The National Bank of the Republic of Macedonia Council discussed about several issues related to its scope of operations, at its today's session.
Press release of the NBRM
The National Bank of the Republic of Macedonia Council discussed about several issues related to its scope of operations, at its today's session.
The Council discussed about and adopted the Decision on the monetary policy objectives for 2006 and the Monetary Policy Projection for 2006. In 2006, the NBRM monetary policy will be directed towards further maintenance of price stability and creation of favorable environment for faster and sustainable economic growth. The projected inflation rate for 2006 equals 2%. The National Bank will achieve its primary objective by maintaining a stable nominal exchange rate of the Denar against the Euro. The maintenance of adequate level of gross foreign reserves will be an essential determinant of the monetary policy. The Denar and the foreign currency deposits of the private sector are expected to go up by 25.4% and 18%, respectively in 2006. Also, the projected annual growth rate of the total credits equals 19.6%. As to the monetary instruments, Treasury bills are planned to be introduced in 2006 for monetary purposes, thus eliminating the previous segmentation of the short-term securities market. The opportunity for investing in Treasury bills by non-banking entities would increase the competitiveness regarding the mobilization of available funds, thereby expecting better responsiveness of the banks and strengthening of the monetary policy transmission channel through the interest rates.
The Council adopted a Decision on calculating and disclosing effective lending and deposit interest rates. This decision sets out underlying uniform rules, which are expected to be adhered to in the offering of banking services, and qualitatively increases the transparency. The potential borrowers, inter alia, will be informed not only on the interest rate, but also on all other costs related to the use of credit from any bank. In addition, the banks will also be bound to disclose other relevant information (terms of using credit, default interest level, credit collateral instruments, possibilities for early repayment of the credit, i.e. for withdrawing the deposit, etc.)
The National Bank of the Republic of Macedonia Council adopted the amendments to the regulations concerning the method of calculating the interest rates, thereby switching from compound method to simple method. The above resulted in adjustment to the common practices on the European money market and the domestic government securities market. Consequently, amendments were made to the regulation for calculating the price i.e. the interest rate on CB bills, which, from now on, will be calculated by the simple method.
The Council discussed about and adopted the Quarterly Report 3/2005, the Monthly Report for October 2005 and the Information on the latest macroeconomic developments in the Republic of Macedonia. A conclusion was drawn that the price stability was preserved and that the inflation gauged through the consumer price index equaled 0.4% in the January - November 2005 period. As to the real sector of the economy, the positive performances in the industry, the trade and the agriculture indicate faster economic activity in the previous period of 2005, aimed at achieving the projected GDP real growth rate of 3.8%. The external sector registered remarkably favorable results. The deficit in the balance of payments current account stood at Euro 40.9 million in the January - September 2005 period, which is by Euro 192.9 million less compared to the same period of 2004. The lower current account deficit is due to the lower trade deficit, the lower deficit in the balance of services and the considerable growth in the private transfers.
The Council discussed about and adopted the Report on Accomplishing the Plan of Activities of the National Bank of the Republic of Macedonia for 2005 and found the Plan to be successfully delivered. In the accomplishment of the Plan, in addition to the current activities, special accent was placed on the projects and the tasks in the area of monetary policy, exchange rate policy and the promotion of the banking system stability, security and efficiency.
The Council adopted the Plan of Activities of the National Bank of the Republic of Macedonia for 2006 which includes numerous measures and activities directed towards further improvement of the design and the conduct of the monetary policy and continuation of the reforms of the banking sector with a view to increasing its efficiency and improving the financial intermediation.
The Council also adopted the NBRM Financial Plan for 2006 and the NBRM Investment Plan for 2006.