Parliament adopts 2005 budget rebalance
Macedonian Parliament adopted Tuesday a rebalance of the budget for 2005.
Setting of the fiscal policy objectives for 2005 remain unchanged by the budget rebalance aimed at maintenance of macroeconomic stability, stabilisation of public debt level and further relaxation of the monetary policy, Finance Minister Nikola Popovski said Monday explaining the changes and supplements to the annual budget before the members of the parliament.
Popovski said that the government in conditions of sustainable macroeconomic stability following the realisation of the incomes and expenditures in the first six months of this year assessed that adequate adjustment of certain parts of budget appropriations is needed by the end of this year.
"Stable budget is adopted in accordance with the defined macroeconomic framework and expected movements in the economy based on relatively successful 2004 on economic plan in which real growth of GDP was over 2.9%. Intensified positive trends are expected still during this year," Popovski said.
The policy is created in such a way to provide real growth of 3.8%, deficit in the basic budget of 0.9% and average inflation of 1.5% for this year. In this direction, Popovski said that fiscal policy for 2005 was set.
"The fulfilment of the basic goals was supported through the following politics - maintenance of the budget incomes and expenditures at around of 21% of the GDP, i.e. maintenance of the public expenditures on relatively same level in relations to the GDP last year, rational expenditures of the budget resources and public finances, decrease of the budget deficit by 0.9% of the GDP and full realisation of the development, social and reform component of the budget," Popovski said.
Popovski said that the economic developments in the first six months of 2005 presented an excellent basis for full realisation of the projections by the end of 2005.
The industrial production on a annual basis increased by 8.3% in the first five months and on a monthly basis the industry on May increased by 15.8% in relations to the same month last year. "We expect industry to increase more than the projected 6% on an annual level," Popovski said.
He informed that according to the latest data which will be announced officially tomorrow or at late day after tomorrow, the industry increased by 9.3% in the first 6 months of this year. "We consider that this is an excellent result," Popovski said.
"In the frameworks of the this index due to the increased influence of food and agricultural products the prices of goods are insignificantly lower while the prices of services are increased by 2.3%. That's why we expect an average inflation of annual level to be 1.2% by the end of 2005," Popovski stressed.
He said that the number of unemployed persons is significantly decreased in the first six months and currently amounts 371.746, which is 22.541 persons less than the end of 2004.
Positive movements are registered in the foreign sector where the export of goods in the first 5 months calculated in dollars is increased by 37.1% in relations to the same period last year and the import is increased by 20.3%.
Popovski said that the low inflation rate and price stability and denar exchange rate still remain main characteristics of the macroeconomic policy.
Explaining the reasons for changes and supplements to the budget, Popovski said that the continuation of the reforms and disciplined fiscal policy are aimed at providing long-term fiscal stability.
"Such stability must be maintained aside from numerous pressures for leaving this concept. The goal is Macedonia to join the developed market economies. The government confirmed this firm determination by signing two synchronised and exclusively important IMF and WB arrangements which will mark the economic perspective in the next mid-term period," Popovski said.
The main accent in reforms should be put on activities towards improvement of the investment and business climate, high liberalisation and flexibility of labour market.
Popovski said that the proposed changes and supplements to the budget enable full approximation with the international standards for reviewing the public incomes and expenditures.
He said that the main reasons for the proposed rebalance are surplus of incomes in the central budget of 2.64 billion Denar realised from dividend of the Telecom and increased payment of incomes from the planned.
By changes the deficit will decrease by half i.e. by 1.8 billion and 920 million Denar and will range between 0.7 to 0.8% of the GDP.
Rebalance foresees coverage of last's years loss of the National Bank of the Republic of Macedonia amounting to 1.2 billion Denar and 500 million Denar will be additionally transferred for recovery of the obligatory reserve of the National bank of the Republic of Macedonia.
The rest of the surplus amounting to 11.6 million Euro or 707 million Denar will be spent mainly on infrastructure projects.