30th November 2022, Skopje – Economic fundamentals are sound, while the authorities undertake appropriate measures for coping with the effects of the external shocks. Sound public finance, including a sustainable public debt position determined by a rigorous and systematic debt sustainability analysis, as stated in the International Monetary Fund (IMF) Mission, assessing our country as regards the Precautionary and Liquidity Line thereto, being made available thereto. It is a matter of an instrument intended only for economies pursuing sound economic policies, by which around EUR 530 million has been made available to our country, covering a 2-year period.
As stated in IMF Mission’s Report, authorities implement sound economic policies, remaining committed thereto in future as well. They indicated the Government’s response to cushioning the effects of the pandemic as prompt and efficient, which continue to also strongly respond to the shocks from the ongoing crisis, which was intensified with the onset of the war in Ukraine and the rising prices of primary commodities.
Relative to other emerging market economies and Western Balkan countries, our country performs well on governance indicators such as government effectiveness, regulatory quality, and rule of law as per the Worldwide Governance Indicators. The process toward EU accession is expected to further strengthen the reform momentum, as stated in the Report.
Fiscal framework was further strengthened by the new Organic Budget Law, which establishes fiscal rules and provides a basis to substantially improve the budget process, IMF Mission staff indicated. Moreover, Government is implementing an action plan to address the recommendations of the IMF’s Public Investment Management Assessment (PIMA).
What was also stated in the Report was that public finances are sound, also including the public debt. The overall fiscal deficit averaged 2.5% of GDP prior to the pandemic, before increasing to 8% as a result of the authorities’ policy response, while being brought down to 5.5% of GDP in 2021. Measures taken in response to the energy and food price shock would bring the deficit to 5.25% of GDP in 2022. It was also stated that the authorities are preparing fiscal measures to reduce the deficit to 3.4 percent of GDP by 2024, as well as that the Government is committed to further consolidation thereafter, consistent with the 3% of GDP deficit limit introduced with the Organic Budget Law. Staff assesses the debt as sustainable, which is expected to gradually decline over the medium term, staying below the high-risk threshold.
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