The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on July 1, 2014, following discussions that ended on May 19, 2014, with the officials of the Former Yugoslav Republic of Macedonia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on June 17, 2014.
KEY ISSUES
Context. Growth accelerated to 3.1 percent in 2013, driven by a positive net exports contribution. The broad policy direction is supportive of near term macroeconomic stability. The key challenge is to transition from stability into an acceleration of medium term growth. Uncertainty with respect to EU accession remains, and weighs on longer term prospects.
Fiscal Policy. The 2014 central government deficit target must be met, even in the face of weaker revenues—lower central government spending is unlikely to derail the recovery and debt stability considerations should weigh more heavily. Laying out the measures underpinning the medium-term adjustment path will reduce implementation risks and ensure a sustainable and growth-friendly consolidation. Large public infrastructure works will support near both term and potential growth, but their substantial impact on public finances needs better monitoring and disclosure.
External Stability. With external risks on the downside, and a baseline drawdown of reserves, the balance of payments outlook for 2014 is fragile. In that context, the focus of monetary policy has appropriately shifted away from providing stimulus toward preserving reserve adequacy in the context of the exchange rate peg. Over the medium term, external sustainability hinges on accelerating FDI flows and continuing to strengthen the tradable sector.
Financial Sector. The financial system remains liquid and relatively healthy, but inefficient intermediation carries substantial opportunity costs for the economy. Strong domestic deposit growth has been increasingly channeled into government securities; a lending culture based on physical collateral results in inefficient allocation of credit and constrains financing for more dynamic entrepreneurial sectors.
Growth and Jobs. A determined effort to alleviate key business environment constraints should invigorate the domestic private sector and may have important catalyzing effects on diaspora investment. Strengthening supply chain linkages between foreign and domestic firms would create more jobs and facilitate knowledge spillovers.
Извор: IMF
