Government of the Republic of Macedonia adopted 2010 Draft Budget at its session held yesterday. Revenues are projected at Denar 143,257 billion, an increase by 3.4% compared to 2009, and expenditures are projected to Denar 153,720 billion or by 2.8% higher compared to 2009. Deficit is projected at 2.5% of GDP, amounting to Denar 10,460 billion.
 
Government projection for 2010 is that GDP growth will account for 2%, and annual inflation rate is planned at maximum 2%.
 
According to Vice Prime Minister and Minister of Finance, Zoran Stavreski, proposed Budget is realistic and includes development component, envisaging reduced public consumption and improved structure.
 
– The Budget will account for 37.3% of GDP, which is less compared to 2009, when it accounted for 37.7% of GDP, Stavreski said, adding that policy for reduction of public expenditures is being implemented gradually, and such trend will continue in future.
 
As it was pointed out at today’s press conference, the Government envisages no new employments in the public administration, except for the ones related to the Euro-integration process and the Ohrid Framework Agreement. Neither public administration salaries will be increased.
 
– In 2010, Government will continue conducting the policy of strict discipline as for employments in the public sector, Stavreski said, adding that no salary increase in the public administration is envisaged, however not excluding such increase if economic performance is better than the planned. However, under present circumstances, when Macedonia has not exited the recession yet, as Finance Minister pointed out, it is realistic to be reasonable when making projections and envisage no salary increase.
 
Salary-related funds are reduced by 2.8% compared to 2009 Budget, and according to Stavreski, this, coupled with the envisaged lower amount of funds for goods and services item by 9.8%, speaks of proposing a serious reduction of these two budget items by a government for the first time.
 
In 2010, Government plans slower dynamics in reducing the social contributions as well, thus pension insurance contributions will be reduced from 19% to 18%, and health insurance contributions will be reduced from 7.5% to 7.3%.
 
– If, in the course of the year, revenue and economic performance is better than the expectations, contributions will be additionally reduced, Stavreski pointed out, adding that contribution reduction will continue as envisaged in the government program.
According to the government proposal, subsidy-related funds will increase by 10.9%, as well as the funds allocated for social transfers by 1.8%, while capital expenditures are envisaged to increase by 16.2% or EUR 51 million more for public investments in 2010. Denar 21,285 billion is envisaged for education and science, Denar 19,756 billion for health, Denar 49,920 billion for social care and child protection, Denar 18,983 billion for infrastructure and economic development and Denar 7,940 billion for agriculture. According to Stavreski, sufficient funds are envisaged for EU and NATO integration processes, whereby 4.7% of total expenditures, or Denar 7,328 billion, is envisaged for defense, and Denar 1,935 billion for Euro-integration process.
 
As for the revenue side, tax revenues are projected at Denar 77,049 billion. VAT revenues are planned to increase by 4.7%.
 
In 2009, budget deficit will be financed from both domestic and external sources, whereby domestic borrowing will be by 11% lower compared to 2009. It is projected at Denar 3,989 billion. External borrowing is planned from World Bank and EBRD for infrastructure projects, agreed budget support from World Bank in the amount of US$ 30 million, as well as from other sources, whereby, as Vice Prime Minister Zoran Stavreski said, both IMF and issuance of new Eurobond are an option too.(MIA)
