Skopje, 13th October 2015 (MIA) – 2016 Budget will provide for historically the lowest level of investments, higher pensions and higher social assistance, while budget deficit will be reduced from 3.6% to 3.2% of GDP, Deputy Prime Minister and Minister of Finance Zoran Stavreski said.

When explaining the 2016 Draft Budget to the members of the Financing and Budget Commission, Stavreski said that the capital investments were projected at Denar 25,092 million, as a development budget component that will directly contribute to intensifying the economic activity in 2016. Capital investments for next year, according to Stavreski, are by Denar 2,858 million higher than those in 2015, being an increase by 12.9%. Investments are intended for significant projects as regards road infrastructure, whereby Denar 250 million is planned for roads, while Denar 2,203 million is planned for the railway infrastructure.

We will resume with the policies aimed at taking care of the socially vulnerable categories, mainly the social assistance beneficiaries and the pensioners, as well as the farmers, for whom, higher funds are envisaged under the 2016 Budget, as well as additional increase of the social assistance and the pensions, Stavreski said.

He said that in the period January-August this year, total budget revenues were over-performed by Denar 12.304 billion or by 13.4% compared to 2014 in the same period. Budget revenues, in which tax revenues play very significant role, remained high in September as well, for which we have preliminary data, and I may say that the tax revenues in the same period, in the first eight months, were higher by Denar 7.711 billion or by 14.4% compared to the previous year, Stavreski said.

As regards total revenues, as he said, certain taxes experienced divergent trends, however, the overall situation is stable. This shows that the collection of budget revenues was better than the expectations, while the execution of the expenditures was in line with the projections, Stavreski said.

According to him, this year will end with firm budget position, good budget liquidity and timely and regular settlement of all budget liabilities. This creates sound basis for entering 2016 with a good budget position, as well as a balance and dynamics that will provide for realizing the expectations for 2016, that being reducing the budget deficit from 3.6% to 3.2% of GDP, Stavreski said.

This, as he explained, is significant since it is a step forward in realizing the Three-Year Fiscal Strategy of the Government of the Republic of Macedonia, envisaging gradual public finance consolidation, whereby, the budget deficit will be both reduced below 3% in 2017 and preserved at that level further on.

According to Stavreski, as for the budget revenues, there will be no need for adjustments as regards the possible increase of taxes or introduction of new taxes or other charges since the favourable tax climate will be preserved with these parameters.

Republic of Macedonia will continue to have lowest taxes worldwide, i.e. the message to the businessmen is that by reducing the budget deficit, the tax rate will remain the same. Given the low taxes for the companies, as well as for the citizens with 10% flat tax, and 7.4% effective tax rate, Republic of Macedonia, as it was assessed by the international financial institutions, will remain a country with the lowest taxes and lowest tax-related expenditures worldwide, Stavreski said.

In conditions of exceptionally complex political situation in the country, as well as crisis in the EU arising from the situation in Greece, Macedonian economy showed high level of resilience and managed to realize an economic growth of around 3%. Average growth of 2.9% of Macedonian economy in the first six months this year is among the higher economic growth rates in Europe, and together with Montenegro in SEE region, it is the highest growth rate realized in the first half of the year. Тhat is a good, even excellent performance taking into consideration the complex political circumstances in the same period, Stavreski said. He pointed out that construction remains to be the significant generator of economic growth, being mainly underpinned by the high level of capital investments from the Budget of the Republic of Macedonia.

I would like to point out that the overall situation as regards export and import, given that the import was growing but with lower dynamics than the export, shows that the trade deficit reduces from year to year, being a good feature during the past years, Stavreski said.

Real GDP growth of 4%, increase of the export of goods and services by 8.1%, and 7.5% growth of gross investments are expected under the 2016 Draft Budget. Inflation rate is projected at 2%.

According to the Draft Budget, total expenditures are projected at Denar 195,788 million, being by 4.7% higher than those in 2015, while total revenues are projected at Denar 176,804 million, being higher by 6% compared to 2015.

Projected deficit level for 2016, as Stavreski explained, will be financed by a combination of domestic and external sources of financing, i.e. within the foreign sources of financing, by issuing Eurobond, while as regards the domestic market, the costs will be minimized and the maturity of securities will be extended, as a policy we have been implementing in the last several years.

Given the envisaged sources of financing the Budget, Republic of Macedonia will remain in the zone of moderately indebted countries, i.e. the Budget will fit into the Medium-Term Fiscal Strategy, Stavreski said.

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