Empirical research shows that compared with other developing countries the transition countries are characterized by a relatively higher current account deficit. Certain research of the IMF 1 shows that for the period 1995-2004 the average current account deficit for the countries from Central and Eastern Europe amounted to 5.5 percent of GDP 2 , compared to the deficit of 2.2 percent of GDP in the countries from Latin America and to the current account surplus of 3 percent of GDP in the Asian countries. Simultaneously with the larger current account deficit, the first two groups of countries also registered a significant increase in their external indebtedness, i.e. a fast growth of their net foreign liabilities. Ladies and Gentlemen, It is a fact that the current account deficit is a variable of great importance for the monetary policy conduct. Nevertheless, it is also a fact that the control over the current account balance could not, neither it is done only through the monetary policy measures, which without any doubt puts the central bank in a delicate position when the external position is deteriorated, since the current account is a function of the interactions between the private sector entities' decisions and the decisions of the economic policy decision-makers. Therefore, the identification of the factors that cause these movements and the implications for the monetary policy conduct are essential. The analyses of the main features of the balance of payments in transition countries indicate that the key and dominant factor for the external disequilibrium is high trade deficit.
The intensification of the process of financial integration and liberalization of the capital transactions as global processes, have set new challenges for the countries in transition, which reflected not only in the balance of payments capital account, but in return in the balance of payments current account, as well as the exchange rate regime. Positive macroeconomic performances of the countries, as well as the fast global growth, low rate of inflation and historically low level of the interest rates in the developed countries are factors that caused high capital inflow in the transition countries and produced significant implications for the conduct of monetary policy in the transition countries. Having in mind that the majority of them are characterized by fixed exchange rate regimes, high capital inflows resulted in appreciation of the real exchange rate and further deepening of the trade deficit, and consequently of the deficit in the balance of payments current account. The process was intensified additionally by the higher productivity growth in the tradable goods through the so-called Balassa Samuelson effect, which according to certain estimates increased the appreciation of the currency on 4 average by 1.5 to 2.5 percentage points . Experiences of more developed transition countries are of special importance for the future challenges of the Republic of Macedonia, as a part of the increasingly intensifying process of EU integration.