S&P Affirms Macedonia at BB­/B, Оutlook stable

Standard & Poor's (S&P) has affirmed Macedonia's long and short-term foreign and local currency sovereign credit ratings at BB­/B with a stable outlook, citing stronger-­than­-expected economic growth in 2015 and a budget deficit that is likely to have remained within the supplementary budget envelope.

Despite the political gridlock, the ratings agency said in a statement, the economy continues expanding solidly.

"Growth was confirmed at 3.7 percent in 2015 as exports from the free economic zones and public consumption grew strongly." Going forward, increased interconnection between the free economic zones and the rest of the Macedonian economy will be crucial to maintain growth, according to S&P. "We believe that ongoing foreign direct investment (FDI), continued net exports, and public-­sector investment projects will continue to support economic expansion."

Macedonia's deficit was lower, at 3.4 percent of GDP, it said adding that the refugee crisis has so far not posed a risk to public finances. "The banking system seems well capitalized, profitable, and funded by domestic deposits," S&P said noting that the measures taken last year by the National Bank had prevented the negative effects from Greece's debt crisis from spilling over in Macedonia's banking sector.

Macedonia's political situation remains uncertain until the elections scheduled in June 2016, the agency noted. The affirmation of Macedonia's credit ratings is considered a positive signal for foreign investors and the international capital market, according to experts.


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