Macedonia: Budget Deficit Mounts to EUR 315 Million

This year the Macedonian Government falls to budget deficit of astonishing EUR 315 million, although according to the initial plan, the deficit was set at EUR 297 million, Utrinski daily reads.

This increased deficit, which the government has adopted at a session last week, has been projected in the this year's budget balance. However, it was not presented at the official media conference, but was announced and explained through various statements made by the Prime Minister Nikola Gruevski and the Deputy Prime Minister and Minister of Finance, Zoran Stavreski.

With the new balance, which the Government calls a "mini" correction, the budget deficit will grow by 3.9% of the gross domestic product (GDP), compared to the previously planned 3.5%, while the budget incomes and expenditures have been cut by some 2%. Given the fact that the GDP this year has been estimated at EUR 8.088 billion, according to the evaluations, the deficit will mount to EUR 315 million, i.e. EUR 18 million.

The Government claims the budget’s rebalance is done because of the fact that the construction of the highway leading to Gevgelija has accelerated, thus required more money. But, the opposition believes that this correction is the result of bad fiscal policy management.

Meanwhile, the data on the filling and emptying of the national treasury has shown that only in the first half of this year, 80% of the budget deficit was spent, i.e. the Government had spent EUR 240 million in the first six months, although only EUR 297 million were allowed.

On Saturday, Prime Minister Nikola Gruevski announced that the budget rebalance will be adopted due to the increase in salaries and pensions.

"The increase in salaries, pensions and the social assistance was a measure projected in the Budget, and the small increase in the budget deficit is related to the increase of means allocated for the construction of the highway leading to Gevgelija. The construction project is being implemented well, and according to the estimated dynamics, it has even accelerated, and in order not to have any disturbance, we needed additional resources," Gruevski said.

Macedonia's Prime Minister Nikola Gruevski says the increase in the budget deficit is due to the increase in salaries and pensions and the construction of the highway to Gevgelija. Photo: Radovan Vujovic

Previously, Finance Minister Stavreski said that the reason for the rebalance in budget, was the harmonization of the dynamics of expenditures, which was better than predicted, especially in the infrastructure sector, with the dynamics of the incomes.

According to Stavreski, there will be additional funds for social incomes. The cuts are equal in the goods and services sector, as well as in the transfers and capital expenditures sector.

"With this 'mini' rebalance, we will manage to remain in the zone of fiscal stability and secure undisturbed realization of the projects," Macedonia’s main treasurer said.

Vanco Uzunov, SDSM Vice President and economy professor, says the budget rebalance is a consequence of the bad fiscal policy management.

"The government, although it knew that there will be elections and planned all its expenses, spent much more than that. Secondly, I think this re-balance is a temporary thing, because the Government must have some acute need at this moment, while I expect a new, significantly larger rebalance in fall, and then, by publishing the Final Balance of the budget, it will justify the expenses" Uzunov said.

According to Uzunov, the link between the highway and the rebalance is dubious, and even its hasten construction. "Why the government, with its constitutional amendments, prescribes the budget deficit to be set at 3% of the GDP, and for several years now, it has been surpassing that limit, like for instance this year, when it will amount to around 4%," Uzunov added.

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