Macedonian Govt Plans 5.5% Economic Growth, 2.8%/GDP Gap in 2009 Draft Budget

The government targets real economic growth of 5.5% next year, compared to 5.0% growth planned for 2008.

The budget gap for next year is set at 11 billion denars ($228.38 million/178.2 million euro), the ministry said in a statement on Friday. Budget revenue is set at 153.215 billion denars and spending is projected at 164.215 billion denars.

The government's fiscal policy for next year is again based on restrictive budget spending through a drastic cut of non-productive expenditures while boosting investments in strategic projects as the only way of dealing with the possible impact of the global crisis, the statement quoted Finance Minister Trajko Slaveski as saying at a news conference.

Overall, 59% of the planned budget revenue will be to be covered by taxes.

The coalition cabinet in Skopje dominated by the right-wing VMRO-DPMNE party introduced flat income and corporate taxes of 12% in 2007, and lowered it to 10% from 2008 in a bid to attract more foreign investment and reduce tax evasion. The flat tax rate replaced a corporate tax of 15% and personal income tax ranging from 15% to 24%.

Average annual inflation in 2009 is projected at 3.5%. This compares with consumer price inflation of 2.5%-3.0% projected for 2008 and 6.1% inflation recorded at the end of 2007.

Macedonia's economy grew by a nominal 6.5% year-on-year in the second quarter of 2008, faster than the revised growth of 4.0% in the same period last year. The country's GDP grew by a revised 5.0% in 2007, compared to 3.1% in 2006.

The Finance Ministry will submit the draft budget to parliament.

(1 euro = 61.7283 Macedonian denars)