Skopje, 5 October 2024 (MIA) - In its latest report, "Fitch Ratings" has affirmed the country's credit rating "BB+ with stable outlook, owed to the credible and consistent macroeconomic policies that "underpin the longstanding de facto exchange rate peg to the euro, more favourable governance indicators than peer medians, and an EU accession process that acts as a reform anchor over the medium term."

Following 2.2% growth in 2024, Fitch expects growth to average 3.5% in 2025-26, partly driven by construction of the 8/10d transport corridors. Despite strong investment, weak productivity and poor demographics weigh on potential growth. Fitch projects the deficit to moderately reduce to 4.3% of GDP in 2025 and 3.8% in 2026

"North Macedonia's tax revenue base has been constrained by a large shadow economy and boosting this through greater use of electronic invoicing (as the government is planning) will take time, while poor demographics makes the expenditure base sticky," says Fitch.

Fitch project North Macedonia's general government debt to rise breaching the 60% limit specified by the Organic Budget Law by 2027. It expects authorities to finalise a 15-year EUR 500 million loan with Hungary at below-market rates to meet the revised budgetary needs and part pre-finance a EUR 500 million Eurobond maturity in January 2025.

Fitch expects greater reliance on domestic issuances in 2025-26, alongside a pipeline of concessional financing, including from the World Bank and European Bank for Reconstruction and Development. It does not anticipate a further drawdown of the EUR 200 million Precautionary and Liquidity Line (PLL) from the IMF, which will lapse in November 2024.

MIA file photo