Budget 2027: A 45 Billion Denar Deficit, a New Loan for an Old Eurobond, and the Minister Promises Debt Will Stay Under 60 Percent of GDP

On 30 October the government adopted the Draft Budget for 2027: revenue of 395.4 billion denars, spending of 440.4 billion and a deficit of 45 billion denars, or 3.5 percent of GDP. Finance Minister Gordana Dimitrieska-Kočoska also promised that public debt will be under 60 percent at the end of both this year and next.

The presentation sounds like progress. This year, after the second budget revision, the deficit is 46.3 billion denars or around 4.1 percent of GDP. But a difference of 1.3 billion denars is no revolution. The fall in the percentage depends largely on whether GDP grows as projected, and the projections are real growth of 3.8 percent and inflation of 3.2 percent. If either one misses, so does the consolidation story.

Where the money comes from

Tax revenue is planned at 223.1 billion denars, up 6.4 percent, with no change in the direction of tax policy, just better collection and more digitalisation. All phrases every minister knows by heart. Dimitrieska-Kočoska herself says they were most pessimistic on excise duties, raised by 1.5 billion denars, and that next year they have another 1.5 billion denars to repay from the solidarity tax. She shifted the blame for that onto the previous government.

Roughly half of spending, 220.8 billion denars, goes on social transfers. Pensions alone are allocated 123.8 billion denars, up 4.8 percent. Healthcare gets 3.9 billion more, and 2 percent of GDP is planned for defence.

Capital spending and the old loan

Capital spending is set at 40.8 billion denars, a little over 9 percent of total spending. A government that boasts of a development budget should answer one question: how much of that money will actually be spent on roads and railways? The second 2026 budget revision cut both revenue and capital investment without cutting the deficit at the same time, and the Fiscal Council warned that the higher deficit is increasingly financing current spending.

The 500 million euro Eurobond issued in March 2023 also matures in 2027. So the new borrowing won't only cover a new deficit, but also repayment of old debt. The promise of debt under 60 percent also depends on how much GDP grows. The real test of this budget isn't today, at a press conference, but at the end of 2027, when the plan will have to be compared with what actually happened.