UNDP urges Macedonia to implement swift reform for accelerated growth

According to a UNDP report released late last month, Macedonia should increase home export capacities and lift barriers to foreign trade. It should also implement reform of the tax system, ensure a balanced budget in the mid-term, and reduce government involvement in the economy.

Known as the Blue Ribbon Report, the UNDP document provides recommendations for accelerated economic growth. It finds that Macedonia has completed the first wave of reforms — including freeing prices and liberalising trade — but still suffers from insufficient integration into the world economy, corruption and excessive influence of the business sector on politicians.

“Measures listed in the report are interlocked and all recommendations should be met in a certain order to achieve the desired goal,” said Josef Brada, a team leader of the Blue Ribbon Comission for Macedonia. “We have tried to present a realistic vision of what Macedonia can achieve in the next ten years, and we have provided a road map for the way ahead.”

Specific steps include expanding lending for exports, promoting export insurance and reducing barriers to foreign trade. The report also recommends rapid liberalisation of capital, reduced government regulation, reform of the tax system, and privatisation of non-core government activities.

“What should be done in the next period is to encourage dynamism of the private sector and improve efficiency of the state–run sector,” said UNDP resident representative in Macedonia Maria Luisa Silva Mejias.

According to Deputy Prime Minister Zoran Stavrevski, economic policy in the country is now on the right track, and the government should push ahead with implementation. “The report offers concrete measures and solutions for their application, and their final goal is accelerated economic development that should complement what has been missed so far,” Stavrevski said.

But Macedonian Economic Chamber President Branko Azevski thinks a major change from past policies is needed. “Some assets must be transferred from the social package to the development sector,” Azevski said. “This will create an ambience for attracting foreign investments and a more dynamic growth.”

For Vanco Uzunov of the University of Skopje, the key to accelerated economic development is macro-economic stability. Instability in this area will limit Macedonia to short-term economic growth, he says.