last decade supported by job growth in the export sector and active labor market policies. After a brief spike, mostly reflecting rising international oil prices, headline inflation is easing, averaging to around 1.5 percent during January-November 2018 (Figure 1).

Table 1.

FYR Macedonia: Summary of Economic Indicators, 2015–2023

(Percent, unless otherwise indicated)

Sources: NBRM; SSO; MOF; World Bank; and IMF staff estimates and projections. National Accounts are revised by SSO, using ESA 2010

^{^1/}The inconsistency between Real GDP growth and contributions to growth results from discrepancies in the official data on GDP and its

^{^2/}Includes general government and SOEs debt.

Table 1.

FYR Macedonia: Summary of Economic Indicators, 2015–2023

(Percent, unless otherwise indicated)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
Real GDP				3.9	2.8	0.2	2.0	2.8	3.0	3.1	3.3	3.4
	Real domestic demand			5.4	5.0	0.3	0.0	2.6	2.3	2.4	2.4	2.4
		Consumption		4.3	2.1	0.1	2.5	2.0	2.1	2.1	2.1	2.1
			Private consumption	4.4	3.9	0.7	2.4	2.4	2.5	2.5	2.5	2.5
		Gross investment		8.3	12.5	0.8	-6.1	4.1	3.0	3.0	3.0	3.0
	Exports (volume)			8.5	9.1	8.1	11.7	8.7	9.0	9.0	9.0	9.0
	Imports (volume)			9.9	11.1	6.4	6.1	7.0	6.8	6.8	6.8	6.8
Contributions to growth ^1/
	Domestic demand			6.3	6.0	0.7	0.0	3.1	2.8	2.8	2.8	2.8
	Net exports			-2.5	-3.2	-0.5	2.0	-0.3	0.2	0.3	0.4	0.6
Output gap (percent of potential GDP)				0.6	1.0	-0.8	-1.0	-0.6	-0.2	0.0	0.0	0.0
Central government operations (percent of GDP)
Revenues				28.7	28.4	29.1	29.7	30.9	30.9	30.8	30.8	30.8
Expenditures				32.2	31.1	31.8	32.3	33.9	33.7	33.6	33.4	33.2
	Of which: capital			3.3	2.9	3.2	2.5	3.5	3.5	3.5	3.5	3.5
Balance				-3.5	-2.7	-2.7	-2.6	-3.0	-2.8	-2.7	-2.6	-2.4
Savings and investment (percent of GDP)
	National saving			28.5	29.7	32.0	31.1	31.4	31.9	32.4	33.0	33.7
		Public		-0.1	0.2	0.5	-0.2	0.5	0.7	0.8	1.0	1.2
		Private		28.6	29.5	31.5	31.2	30.9	31.2	31.6	32.1	32.5
	Foreign saving			2.0	2.9	1.0	0.6	1.4	1.8	2.1	2.3	2.4
	Gross investment			30.4	32.5	33.0	31.7	32.8	33.7	34.5	35.3	36.1
Consumer prices
Period average				-0.3	-0.2	1.4	1.5	1.8	2.0	2.2	2.2	2.2
End-period				-0.3	-0.2	2.4	1.4	2.0	2.0	2.2	2.2	2.2
Private sector credit growth				9.5	0.0	5.3	8.0	7.0	7.0	7.0	7.0	7.0
Memorandum items:
Current account balance (percent of GDP)				-2.0	-2.9	-1.0	-0.6	-1.4	-1.8	-2.1	-2.3	-2.4
Gross official reserves (millions of euros)				2,262	2,613	2,336	2,779	3,155	3,340	3,476	3,685	3,775
	in percent of ST debt			101.2	104.0	82.0	98.1	97.4	95.0	112.0	101.0	100.8
	in months of prospective imports			4.2	4.5	3.7	4.1	4.2	4.1	4.0	3.9	3.7
Gross general government debt (percent of GDP)				38.1	39.8	39.4	41.4	42.5	43.2	43.8	44.1	44.1
Public and publicly guaranteed debt (percent of GDP) ^2/				44.0	46.7	48.0	50.7	53.0	54.0	54.9	54.9	54.4
Foreign direct investment (percent of GDP)				2.2	3.3	1.8	3.3	3.2	3.2	3.2	3.2	3.2
External debt (percent of GDP)				69.3	74.7	73.9	76.1	78.5	78.4	77.4	76.9	75.5
Nominal GDP (billions of denars)				559	595	617	639	670	705	742	784	828
Nominal GDP (millions of euros)				9,073	9,656	10,014	10,383	10,887	11,442	12,055	12,727	13,455

Sources: NBRM; SSO; MOF; World Bank; and IMF staff estimates and projections. National Accounts are revised by SSO, using ESA 2010

^{^1/}The inconsistency between Real GDP growth and contributions to growth results from discrepancies in the official data on GDP and its

^{^2/}Includes general government and SOEs debt.

Table 1.

FYR Macedonia: Summary of Economic Indicators, 2015–2023

(Percent, unless otherwise indicated)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
Real GDP				3.9	2.8	0.2	2.0	2.8	3.0	3.1	3.3	3.4
	Real domestic demand			5.4	5.0	0.3	0.0	2.6	2.3	2.4	2.4	2.4
		Consumption		4.3	2.1	0.1	2.5	2.0	2.1	2.1	2.1	2.1
			Private consumption	4.4	3.9	0.7	2.4	2.4	2.5	2.5	2.5	2.5
		Gross investment		8.3	12.5	0.8	-6.1	4.1	3.0	3.0	3.0	3.0
	Exports (volume)			8.5	9.1	8.1	11.7	8.7	9.0	9.0	9.0	9.0
	Imports (volume)			9.9	11.1	6.4	6.1	7.0	6.8	6.8	6.8	6.8
Contributions to growth ^1/
	Domestic demand			6.3	6.0	0.7	0.0	3.1	2.8	2.8	2.8	2.8
	Net exports			-2.5	-3.2	-0.5	2.0	-0.3	0.2	0.3	0.4	0.6
Output gap (percent of potential GDP)				0.6	1.0	-0.8	-1.0	-0.6	-0.2	0.0	0.0	0.0
Central government operations (percent of GDP)
Revenues				28.7	28.4	29.1	29.7	30.9	30.9	30.8	30.8	30.8
Expenditures				32.2	31.1	31.8	32.3	33.9	33.7	33.6	33.4	33.2
	Of which: capital			3.3	2.9	3.2	2.5	3.5	3.5	3.5	3.5	3.5
Balance				-3.5	-2.7	-2.7	-2.6	-3.0	-2.8	-2.7	-2.6	-2.4
Savings and investment (percent of GDP)
	National saving			28.5	29.7	32.0	31.1	31.4	31.9	32.4	33.0	33.7
		Public		-0.1	0.2	0.5	-0.2	0.5	0.7	0.8	1.0	1.2
		Private		28.6	29.5	31.5	31.2	30.9	31.2	31.6	32.1	32.5
	Foreign saving			2.0	2.9	1.0	0.6	1.4	1.8	2.1	2.3	2.4
	Gross investment			30.4	32.5	33.0	31.7	32.8	33.7	34.5	35.3	36.1
Consumer prices
Period average				-0.3	-0.2	1.4	1.5	1.8	2.0	2.2	2.2	2.2
End-period				-0.3	-0.2	2.4	1.4	2.0	2.0	2.2	2.2	2.2
Private sector credit growth				9.5	0.0	5.3	8.0	7.0	7.0	7.0	7.0	7.0
Memorandum items:
Current account balance (percent of GDP)				-2.0	-2.9	-1.0	-0.6	-1.4	-1.8	-2.1	-2.3	-2.4
Gross official reserves (millions of euros)				2,262	2,613	2,336	2,779	3,155	3,340	3,476	3,685	3,775
	in percent of ST debt			101.2	104.0	82.0	98.1	97.4	95.0	112.0	101.0	100.8
	in months of prospective imports			4.2	4.5	3.7	4.1	4.2	4.1	4.0	3.9	3.7
Gross general government debt (percent of GDP)				38.1	39.8	39.4	41.4	42.5	43.2	43.8	44.1	44.1
Public and publicly guaranteed debt (percent of GDP) ^2/				44.0	46.7	48.0	50.7	53.0	54.0	54.9	54.9	54.4
Foreign direct investment (percent of GDP)				2.2	3.3	1.8	3.3	3.2	3.2	3.2	3.2	3.2
External debt (percent of GDP)				69.3	74.7	73.9	76.1	78.5	78.4	77.4	76.9	75.5
Nominal GDP (billions of denars)				559	595	617	639	670	705	742	784	828
Nominal GDP (millions of euros)				9,073	9,656	10,014	10,383	10,887	11,442	12,055	12,727	13,455

Sources: NBRM; SSO; MOF; World Bank; and IMF staff estimates and projections. National Accounts are revised by SSO, using ESA 2010

^{^1/}The inconsistency between Real GDP growth and contributions to growth results from discrepancies in the official data on GDP and its

^{^2/}Includes general government and SOEs debt.

Table 2a.

FYR Macedonia: Central Government Operations, 2015–23

(Billions of MKD denars, unless otherwise specified)

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 2a.

FYR Macedonia: Central Government Operations, 2015–23

(Billions of MKD denars, unless otherwise specified)

				2015	2016	2017	2018		2019		2020	2021	2022	2023
							Budget	Proj.	Budget	Proj.	Proj.	Proj.	Proj.	Proj.
Total Revenues				160.7	169.0	179.4	192.4	189.7	210.7	207.0	217.8	228.8	241.6	255.4
	Tax Revenues and Contributions			140.8	150.4	157.5	170.8	169.8	184.2	182.0	191.8	201.4	212.7	224.8
		PIT		12.9	14.2	15.3	16.7	16.4	19.1	18.7	19.6	20.5	21.6	22.9
		CIT		12.0	10.8	11.4	14.5	14.5	15.3	15.2	16.0	16.8	17.8	18.8
		VAT (net)		41.7	45.9	47.9	49.4	49.2	52.1	51.6	54.2	57.1	60.3	63.7
		Excises		19.8	22.2	23.1	25.9	25.6	27.3	26.7	28.0	29.3	31.0	32.8
		Custom Duties		4.3	4.8	5.2	5.6	5.6	5.8	5.9	6.2	6.5	6.9	7.3
		Other Taxes		2.2	2.2	1.9	2.5	2.4	2.3	2.3	2.4	2.5	2.7	2.8
		Social Contributions		47.9	50.3	52.9	56.2	56.2	62.3	61.7	65.5	68.7	72.5	76.6
			Pensions	32.2	33.8	35.6	37.8	37.8	42.5	42.1	44.7	46.7	49.3	52.2
			Unemployment	2.0	2.2	2.3	2.4	2.4	2.5	2.5	2.7	2.8	2.9	3.1
			Health	13.6	14.3	15.0	16.0	16.0	17.3	17.1	18.2	19.1	20.2	21.4
	Non-Tax Revenues			12.9	13.0	13.3	14.9	13.7	18.5	17.2	18.1	19.0	20.1	21.2
	Capital Revenues			2.3	2.0	1.5	1.9	1.9	2.0	2.0	2.1	2.2	2.3	2.4
	Grants			4.7	3.6	7.2	4.8	4.3	6.0	5.9	5.9	6.2	6.5	6.9
Expenditures				180.1	185.0	196.3	210.4	206.6	228.4	227.1	237.8	249.2	261.7	275.0
	Current Expenditures			162.0	168.4	176.7	192.0	190.7	202.9	203.6	213.0	223.2	234.2	245.9
		Wages and salaries		24.7	26.0	26.2	26.8	26.8	28.3	28.3	29.8	31.4	33.1	35.0
		Goods and services		18.1	16.8	15.3	17.6	16.3	19.3	19.3	20.3	21.4	22.6	23.9
		Transfers		112.7	118.9	126.8	139.8	139.8	146.1	146.7	152.9	159.7	167.0	174.9
			Pension fund expenditures	50.3	54.6	58.1	61.1	61.1	64.6	64.6	67.0	69.7	72.5	75.5
			Health	23.6	25.6	27.0	29.0	29.0	30.1	30.1	31.6	33.3	35.2	37.2
			Other	38.8	38.7	41.6	49.7	49.7	51.3	52.0	54.3	56.7	59.3	62.2
		Interest		6.5	6.8	8.4	7.8	7.8	9.2	9.2	10.0	10.7	11.4	12.1
	Capital Expenditures			18.7	17.0	19.9	18.5	15.9	25.6	23.6	24.8	26.2	27.6	29.2
	Lending minus repayment ^1/			-0.5	-0.4	-0.3	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1
Overall fiscal balance				-19.4	-16.1	-16.9	-18.0	-16.9	-17.7	-20.1	-20.0	-20.4	-20.1	-19.6
Primary fiscal balance				-13.0	-9.2	-8.5	-10.2	-9.1	-8.5	-10.9	-9.9	-9.7	-8.7	-7.5
Financing				19.4	16.1	16.9		16.9		20.1	20.0	20.4	20.1	19.6
	Domestic			21.7	-3.4	21.3		0.1		0.8	12.3	19.9	-3.8	18.3
		Central Bank deposits		10.3	-5.3	10.5		-4.8		-0.1	0.2	-0.6	-0.3	0.3
		Other domestic financing		11.4	1.9	10.8		4.9		0.9	12.0	20.5	-3.6	18.0
	Privatization receipts			0.0	0.2	0.4		0.0		0.0	0.0	0.0	0.0	0.0
	Foreign			-2.3	19.3	-4.8		16.8		19.3	7.7	0.5	23.9	1.3
Memo items:
	Gross general government debt (in percent of GDP) ^2/			38.1	39.8	39.4		41.4		42.5	43.2	43.8	44.1	44.1
	Nominal GDP (billions of denars)			559	595	617		639		670	705	742	784	828
	Stock of government deposits at the NBRM (billions of denars eop)			26	33	22		27		27	27	27	27	27
	Public and publicly guaranteed debt (in percent of GDP) ^2/^3/			44.0	46.7	48.0		50.7		53.0	54.0	54.9	54.9	54.4

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 2a.

FYR Macedonia: Central Government Operations, 2015–23

(Billions of MKD denars, unless otherwise specified)

				2015	2016	2017	2018		2019		2020	2021	2022	2023
							Budget	Proj.	Budget	Proj.	Proj.	Proj.	Proj.	Proj.
Total Revenues				160.7	169.0	179.4	192.4	189.7	210.7	207.0	217.8	228.8	241.6	255.4
	Tax Revenues and Contributions			140.8	150.4	157.5	170.8	169.8	184.2	182.0	191.8	201.4	212.7	224.8
		PIT		12.9	14.2	15.3	16.7	16.4	19.1	18.7	19.6	20.5	21.6	22.9
		CIT		12.0	10.8	11.4	14.5	14.5	15.3	15.2	16.0	16.8	17.8	18.8
		VAT (net)		41.7	45.9	47.9	49.4	49.2	52.1	51.6	54.2	57.1	60.3	63.7
		Excises		19.8	22.2	23.1	25.9	25.6	27.3	26.7	28.0	29.3	31.0	32.8
		Custom Duties		4.3	4.8	5.2	5.6	5.6	5.8	5.9	6.2	6.5	6.9	7.3
		Other Taxes		2.2	2.2	1.9	2.5	2.4	2.3	2.3	2.4	2.5	2.7	2.8
		Social Contributions		47.9	50.3	52.9	56.2	56.2	62.3	61.7	65.5	68.7	72.5	76.6
			Pensions	32.2	33.8	35.6	37.8	37.8	42.5	42.1	44.7	46.7	49.3	52.2
			Unemployment	2.0	2.2	2.3	2.4	2.4	2.5	2.5	2.7	2.8	2.9	3.1
			Health	13.6	14.3	15.0	16.0	16.0	17.3	17.1	18.2	19.1	20.2	21.4
	Non-Tax Revenues			12.9	13.0	13.3	14.9	13.7	18.5	17.2	18.1	19.0	20.1	21.2
	Capital Revenues			2.3	2.0	1.5	1.9	1.9	2.0	2.0	2.1	2.2	2.3	2.4
	Grants			4.7	3.6	7.2	4.8	4.3	6.0	5.9	5.9	6.2	6.5	6.9
Expenditures				180.1	185.0	196.3	210.4	206.6	228.4	227.1	237.8	249.2	261.7	275.0
	Current Expenditures			162.0	168.4	176.7	192.0	190.7	202.9	203.6	213.0	223.2	234.2	245.9
		Wages and salaries		24.7	26.0	26.2	26.8	26.8	28.3	28.3	29.8	31.4	33.1	35.0
		Goods and services		18.1	16.8	15.3	17.6	16.3	19.3	19.3	20.3	21.4	22.6	23.9
		Transfers		112.7	118.9	126.8	139.8	139.8	146.1	146.7	152.9	159.7	167.0	174.9
			Pension fund expenditures	50.3	54.6	58.1	61.1	61.1	64.6	64.6	67.0	69.7	72.5	75.5
			Health	23.6	25.6	27.0	29.0	29.0	30.1	30.1	31.6	33.3	35.2	37.2
			Other	38.8	38.7	41.6	49.7	49.7	51.3	52.0	54.3	56.7	59.3	62.2
		Interest		6.5	6.8	8.4	7.8	7.8	9.2	9.2	10.0	10.7	11.4	12.1
	Capital Expenditures			18.7	17.0	19.9	18.5	15.9	25.6	23.6	24.8	26.2	27.6	29.2
	Lending minus repayment ^1/			-0.5	-0.4	-0.3	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1	-0.1
Overall fiscal balance				-19.4	-16.1	-16.9	-18.0	-16.9	-17.7	-20.1	-20.0	-20.4	-20.1	-19.6
Primary fiscal balance				-13.0	-9.2	-8.5	-10.2	-9.1	-8.5	-10.9	-9.9	-9.7	-8.7	-7.5
Financing				19.4	16.1	16.9		16.9		20.1	20.0	20.4	20.1	19.6
	Domestic			21.7	-3.4	21.3		0.1		0.8	12.3	19.9	-3.8	18.3
		Central Bank deposits		10.3	-5.3	10.5		-4.8		-0.1	0.2	-0.6	-0.3	0.3
		Other domestic financing		11.4	1.9	10.8		4.9		0.9	12.0	20.5	-3.6	18.0
	Privatization receipts			0.0	0.2	0.4		0.0		0.0	0.0	0.0	0.0	0.0
	Foreign			-2.3	19.3	-4.8		16.8		19.3	7.7	0.5	23.9	1.3
Memo items:
	Gross general government debt (in percent of GDP) ^2/			38.1	39.8	39.4		41.4		42.5	43.2	43.8	44.1	44.1
	Nominal GDP (billions of denars)			559	595	617		639		670	705	742	784	828
	Stock of government deposits at the NBRM (billions of denars eop)			26	33	22		27		27	27	27	27	27
	Public and publicly guaranteed debt (in percent of GDP) ^2/^3/			44.0	46.7	48.0		50.7		53.0	54.0	54.9	54.9	54.4

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 2b.

FYR Macedonia: Central Government Operations, 2015–23

(Percent of GDP)

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 2b.

FYR Macedonia: Central Government Operations, 2015–23

(Percent of GDP)

				2015	2016	2017	2018		2019		2020	2021	2022	2023
							Budget	Proj.	Budget	Proj.	Proj.	Proj.	Proj.	Proj.
Total Revenues				28.7	28.4	29.1	30.1	29.7	31.4	30.9	30.9	30.8	30.8	30.8
	Tax Revenues and Contributions			252	25.3	25.5	26.7	26.6	27.5	27.1	27.2	27.1	27.1	27.1
		PIT		23	2.4	2.5	2.6	2.6	2.8	2.8	2.8	2.8	2.8	2.8
		CIT		22	1.8	1.8	2.3	2.3	2.3	2.3	2.3	2.3	2.3	2.3
		VAT (net)		7.5	7.7	7.8	7.7	7.7	7.8	7.7	7.7	7.7	7.7	7.7
		Excises		3.5	3.7	3.7	4.1	4.0	4.1	4.0	4.0	4.0	4.0	4.0
		Custom Duties		0.8	0.8	0.8	0.9	0.9	0.9	0.9	0.9	0.9	0.9	0.9
		Other Taxes		0.4	0.4	0.3	0.4	0.4	0.3	0.3	0.3	0.3	0.3	0.3
		Social Contributions		8.6	8.5	8.6	8.8	8.8	9.3	9.2	9.3	9.3	9.3	9.3
	Non-Tax Revenues			2.3	2.2	2.2	2.3	2.1	2.8	2.6	2.6	2.6	2.6	2.6
	Capital Revenues			0.4	0.3	0.2	0.3	0.3	0.3	0.3	0.3	0.3	0.3	0.3
	Grants			0.8	0.6	1.2	0.7	0.7	0.9	0.9	0.8	0.8	0.8	0.8
Expenditures				32.2	31.1	31.8	32.9	32.3	34.1	33.9	33.7	33.6	33.4	33.2
	Current Expenditures			29.0	28.3	28.7	30.0	29.8	30.3	30.4	30.2	30.1	29.9	29.7
		Wages and salaries		4.4	4.4	4.2	4.2	4.2	4.2	4.2	4.2	4.2	4.2	4.2
		Goods and services		3.2	2.8	2.5	2.8	2.6	2.9	2.9	2.9	2.9	2.9	2.9
		Transfers		20.2	20.0	20.6	21.9	21.9	21.8	21.9	21.7	21.5	21.3	21.1
			Pension fund expenditures	9.0	9.2	9.4	9.5	9.5	9.6	9.6	9.5	9.4	9.3	9.1
			Health	4.2	4.3	4.4	4.5	4.5	4.5	4.5	4.5	4.5	4.5	4.5
			Other	6.9	6.5	6.8	7.8	7.8	7.7	7.8	7.7	7.6	7.6	7.5
		Interest		1.2	1.1	1.4	1.2	1.2	1.4	1.4	1.4	1.4	1.5	1.5
	Capital Expenditures			3.3	2.9	3.2	2.9	2.5	3.8	3.5	3.5	3.5	3.5	3.5
	Lending minus repayment ^1/			-0.1	-0.1	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Overall fiscal balance				-3.5	-2.7	-2.7	-2.8	-2.6	-2.6	-3.0	-2.8	-2.7	-2.6	-2.4
Primary fiscal balance				-2.3	-1.6	-1.4	-1.6	-1.4	-1.3	-1.6	-1.4	-1.3	-1.1	-0.9
Financing				3.5	2.7	2.7		2.6		3.0	2.8	2.7	2.6	2.4
	Domestic			3.9	-0.6	3.5		0.0		0.1	1.7	2.7	-0.5	2.2
		Central Bank deposits		1.8	-0.9	1.7		-0.8		0.0	0.0	-0.1	0.0	0.0
		Other domestic financing		2.0	0.3	1.7		0.8		0.1	1.7	2.8	-0.5	2.2
	Foreign			-0.4	3.2	-0.8		2.6		2.9	1.1	0.1	3.1	0.2
Memo items:
	Gross general government debt (in percent of GDP) ^3/			38.1	39.8	39.4		41.4		42.5	43.2	43.8	44.1	44.1
	Nominal GDP (billions of denars)			559	595	617		639		670	705	742	784	828
	Stock of government deposits at the NBRM (billions of denars eop)			26	33	22		27		27	27	27	27	27
	Public and publicly guaranteed debt (in percent of GDP) ^2/^3/			44.0	46.7	48.0		50.7		53.0	54.0	54.9	54.9	54.4

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 2b.

FYR Macedonia: Central Government Operations, 2015–23

(Percent of GDP)

				2015	2016	2017	2018		2019		2020	2021	2022	2023
							Budget	Proj.	Budget	Proj.	Proj.	Proj.	Proj.	Proj.
Total Revenues				28.7	28.4	29.1	30.1	29.7	31.4	30.9	30.9	30.8	30.8	30.8
	Tax Revenues and Contributions			252	25.3	25.5	26.7	26.6	27.5	27.1	27.2	27.1	27.1	27.1
		PIT		23	2.4	2.5	2.6	2.6	2.8	2.8	2.8	2.8	2.8	2.8
		CIT		22	1.8	1.8	2.3	2.3	2.3	2.3	2.3	2.3	2.3	2.3
		VAT (net)		7.5	7.7	7.8	7.7	7.7	7.8	7.7	7.7	7.7	7.7	7.7
		Excises		3.5	3.7	3.7	4.1	4.0	4.1	4.0	4.0	4.0	4.0	4.0
		Custom Duties		0.8	0.8	0.8	0.9	0.9	0.9	0.9	0.9	0.9	0.9	0.9
		Other Taxes		0.4	0.4	0.3	0.4	0.4	0.3	0.3	0.3	0.3	0.3	0.3
		Social Contributions		8.6	8.5	8.6	8.8	8.8	9.3	9.2	9.3	9.3	9.3	9.3
	Non-Tax Revenues			2.3	2.2	2.2	2.3	2.1	2.8	2.6	2.6	2.6	2.6	2.6
	Capital Revenues			0.4	0.3	0.2	0.3	0.3	0.3	0.3	0.3	0.3	0.3	0.3
	Grants			0.8	0.6	1.2	0.7	0.7	0.9	0.9	0.8	0.8	0.8	0.8
Expenditures				32.2	31.1	31.8	32.9	32.3	34.1	33.9	33.7	33.6	33.4	33.2
	Current Expenditures			29.0	28.3	28.7	30.0	29.8	30.3	30.4	30.2	30.1	29.9	29.7
		Wages and salaries		4.4	4.4	4.2	4.2	4.2	4.2	4.2	4.2	4.2	4.2	4.2
		Goods and services		3.2	2.8	2.5	2.8	2.6	2.9	2.9	2.9	2.9	2.9	2.9
		Transfers		20.2	20.0	20.6	21.9	21.9	21.8	21.9	21.7	21.5	21.3	21.1
			Pension fund expenditures	9.0	9.2	9.4	9.5	9.5	9.6	9.6	9.5	9.4	9.3	9.1
			Health	4.2	4.3	4.4	4.5	4.5	4.5	4.5	4.5	4.5	4.5	4.5
			Other	6.9	6.5	6.8	7.8	7.8	7.7	7.8	7.7	7.6	7.6	7.5
		Interest		1.2	1.1	1.4	1.2	1.2	1.4	1.4	1.4	1.4	1.5	1.5
	Capital Expenditures			3.3	2.9	3.2	2.9	2.5	3.8	3.5	3.5	3.5	3.5	3.5
	Lending minus repayment ^1/			-0.1	-0.1	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Overall fiscal balance				-3.5	-2.7	-2.7	-2.8	-2.6	-2.6	-3.0	-2.8	-2.7	-2.6	-2.4
Primary fiscal balance				-2.3	-1.6	-1.4	-1.6	-1.4	-1.3	-1.6	-1.4	-1.3	-1.1	-0.9
Financing				3.5	2.7	2.7		2.6		3.0	2.8	2.7	2.6	2.4
	Domestic			3.9	-0.6	3.5		0.0		0.1	1.7	2.7	-0.5	2.2
		Central Bank deposits		1.8	-0.9	1.7		-0.8		0.0	0.0	-0.1	0.0	0.0
		Other domestic financing		2.0	0.3	1.7		0.8		0.1	1.7	2.8	-0.5	2.2
	Foreign			-0.4	3.2	-0.8		2.6		2.9	1.1	0.1	3.1	0.2
Memo items:
	Gross general government debt (in percent of GDP) ^3/			38.1	39.8	39.4		41.4		42.5	43.2	43.8	44.1	44.1
	Nominal GDP (billions of denars)			559	595	617		639		670	705	742	784	828
	Stock of government deposits at the NBRM (billions of denars eop)			26	33	22		27		27	27	27	27	27
	Public and publicly guaranteed debt (in percent of GDP) ^2/^3/			44.0	46.7	48.0		50.7		53.0	54.0	54.9	54.9	54.4

Sources: MoF and IMF staff estimates.

^{^1/}Results from excluding: (i) revenues from lending; and (ii) lending guarantees from current expenditures.

^{^2/}The historical debt ratios differ slightly from the numbers reported by MoF due to using end-year debt in local currency divided by local currency GDP.

^{^3/}Includes general government and SOEs debt.

Table 3a.

FYR Macedonia: Balance of Payments, 2015–23

(Millions of euros, unless otherwise indicated)

Sources: NBRM; and IMF staff estimates.

Table 3a.

FYR Macedonia: Balance of Payments, 2015–23

(Millions of euros, unless otherwise indicated)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
Current account				-177	-275	-103	-66	-153	-206	-257	-291	-323
	Trade balance			-1823	-1813	-1788	-1796	-1916	-2025	-2146	-2253	-2354
		Exports		3047	3529	4074	4686	5142	5656	6224	6851	7539
		Imports		4870	5342	5861	6482	7058	7681	8370	9104	9893
	Services (net)			349	341	377	438	462	489	519	552	587
	Primary Income (net)			-286	-384	-398	-427	-468	-512	-539	-569	-602
	Secondary Income (transfers, net)			1583	1581	1706	1720	1768	1842	1909	1979	2046
		Of which
			Official	54	91	113	77	84	91	89	93	95
			Private	1529	1490	1593	1643	1684	1750	1821	1886	1950
	Capital account (net)			7	11	18	10	10	11	12	12	11
Net lending (+) / Net borrowing (-)				-170	-265	-85	-56	-144	-195	-245	-279	-312
	Financial account			12	-610	52	-498	-520	-381	-381	-489	-402
		Direct investment (net)		-203	-317	-180	-342	-348	-366	-385	-407	-430
		Portfolio investment (net)		-66	-429	19	-362	-262	-264	-50	-255	-24
		Other investment		280	136	213	207	90	249	54	173	52
			Trade credits (net)	-61	-37	-72	-75	-78	-82	-87	-92	-97
			MLT loans (net)	58	-94	51	44	-189	49	-100	20	-109
			ST loans (net)	-4	-12	-14	6	4	5	4	6	7
			Currency and deposits (net)	287	279	248	232	353	278	237	239	251
			Other (net)	0	0	0	0	0	0	0	0	0
Errors and omissions				-2	-8	-10	0	0	0	0	0	0
Overall Balance				-183	337	-146	442	376	185	136	209	90
Memorandum Items:
ST debt at residual maturity (year-end)				2236	2513	2849	2832	3238	3516	3103	3649	3745
Gross foreign exchange reserves				2262	2613	2336	2779	3155	3340	3476	3685	3775
		Months of prospective imports of G&S		4.2	4.5	3.7	4.1	4.2	4.1	4.0	3.9	3.7
		Percent of short-term debt (residual maturity)		101.2	104.0	82.0	98.1	97.4	95.0	112.0	101.0	100.8
External debt (percent of GDP)				69.3	74.7	73.9	76.1	78.5	78.4	77.4	76.9	75.5
External debt service				1948	1740	1929	2265	2257	2668	2950	2543	3094
		Percent of exports of G&S		44.0	35.4	35.0	36.4	33.3	36.1	36.6	28.9	32.1
		Percent of exports of G&S and transfers		32.7	27.2	27.1	28.8	26.7	29.2	29.8	23.8	26.7

Sources: NBRM; and IMF staff estimates.

Table 3a.

FYR Macedonia: Balance of Payments, 2015–23

(Millions of euros, unless otherwise indicated)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
Current account				-177	-275	-103	-66	-153	-206	-257	-291	-323
	Trade balance			-1823	-1813	-1788	-1796	-1916	-2025	-2146	-2253	-2354
		Exports		3047	3529	4074	4686	5142	5656	6224	6851	7539
		Imports		4870	5342	5861	6482	7058	7681	8370	9104	9893
	Services (net)			349	341	377	438	462	489	519	552	587
	Primary Income (net)			-286	-384	-398	-427	-468	-512	-539	-569	-602
	Secondary Income (transfers, net)			1583	1581	1706	1720	1768	1842	1909	1979	2046
		Of which
			Official	54	91	113	77	84	91	89	93	95
			Private	1529	1490	1593	1643	1684	1750	1821	1886	1950
	Capital account (net)			7	11	18	10	10	11	12	12	11
Net lending (+) / Net borrowing (-)				-170	-265	-85	-56	-144	-195	-245	-279	-312
	Financial account			12	-610	52	-498	-520	-381	-381	-489	-402
		Direct investment (net)		-203	-317	-180	-342	-348	-366	-385	-407	-430
		Portfolio investment (net)		-66	-429	19	-362	-262	-264	-50	-255	-24
		Other investment		280	136	213	207	90	249	54	173	52
			Trade credits (net)	-61	-37	-72	-75	-78	-82	-87	-92	-97
			MLT loans (net)	58	-94	51	44	-189	49	-100	20	-109
			ST loans (net)	-4	-12	-14	6	4	5	4	6	7
			Currency and deposits (net)	287	279	248	232	353	278	237	239	251
			Other (net)	0	0	0	0	0	0	0	0	0
Errors and omissions				-2	-8	-10	0	0	0	0	0	0
Overall Balance				-183	337	-146	442	376	185	136	209	90
Memorandum Items:
ST debt at residual maturity (year-end)				2236	2513	2849	2832	3238	3516	3103	3649	3745
Gross foreign exchange reserves				2262	2613	2336	2779	3155	3340	3476	3685	3775
		Months of prospective imports of G&S		4.2	4.5	3.7	4.1	4.2	4.1	4.0	3.9	3.7
		Percent of short-term debt (residual maturity)		101.2	104.0	82.0	98.1	97.4	95.0	112.0	101.0	100.8
External debt (percent of GDP)				69.3	74.7	73.9	76.1	78.5	78.4	77.4	76.9	75.5
External debt service				1948	1740	1929	2265	2257	2668	2950	2543	3094
		Percent of exports of G&S		44.0	35.4	35.0	36.4	33.3	36.1	36.6	28.9	32.1
		Percent of exports of G&S and transfers		32.7	27.2	27.1	28.8	26.7	29.2	29.8	23.8	26.7

Sources: NBRM; and IMF staff estimates.

Table 3b.

FYR Macedonia: Balance of Payments, 2003–23

(Percent of GDP, unless otherwise indicated)

Sources: NBRM; and IMF staff estimates.

Table 3b.

FYR Macedonia: Balance of Payments, 2003–23

(Percent of GDP, unless otherwise indicated)

					Avg 2003–12	2015	2016	2017	2018	2019	2020	2021	2022	2023
									Projections
Current account					-4.9	-2.0	-2.9	-1.0	-0.6	-1.4	-1.8	-2.1	-2.3	-2.4
	Trade balance				-23.4	-20.1	-18.8	-17.9	-17.3	-17.6	-17.7	-17.8	-17.7	-17.5
		Exports			25.3	33.6	36.5	40.7	45.1	47.2	49.4	51.6	53.8	56.0
		Imports			48.6	53.7	55.3	58.5	62.4	64.8	67.1	69.4	71.5	73.5
	Services (net)				3.0	3.8	3.5	3.8	4.2	4.2	4.3	4.3	4.3	4.4
	Primary Income (net)				-1.6	-3.2	-4.0	-4.0	-4.1	-4.3	-4.5	-4.5	-4.5	-4.5
	Secondary Income (transfers, net)				17.1	17.4	16.4	17.0	16.6	16.2	16.1	15.8	15.5	15.2
		Of which
			Official		0.9	0.6	0.9	1.1	0.7	0.8	0.8	0.7	0.7	0.7
			Private		16.1	16.8	15.4	15.9	15.8	15.5	15.3	15.1	14.8	14.5
	Capital account (net)				0.0	0.1	0.1	0.2	0.1	0.1	0.1	0.1	0.1	0.1
Net lending (+) / Net borrowing (-)					-4.9	-1.9	-2.7	-0.8	-0.5	-1.3	-1.7	-2.0	-2.2	-2.3
	Financial account				-7.2	0.1	-6.3	0.5	-4.8	-4.8	-3.3	-3.2	-3.8	-3.0
		Direct investment (net)			-4.1	-2.2	-3.3	-1.8	-3.3	-3.2	-3.2	-3.2	-3.2	-3.2
		Portfolio investment (net)			-0.7	-0.7	-4.4	0.2	-3.5	-2.4	-2.3	-0.4	-2.0	-0.2
		Other investment			-2.4	3.1	1.4	2.1	2.0	0.8	2.2	0.5	1.4	0.4
			Trade credits (net)		-0.9	-0.7	-0.4	-0.7	-0.7	-0.7	-0.7	-0.7	-0.7	-0.7
			MLT loans (net)		-1.6	0.6	-1.0	0.5	0.4	-1.7	0.4	-0.8	0.2	-0.8
			ST loans (net)		-0.1	0.0	-0.1	-0.1	0.1	0.0	0.0	0.0	0.0	0.1
			Currency and deposits (net)		0.6	3.2	2.9	2.5	2.2	3.2	2.4	2.0	1.9	1.9
				Of which: Commercial banks	-0.1	-0.2	-0.2	-0.1	-0.2	-0.1	-0.1	-0.1	-0.1	-0.1
			Other (net)		-0.3	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Errors and omissions					0.0	0.0	-0.1	-0.1	0.0	0.0	0.0	0.0	0.0	0.0
Overall Balance					2.3	-2.0	3.5	-1.5	4.3	3.5	1.6	1.1	1.6	0.7
					(Percentage change, year-on-year)
	Exports of G&S (Value)				10.8	8.2	11.2	12.1	13.0	8.8	9.0	9.2	9.3	9.3
		Volume			8.5	8.5	9.1	8.1	11.7	8.7	9.0	9.0	9.0	9.0
		Price			1.6	-0.2	1.9	3.6	1.2	0.0	0.0	0.1	0.2	0.2
	Imports of G&S (Value)				9.4	6.1	8.4	8.3	9.6	8.4	8.4	8.6	8.5	8.4
		Volume			6.9	9.9	11.1	6.4	6.1	7.0	6.8	6.8	6.8	6.8
		Price			2.0	-3.5	-2.5	1.8	3.3	1.3	1.5	1.7	1.5	1.5

Sources: NBRM; and IMF staff estimates.

Table 3b.

FYR Macedonia: Balance of Payments, 2003–23

(Percent of GDP, unless otherwise indicated)

					Avg 2003–12	2015	2016	2017	2018	2019	2020	2021	2022	2023
									Projections
Current account					-4.9	-2.0	-2.9	-1.0	-0.6	-1.4	-1.8	-2.1	-2.3	-2.4
	Trade balance				-23.4	-20.1	-18.8	-17.9	-17.3	-17.6	-17.7	-17.8	-17.7	-17.5
		Exports			25.3	33.6	36.5	40.7	45.1	47.2	49.4	51.6	53.8	56.0
		Imports			48.6	53.7	55.3	58.5	62.4	64.8	67.1	69.4	71.5	73.5
	Services (net)				3.0	3.8	3.5	3.8	4.2	4.2	4.3	4.3	4.3	4.4
	Primary Income (net)				-1.6	-3.2	-4.0	-4.0	-4.1	-4.3	-4.5	-4.5	-4.5	-4.5
	Secondary Income (transfers, net)				17.1	17.4	16.4	17.0	16.6	16.2	16.1	15.8	15.5	15.2
		Of which
			Official		0.9	0.6	0.9	1.1	0.7	0.8	0.8	0.7	0.7	0.7
			Private		16.1	16.8	15.4	15.9	15.8	15.5	15.3	15.1	14.8	14.5
	Capital account (net)				0.0	0.1	0.1	0.2	0.1	0.1	0.1	0.1	0.1	0.1
Net lending (+) / Net borrowing (-)					-4.9	-1.9	-2.7	-0.8	-0.5	-1.3	-1.7	-2.0	-2.2	-2.3
	Financial account				-7.2	0.1	-6.3	0.5	-4.8	-4.8	-3.3	-3.2	-3.8	-3.0
		Direct investment (net)			-4.1	-2.2	-3.3	-1.8	-3.3	-3.2	-3.2	-3.2	-3.2	-3.2
		Portfolio investment (net)			-0.7	-0.7	-4.4	0.2	-3.5	-2.4	-2.3	-0.4	-2.0	-0.2
		Other investment			-2.4	3.1	1.4	2.1	2.0	0.8	2.2	0.5	1.4	0.4
			Trade credits (net)		-0.9	-0.7	-0.4	-0.7	-0.7	-0.7	-0.7	-0.7	-0.7	-0.7
			MLT loans (net)		-1.6	0.6	-1.0	0.5	0.4	-1.7	0.4	-0.8	0.2	-0.8
			ST loans (net)		-0.1	0.0	-0.1	-0.1	0.1	0.0	0.0	0.0	0.0	0.1
			Currency and deposits (net)		0.6	3.2	2.9	2.5	2.2	3.2	2.4	2.0	1.9	1.9
				Of which: Commercial banks	-0.1	-0.2	-0.2	-0.1	-0.2	-0.1	-0.1	-0.1	-0.1	-0.1
			Other (net)		-0.3	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Errors and omissions					0.0	0.0	-0.1	-0.1	0.0	0.0	0.0	0.0	0.0	0.0
Overall Balance					2.3	-2.0	3.5	-1.5	4.3	3.5	1.6	1.1	1.6	0.7
					(Percentage change, year-on-year)
	Exports of G&S (Value)				10.8	8.2	11.2	12.1	13.0	8.8	9.0	9.2	9.3	9.3
		Volume			8.5	8.5	9.1	8.1	11.7	8.7	9.0	9.0	9.0	9.0
		Price			1.6	-0.2	1.9	3.6	1.2	0.0	0.0	0.1	0.2	0.2
	Imports of G&S (Value)				9.4	6.1	8.4	8.3	9.6	8.4	8.4	8.6	8.5	8.4
		Volume			6.9	9.9	11.1	6.4	6.1	7.0	6.8	6.8	6.8	6.8
		Price			2.0	-3.5	-2.5	1.8	3.3	1.3	1.5	1.7	1.5	1.5

Sources: NBRM; and IMF staff estimates.

5. The overall fiscal deficit is expected to decline to 2.6 percent of GDP in 2018, mostly due to spending under-execution (Tables 2a and 2b). High political uncertainty in the pre-referendum period and the decision to scrutinize existing portfolio of construction projects contributed to exceptionally weak public spending execution (Figure 2). In mid-2018, the government introduced financial incentives to support investment and employment, subject to extensive qualification criteria which have had a low uptake compared to the budgeted amount (text table). Revenues on aggregate underperformed, although collections of CIT and social security contributions exceeded expectations as exemptions, previously granted to companies in the Technological and Industrial Development Zones (TIDZ), started to expire.

Key Components of the Financial Incentives for Investment and Employment

Sources: Law on Financial Incentives for Investment, approved in May 2018.Note: In addition to specific criteria for each of the 8 categories, all beneficiaries must meet the following overall criteria (i) having increases in realized income and the number of employees; (ii) not performing activity of public interests and regulated activities; (iii) not receiving agricultural subsidies, performing construction activity related to residential building, nor performing activity in the field of information and communication (except for R&D related activities).

6. Monetary and financial conditions have been favorable. The successful issuance of a 7-year €500 million Eurobond in January 2018 at a record-low yield of 2.75 percent, followed by regular foreign exchange (FX) purchases, has bolstered reserves. Against the background of favorable FX market developments, strong deposit growth, moderate inflation, and a negative output gap, the NBRM cut its policy rate twice by 25 basis points in March and August 2018, respectively. The monetary policy easing, along with higher demand from households on the back of an improving labor market, is supporting private sector credit growth (Tables 4 and 5).

Table 4.

FYR Macedonia: Monetary Survey, 2015–23

(Billions of denars, unless specified otherwise)

Sources: NBRM; and IMF staff estimates.

Table 4.

FYR Macedonia: Monetary Survey, 2015–23

(Billions of denars, unless specified otherwise)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
NFA				137.5	158.5	144.0	171.2	194.3	205.6	213.9	226.7	232.2
	Central Bank			134.2	155.6	138.9	166.1	189.1	200.5	208.8	221.6	227.1
	Commercial Banks			3.3	2.9	5.1	5.1	5.1	5.1	5.1	5.1	5.1
NDA				196.6	196.2	228.9	237.9	234.3	246.8	263.8	277.7	300.5
	Credit to Government (net)			13.3	2.5	14.8	9.5	10.2	11.8	11.2	10.9	11.3
		From Banks (net)		36.5	32.6	34.0	33.0	33.7	35.1	35.1	35.1	35.1
			of which: Credit (Tbills)	38.0	34.0	35.3	34.9	35.6	37.0	37.0	37.0	37.0
		From Central Bank (net)		-23.2	-30.1	-19.1	-23.5	-23.5	-23.3	-23.9	-24.2	-23.8
			of which: Deposits	-26.2	-32.6	-21.9	-26.7	-26.7	-26.5	-27.1	-27.4	-27.0
	Credit to Private Sector (Gross)			285.7	285.8	300.8	324.9	347.6	371.9	397.9	425.8	455.6
		From Banks		284.8	284.8	299.9	324.0	346.6	371.0	397.0	424.9	454.7
			Denars	157.6	160.0	175.0	180.2	192.8	206.3	220.8	236.3	252.9
			FX	127.2	124.8	124.9	143.8	153.9	164.7	176.2	188.6	201.8
		From Central Bank		0.9	1.0	0.9	0.9	0.9	0.9	0.9	0.9	0.9
	Other Items (net)			-102.4	-92.2	-86.8	-50.6	-77.5	-90.9	-99.5	-113.1	-120.5
Broad Money (M3)				334.1	354.7	372.9	409.0	428.6	452.4	477.7	504.4	532.7
	Currency in Circulation			26.3	28.2	30.0	31.1	32.6	34.2	36.1	38.1	40.3
	Total Deposits			307.8	326.5	343.0	377.9	396.0	418.2	441.6	466.3	492.5
		Denars		183.4	193.0	204.2	225.0	235.8	249.0	262.9	277.6	293.2
		FX		124.4	133.5	138.8	152.9	160.3	169.2	178.7	188.7	199.3
				(Percentage change, year-on-year)
Private Sector Credit				9.5	0.0	5.3	8.0	7.0	7.0	7.0	7.0	7.0
Broad Money				6.9	6.2	5.1	9.7	4.8	5.6	5.6	5.6	5.6
Private Sector Deposits				6.4	6.1	5.0	10.2	4.8	5.6	5.6	5.6	5.6
				(Contribution to annual growth in broad money)
NFA				-2.9	6.3	-4.1	7.3	5.6	2.6	1.8	2.7	1.1
NDA				9.8	-0.1	9.2	2.4	-0.9	2.9	3.7	2.9	4.5
				(Percent of GDP)
Private Sector Credit				51.1	48.0	48.8	50.8	51.8	52.8	53.6	54.3	55.0
Broad Money				59.8	59.6	60.5	64.0	63.9	64.2	64.4	64.4	64.3
Private Sector Deposits				55.1	54.9	55.6	59.1	59.1	59.4	59.5	59.5	59.4
Memorandum Items:
	Money Multiplier			5.5	5.4	5.4	5.4	5.3	5.3	5.2	5.3	5.3
	Reserve Requirement Ratio (% of deposits)
		Denars		8.0	8.0	8.0	8.0	8.0	8.0	8.0	8.0	8.0
		FX Indexed		20.0	50.0	50.0	50.0	50.0	50.0	50.0	50.0	50.0
		FX		15.0	15.0	18.0	18.0	18.0	18.0	18.0	18.0	18.0
	Velocity			1.7	1.7	1.7	1.6	1.6	1.6	1.6	1.6	1.6

Sources: NBRM; and IMF staff estimates.

Table 4.

FYR Macedonia: Monetary Survey, 2015–23

(Billions of denars, unless specified otherwise)

				2015	2016	2017	2018	2019	2020	2021	2022	2023
							Projections
NFA				137.5	158.5	144.0	171.2	194.3	205.6	213.9	226.7	232.2
	Central Bank			134.2	155.6	138.9	166.1	189.1	200.5	208.8	221.6	227.1
	Commercial Banks			3.3	2.9	5.1	5.1	5.1	5.1	5.1	5.1	5.1
NDA				196.6	196.2	228.9	237.9	234.3	246.8	263.8	277.7	300.5
	Credit to Government (net)			13.3	2.5	14.8	9.5	10.2	11.8	11.2	10.9	11.3
		From Banks (net)		36.5	32.6	34.0	33.0	33.7	35.1	35.1	35.1	35.1
			of which: Credit (Tbills)	38.0	34.0	35.3	34.9	35.6	37.0	37.0	37.0	37.0
		From Central Bank (net)		-23.2	-30.1	-19.1	-23.5	-23.5	-23.3	-23.9	-24.2	-23.8
			of which: Deposits	-26.2	-32.6	-21.9	-26.7	-26.7	-26.5	-27.1	-27.4	-27.0
	Credit to Private Sector (Gross)			285.7	285.8	300.8	324.9	347.6	371.9	397.9	425.8	455.6
		From Banks		284.8	284.8	299.9	324.0	346.6	371.0	397.0	424.9	454.7
			Denars	157.6	160.0	175.0	180.2	192.8	206.3	220.8	236.3	252.9
			FX	127.2	124.8	124.9	143.8	153.9	164.7	176.2	188.6	201.8
		From Central Bank		0.9	1.0	0.9	0.9	0.9	0.9	0.9	0.9	0.9
	Other Items (net)			-102.4	-92.2	-86.8	-50.6	-77.5	-90.9	-99.5	-113.1	-120.5
Broad Money (M3)				334.1	354.7	372.9	409.0	428.6	452.4	477.7	504.4	532.7
	Currency in Circulation			26.3	28.2	30.0	31.1	32.6	34.2	36.1	38.1	40.3
	Total Deposits			307.8	326.5	343.0	377.9	396.0	418.2	441.6	466.3	492.5
		Denars		183.4	193.0	204.2	225.0	235.8	249.0	262.9	277.6	293.2
		FX		124.4	133.5	138.8	152.9	160.3	169.2	178.7	188.7	199.3
				(Percentage change, year-on-year)
Private Sector Credit				9.5	0.0	5.3	8.0	7.0	7.0	7.0	7.0	7.0
Broad Money				6.9	6.2	5.1	9.7	4.8	5.6	5.6	5.6	5.6
Private Sector Deposits				6.4	6.1	5.0	10.2	4.8	5.6	5.6	5.6	5.6
				(Contribution to annual growth in broad money)
NFA				-2.9	6.3	-4.1	7.3	5.6	2.6	1.8	2.7	1.1
NDA				9.8	-0.1	9.2	2.4	-0.9	2.9	3.7	2.9	4.5
				(Percent of GDP)
Private Sector Credit				51.1	48.0	48.8	50.8	51.8	52.8	53.6	54.3	55.0
Broad Money				59.8	59.6	60.5	64.0	63.9	64.2	64.4	64.4	64.3
Private Sector Deposits				55.1	54.9	55.6	59.1	59.1	59.4	59.5	59.5	59.4
Memorandum Items:
	Money Multiplier			5.5	5.4	5.4	5.4	5.3	5.3	5.2	5.3	5.3
	Reserve Requirement Ratio (% of deposits)
		Denars		8.0	8.0	8.0	8.0	8.0	8.0	8.0	8.0	8.0
		FX Indexed		20.0	50.0	50.0	50.0	50.0	50.0	50.0	50.0	50.0
		FX		15.0	15.0	18.0	18.0	18.0	18.0	18.0	18.0	18.0
	Velocity			1.7	1.7	1.7	1.6	1.6	1.6	1.6	1.6	1.6

Sources: NBRM; and IMF staff estimates.

Table 5.

FYR Macedonia: Central Bank Survey, 2015–23

(Billions of denars, unless specified otherwise)

Sources: NBRM; and IMF staff estimates.

Table 5.

FYR Macedonia: Central Bank Survey, 2015–23

(Billions of denars, unless specified otherwise)

					2015	2016	2017	2018	2019	2020	2021	2022	2023
								Projections
NFA					134.2	155.6	138.9	166.1	189.1	200.5	208.8	221.6	227.1
	Assets				139.4	160.7	143.7	170.9	194.1	205.5	213.8	226.7	232.2
	Liabilities				-5.1	-5.1	-4.8	-4.9	-4.9	-5.0	-5.0	-5.1	-5.1
NDA					-73.0	-90.1	-67.3	-89.9	-108.7	-114.9	-117.7	-125.6	-125.9
	Banks (net)				-33.9	-41.1	-35.9	-53.7	-72.4	-78.8	-81.0	-88.6	-89.3
	of which:
		NBRM Bills and short-term facilities			-34.0	-36.5	-35.9	-45.9	-45.9	-45.9	-45.9	-45.9	-45.9
	Central Government (net)				-20.1	-26.6	-16.1	-20.9	-21.0	-20.7	-21.3	-21.6	-21.3
		of which:
			Deposits at Central Bank		-26.2	-32.6	-21.9	-26.7	-26.7	-26.5	-27.1	-27.4	-27.0
				Denar	-8.8	-11.0	-13.9	-16.1	-16.1	-16.0	-16.2	-16.4	-16.2
				FX	-17.4	-21.7	-8.0	-10.6	-10.7	-10.5	-10.9	-11.0	-10.8
	State and Local Governments (net)				-3.1	-3.5	-3.0	-3.0	-3.0	-3.0	-3.0	-3.0	-3.0
	Other items (net)				-15.9	-18.9	-12.3	-12.3	-12.3	-12.3	-12.3	-12.3	-12.3
Reserve Money					61.2	65.5	69.7	76.1	80.4	85.6	91.1	96.0	101.3
	Currency in Circulation				26.3	28.2	30.0	31.1	32.6	34.2	36.1	38.1	40.3
	Other				34.9	37.4	39.7	45.1	47.8	51.3	55.1	58.0	61.0
		Cash in Vaults			5.7	6.2	6.2	6.4	6.6	6.8	7.0	7.2	7.4
		Total Reserves			29.3	31.1	33.5	38.6	41.2	44.5	48.0	50.7	53.5
			on Denar Deposits		16.0	17.0	19.4	22.3	24.0	26.4	28.9	30.5	32.2
			on FX Deposits		13.3	14.1	14.1	16.4	17.1	18.1	19.1	20.2	21.3
					(Contribution to annual growth in reserve money)
NFA					-17.8	34.9	-25.5	39.0	30.3	14.1	9.7	14.1	5.7
NDA					18.4	-27.9	34.7	-32.4	-24.7	-7.7	-3.2	-8.7	-0.3
					(Percentage change, year-on-year)
Reserve Money					0.6	7.1	6.3	9.3	5.6	6.4	6.5	5.4	5.4
Memorandum Items:					(Percent of GDP)
	NBRM Bills				4.5	3.9	4.1	5.7	5.5	5.2	5.0	4.7	4.5
	Government Deposits at Central Bank				4.7	5.5	3.5	4.2	4.0	3.8	3.6	3.5	3.3

Sources: NBRM; and IMF staff estimates.

Table 5.

FYR Macedonia: Central Bank Survey, 2015–23

(Billions of denars, unless specified otherwise)

			2015	2016	2017	2018	2019	2020	2021	2022	2023
						Projections
NFA			134.2	155.6	138.9	166.1	189.1	200.5	208.8	221.6	227.1
	Assets		139.4	160.7	143.7	170.9	194.1	205.5	213.8	226.7	232.2
	Liabilities		-5.1	-5.1	-4.8	-4.9	-4.9	-5.0	-5.0	-5.1	-5.1
NDA			-73.0	-90.1	-67.3	-89.9	-108.7	-114.9	-117.7	-125.6	-125.9
	Banks (net)		-33.9	-41.1	-35.9	-53.7	-72.4	-78.8	-81.0	-88.6	-89.3
	of which:
		NBRM Bills and short-term facilities	-34.0	-36.5	-35.9	-45.9	-45.9	-45.9	-45.9	-45.9	-45.9
	Central Government (net)		-20.1	-26.6	-16.1	-20.9	-21.0	-20.7	-21.3	-21.6	-21.3
		of which:

1	Wage subsidies for new employment with monthly wage at least 50 percent higher than the minimum wage.
2	Financial support to foreign firms with substantial cooperation with domestic suppliers.
3	Financial support for investment in technological development and research.
4	Financial support, tax discounts, and wage subsidies for large investment projects.
5	Financial support for investment in new machinery and equipment.
6	Financail support for purchasing assets from business entities that are subject to bankruptcy/liquidation.
7	Financial support for investments to increase the market competitiveness.
8	Financial support to listed activities defined as assisting the access to new markets and growth.

1	Wage subsidies for new employment with monthly wage at least 50 percent higher than the minimum wage.
2	Financial support to foreign firms with substantial cooperation with domestic suppliers.
3	Financial support for investment in technological development and research.
4	Financial support, tax discounts, and wage subsidies for large investment projects.
5	Financial support for investment in new machinery and equipment.
6	Financail support for purchasing assets from business entities that are subject to bankruptcy/liquidation.
7	Financial support for investments to increase the market competitiveness.
8	Financial support to listed activities defined as assisting the access to new markets and growth.

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