Macedonia unveiled on Thursday a package of tax incentives worth 330 million euros as it tries to counter the impact of the global financial crisis on its growth prospects. The package of 10 measures, which includes reductions in customs duties on raw material imports and tax cuts for the agricultural sector, should have a "very positive impact" on the economy, Prime Minister Nikola Gruevski told a news conference.
Analysts say the global slowdown will hit the landlocked Balkan state's import-reliant economy, which has been struggling with high trade deficits for years. The government expects Macedonia's growth rate, which reached 6 percent in the first half of 2008, to dip to 5-5.5 percent at the end of the year, while the European Bank for Reconstruction and Development recently cut its forecast for 2009 to 4.7 percent.
The government will also waive interest arrears on unpaid income tax, capital gains tax, VAT, property tax and pension contributions, Gruevski said, adding that companies will be allowed to pay the debt in instalments. Capital gains tax will be charged only on dividends, and debt for unpaid mandatory health insurance will be written off within four years if companies resume regular payments during that period.
"The government continues to be alert and ... is ready to take additional measures if needed", Gruevski said. Demand for Macedonia's key products has declined in recent months, further widening a chronic foreign trade gap that reached $2.2 billion in January-September as the country continued its recovery after years of wars and a long transition from communism.