THE IMPACT OF PUBLIC DEBT ON THE ECONOMIC DEVELOPMENT OF NORTH MACEDONIA

Public debt is an alternative choice for the countries to fund their projects, and also serves as an effective option in terms of budget deficit or in terms of financial crisis. The amount and the composition of public debt varies from one region to another. Different attitudes and insights regarding the effect of the public debt on the economic growth have emerged throughout the years, hence the differences in the opinions about public borrowing as a method of financing. While some view it as an instrumental feature of the public finances, and an indicator about the efforts a country is putting in the process of economic development; others view it as a sign of fiscal irresponsibility and poor budget planning. Overall, there is still a debate whether it is safe to classify public borrowing as a positive feature in a country’s finances or not. The purpose of this study is to provide a better insight of the public debt and its impact on the economic growth in North Macedonia. Secondary data from the World Bank and the Ministry of Finance will be used in order to provide insight. Data that will be used for observation is public debt as percentage of GDP and in its nominal form, as well as GDP growth rate and real GDP per capita, in the period around the global financial crisis and prior to the pandemic crisis in order to understand the causes of the excessive borrowing of a country.

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