Skopje, 29 September 2023 (MIA) – The restoration of historically low inflation rates remains a priority for the central banks. With the right combination of policies, the Western Balkan economies can ensure low inflation and long-term acceleration of the region’s convergence with the EU. These were some of the messages sent at the opening of the ninth international research conference held Friday in Skopje, organized by the National Bank and the Reinventing Bretton Woods Committee.

According to Governor Anita Angelovska-Bezhoska, inflation remains one of the key challenges, which despite slowing down, is still above the intended level. Therefore, she said, maintaining a cautious monetary policy aimed at reducing inflationary pressures on a permanent basis is a priority of the central banks.

“The tightened monetary policy can have an unfavorable reflection on the recovery of the economies, but it can also create risks for the financial system, as was the case in the United States. These events in the banking system of the US did not transfer over to Europe. The banking systems in the region of Central, Eastern and Southeastern Europe, including the Western Balkans region, have dealt with the crisis well so far. According to the latest data, the capital adequacy ratio in the region is at 20 percent on average, while the liquidity rate is almost 27 percent. The quality of credit portfolios remains solid, with non-performing loans below 4 percent on average, which is lower than pre-pandemic levels,” said Angelovska-Bezhoska.

However, she added, the further strengthening of the resilience of the banking systems is necessary, and would enable more room for reactions in the monetary policy without unfavorable effects on financial stability.

“Additionally, it’s not less important for the countries to possess a solid regulatory framework and instruments for maintaining financial stability,” underlined the Governor.

According to the President of North Macedonia, Stevo Pendarovski, the National Bank, with its policies, has contributed to the maintaining of macroeconomic stability in the country.

The Director of the European Department of the International Monetary Fund (IMF), Alfred Kammer, highlighted the importance of policies in terms of accelerating economic growth in the region and overcoming the inflation crisis.

“If I have to convey one key message for you, it is that policies are important. With the right combination of various policies, the Western Balkan economies can ensure lower inflation and an increased long-term growth trajectory,” said Kammer, stressing the significance of structural reforms when it comes to improving the region’s economic potential.

The Executive Director of the Reinventing Bretton Woods Committee, Marc Uzan, noted that everyone is witness to many structural changes in terms of the labor force, the relocation of the production of multinational companies to their native country, the new global trade, geopolitical tensions and the “greening” of the global economy, which, he said, will remain relevant in the coming period. Uzan stressed that this poses the question of whether we are headed to a new macroeconomic “normal”, where the tightened financial conditions remain for a longer period.

Photo: National Bank of North Macedonia