Finance Minister Fatmir Besimi during Monday’s visit to the European Commission spoke about the economic situation in North Macedonia and the impact of Russia-Ukraine conflict on the global economic crisis, MIA’s Brussels correspondent reports, news agency MIA informs.
During his stay in Brussels, he met with the EU Commissioner for Economy Paolo Gentiloni and the EU Commissioner for Budget and Administration Johannes Hahn and discussed the energy crisis that hit hard Europe in recent months, including here North Macedonia.
Besimi told MIA that he briefed his interlocutors on the government’s measures in handling the energy crisis in the country, pointing out that about 5.2 billion were allocated at the end of 2021 and the same amount to the state-owned electricity producer ESM during 2022.
“The VAT on household electricity was reduced from 18 percent to 5 percent last year until July, then it was 10% and next year it will be 18%. In addition, all this has fiscal implications. Then the program of financial support in the amount of 1,000 denars monthly for the socially vulnerable households was provided to 35,000 households. In addition, here is the program against energy poverty adopted by the government during the energy crisis. As well as the additional cost of the energy crisis in the private sector due to high prices,” Besimi said.
He further noted that geopolitical uncertainty is also being taken into consideration.
“It was noted that we operate within budget, these are funds that were planned and it was discussed what Europe is doing and what we as a country in the coming period can find some new ways of financing the additional expenses that by the end of the year may be caused by energy crisis, especially from a geostrategic point of view, if tensions with Ukraine escalate or are not resolved in the direction of predictability, it is likely that part of it will affect the prices of energy, above all, and other products,” Besimi said.
Although he does not want to speculate, Besimi admits that the crisis between Ukraine and Russia could possibly lead to deterioration in European markets.
“It depends on the impact on European markets in the field of energy, which has already been felt. It can be worse if something happens, if the situation escalates on prices as well. Other escalations, depending on the direction of the implications, might lead to energy shortages, but that remains a speculative scenario for now,” Besimi said.
In regard to the government’s measures to respond to the economic shock, when asked if it is possible to move towards the nationalization of the energy sector in North Macedonia, Besimi said that the country has undertaken a number of commitments as a member of the European Energy Community and EU candidate country, which includes market liberalization, and that the state intervened on energy market to reduce the negative impact on the households, as in the case of the heating company BEG.
“During state of crisis over energy, the state is empowered to intervene financially. Thus, BEG and the government based on that decision, through state companies determined them to produce for domestic needs, not for export and to provide electricity needed for state-owned electricity producer ESM, for a regulated market including the households. The government through ESM takes part in no increase of the price of electricity as it happened in the market that increased several times. It now remains at 9.5 percent increase this year, as a result of the policies we are implementing as indirect state intervention in the energy market,” Besimi told MIA.
Besimi said that EU supports measures taken by the Macedonian government.
“We have reduced the VAT on household electricity, which was one of the recommendations that we have fulfilled. Regarding the socially vulnerable households, the program against energy poverty and in the regulated market, we provided support and budget funds to the state company so that it can compensate that price difference from what it costs in the market and how much is sold in the regulated market.
As government, we have played a role as an owner, not just as a policy-maker. As the owner of the state-owned company, we ordered to sell at a lower price, so that there would be no such price shock. On the other hand, those losses are covered by the government,” he said.
Besimi said that North Macedonia has applied for three projects in the field of transport, environment and energy in the program of the European Commission, and the results will be announced this week.
“Moreover, within Accelerated Growth Plan, we plan to invest €4 billion in public sector and additional €8 billion in the private sector in the next five years. We also presented how to integrate it with the Economic and Investment Plan. That was the second topic, which means supporting growth in the medium term,” he added.
The Economic and Investment Plan is European Commission’s program to support the Western Balkans, primarily in infrastructure projects, mobilizing up to €9 billion for the entire Western Balkans from 2021 to 2027.
It will help attract public and private investments, backed by the Western Balkan Guarantee Facility, which has a potential to mobilize up to €20 billion.
“So that is the main goal, and to see during 2022 in terms of what will be the EU policies for the Western Balkans and what measures we will take to address these challenges and to have a financing plan for the year on these additional costs arising from the energy crisis,” Besimi said.
One of the issues is the impact of the energy crisis on our economy, Besimi said, and the second issue is the government’s plan for accelerated economic growth, “which is a five-year growth plan, where it is planned to accelerate growth by 2.5% on average per year, at five percent on average per year for the next five years, which is based mainly on investment.”
