The National Bank of the Republic of Macedonia Council discussed several issues from its operations at its today's session.
Press release of the NBRM
The National Bank of the Republic of Macedonia Council discussed several issues from its operations at its today's session.
The Council adopted amendments to the Decision on determining methodology for classification of balance sheet and off-balance sheet asset items of the banks by their risk degree, aimed at further strengthening of the banks' credit policies and procedures related to the credit risk management. These amendments introduce the concept of retail portfolio classification, i.e. classification of a group of small and medium credits. The banks have been offered an alternative solution that facilitates the approach to the risk classification of numerous small credits. Also, the amendments to this Decision specifies a requirement for allocation of 1% special reserve for loan losses arising from credit exposure classified in risk category A, other than exposure to the NBRM, the Republic of Macedonia and first-class banks. So far, the banks have been making decisions, on their own initiative, whether to allocate 2% provisions for such exposure.
The Council adopted a Decision on the methodology for allocating special reserve for loan losses from foreclosures. The decision sets out the criteria for allocating special reserves for loan losses from foreclosures and the timeframes within which such foreclosures will be gradually written off, unless sold or used for performing the functions of the banks.
At its session, the National Bank of the Republic of Macedonia Council also adopted the Decision on the conditions and manner under which residents can collect and pay in foreign currency cash in the transactions with non-residents. Starting from the general orientation for releasing the central bank from activities that are not typical for a modern central bank, and taking into account the financial sector development and the concept of promoting the economic system of the Republic of Macedonia which is based on the principles of functional market economy, the decision specifies the conditions and the manner of collection in foreign currency cash in the transactions with non-residents in a manner that excludes the NBRM involvement in the issuance of approvals for collection in foreign currency cash on the basis of import and export of goods and services. In fact, the decision highlights the obligation of the residents, including the authorized banks, to adhere to the regulations governing the anti-money laundering in the transactions in foreign currency cash.
The National Bank of the Republic of Macedonia Council, at its today's session, discussed the Quarterly Report 1/2006 and the Monthly Report for April 2006, and was also informed on the latest macroeconomic developments. In the January - May 2006 period, the average inflation rate equaled 3.1%, primarily owing to the increase in the excises at the beginning of the year. The banks' total deposit potential in May 2006, relative to the same month of the preceding year, went up by 17.4%. The enhanced deposit base of the banks, having a moderate reduction in the banks' lending interest rates, contributes to further acceleration of the banks' credit activity. Thus, on annual basis (May 2006 / May 2005), the banks' total credits to the private sector surged by 22.8%. The monetary policy was conducted in an environment of higher supply of relative to demand for foreign currency on the foreign exchange market, contributing to further growth in the gross foreign reserves, thus reaching Euro 1,212.4 billion at the end of May 2006. The interest rate on the last CB bills auction equaled 5.5%. In the first three months of 2006, the balance of payments current account deficit totaled Euro 14.8 million, which is inconsiderably lower relative to the same period of the preceding year, having a higher trade deficit, and higher inflows on the basis of private transfers. In the first quarter of 2006, the labor market also registered positive developments. Thus, according to the Labor Survey, in the first quarter of 2006, the total number of employed individuals substantially increased by 10.3% compared to the same period of the previous year. Consequently, the employment rate went up by 3 percentage points and equaled 34.6%, whereas the unemployment rate reduced by 2.5 percentage points relative to the first quarter of 2005, equaling 36.2%.