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Nikola Gruevski says the government will pay off its entire debt to the private sector by February 2013 in order to improve the economy's overall liquidity.
Macedonian Prime Minister, Nikola Gruevski
Amid signs that Macedonia is entering recession, and following complaints from businesses about unpaid bills, Prime Minister Gruevski has for the first time admitted that delayed payments of VAT returns and invoices to companies is a problem.
“Our goal is to return half of the sum by the end of November. By the end February 2013 the problem will be solved,” Gruevski said, without specifying exactly how much the government owes the private sector.
The government has until now denied owing big sums to firms in VAT returns and in commissioned but unpaid work.
But many businessmen have indicated that outstanding government debts are a major factor in their liquidity problems.
“It is a virtue to admit a policy is wrong and to try to fix it,” Branko Azeski, the head of the Economic Chamber of Macedonia, said afterwards.
Another body, the Association of Economic Chambers of Macedonia, in July warned that many companies face “chronic liquidity problems” and that there were no signs of improvement.
Recent data reveal that roughly half of all the firms in Macedonia now have frozen bank accounts.
The opposition Social Democrats described the Prime Minister’s decision to address the issue of debt to the private sector as insincere.
“If he was sincere, he would have disclosed the sum that the state owes firms. That way we would have been able to monitor whether companies will get their money or not,” Zoran Jovanovski, the Social Democrats' vice-president, said.
The opposition party has previously mooted that the size of the debt may amount to hundreds of millions of euro.
Gruevski said that to prevent the problem from reoccurring, the government was going to make resolving this issue a fiscal priority in 2013.
Macedonia has had a tough time this year. Amid shrinking exports caused largely by the European crisis, the country marked three consecutive quarters this year with minus growth and with no signs of improvement on the horizon.
As part of its effort to keep the economy afloat in crisis, over the past two years the government has increased spending on infrastructure.
But the government also passed a law allowing it to postpone payments for such work, and many firms have complained that this is unfair.
The World Bank in its latest report predicts a difficult year for the Western Balkans. It forecasts shrinking economic activity generally, as well as rising unemployment.
Half of Macedonian companies have frozen bank accounts because of their severe liquidity problems, latest official data show.
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