Skopje, 15 April 2023 (MIA) — The country's economy has shown resilience to the global shocks; macroeconomic stability has been maintained through adherence to consistent policies and the long-standing exchange rate peg to the euro; and despite the jump in the import bill from higher energy prices, foreign-exchange reserves rose by EUR 272 million, a National Bank press release cites the latest Fitch report affirming the country's BB+ credit rating and upgrading its outlook to stable.

"Foreign exchange reserves continue to remain at a level which, according to international standards, is adequate to support the strategy of a stable exchange rate," the central bank says, pointing out that the banking sector had remained solid and unaffected by recent global stresses.

"The inflation rate started to drop in November and this trend is expected to continue this year," the release says, adding that according to Fitch, "tighter monetary policy and easing food and energy prices are set to pull down inflation in 2023."

"Capital adequacy strengthened last year to 17.7% at end-year (Tier 1 capital of 16.6%), from 17.3% and return on equity was 12.2%. Non-performing loans fell to a long-term low of 2.9% at end-2022, with provisioning of 69.4%, and central bank stress tests show resilience to higher interest rates and energy prices. An increase in foreign currency deposits in 1Q22 is being slowly unwound (46.4% at end-2022 from 47.3% at end-1Q22 and 44.8% at end-2021) and foreign-currency reserve requirements were raised in November to encourage local-currency savings," the release cites the Fitch report.

Also, the National Bank notes, Fitch has noted the resilience of the external sector to the jump in the import bill from higher energy prices: "Higher imports pushed the current account deficit to a 12-year high of 6.2% of GDP in 2022, but strong inflows of net foreign direct investments (FDI) and new external financing meant foreign-exchange (FX) reserves rose by EUR 272 million (stable in US dollar terms)." mr/