New 2009 Supplementary Budget includes cuts of both the revenues and the expenditures by 3.2%.

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According to the proposal adopted at yesterday’s Government session, to be also adopted by the Parliament, revenues amount to Denar 138,459 billion and expenditures account for Denar 149.5 billion. Deficit remains within the previous projections, with a certain reduction by around Denar 300 million, i.e. it will account for 2.8% of GDP. Projections, as Vice Prime Minister and Minister of Finance, Zoran Stavreski, said at today’s press conference, are made on the basis of budget performance in the first months this year and the forecasts for the coming four months.

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– Expenditures are, to a great extent adjusted, so as to adjust the government spending, and the spending in the public sector as a whole, to the developments in the real economy, said Minister Satvreski. Savings are created in all categories on the expenditure side, whereby cuts were mostly made at less productive items and projects with high import component so as to maintain macroeconomic stability and BOP stability. However, as Stavreski explained, on the other hand, we strive for keeping the dynamics of the projects that are important for the economic activity.

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Supplementary Budget envisages reduction of the salaries and wages item by Denar 684 million or by 3% in relation to the already supplemented budget. This item is reduced by 7 percentage points in the new Supplementary Budget compared to the initial 2009 Budget. There are also cuts at the per diem and official trips item, and such expenditures at some budget users are reduced by even 50%, while capital expenditures are reduced by 18%. Social transfers remain unchanged, so pension payments and other social allowances will be executed on regular basis.

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With respect to the envisaged projects, procurement of buses for city transportation in Skopje is postponed, and there will be slower dynamics in the realization of certain projects such as the laboratories projects in educational and scientific institutions, VMRO Museum, Vodno Cable Car, etc.

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Supplementary Budget envisages additional funds for certain projects, as follows: Denar 360 million for procurement of fire-fighting planes, Denar 60 million for procurement of six fire-fighting vehicles, as well as funds for procurement of pills and vaccines against the H1N1 virus.

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Stavreski pointed out that funds are provided for covering the deficit, whereby financing through treasury bills will be reduced. Funds from the Eurobond and from foreign credits will also be used.

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Government, with the latest amendments to the Budget, envisages GDP rate of – 0.6% annually, with 0.1% inflation. Minister Stavreski said that it was expected for Macedonia to exit the recession in the fourth quarter, and to slowly start to recover. He also added that there is data showing increase in the orders at the enterprises.

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When asked whether there will be a need for an arrangement with the IMF, Vice Prime Minister Stavreski pointed out that at the moment there was no need for concluding an arrangement and that there were no statistical data showing that the situation in the countries having concluded an arrangement with the IMF was better. He also added that Macedonia, as an IMF member, has funds available for the quota in the amount of US$ 88 million, and these funds could be withdrawn any time if need arises. According to him, there is not need to be hasty in spending these funds.

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With respect to the funds from the European Investment Bank intended for small- and medium-sized enterprises, as one of the anti-crisis government measures, Stavreski emphasized that it was expected for the agreements with the commercial banks for allocation of funds to be signed by the end of the week. Banks, at the meeting held last week, expressed their readiness to participate in the project, whereby 75% of the funds for each separate project are provided from the European Investment Bank, and 25% are provided from the banks. Lending interest rate is 6%.(MIA)

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