Retaining positive rates of economic growth, improving economic infrastructure and maintaining a high level of social stability are the three key objectives of the 2012 budget, Vice PM and Finance Minister Zoran Stavreski said on Monday.

Elaborating the 2012 draft-budget before members of Parliament's Financing and Budget Committee, Stavreski stressed that Macedonia was prepared for many possible scenarios. Provided that Europe's economy is able to promptly tackle current risks and to at least achieve certain stability, then GDP's growth of 4.5% can be achieved or surpassed.

"The debt crisis could spill across Europe, which requires the Government of Macedonia to carefully conduct its economic policies. The budget must be flexibly planned in order to be adapted to circumstances and risks if necessary. The 2012 budget contains elements of such flexibility and adaptability. The basic and most important shield of eventual blows in the draft-budget is the projection of revenues," Stavreski noted.

Inflation is projected at 2.5%, foreign exchange rates will be stable, while foreign exchange reserves will maintain a solid level.

"The main factor of trust in the fiscal policy for next year is to maintain a budget deficit up to 3% in line with recommendations stemming from the Stability and Growth Pact. Macedonia goes one step further - the budget deficit will be lower, about 2.5%. Hence, for the period of 2009 and 2012 Macedonia will have the lowest average budget deficit in Europe," the Vice PM said.

He added that the Government was prepared unless the economic crisis escalated.

Next year's budget is projected at Denar 169 billion (about EUR 2,77 billion), with revenues at Denar 159 billion (about EUR 2,58) and a deficit equivalent to 2.5% of the gross domestic product (GDP).

The GDP growth is projected at 4,5 per cent along with a 2,5 per cent annual inflation rate. Capital investments are to increase for 28 per cent.

The growth of budget revenues and expenditures have been projected at 5,7 percent, slightly lower than previous years due to the economic trends in Europe. More funds have been earmarked for the education, health care and infrastructure, including a construction of free economic zones.