Macedonia Government Proposes Budget Cuts

The draft effort to balance the budget, which predicts cuts in some ongoing projects, is expected to be put before the parliament shortly.

The net savings will come primarily from goods and services, said Finance Minister Zoran Stavreski at yesterday’s short press conference following the government session.

On the other hand “more funds will be allocated to health and social service sectors, as well as pension funds," he noted, adding that the draft for balancing the budget does not contain any increases in taxes or reductions in salaries and pensions.

Journalists pressed the minister as to whether the controversial project for the revamp of the capital, dubbed “Skopje 2014”, would be affected by the proposed budget cut. Some observers previously feared that the revamp project could take away €200 million in funds needed for other measures.

"We tried to keep the continuity of projects, but there will be cuts in some," Stavreski said, without revealing which parts of this and other ongoing programmes will be affected.

Stavreski also announced the government's new set of austerity measures aimed at increased savings. As part of the move government ministers, vice ministers and Prime Minister Nikola Gruevski agreed to cut their own wages by ten percent. The same applies for other elected state officials.

Per diem payments for government employees and the administration will be reduced, the salaries in the public sector will remain frozen and steering and supervisory boards will see a 30 per cent decrease in fees.

The effort to balance the budget, the first this year, foresees a budget deficit of 2.5 percent of GDP, the same as the previous projection.

The current budget projection foresees total revenue of €2.34 billion and expenditures of €2.51 billion for this year.

Increases in the revenue and expenditure sides amount to 3.4 and 2.8 per cent, respectively. The government foresees GDP growth of 2 per cent, with an annual inflation rate of 2 per cent.