Republic of North Macedonia: Selected Issues

International Monetary Fund

No 2024/027, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper focuses on challenges and policies regarding climate change in the Republic of North Macedonia. A scale-up of private and public investments, along with decommission of old and polluting coal-based power plants, is needed to adapt to climate change and meet emissions targets as part of the green transition. The EU-Carbon Border Adjustment Mechanism (EU-CBAM) from 2026 will affect North Macedonia, and the authorities should consider a gradual introduction of carbon taxation to prepare for the EU-CBAM, as also envisioned in existing legislation. The introduction of the EU CBAM will influence North Macedonia’s exports to the EU negatively, as well as revenue collected, as part of the EU CBAM will be foregone revenue for North Macedonia. Instead, North Macedonia should consider a form of carbon taxation, as also envisioned in existing legislation, to collect the revenue by the state, as well as recycle part of this to mitigate the impact of the carbon tax and further support the green transition.

Keywords: interest rate pass-through; long term interest rates pass-through; interest rate transmission; climate policy agenda; productivity competition; Total factor productivity; Productivity; Central bank policy rate; Climate change; Electricity; Europe; Global (search for similar items in EconPapers)
Pages: 59
Date: 2024-01-26
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