SKOPJE, Jan. 29 (Xinhua) -- International Monetary Fund (IMF) executive board urged the Macedonian authorities to pursue the structural reform agenda to lift productivity growth and accelerate income convergence, with the prospect of opening accession negotiations with the European Union, IMF reported in a press release on Tuesday.
In the press release on the assessment made, the IMF directors welcomed the revival of reforms in Macedonia, following the restoration of political stability, which has resulted in renewed confidence and a pickup in economic activity.
"The real GDP growth in Macedonia experienced a modest rebound in the first three quarters of 2018 and is estimated to have reached 2 percent for the year, after nearly stalling in 2017," said the IMF directors.
According to IMF, private consumption in Macedonia, buoyed by employment and household credit growth and robust exports growth, boosted by solid foreign demand and revived metal sector, supported economic activity.
"Investment continued to contract due to the postponement of large infrastructure projects, falling construction and lingering uncertainties," reads the press release.
The overall fiscal deficit is expected to have marginally improved to 2.6 percent of GDP in 2018 mostly due to underexecution of capital spending.
Moreover, according to IMF assessment, public debt in Macedonia is estimated to have reached 50.7 percent of GDP at the end of 2018.
Directors noted that fiscal developments in the past decade have reduced policy space, and agreed that a gradual and steady fiscal consolidation toward a zero primary balance in the medium term is needed to put public debt on a firm downward trajectory.
The directors also encouraged further efforts to strengthen public financial management and increase fiscal transparency. They agreed that monetary policy has been appropriately accommodative against a background of moderate economic activity, low inflation, and favorable foreign exchange markets.
They noted that the banking system remains well capitalized, liquid, and profitable but that there are risks that should be closely monitored.
They said that active labor market policies should continue to target youth and the longterm unemployed but with a greater emphasis on building skills and facilitating education to work transition. The directors also welcomed ongoing efforts to raise female labor force participation.
The directors urged Macedonian authorities to maintain commitment to implementing key institutional reforms that strengthen governance, reduce corruption, and ensure an effective rule of law.
The IMF consults annually with each borrowing member government. Through these contacts, known as "Article IV Consultations," the IMF attempts to assess each country's economic health and to forestall future financial problems.