Macedonia needs stronger fiscal consolidation

The International Monetary Fund (IMF) said on Wednesday that the formation of the new government is a turning point for the Macedonian economy, and underscored this as an opportunity to rebuild policy space and revive reforms.Macedonia needs stronger fiscal consolidation due to rapid rise in public debt and high gross financing needs. On the fiscal front, the overall deficit narrowed to 2.6% in 2016, with the improvement largely due to under-execution of capital investment, spending constraints imposed during the pre-election period, and accumulation of payment arrears, the IMF said in its concluding statement on Article IV consultation with Macedonia on the country’s economic performance and policies.The IMF expects Macedonia to close 2017 with fiscal deficit equivalent to around 3% of GDP, while public debt is projected to rise to 47% of GDP, according to the statement. “[IMF] Directors welcomed the authorities’ intention to reduce the overall deficit gradually to 2% of GDP in the medium term, but stressed that this should rely on durable measures”.