INTERVIEW-Macedonia c.bank sees zero growth this year-governor

Thu Nov 22, 2012 3:51pm GMT

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* Macedonia economy to stagnate in 2012, rise 2.6 pct in 2013 -cbank governor

* Exports to rise 10 pct next year thanks to new investment

* Macedonia negotiates 200-250 mln euro loan with World Bank

By Daria Sito-Sucic

SARAJEVO, Nov 22 (Reuters) - Macedonia's central bank has cut its 2012 economic growth forecast to zero from 2.4 percent because of the euro zone crisis but sees growth of 2.6 percent in 2013, its governor said on Thursday.

"The decline this year has been mainly influenced by the European crisis and recession," central bank chief Dimitar Bogov told Reuters on the sidelines of a financial conference.

The euro zone accounts for 60 percent of total exports from the landlocked former Yugoslav republic situated north of Greece.

However, Bogov said he expected the economy to pick up next year after the opening of automotive industry plants by U.S. and British investors and the launch of new infrastructure projects.

"We expect a major rise of exports, around 10 percent, as a result of these new capacities mainly in car industries," he said.

Macedonian exports were worth $4.4 billion exports in 2011 but only $2.9 billion for the first nine months of 2012.

Bogov said the central bank now expected external demand for 2012, as measured by the value of exports, to dip by 0.4 percent versus last year's level. Previously the bank forecast a 1.8 percent increase.

According to Bogov, the car industry accounts for 16.5 percent of Macedonian exports, and that the figure was expected to rise with new investment to around 40 percent in the next few years.

The governor said Macedonia's banking sector was well protected against deleveraging but the real sector has seen outflow of capital, mainly to neighbouring Greece.

"Greece was among major investors in the past decade but we now have outflow of capital from Macedonia to Greece, mainly from the non-financial sector," Bogov said.

He said Greek-owned companies operating in Macedonia were taking profits back to Greece through dividends and loans to their parent companies.

"We don't see deleveraging from the banking sector because we have ring-fencing," Bogov said. Banks in Macedonia have a limit of exposure of 10 percent of their total capital.

Bogov said the government was negotiating with the World Bank a new loan of 200-250 million euros, under which the World Bank would provide part of the loan and guarantee repayment for the part which Macedonia would seek from private banks.

"The government has already made offers to several banks, and if everything goes according to the plan we can expect the deal in January or February next year," he said.

Macedonia last year clinched a debut World Bank-guaranteed 130 million euro international syndicated loan with Citigroup and Deutsche Bank as arrangers.

It also has a 480 million euro precautionary loan with the International Monetary Fund, from which it has drawn 200 million euros.

Bogov said public debt currently amounted to 30 percent of Gross Domestic Product, steadily rising from 20 percent in 2008. The government targets a budget deficit of 3.5 percent of GDP in 2013, the same as this year, but wants the gap to narrow significantly in 2014, he said without elaborating. (Reporting By Daria Sito-Sucic; editing by Zoran Radosavljevic and Stephen Nisbet)

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