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Country Risk Service North Macedonia 1st Quarter

  • ID: 4988906
  • Country Profile
  • February 2020
  • Region: North Macedonia
  • 26 Pages
  • The Economist Intelligence Unit
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The sovereign risk score is at the more risky end of the BB-rating band in The Economist Intelligence Unit's latest report. Since 2017 fiscal transparency, and the sustainability of the pension and healthcare systems, have improved. However, current spending has been increasing and fiscal space has shrunk. The public debt ratio is broadly in line with the BB-rated median, but worryingly has more than doubled since 2008. External debt as a percentage of GDP is much higher than the median for other BB-rated countries.

The currency risk score improves by 3 points, to 40, bringing the rating closer to the BBB band. Foreign-exchange reserve coverage of short-term debt is lower than the median for BB-rated countries, but gross financing coverage is adequate. The denar does not appear overvalued, and the authorities are committed to maintaining the de facto peg to the euro in 2020-21.

The banking sector risk rating is BB. Non-performing loans (NPLs) have fallen, partly owing to write-offs, and are expected to be below 5% of total loans at end-2019. However, the large share of foreign-currency-denominated loans in total loans for unhedged households (about 50%) is a vulnerability. NPLs are fully provisioned and capital adequacy is sound.
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Country Risk Service North Macedonia 1st 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
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