Skopje, 10 December 2024 (MIA) – The 2025 budget is a document through which the government outlines policy changes aimed at achieving fiscal consolidation, ensuring fiscal sustainability, and supporting economic growth. Built on realistic macroeconomic assumptions and fiscal projections, it guarantees the uninterrupted operation of institutions and the state, the regular servicing of obligations, and, most notably for the new government, its developmental focus by encouraging the realization of a significant investment cycle, stated Finance Minister Gordana Dimitrieska Kochoska during her presentation of the 2025 draft-budget to the members of Parliament on Tuesday.

As the Minister highlighted, the coming year will be a year of investments that will add value, "set the wheels in motion," and elevate us to a higher rung in achieving faster economic growth. Dimitrieska Kochoska announced public sector investments exceeding 47 billion denars, which are expected to have a substantial positive impact on economic activity.

According to her, the government’s new plan is built on the realistic execution of this strong public sector investment cycle, supplemented by investments in the private sector and local municipalities.

“We will focus on the revenue side to ensure more efficient revenue collection, which will not mean new tax burdens but rather a greater restriction on the grey, or informal economy, along with efforts to combat corruption and crime, particularly financial crime,” Dimitrieska Kochoska said.

The 2025 budget is developmental, incorporating a social component and based on sustainable and disciplined fiscal spending, reducing non-essential expenditures, and significantly improving efficiency and purpose of the use of budget funds.

It includes support and subsidies for citizens and businesses through clearly defined criteria for budget support, performance- and results-based budgeting, realistic budgeting principles, redesigning the budget structure, and increased capital investments directed toward implementing infrastructure projects and strategic planning of major infrastructure initiatives.

“A key feature of this budget is the trend of expenditure growth being lower than the trend of revenue growth. Specifically, revenues in this budget are increased by 13%, while expenditures are increased by 10% compared to 2024, contributing to fiscal consolidation and reducing the budget deficit by approximately 3.3 billion denars,” Dimitrieska Kochoska said.

According to the projects, the total revenues of the 2025 budget are planned at 358.8 billion denars, while expenditures are planned at 400.2 billion denars. These projected revenues and expenditures, she explained, result in a budget deficit estimated at an amount of 41.350 million denars or 4% of the projected GDP.

The government will continue its commitment to achieving gradual alignment with fiscal rules within the framework of the Fiscal Strategy 2025-2029 through the implementation of measures on both the revenue and expenditure sides.

“Total tax revenues in the budget are projected at 202.1 billion denars, which is approximately 12.8% higher than the revenues planned for 2024. These revenues account for 19.8% of the GDP for 2025, reflecting a slight increase in their share compared to the previous year. As core revenues of the budget, tax revenues make up 56.3% of the total revenue structure of the 2025 budget,” Dimitrieska Kochoska said.

Total expenditures (current and capital) are planned at a level of 400.2 billion denars, which is 10.3% higher, or approximately 37.4 billion denars more, compared to 2024.

“The most significant feature of this budget is its developmental component, with a substantial share of capital expenditures amounting to approximately 4.65% of GDP on an annual basis, planned at around 47.2 billion denars,” Dimitrieska Kochoska noted.

“In this way, fiscal policy for the upcoming year will be focused on creating the conditions for a new cycle of economic growth, ensuring a significant level of public investments that form the foundation for improving economic prospects, as well as for a better quality of life for citizens,” she added.

“In addition to the high level of capital investments from budget funds, significant funds have also been secured through loans from international financial institutions and bilateral creditors," she said before the members of Parliament.

In 2025, the government plans to continue its financial support and cooperation with municipalities, aimed at continuously investing central budget funds for capital infrastructure projects in municipalities, enhancing the financial stability of municipalities through a fair allocation of funds based on the principles of balanced regional development. It will also provide benefits and incentives for municipalities with well-planned budgets, high implementation rates, and strong local tax collection, along with an improved methodology for calculating current maintenance costs.

Significant investment allocations from the budget are planned in the area of road infrastructure, related to the design and construction of a section of Corridor VIII.

In 2025, the funds are to be allocated for the continuation of projects for the construction and rehabilitation of the railway line from Corridor VIII, the initiation of a project for the construction of a joint railway border crossing with the Republic of Serbia and the construction and equipping of the Tabanovce railway station.

In the area of municipal infrastructure and waste management, the construction of water supply and sewage systems in municipalities will continue with an intensified pace, financed by the new credit line from the European Investment Bank (EIB).

Another significant capital project to be implemented in this area is the Regional Solid Waste Project, which will be financed with a loan from the EBRD. The project aims to develop and establish regional waste management systems in the following selected regions: Southwest, Polog, Pelagonija, Vardar, and Southeast regions.

With a loan from the World Bank, the implementation of the Public Sector Energy Efficiency Project will continue, which will finance energy-efficient projects in municipalities, as well as public healthcare institutions under central government control.

As the Minister explained, funds are allocated for further development of technological-industrial development zones, construction of necessary infrastructure and facilities, and geomechanics research work.

For the healthcare sector, investments are planned for the construction and reconstruction of public healthcare institutions, as well as the procurement of medical equipment.

In the area of investments in education, child protection, and sports, capital expenditures are projected for the construction and reconstruction of primary and secondary schools, kindergartens, construction of school and sports halls, reconstruction of student dormitories, equipment and renovation of universities, and investments in sports infrastructure.

Significant capital investments are planned to support the agricultural sector, aimed at rural development, construction of hydro-systems, and investments to improve competitiveness and modernize agricultural farms.

Dimitrieska Kochoska stated that in the area of justice, in 2025, as part of the Project for the Reconstruction of Penal and Correctional Institutions, financed with a loan from the Development Bank of the Council of Europe, the implementation of a detention unit, a closed unit, and a central economic unit at the Idrizovo correctional facility will begin, and she announced it as one of the priorities.

Dimitrieska Kochoska informed the members of the Parliament that the government will once again borrow 500 million euros from Hungary, which will be used to cover the Eurobond issued in 2018, while the remaining funds will be secured through domestic investment.

"As of September 30, 2024, the national debt stands at 49.3% of GDP, while public debt is at 56.9% of GDP. According to the latest projections from the Ministry of Finance, the public debt will reach 62.7% by the end of 2024. By the end of 2025, it will be 62.1%, which clearly demonstrates that we are working seriously on fiscal consolidation," Dimitrieska Kochoska noted.

The parliamentary debate on the 2025 draft-budget will last for five days.

Photo: MIA archive