Skopje, 10th November 2014 (MIA) – Macedonia will end the year with a growth achieved above the regional average. The economy will grow by around 3.5% in 2014, supported by the strong exports and the higher private consumption.
This are the findings of the IMF Mission, which stayed Macedonia for the past two weeks, announced at the joint press conference with the Deputy Prime Minister and Minister of Finance, Zoran Stavreski, and NBRM Governor, Dimitar Bogov.
– Growth this year is above the regional averages and it is projected at around 3.5%, to slightly strengthen next year. It is balanced and reflects the strong export and the higher private consumption. Domestic investments are supported by public infrastructure projects, while private consumption is also higher as a result of the increased credit growth, employment growth, rather than the weak domestic demand, IMF Chief of Mission, Ivanna Vladkova Hollar, said.
Minister Stavreski underlined that growth of Macedonian economy was solid in the first nine month, being a growth which reflected the sound basis of the policies contributing for such growth. – Growth is mainly result of the intensified capital investments from the Budget of the Republic of Macedonia and the attracting of foreign investments, which have significantly increased the potential for high value-added production and contributed to export increase, as well as job creation, Stavreski said.
– We expect for the growth to be between 3.5% and 3.8% in 2014, which is one of the highest growth rates in Europe, maybe the highest for the next two years as well. We expect a high economic growth, which will reach around 4% and more than 4%, should the world economy not face any new recession developments, Minister Stavreski said.
He pointed out that fiscal policy was implemented and expenditures were executed in line with the projections, and budget revenues performance was as planned.
– We manage, with good coordination between the fiscal and the monetary policies, to create good climate to support the domestic companies. The support is reflected in the higher credit growth, coupled with other measures, so as for the Macedonian business sector to achieve better results than the others in the region, Stavreski stated.
He expects for the good coordination to continue, currency stability to be maintained, as well as possibility for the companies to obtain credits they need for investments to be provided.
Government debt, according to him, is at the lowest level in the region and among the lower in Europe, and it will remain at that level. Envisaged fiscal consolidation measures are aimed thereto, gradual reduction of the budget deficit is envisaged in the coming period. – Such reduction, as the IMF recommended, will be implemented with a pace so as not to distort the growth, Stavreski pointed out.
To the end of further strengthening of transparency and strengthening the fiscal discipline, constitutional amendments will be introduced to fix the fiscal rules, i.e. to position the maximum level of both the budget deficit and the public debt.
According to the IMF Mission, stronger consolidation is needed. Vladkova Hollar pointed out that the new 2015 – 217 Fiscal Strategy includes deficit targets higher than the ones in the previous Strategy, meaning that stabilization of public debt will occur latter and at a higher level.
She pointed out three IMF recommendations. They, as she said, refer to the following. If revenue performance is better than the projections, they should be saved, rather than spent. If revenue performance is lower, there should be a contingency plan so as to determine the priorities for spending cuts, as well as, by the time the planned fiscal rule is established, the public debt to be kept below the planned 60 percentage of GDP threshold.
– This threshold is a ceiling, rather than a target, which means that the policy should be aimed at keeping the debt comfortably below that level in normal times, Vladkova Hollar underlined.
With respect to public debt management, she pointed out that continuous close cooperation between the Ministry of Finance and the Central Bank is needed, since, as she said, Government external borrowing has implications for the monetary policy through its impact on domestic liquidity and the level of foreign exchange reserves.
– We recommend continued close cooperation between the fiscal and the monetary authorities so as for the public debt management strategy to accordingly take into account the factors affecting the external sustainability. We recommend for the public debt management strategy to include a broader definition of public sector debt, including all borrowing by state-owned enterprises. In this respect, we welcome the recent step undertaken by the authorities to publish the public debt data, IMF Chief of Mission said.
She added that there were some areas in which additional activities would contribute to increased productive potential of the economy aimed at reducing unemployment and more inclusive growth.