Page 143 - SE Outlook Regions 2023

generated in 2022. Companies whose profit was higher due to the sale
of assets will not be taxed. The tax will be collected in 2023.

4.5 Budget and debt - Kosovo

At the end of October, Kosovo’s government adopted the state budget
for 2023 worth €3.2bn, which will be higher by about €0.4bn from the
2022 budget. About €750mn will be allocated for wages.

According to PM Albin Kurti, the 2023 state budget comes after "the
most successful year in history, in terms of budget revenues".

The draft budget has three objectives – economic recovery, mitigating
the impact of high inflationary pressures and ensuring macrofiscal
stability for the economic growth. The Ministry of Defence will receive
€123mn from the budget funds in 2023 or 20% more than a year earlier.

The International Monetary Fund (IMF) said that the draft budget for
2023 appropriately envisages a return to the fiscal rule deficit ceiling.
The implied rise in the fiscal deficit will provide a moderate fiscal
impulse of 1-2 pp of GDP, helping the economy soft land. Strong fiscal
buffers suggest a still comfortable financial position. Staff assesses
public debt to be sustainable with the public debt-to-GDP ratio
projected to remain below the legal ceiling of 30% of GDP throughout
the forecast horizon.

The World Bank expects the fiscal deficit to increase to 1.6% of GDP in
2023 from 0.8% expected in 2022 and to grow further to 2.1% in 2024.

The debt is seen at 21.9% of GDP in 2023, up by 1pp from 2022.

4.6 Budget and debt - Moldova

The government of Moldova has endorsed the 2023 budget, with a
public deficit target of 6% of GDP, or MDL18.5bn (€900mn).

The government expects a 2% GDP in 2023, after the 3% GDP decline
in 2022. The budget also assumes 15.7% average inflation next year,
down from 29.3% in 2022.

However, the financing of next year’s budget deficit largely depends on
external financing — which is provided by international financial
institutions and donors. The government envisages that only MDL3.5bn
of the MDL18.5bn deficit, meaning less than 20%, will be financed from
the domestic market.

The actual deficit is thus going to be adjusted in line with the external
financing available. The country has not pursued plans to issue
Eurobonds.

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