Analysts see risk of fiscal loosening in Macedonia under new government

It would be essential to watch the fiscal policies of Macedonia's new government as 'overly ambitious investment plans" could potentially trigger fiscal loosening, Raiffeisen Research analysts said on Thursday. 

The new coalition government in Skopje will be largely seen as pro-EU and pro-reformist, the analysts said in a market note after Macedonia's parliament voted into office on Wednesday night a centre-left coalition government formed by opposition Social Democratic Union (SDSM) leader Zoran Zaev, who vowed to strengthen the country's economy and speed up the EU integration process. Zaev, who was voted in as prime minister, said that the new government, which comprises representatives of SDSM and two ethnic Albanian parties, DUI and the Alliance of Albanians, will be a reformist one and will be committed to working for all Macedonian citizens. The forming of the new government puts an end to a six-month long political deadlock that followed early general elections held in December 2016. 

"The appointment of new government in Macedonia should be credit positive as it should help avoid new political collision and kickstart the necessary reforms," the analysts opined. SDSM pledges more transparency in the finance ministry, an increase of minimum wages and measures to boost employment in its government programme. 

The new government led by Zoran Zaev comprises two deputy prime ministers and 23 ministers, eight of them without portfolio.  The finance ministry will be headed by Dragan Tevdovski, associate professor of mathematics and statistics at the Skopje university and chairman of SDSM's economic affairs committee.  

Asked whether the new government plans to revise the state budget, a SDSM press officer told SeeNews on Thursday that the finance minister needs first to assess the current financial situation and only then could he take a decision. Economy minister Kreshnik Bekteshi, nominated by DUI, previously headed the Swiss and Belgian offices of Macedonia's agency for foreign investments. 

Foreign minister Nikola Dimitrov previously served as deputy minister of foreign affairs and ambassador of Macedonia to the Netherlands and to the United States. Dimitrov has also been a special envoy in the talks on resolving the dispute with Greece over Macedonia's name.  Greece is blocking Macedonia's membership of the EU and NATO because of the dispute, as Athens believes that the country's name implies territorial claims to the eponymous northern Greek province. 


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