Government adopted the Supplementary Budget

7th July 2017, Skopje - Supplementary Budget for increase of wages, support to domestic enterprises, job creation, as well as for retaining the youth in Macedonia. 

Address by the President of the Government of the Republic of Macedonia Zoran Zaev at the occasion of adoption of the 2017 Draft Supplementary Budget by the Government:

Please allow me, in the presence of the Minister of Finance, to inform you that the Government adopted the Supplementary Budget today, submitting it to the Assembly, according to a proposal coming from the comprehensive and thorough analysis of the Ministry of Finance, which since the Minister took office, was fully committed to leveling and attentively projecting all budget items as regards the revenues and the expenditures.

Main objective of the Government was preparing a Supplementary Budget, which in the best possible way, will harmonize the differences between the projections and the performance, as well as proposing a budget that will provide for realizing the policies of the new Government’s Programme, which we promised to the citizens of the Republic of Macedonia, that they will be realized according to the envisaged dynamics.

This Supplementary Budget will provide for conditions of smooth implementation of the financial policies of the new Government, thus creating the necessary conditions for serving both the citizens and the businesses of the country.

Main instrument we applied for this Supplementary Budget was reducing the non-productive costs, thus saving significant amount of financial resources, which will be intended precisely for the citizens.

We should take into account that the Supplementary Budget is not a new Budget, but it is a matter of its adaptation, whereby such adjustment was made by projections, according to which, the revenues for the next period are reduced to real expectations, and the budget deficit is not increased, i.e. it is projected at 2.9% of GDP.

Supplementary Budget was also prepared on the basis of the projections on economic growth, i.e. the Gross Domestic Product. Projections of the previous Government were that GDP in 2017 will account for 3%. Taking into consideration that the GDP growth in the first quarter amounted to 0%, our projections are that 2.2% growth will be achieved by the end of the year. These projections are real, if we take into account that the World Bank forecasted growth of 2.8%, while the National Bank of Macedonia forecasted 2.7% growth.

These interventions and such designed Supplementary Budget are a result of the cost-effective operations of this Government.

Please allow me to underpin our stance with arguments. In fact, amendments providing for cost-effective operations and the Supplementary Budget refer to the following:

Revising the revenue side of the Budget by 1.5% downwards, i.e. by Denar 2,907 million in line with the performance in the first six months of the year.

Reallocating the funds among the budget users intended for payment of salaries.

Allocating additional Denar 1245 million in the Pension and Disability Insurance Fund so as to provide for smooth payment of pensions and costs for the second pension pillar, something that should have been projected when projecting the Budget, as well as additional Denar 200 million for timely payment of all guaranteed social rights of the citizens of the Republic of Macedonia.

Reducing all non-productive costs of the Government and all government institutions, such as business trips, entertainment expenses, economic promotions and advertising. Thus, the costs are being reduced by more than 10%.

As for these costs, I would like to inform you that the largest cuts were made at the budget of the Prime Minister, or the item- Government of the Republic of Macedonia.

Total funds, by cutting the Prime Minister's budget, amount to somewhat more than Denar 420 million. These are the funds that were planned to be spent for campaigns, broadcasting and re-broadcasting advertisements abroad, as well as for selective distribution to certain citizen’s organizations.

For comparison purposes, in the so-far practice, no Supplementary budget included any cuts of the Prime Minister’s budget. On the contrary, the budgets of the previous Prime Ministers have only increased from year to year.

Dear all,

The Supplementary Budget we submit for adoption before the Members of the Parliament, speaks in favour of the fact that this Government, with their cost-effective operations, takes care and supports the citizens of our country, being focused on improving the living standard, as well as supporting the small- and medium-sized enterprises.

To that end, modifications and amendments to the 2017 Budget comprise funds for:

Subsiding the minimum wage, so as for it to amount Denar 12 thousand, as of 1st September. This measure envisages for the Government to subsidy around 70% of the necessary growth of gross wage, covering around 70 thousand of our employees, fellow citizens: Supplementary Budget will permanently resolve the issue of redundant workers not being covered in the existing legal solutions until now. These are our fellow citizens, who protested in cold winter and hot summer throughout the country for years. This measure will cover around 3000 persons and their families who will acquire right to monthly allowance: Cutting the non-productive costs in the Budget, will also provide for support to domestic tourism, by subsidizing annual vacation of the workers with low revenues in the amount of Denar 60 million. These are workers mainly from the leather and textile industries. This also means support for the tourist capacities of the Republic of Macedonia and annual vacation for the lowest paid workers.

Modifications and amendments to the 2017 Budget of the new Government cover all this.

And that is not all:

EUR 9 million or around Denar 500 will be used for the active policies and measures aimed at supporting new employments. When we announce this, we mainly take into account the young people and the “Guarantee for Young People” Project as part of this Government’s Programme, by which every young individual in the country will be offered either employment, additional education or practice and training, so as to be competitive on the labour market and willing to stay and work in his native country Macedonia. Around Denar 135 million will be intended for supporting the small-and medium-sized enterprises, as well as the domestic Greenfield investments. This means that as soon as the Supplementary Budget is adopted, the conditions applying for foreign companies will instantly apply for domestic companies as well. Support as regards the tax exemption, personal income tax and profit tax, direct support in the field of infrastructure, direct state aid depending on both the number of jobs ad the degree of usage of raw materials from national origin; These modifications and amendments to the Budget include Denar 500 million for supporting the attraction of donations from the IPA Programme so as to intensify the activities supported by the EU in pre-accession period of our country with respect to the Euro-integration.

We will support the problem of farmers, cyclically occurring every summer and autumn, by direct state intervention, the ultimate goal of which is protection of the farmers as regards attaining a price, which means minimum costs for their operations. As of 1st September, we will start resolving the crucial issues for the agricultural works and the village life. We will commence a procedure of leveling off and tamping the country roads throughout Macedonia in the total amount of Denar 30 million, and several other measures, which we will announce on ongoing basis.

Dear all,

From macroeconomic point of view, I will mention only several points.

Tax revenues were planned to be collected with 8.9% rate, while Ministry of Finance projected this rate at 6.9%.

Previous Government projected the total revenues at Denar 187.6 billion, while our projections are at around Denar 184.7 billion by the end of the year.

Expenditures were projected at Denar 206.2 billion, while under this Supplementary Budget, they are projected at Denar 203.3 billion.

This year's budget deficit is projected at Denar 18.6 billion, i.e. 2.9% of GDP, i.e. it is not increased given that the previous Government projected it at 3%.

Respectable citizens, we said that the funds will be aimed for the citizens, the wages will be increased and the domestic enterprises will be given support for creating new jobs.

For that very reason, we stand upright before you with actual reforms, by which conditions will be created for new financial and economic policies. These new policies are vital since they will provide for better life of all people in Macedonia!