Economy and Banking Sector of Macedonia

Macedonia (officially the Republic of Macedonia) is a country in Southeastern Europe (Balkan peninsula). Macedonia is a candidate for joining the European Union since 2004.

Main sectors of Macedonian economy are manufacturing (including mining and construction), trade, transportation, accommodation and agriculture.

Macedonian banking sector is highly concentrated and is dominated by foreign-controlled banks. Most of the banks in Macedonia operate as universal banks.

Location Southeastern Europe
Population (2016)2 071 278 ↑ (0.00%)
EU Status not a member, candidate since 2004
Economy
National Currency MKD (Macedonian denar)
GDP 
    Nominal GDP (2015)9.1 bln EUR ↑ (+0.05%)
    Nominal GDP per Capita (2013)3 900 EUR ↑ (+0.05%)
    Real GDP Growth (2015)3.7 % ↑ (2014: 3.6 %)
Inflation Rate 
    CPI, Year Average (2014)-0.1 % ↓ (2013: 2.8 %)
Unemployment Rate (2014)28.0 % ↓ (2013: 29.0 %)
Credit Ratings (as of Sep 2016)
    FitchBB speculative, outlook negative
    Moody's-
    S&PBB- non-investment grade speculative
Taxation
Double Taxation Agreements 27 signed agreements
Information Exchange 
    Automatic Exchange no commitment to start
FATCA no IGA
Banking Sector
Financial Market Development 4.2 (max 7.0) rank: 57th out of 138 countries
    Banks' Soundness 5.3 (max 7.0) rank: 52nd out of 138 countries
Deposit Guarantee Scheme 
    Maximum Protected Amount 30 000 EUR
Banking Sector Structure 
    Number of Banks16
Major Banks
 Komercijalna Banka AD Skopje  Univerzalna Investiciona Banka AD Skopje
 Stopanska Banka AD Skopje  ProCredit Bank AD Skopje
 NLB Tutunska Banka AD Skopje  Halk Bank AD Skopje
 Ohridska Banka AD Skopje
 List of Banks in Macedonia

Macedonian Economy

GDP

According to Eurostat, nominal GDP of Macedonia in 2015 was 9.1 bln EUR.

Macedonia outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.6% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 3.7% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Macedonia.
Chart 1. Real GDP Growth in Macedonia. Source: Eurostat, International Monetary Fund.

In 2013, nominal GDP per capita in Macedonia was 3 900 EUR.

Macedonia has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -53.9% over the past 10 years (2003 - 2013). GDP per capita at PPP in 2014 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Macedonia; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Macedonia; European Union = 100.
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Inflation Rate

According to , inflation rate in Macedonia in 2014 expressed as annual percentages of average consumer prices was -0.1% which was below the Euro Area average (0.4%) and below the European Union average (0.6%). Inflation rates in 2015 - 2021 are IMF's estimates.

Inflation Rate in Macedonia.
Chart 3. Inflation Rate in Macedonia. Source: International Monetary Fund.
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Taxation in Macedonia

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Macedonia signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Austria
 Belgium
 Bulgaria
 Croatia
 Czech Republic
 Denmark
 Estonia
 Finland
 France
 Germany
 Hungary
 Ireland
 Italy
 Latvia
 Lithuania
 Luxembourg (Jul 2013)
 Netherlands
 Norway
 Poland
 Romania
 Slovakia
 Slovenia
 Spain
 Sweden
 Switzerland
 United Kingdom

There are also several agreements between Macedonia and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Belgium
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Macedonia didn't sign the automatic information exchange agreement and didn't indicate a timeline of the start of the automatic information exchange.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Although there is no IGA between Macedonia and the United States, banking and financial entities operating in Macedonia have reached the agreement with the IRS to participate in FATCA on an individual basis.

Further Information:
FATCA and European countries

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Macedonian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Macedonia is scored 4.2 out of maximum 7.0 and ranked 57th out of 138 analysed economies. Soundness of banks is scored 5.3 bringing Macedonia into the 52nd place, trustworthiness and confidence of financial market is scored 4.5 (46th place).

Financial Market Development in Macedonia.
Chart 4. Financial Market Development in Macedonia. Source: WEF.
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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Macedonia are summarised in Table 1.

Scheme Participantsall credit institutions operating in Macedonia (including branches of foreign banks), branches of Macedonian banks abroad
Eligible Depositorsnatural persons
Covered Accountsall deposit accounts
Covered Currenciesall
Maximum Protected Amount30 000 EUR
Paid In CurrencyMKD

Table 1. Deposit guarantee scheme in Macedonia.

Further Information:
Deposit Guarantee Schemes in Europe

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Banking Sector Structure

Currently there are 16 credit institutions operating in Macedonia.

All the credit institutions operating in Macedonia can be classified into several categories. Table 2 summarises the number of banks in each category.

CategoryNumber of Banks
Banks15
Central banks1

Table 2. Number of banks by category in Macedonia.

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