November 19, 2018 / 2:04 PM / 22 days ago

Macedonia should seize new EU prospect to reform, raise growth - IMF

FILE PHOTO: A general view of the city's skyline in Tetovo, Macedonia, October 29, 2018. REUTERS/Ognen Teofilovski

SARAJEVO (Reuters) - Macedonia should seize on the prospect of faster EU integration to push ahead with reforms that will enable stronger economic growth, the International Monetary Fund said on Monday.

Skopje’s agreement with Athens to change the country’s name to the Republic of North Macedonia is set to unblock its NATO and EU membership bids. Parliament is expected to pass constitutional changes and officially adopt the new name by the end of January the latest.

“A decisive push for structural reforms and opening of EU accession negotiations could boost growth through higher capital inflows and enhanced confidence,” the IMF said in a statement following its mission’s visit to the country.

The lender said Macedonia’s economy is projected to grow 2.8 percent in 2019, after 2 percent this year. Growth is expected to reach 3.5 percent over the medium term, based on planned infrastructure investment and stronger exports.

But renewed political uncertainty remains a key risk, the fund said. The government needs to address labour market weaknesses, such as skill shortages and labour migration, in a country with an official unemployment rate of 21 percent.

The IMF recommended reforms to strengthen governance, the rule of law and the judicial system, and tackle tax evasion.

While the banking sector is healthy, with banks well capitalized, liquid and profitable, the operational independence of the central bank must be ensured and supervision intensified for systematically important banks, the lender said.

Reporting by Daria Sito-Sucic; Editing by Peter Graff

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