The National Bank of the Republic of Macedonia Council discussed on several issues within its operating area on the session held today.

Skopje, 25 December 2008     

Press release of the NBRM

The National Bank of the Republic of Macedonia Council discussed on several issues within its operating area on the session held today.

The Council discussed and adopted the Decision on the monetary policy goals for 2009. In conditions of considerable uncertainty for the possible effects from the world crises on the Macedonian economy, inflation stabilization is mainly expected for 2009, so the average annual inflation rate would range between 2.2% and 3.4%. For maintaining the inflation on low and stable level, which represented the final goal of the monetary policy, NBRM will continue applying the strategy for maintenance of stable exchange rate of the Denar against the Euro, as intermediary goal of the monetary policy.

The Council concluded that the developments in the current account of the balance of payments, which at the moment are negative, as well as the developments in the capital account, which are felt as very uncertain due to the global financial crises, shall be the key factors for realization of the main monetary policy goal. This takes for a careful monitoring of the external developments and undertaking adequate measures by all macroeconomic policy careers.

On the session held today, the Council adopted a Decision on a compulsory deposit with the National Bank of the Republic of Macedonia. According to this Decision, the measure which envisages monthly growth rates of the credits to households continues to be applied, so for 2009 these credits are envisaged to grow up by 11.3%, on cumulative basis.  If the outstanding amount of the credits to households exceeds the envisaged growth rate for each month, the banks and the saving houses shall be obliged to allocate a deposit with the National Bank in amount equaling the amount of the excess.

The Council discussed and adopted the Report on the Banking System and Banking Supervision of the Republic of Macedonia in the third quarter of 2008. The report states that in the third quarter of 2008 the deposits of the non-financial persons and the credit activity of banks continued to grow, but with lower dynamics. Certain worsening in the quality of the credit portfolio is identified. In the first three quarters of 2008, the banks' gain rose by 15.8% relative to the same period of 2007, which also represented lower growth.

In the third quarter of 2008, the capital adequacy rate, as a basic indicator on the banks' solvency position, reduced from 15.6% to 15%, but it was still under the legally prescribed minimal level of 8%.

In the third quarter of 2008, the liquidity of banks in the Republic of Macedonia was mainly satisfactory, but the downward trend in the liquidity indicators continued. It resulted mainly from the accumulation of the effects from the intensive growth in the crediting on longer terms, which was registered in the previous years, opposite of the almost unchanged high preferences of the domestic depositors for saving on shorter terms. Hence, the need for the banks to monitor and to manage the liquidity more carefully was higher.

Based on the total current developments in the Macedonian economy which resulted from the global financial and economic crises, the Council adopted more decisions acting towards further strengthening of the safety and stability of the banking sector in the Republic of Macedonia.

In order to act precociously, acting towards higher level of the liquidity in individual banks and in the banking system of the Republic of Macedonia, on the Session held today the Council adopted the Decision on liquidity risk management. This decision introduces a liability for the banks to maintain certain minimal level of liquid assets for settling its liabilities which fall due in the following 30 and 180 days, separately in Denars and in foreign currencies. Such prudent measure shall improve the maturity matching of the assets and liabilities of banks, so that the expected increase in the liquid assets in the assets of banks shall strengthen their solvency position too. On a short term, this measure will result in increase in the banks' resistance to eventual unfavorable effect from the current global financial and economic crises, having in mind that the crises reflected through the liquidity problems of the banks across the world. On longer term, the measure shall enable more secure and maintainable operating in the banking sector.

In conditions when the banks shall have to improve their foreign currency liquidity to reach up to the newly determined minimal level of liquid assets, the Council adopted a Decision on foreign currency deposits with the National Bank of the Republic of Macedonia. With this measure, the banks are given an additional chance for not being obliged to hold the foreign assets abroad, but to deposit them with the National Bank. In conditions of unstable developments in the international financial markets, the banks shall be able to be unexposed to the credit risk when placing the foreign assets. The interest rates of the foreign currency deposits placed with the National Banks shall be equal with the interest rates of those assets placed with the central banks in the Euro area, in the international financial institutions or from the incomes of the Treasury bills of the member-states of the Euro area.

The amendments to the Decision on the exposure limits were adopted. They envisage for the exposure of the domestic banks to foreign first rate banks to be included in the calculation of the exposure limits in the full amount, and not as so far, only 20% of the amount. This measure is expected to reduce the level of concentration of the exposure of the domestic banks to individual foreign banks.

On the session held today the Council adopted also the Decision on managing interest rate risk in the banking book. This Decision prescribes the minimal needed elements for managing the interest rate risk in the banking book, as well as the method for measuring the banks' exposure to such risk.

Considering the recent developments in the international financial markets, the Council adopted a Decision on determining the types of securities that the authorized banks may purchase and sell, which inter alia, enables increase in the lowest allowed long-term credit rating of the securities in which one authorized bank can invest abroad.

The Council adopted the Decision on reserve requirements which incorporate the decisions on reserve requirements of banks and saving houses. Simultaneously, according to the new Chart of Accounts which shall start being applied on January 1, 2009, an adjustment is performed in the accounts of the balance sheets of banks and saving houses which are included in the basis for calculation of the reserve requirements.

The Council adopted the Decision on submitting data on the balance and the turnover on the account from the banks' Chart of Accounts and on submitting financial reports, which determines the manner and the deadlines for submission of data from the banks electronically, in accordance with the new Chart of Accounts, as well as of part of the financial reports of banks. The Council also adopted the Decision on amending the Decision on obligatory reporting on the operations with abroad.

The Council discussed and adopted the Report on the performance of the Program of activities for 2008, as well as the Program of activities for 2009. The projects envisaged in the Program of activities for the following year represent a continuance of the various reforms which enable qualitative improvement in the institutional capacity of the Central Bank in function of performance of its legally determined activities.

The Council discussed the Information on international investment position of the Republic of Macedonia for 2007, and it discussed and adopted the Financial Plan, Investment Plan, the Procurement Plan of the National Bank of the Republic of Macedonia for 2008, as well as the Program of activities of the Internal Audit Department for 2009.

  Governor's Office