Statement of the IMF Staff Mission to FYR of FYR of Macedonia
November 7, 2006Press Release No. 06/244
The following statement was issued on November 5 in Skopje by the International Monetary Fund's mission to FYR of Macedonia at the conclusion of discussions with the authorities:
"An IMF mission headed by Mark Griffiths has visited Skopje October 24-November 5, 2006 to discuss the Second Review under the Stand-By Arrangement. In its economic program, the Macedonian government aims to achieve sustained, high economic growth and increased employment and low inflation, with the aim of doubling living standards in the next 10-12 years. The mission supports these goals. The key to achieving them is to maintain macroeconomic stability, while implementing structural reforms that improve the business climate.
"The mission found that considerable progress has been made towards completing the review. The program's main macroeconomic targets for 2006 are being met, the fiscal position is strong, and interest rates have remained low. Despite the elections, a number of structural reforms have been implemented, including the establishment of a large taxpayer office and strengthening of banking supervision. Agreement was also reached on structural reform plans for 2007, including reducing licensing requirements, strengthening contract enforcement, and liberalizing telecommunications.
"Although there has been progress, further steps will be needed to complete the review. For the remainder of the year, it will be essential to keep budget performance on track. Here, the mission strongly supports the authorities' commitment to pass a supplementary budget consistent with the 0.6 percent of GDP deficit target. Progress also needs to be made towards agreement on next year's budget, including measures to pay for lower taxes. In addition, the new banking law needs to be submitted to Parliament, social security contribution bases harmonized, plans for attracting foreign direct investment need to be clarified and included in the budget, and measures should be taken to improve the financial health of the energy sector.
"Provided sufficient progress is made in the coming weeks, an IMF Executive Board meeting to complete the Second Review could be held in early 2007.
"Finally, the mission would like to thank the Macedonian authorities for their cooperation throughout the mission and for their generous hospitality."