The state started settling its liabilities towards the companies today already. In an interview for, Minister of Finance, Zoran Stavreski, said that first half of the debt would be paid in a month, while the whole process would be completed by February next year. Priority of the 2013 Budget is for the debt situation not to be repeated. The Budget, still in preparation, will be a development budget and will respond adequately to the challenges of the debt crisis in Europe. The state announces settlement of liabilities towards the business sector by February inclusive. What will the pace of this process be?

Stavreski: Today already we started to gradually reduce the delays in VAT refund and payments on the basis of invoices. According to the goal we have set and the promise made by the Prime Minister Nikola Gruevski to the Macedonian business community, this problem is to be resolved by the end of February 2013. We expect for half of the funds to be paid by November inclusive, and the rest to be paid within the deadline by February inclusive. In addition, when creating 2013 fiscal policy, this problem not to occur in future will be set as a priority. Settlement of liabilities will increase budget deficit by 1% this and the next year. Was the increase of the deficit the only possibility available at the moment?

Stavreski: Macedonia is a country with lower budget deficit and lower level of borrowing in Europe. We conduct sound and stable macroeconomic policy. By increasing the budget deficit by 1%, we will not deviate from this concept. We are also being extended support from the international financial institution like IMF, the World Bank, which consider this move of the Government as a short-term positive step in the macroeconomy. Confirmation for this is the readiness of the World Bank to issue a guarantee to the Republic of Macedonia, by which the country will be able to borrow funds on the international capital market at a price twice lower than the market one. Macedonia will remain to be a macroeconomic stable country, it will remain to be among the 4-5 countries with lowest indebtedness in Europe and among the ten and so countries with the lowest budget deficit in Europe, at the same time, eliminating or reducing to minimum the problems with late payments by the budget institutions. It will affect the credit rating, i.e. it will increase the costs of borrowing by the country. How will the Government close the deficit?

Stavreski: We plan to use the advantage offered by the World Bank through the Policy Based Guarantee Instrument. World Bank extends this instrument to stable economies with sound macroeconomic policy and low level of government debt. Thanks to this instrument we will be available cheap funds on the capital market – for instance, if interest rate at the commercial banks ranges between 8% and 9%, we can borrow at twice lower interest rate. Country’s credit rating is to the credit rating agencies, however, we expect for they to value the fact that Macedonia remains to be one of the countries with the lowest government debt in Europe and among the countries with the lowest budget deficit in Europe. You have announced increase of pensions and welfare, new infrastructure projects. What else will the 2013 Budget have funds for?

Stavreski: 2013 Budget is not finalized yet, but I can say that we will continue realizing the set agenda. We will focus on major capital investments, such as construction of the Corridor Alexander the Great and other motorways, construction of national gas pipeline, construction of the railroad tracks towards Bulgaria and reconstruction of Corridor X railroad tracks, construction of major energy projects, etc. In addition, the Government will continue investing in construction of infrastructure in the Technological and Industrial Development Zones, thus encouraging foreign and domestic investors to make new investments and open jobs. In addition to all this – increase of pensions, welfare, agricultural subsidies and stimulating the investment cycle, we will remain consistent to the low-tax policy and Macedonia will be one of the rare countries in Europe that will not increase the taxes. You said the deficit next year will be 3.5%. Are other macroeconomic indicators for the 2013 Budget defined?

Stavreski: As I have said the Budget is not finalized yet, but I can tell you that the next year’s Budget will respond adequately to the European debt crisis and it will be basis for the economic development once the crisis is overcome.

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