The Government will carry out a Budget review in the coming week, reducing it by five percent. This results from the European crisis by the end of 2011 and the onset of 2012, accompanied by the weather conditions in the first two months, which had an effect on the reduction of the companies' operations and citizens' consumption, said Vice Premier and Finance Minister Zoran Stavreski on Wednesday.

According to him, the review aimed at improving the budget's liquidity and maintenance of low taxes.

"The review will improve the budget's liquidity. It will correspond to the situation in the first three months, with the expectation that economic activities and budget revenues stabilize by the year-end. However, events from the first quarter, influenced by the European economic crisis, will reflect in the total budget revenues for the entire year", said Stavreski.

He added that industry, construction, agriculture, traffic, hospitality and tourism are expected to contribute to economic stabilization and achievement of projected revenues.

Stavreski emphasized that tax hikes, which many European countries have applied instead of reducing budget deficits, is not a good measure, since it would contribute to increase of costs for the economy and directly hit citizens.

"Budget deficit will remain as projected, at 2.5 percent of the GDP. This is one of the key benefits of the fiscal policy, representing a significant indicator for domestic and foreign investors", he said, adding that the GDP growth rate projections would also be altered.

The review encompasses all segments, except for pensions, salaries, social contributions and agriculture subsidies.

With regards to capital projects, the FinMin said dynamics of realization would be monitored, accompanied by reduction in the ones that are delayed.

"We will try to disrupt the dynamics of capital projects as less as possible", said Stavreski.

He underlined that total budget revenues in the first quarter were higher by 1.2 percent compared to 2011, but by nine percent lower than projected.

The budget review will result in cuts amounting to Denar 7-7,5 billion (EUR 116-124 million).