S&P forecasts no direct impact on FYROM ratings

Standard & Poor’s Ratings Services said that the political crisis in the government of the former Yugoslav Republic of Macedonia (FYROM) would have no immediate effect on either its ratings or outlook on the sovereign but worsening interethnic relations would lead to mounting pressures on FYROM ratings. On March 13, 2008, the Democratic Party of Albanians left the 18-month old government of Prime Minister Nikola Gruevski. The party’s departure was triggered by the government’s alleged failure to back laws allowing greater use of the Albanian language and national symbols in the ethnically divided country (where ethnic Albanians account for 25 percent of the population), its reluctance to immediately recognize an independent Kosovo, and its reluctance to provide benefits to veterans of the 2001 ethnic Albanian insurgency. A subsequent collapse of the government could reignite dormant tensions between ethnic Macedonians and the Albanian minority. FYROM’s sovereign ratings and stable outlook are based on the continued normalization of interethnic relations. «Further significant deterioration of Macedonian-Albanian relations would put downward pressure on the ratings, undermining prospects for structural reforms and prudent macroeconomic policies. It could also cause further delays to the initiation of formal EU accession negotiations beyond 2009,» S&P said.

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