The International Monetary Fund’s Executive Board has completed its Article IV consultation for North Macedonia. It said growth strengthened to 3.5 percent in 2025, but renewed pressure from higher global energy prices is expected to slow growth to 3.1 percent in 2026 and lift inflation to 4.5 percent, with public debt broadly stable at around 60 percent of GDP. Against that backdrop, the Board called for rebuilding policy buffers through credible fiscal consolidation and a sufficiently restrictive monetary stance to contain inflation and safeguard the exchange rate peg. Directors said reducing the fiscal deficit to 3.5 percent of GDP in 2026 would require credible, concrete measures, and supported a more ambitious medium term consolidation path anchored in the fiscal framework. Priorities include reducing tax expenditures, strengthening tax administration, containing wage and pension spending, improving the efficiency of public investment, keeping energy support temporary and targeted to vulnerable households, phasing out remaining tax reductions, and strengthening fiscal transparency and state-owned enterprise governance. The Fund also judged the financial system sound, but flagged rapid credit growth and rising real estate exposures as risks that may require further macroprudential action, alongside continued alignment of banking legislation with European Union standards, stronger AML/CFT implementation, and further reforms in labor markets, the energy sector, governance, anti-corruption, and state-owned enterprises. The authorities have consented to publication of the staff report, which will be released shortly, and the next Article IV consultation is expected on the standard 12-month cycle.
International Monetary Fund2026-06-08
International Monetary Fund completes North Macedonia Article IV consultation and urges tighter fiscal and monetary policy
The IMF Executive Board’s Article IV consultation for North Macedonia projects growth of 3.5 percent in 2025, slowing to 3.1 percent in 2026, inflation at 4.5 percent, and public debt near 60 percent of GDP. Directors urged rebuilding policy buffers via credible fiscal consolidation, cutting the deficit to 3.5 percent of GDP in 2026, maintaining a restrictive monetary stance to contain inflation and protect the exchange rate peg, and using macroprudential tools to curb rapid credit growth and real estate risks. They also called for stronger tax administration, tighter wage and pension control, more efficient public investment, targeted temporary energy support, better fiscal transparency and SOE governance, and further reforms in banking legislation, AML/CFT, labor markets, energy, governance, and anti-corruption.