Inflation won't rise, Denar to remain stable
Saturday, 08 March 2008
Image There are no conditions for further rising of inflation at the demand side, and the exchange rate of Denar to the Euro is guaranteed to remain unchanged by the end of the year.

The minister of finance Trajko Slaveski expressed this assurance at a press conference convened at journalist's request after the information that the inflation rate in the past month reached 9,6 percent.

He pointed out that the Government doesn't underestimate the phenomenon of the global rise of inflation and undertakes active measures to restrain it in Macedonia.

This is a one-time increase of prices, a phenomenon that is under control and those that control the macro-economic policy are fully coordinated in order to protect the standard of living of Macedonian citizens", Slaveski said.

He pointed out that the fiscal policy aids the monetary policy by being restrictive, which can be seen in the budget suficits realized.

Slaveski informed that in 2007, instead of the projected budget deficit of one percent in regards to the GDP, a suficit of 0,6 percent was realized, and the same trend continued in the first two months of 2008, when more income than expenses were realized.

The finance ministers asked increase of some prices to be distinguished from the general rise of prices.

"Some manufacturers could easily be confused and think that the increase of some prices means general rise of prices. Also, some manufacturers could be fooled into wanting to modify the prices upwards", Slaveski said.

He warned that harsh monetary measures are danger to economic growth, and overly restrictiveness could lead to choking of the economy.

"It is very important that the National Bank of Macedonia (NBM), as one who controls the monetary policy - of course, in coordination with the Government and with those who control the fiscal policy - knows how to set exact balance to contribute towards preventing further price rise, but, on the other hand, not to choke the economy", Slaveski said.

According to him, care should be taken, and the fight against inflation of certain group of products must not turn into deflation.

"Macedonia least needs its economy to be pushed into recession. The two goals should be achieved, to maintain economic growth and to establish control over the prices", Slaveski claims.

He pointed out that there is no danger of disrupting the ratio of the Denar's exchange rate, because in February there was no need for NBM to intervene to protect the Denar exchange rate, even with a single Euro.

"I want to send message to Macedonian citizens, people with bank savings and investors, that the exchange rate of Denar will remain unchanged - 61,5 Denars for one Euro - until 31.12.2008, by when we have projected the policies for this year", Slaveski concluded.

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