National Bank Inspiring Confidence

Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia (the country’s central bank) for the past four years, previously served as the bank’s Vice-Governor and as the chief economist for Stopanska Banka Skopje, the country’s largest bank. He discusses the National Bank’s priorities and recent performance.

What is the main strategy and focus of the National Bank of the Republic of Macedonia?

Dimitar Bogov: The bank’s primary goal is to ensure price stability, and we are achieving this through maintaining a stable exchange rate for the Macedonian denar against the euro. The current rise in household savings reflects consumer confidence in the bank’s policies and practices. Macedonia has enjoyed a stable exchange rate and an average inflation rate of around 2% since 1997 in spite of external shocks. We have achieved this through our main monetary-policy instruments, our policy rate on central-bank bills and our reserve-requirement ratio. The National Bank has developed a strategic plan for 2015-2017 which focuses on price stability, financial stability and institutional capacity-building to adapt the bank to the criteria of the European System of Central Banks, which the National Bank will join once Macedonia is part of the EU.

What is your prediction for Macedonia’s GDP for the coming year(s)?

Dimitar Bogov: After a slight recession in 2012 as a result of the recession in the euro zone, Macedonia’s GDP grew by 2.7% in 2013 and by 3.8% in 2014. We anticipate 4.1% growth this year. The main drivers of this growth will continue to be fiscal stimulus, FDI, and increasing demand from EU markets for Macedonia’s traditional industrial exports. More than 70% of Macedonia’s exports are to the EU and the euro zone. We expect inflation this year to be slightly positive, around 1%, and to normalise to our long-term target of 2% in 2016.

Please elaborate on some recent and major developments within Macedonia’s banking sector?

Dimitar Bogov: Macedonia’s banking sector has been stable and resilient for many years. It is dominated by foreign banks, mainly from the euro zone, particularly Slovenia and Greece. Banks in Macedonia are very healthy, with excellent liquidity and capital, and they do not have to rely on their parent banks for financing. Macedonia’s two strongest banks are Stopanska Banka, which is owned by Greece’s NBG, and Tutunska Banka, owned by NLB from Slovenia. The National Bank encourages consolidation of smaller and medium-sized banks in the banking sector, which currently includes 15 banks. Some Macedonian banks are looking for strategic international partners. Macedonia is an excellent base in the Balkans for financial-services companies.