Development Policy Loan

closed

Closed

The objectives of the First Programmatic Development Policy Loan Program for Macedonia, former Yugoslav Republic (FYR) of are: (i) to manage the impact of the global crisis by maintaining a sound macroeconomic and fiscal framework; (ii) to cushion the impact on the poor and vulnerable by enhancing social protection systems; and (iii) to strengthen the resilience of the financial sector by addressing potential vulnerabilities. The ultimate objective is to support the Government to emerge from the crisis on a stronger footing and to resume sustained high growth and convergence in living standards with the rest of Europe. The ongoing international economic crisis has brought to a halt the acceleration of economic activity of the last few years in the FYR of Macedonia. Following growth rates of close to six percent in 2007 and the first three quarters of 2008, economic activity has slowed down considerably since. Industrial production has been declining, business confidence has reached low levels, financing conditions have become tighter and labor market performance has deteriorated. Exports have dropped sharply. Negative effects have also spilled over into the fiscal accounts, and tax revenues in particular have disappointed relative to expectations, although two budget revisions in May and October 2009 have introduced sharp expenditure cuts, and hence the fiscal deficit is still forecast to be a manageable 2.8 percent of Gross Domestic Product (GDP). The authorities have proactively managed the crisis to create grounds for a sustainable and robust recovery. Anti-crisis measures were announced in late 2008 and early 2009. Following an initial fiscal stimulus, the two supplementary budgets adopted in 2009 have not only helped to contain public spending but also to improve its allocation. Non-priority expenditures were eliminated while funds for the social safety nets were protected. In addition, comprehensive payroll reform has been introduced to boost competitiveness of the economy. Significant improvements to the business environment were undertaken and measures to strengthen the resilience of the financial sector are underway.

FY17 - Health,FY17 - Public Administration,FY17 - Social Protection

World Bank Group

Project

Manufacturing (Industrial), Seaport, Government