The Government has approved the 2012 budget rebalance, which foresees a cut of about 4.5-5 percent.

The revenues and expenditures are to be slashed for Denar 7,39 billion and 7,6 billion respectively, Finance Minister Zoran Stavreski told reporters late Tuesday.

The ongoing financial crisis in the EU decreased Macedonia's economic activity in the first three months of the year and hence the budget income. The budget rebalance is aimed at improving the liquidity of the national economy, Stavreski said.

The budget-tightening includes all ministries and is mainly related to three categories - goods & services, transfers and capital expenditures, Stavreski said.

The Government plans for this year's economic growth to reach 2.5 percent, taking into account the negative industrial production indicators for the Q1.

"We expect for better economic developments in the remaining three quarters of this year. Anticipating the Q1 negative results, we expect for the 2012 growth rate to be at 2.5 percent, close to the IMF projection of two percent," Stavreski said.

Moderate inflation rate of 2.8 percent is also expected this year, due mainly to a hike of prices in the last few months as a result of oil prices surge at stock markets worldwide.