A 6–7 billion denar hole in the budget from cutting excise duties and VAT on fuels

Expensive fuels are once again putting pressure on North Macedonia’s budget. To soften the rise in fuel prices and the blow to citizens’ living standards and the economy, the Government intervened by cutting excise duties and VAT, but this also reduced revenues into the state coffers. According to the latest estimates, by the end of this year budget revenues from these items could be 6 to 7 billion denars lower, around €97–113 million, as the newspaper Večer Press reports.

Prime Minister Hristijan Mickoski warned that there may be another budget rebalance by the end of the year. “We expect that by the end of the year we will be 6–7 billion denars below what we planned, and for this reason we may have another rebalance by the end of the year,” Mickoski stated. He stressed that the Government’s priority remains protecting citizens’ living standards, controlling inflation and keeping fuel prices low.

Finance Minister Gordana Dimitrieska-Kočoska said she does not expect significant changes by the end of the year in the forecasts for economic growth and the budget deficit, and that even if there is a new rebalance, cuts will be worked out on both the revenue and the expenditure side. Meanwhile, uncertainty in world energy markets continues. Academician Taki Fiti warns that a new oil shock could lead to stagflation — a combination of slow economic growth, higher inflation and rising unemployment. North Macedonia, as an import-dependent country that does not produce oil, is particularly sensitive to these external pressures, according to him. The price of fuel thus remains not only an economic and social issue, but also a serious fiscal one: the longer the state intervenes to keep prices low, the greater the pressure on budget revenues.