North Macedonia’s public and state debts continue to rise, with public debt reaching €9.7 billion and the central government’s debt at €8.5 billion, representing 50.3% of gross domestic product (GDP), according to the Ministry of Finance.
Parliamentary debates over the proposed 2026 budget, valued at around €6 billion with a projected deficit of 3.5% (€210 million), have sparked disagreement between the government and opposition over new borrowing. While the opposition warns of historic levels of debt, the government describes the plan as developmental, projecting a gradual reduction in public debt next year.
Economic analyst Arben Halili said the state continues to take new loans to repay existing debt amid persistently low realization of capital investment projects. “The country shows very low execution of capital projects while continuously borrowing in the name of boosting domestic economic productivity,” Halili told Radio Free Europe.
The government has earmarked 40.5 billion denars (€660 million) for capital investments in 2026, but past trends show that actual implementation rarely exceeds 50%. Blagica Petreski, executive director of Finance Think, said most borrowed funds are spent on salaries, social protection, and transfers, rather than projects that generate long-term economic value.
Finance Minister Gordana Dimitrieska-Kochoska said fiscal consolidation measures and strengthened expenditure control are expected to gradually reduce public debt. The government plans to repay previous loans, including the 2020 Eurobond, through domestic and international financial markets. She added that new borrowing will primarily finance the budget deficit, and public debt could drop below 60% of GDP before 2028.
Opposition MP and former deputy prime minister for economic affairs, Fatmir Bitiçi, criticized the 2026 budget for creating record debt levels and historically high interest payments, projecting public debt above 62% of GDP.
The current government, which took office in 2024, inherited prior debts and approved new loans, including a €1 billion Hungarian credit—half allocated to municipalities and the private sector—and a planned £6 billion loan from the United Kingdom. Analysts stress that these funds must be directed toward infrastructure, healthcare, energy, transport, technology, and education to ensure productive and sustainable economic growth.
Halili emphasized that past borrowing has had limited impact, with many projects failing to deliver tangible results. Petreski added that rigorous project selection, cost-benefit analysis, clear performance indicators, and transparency are essential to transform loans into a genuine development tool rather than a fiscal burden.