Budget rebalance shifts spending from investment to social support

The government’s second budget rebalance in three months shifts the priorities of public spending from investment toward social support, while keeping the deficit unchanged.

Lawmakers are now discussing a package that trims both revenues and expenditures by €86 million each, leaving the fiscal gap at €750 million, or 4.1% of GDP. Capital investments are being cut by €90 million and will total almost €670 million under the new figures.

Why the rebalance was proposed

Finance Minister Gordana Dimitrieska-Kochoska reported that excise revenues have fallen by €60 million as a result of government measures to reduce fuel excises. She said the rebalance is intended to align budget projections with actual economic movements, which remain under pressure from global tensions.

Some analysts described the move as the consequence of poor planning. “It is not possible—how could you not foresee expenditures in June through September and October. You cannot not know that there will not be such capital investments. There will not be, however when in the political rhetoric of the parties, and in the ruling party blatantly, terms like ‘GDP growth measured through the GDP growth item’, ‘capital investments that meant development’, capital investments are roads and similar in politicians' rhetoric, which has nothing to do with reality, but politically it is done that way. Now the minister's hands are tied, she must show responsibility, she must show capital investments, and she must feed social policy, the pensioners, and the budget does not have enough money and she has to do such cheap childish budget gymnastics,” said university professor Vancho Uzunov.

With the previous rebalance in July, the budget hole was widened by about €100 million to free up additional funds for capital projects. This time, the shortfall remains the same but planned capital spending is reduced.

“In ten months we practically have four budgets. At the end of last year the basic budget for 2026 was adopted, in July the first rebalance, now the second rebalance is being debated, and already in procedure is the budget for the next year which should be delivered legally in about 10 days. Plus, by the end of the year there may be a new reallocation,” said economic journalist Mirche Jovanovski.

The authorities keep growth at a projection of 3.5% and inflation at 3.8%. The plan foresees nearly €6.1 billion in revenues and spending of more than €6.84 billion.

Photo: press material from the event