Skopje, 1 July 2024 (MIA) - North Macedonia, along with other Western Balkan countries, is facing mounting challenges from natural hazards that are impacting lives, hindering growth, and straining public finances. To prepare for these climate-related threats and work towards its goal of joining the European Union, the country needs to undertake a series of reforms, according to the World Bank's "North Macedonia Climate Public Finance Review". 

"According to North Macedonia Climate Public Finance Review by the World Bank, over the past 50 years, North Macedonia has seen a significant increase in floods, extreme heat waves, fires, and heavy rainfalls. In the last two decades alone, the country has experienced 12 climate-related national disasters affecting 1.3 million people. With global warming progressing, the situation is expected to worsen in the coming years," the World Bank said in a press release on Monday. 

Massimiliano Paolucci, the Country Manager for Kosovo and North Macedonia at the World Bank, said that taking urgent actions to mitigate and adapt to the climate change is a priority, but it requires a new set of policies and sizeable investments.

"Climate impacts are expected to intensify alongside greenhouse gas emissions, making the country hotter and drier, with more frequent and severe torrential rains leading to floods," Paolucci noted. 

The report emphasizes the importance of smart fiscal policies to absorb climate-related losses and support sustainable economic development.

"Tax policy, for example, could incentivize green transportation and sustainable technologies, by removing end subsidies to coal-fired electricity, while protecting vulnerable households from increased energy costs. Climate budget tagging and green procurement processes can mitigate economic costs and protect public finances," says the World Bank.

The report highlights the need for North Macedonia to quickly implement carbon pricing to curb greenhouse gas emissions and raise significant revenue for the state budget, potentially up to EUR 730 million annually.

"Revenues from carbon pricing could support households and businesses during the much-needed green transition and provide co-benefits such as improved air quality and health," said Sanja Madzarevic-Sujster, Senior Economist at the World Bank and author of the report.

As North Macedonia aims to join the European Union and align with its net-zero objectives, the report stresses the importance of supporting the country's green transition through fiscal policy measures.

"Furthermore, as the European Union continues to implement reforms that prioritize green products, the competitive edge of imported goods that are high in emissions and have not paid a carbon price will be reduced," said Joseph Pryor, Senior Climate Specialist and the author of the report. "This would affect North Macedonia given that the European Union is its largest trading partner".

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