3rd November 2021, Skopje – Attaining local and regional development is one of the key objectives of the Government Program as part of the commitments to intensifying the growth, which should be inclusive and sustainable, as well as improving the quality of life of citizens. Growth Acceleration Plan, fiscal decentralization reform and the 2022 Draft Budget, wherein capital investments account for 14% of total expenditures, are aimed thereto, Minister of Finance, Fatmir Besimi stressed at the event organized by UNDP, covering the topic “Financing infrastructure investments for sustainable local development and economic recovery”.
The 2022 Draft Budget, as Minister said, includes development component, thus creating a climate for overall development, which implies the municipal development as well.
Minister also paid particular attention to the fiscal decentralization reform, offering sound systemic solution for stable municipal funds.
“Municipalities are being allocated more funds under this reform. This can be achieved by increasing the percentage of revenues transferred to the municipalities on the basis of PIT from the existing 3% to 6%, with percentage of VAT grants also increasing from 4.5% to 6%, starting 2024. Gradual increase of PIT revenues is envisaged by 2024, with 4% in 2022, 5% in 2023 and 6% in 2024″, he said, adding that the funds from the additional increase of VAT percentage, intended for the municipalities, will be distributed in two new Funds – Performance Fund and Equalization Fund.
Municipalities showing higher own revenue collection will be awarded funds from the Performance Fund, while the Equalization Fund will be aimed towards offsetting the differences considering the fiscal capacity of the municipalities.
Minister Besimi pointed out that local and regional development is a goal, also covered in the Growth Acceleration Plan. This Plan is also geared towards scaling up investments by mobilizing funds from the private sector.
“In this respect, Fund for Local and Regional Development will be also established for the purpose of supporting local governments and local and national public enterprises, all to the end of expanding and developing the local infrastructure, providing high-quality local public services and improving the local governance”, Besimi stressed.
Capital for the respective Fund will be provided from Central Budget funds, whereby commercial banks, official creditors and donors will provide additional funds geared towards local and regional investments and development projects.