1. VAT in North Macedonia: Recent Measures, Tax Efficiency, and Potential Revenue Space
SCALING UP INVESTMENT
B. The Government’s GrowthAccelerationPlan
C. Measuring and Benchmarking Infrastructure in North Macedonia
D. Public Investment Management
E. The Macroeconomic Effect of Scaling Up Investment
F. Policy Considerations
1. Investment Trends
2. GrowthAccelerationPlan: Overview
3. Economic Infrastructure Gaps
4. Social Infrastructure Gaps
5. Quality of Hospitals and
of structural policies, which can facilitate reallocation and transformation . This crisis created the opportunity to prepare the next generation of structural reforms.
The authorities concur with staff’s analysis that successfully up scaling investments can boost the economy’s growth potential and limit scarring from the pandemic . While the country’s per capita stock of public capital nearly has a 50 percent gap with new EU member countries, the government’s ambitious GrowthAccelerationplan will increase public investment and facilitate green- and digital
, Ezequiel Cabezon , Giuseppe Cipollone , Jacques A. Miniane , Nhu Nguyen , Martin Petri , Jens Reinke , and James Roaf . 2018 . “ Public Infrastructure in the Western Balkans: Opportunities and Challenges .” Departmental Paper 18/02 , International Monetary Fund , Washington, DC .
Government of the Republic of North Macedonia . 2021 . “ GrowthAccelerationPlan 2022–2026 .” Ministry of Finance and Prime Minister’s Office .
International Monetary Fund (IMF). 2014 . “ Is it Time for an Infrastructure Push? The Macroeconomic
framework and deposit insurance. Completing the legislative process is important in this regard.
Directors encouraged policies to facilitate resource reallocation, improve education outcomes, and strengthen the social safety net. Efforts to reduce informality and raise labor participation of women and youth are also important. To preserve employment and competitiveness, Directors considered that minimum wage increases should also be guided by productivity trends. They welcomed the GrowthAccelerationPlan, noting that its implementation can boost growth and spur a green
-term growth outlook. Finally, lack of progress with EU accession may weaken the prospects for economic convergence. On the positive side, a renewed push for reforms, possibly coupled with improved EU accession prospects, could boost capital inflows and confidence. If well implemented, the government’s investment plan (“GrowthAccelerationPlan”) could spur demand and boost growth rates ( Box 1 ).
North Macedonia: External Sector Developments
Sources: Haver Analytics; NBRNM;and IMF staff calculations.
12. The authorities project
The economy is rebounding. After a 6 percent drop in 2020, real GDP is projected to grow at 4 percent both in 2021 and 2022, reflecting improved mobility, a return of the diaspora, and continued policy support. With uncertainty remaining high, including about the course of the pandemic, policies need to be kept flexible. Emphasis should be on limiting the economic scars from the pandemic crisis while making progress on long-standing reform priorities such as further strengthening public financial management and revenue administration and buttressing the financial safety net.
The Gabonese economy was gradually recovering from the 2014 oil price shock when it was hit by the Covid-19 pandemic. Decisive confinement measures have helped save lives, but the pandemic and the fall in oil prices have severely hit the economy, increasing unemployment and poverty. With a weak economy and increased COVID-19 related spending, the fiscal deficit has widened, with a sharp increase in public debt. Emergency financing from the IMF through the Rapid Financing Instrument (US$299.61 million) helped meet urgent balance of payment needs in 2020. Growth is expected to resume in 2021 but the pandemic has made the economic outlook very challenging and generated sizable financing needs over the medium term.
1. Prior to the pandemic, the 2017–19 Extended Arrangement and higher oil prices helped the economy recover from the 2014 oil shock (Annex I). Growth picked up gradually, the fiscal and external positions improved, public debt started to decline, and the country contributed to the rebuilding of regional international reserves (Figure 1). However, due partially to weak implementation capacity and persistent governance issues, several reforms have yet to be completed to increase revenue, improve public finance management, reduce debt vulnerabilities, and improve the business environment.