The Law on Fiscal Discipline, entering into force on Friday, is expected to significantly improve the liquidity of Macedonia's economy, according to Deputy PM and Finance Minister Zoran Stavreski.

"It involves a request by local firms in Macedonia envisaging the introduction of deadlines for paying obligations between firms in the private sectors and in cases when private subjects cooperate with the state," Stavreski told reporters after a meeting in the Ministry of Agriculture.

By introducing strict deadlines, a commitment to pay within a defined deadline, payment of penalty and an interest rate if these deadlines are breached, the practice of not paying liabilities implemented by some firms with solid liquidity will be abolished, according to him.

"In a way a culture of not paying liabilities has been created, which is unfavorable for a market economy and for a functional domestic economy. Numerous firms have been urging instruments to be found to tackle the situation. The Law on Fiscal Discipline will meet these demands," Stavreski stated.

The practice is applied in many EU countries, he added saying he hoped that all subjects committed to conducting legal businesses and all those willing to pay liabilities would be protected under this law.

The law stipulates private firms to sign a contract obliging them to make all the payments within 60 days unless the two parties reach a different agreement. The deadline for paying liabilities can be stretched up to 120 days.

The law covers not only private firms, but also payments between private firms and state institutions.

If the law's provisions are breached, fines ranging between 5,000 and 10,000 are envisaged.

Legal provisions for public health institutions, public enterprises, state-formed companies, municipalities, the Health Insurance Fund will enter into force as of 1 January 2016.

The law was adopted in late 2013 upon a request of the business community.