{"id":9324,"date":"2023-11-03T10:26:14","date_gmt":"2023-11-03T10:26:14","guid":{"rendered":"https:\/\/nkeu.mk\/?p=9324"},"modified":"2023-11-03T10:27:27","modified_gmt":"2023-11-03T10:27:27","slug":"9324","status":"publish","type":"post","link":"https:\/\/nkeu.mk\/en\/2023\/11\/03\/9324\/","title":{"rendered":"Second Session of Working Group \u2013 6, Anticorruption, on the topic: \u201eRule-Based Fiscal Policy: Paving the Path for Robust Public Finances and Seamless EU Integration of North Macedonia\u201d"},"content":{"rendered":"<p style=\"text-align: justify;\">On November 2, 2023, in the premises of Hotel Panorama, the second session of Working Group 6 &#8211; Anti-corruption (Chapter 5 &#8211; Public procurement, Chapter 18 &#8211; Statistics, Chapter 32 &#8211; Financial control) was held on the topic \u201cRule-Based Fiscal Policy: Paving the Path for Robust Public Finances and Seamless EU Integration of North Macedonia.\u201d<\/p>\n<p style=\"text-align: justify;\">The working group recommends a review of the clauses set in the fiscal rules for natural disasters, decline in economic activity and costs for strategic investment projects, which allow full or partial non-use of the rules, that is, their alignment with practice in EU countries.<\/p>\n<p style=\"text-align: justify;\">Determining the needs for funding in public health and the pension system in the next ten years from the point of view of the needs that will be created by the process of the demographic aging of the population and the emigration of the workforce, are also part of the recommendations, according to which the basis is thinking about changes in the tax system and the creation of specific fiscal rules that will support the better functioning of the system.<\/p>\n<style type=\"text\/css\">\r\n\t#foogallery-gallery-9296 .fg-image {\r\n        width: 640px;\r\n    }\r\n<\/style>\r\n\t\t\t\t<div class=\"foogallery foogallery-container foogallery-image-viewer foogallery-link-image 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src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20width%3D%22640%22%20height%3D%22360%22%20viewBox%3D%220%200%20640%20360%22%3E%3C%2Fsvg%3E\"><\/span><span class=\"fg-image-overlay\"><\/span><\/a><figcaption class=\"fg-caption\"><div class=\"fg-caption-inner\"><div class=\"fg-caption-title\">_DSC0862<\/div><\/div><\/figcaption><\/figure><div class=\"fg-loader\"><\/div><\/div><div class=\"fg-item fg-type-image fg-idle\"><figure class=\"fg-item-inner\"><a href=\"https:\/\/nkeu.mk\/wp-content\/uploads\/2023\/11\/DSC0886.jpg\" data-caption-title=\"_DSC0886\" data-attachment-id=\"9307\" class=\"fg-thumb\"><span class=\"fg-image-wrap\"><img width=\"640\" height=\"360\" class=\"skip-lazy fg-image\" data-src-fg=\"https:\/\/nkeu.mk\/wp-content\/uploads\/cache\/2023\/11\/DSC0886\/2793161572.jpg\" src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20width%3D%22640%22%20height%3D%22360%22%20viewBox%3D%220%200%20640%20360%22%3E%3C%2Fsvg%3E\"><\/span><span class=\"fg-image-overlay\"><\/span><\/a><figcaption class=\"fg-caption\"><div class=\"fg-caption-inner\"><div class=\"fg-caption-title\">_DSC0886<\/div><\/div><\/figcaption><\/figure><div class=\"fg-loader\"><\/div><\/div><div class=\"fg-item fg-type-image fg-idle\"><figure class=\"fg-item-inner\"><a href=\"https:\/\/nkeu.mk\/wp-content\/uploads\/2023\/11\/DSC0766.jpg\" data-caption-title=\"_DSC0766\" data-attachment-id=\"9300\" class=\"fg-thumb\"><span class=\"fg-image-wrap\"><img width=\"640\" height=\"360\" class=\"skip-lazy fg-image\" data-src-fg=\"https:\/\/nkeu.mk\/wp-content\/uploads\/cache\/2023\/11\/DSC0766\/478649434.jpg\" src=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20width%3D%22640%22%20height%3D%22360%22%20viewBox%3D%220%200%20640%20360%22%3E%3C%2Fsvg%3E\"><\/span><span class=\"fg-image-overlay\"><\/span><\/a><figcaption class=\"fg-caption\"><div class=\"fg-caption-inner\"><div class=\"fg-caption-title\">_DSC0766<\/div><\/div><\/figcaption><\/figure><div class=\"fg-loader\"><\/div><\/div>\t\t<\/div>\r\n\t\t<div class=\"fiv-ctrls\">\r\n\t\t\t<div class=\"fiv-prev\"><span>Prev<\/span><\/div>\r\n\t\t\t<label class=\"fiv-count\"><span class=\"fiv-count-current\">1<\/span>of<span class=\"fiv-count-total\">12<\/span><\/label>\r\n\t\t\t<div class=\"fiv-next\"><span>Next<\/span><\/div>\r\n\t\t<\/div>\r\n\t<\/div>\r\n<\/div>\n<p style=\"text-align: justify;\">The group recommends an analysis of the effectiveness of the threshold of the fiscal rule for municipalities, which determines the revenue side of the municipal budgets as a percentage of the achievements in the previous three years, in order to not be able to plan an unachievable budget revenue side that will create assumed and unpaid obligations.<\/p>\n<p style=\"text-align: justify;\">Functioning of the IFMIS system, which will enable full connection of public finances and an adequate information base for the functioning of a rule-based public finance system, is also a recommendation, according to which it will be ensured that the system records and shows all created obligations and the creation of rules that will prevent an increase in paid obligations.<\/p>\n<p style=\"text-align: justify;\">As informed by the working group, the EU is in the process of defining a new system of rules in public finance. While the existing fiscal rules in the European Union were suspended during the pandemic and the start of the war in Ukraine and will have to be renewed in 2024, the European Commission is proposing a system of fiscal rules, which aims to minimize the negative externalities of the fiscal imbalance of the member states on the rest of the Union. It consists of three components: a set of criteria and objectives for fiscal sustainability, mandatory fiscal adjustment to a sustainable fiscal position, and sanctions in case of non-compliance.<\/p>\n<p style=\"text-align: justify;\">The session began with an introductory speech by Professor <strong>Mileva Gjurovska<\/strong>, National Coordinator of NKEU-MK, and President of the European Movement in the Republic of North Macedonia, who, with a greeting to the attendees, explained the current work of the NCEU-MK, which is based on scientific and structured dialogues, and clarified the other active chapters at the moment, namely: Chapter 23 and Chapter 24. Anti-corruption is of vital importance for North Macedonia, and part of Cluster 1, Fundamental Values, and today&#8217;s topic is important for the state of the country.<\/p>\n<p style=\"text-align: justify;\">&#8211; However, for this area, as well as for many other civil associations, they have already accumulated knowledge capital. That knowledge is important for the institutions, but also for the citizens who should have information when it comes to Working Group 6 and anti-corruption so that citizens are really informed about the flow of public money, pointed out Gjurovska.<\/p>\n<p style=\"text-align: justify;\"><strong>Aleksandar Krzalovski<\/strong>, Director of the Macedonian Center for International Cooperation (MCMS) in the role of co-chairman, announced the topic, emphasizing the importance of anti-corruption for a country like North Macedonia that has major problems with fiscal policies, which should be raised to the European level. He announced <strong>Franzi Kluzer<\/strong>, Senior Advisor, Ministry of Finance of the Republic of Slovenia, clarifying the need for a European perspective on the debt of the states, and the goal to which we should strive during the European integration process.<\/p>\n<p style=\"text-align: justify;\">In his introductory speech,<strong> Kluzer<\/strong> pointed out that Macedonia has many open problems, but the most challenging issues are those that we need to solve with the existing fiscal rules. In 2015, 2016 and 2017 we have a turnaround from negative GDP growth, and only later did we create space for fiscal consolidation. The new fiscal rules should be more in the sense that we can have a gradual but sustainable path to consolidation. If the country proposes some major investments or reforms, then it may take more time for fiscal adjustment. If the country is assessed as a high-risk country, then the adjustment period should be longer. If you have 4 years of plans, you have to show your research after that, which shows that the debt is reduced, <strong>Kluzer<\/strong> added.<\/p>\n<p style=\"text-align: justify;\">As the next speaker, <strong>Krzalovski<\/strong> announced <strong>Gligor Bishev<\/strong>, professor and President of the Fiscal Council of\u00a0 North Macedonia, who in his presentation focused on the fiscal situation of North Macedonia, namely that today there is no institution that leads a discretionary and monetary policy, because the holders of economic policies want to make the business environment predictable, and from that aspect, whether the rule is 3% deficit or 60% maximum debt, you can see the budget deficit and debt, and whether we stick to those rules. The golden fiscal rule says that the budget deficit should be equal to 0. From 1996 to 2009 the fiscal deficit approached 0, but in 2001, due to the conflict, the budget deficit went up to 7.5% percent, and in 2006 and 2007 we even have a fiscal deficit surplus. He shared that budget revenues and expenditures in North Macedonia range from 30-35% of GDP, which is one of the lowest levels in Europe. The state must also invest in innovation, and a transition to a digitized economy, and appropriate industrial policies should be ensured. There are a number of challenges ahead of us, but the key will be how to increase the growth rate so that the standards of the citizens converge in parallel, and at the same time, to better implement the fiscal rules.<\/p>\n<p style=\"text-align: justify;\">&#8211; We face a large number of challenges, the convergence to the EU will require much more investment and transformation. The key will be how to make the expenditure side more efficient and to increase the growth rate so that the standards of the citizens converge in parallel and at the same time the fiscal rules are applied more intensively, he pointed out.<\/p>\n<p style=\"text-align: justify;\">The next speaker and continuous NKEU-MK expert, the professor at the Faculty of Economics, <strong>Dragan Tevdovski<\/strong>, stated the need for all institutions to be run according to fiscal rules, because institutions essentially create political discipline. He emphasized that we need to understand what the EU is doing and what Macedonia should do: firstly, the fiscal rules should be well designed to bring the public debt within development frameworks, and at the same time enable investment activity, and secondly, and more importantly, to respect those rules. We need to think and try to apply the elements of the European system slowly. The first thing to do is to choose a fiscal path: create a sustainable level of public debt and get it right. Corrective mechanisms should be put in parallel with the fiscal path. Tax reforms should absolutely be considered. To establish the balance of payments of the public sector.<\/p>\n<p style=\"text-align: justify;\">&#8211; This is a convention for Europe. We should not wait for entry into the EU, but we should try to apply these elements to the system where we want to enter, he said. According to him, the first thing that can be done is to choose a fiscal path that will create a sustainable level of public debt in the medium term and take care that investments in the medium term are as they should be.<\/p>\n<p style=\"text-align: justify;\">The expert part of the session was announced by <strong>Victor Mitevski<\/strong>, Coordinator of Working Group 6, Executive Director of the Association for Research and Analysis ZMAI &#8211; Skopje, he referred to the indisputable importance of the topic, and in the role of moderator of the event, announced <strong>Sanja Madzarevic &#8211; Sujster<\/strong>, Senior Economist for the Western Balkans and World Bank Economist for North Macedonia, who joined online through the ZOOM platform.<\/p>\n<p style=\"text-align: justify;\"><strong>Madzarevic-Sujster<\/strong> said that the most important thing for the country to do is to understand where it wants to go during the accession process, because it is very important so that every sector of the economy can contribute to this goal. She prepared a presentation on exactly this topic, focused on the fiscal policies of North Macedonia. The presentation informed about the financing costs that have increased, which requires a reduction in gross costs, as they take a large part of the budget resources. She said that we need to rebuild the fiscal buffers so that they can withstand future shocks and help with consolidation. It should be a coordinated approach to protect the economy. According to <strong>Madzarevic &#8211; Sujster<\/strong> there are four elements of a fiscal strategy for recovery and stabilization: a credible fiscal consolidation plan to stabilize debt and rebuild fiscal buffers, strengthening PFM institutions, fiscal rules and fiscal supervision, support for revenue mobilization and coping with the inefficiency of spending, and creating space for a green transition. The improvement of the credit rate is important to reduce the risk criteria, i.e. fiscal consolidation is needed to stop the growth of the public debt and return to a sustainable path, to create the fiscal space needed to absorb the EU funds and to create buffers against aging costs that are important to protect against long-term shocks. Finally, <strong>Madzarevic-Sujster<\/strong> said that we should also work on the public perception of the rules because it will be very important for the long-term improvement of the country.<\/p>\n<p style=\"text-align: justify;\">The following expert presentation and analysis by <strong>Zoran Jovanovski<\/strong>, Vice-President of the Chamber of Commerce of the Republic of North Macedonia, focused on the role of the business sector in the implementation of policies. <strong>Jovanovski<\/strong> clarified that fiscal rules, in his opinion, are matters of trust in the system, and are needed so that not everyone can do what they want, and should enable the introduction of discipline that is sustainable in the long term, and all of this should result in improvement of trust in the system. There are findings from the IMF study in relation to fiscal policy: the tendency of economic policymakers to run a fiscal policy with a deficit is widespread, there are also cases where a discretionary fiscal policy is conducted in the short and medium term, the fiscal adjustment is like what <strong>Madzarevic &#8211; Sujster<\/strong> also mentioned, if it is accompanied by structural reforms, it does not necessarily lead to a recession, and to have a prolonged commitment to fiscal discipline, that is, to think in the long term, and not from today to tomorrow.<\/p>\n<p style=\"text-align: justify;\">The last of the expert panel spoke was <strong>Dzevdet Hajredini<\/strong>, Former Minister of Finance, pointing out that taking into account the circumstances and the topic, at a time like this when there is a debate about what the fiscal policy should be, people from the government, from the Ministry of Finance in particular, are needed because their viewing is important, and that is why they don&#8217;t want to attend and listen. We are all witnesses that this government and the ministers for economic and financial policy, boast that they have a program and rules and that they apply them, but those who are paid to implement it do not do it properly. We come to the dilemma: what is the problem, and where will the recommendations that emerge from the session go? They will go to institutions that cannot implement them. The prime minister said that we are the best country in the region, and naturally he cannot be expected to come and listen to what the economic policy should be, when he thinks he already knows that, while Ursula von der Leyen, the president of the European Commission explains that we have made incredible reforms, even though she knows that North Macedonia passes laws that amnesty hundreds of convicts, and misuses the European flag, and the question arises if what we are talking about today is not appreciated, then how do we expect progress? Not once have any of the representatives of the Union confirmed that Macedonia will enter the EU in 2030, but we think so, but there are some situations that, no matter what we want, will not be able to be resolved so early, and instead of forecasting, we should focus on reforms.<\/p>\n<p style=\"text-align: justify;\">With this presentation, the expert analysis is closed, but the discussion part is opened, in which the attendees can get involved with their opinions, and refer to the proposal of recommendations from Working Group 6, with their own proposals for changes and additions to them. Most of the discussion focused on public administration and the need for better fiscal education for citizens.<\/p>\n<p style=\"text-align: justify;\">The session was closed by Professor <strong>Mileva Gjurovska<\/strong>, who pointed out that the session is not over yet, even though the dialogue has ended, and this topic still needs to be discussed. The proposed recommendations can undergo changes and she indicated to the attendees to write their changes via e-mail, and they then become public and are forwarded to public institutions and the media.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On November 2, 2023, in the premises of Hotel Panorama, the second session of Working Group 6 &#8211; Anti-corruption (Chapter 5 &#8211; Public procurement, Chapter 18 &#8211; Statistics, Chapter 32 &#8211; Financial control) was held on the topic \u201cRule-Based Fiscal Policy: Paving the Path for Robust Public Finances and Seamless EU Integration of North Macedonia.\u201d [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":9309,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_links_to":"","_links_to_target":""},"categories":[85,3,4],"tags":[],"_links":{"self":[{"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/posts\/9324"}],"collection":[{"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/comments?post=9324"}],"version-history":[{"count":3,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/posts\/9324\/revisions"}],"predecessor-version":[{"id":9327,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/posts\/9324\/revisions\/9327"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/media\/9309"}],"wp:attachment":[{"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/media?parent=9324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/categories?post=9324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nkeu.mk\/en\/wp-json\/wp\/v2\/tags?post=9324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}