26th October 2021, Skopje – Annual economic growth above 5%, investments in both the public and the private sectors reaching EUR 12 billion, creating 156,000 jobs, coupled with fiscal consolidation, i.e. maintaining stable public debt, are part of the expected effects from the Growth Acceleration Plan 2022-2026, adopted by the Government today, and presented by the Prime Minister, Zoran Zaev, and the Minister of Finance, Fatmir Besimi, at a press conference.
Ministry of Finance has prepared the GAP together with the government departments, with an ambitious, however, attainable goal to support the economic recovery and the accelerated growth.
The GAP is based on a new approach, offering a coordinated support to encourage investments in the public and the private sectors in many priority areas, by precisely indicating the available sources of financing and the financing instruments and mechanisms, assessing thereby the expected outcomes.
“The Plan will play a key role in boosting jobs and growth in the economy of country with new investments, 5% GDP growth and maintaining stable public debt”, Prime Minister Zaev said.
Addressing the Plan’s three main goals, Prime Minister Zaev pointed out that it offers an innovative access to capital to finance the economic growth acceleration which, in addition to EUR 4 billion public investments, will also mobilize investments by the private sector, which are estimated in the amount of EUR 8 billion.
He emphasized the importance of capital investments for the economic development, pointing out their continuation even in times of pandemic.
“Therefore, as he said, CAPEF mechanism is put in place, rewarding the good performers among budget users in terms of capital expenditure execution, and the estimates are that this mechanism could generate additional EUR 1.5 billion of capital expenditure over the 2022-2026 period”.
According to the Prime Minister, the second goal under the Plan has already started to be realized. GDP in the first half of 2021 accounted for 5.6%, with 13.1% in Q2, speaking in favour of the economy getting back to the growth trajectory.
“Recently, the World Bank has revised the 2021 GDP growth forecast for North Macedonia upwards from 3.6% to 4.6%, exceeding even our projections of 4.1% growth. Private sector activities will intensify by introducing new ways of access to capital, instruments, funds and sources of financing which will mobilize much more funds and investments from the private sector itself. Thus, total investments will be scaled up, growth of GDP and job creation will be both accelerated.
Unemployment accounts for 15.9% at the moment, being at the historic low level. According to the Plan, it is envisaged for the investments growth to be coupled with increase of the employment rate to 54.3% in 2026, with the unemployment rate entering a single-digit zone for the first time (8.6%) by 2026, Prime Minister Zaev said, adding that favourable macroeconomic developments will strengthen the public finances, leading to fiscal sustainability, reduction of public and publicly guaranteed debt below 60% of GDP in 2026.
“This Government is characterized with cost-effective, accountable, responsible and transparent operations, the stable Budget at central and local level speaking in favour thereof. Even amid pandemic, there were no delays in payment of wages and pensions, private sector and those most severely affected by the pandemic were financially supported, coupled with these major long-term plans we have created, the benefits of which will be felt by the present and the future generations”, the Prime Minister underlined.
Minister of Finance Besimi pointed out that the Plan is a continuation of all measures undertaken to manage the COVID-19 induced pandemic.
“The pandemic outbreak last year caused deep health and socio-economic crisis. It raised a need for prompt and timely actions, and we therefore designed both measures to protect the health and six sets of economic measures amounting to more than EUR 1 billion. We are now continuing with the Growth Acceleration Plan, responding to the needs to support economic recovery and regrowth, at the same time implementing fiscal consolidation on the medium term, i.e. reducing the budget deficit and the public debt”, Minister Besimi said.
GAP actually implies accomplishing what we have announced in 2021 Budget, i.e. Strategy for Economic Recovery and Accelerated Growth or SmartER Growth, policies for budget consolidation 2021-2025 and 2021-2025 Public Investment Plan.
“The Plan is a blend of conventional and innovative financing instruments. Proposed instruments to provide for project financing within the Plan are the following: capital expenditure efficiency mechanism (CAPEF), development bond, project bonds, green bonds, inflation-indexed bond, PPP, public asset management, guarantee scheme, Energy Efficiency Fund, Fund for Local and Regional Development, Fund for Research and Development, Hybrid Green and Digital Economy MSME Fund, Hybrid Strategic Green Investment Fund, Fund of Funds, venture capital funds and crowdfunding”, Minister Besimi pointed out.
Growth Acceleration Plan will support investment projects in the public and the private sectors, thus strengthening the competitiveness of the economy and improving the quality of life, and it will focus on many priority areas: green economy, digitalization, innovation and technology, improvement of the physical infrastructure and human capital development, as well as social cohesion.
As the Minister emphasized, precisely defined institutional governance structure has been put in place so as to manage the whole process towards its successful implementation.
The Plan has been adopted through an intensive communication with the international financial institutions and other development partners, expressing their readiness to provide financial and technical support. Following the First Annual Conference of the Ministry of Finance, the GAP has been presented to the business community, the banking sector and the other stakeholders through the established SEFF (Skopje Economic and Finance Forum) platform.