PUBLIC FINANCE SPENDING OVERVIEW IN COVID AND MID TERM PERIOD: THE CASE OF NORTH MACEDONIA
PUBLIC FINANCE SPENDING OVERVIEW IN COVID AND MID TERM PERIOD: THE CASE OF NORTH MACEDONIA

Summary/Abstract: The past two years, the significant deterioration of the global economic environment and the decline in external demand caused by the health crisis affected the activity of domestic export companies and industrial production, remittances and foreign direct investment. Restrictive measures to prevent the spread of coronavirus in the country have affected some of the activities within the service sector, such as trade, transport, hospitality and tourism. As a result of all this, the domestic economy faced one of the deepest recessions so far. The effects of the pandemic on the labour market have been limited, due to government measures to mitigate its effects on jobs. The crisis caused by the pandemic with similar negative consequences hit the European economy, so that economic activity in the EU fell by 14% in the second quarter in 2020, while Germany, as the largest economy within the EU and our most important trading partner fell by 11.3 %.The health and economic crisis in the past period of 2020 had a strong impact on the realization of the Budget. Also, the comprehensive measures adopted by the Government to prevent the spread of COVID-19 expressed through six sets of measures (which were aimed at amortizing the impact on the economy and stimulating consumption) had an impact on economic activity and through them enable protection of jobs, budget liquidity was ensured, the highest priority liabilities were serviced, minimizing all less productive spending. Taken measures from the government has very high impact on the economic growth, the first four set of measures contributed to reduce the economic growth for 3.9% in 2020 and with fifth and six sets of measures contributed to reduce the economic growth for 0.7 % in 2021.The health crisis has given new emphasis to the sustainability of public finances over the past two years and strongly emphasized the need to balance between short-term stabilization goals and long-term fiscal sustainability. This situation imposed the need for an expansionary fiscal policy in order to support the economy in a pandemic that led to a rapid increase in the budget deficit and public debt. This imposes the need for rationalization of public expenditures, as well as measuring the results of their realization in order to increase the efficiency of public expenditure and achieve fiscal sustainability in the medium term. The analysis is made on the basis of historical data on planned and realized budget revenues and expenditures for the period from 2015 to 2021, in order to see the size and trend of their movement in order to take measures for fiscal consolidation and ensure sustainability of public finances. The research aim is in order to see the size and trend of planned and realized budget revenues and expenditures movement in order to take measures for fiscal consolidation and ensure sustainability of public finances. The main research problem is planned and realized budget revenues and expenditures and its position to deal with the health crises in the Republic of North Macedonia. The research subject is focused on the data reports from the Ministry of Finance of North Macedonia. The data analysis was accomplished using STATA 16 statistical software for data science.

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