IMF Executive Board concluded the regular annual consultations with Macedonia

22nd November 2017, Skopje – At the occasion of concluding the regular annual consultations with Macedonia under the so called Article IV, the IMF Executive Board stated in the press release that the formation of the new government is an important turning point for the Macedonian economy, and underscored this as an opportunity to rebuild policy space and revive reforms. IMF noted the negative impact of the prolonged political crisis on economic growth, as well as the limited progress on structural reforms.

According to IMF, economic growth in 2017 is projected at 1.9%, while the expected inflation rate accounts for 1.2%. Projected budget deficit in 2017 accounts for around 3% of GDP, while public debt is projected at 47.1% of GDP.

As regards the press release related to fiscal policy, the Executive Board emphasized the need for fiscal consolidation, in light of the rapid rise in public debt in the past and high gross financing needs. Board welcomed the Government's intention to reduce the overall budget deficit gradually to 2% of GDP in the medium term, but stressed that this should rely on durable measures. Executive Board also supported the Government's plan to strengthen public finance management and increase fiscal transparency.

As for structural policies, the Executive Board urged the authorities to intensify the pace of structural reforms to increase employment and boost productivity. They welcomed the Government’s plan to support employment and social inclusion, which need to be carefully targeted. In order to preserve competitiveness and fiscal sustainability, the Executive Board stressed the need to keep wage growth in line with productivity developments. In addition, in light of an aging population, they noted the importance of increasing labor force participation, as well as the active labor market policies. Directors advised further improvements in governance and public administration, trade-enabling logistics, and skills to boost FDI inflows.

At the same time, IMF published the regular annual report on Macedonia, which is a result of the regular IMF Mission in Macedonia, held in the period 6th September – 19th September 2017.