Government of the Republic of North Macedonia, at its today’s regular session, adopted, upon proposal by the Ministry of Finance, the 2024 Draft Budget. Next year’s Budget is aimed at ensuring economic growth and fiscal sustainability, as well as providing for regular payment of all liabilities, also including higher wages, pensions, social rights, support for the enterprises and the farmers, as well as the citizens. Draft Budget, which the Government submitted to the Parliament was presented to the public at the press conference by Prime Minister Dimitar Kovacehsvki and Minister of Finance, Fatmir Besimi.
“2023 Budget will be a cornerstone of economic recovery, coupled by growth acceleration further on, while also providing for fiscal sustainability by carrying on the fiscal consolidation process. Budget will be a sound basis for accelerated implementation of increased number of infrastructure projects, attraction of foreign investments, innovations of domestic companies, support for the national economy, the private sector and the citizens, as well as intensification of the convergence of Republic of North Macedonia towards the EU. In addition, it will provide for regular and undisrupted fulfillment of all legal obligations, also including the obligations arising from NATO membership and smooth implementation of election activities”, Prime Minister Kovachevski pointed out.
He thereby added that the Budget is being planned for the third year in a row amidst pronounced uncertainty, external risks and unfavorable trends in the global economy and that the 2024 Draft Budget is a response to the needs and the developments Macedonian economy faces. In 2024, the economic growth is expected to account for 3.4% amid scaled up investments, solid growth of consumption and recovered foreign demand, while expecting for the inflation rate to stabilize, being projected at 3.6%.
Total revenues of the 2024 Budget of the Republic of North Macedonia are projected in the amount of Denar 310.1 billion (31.6% of GDP), being higher by 10% in relation to 2023, while expenditures are projected in the amount of Denar 343.6 billion (35% of GDP), being higher by 5.8% compared to 2023. Such projected revenues and expenditures result in a budget deficit of 3.4% of the projected GDP or Denar 33.5 billion in absolute terms. Projected deficit is in line with the strong commitment to fiscal consolidation, accompanied by further budget discipline and secured fiscal space to support domestic economy and citizens and infrastructure projects.
Minister of Finance Besimi underlined that the Budget structured in such manner, while simultaneously reducing the expenditures and improving the revenue collection, speaks in favor of the Government’s commitment to fiscal consolidation, i.e. deficit reduction.
“Draft Budget comprises all features in support of development and ensured fiscal sustainability as well, which is of great significance for a developing economy like ours. Development and Sustainability are the two key words describing the 2024 Budget. 2024 Budget includes a development component owing to the continuous infrastructure investments, i.e. the largest infrastructure cycle in the history of our country. Budget is sustainable, since despite the strong infrastructural component and external challenges, we keep carrying out the fiscal consolidation, i.e. reducing the budget deficit to 3.4% (almost one third compared to this year, accounting for 4.8%)”, as Besimi emphasized.
He went on that for the purpose of accomplishing the investment cycle, capital expenditures are projected in the Budget, amounting to Denar 45.1 billion, as investments in the already commenced infrastructure projects, in the fled of road, railway, energy and utilities infrastructure, health, education, social system, agriculture, culture, sports, environmental protection and judiciary.
During the press conference, it was stressed that the 2024 Draft Budget keeps adhering to the golden rule of government spending, stipulating lower deficit in relation to capital expenditures, while also providing funds for the systemically established mechanisms for further increase of public sector wages in line with the General Collective Agreement, coupled by higher pensions and increased funds for the municipalities.
“Under the Draft Budget, additional EUR 160 million is provided for the purpose of paying the increased wages alone, additional EUR 170 million for implementing the systemic solution in view of paying the increased pensions, coupled by a lower deficit in nominal terms by EUR 150 million, compared to 2023, thus using these funds for making savings, implying less borrowing as well”, Minister Besimi said.
Under the 2024 Draft Budget, Denar 298.6 billion is projected as current expenditures, thus providing for regular payment of the wages to the public sector employees and their harmonization with the General Collective Agreement, timely and regular payments of pensions and their indexation with the systemic solution, guaranteed minimum income and other social rights, payment of agricultural subsidies, support for small- and medium-sized enterprises, support for subsidizing the innovation activities, as well as allocation of funds for targeted support to the vulnerable categories and the business sector. Denar 215.2 billion is projected as transfers and subsidies, being by approximately 5% higher compared to 2023. For the purpose of paying pensions in line with the newly set methodology, Denar 83.6 billion is projected. Denar 13.5 billion is projected for paying social protection allowances. Additional Denar 1.5 billion is projected as targeted measures for the most vulnerable groups, with Denar 2 billion being projected as active employment measures and policies.
Denar 45.7 billion is projected as health protection, by which health services are financed, liabilities of public health institutions are paid, medicine programs are financed, among which the drug “Trikafta” for cystic fibrosis – while also proving funds for increased wages for all public health sector employees in line with the General Collective Agreement.
Funds are projected for paying agricultural subsidies, subsidies intended for supporting small- and medium-sized enterprises, boosting the competitiveness, innovation activity, technological development and research, new investments, supporting the export and conquering new markets, supporting job creation and similar.
2024 Budget also includes increased funds for transfers to local government units, amounting to Denar 29.7 billion. Municipalities will receive Denar 787 million, i.e. 15.5% higher funds on the basis of the projected increased percentage of VAT grants from 4.5% to 6% from the VAT collected in the previous year. Additional increase by Denar 2.5 billion is provided for financing the increased wages of the employees in the local institutions.
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