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5th April 2022, Skopje – Second year in a row already, the Ministry of Finance closely monitors the process of execution of capital expenditures by the budget users through the established CAPEF mechanism, regulated under the Law on 2021 Budget Execution and Law on 2022 Budget Execution, which envisages rewarding the good performers among the budget users as per the set criteria. Today, Government of North Macedonia adopted the Information on Execution of Capital Expenditures in Q1 2022.

In line with the CAPEF mechanism, at the end of Q1, budget users are to have executed at least 15% of the projected capital expenditures, with 40% at the end of Q2 and 65% at the end of Q3. Should they perform below these thresholds, the funds are restricted as budgeted capital expenditures only within the respective budget user’s budget, without any right to spending.

Should central government budget users execute 40% of the capital expenditures as of the second quarter inclusive in the current year, i.e. 65% of the capital expenditures as of the third quarter inclusive in the current year, within the respective sub-program and the item under the adopted core budget, including the in-year reallocations, they are returned the withheld funds.

Upon proposal by the Government of the Republic of North Macedonia, the Parliament of North Macedonia decides on the use of the budgeted capital expenditures withheld, but not being returned, under a Decision on Reallocation of Funds between Central Government Budget Users and the Funds or by adopting modifications and amendments to the Budget.

According to the Minister of Finance, Fatmir Besimi, the system has been already put in place and introduced to all budget users, which are aware that should they fail to execute the projected expenditures, they will be withheld the funds. CAPEF mechanism was also applied in 2021, with positive effects on the execution of capital expenditures in the very year we faced crisis. Hence, data show that at the end of 2021 execution of projected capital expenditures accounted for 79%, with the absolute amount of capital investments also being higher compared to the previous years. In fact, in 2021, capital expenditure execution amounted to Denar 23.4 billion.

As regards Q1 this year, execution of capital expenditures accounted for 12.9%. In the course of the first three months, i.e. 1st January to 31st March 2022, Denar 4.9 billion was executed, being by 23.5% more compared to the same period last year, or by around Denar 1 billion more.

By applying the CAPEF mechanism, it has been determined that the budgeted capital expenditures not being executed amount to Denar 558 million, funds which the budget users will be withheld.

Central Government budget users being withheld the funds, but having executed 40% of the capital expenditures projected in the budget will be returned the withheld funds by the Ministry of Finance to the respective sub-programs and items.

As a Government we remain committed to implementing capital investments despite the prevalent energy crisis and responding adequately so as to reduce its impact, having adopted a set of 26 measures therefore. Implementing capital investments implies achieving higher growth rates and better living standard of the citizens.

Also available in: Macedonian Albanian

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