GOVERNMENT TO REPAY PREMATURELY ANOTHER $137 MN

Macedonia will prematurely repay 137 million dollars to the World Bank and the European Investment Bank, thus entering the group of countries with low indebtedness.

Together with the debt of 103 million dollars repaid to the Paris Club of Creditors last month, 240 million dollars are being prematurely repaid, Prime Minister Nikola Gruevski said.

This portion of Macedonia’s debt will be repaid with the surplus in the foreign currency reserves of 1.8 billion euros. Macedonia’s foreign debt totals 1.6 billion euros.

With the premature debt repayment, 20 percent of the country’s total debt to the World Bank and 6 percent of the debt to the European Investment Bank will be covered and over 37 million dollars, due for payment by 2021, will be saved. Thus, Macedonia’s total foreign debt will decline by 20 percent.

"Such premature debt repayment rarely happens. Only Russia, Brazil, Argentina, Peru and Mexico in the recent past did it, thus sending out a signal to the global financial markets of turning over a new leaf in their economic policy. The premature debt repayment is a signal to investors that the country is conducting a sound and stable economic policy and will have a positive effect on the country’s credit rating, business and overall public debt portfolio in terms of its currency and interest structure," the Prime Minister explained. The Government is considering premature debt repayment to other institutions too and the IMF is next on its list.

Macedonia will save millions and improve its credit rating with the early repayment of its debt of about 37 million euros to the International Monetary Fund, experts say. They further add that by doing so Macedonia will show that it conducts a sound economic policy and will attract more foreign investments.

Marjan Nikolov, expert from the Center for Economic Analysis, has a positive view of the Government’s move for early repayment of the debt to the IMF.

"In this way, a clear signal will be sent that Macedonia is capable of repaying credits and its credit rating will improve. This is a good way to attract foreign investments to whom this economic parameters may be decisive in reaching a decision whether to come to invest or not," Nikolov says.

Over the past few years, experts and politicians debated Macedonia’s cooperation with the IMF. Some thought that the IMF dictated a restrictive economic policy that checked the economic growth, while others believed the cooperation was essential for a stable macroeconomic policy.