Press Release No. 18/396

IMF Publishes Fiscal Transparency Evaluation for Macedonia

October 29, 2018

The International Monetary Fund (IMF) has today published a Fiscal Transparency Evaluation report for the Former Yugoslav Republic of Macedonia. The report assesses Macedonia’s fiscal transparency practices against the standards set out in the IMF’s Fiscal Transparency Code and was carried out in May 2018 by the IMF’s Fiscal Affairs Department, in conjunction with the Statistics Department, at the request of the Government of Macedonia.

Assessed against the standards of the Fiscal Transparency Code, the report found that Macedonia meets the standard of good or advanced level practice on 13 of the 36 principles assessed, and the basic practice on a further 12 principles. Moreover, in 5 areas where Macedonia’s transparency practices do not currently meet basic practice, the report finds these could be readily addressed by publishing data that are already collected for internal management purposes.

The report recognizes several key strengths of fiscal transparency practices in Macedonia. For example, fiscal reports cover the bulk of general government activities and are published in a frequent and timely manner. Budget documentation presents medium-term macroeconomic and fiscal projections and is prepared in accordance with a clear legal framework for budget formulation. In addition, several risks to the public finances are disclosed, including for macroeconomic, public debt and explicit guarantees.

At the same time, the evaluation highlights several areas where Macedonia’s fiscal transparency practices could be further improved. Fiscal reports could be made more comprehensive by expanding coverage to several entities currently treated as being outside of general government, presenting more complete balance sheet information and disclosing the fiscal costs of tax expenditures. Budget documentation should more accurately report taxes levied by the government and allocated to other entities and, also present information on: the own-source activities of extra-budgetary funds; medium-spending plans of budget entities; the performance of key policy areas; and more complete information public investment projects. Finally, publishing a comprehensive summary report on fiscal risks could help ensure policymakers and the public better understand risk exposures and facilitate improved monitoring and management of them.

Key recommendations of the report to further improve fiscal transparency practices in Macedonia include:

· Expand the institutional coverage of fiscal and statistical reports by classifying institutional units in line with international standards;

· Regularly publish balance sheet information and estimates of revenues forgone from tax expenditures;

· Present, in the budget documentation, more comprehensive information on extrabudgetary units and classify all taxes levied by the government in line with international standards;

· Regularly report on compliance with medium-term fiscal objectives and enhance reporting against performance indicators for key policy areas;

· Include in the budget documentation medium-term spending plans for budget organizations, and the total costs of investment projects;

· Publish a summary fiscal risk report discussing the size and nature of specific fiscal risks, and strategies for their management; and

· Strengthen monitoring and oversight of fiscal risks arising from public-private partnerships and public corporations.

The Macedonian authorities have placed improving the quality and transparency of public institutions at the core of its medium-term public financial management reform strategy. The implementation of reforms recommended in this report, in addition to those already planned, will result in further improvements in fiscal transparency in Macedonia in the coming years.

Further information about the IMF’s Fiscal Transparency Code and Macedonian Fiscal Transparency Evaluation can be found at: