The debts of the Macedonian citizens to the banks, in absolute amount, are lower than those of the EU citizens. But in terms of assets, they are significantly higher. The interest rates that Macedonians receive from the banks are the same as in the EU, but the interest rates they pay to the banks are much higher. The poor are much more indebted than the rich.

Branimir Jovanovic

What is the indebtedness of the citizens in Macedonia?

Macedonian citizens in 2020 owed to banks and other financial institutions a total of 3.3 billion euros. That is, each resident, on average, owed 1579 euros. During the pandemic, i.e. in 2020, the debt increased by 270 million euros, similar to previous years. From 2017 to 2020, the debt has increased by a total of 810 million euros.

However, in addition to having loans to banks, Macedonian citizens also have savings, i.e. financial assets, and they are approximately twice as high as debts. The total financial assets of Macedonian citizens in 2020, including bank deposits, savings in pension funds and shares, amounted to 7.4 billion euros. They also have an upward trend, so from 2017 to 2020 they grew by a total of 1.6 billion euros.

The net indebtedness of the Macedonian citizens, i.e. the ratio between debts and assets, in 2020 was 44.4%, which is a small increase compared to previous years. In 2017, net indebtedness was 42.7%, which means that the indebtedness of Macedonian citizens is growing faster than their assets are growing.

What is the indebtedness in the EU?

The indebtedness of EU citizens in 2019 amounted to 19,091 euros per capita, which is 12 times more than in Macedonia. But there, the funds are much higher – in 2019, they amounted to 67,189 euros per capita. As a percentage of assets, the debt is 28.4%, which is significantly lower than the Macedonian 44.4%. In only three EU countries the indebtedness of the citizens to the banks is higher than the one in Macedonia (in net amount).

 What are the interest rates on the debt?

In addition to the level of indebtedness, the interest paid on the debt is also important. Since interest rates vary depending on the type of loan (its purpose, maturity, currency, etc.), for illustration, we will take housing loans in euros. The average interest rate on newly approved housing loans in Euro in July 2021 in Macedonia was 3.19% per year. In the EU, the average interest rate on home loans was 1.3%, or almost 2 percentage points lower.

On the other hand, the interest rates that banks pay to citizens for their savings are almost the same in Macedonia and the EU. The average interest rate on new euro deposits in Macedonia in July 2021 was 0.37%. In the EU, the average interest rate on deposits was 0.23%, i.e. only 0.14 percentage points lower than in Macedonia.

So, the banks in Macedonia pay to the depositors almost the same interest rates as the banks in the EU pay, but charge them several times more for the loans than the banks in the EU charge.

Who owes, and to whom?

But the main question when it comes to indebtedness is – who owes and to whom they owe? Because, not all citizens in a country are the same according to their economic power. State-level averages are always “sarma”, that is, a combination of rice, cabbage and meat, especially when it comes to finances.

Unfortunately, such disaggregated data are not available for Macedonia, but they exist for the EU, and what can be seen is, quite expected, that the biggest debtors are the poorest, and the biggest creditors are the richest. Thus, for 2017, the lower quintile of households in the EU (i.e. the poorest 20%) had a debt-to-assets ratio of 113.3%, i.e. they owed more than they owned. The upper quintile (i.e. the richest 20%) had a debt / asset ratio of only 8.3%, i.e. they had 12 times more assets than debt.

Although such data do not exist for Macedonia, with a great deal of certainty it can be argued that the situation is even worse, given the much more pronounced social differences than in the EU.


Branimir Jovanovic, Vienna Institute for International Economic Studies