Remarks by Linda Van Gelder, World Bank Director for the Western Balkans, Following Discussions with Macedonian Government

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Honorable Prime Minister Zaev, members of the media:

Thank you to Prime Minister Zaev and his cabinet for the opportunity to dialogue today. A particular thank you to Minister Tedvoski and his staff for the overall coordination with line Ministers and their respective staff, and for the organization of this useful meeting.

Today, the World Bank team had a very productive discussion with the Prime Minister and key members of his cabinet about the challenges and opportunities for Macedonia in the medium-term. Our aim is to develop an effective partnership with the new authorities in order to support, with our expertise and financing, inclusive growth and shared prosperity for all the citizens of Macedonia.

We had an interesting discussion about how Macedonia could fulfill its aspiration to become a high-income country. Moving from middle- to high-income is not an easy process and only a few countries have managed to achieve this. It requires the simultaneous pursuit of an integrated agenda, which includes:

  • Macro-economic stability and sustainability,
  • Integration into the global economy,
  • A business climate conducive to investment and domestic private sector growth,
  • Access to opportunities for all citizens,
  • Efficient and transparent institutions.

Macedonia has made progress on some of these dimensions, but more needs to be done to achieve a high-income future. Despite external and domestic shocks, Macedonia managed to maintain its macroeconomic stability. This important achievement is a prerequisite for economic growth and poverty reduction. Thus, continuing to implement prudent macroeconomic policies remains essential. Our analysis, including the 2015 Public Expenditure Review, shows that public finance management reforms should be continued to enhance stability, quality and – importantly – transparency of public spending.

In addition, Macedonia took measures to streamline business regulations to promote investment, and it would be important to maintain the reform momentum to further strengthen the investment climate, in particular to level the playing field for competition among firms and strengthen the links between foreign investment and the local private sector.

But, to achieve higher sustained and inclusive growth, it is also important to accelerate reforms to shift from a consumption-driven growth model towards higher investments and exports. In addition to macroeconomic stability, this would require improving competitiveness by enhancing public service delivery and transparency, improving the rule of law, deepening connectivity/integration to global markets, eliminating barriers to employment and labor force participation, and ensuring access to opportunities for all. To break the cycle of high emigration and limited job creation, efforts should also be dedicated to improving prospects for young people, through strengthening their skills for the global economy.

Today’s meeting was very productive and useful for us to look at the Government’s program and to begin to shape our strategic engagement in Macedonia for the coming years. We have identified areas of possible cooperation such as growth and competitiveness; skills and inclusion; competitiveness/jobs and regional integration; social protection; energy and energy efficiency; and effective and transparent financial management.

In addition to future engagement, we look forward to the effective implementation of projects that are already active. The current World Bank program in Macedonia includes an active portfolio of seven investment operations, with total commitments of US$ 348.9 million, of which about US$ 230 million has yet to be disbursed. Together with the Government and other donor partners, we will work to improve municipal infrastructure, upgrade and rehabilitate road infrastructure, develop better tourism services, improve skills and innovation, and enhance social protection, focusing in particular on the poorer and marginalized communities.

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