Angelovska: Sooner-than-expected reopening of the economy, revenue collection in June better than the projected one

2nd July 2020, Skopje - Revenue collection in June has been significantly better than the projections, thereby indicating sooner-than-expected reopening of the economy.  Revenue collection in June was lower by 9.6% compared to last year, being an improvement in relation to the previous two months. Certain duties even recorded significant overperformance compared to last year, such as personal income tax and contributions. This pointed out by Minister of Finance Nina Angelovska at one of the regular press-conferences on the monthly Budget execution, which to the end of greater transparency, are carried out since the start of the COVID-19 crisis.

In the January-June period, total budget revenue collection accounted for 44% of the Supplementary Budget or Denar 87.4 billion. This was by 9% lower compared to the same period last year. As for the projections, the performance percentage is almost the same as last year, the Minister pointed out, indicating that the revenue collection dynamics has been preserved 

-It is worth mentioning that the total revenue collection in June is significantly better than the expectations, - the revenue collection in June is by 9.6% lower compared to June last year, which were projected to be lower by 20% according to the respective scenario. Tax revenues in the first half of the year dropped by 13% on annual basis, amounting to Denar 47.3 billion. In June alone, according to the scenario under the Supplementary Budget, the projections were revised downwards with an expected decline of somewhat higher than -20%, while the realized drop accounted for -14.4%. This was a positive difference of around Denar 700 million. Following the drop of 31% and 29% respectively in April and May, there is a positive movement and improved tax collection – Angelovska said.

She pointed out that as a result of the Government measures to support the payment of wages, the personal income tax revenues experienced positive e trends, where growth of 1.7% is observed, as well as the contributions increasing by 8% in cumulative terms since the beginning of the year.

 VAT also recorded upward trend. While VAT declined by -43.5% and -33%, respectively in April and May, its drop accounted for -7.5% in June. The negative rates declined in the second quarter.

VAT refund has also been smooth and the companies receive refund on a regular basis.
In times of crisis, VAT refund in the first half of 2020 is higher by Debar 660 million compared to the same period last year or by 6% more. The mitigation of the decline in VAT revenues, among other things, is due to the implemented measures aimed at stimulating the personal consumption, the Minister said.

The expenditures in the first half of the year recorded growth on annual basis, mostly as a result of undertaken measures aimed at fighting against COVID-19 crisis, Minister of Finance said, by which total expenditures amounted to Denar 113 billion, increasing by 9.9% on annual basis or by Denar 10.2 billion. This increase of the expenditures is justified due to the payment of: higher pensions, social welfare, wages, as well as support for companies and citizens affected by COVID-19, amounting to around Denar 5.4 billion or EUR 88 million. The budget deficit in the first half of the year was realized in the amount of Denar 25.9 billion or 3.8% of GDP, being in line with the projections, i.e. in accordance with the planned dynamics.

-The purpose of the Ministry of Finance is to ensure continuous Budget execution, without any delay, within the legally set deadlines, i.e. payment of wages to the employees, timely payment of allowances to the socially vulnerable categories, prevention of accumulation of arrears, as well as timely VAT refund. This also includes the COVID-19 –related measures, support the state provides to citizens and companies, in accordance with the possibilities, through the domestic payment card, the subsidized wages and contributions, as well as the deferred payments of tax liabilities. The country itself is obliged and liable for providing and delivering public goods and services to all, especially now, in these difficult times, Angelovska said.

Minister of Finance pointed out that she expects a gradual recovery of the domestic economy in the third and the fourth quarter, which will be supported by the implementation of the third set of measures aimed at reviving the economic activity.