The NBRM Council on the session held today discussed and adopted the Report on the Management of the Foreign Reserves in the first half of 2010 and the Internal Audit Report in the first half of 2010. 

Skopje, 30 September 2010

Press release of the NBRM

The NBRM Council on the session held today discussed and adopted the Report on the Management of the Foreign Reserves in the first half of 2010 and the Internal Audit Report in the first half of 2010. 

The Report on the Management of the Foreign Reserves in the first half of 2010 states that in the analyzed period the National Bank continued to invest the foreign reserves in Government securities and in short-term deposits with central banks of countries that have high credit ratings and that conduct prudent macroeconomic policies. The conservative approach and the high level of security of the invested foreign reserves proved as an adequate source, in conditions of high instability of the international financial markets and uncertainty about the future macroeconomic developments. The general principles of investing the foreign reserves in the first half of 2010 were the security and liquidity, which determined the performances of the foreign reserves with respect to the profitability. The total income from the foreign reserves amounted to Euro 12.4 million and they were within the projections.


The Internal Audit Report for the first half of 2010 states that in this period all planed regular and additional activities within the internal audit area were realized, in function of improvement of the internal operating processes of the bank. Nine regular audits were performed, as well as all activities related with the monitoring of the given recommendations for improvement of the control. It was concluded that in the first half of 2010, the Program of Operations of the Internal Audit was fully realized.

 
On the session held today, the NBRM Council was informed on the latest macroeconomic developments. The data on inflation in August 2010 showed moderate intensification in the rise of the consumer prices on annual basis (which was mainly due to the intensified positive contribution of the food prices), so the average inflation rate in the first eight months of 2010 amounted to 1% and was within the anticipations. With respect to the economic activities, the announced GDP rise of 0.4% in the second quarter of 2010, on annual basis, was close to the NBRM's projection of 0.5%. The last available data on the industrial output as of August showed that the fall in the industry output reduced by 3% in the first eight months of 2010. 
 

Relatively stable trends were maintained on the foreign exchange market. Namely, the gross foreign reserves as of 31.08.2010 amounted to Euro 1.718,7 million, registering rise relative to the end of the previous year of Euro 121.2 million, mainly as a result of the net purchase on the foreign exchange market. Such trends on the foreign exchange market this year resulted from the considerable drop in the deficit on the current account of the balance of payments which amounted to 1.7% of GDP in the first half of the year, opposite to 6.6% of the GDP in the same period of the previous year. The largest contribution for the narrowing of deficit on the current account came from the drop in the trade deficit and the rise in the current transfers. In the capital and financial account in the first half of 2010 inconsiderably lower net inflows were realized relative to the same period of the previous year, but still they were enough to fully cover the deficit on the current account and they enabled rise in the foreign reserves. The positive developments in the external sector continued in July and August 2010 as well, when the private transfers  continued to grow (more intensively relative to the projections), and in accordance with the  latest projections on the foreign trade in July 2010 the narrowing in the trade deficit continued on annual basis. 
 

The developments in the deposits and credits of banks were in accordance with the projections for the third quarter. In August 2010, in the banking sector high growth in the total deposits was registered on monthly basis, so the outflow of deposits from the banking sector for payment of dividend to one company in July was fully compensated. Therefore, the annual growth rate in the total deposits in August amounted to 13.5%, with more intensive rise with the Denar deposits being registered. In accordance with the growth in the deposit potential, the annual growth rate of the total credits of banks continued to intensify from 6% in July to 7.1% in August 2010 (with rise in the corporate credits of 9.5%, and households credits of 4.1% being realized). In July the downward trend in the interest rates which stared at the beginning of this year continued, and the monthly drop in July was most intensive in the previous period of the year. The weighted interest rate of banks for the extended credits in July amounted to 9.2%. 

Governor's Office