Fiscal and Monetary Policy in Republic of Macedonia
Expert: Blagoja Nanevski, PhD 1. Fiscal and Monetary Policy
1.1. Planned and implemented activities of the Government of RM in the reporting period 1.1.1. Fiscal Policy In the reporting period, the fiscal policy was directed towards realization of several previously planned activities, as well as undertaking measures which should have acted in the direction of gradual drawing of the national economy out of the recession phase. They are mainly based on the following: a) Further liberalization of the fiscal policy, i.e. increasing the fiscal freedom of the entrepreneur with the purpose of stimulating the development of the country. That characteristic is determined by many previously undertaken measures and several additional ones that were noticed and highly evaluated in the annual report of the “The Heritage Foundation” and “The Wall Street Journal” which will be detailed elaborated in the following chapter of this Report; b) Continuing the cut in the social contributions rates. As of 1 January, 2010, the contribution rate for pension insurance was cut from 19 to 16.5 percent, the contribution rate for health insurance was cut from 7.5 to 7.0 percent, and the contribution rate for employment was cut from 1.4 to 1.2 percent. The aim of these measures is cutting down the financial burden of the business subjects and creating the possibility for giving financial means which will be used for stimulating production, thus increasing the number of the employees (decreasing the number of unemployed); c) Realization of the planned dynamics for approving subsidies for certain agricultural products. With the budget of RM for 2010, they are planned to reach the amount of 100 millions of euros. Their realization in the period of 2010 would mean completing the program-planned amount for granting subsidies in agriculture and thus its adaptation to the corresponding system of agricultural financing determined in the European Union. The bulk of the subsidies is planned to be
1.1. Planned and implemented activities of the Government of RM in the reporting period 1.1.1. Fiscal Policy In the reporting period, the fiscal policy was directed towards realization of several previously planned activities, as well as undertaking measures which should have acted in the direction of gradual drawing of the national economy out of the recession phase. They are mainly based on the following: a) Further liberalization of the fiscal policy, i.e. increasing the fiscal freedom of the entrepreneur with the purpose of stimulating the development of the country. That characteristic is determined by many previously undertaken measures and several additional ones that were noticed and highly evaluated in the annual report of the “The Heritage Foundation” and “The Wall Street Journal” which will be detailed elaborated in the following chapter of this Report; b) Continuing the cut in the social contributions rates. As of 1 January, 2010, the contribution rate for pension insurance was cut from 19 to 16.5 percent, the contribution rate for health insurance was cut from 7.5 to 7.0 percent, and the contribution rate for employment was cut from 1.4 to 1.2 percent. The aim of these measures is cutting down the financial burden of the business subjects and creating the possibility for giving financial means which will be used for stimulating production, thus increasing the number of the employees (decreasing the number of unemployed); c) Realization of the planned dynamics for approving subsidies for certain agricultural products. With the budget of RM for 2010, they are planned to reach the amount of 100 millions of euros. Their realization in the period of 2010 would mean completing the program-planned amount for granting subsidies in agriculture and thus its adaptation to the corresponding system of agricultural financing determined in the European Union. The bulk of the subsidies is planned to be