14th October 2022, Skopje – “Republic of North Macedonia has shown positive progress as regards economic and monetary policy, covered under Chapter 17. What is significant is that under more than 70% of the Chapters in the North Macedonia’s Progress Report by the European Commission, progress was noted as regards the implemented reforms. Adoption of the new Organic Budget Law was particularly emphasized, setting clear fiscal rules for the budget deficit and the general government debt, and being harmonized with the EU Budget Framework Directive, Deputy Minister of Finance, Filip Nikoloski pointed out at the panel discussion “With All Capacities to the European Standards – Institutions Delivering for the Citizens”. This was the first out of the three events under the slogan “On the Path to Europe: New Reforms, New Opportunities”, which will, during this period, be held on the occasion of the publication of the EC Report, organized by SEP.
Organic Budget Law also contains provisions for establishing independent body, i.e. the Fiscal Council, which will monitor the harmonization with the fiscal rules.
Nikoloski said that the introduction of the Fiscal Council will provide for independent and professional analyses and views on the macroeconomic and fiscal assumptions, the Fiscal Strategy, the Budget, the Budget execution reports, the fiscal risks, and similar.
To the end of increasing the Government’s accountability, statement on fiscal policy is introduced, which is to include guidelines for the fiscal strategy during the Government’s term.
In addition, Integrated Financial Management Information System – IFMIS, being under implementation, will ensure better planning and monitoring of budget revenue performance and budget expenditure execution, as well as their control.
At the event, high-level delegations stressed that the Report is a strong recognition of the implemented reforms, which is particularly significant considering the still present pandemic coupled by the energy and price crisis.
Thereby, amid tightened conditions on the global capital market, the Report also noted the issue for financing the budget deficit. When asked which policies are being conducted as regards the prudent public debt management, Nikoloski said that the Government remains committed to gradual fiscal consolidation in the medium run.
“In line with the Fiscal Strategy, gradual fiscal consolidation has been foreseen, aimed at reducing the budget deficit as % of GDP, from 4.2% in 2023 to 2.8% in 2027, as well as improved public finance structure, with significant share of capital expenditures of 4% of GDP per year. Prudent and strategic public debt management is in support of gradual fiscal consolidation. To that end, I will hereby mention the PLL, for which IMF Mission gave us green light last week, as well as the issue of the German registered notes under significantly more favourable terms and conditions than those on the global capital market, Nikoloski pointed out, thereby stressing that the ongoing challenges must be taken into account, such as the energy and price crisis, entailing adequate fiscal response thereto.
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