1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Budget System in the Former Yugoslav Republic of Macedonia Toni Dimovski Head of Budgets & Funds Department Seminar on Budget and EU Funds Skopje, 14-15 May 2007

2. BUDGET SYSTEM IN REPUBLIC OF MACEDONIA  Until 1993, Law on Common and Social Needs  Starting 1993, Budget Law  In a period of 12 years, many modifications and amendments  In 2005 new Budget Law – oriented towards EU Regulations and Directives

3. New Organic Budget Law adopted (July 2005) Budget presentation on a new definition according to GFS 1986 Functional approach Ministries need to prepare strategic plans BUDGET REFORMS

4. PROGRAMME BUDGETING Government programmes based on Government strategic priorities Government programmes based on Government strategic priorities Budget programmes based on legislative activities of the budget users are shown as separate programmes and sub-programmes Budget programmes based on legislative activities of the budget users are shown as separate programmes and sub-programmes Capital sub-programmes: projects identified as separate sub-programmes Capital sub-programmes: projects identified as separate sub-programmes

5. (In mil.Euros) % (In mil.Euros) % GDP 5.310 General pubic services 126 2,38 Defence 119 2,25 Public order and peace 164 3,08 Economic affairs 392 7,37 Environment protection 6 0,11 Dwellings and community development 27 0,51 Health 291 5,48 Recreation, culture and religion 35 0,65 Education 253 4,76 Social protection 604 11,37 2007 2007 Central Budget Expenditures by COFOG Functional Classification

6. EU Funds The Ministry of Finance shall be authorized to manage the resources received from the Budget of the European Union, in accordance with the European Union provisions and regulations for financing and concluding agreements. The Ministry of Finance shall be authorized to manage the resources received from the Budget of the European Union, in accordance with the European Union provisions and regulations for financing and concluding agreements. Structural Funds and Cohesion Funds of the European Union, as well as other assistance and programs of the European Union shall be an integral part of the budgets and shall be presented separately in revenue plans and plans of appropriations by programs and sub- programs. Structural Funds and Cohesion Funds of the European Union, as well as other assistance and programs of the European Union shall be an integral part of the budgets and shall be presented separately in revenue plans and plans of appropriations by programs and sub- programs. Appropriations of the basic budget earmarked for co-funding shall be shown in the Budget in the respective program, i.e. sub- program. Appropriations of the basic budget earmarked for co-funding shall be shown in the Budget in the respective program, i.e. sub- program. Funds referred to EU funds shall be a long-term financial liability of the Republic of Macedonia, i.e. of the municipality and shall be used within the project period. Funds referred to EU funds shall be a long-term financial liability of the Republic of Macedonia, i.e. of the municipality and shall be used within the project period.

7. GENERAL GOVERNMENT BUDGET STRUCTURE General Govt. Budget Budget of the RM (Central Government Budget) Central Budget Core Budget Budget of self- financing activities, donations and loans Budgets of Extra- Budgetary Funds PDF HIF Employment Agency Road Fund Budget of LGUs

8. CONSOLIDATED GENERAL GOVERNMENT BUDGET (mil. EUR) 200720082009 Consolidated GG Budget –Revenues 1.892 2.0202.145 % of GDP 36 35 34 Consolidated GG Budget –Expenditures 1.947 2.0912.196 % of GDP 37 36 35 Consolidated GG Budget –Deficit -55 -72 -51 % of GDP -1 -1 -1 Central Budget-Revenues 1.215 1.305 1.387 % of GDP 23 23 22 Central Budget-Expenditures 1.261 1.358 1.443 % of GDP 24 24 23 Central Budget-Deficit -46 -53 -56 % of GDP -0.8 -0.9 -0.9 GDP 5.310 5.769 6.298

9. CONSOLIDATED GENERAL GOVERNMENT BUDGET (mil. EUR) 2007 2008 2009 2007 2008 2009 Budget Funds –Revenues 503 391 416 % of GDP 10 7 7 Budget Funds –Expenditures 513 409 412 % of GDP 10 7 7 Budget Funds –Deficit -10 -18 4 % of GDP 0 0 0 LGU Budget-Revenues 173 324 341 % of GDP 3 6 5 LGU Budget-Expenditures 173 324 341 % of GDP 3 6 5 LGU Budget-Deficit 0 0 0 % of GDP 0 0 0 GDP 5.310 5.769 6.298

10. BUDGET PROCESS Mid-term Macroeconomic Macroeconomic policy policy Fiscal policy Budget circular Adopting the Budget Defininggovernmentpriorities Budgetrequests Budget Proposal submitted to the Government Budget proposal adopted by the Government and submitted to the Parliament

11. PLANNED BUDGET DEVELOPMENTS Implementation of new budget software Implementation of new budget software Application of GFS 2001 in budget reporting for the purpose of compatibility with ESA 95 Application of GFS 2001 in budget reporting for the purpose of compatibility with ESA 95 Medium-term expenditure ceilings by functional approach Medium-term expenditure ceilings by functional approach Developing performance indicators Developing performance indicators Capital budgeting Capital budgeting