26th February 2025, Skopje – Intensified public investments, coupled with consumption supported by government transfers and real wage growth, will be main driving forces of domestic economic growth in 2025, as noted in the preliminary findings under Article IV Mission, published in the IMF’s Concluding Statement upon the consultations, which took place in our country.
IMF staff, as stated in the published report, noted the Government’s objectives of reducing deficit, boosting productivity, raising living standards, and reducing informality.
As per IMF, growth is gaining momentum in our country, which is expected at 3.3% in 2025, with still persisting impact of weak external demand seen in 2024. In the long term, high emigration threatens to be a drag on potential growth. As per IMF staff, key factor for boosting productivity and offsetting costs of emigration are the structural reforms aimed at improving business environment, strengthening labor market, increasing public infrastructure investments, strengthening rule of law and anti-corruption efforts, as well as enhancing governance.
IMF staff also stressed the authorities’ objectives of reducing budget deficit, highlighting the crucial importance of attaining the expected revenue growth by reducing the shadow economy and increasing the tax compliance. Thereby, IMF representatives welcomed the Public Revenue Office’s efforts to modernize the processes and reduce the informality, while also pointing out that credible fiscal strategy is needed to restore compliance with fiscal rules as regards budget deficit and public debt levels, being crucial for preserving credibility to maintain access to international capital market, creating space for investments, and strengthening resilience against future shocks. Thereby, as per IMF, the focus should be on controlling current spending by returning to a rule-based pension system – indexing only to inflation, as well as limiting public wage growth to inflation in the near term.
According to IMF Mission, structural fiscal reforms are needed to strengthen fiscal governance and improve spending efficiency, with some progress underway, thereby also indicating that the key ongoing measures include implementing the Public Investment Management decree and manual, adopting the PPP law, and conducting spending reviews to optimize budget allocation.
IMF Mission took place in the period 13th February – 25th February, and based on the preliminary findings thereof, a report will be prepared. Article IV Consultations take place at regular annual intervals.
