Bi-Weekly Report 30 April-13 May 2019


Increased uncertainty, following the decision to re-run Istanbul elections

State-owned banks prevented a decline in (FX-adjusted) lending activity in Q1:19

Deposit dollarization increased sharply in Q1:19, mainly due to heightening political and economic uncertainty ahead of the end-March local elections



The 4-quarter rolling budget deficit stood at 2.9% of GDP in Q1:19, unchanged compared with Q4:18, but still marginally close to the critical EU threshold of 3.0%

The FY:19 budget deficit could reach excessive levels



Higher grants from the EU and non-tax revenue pushed up (temporarily) the 4-quarter rolling budget surplus to 1.2% of GDP in Q1:19 from 0.1% in Q4:18

Bulgaria's already low gross public debt is set to decline further in FY:19



The fiscal balance improved slightly on an annual basis in Q1:19

The expected expansionary fiscal stance in FY:19 will not reverse the downward trend of the public debt-to-GDP ratio


North Macedonia

A long period of political turbulence ends with the election of a pro-European President

A strong rebound in lending to corporates pushed overall credit growth to a 13-quarter high of 9.0% y-o-y in Q1:19

Customer deposit growth maintained momentum in Q1:19 (up 9.6% y-o-y), underpinned by the corporate segment



The IMF mission concludes Albania's second Post-Programme Monitoring review

The current account deficit continued on its downward trend, for a 4th consecutive year, narrowing to a 12-year low of 6.7% of GDP in FY:18

The CAD is set to narrow further this year and be fully covered through large FDIs



The banking sector turned profitable for the first time in 8 years in FY:18, supported by a sharp decline in the cost of risk and an exceptional accounting gain related to the Hellenic Bank's acquisition of Cyprus Cooperative Bank's operations



The envisaged fiscal consolidation for this fiscal year -- 1.3 pps of GDP -- is on track

Fiscal consolidation to continue in FY:19/20 and meet its target of 1.3 pps of GDP


Appendix: Financial Markets

Bi-Weekly Report 30 April-13 May 2019