21st November 2022, Skopje – Gradual fiscal consolidation, sound strategy and viable plan on growth acceleration, investments in human and physical capital, digitalization and sustainability are the five key steps in accelerating the economic growth upon the recovery of the economy from the ongoing global crisis, as written in his column dedicated on the Budget and the economic strategies, Minister of Finance, Fatmir Besmi wrote. Accelerated economic growth and using public finances to stimulate growth require a fiscal space above all. However, on the other hand, strong fiscal tightening, especially in times when economic growth slows down, can lead to contraction of the economy and negative consequences, Minister Besimi pointed out.
“Following the overcoming of the first and the most severe blow of the pandemic, we commenced to gradually reduce the budget deficit. Under the new 2023 draft Budget, budget deficit drops by 0.7 p.p. in relation to 2022 projections. Our goal in the medium term is for budget deficit to be gradually reduced to below 3%, i.e. below the Maastricht criterion”, he stressed.
Within the strategic and planning approach as regards the economic growth acceleration, Besimu underlined the Growth Acceleration Financing Plan, which following the example of the Juncker Plan, in addition to the public capital, the private capital is also mobilized in support of investments.
“These funds will provide for supporting public and private sector projects, entailing boosted competitiveness of the economy, improved quality of life, environment, digitalization, innovations, human capital and social inclusiveness”. Minister wrote.
In his column, he pointed out both public and private investments as a driving force of economic growth and development.
“Making investments in both human and physical capital is the multiplying part of the GDP equation. Hence, the focus is placed on investments, as per the new Draft Budget as well. Human capita investments are classified as one of the five key priorities of the Government. I would like to hereby indicate that with technical assistance from the World Bank, we work on Human Capital Strategy, by which North Macedonia stands out as the first country in the region to have such a strategic document in place. We strive for allocating higher funds with each next Budget as investments in the infrastructure development. Budget structure is changing in terms of having stronger development component”.
Minister emphasized digitalization as additional encouragement of the economic growth. It is a catalyst of the labor and capital productivity growth, as well as way of obtaining products and services at lower price.
As the last step in attaining long-term economic growth and development, Besimi pointed out the sustainability, i.e. sustainable energy, sustainable agriculture, sustainable finances, etc. He indicated that sustainability is a set of smart and accommodative policies yielding results over a longer time period. Therefore, under the investment agenda, this aspect is certainly taken into account by the Government, while as regards finances, development budget policies and fiscal decentralization, in addition to the fiscal consolidation, are also considered.