Skopje, 15 June 2010

Press release of the NBRM

Today, the National Bank of the Republic of Macedonia (NBRM) adopted a decision on decreasing the interest rate on CB bills auctions by one percentage point, from 6% to 5%, annually. The key significance of such a decision is the continuity of the favorable trends on the foreign exchange market, thus making the environment for implementation of the monetary policy still relatively favorable. Namely, in May and in the last period of June, the NBRM realized net purchase of foreign exchange on the foreign exchange market, which contributed to further growth in the gross foreign reserves. As of June 04,2010, the gross foreign reserves equal Euro 1,694.5 million, with the current level of foreign reserves ensuring 4.3 months coverage of the projected import of goods and services of the following year.

The still weak domestic demand, which results in reduced imports, the recovery of the exports in conditions of stabilization of the global demand and more favorable trading conditions, as well as the stabilized expectations of the economic agents, significantly contribute to the favorable trends on the foreign exchange market. In the foreign trade, despite the higher increase in the imports in April, the growth in the exports still remains more intensive and cumulatively for the first four months of the year the trade balance is higher by 22.7% relative to the same period of the preceding year. The private transfers' dynamics is still significantly better than expected, which is signal for smaller perceptions of risk for the stability of the domestic currency. The statement for poorer domestic demand is supported also by the data on the banks' credit market, where the developments although recuperated, are still with moderate dynamics. Namely, according to the preliminary data, the credit growth in May equals 4.4% annually and it gradually approaches to the projected growth for the end of the second quarter of 5.3%. On the other hand, the banks' investments in non-risk instruments from the beginning of the year until now increase intensively, showing existence of available investment assets and still present bank's estimates for uncertainty and risk for the economic activity.

The risks related to the developments in Greece and their direct and indirect effects on the domestic economy are still present. However, the measures undertaken by the European Union, supported by the IMF, towards creation of financial mechanism for preserving the financial stability and prevention from shocks on the financial markets are encouraging. The downward trend of the interest rate of NBRM that commenced at the end of 2009 is expected to have positive reflection on the banks' credit activity, with positive effects on the real sector of the economy. NBRM has been cautiously monitoring the developments and if necessary, it will react adequately.  The current level of foreign reserves enabling buffering of possible negative trends in the following period is of key importance.

Governor's Office