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                                                     Former Yugoslav Republic of Macedonia

                                                    Public Expenditure Policy Based Guarantee

                                                           SUMMARY OF DISCUSSION

                                                         Meeting of the Executive Directors

                                                                   January 8, 2013
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                                       Executive Directors approved the Public Expenditure Policy Based Guarantee for
                               the Former Yugoslav Republic of Macedonia (FYR Macedonia) in the amount of
                               EUR155 million (USD201.5 million equivalent) on the payment terms and conditions set
                               out in the President’s memorandum (R2012-0256).

                                       Directors endorsed the objective of the reform program supported by the
                               Guarantee which would ensure that fiscal policy, and public expenditure policy in
                               particular, supported an environment conducive to growth, more effective social
                               protection and improved service delivery. They commended the FYR Macedonia for
                               maintaining macroeconomic stability and laying the groundwork for economic recovery
                               while the country is adversely affected by the Euro zone economic challenges. Directors
                               also supported the use of the policy based guarantee to access international capital
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                               markets under more favorable terms and at a longer tenor. With regard to risks, Directors
                               noted the potential negative impact of the highly uncertain external economic
                               environment and the risk of stalled progress in the European Union integration which
                               could diminish political and popular support for essential reforms.
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                               
                               This summary is not an approved record.