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Global Economics

Macedonia Mulling an IMF Loan or Eurobond Issue, Gruevski Says


Macedonia is considering whether to take a low-interest loan from the International Monetary Fund or sell Eurobonds to cover next year's budget gap

(Bloomberg) -- Macedonia is considering whether to take a low-interest loan from the International Monetary Fund or sell Eurobonds to cover next year's budget gap, Finance Minister Nikola Gruevski said.

The former Yugoslav republic, which has been a European Union candidate since 2005, targets a budget deficit of 2.5 percent of gross domestic product this year and next, Gruevski said Nov. 23 in London at the Bloomberg Businessweek European Leadership Forum.

"It's good that we have a choice," Gruevski said. "To go with another Eurobond or with the IMF offer for a low interest-rate loan without preconditions. We'll make the decision in the next period."

Macedonia's government will decide depending on what happens on international markets in the coming months, Gruevski said. If the terms for a Eurobond sale are more favorable than the IMF loan, then it will sell bonds, he said.

"If the price of the Eurobonds goes up, we'll take the IMF loan," Gruevski said. The country has previously sold Eurobonds worth 175 million euros ($234.4 million), Gruevski said.

The Balkan nation of 2 million sees an economic expansion of 3.5 percent in 2011 after growth of between 1 percent and 2 percent this year, Gruevski said. Macedonia's economy contracted 0.6 percent in 2009, the worst in eight years as the global financial crisis cut lending and investment, he said.

Konstantinova is a reporter for Bloomberg News.

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