22nd July 2021, Skopje – Citizens’ health, sound economy and sound finances and society in general remain to be the key priorities for this year. 2021 Supplementary Budget addresses the respective priorities, projecting revenue increase by 4.7% or by around Denar 10 billion, increased capital expenditures by 24%, as well as additional funds for the measures aimed at supporting the households and the business sector, the health sector and the immunization process, increased support to agriculture and socially vulnerable groups, Minister of Finance, Fatmir Besimi, pointed out, elaborating on the 2021 Supplementary Budget, put on the agenda before the MPs at the Parliament of the Republic of North Macedonia.
– Fiscal policy is to be always matching the real needs, supporting the economic growth and development, job creation and better living standard for the citizens. Therefore, main goals of the 2021 Budget are strengthening the financing of the healthcare system and preserving the health and the life of citizens, supporting the economic stabilization and laying the foundations for solid economic recovery and accelerated growth, uninterrupted financing of the basic functions of the state and supporting the judiciary reforms, as well as the EU integration process, the Minister underlined.
Pointing out that 2021 Supplementary Budget reflects the economic developments, proper use of public funds to the end of achieving the set targets, as well as dedication to coping with the pandemic, the Minister said that fiscal stimulus for the business sector and the citizens continues until full recovery and getting the economy back to the economic growth trajectory. He also added that commitment to investing in durable consumer goods remains, focusing on implementation of capital infrastructure projects in road and railway infrastructure, energy and utilities infrastructure, as well as capital investments geared towards improving the conditions in the health, education and social sectors, agriculture and environment protection.
The Minister underlined that budget revenues show excellent performance. Since the beginning of the year by June 2021 inclusive, revenue collection amounted to Denar 101.1 billion, accounting for 47.5% in relation to the projections and increasing by 15.6% compared to the same period last year.
Expenditures are executed on regular basis and in a timely manner within the projections and the expectations. As of June 2021 inclusive, expenditures were executed in the amount of Denar 116.8 billion, accounting for 47.2% in relation to the annual projections, registering an increase of 3% compared to the same period last year.
Economy is expected to recover this year, with growth projected at 4.1%. Trade in the first four months in 2021 intensified, export of goods grew by 40.7% in nominal terms, while import surged by 34.4%. Data on industry show that drop of production recorded in the previous two months was interrupted in March, experiencing growth of 46.1% in April. Unemployment rate continued declining, reaching 16%, wages experienced 4% growth in nominal terms, with capital expenditures increasing by 48.2% in the first six months compared to the same period last year.
Investments will play a crucial role in the economic recovery and its gradual intensification. Gross investments are projected to experience real growth of 8% in 2021, with both private and public investment expected to contribute positively. Consumption is projected to pick up by 4% real terms, with growth of public consumption projected at 4.3%. Export is projected to surge by 10.6% and import to increase by 11% in real terms. Number of employed is projected to increase by 1%, which will contribute for the average employment rate to increase to 47.5%, bring the unemployment rate down to 15.8%.
Under the modifications and amendments to the 2021 Budget, total revenues are projected at Denar 222.5 billion, being by 4.7% higher in relation to the initial Budget projections. Total expenditures are projected at Denar 268.8 billion, being by 8.6% higher in relation to the projections. Projected revenues and expenditures imply a deficit in the amount of Denar 46.2 billion, i.e. 6.5% of GDP.
More funds for capital expenditures are allocated in the Supplementary Budget, i.e. additional funds for the health sector to contribute directly to coping with the health crisis. To the end of continuing the measures under the previous sets of measures, recovering the economy and getting the economic growth rates back to the pre-crisis trajectory, funds are projected for measures within the fifth and the sixth sets of measures aimed at direct support to both the business sector and the economy, payment of vacation allowance in line with the Sector Collective Agreement for State Institutions and engagement of teaching assistants for children with special needs. Under the Supplementary Budget, non-essential costs at the budget users are limited and reduced to minimum.
Moreover, in line with 2022-2026 Fiscal Strategy, in addition to the strengthened structure of public finances by increasing the share of capital expenditures, gradual fiscal consolidation is envisaged by reducing the budget deficit as a percentage share of GDP, as follows: 4.3% in 2022, 3.5% in 2023, 2.9% in 2024, 2.5% in 2025 and 2.2% in 2026.
Budget of the Republic of North Macedonia is fully created to the end of achieving the strategic priorities, accelerating the economic growth, the priority as regards the EU integration process and the obligations deriving from the NATO membership.
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