Macedonia's outgoing government has adopted a draft 2016 budget, which lowers the deficit target to 3.2% of GDP from 3.6% planned for this year, finance minister Zoran Stavreski said on September 24. The budget is based on a projected GDP growth of 4% and inflation of 2%.

Total budget revenues are planned to increase by a nominal 6% y/y to MKD176.8bn (€2.9bn). Total expenditures are set to rise 4.7% y/y to MKD195.8bn, so the deficit will narrow by 5.7% y/y to MKD19bn. Stavreski noted that under the fiscal strategy the deficit will decrease to below 3% of GDP as of 2017.

On the revenues side, tax revenues and contributions are seen at MKD101.5bn (up 6.5%) and MKD49.2bn (up 4.2%), respectively. On the expenditure side, capital expenditures are planned to go up 12.9% to MKD25.1bn. The draft budget also provides for increases in pensions, social benefits and salaries.

Macedonia will hold early elections on April 24, 2016. The polls will be organised by a new government, headed by a new PM, that will be sworn in on January 15.

Prior to that, on October 20, the main opposition party SDSM will nominate new ministers of interior and labour and social affairs, whereas VMRO-DPMNE will nominate deputy ministers with veto rights on election-relates matters in these two ministries. SDSM will also nominate deputy ministers with veto rights in the ministries of finance, agriculture and information society and administration. These new ministers and deputy ministers will keep their positions in the government that will take office on January 15.