Country Risk – Conditions and Trends in Macedonia, Proposals for Reduction in Conditions of Unstable Environment

AbstractHaving in mind globalization and financial integration, country risk analysis has become extremely important for the international creditors and investors. This paper briefly discusses the concepts and definitions, its basic components, and presents a survey of some quantitative methods that are used to address various issues related to country risk. It also gives a summary review of selected key elements needed in assessing the country risk. Further the paper stress some of the basic indicators for assessment of the country risk (The Debt Service Ratio, Import Ratio, Investment Ratio, VAREX-Variance of Export Revenue, Domestic Money Supply Growth), and their indicative calculation for Macedonia, based on relevant available data. Than follows an overview of basic macroeconomic indicators in Macedonia that are included in the calculation of country risk, and through which an attempt is made to monitor and predict changes in risk exposure of Macedonia in the 2007-2014 period. Proposals for possible reduction of the Macedonia risk exposure in terms of unstable environment are moving toward determination of the underlying strengths and weaknesses of the Macedonian economy, and in direction of developing strategies for promotion of the advantages and reducing the vulnerabilities. That is in order to change the perception of Macedonia in the immediate and wider environment and to attract foreign direct investments and various other forms of investment in the country. Shortly, the goal of the paper is to point the importance of country risk assessment, to determine and compute the basic indicators of country risk in Macedonia, and having in mind those indicators and main macroeconomic indicators to suggest some strategies for its reduction