2013年-世界发展银行全球_FYR_Macedonia_Policy-Based_Guarantee___Supporting_the_Development_Agenda_and_Strengthening_Access_to_Capital_Markets_4页_1mb

FYR Macedonia Policy-Based Guarantee Summary

Core Content

The document outlines the challenges faced by FYR Macedonia in accessing international capital markets during the global economic turmoil, particularly the Eurozone crisis, and how the World Bank's Policy-Based Guarantee (PBG) helped the country overcome these challenges.

Key Messages

• Global Economic Turmoil: The ongoing economic instability has limited access to capital markets, with investors favoring only the safest assets.
• Impact on Small Economies: Small, open, and developing economies like FYR Macedonia are particularly affected by this market shift.
• Fiscal and Structural Fundamentals: FYR Macedonia has a strong track record in macroeconomic management and structural reforms, giving it some fiscal space to respond to the crisis.
• PBG as a Solution: The World Bank's PBG instrument helped the country access capital markets at competitive terms, even in a highly constrained environment.

Main Viewpoints

• Economic Integration with the EU: FYR Macedonia is closely integrated with the EU, making it vulnerable to external shocks, especially from the Eurozone.
• Macroeconomic Stability: The country has maintained macroeconomic stability for almost two decades, with low public debt and manageable fiscal deficits.
• Structural Reforms: FYR Macedonia has implemented reforms in various areas, including improving the investment climate, promoting competition, and strengthening legal frameworks.
• Social Reforms: The government has introduced measures to improve social protection and increase formal labor market participation, such as reforms to the health insurance system and the introduction of an income test.

Key Information

FYR Macedonia's Economic Situation

• Growth Performance: The economy was affected by the global financial crisis and the subsequent Eurozone turmoil, with growth weakening to less than 1% in 2011.
• Fiscal Space: Despite the challenges, the country had some fiscal space to respond to the global slowdown.
• Public Debt: Public debt stood at about 29% of GDP, with fiscal deficits typically under 3% of GDP.

Policy-Based Guarantee (PBG)

• Purpose: The PBG was used to support the country's development agenda and improve access to capital markets.
• Structure: The PBG allowed the government to borrow €130 million at highly competitive terms, with about 65% of the debt service guaranteed by the IBRD.
• Benefits:
  • Improved Market Access: Enabled the country to borrow from the international bank loan market, which it had not done before.
  • Better Borrowing Terms: Extended maturity to five years (50% longer than previous borrowings) and reduced interest rates significantly.
  • Expanded Investor Base: Catalyzed interest from large foreign banks and financial institutions.
  • Diversified Financing Sources: Reduced reliance on a limited number of market sources.
  • Budgetary Savings: Estimated savings of €25 million or about 0.3% of GDP.

PBG vs. Traditional DPL

• Efficiency: Compared to a traditional Development Policy Loan (DPL), the PBG was more efficient in the specific context of FYR Macedonia.
• Leverage: The PBG allowed the World Bank to provide more financing than a DPL, thanks to the 4:1 exposure treatment.
• Resource Recycling: The shorter maturity of the PBG loan enabled faster recycling of IBRD capital, making it available for other development initiatives.

Conclusion

The PBG was successful in supporting FYR Macedonia's reform program and mitigating external risks due to the Eurozone turmoil. It allowed the country to access capital markets at favorable terms when commercial funding was virtually closed, demonstrating the effectiveness of the World Bank's guarantee instrument in enhancing market access and financial efficiency.

About the Author

Evgenij Najdov is a Senior Economist in the Poverty Reduction and Economic Management Sector Unit of the Europe and Central Asia Region of the World Bank.