The International Monetary Fund (IMF) demands that the Macedonian authorities should increase the value-added tax (VAT) as a condition for further cooperation. Skopje believes that this will deteriorate the population's living standards which are not that high so far. According to a RIA Novosti correspondent, the IMF experts currently in Macedonia see no other way out "to patch" the budget deficit amounting to DEM 700 million or 9.2 percent of the gross national product (GNP). This week the government should make a decision concerning the increase in taxes on bread, milk, meat, vegetable oil, as well as electric energy, transportation fares and other products and services in the amount of 5 to 19 percent. Such measures can put the majority of Macedonia's two-million-strong population on the verge of poverty taking into consideration the fact that 375,000 of the economically active population are jobless and 70,000 families receive social subsidies. Experts do not rule out possible introduction of partial foreign exchange control in Macedonia or even full control over the country's monetary policy. The fact that during the war with the Albanian armed formation - the National Liberation Army - the explicit and implicit losses accounted for USD 1,240 million did not help the official Skopje at talks with the IMF. The situation is also complicated by the fact that the international conference of Macedonia's donor-countries scheduled for mid-October in Brussels has been postponed. Skopje believes such a conference could take place in November, but EC Commissioner Chris Patten stated last week that it was postponed for an indefinite term on condition of the peaceful plan implementation.
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