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SKOPJE (Macedonia), May 24 (SeeNews) - Macedonia's economy is expected to expand at a progressively faster rate by 2019, but the projection will be put into question if the country fails to regain investor confidence, the Council of the European Union has said.
Even though household consumption and exports remained robust during 2016, the protracted political crisis slowed down Macedonia's GDP growth, as investments significantly declined, the Council said in a statement on the joint conclusions of the bloc's annual economic and financial dialogue with the Western Balkans and Turkey published on Tuesday.
The Council noted that Macedonia has implemented just to a limited extent the targeted policy guidance set out in last year's conclusions.
It urged the country's authorities to develop a proper fiscal consolidation strategy by defining and and costing concrete revenue and expenditure measures on a multi-annual basis, whilst protecting growth-enhancing spending.
"While adhering to its targets for fiscal consolidation, the government has still not put forward any supporting measures," the Council said, adding that Macedonia needs to improve its budget planning capacity and fiscal transparency.
The country's economic development is further hindered by insufficient transparency and inadequate planning of public finances, as well as by a weak procurement framework, the Council noted. It called upon Macedonia to address this issue by adopting a comprehensive and credible public finance management reform programme.
"Structural obstacles to growth and competitiveness include an excessive state influence in the economy, an underdeveloped private sector, an unpredictable regulatory environment without due stakeholder consultations, weak access to finance, informalities, declining human capital due to inefficiencies in the education system, skills mismatch, high unemployment (especially for youth and long-term) and low employment rate of women and people with low qualifications," the Council said.
The country has been without elected government since 2015, when the coalition cabinet led by nationalist VMRO-DPMNE party resigned amid a wiretapping scandal. Currently, Social Democratic party leader Zoran Zaev is in talks for forming a coalition government with ethnic Albanian parties which entered parliament after EU-brokered early election held in December.