External Debt Management

The National Bank of the Republic of Macedonia may participate in contracting and negotiating the external Government debt. In addition, the National Bank of the Republic of Macedonia may also conclude foreign financial credits for liquidity purposes. On the basis of registered foreign credits data, National Bank prepares reviews on:

·         total external debt of the country by creditors and by types and purposes of the foreign credits, and

·         disbursements, repayments and schedules of future debt maturities

In the post-independence period, a significant progress in relations with the foreign creditors was achieved, and the Republic of Macedonia succeeded to reschedule inherited external debt from former SFR Yugoslavia. Thus, rescheduling arrangements were signed with Paris Club creditor countries (on July 17,1995) and with London Club of creditors (on March 26,1997).

Debt to Paris Club of creditors was rescheduled under very favorable conditions: a/ for the pre cut-off date debt, principal and interest (except late interest) as of June 30,1995, that mature in the consolidation period (July 1, 1995 - June 30, 1996), were rescheduled with repayment period of 15,5 years of which 4 years grace period. There will be 24 semi-annual installments, of which the first one will be paid on July 31,1999, and the final one on January 31, 2011. The first 6 installments are increasing and the rest are equal. Late interest on these debts and arrears of post cut-off date debts as of June 30,1995 will be paid in 8 equal semi-annual installments, the first payment to be made on July 31,1998 and the final payment to be made on January 31,2002.

According to the agreement with London Club, Republic of Macedonia accepted 5,4% of the NFA debt of former SFRY and 3,65% of interest arrears and late interest. The debt was exchanged on March 26,1997 for bonds issued by Republic of Macedonia with maturity of 15 years of which 4 years grace period. Interest rate is LIBOR + 13/16. The bonds will amortize in 22 semi-annual increasing installments. Semi-annual interest payments will start from January 1,1998. The first 4 interest payments will be made up to 3,5% and the next 4 interest payments up to 3,75%. The difference to actual interest rate will be capitalized.

The Republic of Macedonia (private or state entities) has access to the international financial markets, but still it does not borrow. The main reason is that Republic of Macedonia is still eligible for IDA (World Bank) credits, under much better terms than borrowing from the international financial markets. As soon as this possibility dissapears, the Republic of Macedonia (and all legal entities) will become active participants at the international financial market.