Skopje, 5 November 2023 (MIA) — Each year, the gray economy costs the state as much as the building costs for the Corridor 8 or Corridor 10d highway sections, four hospital centers, or for reconstructing all school buildings in the country, Minister of Finance Fatmir Besimi wrote in a recent op-ed.

According to the Ministry of Finance in a press release, Minister Besimi wrote that if the entire informal sector were formalized, there would be no need for borrowing to finance the national budget.

He noted that the state's five-year Strategy on the Formalization of the Informal Economy would help through strengthening the system for reducing the gray economy as well as raising the tax morale.

"The informal economy is one of the biggest structural obstacles for the convergence of developing countries with developed economies. This also applies to the convergence of our economy with the European Union," Besimi wrote.

"Tax revenues after fully formalizing the informal sector, without any change in tax policy, would be equal to the capital expenditures in the annual budget," he wrote, citing estimates that the informal economy amounted to about 30% of the country's GDP.

The finance minister stressed that to reduce the gray economy, it should be made unprofitable. This would require deterring businesses from participating in the shadow economy and incentivizing participation in the formal sector.

In addition, he said, improvements to labor relations regulations were under way, together with efforts to raise public awareness of the underground economy and tax morale through the portal vnesiboja.mk. mr/