Besimi: Local and regional development – one of the key goals of the Government

Achieving local and regional development is one of the key goals of the Government. In the direction of achieving this goal, the Plan for Accelerated Economic Growth, the Reform for improving fiscal decentralization and the Draft Budget for 2022, in which capital investments are 14 percent of the total expenditures, are put in the function of achieving this goal, said Minister of Finance Fatmir Besimi at the meeting dedicated to the financing of infrastructural investments for sustainable local development and economic recovery, organized by UNDP.

Besimi pointed out that the Draft Budget is developmental, which creates a climate for development of the entire country, and in that context also of the municipalities. With the reform for promotion of the fiscal decentralization, on the other hand, more funds are allocated to the municipalities.

–  This is achieved by increasing the current three percent of the anticipated revenues for the municipalities from personal income tax to six percent, and of the VAT subsidy rate from 4.5 percent to 6 percent, which will apply from 2024. By 2024, gradual increase of revenues from personal income tax is anticipated, hence, the percentage for 2022 will be 4 percent, for 2023 5 percent and will reach 6 percent by 2024, said Besimi.

The funds from the additional increase of the percentage of the VAT for municipalities, as Besimi explained, will be allocated in two new funds – Performance Fund (successfulness) and Equalization Fund. The Performance Fund will reward municipalities that have better collection of local revenues, while the Equalization Fund will act in the direction of reducing the differences in accordance to the fiscal capacity of the municipalities.

The Minister pointed out that achieving local and regional development is reflected also in the Plan for accelerated economic growth.

– A Fund for local and regional development will also be formed within this framework, whose purpose is to support local governments and local and national public enterprises with the goal of expanding and developing local infrastructure, providing high-quality local public services and promoting local management, stressed Besimi.

The capital for the Fund will be provided from funds of the central budget and will be supplemented with funds from commercial banks, official creditors and donors in order to provide additional finances for local and regional investment and development projects/MIA.

Translation: N. Cvetkovska