Page 125 - SE Outlook Regions 2022

Capital investments are set at MKD37.8bn, which is about 27% more
compared to 2021.

Economic growth of over 5% per year, investments in the public and
private sector of €12bn and the creation of 156,000 new jobs are
included in the Plan for Accelerated Economic Growth for the period
2022-2026 adopted by North Macedonia’s government in October.

The plan also foresees fiscal consolidation and maintaining stable
public debt.

The main feature of the draft budget for 2022 is that the deficit will only
be used to support a significant part of the capital investments.

The funds are intended for speeding up works on implementation of
road and railway infrastructure, and energy and communal
infrastructure projects, as well as capital investments to improve the
conditions in the health, education, social system, agriculture, culture,
sports, environmental protection and the judiciary.

In order to respond to the still present challenges from the COVID-19
pandemic, more funds are provided in the health sector and are
planned at the level of MKD7.4bn.

Fitch said that the government's 2022 budget proposal is in line with the
2022-2026 fiscal strategy, which projects the budget deficit declining to
4.3% and 3.5% of GDP in 2022-2023, before reaching 2.2% of GDP by
2026. The risks to the government strategy are derived from lower
growth than the government's forecast (averaging 5.3% between
2022-2026) and failure to contain current spending.

Fitch forecasts the government deficit to decline to 5% of GDP in 2022
and 4.1% in 2023, above the 4% and 3.5% forecast for the 'BB' median.
The rating agency’s forecast assumes lower revenue growth in line with
its growth forecast, as well as under-execution in planned public
investment. The government expects public investment to increase
from 2.4% of GDP in 2020 to 6% by 2026, a challenging task despite
the recent improvements.

4.9 Budget and debt - Romania

Romania’s general government budget will still stand at 6.3% of GDP in
2023, double the 3% threshold it has to drop under by 2024, according
to the European Commission’s Autumn Forecast published on
November 11.

The country’s general government budget’s deficit will shrink by 1.4pp
from 9.4% of GDP in 2020 to 8% of GDP in 2021 (on one-off elements)
but the fiscal consolidation will measure only 1.7pp over the coming two
years — leaving the public deficit at 6.3% of GDP in 2023, according to

125 SE Outlook 2022 www.intellinews.com