23rd November 2022, Skopje – More funds for pension indexation and wage harmonization with the costs of living, funds pertaining to next year’s anti-crisis measures, as well as strong development component given the scaled-up capital investments by 50%, projected under the 2023 Draft Budget. However, when guided by the golden rule of government spending, with the borrowing intended solely for investments, as per the 2023 Budget, we remain committed to gradual fiscal consolidation. This was pointed out by Minister of Finance, Fatmir Besimi in his presentation before the Financing and Budget Commission in the Parliament building of the Republic of Macedonia.
“2023 Draft Budget incorporates four main goals: coping with the consequences of the energy crisis and the rising inflation: continuation of the fiscal consolidation and reinforced fiscal sustainability; providing conditions for economic recovery and sustainable economic growth and smooth financing of the basic functions of the state and support for reforms pertaining to the judiciary and the EU integration (EU and NATO),” Minister of Finance emphasized.
Under the 2023 Draft Budget, total revenues are projected in the amount of Denar 282.1 billion, being higher by 14.8% compared to 2022, with the expenditures being projected in the amount of Denar 324.8 billion, or by 12.6% higher in relation to 2022. Budget deficit is projected at 4.6% of GDP or Denar 42.7 billion.
“2023 Budget revenue projections are based upon revenue performance throughout 2022, expectations for economic growth and improved efficiency and effectiveness of the public revenue collection system. For the purpose of attaining the revenue projections, measures and activities have been planned, geared towards: enhancing the existing tax regulations, reducing the tax evasion, introducing advanced technologies, modernizing and automating the working processes, strengthening the revenue collection capacities of the institutions, increased and more efficient tax revenue collection, as well as strengthening the institutional coordination”, Minister pointed out.
Expenditures projected under the next year’s Budget will provide for fiscal consolidation, economic recovery and accelerated growth, continuous implementation of disciplined budget policy and enhanced public spending control, support for the domestic economy, the private sector and the citizens, intensified and speeded up infrastructure project implementation, attraction of foreign investments and innovations of domestic companies, as well as support for the EU integration process, and the obligations deriving from the NATO membership and similar.
The 2023 projected deficit in the amount of Denar 42.7 billion, as well as the debt repayment amounting to Denar 52.1 billion (Denar 36.5 billion out of which as external debt and Denar 15.6 billion as domestic debt) will be financed via domestic and foreign borrowing.
“In the medium term, despite the present risks and uncertainty, fiscal policy will remain focused on further consolidation, restructuring and optimization of public revenues and expenditures, coupled with gradual reduction of the budget deficit and the public debt, boosting the economic activity through capital expenditures and infrastructure investments, as well as improving the doing business conditions and job creation. Redefined budget framework will provide for a timely and proper fiscal response to the deteriorated global macroeconomic context and sustainable public finances amid increased uncertainty. Budget support to cushion the price shocks and subsidize the energy and electricity system are aimed at preserving both the living standard of the citizens and the companies’ liquidity”, Besimi pointed out.
Minister also pointed out that execution of capital expenditures and implementation of infrastructure projects in the priority areas, in line with the government policies, will generate positive multiplicative effects on the medium-term economic growth and accelerate the real economic convergence towards the economy of the European Union. Preserving macroeconomic stability and fiscal sustainability will provide for creating more favourable conditions for economic activity intensification.