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FinMin Angelovska: Budget revenue higher than expected, economy recovering

Realization of total tax revenue in June is better than expected, noting a 9.6% decrease compared to 2019, in contrast to the projected 20%, Finance Minister Nina Angelovska told a press conference Thursday.

Skopje, 2 July 2020 (MIA) – Realization of total tax revenue in June is better than expected, noting a 9.6% decrease compared to 2019, in contrast to the projected 20%, Finance Minister Nina Angelovska told a press conference Thursday.

She added that despite challenges the Macedonian economy is facing due to the COVID-19 pandemic, budget execution is going according to plan, stressing that implemented measures have shown results and gradual recovery of the domestic economy is expected in Q3 and Q4 of 2020, with the realization of the government’s third set of economic measures.

“Data shows that economic recovery has started and is going better than expected. Total revenues note a decline, but only a mild one, while some expenditures have grown compared to this period last year,” the Minister said.

She underlined that in January-June 2020, realization of total budget revenue was 44% of the budget rebalance, amounting to Mden 87.4 billion, which is a 9% decrease compared to the same period in 2019.

Angelovska noted that realization of total revenue in June 2020 is significantly better than projected 20% decrease and is only 9.6% lower compared to June 2019.

She stressed that tax revenue in the first half of 2020 has decreased by 13% at annual level and stands at Mden 47.3 billion.

“June projections, in line with budget rebalance scenario, expected a 20% drop, but tax revenue decreased in reality only by 14.4%. This is a difference of about Mden 700 million. After April and May drops of 31% and 29% respectively, tax realization is improving,” Angelovska told the news conference.

Personal income tax revenue is also on the rise, registering a positive growth rate of 1.7% in June, after the -11.7% in April and -25.7% in May. This, she added, is due to government measures helping companies hit by COVID-19 pay salaries.

Improvement has been registered in VAT revenue as well, which stands at -7.5% in June, after the -43.5% and -33% in April and May respectively. Moreover, VAT return, Angelovska said, is uninterrupted. Despite the crisis, it’s Mden 660 million, i.e. 6% higher compared to the same period in 2019, mainly due to measures aiming to increase personal spending.

The Minister noted that the growth rate of contributions, which stand at a total of Mden 31.7 billion, is 8%. This, she underlined, is a good sign for labor market activity. The growth rate shows the effect of measures taken to retain jobs in the fight against COVID-19.

“12% increase in this portion of revenues shows that the economy has responded well to measures. In April and May, rates were 1.5% and -0.9% respectively, making improvement evident,” Angelovska said.

Expenditures in the first half of 2020 have, according to the Minister, saw an increase at annual level, due to measures taken to mitigate the effects of the coronacrisis.

“Total expenditures stand at Mden 113 billion, a 9.9% increase at annual level. This is due to Mden 5.4 billion, i.e. EUR 88 million for support of citizens and companies affected by COVID-19. More than half of expenditures’ increase is due to COVID programs and the rest due to higher pensions, welfare, and increased salaries in the health and education sectors,” Angeloska said.

Budget deficit in the first half of 2020 stands at Mden 25.9 billion, i.e. 3.8% of the GDP and is in line with projections.

The Finance Minister stressed that stakeholders aim to enable uninterrupted budget realization, making sure among other things that salaries and contributions are timely distributed.

COVID measures and state support for citizens and companies, Angelovska added, in the form of payment cards, salary subsidies, etc. are part of the plan.

Gradual recovery of the domestic economy, she underlined, is expected in Q3 and Q4, with the realization of the government’s third set of economic measures.

https://youtu.be/zIGm9LN6UCY

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