Speaking about the Macedonian economy and countries from Western Balkan region in terms of facing the new global cycle, we have to mention some strong points and some still existing weaknesses. Generally, sound and stable banks have additionally strengthened due to the new capital requirements during the last several years, as well as due to the stronger efforts for better nonperforming loans management and resolution. Current account deficit region-wide has reduced as a result of the favorable price impact, in line with commodity prices slowdown and in the Macedonian case, due to the contribution of new companies with foreign capital that significantly changed our export structure into higher value added products. We have seen positive results in the dealing with unemployment as one of the main problems in the region. In Macedonia, it has significantly reduced due to new jobs creation, measures against informal economy and active labor market measures. However, the countries of the region should continue strengthening their potential growth, productivity and competitiveness. The total factor productivity growth in many emerging economies registered a slowdown during the crisis mainly reflecting the slower growth and technological progress in advanced economies. However, the emerging economies must strengthen their activities towards higher efficiency on all levels of operation, building institutional capacity and further implementation of structural reforms that all together should improve total factor productivity contribution and boost the overall convergence towards advanced economies.
Accordingly, initiatives are underway to assign ratings to banks based on a combination of quantitative and qualitative indicators that will assess their efficiency and sustainability. During the course of this year, we expect to finalise the bank examination  methodology based on the Bank Sustainability Risk Index (BSRI) to facilitate the transition from an annual ‘on-site’ examination approach to a ‘risk-based’ supervision approach. Further, we intend to incorporate BSRI to examination reports of all licensed banks and assign a supervisory rating grade for banks with effect from 2019, on a staggered basis. Banks have also been engaged in the implementation of Basel III capital standards and implementation is to be completed by 1 January 2019. While banks have been working on the improvement of their capital adequacy ratios, a capital conservation buffer and a surcharge on domestic systemically important banks have been imposed to ensure that banks actively build capital buffers. The direction to increase the existing minimum capital requirements was targeted at improving the quality of capital to ensure that these buffers are of a more resilient nature. This will help safeguard the banking sector during periods of excessive credit growth and/or adverse economic conditions. It will also minimise the systemic risk arising from the interconnectedness among banks. Under the Basel III guidelines, banks will also be required to comply with guidelines regarding a Net Stable Funding Ratio with due consideration to the composition of their assets and off-balance sheet exposures.