The European Commission’s recommendation for the Republic of Macedonia to start European Union entry talks will boost investors’ confidence in the country and boost its economic expansion, Dragan Tevdovski said.
Macedonia’s economic growth is forecast to accelerate to 3.2 percent this year and 3.5 percent in 2019, after a stagnation in 2017, driven by solid private consumption and very strong exports, the Macedonian Finance Minister told Bloomberg.
The forecast reflects increased industrial output, lending and higher foreign investment, since Prime Minister Zoran Zaev’s government took office 11 months ago, ending the nation’s worst political crisis since the bloody breakup of Yugoslavia, wrote Bloomberg.
“The Commission’s position gives a huge impetus for further reforms” and is a great signal for domestic and foreign investors, further underlining the positive effects of the political stabilization and the good outlook for the future,” Tevdovski said.
“The biggest challenge is to take advantage of the current positive moment in the political and economic environment,” he noted.
Zaev’s cabinet took office in the first leadership change in a decade and has since restored ties with the 28-nation bloc. The country is working to solve a dispute over its name with neighboring Greece, which believes it to be a territorial claim on its northern province of the same name and has blocked Skopje’s efforts to join both the EU and the North Atlantic Treaty Organization, reported Bloomberg
“The country will achieve this year’s budget deficit target of 2.7 percent of economic output on excellent tax collection and cut it to 2 percent in a few years,” FinMin Tevdovski said.
The administration plans to raise income tax for the highest earners to 18 percent next year from a 10 percent flat tax now, which will help the cabinet raise revenues by about 0.4 percent of GDP, Tevdovski said. Corporate tax will remain unchanged at 10 percent, he said, according to Bloomberg.
Minister Tevdovski is taking part in the Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington.