13th October 2022, Washington – IMF sent a strong signal for the policies conducted by the Government in times of crisis by affirming that North Macedonia can use funds under the Precautionary and Liquidity Line (PLL). Measures we have adopted as support to the citizens and the businesses in the first half of 2022 have contributed to ease the effects of inflation by 3 percentage points. Support will continue, however it will be strictly targeted to the most vulnerable categories of citizens and businesses,
Minister of Finance, Fatmir Besimi, pointed out in his interview for Voice of America Macedonian in Washington, where he takes part in the IMF/WB Annual Meetings.
“At the beginning, even in March this year, we adopted general measures to protect against the price shock, pertaining to reducing or abolishing taxes on part of products and setting margin caps. They yield effects on the short term, hence inflation was alleviated by 3 p.p. in the first half this year by just applying the respective measures. Part of the measures pertained to coping with the electricity problem. All global reports of the IFIs indicate such measures as one to be used on the short term so as to eliminate the speculative effect on the market, which was achieved. Subsequently, the slowly transferred into targeted measures, i.e. the Budget will provide support only for the most affected ones, while the other categories of the population will pay the market price. This is what we have been doing over this period”, Minister Besimi said.
He pointed out that we are facing a crisis which, from an economic point of view, is quite different from the one during the COVID-19 pandemic. Therefore, fiscal consolidation is to be put in place unlike during the Coronavirus crisis when both monetary and fiscal expansion occurred.
“There is monetary restriction now, therefore fiscal consolidation is to be put in place, i.e. to spend less in a more targeted manner. At the moment, we are in a phase when the support we will extend is to be strictly targeted so as to be able to reduce the deficit. There is no other recipe. Simply put, everyone should be aware of what is going on globally in terms of energy products and finances and, should support be extended, it has to be strictly targeted”, Minister Besimi emphasized.
He underlined that this is a severe global crisis and budget funds alone are not enough to cushion the shocks. “We are all to be aware of it, the citizens and the businesses. In order to overcome it, first of all, targeted measures are to be undertaken, because the spending should be within the Budget sustainability. Second, money is expensive on the global financial markets and there are not enough financial resources, which is the other limiting aspect of this crisis. Third, in addition to the targeted measures to support the vulnerable categories of citizens and businesses, we are also working on medium-term and long-term solutions aimed at increasing the energy efficiency, ensuring energy independence, renewable sources of energy and raising the general awareness for energy saving during this period. Thereby, we are undertaking reform activities to be sound basis as regards the sustainable growth policies in the coming period, once the crisis is over”, Minister of Finance said.
As for the inflation in the country, he underlined that it is directly linked with what happens on the European market. He also explained that it is due to the fact that our economy is more open compared to the other countries in the region. What happens on the European market, in particular in Germany, accordingly reflects on our country.
In his interview, the Minister pointed out that prices are expected to stabilize in 2023, and no stagflation is expected. Although growth will be slow, there will still be a growth, which is expected to be around 3% this and the next year.
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