The financial system is ready to deal with the corona crisis. The prudent regulation of financial regulators, in its major part in line with the European regulations, has contributed to the system being able to deal with the shock caused by the Covid-19 pandemic.
These are some of the conclusions derived at the Committee for Financial Stability, where the President of the Council of Experts of the Insurance Supervision Agency (ISA), Krste Shajnoski, participated as well.
The session was chaired by the Governor of the National Bank, Anita Angelovska-Bezoska, and was attended by the Minister of Finance, Nina Angelovska, the Chairperson of the Securities and Exchange Commission (SEC), Nora Aliti and the Chairman of the Council of Experts of the Agency for Supervision of Fully Funded Pension Insurance (MAPAS), Maksud Ali.
The President of the Council of Experts of ISA, Krste Shajnoski, referring to the stability of the insurance sector, stressed that it continues to function stably, and that it has identified the advantages and the risks that need to be monitored in order to maintain this trend.
He pointed out that so far ASO has adopted two sets of measures. The first set, among other things, required from the insurance undertakings to take all possible measures to maintain their capital and solvency in order to fully protect the rights of insureds.
“The adopted amendments to three of the rulebooks and one decision give additional regulatory space in the operation of insurance undertakings, which will inevitably have a positive effect for the end- users in terms of dynamics of premium payment and timely and objective claim payment. In addition, with these regulatory changes, it is possible for the insurance undertakings to provide solvency for their normal functioning and regular claim payment. ” said Shajnoski.
The Governor Anita Angelovska – Bezoska first referred to the current measures taken by the National Bank so far refering to the banking system, aiming to maintain and further strengthen its stability, but also to create preconditions for banks despite the different challenges they are facing in order to continue to provide the necessary credit support to the economy.
The focus was directed towards regulatory changes especially those which allow greater flexibility for banks in restructuring the loans in order to ease the financial burden on the borrowers. The measures aimed at releasing banks’ liquidity and channeling their work towards economy support through the reduced amount of offered treasury bills and the possibility of releasing the required reserve for the restructured and approved loans of affected sectors.
Temporary relief regarding regulatory reporting and supervisory access for banks were also explained by means of which the banks are enabled to focus more on the needs of the citizens and the companies.
As the Governor pointed out, when introducing each of the measures, the National Bank analyzes their impact not only on each bank separately, but also on the banking system as a whole, so that these measures are both effective in supporting the Macedonian economy and in maintaining the financial stability of the country.
“The latest stress -testing shows that both banks separately and the banking system as a whole, since last year, have displayed increased resistance to shocks. The system is healthy and stable, with high and stable liquidity and solvency, “said Angelovska-Bezoska.
The Minister of Finance, Nina Angelovska, pointed out that the coordination between the National Bank and the Ministry of Finance is crucial for the quality management of the current situation. In the part of measures referring to the financial system, certain activities have been undertaken pertaining to the financial and leasing companies directed towards introducing a measure to reduce the annuities of the credit users up to 70% of the annuity. This measure was taken in order to protect their sustainability and further operation on the market, as well as to protect the credit users. The measures taken by the real sector are aimed at maintaining and raising liquidity through two lines of interest-free loans, tax exemptions, financial support measures, and also regular activities such as rapid servicing of VAT refunds to companies.
“The VAT refund to companies for April alone is 38 million euros, which is 23% more than the same month last year. The VAT refund from the beginning of the year is 145 million euros, which is 16.7% more than the same period last year. Rapid VAT refunds are extremely important for maintaining the liquidity of companies, especially in these conditions of health issues and economic crisis. In addition, in order to act towards liquidity increase interest-free loans are activated from the lines “Covid 1” and “Covid 2″ of the Development Bank of North Macedonia, in the total amount of 13.7 million euros, which are of great importance because they target micro , small and medium enterprises. Commercial banks will soon be offering a line of cheap loans of 51 million euros. Furthermore, there is the measure for deferred payment of advance payments of corporate income tax and personal income tax for self-employed persons. Through the measure of financial support of 14,500 denars per employee for April and May, the amount of which is estimated at around 100 million euros, in addition to the basic purpose of paying salaries and preserving jobs, it is an additional large liquidity injection for the economy,” Angelovska said.
The President of the SEC, Nora Aliti, referred to the activities taken by the SEC in order to ensure continuity in the operations of the capital market and to stabilize the share price on the stock exchange market. “The total turnover realized on the Macedonian Stock Exchange as of April 28 amounts to approximately 78 million euros. “Compared to the main stock indexes in the region, the main stock market index MBI 10 has the lowest decline of 6.92%, compared to the value of the last trading day in 2019,” said Aliti.
She also pointed out that in order to increase transparency, the SEC asked the listed companies to act in accordance with the prefix “more than” net compliance and “more than” disclosure, after which the companies not only have started their timely reporting on SEI Net but also have they started to publish the assessments of the management on the impact of the corona crisis upon the company’s operations in the first quarter, as well as on future financial operations.
It was emphasized at the session that the impact of the Cavid-19 pandemic on world financial markets is expected to have only short-term effects on pension funds, given that they are long-term investors.
“Our pension funds are still in the process of accumulation and their gradual recovery and stabilization is expected, which would lead to good investment results that will offset the gains caused by the current market shocks,” said the President of the Council of Experts, Maxud Ali.
He underlined that more than 95% of the members of the second pension pillar are under the age of 50 and that short-term adverse effects of the corona crisis are expected to be neutralized in the future. As he pointed out, no significant changes and movements are expected in the structure of pension funds, which could significantly affect the financial stability.
At the session, it was concluded that the measures taken additionally guarantee that financial stability will be maintained. All financial regulators are eager and determined to further monitor in coordinated manned the current situation, ready whenever necessary to take further measures and activities in accordance with their competencies.