Skopje, 11 March 2025 (MIA) - The fiscal strategy is yet to play the role of a strategic document serving as an anchor for the country's macroeconomic and development policies. The strategy is changed too often, thus losing the long-term orientation for both the macroeconomic policies and the fiscal policy. Analysis for the period 2004-2023 has shown a tendency for stimulation of the economic growth through fiscal expansion, an aspect that needs to be reevaluated because it does not give proper results on the long run. The public debt has exceeded 60 percent in 2024 but the outstanding claims by the end of 2024 are not taken into account, meaning that the debt stands at about 65 percent of the GDP, which is in line with EU's financial and budget statistics, said Fiscal Council chair Gligor Bishev said on Tuesday.

Bishev told members of the Parliament's Committees on Economic Affairs and Finances and Budget, European experts and other officials that the Fiscal Council sees the Fiscal Strategy 2025-2029, which the Parliament has adopted, as proper.

"The Strategy represents a good framework for fiscal consolidation, with budget deficit at four percent in 2025, down to 2.8 percent in 2029. The Fiscal Council fully agrees and supports this dynamics. The public debt stands at 62 percent of the GDP in 2026 but current data shows that the fiscal debt is now at 60 percent, outstanding claims excluded. On the risks, we have pointed out that the fiscal capacity of the public revenues based on taxes and contributions is 32-33 percent of the GDP. The latest IMF study shows that the fiscal capacity based on tax revenues is estimated at 22.24 percent, whereas budget expenditures for the next four years are projected at 40 percent of the GDP. This is where we see the largest risk for realization of the budget strategy. We have recommended increased efficiency and cutting public expenditures, in parallel with rising fiscal discipline, especially among public institutions, state enterprises and local authorities, pension system reforms and environmental taxation, as well as convergence to the EU tax systems," said Bishev.

In the long term, the Fiscal Council wants to see reduced budget grants for pensions of under 30 percent, "because everything that is over this threshold makes the budget unsustainable and vulnerable".

"We have supported the Government's commitment in the Fiscal Strategy to have public investments at an average of five percent of the GDP, while in the Development Strategy 2024-2044, also adopted by the Parliament, they are projected at 6.5 percent of the GDP. The Fiscal Council recommends there be quantification of budget effects and no revisions of the fiscal priorities ahead of election cycles," said Bishev.

According to him, Macedonian fiscal rules fully meet the World Bank requirements: ensure long-term stability of public finances and the fiscal policy, enable proper response in circumstances of economic shocks or in need of further investments in infrastructure projects and development, while ensuring the creation of fiscal buffers during favorable periods.

In addition, Bishev highlighted the necessity for staffing and financial independence of the Fiscal Council.

Photo: Screenshot