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The sovereign risk score has deteriorated by 5 points to 53, triggering a rating downgrade to B. The economic crisis caused by the novel coronavirus pandemic has led to a sharp deterioration in macroeconomic and fiscal indicators. North Macedonia already had limited fiscal space before the crisis, and public debt more than doubled since 2008. A weak institutional environment is a major source of risk.
The currency risk score has worsened by 6 points to 46 but the rating remained unchanged at BB. The economic shock triggered by the pandemic will result in a larger current-account deficit and an increase in external financing needs, prompting the government to request financial assistance from the IMF and the EU. The de facto exchange-rate peg with the euro remains credible nonetheless.
The banking sector risk score has deteriorated by 5 points to 49, triggering a rating downgrade to B. Asset price revaluation risks are very high in the current environment. Non-performing loans declined to 4.8% of total loans in the third quarter of 2019, but we expect them to rise again this year and next. The large share of foreign-currency lending is a source of credit risk.
The currency risk score has worsened by 6 points to 46 but the rating remained unchanged at BB. The economic shock triggered by the pandemic will result in a larger current-account deficit and an increase in external financing needs, prompting the government to request financial assistance from the IMF and the EU. The de facto exchange-rate peg with the euro remains credible nonetheless.
The banking sector risk score has deteriorated by 5 points to 49, triggering a rating downgrade to B. Asset price revaluation risks are very high in the current environment. Non-performing loans declined to 4.8% of total loans in the third quarter of 2019, but we expect them to rise again this year and next. The large share of foreign-currency lending is a source of credit risk.
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Country Risk Service North Macedonia 2nd Quarter
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Sovereign risk
Current assessment
Positive factors
Negative factors
Rating outlook
Currency risk
Current assessment
Positive factors
Negative factors
Rating outlook
Foreign-exchange regime
Banking sector risk
Current assessment
Positive factors
Negative factors
Rating outlook
Generic risks
Political risk assessment
Economic structure risk assessment
Country risk
Overall country risk
Central scenario for 2020-24: Political stability
Central scenario for 2020-24: Election watch
Central scenario for 2020-24: International relations
Central scenario for 2020-24: Policy trends
Central scenario for 2020-24: Fiscal policy
Central scenario for 2020-24: Monetary policy
Central scenario for 2020-24: Economic growth
Central scenario for 2020-24: Inflation
Central scenario for 2020-24: Exchange rates
Central scenario for 2020-24: External sector
Central scenario for 2020-24: External financing requirement
Central scenario for 2020-24: External debt
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Sovereign risk
Current assessment
Positive factors
Negative factors
Rating outlook
Currency risk
Current assessment
Positive factors
Negative factors
Rating outlook
Foreign-exchange regime
Banking sector risk
Current assessment
Positive factors
Negative factors
Rating outlook
Generic risks
Political risk assessment
Economic structure risk assessment
Country risk
Overall country risk
Central scenario for 2020-24: Political stability
Central scenario for 2020-24: Election watch
Central scenario for 2020-24: International relations
Central scenario for 2020-24: Policy trends
Central scenario for 2020-24: Fiscal policy
Central scenario for 2020-24: Monetary policy
Central scenario for 2020-24: Economic growth
Central scenario for 2020-24: Inflation
Central scenario for 2020-24: Exchange rates
Central scenario for 2020-24: External sector
Central scenario for 2020-24: External financing requirement
Central scenario for 2020-24: External debt
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
Note: Product cover images may vary from those shown
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