Zoran Stavreski Vice Prime Minister and Minister of Finance

1. Emerging Economy in Europe Zoran Stavreski Vice Prime Minister and Minister of Finance May, 2013

2. Key Macroeconomic Indicators INFLATION REAL GDP GROWTH RATE (%) Low and stable over last 10 years Average inflation: 2% annually CURRENCY EXPORT GROWTH RATE (%) Fixed exchange rate pegged to the Euro CREDIT RATINGS 2012 FDI (% of GDP) • Standard & Poor’s: BB, Stable Outlook • - Fitch: BB+, Stable Outlook Source: SSO and MoF; *Projection

3. Financial System Sound and stable financial system NospilloveroftheworldfinancialcrisisonMacedonia Bankingsystemconsistsof: 17 banksand 7savinghouses 73% share of foreign in total bank capital MostrecentlythefollowinginternationalbanksenteredtheMacedonianbankingsystem: French Societe Generale Bank Austrian Sparkasse Bank Dutch-Turkish Halk Bank

4. Sustainable Public Finances Prudent fiscal policies • Total revenues 30.1% of GDP • Total expenditures 33.7% of GDP Moderate size of Government and fiscal policy that supports economic growth • Budget balance -3.5% of GDP • General Government Debt32.8% of GDP Invest Macedonia - Agency for Foreign Investments Source: MoF; *Projection

5. Lowest taxes in Europe Lowest Flat Tax on Profit 10% Lowest Flat Tax on Income 10% Tax on Undistributed Profit 0% Reduction of social contributions Total rate of 26.5% in 2013 Pension and disability insurance 18% Health insurance 7.3% Unemployment insurance 1.2% Corporate Tax is only paid when dividends and profits are distributed, effectively making the CT rate 0% Social contributions have been reduced from 32% to 26.5% Additional incentives in the Free Economic Zones - On-line payment of taxes and - Simple tax administration procedures

6. Regulatory reforms One-Stop-Shop: 4 hours company registration without minimum start-up capital Regulatory Guillotine (“silence is consent”, reduced administration fees, time limits) Electronic One-Stop-Shop for customs permits and licenses Improving interoperability (exchange of information) between government institutions, which reduces red tape and regulatory burden on companies Cadastre reforms Digital Cadastre covering 99% of the real estate in Macedonia Notaries and land surveyors have access to the land register by an on-line system to obtain extracts of real estate and check if it is free of burdens and mortgages. Liberalization of real estate market Foreigners free to purchase real estate and construction land Simplification of procedures for obtaining construction permits from 21 to 3 steps Continuous implementation of Regulatory and Administrative Reforms

7. 6 years continuously among the Best Reformers - 5th IN THE WORLD IN THE EASE OF STARTING A BUSINESS - 19th IN THE WORLD IN PROTECTING INVESTORS Doing Business 2013 Report 37th BEST COUNTRY FOR BUSINESS IN THE WORLD Forbes Magazine 3rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2010 & 2012 Report 2nd IN THE WORLD WITH LOWEST TOTAL TAX RATE LEVEL PWC and World Bank Group 2013 Study 3rd BEST REFORMER IN THE WORLD World Bank’s Doing Business 2010 & 2012 Reports 23rd IN THE WORLD ON THE OVERALL INDICATOR “EASE OF DOING BUINESS” Doing Business 2013 Report 2012 Best Countries For Business

8. Significant improvement on the world leading indicators measuring business climate and competitiveness Macedonia improved: 71 places – “Ease of Doing Business Indicator”, DB Report Macedonia is the 5th country among the 50 economies that have most reformed since 2005, DB Report 2013 Macedonia is among the 4 case studies in DB 2012 Report (with S.Korea, UK and Mexico) 14 places–“Global Competitiveness Index”, WEF Report 35 places–“Index of economic freedom”, Heritage Foundation 45 places –“Best Countries for Business”, Forbes Magazine

9. Ease of Doing Business 2013Global Rank

10. Free Trade Agreements EU – European Union (27 countries) EFTA – European Free Trade Association (4 countries) CEFTA – Central European Free Trade Agreement (8 countries) Bilateral Free trade agreements with: Turkey and Ukraine Free Trade Agreements provide access to markets in 41 country with 650 million consumers

11. Education • Investments in Education • Education Budget ~5-6% of GDP • Free textbooks for students in elementary and high schools (both are mandatory) • Introduction of 2 foreign languages and entrepreneurship as subjects in primary schools • Mandatory secondary education • Opened new universities with campuses in many cities in Macedonia, over 50 new R&D laboratories, textbooks from top 100 world universities, scholarships • 99% enrolment rate from secondary to tertiary education

12. SUMMARY: WHY TO INVEST IN MACEDONIA? • Macroeconomic and financial stability • Prudent fiscal policies that support economic growth • Attractive tax package and Incentives in FEZs • Young, available and competitive work force (41% of population under 30, excell.language skills) • Consistent and predictable policies • Track record for successful implementation of economic, regulatory and administrative reforms • Among top reformers according to WB Doing Business • Free trade to 650 million market • Solid Infrastructure (Trans European Corridors 8 & 10) • Business friendly government

13. Thank you for your attention!