Rebalance or a lack of balance?

Zdravko Saveski

There are a number of reasons why there is little public interest in Macedonia regularly when it comes to budgeting or rebalancing. First, most often there is some political event distracting the public. In this case, the mega-scandal dubbed “Racket” and the government’s attempts to “manage” its “non-involvement” in it. Second, the lack and volume of data, which makes analysts usually prefer not to spend time analyzing them, preferring subjects that require less effort. Third, what is the point of the analysis? Do we have a democratic government that is ready to hear the voice of the expert and the general public? Yes, if one wants to believe that.
Before I go into the analysis of some aspects of the draft rebalance, I would like to point out one “curiosity”. Namely, the government adopted the proposal rebalance just days after the election of the new Minister of Finance Nina Angelovska. It says the government has passed a proposal for a rebalance, which was not prepared by the new Finance Minister. We know the reason. Zaev got the crazy idea to be the finance minister as well, but withdrew under pressure of the expert and general public and the reaction of the Anti-Corruption Commission. Therefore, as the rebalance was being prepared, there was no finance minister. The mere fact that the government was preparing a rebalance without an elected finance minister indicated that Zaev would seek a minister who would only nod her head and fulfill the wishes of those who really hold the reins of the government’s economic politics: boss Zoki and boss Kocho. And apparently in Angelovska they have found their English queen at the head of the Ministry of Finance. What I really do not understand is why Angjushev was not appointed Minister of Finance? He is, in fact, the actual Minister of Finance. And after the removal of Tevdovski, it will be even more so.
Let’s see the draft proposal-rebalance not prepared by the new finance minister. The catastrophic non-realization of capital investments is a very strong confirmation of this government’s inability. Last year, they changed the name of the country, making the economy less important. Zaev announced this year as the year of economy. And? The year is nearing its end, and there is no trace of the economic breakthrough, as expected. How could it be any different, when even the capital investments they had foreseen they did not manage to implement?
The biggest news of the rebalance is that the state will pay contributions to bosses that will increase workers’ wages to 6,000 denars. At first glance the measure may seem good, but once one sees the the context and details – it is not. The government’s motivation for the measure is to discourage payment of part of the “envelope” salary. This is a very widespread problem. According to Finance Think, in 2017, 18 percent of workers received the so-called “envelope” pay. As much as 62 percent of workers insured on a minimum wage receive an “envelope” pay. And because of the introduction of progressive taxation, it is possible that even more bosses would be reluctant to do so.
The government should respond to this problem, but not by – rewarding the violators of the law! Here’s what it’s all about. Some bosses cut workers’ salaries by not paying them social security contributions. They keep that money for themselves, further enriching their labor accounts. And they undermine the stability of the Pension and Health Fund by breaking the law, which requires payment of contributions and personal tax on the full amount of salary. And now the government is planning not only not to punish disobedience, but also, with the citizens ‘money, to make up for the non-payment of contributions, and the money that bosses cut from their workers stay in the bosses’ pockets.
And how do we interpret this “detail” of the rebalance? Although revenues from the budget on the basis of income tax, profit and capital gains are projected to the same amount as before, the income from social security contributions is reduced by as much as MKD 856 million. As the government plans to set aside 400 million denars for this measure, the reduction in total budget revenues for this amount is clear. But what is the reason for the decrease of the remaining 456 million denars? Does this mean that the government expects the practice of paying part of the “envelope” salary to continue and calculate it in the rebalance?
Let’s see the rest of the nonsense of the proposal. In addition to capital investments, the Ministry of Education and Science (which now has 843 million denars less) will suffer the most, while the Ministry of Interior (which will receive an additional 288 million denars) will gain the most. When less money is given to education and more to the police, how can one doubt that the country is heading in the right direction? It is worth mentioning that the budget for the MoI has never been higher, a fact that should be welcomed by any democratically minded citizen! It is a pity that Zaev did not find it necessary to boast of this great accomplishment of his government. He would undoubtedly get applause on the open stage. In education, two things need to be emphasized. First, the draft rebalance foresees a reduction in budget funds for salaries and allowances.
Most in higher education, and in secondary education, and the government managed to “save” at the expense of primary education salaries. Since it is not a matter of reducing employees’ salaries in education, it is probably about reducing the number of employees in education. After all, why hire new teachers? Isn’t the goal to reduce the number of public sector employees? The second “success” of the government in this regard is the new breaking of the record for the least funding for science. When SDSM came to power, the 2017 budget provided for a mere 0.30 percent of the budget for science. Although science is on a catastrophic level, and although science should also contribute to the economic progress of the citizens, although with very little money this percentage of budget allocation for science could be doubled, SDSM in 2018 – reduced these funds to 0, 20% of the budget. But obviously this was too much for them, so in the 2019 budget they cut their budget funds to 0.18, and with the rebalance they plan to cut it to 0.16 percent. At least since 2003, no budget has predicted a lower percentage of science funding!
The cuts have not only affected the Ministry of Education and Science. Both the Ministry of Labor and Social Policy and the Ministry of Agriculture and Forestry and the Ministry of Health have suffered. A fact that also speaks a lot about the “social” priorities of the non-democratic government in power. Due to lack of space, I will single out one data. In healthcare, for clinics in rural areas, according to this year’s budget, the government planned to allocate a miserable 50,000 euros. With the rebalance proposal these funds are reduced to – one big ZERO.
When a government forecasts a record high level of budget allocation for the Ministry of Interior, while breaking the record for the lowest allocation for science, cutting back on education and healthcare, and when it extremely nonchalant and arrogantly writes a zero for rural clinics, you know that there is something fundamentally wrong with this government.

Views expressed in this article are personal views of the author and do not represent the editorial policy of Nezavisen Vesnik