It is a great success in such difficult year to ensure the payment of social benefits, not a single day of delay in payment of pensions, as well as to ensure sufficient funds for realization of the ambitious public investment program.
The public is being spread a lot of speculations and falsehoods, so as to create confusion and an impression that the budget revenues are secured with collection of fines. I responsibly claim that they are politically spread falsehoods, said Zoran Stavreski, Vice Prime Minister and Minister of Finance, who in the interview for “Nova Makedonija” Newspaper talks about many important issues he is in charge of.
National Bank of Macedonia finally decided to reduce interest rates on CB bills by 0.5%. Is this reduction enough and do you believe commercial banks will react accordingly by reducing interest rates on credits?
– Recovery of Macedonian economy requires more credits and lower interest rates. The step National Bank has undertaken is certainly a positive one, however, it should be just the first in the series of adjustments of monetary policy to the current developments and the demands of the real sector. In line with the perspectives of the Macedonian economy in 2010, which the National Bank also projected to be much better, I am certain that there will be a possibility to further reduced the interest rate soon. This would correspond to the projects on the Government, the NBRM and the IMF for recovery of the economy in 2010, with projected GDP growth of 2%. Loosening of monetary policy is also enabled through the continuous five-month upward trend of foreign currency reserves. They amount to EUR 1,580 million now, or are by EUR 80 million higher compared to December 2008. Regarding the reaction of the banks, part of them have already announced the reduction of interest rates, although to a modest level for the time being. Factors influencing the amount of credits and the level of interest rates are the political and the economic risk of the country, as well as adequacy of the fiscal policy and the level of restrictiveness of the monetary policy. It is a fact that the risk to the country is reduced and that fiscal policy in 2009 and 2010 is well measured as for such crisis conditions. This has been also confirmed by the IMF not long ago, saying that fiscal targets of 2.8% in 2009 and 2,5% in 2010 were appropriate to support the economic activity and the investments, as well as by “Standar&Poor’s”, the most renowned credit rating agency in the world, assessing the rating of the Republic of Macedonia as stable, with positive outlook.
There is prevailing opinion that disbursement from the credit line the Government secured from European Investment Bank in the amount of EUR 100 million was unnecessarily delayed. Was the poor staffing of MBDP or of the commercial banks the problem and what is the dynamics for the credit disbursement?
– Credit line in the amount of EUR 100 million to support small- and medium-sized enterprises is the largest so far intended for this sector. It almost equals the sum of all credit lines provided by the state to the economy in the past ten years. At the same time, the credit line was secured for a very short period. Negotiations with EIB started in March this year, and the agreement was signed in June already. According to the experience so far, credit lines intended for this sector happened to be negotiated for approximately a year. Projects in the amount of around EUR 40 million were approved so far, and they are to be financed with EUR 20 million credit funds and EUR 19.3 million investors’ own funds. EUR 15 million out of EUR 20 million is from EIB credit line, while EUR 5 million is provided from the commercial banks. I believe that other funds are going to be disbursed relatively soon, since it is obvious the Macedonian firms are “hungry” for cheap credits.
According to Ministry of Finance data, as of October inclusive, budget revenues amounted to around Denar 33.2 billion (EUR 539.9 million), being less in relation to the projections for this fiscal year. What projects on the expenditure side are postponed for the next year, having in mind that it is obvious that by end-December the Government will hardly collect that amount of funds?
– Data you mentioned are different from Ministry of Finance data, and it is probably a matter of inappropriate comparison. Total realized budget revenues in the core budget in Q3 2009 accounted for 97.3%, meaning they were lower by only 2.7% or by Denar 538 million in relation to the projections. According to the preliminary data, as of November inclusive, total realized revenues in the core budget amounted to around Denar 71.5 billion. If we add the expected revenue performance in December, deviation on annual level will be less than 5%, which in crisis situation is quite acceptable performance. At the same time, savings were realized on the expenditure side at the less productive expenditures. Thus, for instance, regarding salaries, savings of around Denar 800 million is expected, being a result of the strict control over new employments. As for the operating expenditures, goods and services, savings of more than Denar 3 billion were realized, as a result of the rigorous controls over non-productive expenditures for contractual services, official trips, mobile and fixed phones, entertainment expenses, and other expenditures. With respect to capital investments, we expect better performance compared to the previous years. In fact, no postponement of important capital projects is envisaged. However, there will be deviations as a result of the slowed down dynamics in procurement of equipment with high import component, longer period necessary for settling property and legal relations (land expropriation), repeating of procurement procedures, etc. All in all, it is a great success in such difficult year to ensure the payment of social benefits, not a single day of delay in payment of pensions, as well as to ensure sufficient funds for realization of the ambitious public investment program.
Government should spend additional EUR 144 million on capital projects and investments by the end of December. What are the projects?
– Budget funds are used to finance all capital projects envisaged in the 2009 Program on Government Operations.
Will there be any last-minute reallocation of funds for investments? – No such thing is envisaged for the time being. Government increased the funds for non-tax revenue item (fines, court and administrative fees, fees and charges, other government services, other non-tax revenues) from EUR 145.7 million to EUR 200.6 million in the 2010 Draft Budget. What are these forecasts based on?
– The public is being spread a lot of speculations and falsehoods, so as to create confusion and an impression that the budget revenues are secured with collection of fines. I responsibly claim that they are politically spread falsehoods. Let’s clear the “fog” being deliberately created. First, the public should know that non-tax revenues include many different categories, among which revenues of the Agency for State Roads from road tolls and vehicle registration fees (Denar 1,890 million is projected or approximately at the same level as last year), projected funds on the basis of concession fees for water, mineral raw materials and agricultural land (Denar 950 million), Telecom dividend (EUR 2,400 million), NBRM profit, purchase of courtyard land at the price of EUR 1 per square meter, collection of claims on the basis of banks’ rehabilitation, interest on deposits, etc. Second, let’s present the figures precisely: non-tax revenues in 2010 are lower compared to 2009 by Denar 2,706 million, or by around 15%. Third, within non-tax revenues, administrative fees are projected to around Denar 850 million, which is identical to 2009. Fourth and the most important, revenues on the basis of fines in 2009 were projected to amount only Denar 526 million (same level is projected in 2010), and the realization as of November inclusive was just Denar 440 million. If we compare Denar 526 million or EUR 8.5 million with the total EUR 2.3 billion of total budget revenues, it means that revenues from fines account for negligible 0.3%-0.4% of total budget revenues. Can anyone, taking into account all these facts, deny arguably the thesis that the budget revenues are secured with collection of fines? Finally, let’s discuss this issue from another angle: activities related to regular collection of taxes and contributions, adherence to ecological standards, greater safety in traffic, respecting workers’ rights, etc., mean adequate control and imposing fines to those disobeying the law. These activities are integral part of observing financial discipline. These activities are an integral part of the efforts to create ecologically cleaner country, efforts aimed at fight against grey economy and unfair competition, efforts to ensure that workers are able to exercise their rights on the basis of employment, health and pension insurance. All this is an integral part of the efforts to create legal state, as an essential context of European values we all together aim for.
Leg of Russian gas power line “South Stream” will pass through Macedonia? You have announced that Russia will repay the clearing debt towards Macedonia through gasification projects. Is it true that leg of “South Spring” pipeline will pass through the territory of Macedonia to Albania and South Italy?
– The gas power line is a project of strategic importance to the Republic of Macedonia. Its realization is much easier, if not only possible, with a strong strategic partner, and Russia and “Gazprom” are certainly such partner. Therefore, I am very pleased that a twenty-year long issue of the debt of Russia to Macedonia, inherited from SFRY, is resolved in this manner, through investment in this capital project. I believe that this will open the doors for integration of the Republic of Macedonia in one of the existing regional gas power lines. Partnership with Russia and “Gazprom” on the construction of the Macedonian gas power line is the first step aimed in that direction. “South Stream” is one of the options and it would be very important for a leg of the gas power line to pass through Macedonia. However, I believe that what is even more significant for Macedonian from a strategic point of view is to ensure access to one more transnational gas power line, meaning to have two alternatives and greater security on the supply side. There is a chance for this to be realized, however, much political effort and lobbying is needed, joint lobbying with the neighbouring countries and friends from Europe. The Government is working on this.