Skopje, 31st October 2012 (MIA) – Moderate growth of economy, among the highest in the region, however below the potential rate Macedonia has or has realized before the crisis, are the Government projections for 2013.
– Regardless of how the developments evolve as regards the European crisis, one cannot expect drastic, sharp improvement or return of the growth rates as the ones prior to the crisis. Most probably, the scenario is gradual return of growth, however, being accompanied with risks from both sides in the next two years, Vice Prime Minister and Minister of Finance, Zoran Stavreski said at today’s debate of BankExpo.
As for the crisis, Macedonian, as well as all Governments in Europe face the challenge to work with multiple scenarios.
– There is no single scenario since there are several alternatives about the manner of solving the European crisis and determining its dynamics. What is common in all scenarios is the fact that Macedonia will not achieve worse performance than the present one in Europe, it will rather realize better results. As regards the Budget and public finance, the conditions will be also better than the other countries, Minister said.
He pointed out that we are yet to face challenges, times in which we should continue to conduct the policies, which, as so far, have led to avoiding bad scenarios. Macedonia should do its best given that it is a small country, being located in Europe and thus suffering the consequences of the crisis.
Government, through somewhat higher level of budget spending should continue to help the economy to sustain its level of liquidity as much as possible.
– We believed that during this and next year, it is more useful to temporarily widen the budget deficit, thus providing for higher performance of capital investments and completing the settlement of liabilities towards the companies. On the medium run, Macedonia will gradually reduce the Budget deficit, Stavreski pointed out.
If next year, there is reason to reduce the Budget deficit or if the situation in Europe worsens, the Government is ready to find appropriate solutions.
According to Stavreski, as for this period, there is no definitive reply to the question whether there should be somewhat higher consumption and fiscal stimulus or whether savings should be made. Still, the Government stance is that there is need to gradually support the economic activity through fiscal stimulus in the next two or three years of crisis, without thereby violating the long-term stability of public finance.
– We are yet to face many challenges, mainly due to the developments in the EU, in particular in the Eurozone. Next year will be tougher. We envisage stagnation of the economic growth, of around zero, as in 2012. Still we expect revival, however, not from the European Union. There will be more foreign investments, already starting with production, which will yield effects. State also started two major infrastructure projects, which will have positive effects on the economic growth, Governor Dimitar Bogov assessed.
Price stability will be preserved, it will not be violated although there are certain factors, prices on the global stock markets, prices of food and oil, being beyond the control of NBRM. Inflation will be perhaps somewhat higher, around 3% to 3.5%, however not dramatically higher. There is no potential to go out of control.
– In 2013, we expect low domestic demand, without potential for distorting the price stability. It is not easy when prices of main food products grow bigger, it will certainly affect many families, however the task of NBRM is to take care of the general price stability and it will do so. Price stability will be preserved and there should be no any dilemmas related thereto, Bogov stressed.
Next year, growth of export is also expected, due to the increased number of export-oriented companies as a result of the foreign direct investments.
In 2013, banking sector will also face challenges, however, there will be no danger for its jeopardizing. – In the past period, banks increased the capital and the liquidity, pointing out to the fact that they are stable, Governor said.
He especially pointed out to the need for consolidations since in Macedonia, as he assessed, there are too many banks, 17. I encourage such process, in which there is not room for concerns. We can only get bigger quality. What we need is stronger and large banks. It is then when the competition will increase. Small banks have no such power to operate on the market and increase the supply of bank products. This can be done only by large banks, Bogov recommended.
Biggest problem of the businessmen, as they said during the discussion, is the liquidity. They complained about the slow bureaucratic procedures, they required easing of monetary policy, VAT refund, as well as help of banks in the business activities between the Government and the companies for the purpose of deferred payment of credits.
As for liquidity, Stavreski previously appealed to the banks and the companies for accelerated employment of the funds provided under foreign credit lines under subsidized conditions, mainly from the European Investment Bank. These funds are available and they may, Vice Prime Minister said, save many enterprises.
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