S&P rates Macedonia

Standard & Poor's said it assigned its BB/B foreign currency and BB+/B local currency sovereign credit ratings to the Republic of Macedonia. The outlook is positive.

"The ratings on Macedonia are constrained by the ongoing importance of inter-ethnic relations, structural and governance issues in the economy, and a government expenditure structure that leaves little flexibility to rein in spending," said S&P credit analyst Kai Stukenbrock.

S&P said the ratings are supported by rapid progress toward political stability, driven by the Ohrid Framework Agreement that ended the inter-ethnic violence of 2001, and the prospect of EU membership. Inter-ethnic relations will still continue to play an important role in determining political stability, but the commitment of the international community to stability in Macedonia remains strong, and would have a moderating influence should tensions increase again. Moreover, the ratings are underpinned by macroeconomic stability and moderate levels of external debt.

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