Minoski: The crisis impacts on the economy, necessary correction of the treasury

You took over one of the most important posts in the country. What will be your biggest priorities?

“The main priority is enabling the opening of new jobs, as well as improvement of the citizens’ standard of life, attracting foreign and supporting domestic investments, continuous improvement of the business environment and strengthening of the fiscal discipline.

In light of the main priority, we recently presented, and should begin implementation next month, of the project “Macedonia is hiring 2” – the sequel to a very important economic measure of the government that yielded 19.000 new jobs in just one year, with a further 15-20.000 expected over the next period, totaling 40.000 new jobs from this measure alone. The numbers are extraordinary, considering they mean providing sources for 40.000 families in Macedonia through one measure.

The current unemployment rate is the lowest in the history of the country. More than 150.000 new jobs were created over the last ten years. It represents an additional challenge for an even more intensive action towards solving the structural unemployment problems, which have dragged for several decades, as well as promoting the active approach of the labor market that provides a better coordination between the supply and demand of labor.

Foreign investments play an important role in the creation of new jobs. The foreign investors bring new technologies, new knowledge, experience and new standards that add value to the Macedonian export and the Macedonian workers, who become more competitive on the labor market through training. Last year, there were 30 foreign investments in Macedonia, while 17 foreign companies announced their investment and/or began construction and production in the first five months of the year. By the end of 2016, we expect at least as many companies to decide to invest in Macedonia.

At the same time, we are working on networking of domestic companies that will cooperate with foreign partners, eventually resulting in transfer of knowledge, good business practices, increased production and increased number of employees at the domestic companies.

The increase in employment of qualified workers will lead to an increased need of such workers, which will lead to an increase of their salaries.

The investments are not possible without a good business climate, which is something the government is actively working on. The activities for improvement of the business environment, aimed at simplification of the regulation and procedures, increased flexibility of the labor market and better access to funds will continue over the next period.

Domestic investments are equally important as the foreign. That is why it is important to provide liquidity of the domestic companies through good credit lines, such as the 350 million euros from the Macedonian Bank for Development Promotion, the Innovation Fund, but primarily through low taxes and a generally good business climate. Macedonia’s taxes are the lowest in Europe, which enables the companies to invest their funds in business development.

A continuous and sustainable economic growth is possible only through export-oriented and competitive private sector, based on products and services with high added value.

How do you think that your previous position and experience as Director of the Public Revenue Office will benefit you as Minister of Finance?

“Being Director of PRO certainly is a good foundation. The Ministry of Finance creates policies and laws, while PRO implements them practically. The PRO’s share in the budget’s revenue is more than 65%, making it one of the most important pillars. The activities started during my tenure, which led to an increased tax charge, should continue over the next period for an even greater tax compliance rate. Before being appointed Director of the PRO, I was the Director of the State Market Inspectorate and those two institutions are particularly complex, considering the fact that both include inspection supervision. The emphasis in the communication with the private sector was in the so-called soft approach, which implies communication, education and stimulation of the voluntary compliance. I will continue implementing these good practices in my new position as well. In my opinion, the Minister of Finance should be in constant contact with the businessmen, be directly informed about the problems in the private sector and suggest policies and legal solutions that will work in practice.

I have been actively involved in the reforms of the labor market throughout my professional career through introduction of legal measure for greater flexibility, creation of employment policies, promotion of active measures in the labor market, introduction of the electronic check-in/check-out system, etc. I was also actively involved in the activities for introduction of a third pension pillar as part of the reforms of the Macedonian pension system. I am also experienced in working in projects aimed at reforms of the payment system, improvement of the banking supervision, reduction of the circulation of cash by stimulating the use of credit cards, as well as activities related to improvement of the work of the Macedonian credit bureau. Part of my previous post was the strategy for improvement of the export and strengthening of the capacity of the project “Invest in Macedonia”. I believe that my accumulated experience will be of great benefit to the position of Minister of Finance.

What is your position about the direction of the Macedonian economy?

“The current political turmoil will certainly have an effect on the economy and economic activity. The companies are afraid to invest, the citizens are careful about the consumption of durable goods and the banks are more prudent about giving loans. Despite the solid construction activity, the first quarter recorded a decrease in the gross investments. Such caution during political instability can lead to a smaller economic growth than expected.

We have seen high rates of industrial production growth during last year and early this year. That rate in April, while still positive, has stalled a bit.

A positive moment is that the export is continuing to grow by solid rates, mostly because of the export from the free economic zones.

What is the task of the fiscal policy in conditions when the investments and private consumption are dropping?

Our goal is to secure the liquidity of the private sector through regular payment of salaries, pensions, subsidies and social care while maintaining a certain level of capital expenditure in order to support the economic growth.

Considering the current political situation, are there any budgetary changes planned?

Despite the well-founded economic policies, the political crisis has started to show its effect. That is why certain corrections will have to be made. The rebalance will be a response to the effects of the political crisis and the decreased growth through support of private consumption and public investments. Capital investments are still at a high level, even higher than last year. We will continue implementation of the big infrastructure projects – new highways, regional roads, and local roads, reconstruction of the railway system, as well as new schools and hospitals.

In accordance with the established practice, the announced increases of social care in July and pensions in September will be realized.

Do you plan on issuing a new Eurobond?

Considering the corrected growth projections and the prolonged political crisis in the country, the government gave permission to the Ministry of Finance to explore the market for issuing a Eurobond. Over the next period, a team from the Ministry will explore the market and if good conditions are created, a Eurobond would be issued.

In that direction, and in light of the recent referendum of the citizens of Great Britain to exit the EU, we are carefully following the situation on the world security markets. The results of the referendum will have a direct influence on the movements on the international capital market.

Why is it necessaryy to issue a Eurobond?

The political crisis doesn’t seem to end any time soon. The Eurobond can be seen as a bank guarantee at the National Bank that will provide safety if the political crisis is prolonged.

The influx of fresh capital in the country will serve as a guarantee for the macroeconomic stability and will bring positive movement in the economy, which is influenced by the political crisis. The foreign capital will help reduce the debt in the domestic market, which in turn will increase the crediting funds and motivate the domestic companies to invest. All of this will lead to an increase in the private consumption, resulting in a positive economic activity and bigger economic growth.   

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