Page 146 - SE Outlook Regions 2023

The fiscal consolidation will continue in 2023. The proposed budget for
2023 is aimed at overcoming the challenges of the global economic and
energy crisis, for which it allocates €250mn. The budget also lays the
foundation for accelerated economic growth in the medium term.

The draft budget for 2023 projected revenues of MKD282bn, up 14.8%
compared to this year and expenditures of MKD324.8bn 12.6% higher.

The budget allocated funds for increasing pensions, supporting
companies and farmers, for transfers to local self-government units, but
also €795mn for capital investments, which is 52.3% more compared to
2022.

Finance Minister Fatmir Besimi said that what is particularly significant
is that the 2023 budget is based on the ‘golden rule’ of economics,
which is that capital investments will be higher than the deficit. This
means borrowing will be used only to finance investments, capital and
added value projects, to accelerate growth and contribute to improving
the lives of citizens.

In November, the International Monetary Fund (IMF) approved a
two-year arrangement for North Macedonia under the Precautionary
and Liquidity Line (PLL) of about €530mn to address the economic
fallout of global shocks from the COVID-19 pandemic and Russia’s
invasion of Ukraine.

The approval of the PLL arrangement allows an immediate
disbursement of about €110mn, which would be followed by another
tranche of about €155mn upon completion of the first review planned in
May 2023.

The PLL arrangement will support the authorities’ policies and boost
international reserves, and can also serve as a catalyst to obtain other
external financing.

The World Bank said that with limited fiscal space, elevated public debt
and increased cost of financing, fiscal support needs to target the most
vulnerable.

Regarding the budget financing and the repayment of the debt in the
amount of MKD52.1bn stemming from due obligations, almost half of
which is from the 2016 Eurobond, will be carried out from domestic and
external sources.

Domestic borrowing will be realised through government securities or
domestic loans, while external financing will come from the issuance of
debt securities on the international capital market, withdrawal of a
tranche from the IMF’s PLL as well as favorable funds from
international financial institutions (IFIs).

North Macedonia’s Finance Minister Fatmir Besimi said that the

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