16th May 2022, Skopje – Budget restructuring will make room for potential measures, which will contribute to overcoming the ongoing crisis. Under the Supplementary Budgets, cuts will be made wherever possible, as Minister of Finance, Fatmir Besimi wrote in his article. He points out the ongoing crisis is an aftershock caused by the COVID-19 pandemic, and as such it should be weaker than the initial blow, as well as that the baseline scenarios of international financial organizations for this year envisage growth for the global and the national economies.
“Ministry of Finance is already consulting with the respective institutions about the degree of project implementation, as well as the execution of the current expenditures. What I can say with certainty as a Minister of Finance is that we will be extremely conservative, cuts will be made wherever possible. This will make more room for new actions and measures, which, given the situation, will probably be needed again”, Besimi wrote.
Minister of Finance pointed out that Government’s so-far response to the ongoing crisis is one of the strongest in the region.
As of the onset of the crisis, the so-far actions taken by the Government in the form of measures geared towards supporting the economy and the citizens, amounted to EUR 615 million. This amount is among the strongest responses to the crisis in the region. Croatia has allocated around EUR 635 million, Greece has allocated EUR 500 million, with Slovenia and Albania providing approximately EUR 200 million each, therefor, etc. As a Government, we aim to provide support to the citizens, above all the vulnerable categories, preserve the health of the economy and overcome this crisis, thereby getting back the economy to the growth trajectory, all to the end of attaining the desired goal – higher and sustainable economic growth rates – Minister Besimi pointed out in his article.
He underlined that the war in Ukraine has placed the policy makers in a crucial dilemma. Faced with crises, one after the other, as well as with the challenge to stay on the course with the set ambition for growth and development, the triangle inevitably imposes itself in achieving these three goals: managing the crisis, maintain the growth and fiscal consolidation.
“Both the International Monetary Fund and the World Bank suggest that fiscal policy is to be adjusted to the level of economic exposure to the war in Ukraine, the pandemic itself and the recovery of the economy. Due to the needed fiscal expansion in many countries during the pandemic, the debt has reached all-time record high level. Moreover, as a result to central banks’ response to the price pressures by tightening the monetary policy, governments are facing high interest rates on the capital markets. Still, the need for consolidation should not prevent the governments to give priority to the adequate supporting measures for the standard of the vulnerable categories, in particular those susceptible to the price pressures, and to measures to protect the economy, Minister of Finance wrote in his article.
He also underlined that from the point of view of public financial management, achieving the goals of the inevitable triangle necessitates budgetary interventions: on the expenditure side – expenditure cuts and their reprioritizing, on the revenue side – reforms for greater efficiency and consolidation, and in terms of financing – sustainable instruments.