Macedonia Borrows More Despite Europe's Concern

By the end of this year, Macedonia will borrow another ?700 million, ignoring European Commission advice contained in the recent annual progress report to stop adding to the already sizeable debt.

Days before the Commission said it was worried by Macedonia's growing debt, the government said it would issue more eurobonds worth ?500 million to support the budgets this and next year.

The cash will be raised by the end of the year and the loan repaid over the next ten years.

A month earlier, parliament approved raising another ?200 million in a loan to be spent on gasification, new roads and financial support for municipalities.

"Macedonia is joining the countries that spend beyond any measure," a former professor at the economics faculty in Stip, Krste Sajnoski, said.

"Japan's debt amounts to 240 per cent of it GDP, but it has a huge foreign exchange surplus, the yen is strong and much of that debt is internal. It has all the characteristics that Macedonia's [economy] does not," he added.

The total size of Macedonia's government debt, which includes money owed by central government, municipalities, many public enterprises and the central bank, has long been a source of contention.

In the absence of official data, the IMF late last year estimated general government debt by the end of 2014 to be 44.8 per cent of GDP. In money terms, this would be around ?3.5 billion.

The IMF also estimated that general government debt will rise to 55.2 per cent by 2018.

"There has been some backsliding in public finance management. The development of overall public debt remains a concern," the Commission wrote in its annual progress report issued last Tuesday.

"The budget should be more geared...