ECONOMY

S&P leaves FYROM rating unchanged

Standard & Poor’s Ratings Services said today that the EU’s decision not to recommend a date for accession talks for the Former Yugoslav Republic of Macedonia (foreign currency BB+/Stable/B; local currency BBB-/Stable/A-3) has no ratings impact. This was expected, although FYROM is an EU-candidate country. It had already incorporated it at the current rating level (see «Macedonia L-T FC/LC Sovereign Ratings Affirmed At ‘BB+/BBB-‘ On Prudent Policy; Outlook Stable,» published on Ratings Direct, Standard & Poor’s Web-based credit analysis system, on May 29, 2007). Factors constraining the ratings on FYROM include structural rigidities and residual political tensions among political parties. EU candidacy status was granted in December 2005 after the country made rapid progress toward political and macroeconomic stability. While this supports the prospect of EU membership after the turn of the decade, accelerating this time line to accede before 2009 would act as a positive credit factor. Further structural reforms, and improved political stability and interethnic relations, are needed to support positive rating actions.