8th May 2021, Skopje – Establishing development funds, such as for instance a possibility to establish Fund for Export Companies Support, Investment Fund, Fund of Funds, Venture Capital Fund, Strategic Investment Fund and using the crowdfunding instrument are part of the Growth Acceleration Financing Plan. The Plan is focused on mobilizing private sector capital so as to multiply the investments in both the public and the private sector, hence accelerating the economic growth, Minister of Finance, Fatmir Besimi, wrote in his article, pointing out that higher economic growth rates of 5% in average can thus be achieved.
As the Minister wrote, in times when all countries face increased debt, as a result of the Coronavirus crisis, it is necessary for new sources of financing to be sought, to the end of simultaneously boosting the economic growth and maintaining the macroeconomic stability.
– As for our commitments to fiscal decentralization, as well as the commitments to double the economic growth and achieve 5% GDP annual growth rates, Ministry of Finance is in the final stage of preparing the Growth Acceleration Financing Plan, to be soon presented to, and discussed with, the public. The Plan addresses the new ways of access to capital to finance the recovery and the acceleration of the economic growth through projects in both the public and the private sector. The purpose of the Plan is to scale up the total investments in the economy, thereby staying on the set path to gradually reduce the fiscal deficit and to maintain stable debt level, Besimi wrote.
The Plan, as the Minister pointed out, involves establishment of development funds, innovation support funds, guarantee funds, equity funds, venture capital funds and similar instruments for support of export-oriented companies, small- and medium-sized enterprises, as well as social enterprises. Public-private partnerships, concessions and other instruments for financing public capital projects are also planned to be put into places, to be coupled by financing private sector projects. These are the projects indicated within the National Investment Committee (NIC), also including new projects arising upon initiatives of the public or the private sector.
– Possibility to establish various development funds is being considered, which will target projects in the public sector and the private sector, applying different mechanism for capital mobilizing. One of them is the Fund for Export Companies Support which is intended for supporting the production of export-oriented companies through favourable credits. Another possibility is establishment of Investment Fund, which will support major projects, above all capital projects in the area of education, such as construction of kindergartens, schools, sports halls, etc., whereby when selecting the companies that would participate in the process, priority will be given to small- and medium-sized enterprises. One more Fund is envisaged, Fund of Funds, focusing on stimulating larger investments by growth-oriented businesses. Venture Capital Fund is also planned to be established, to mobilize resources from institutional investors and private entrepreneurs which will invest larger amounts. Strategic Investment Fund would finance infrastructure and investments. Crowdfunding is planned as additional financing instrument. Development bond, as a financing instrument, is also considered as a possibility, Besimi wrote.
As regards the implementation of the new financial instruments, in his article, Minister of Finance points out the necessity to create an adequate institutional framework to provide for their application and their upgrading as well. Several legal solutions to support the establishment of these Funds are in the process of preparation and adoption.
Law on Investment Funds is one of these legal solutions, pending parliamentary procedure. With World Bank support, Ministry of Finance works on the Law on Alternative Investment Funds, which is to be adopted in the course of 2022, governing the operations of the venture capital funds. Law on Modifications and Amendments to the Law on Macedonian Bank for Development Promotion regulates the Guarantee Fund, which offers additional possibility for easier access to financial resources by credit risk sharing with the commercial banks. Under the amendments to the Law, establishment of Funds is envisaged, to be managed by the Development Bank on behalf of the Government, pertaining to crediting in the country, issuance of payment guarantees, avals and other forms of security, purchase, sale and collection of claims, factoring and forfaiting on behalf of clients, trading in securities in his/her name and on his/her own behalf, collecting, processing and analyzing information of creditworthiness of the legal entities and their sale, economic-financial consulting, credit insurance against commercial and political risks and investment insurance.