In the Macedonian Parliament on Friday, Finance Minister Dragan Tevdovski presented the report on the implementation of the 2016 budget, during which he said that he considers the growth rates of the last years to be low and dependent on public spending on infrastructure, which he said was often misappropriated. VMRO-DPMNE members of Parliament, under whose term the 2016 budget was passed and implemented, said that it contained prudent and well chosen policies and projects that helped reduce unemployment and bring new investment.
Vasko Kovacevski from SDSM said that VMRO-DPMNE failed to support the private sector with the budget. He added that the final analysis shows significant failings in the non-tax revenue side and especially in foreign donations, which amounted to only 35 million EUR.
“If we examine all the items, the revenue and the spending, we can conclude that the VMRO-DPMNE Government failed to ensure a better and more dignified life for the citizens”, Kovacevski said.
Liljana Kuzmanovska from VMRO-DPMNE replied that 2016 was a successful year according to all economic data, and that that was owed to the well placed economic policies which helped Macedonia whether the political troubles and the two failed attempts to hold elections.
“Foreign direct investments secured by the previous Government, which total 2,6 billio EUR, helped the economy grow in 2016 and helped bring unemployment down”, Kuzmanovski said, pointing to the record low unemployment numbers. VMRO-DPMNE’s Ilija Dimovski added that the economic team of the new, SDSM led Government, is pushing a negative public campaign considering the fact that they expect negative economic developments in the future due to their policies. “I’m scared for the economic policy of our country and the consequences of their actions”, Dimovski said about the SDSM proposals to increase taxes.
Earlier, Finance Minister Tevdovski said that “in the past years, the growth rates were about 2,5 percent, but if we exclude public construction spending, it would be about 0,5 percent, meaning that private sector investments are low and the business sector is suffocated and fails to produce expected growth rates. State spending often went to unproductive programs such as Skopje 2014 and mistaken highways. Our main problem is that this is unsustainable in the long run, if the economy keeps growing on adding more debt”. Construction grew by 18,5 percent in 2016, while industry dropped by 1,5 percent, the newly appointed Finance Minister said.
Industrial growth in the free economic zones open to foreign manufacturers grew by 11,5 percent. Tevdovski said that this is owed to the fact that these companies receive tax and customs breaks, as well as subsidies.
Deficit levels in 2016 were at 2,7 percent, with revenues at 169,3 billion denars and spending at 185,4 billion.
“We need to learn from the mistakes of the past and prevent them from happening again”, Tevdovski said, adding that at the end of his term, Macedonia will have a balance sheet like Denmark.
Krsto Mukoski from VMRO-DPMNE responded to the minister, pointing out that in his very remarks he acknowledged that “the public finances in 2016 allowed timely payment of all obligations, while maintaining fiscal sustainability and the efficient and economic model of public spending which led to macroeconomic stability and positive rates of growth”. Mukoski added that the deficit for 2016 was lower than the projected 2,9 percent of GDP. He blamed the new, SDSM led Government, of rapidly expanding the issuing of new debt, saying that, if these rates of adding new debt continue, Macedonia will end 2017 with 650 million EUR in new debt.
Tevdovski responded that the net new debt that was added was low, and that under his term it grew by merely 1,2 billion denars (20 million EUR), while at the same time 75 million EUR in debt owed to Deutsche Bank were returned. “We only borrowed about a third of the amount we paid back”, said Tevdovski, adding that the interest rates on the newly acquired debt are much lower than on the maturing debt.