Skopje, 27 October 2005
Press release of the NBRM
The National Bank of the Republic of Macedonia Council discussed and adopted the Semi-annual Report of the National Bank of the Republic of Macedonia for 2005, the Report on Banking Supervision and Banking System of the Republic of Macedonia and the Report on Managing the Foreign Reserves of the National Bank of the Republic of Macedonia in the first half of 2005, at its session held today. According to the regulations, these reports are submitted to the Parliament of the Republic of Macedonia for the purpose of its information.
In the first half of 2005, the NBRM monetary policy was conducted in an environment of accelerated activity, disciplined budget spending and favorable movements in the external sector. The GDP grew by 3.7% in real terms, and the deficit in the current account of the balance of payments reduced by 58.8% relative to the same period of the preceding year. The National Bank of the Republic of Macedonia maintained the price stability, i.e. in environment of favorable movements on the foreign exchange market and stable nominal exchange rate of the Denar against the Euro, the average inflation rate equaled 0.2%. In the first half of 2005, the total deposit potential of the banks picked up by 29.4% annually, which is an indicator for further strengthening of the confidence in the banking system. Also, the total placements of the banks considerably rose by 23.2% on annual basis, indicating further strengthening of the financial intermediation of the banking sector.
At the end of June 2005, the gross foreign exchange reserves stood at Euro 778 million, which is by Euro 61 million more compared to December 31, 2004, primarily owing to the substantial net purchase of foreign currency on the foreign exchange market by the NBRM, and simultaneously, timely fulfilling of the external liabilities of the Republic of Macedonia. The foreign reserves are placed in financial institutions enjoying high credit rating, foreign central banks and international financial organization, in adequate financial instruments. The National Bank foreign reserves management relies upon the principles of security, liquidity and profitability.
The data on the current developments show continuation of the positive trends in the economy. Thus, in the first nine months of 2005, the inflation rate equaled 0.4% and the industrial output went up by 8.2%, on average. In July, the balance of payments current account registered a surplus of Euro 31 million. After the switch to the interest rate tender, the interest rate on the CB bills auction held on October 26, 2005 equaled 9.8%, which is a decline of 0.2 percentage points.
The banking system continued registering positive developments and the banks' total financial potential reached Denar 132.2 billion on June 30, 2005, which is the record level since the monetary independence of the Republic of Macedonia. The banking system remained stable, which is also illustrated by the relatively high capital adequacy of the banks, which equaled 23.1% on June 30, 2005. The first half of 2005 was characterized by considerable improvement of the banks' profitability, when the banking system registered positive financial result in the amount of Denar 947 million. At the end of the first half of 2005, the rate of return on assets and return on capital of the banking system equaled 1.5%, and 9.2%, respectively.
Governors' Office