Press Release No. 11/322

Press Release: IMF Completes First Review Under the Precautionary Credit Line with the Former Yugoslav Republic of Macedonia

September 2, 2011

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Macedonia’s performance under an economic program supported by a two-year Precautionary Credit Line (PCL) arrangement and reaffirmed Macedonia’s continued qualification to access PCL resources. The PCL was approved on January 19, 2011 (see Press Release No. 11/14) in the amount equivalent to SDR 413.4 million (about €463.3 million, 600 percent of quota). The access under the arrangement in the first year is equivalent to SDR 344.5 million (about €386.1 million, 500 percent of quota), rising in the second year to cumulatively SDR 413.4 million. In March 2011, the Macedonian authorities drew SDR 197 million (about €220.8 million, 286 percent of quota) of the resources available to them in the first year under the PCL (see Press Release No. 11/98).

Following the Executive Board’s discussion, Ms. Nemat Shafik, Deputy Managing Director and Acting Chair, said:

“Macedonia continues to pursue sound economic policies that are consistent with the program supported by the Precautionary Credit Line (PCL) arrangement. Growth has picked up, underlying inflation remains low, international reserves have been broadly stable, and the 2011 fiscal deficit target under the program is within reach.

“Nonetheless, Macedonia’s decision in March 2011 to make a purchase under the PCL arrangement highlighted remaining external vulnerabilities. The authorities are strengthening debt management policies and practices, focusing both on improving access to external funding and on developing the domestic public debt market. This will help to ensure that Macedonia is able to meet its financing needs from private market sources in the future. In this context, the authorities intend to publish an action plan on debt management reforms and will draw upon IMF technical assistance for this initiative.

“Despite sound policies and fundamentals, Macedonia remains exposed to unusually high levels of risk related to global growth and financial conditions as well as regional developments. This calls for continued vigilance and further efforts to address remaining vulnerabilities and improve data adequacy. The PCL plays a valuable role in supporting market confidence by signaling Macedonia’s commitment to prudent policies and strengthening its reserve buffers. While Macedonia is not expected to require further purchases under the PCL, the availability of these resources provides additional insurance against adverse external developments.”