EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.11.2008 
SEC(2008) 2695 
  
COMMISSION STAFF WORKING DOCUMENT 
 
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 
2008 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2008-2009
 
{COM(2008) 674} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 5 
1.3. Relations between the EU and the fo rmer Yugoslav Republic of Macedonia............. 5 
2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 7 2.2. Human rights and the protection of minorities .......................................................... 15 2.3. Regional issues and international obligations............................................................ 22 3. Economic criteria ....................................................................................................... 23 3.1. The existence of a functioning market economy ....................................................... 23 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 28 
4. Ability to assume the obligations of membership...................................................... 30 4.1. Chapter 1: Free movement of goods .......................................................................... 30 4.2. Chapter 2: Freedom of movement for workers.......................................................... 31 4.3. Chapter 3: Right of establishment and freedom to provide services ......................... 32 4.4. Chapter 4: Free movement of capital......................................................................... 33 4.5. Chapter 5: Public procurement................................................................................... 34 4.6. Chapter 6: Company law............................................................................................ 35 4.7. Chapter 7: Intellect ual property law........................................................................... 36 
4.8. Chapter 8: Competition policy................................................................................... 37 4.9. Chapter 9: Financial services ..................................................................................... 38 4.10. Chapter 10: Information society and media............................................................... 39 4.11. Chapter 11: Agriculture.............................................................................................. 41 4.12. Chapter 12: Food safety, veteri nary and phytosanitary policy .................................. 42 
4.13. Chapter 13: Fisheries.................................................................................................. 45  
4.14. Chapter 14: Transport policy ..................................................................................... 45 4.15. Chapter 15: Energy .................................................................................................... 47 4.16. Chapter 16: Taxation.................................................................................................. 48 4.17. Chapter 17: Economic and monetary policy.............................................................. 49 
EN 3   EN 4.18. Chapter 18: Statistics.................................................................................................. 5 0 
4.19. Chapter 19: Social policy and employment ............................................................... 50 4.20. Chapter 20: Enterprise and industrial policy.............................................................. 53 4.21. Chapter 21: Trans-European networks....................................................................... 54 4.22. Chapter 22: Regional policy and coordi nation of structural instruments .................. 54 
4.23. Chapter 23: Judiciary an d fundamental rights ........................................................... 55 
4.24. Chapter 24: Justice, freedom and security ................................................................. 62 4.25. Chapter 25: Science and research .............................................................................. 66 4.26. Chapter 26: Education and culture............................................................................. 66 4.27. Chapter 27: Environment ........................................................................................... 67 4.28. Chapter 28: Consumer and health protection............................................................. 69 4.29. Chapter 29: Customs union........................................................................................ 70 4.30. Chapter 30: External relations.................................................................................... 71 4.31. Chapter 31: Foreign, secur ity and defence policy...................................................... 72 
4.32. Chapter 32: Financial control..................................................................................... 73 4.33. Chapter 33: Financial an d budgetary provisions........................................................ 74 
STATISTICAL ANNEX.......................................................................................................... 75 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
The former Yugoslav Republic of Macedonia 2008 Progress Report 
1. I NTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported regularly to th e Council and the Parliament 
on progress made by the countries of the Western Balkans region. 
This report on progress made by the former Yugo slav Republic of Macedonia in preparing for 
EU membership largely follows the same  structure as in previous years.  
The report: – briefly describes the relations between th e former Yugoslav Republic of Macedonia and 
the Union; 
– analyses the situation in the former Yugos lav Republic of Macedonia in terms of the 
political criteria for membership; 
– analyses the situation in the former Yugos lav Republic of Macedonia on the basis of the 
economic criteria for membership; 
– reviews the former Yugoslav Republic of Mace donia's capacity to assume the obligations 
of membership, that is, the acquis expressed in  the Treaties, the secondary legislation, and 
the policies of the Union. 
The period covered by this repor t is from 1 October 2007 to early October 2008. Progress is 
measured on the basis of decisions taken, legisl ation adopted and measures implemented. As a 
rule, legislation or measures which are under preparation or awaiting parliamentary approval 
have not been taken into account. This approach  ensures equal treatmen t across all reports and 
permits an objective assessment. 
The report is based on information gathered and analysed by the Co mmission. In addition, 
many sources have been used, including contri butions from the government of the former 
Yugoslav Republic of Macedonia, the Member States, European Parliament reports
1and 
information from various internationa l and non-governmental organisations. 
The Commission draws detailed conclusions regarding the former Yugoslav Republic of 
Macedonia in its separate communication on enlargement2, based on the technical analysis 
contained in this report. 
                                                 
1 The rapporteur for the former Yugoslav  Republic of Macedonia is Mr Meijer. 
2 Enlargement Strategy and Main Challenges 2008-2009 
EN 5   EN 1.2. Context 
The European Council of Decemb er 2005 granted the status of  candidate country to the 
former Yugoslav Republic of Macedonia. Th e Stabilisation and Association Agreement 
(SAA) between the former Yugoslav Republic of  Macedonia and the EU was signed in April 
2001 and entered into force in April 2004. The Council adopted the Accession Partnership for 
the country, including key prioriti es for reform, in February 2008. 
1.3. Relations between the EU and the fo rmer Yugoslav Republic of Macedonia 
The former Yugoslav Republic of Macedonia is  participating in th e Stabilisation and 
Association Process (SAP). 
The former Yugoslav Republic of Macedonia has made progress in the implementation of the 
Stabilisation and Association Agreement  (SAA) and has reached a high level of 
compliance. In particular, progress has been ach ieved in aligning with the SAA provisions in 
the field of electronic communications. The c ountry fulfils all the commitments foreseen 
under the first stage of implementation of Title  V (Movement of workers, establishment, 
supply of services, capital) of the SAA. A Protocol to the SAA to take account of the 
accession of Bulgaria and Romania to the EU  entered into force on 1 November 2008.  
Political and economic dialogue between the EU and the country has continued through the 
SAA structures. Due to early elections held in June, the SA Committee was postponed to 
September and the SA Council to December. As foreseen, seven sectoral sub-committees 
have been held since November 2007. 
The EU provided guidance to the author ities on reform priorities through the Accession 
Partnership of February 2008. Progress on these reform priorities is encouraged and 
monitored through the bodies set up under the SAA. Based on the Accession Partnership, the 
2007 Progress Report and comments made by the Commission, the former Yugoslav Republic 
of Macedonia adopted a revised national programme  for the adoption of the acquis in April. 
Following the entry into force of the EC/th e former Yugoslav Republic of Macedonia 
agreements on visa facilitation and readmission  in January 2008, the first meetings of the 
Joint Committees provided for in these two ag reements were held in May 2008. The visa 
facilitation agreement simplifies procedures for the issuing of visas to certain categories of citizens of the former Yugoslav Republic of Macedonia, including students, scholars, businesspeople and journalists. Under the terms of this agr eement citizens of the former 
Yugoslav Republic of Macedonia pa y a reduced visa f ee or receive visas free of charge. The 
agreement on readmission sets out clear obligations  and procedures for the authorities of both 
the former Yugoslav Republic of Macedonia and EU  Member States as to when and how to 
take back people who are illegally residing  on their territories. Implementation of the 
readmission agreement is proceeding smoothly. 
In January, the Council welcomed the Commission's intention to launch a visa dialogue based 
on detailed roadmaps with clear benchmarks in order to gradually advance towards visa 
liberalisation. The Commission officially launc hed the dialogue with the former Yugoslav 
Republic of Macedonia in February  and presented the road map in May. The process will be 
closely monitored by the Commission which will assess the progress an d follow the adoption 
and implementation of the necessary reforms to wards the abolition of th e visa requirement. 
EN 6   EN As regards financial assistance , the new Instrument for Pre- Accession Assistance (IPA) 
started on 1 January 2007. The 2008-2010 Multi -Annual Indicative Planning Document 
(MIPD) for the former Yugoslav Republic of  Macedonia was adopted in September 2008. In 
2008, the national programme amounted to € 70 million. In addition the country continues to 
benefit from regional and horizontal progra mmes. Cross border cooperation is used to 
promote dialogue between local and regiona l authorities of ne ighbouring countries. 
Transfer of responsibility fo r the implementation of CARDS assistance from the European 
Agency of reconstruction (EAR) to the Comm ission Delegation in Skopje was completed in 
September. The EU assistance portfolio managed by the EAR in the country amounts to € 326 million. By July 2008, more than 97% of this total had been contracted and more than 93% disbursed. The national CARDS allocations to  the former Yugoslav Republic of Macedonia 
since 2002 amount to € 195.5 million. Assistance focused on support to the implementation of the Ohrid Framework Agreement, strengthening of  administrative capac ity with particular 
emphasis on the rule of law sector, economic deve lopment, social cohesion and support in the 
field of the environment.  
IPA assistance is implemented by the Delegation in Skopje. The EU aims to transfer the 
management of IPA Funds to the national aut horities under the Decentralised Implementation 
System (DIS) once the national authorities have  developed the necessary capacity to assume 
this responsibility. Further attention is needed  to developing accountable  administrations and 
institutions with appropriate capacity. 
As regards financial support to civil society , this has been extens ively supported through the 
different CARDS programmes, including aid to establish the national civil society forum, 
capacity building to civil society organisatio ns and the establishment of regional NGO 
support centres, co-financed by the EU with € 1.2 million. Presently still ongoing is the 
support - through the Cent re for Democracy and Reconciliat ion in Southeas t Europe - to 
translate history teaching material and develop a history teachers database to raise awareness 
and create a contact network, amounting to a total of € 159 000. Under the Cross Border 
Cooperation programmes with Bulgaria and Gr eece, several civil society organisations 
received support to stimulate economic development, preserve cultural heritage or implement 
projects with a social objective. 
As regards Community programmes , the former Yugoslav Republic of Macedonia has 
signed memoranda of understanding for pa rticipation in the following Community 
Programmes: 'Entrepreneurship and Innova tion specific Programme' (EIP) of the 
'Competitiveness and Innovation Framework Programme'
, in October 2007 ; 'Progress' , in 
October 2007 ; and 'Culture' , in January 2008. 
2. P OLITICAL CRITERIA  
This section examines progress made by the former Yugoslav Republic of Macedonia towards 
meeting the Copenhagen political criteria, which re quire stability of institutions guaranteeing 
democracy, the rule of law, human rights and respect for and protection of minorities. It also monitors regional cooperation, good neighbourly relati ons with enlargem ent countries and 
Member States, and respect for international obligations, such as cooperation with the UN 
International Criminal Tribunal fo r the former Yugoslavia (ICTY). 
EN 7   EN 2.1. Democracy and the rule of law 
Parliament Early parliamentary elections were held on 1 June. The OSCE-ODIHR election observation 
mission reported that key international standards were not met in the conduct of the elections. 
The electoral campaign was marred by several incidents. In many instances attacks on campaign offices were not investigated by the authorities, which conveyed a sense of 
impunity to the perpetrators. Effective remedies were not taken against the alleged violations. 
Equal access to the media was not ensured and several government communication campaigns continued or were launched during the official election campaign. 
On election day, organised violence, inti midation and stuffing of ballot boxes in 
predominantly ethnic Albanian areas preven ted citizens from exercising their democratic 
rights. One person was killed a nd several others injured. The law was enforced selectively, 
and the authorities failed to prevent violence and intimidati on. Senior ethnic Albanian police 
officers with affiliation to one of  the political partie s in government acted in a partial manner: 
policemen belonging to special police units partic ipated in irregulariti es in favour of their 
political party. 15% of vote counts were assessed as bad or very bad by ODIHR. 
The authorities have launched investigations against the perpetrators of the incidents and 
irregularities. To date, these have led to 34 court cases. The president of the Supreme Court 
has instructed the courts to give priority to  these cases. Verdicts have been reached on a 
number of cases leading to prison sentences for 15 persons. The remaining cases concerning 
143 perpetrators are ongoing. Concurrently, 28 police officers have been suspended and 
against eleven of them criminal charges have been initiated. It is essential that the investigations and prosecutions are completed in a thorough and timely fashion in order to 
provide an effective deterrent effect. 
The irregularities in the parl iamentary elections of July 2006 have not been effectively 
addressed. No sentences have been delivered fo llowing the procedures in itiated against the 20 
perpetrators of elec tion irregularities.  
Nonetheless, the administrative aspects of the elections were managed relatively well. The 
State Electoral Commission (SEC) operated in a transparent and efficient manner. It reacted 
promptly to misleading campaign posters displayed on the eve of the election. New members of electoral boards were sel ected randomly from among civil servants and public service 
employees and were trained, which made the el ection administration more professional. The 
large number of international and domestic obser vers contributed to the transparency of the 
election.  
The SEC reacted firmly and in a transparent manner to the irregularities. It annulled the 
results in 197 polling stations, accounting for 10%  of the registered voters, and dismissed six 
chairpersons of municipal elec toral boards. The Supreme Court confirmed most of the SEC’s 
decisions. The re-runs were organised on 15 June in 187 polling stations. There was a 
remarkable improvement in security due to ex tensive policing and calls from all political 
leaders; nonetheless, some furthe r irregularities took pl ace and further re-runs  had to be held 
on 29 June in 15 polling stations.  
The voter turnout increased slightly compar ed to 2006, reaching 57.5%. Gender balance in 
candidate lists further improved and surpasse d the requirement in the Election Code as 
EN 8   EN women counted for 35%. Several parties representing smaller ethnic communities 
participated, as part of larger coalitions. 
The coalition led by the Internal Macedonian Revolutionary Organisation-Democratic Party 
for Macedonian National Unity  (VMRO-DPMNE) won 63 of the 120 seats, against 27 for the 
coalition led by the Social Democratic Union (SDSM). The Democratic Union for Integration 
(DUI) won 18 seats, the Democra tic Party of Albanians (DPA), 11, and the Party of European 
Future (PEI), 1. Several smaller parties secured on e or more seats as part  of the coalitions led 
by VMRO-DPMNE or SDSM.  
ODIHR made 28 recommendations for future ac tion, including reform of the electoral code, 
making campaign financing more transparent,  strengthening the cap acity of the State 
Electoral Commission (SEC) and ensuring e qual access to the media. Following the 
publication of the ODIHR report , the Government adopted an Action Plan which addresses 
most of the OSCE/ODIHR recommendations , although it does not provide deadlines, a 
methodology or a budget. In October, the Electora l Code was amended, broadly in line with 
OSCE/ODIHR recommendations, in pa rticular as regards the main tenance of the voters' list, 
strengthening rules on financ ing of electoral campaigns a nd clarifying procedures for 
addressing election irregularities. 
In December the Parliament adopted some si gnificant reforms, on the basis of a renewed 
consensus between the government coalition and the opposition. Laws were adopted on the 
public prosecutor's office, the council of public  prosecutors and the committee on inter-ethnic 
relations. The remaining appointment to the Judicial Council was made at the end of 
December. Political parties al so agreed on the replacement of a Deputy Speaker and on a new 
member of the Committee on inter-ethnic relations. 
A National Council for EU Integration (NCEI) wa s established, chaired by the leader of the 
opposition and comprising representatives from the main political parties in Parliament and 
all sectors of society. The NCEI has so far b een able to make a valuable contribution to 
building consensus in favour of the EU. The Committee on EU Affairs remained among the 
most active committees.  
In July the new Parliament adopted rules of  procedure which had been the subject of 
controversy for several years. It also quickly  re-established most parliamentary committees, 
including the EU affairs committee and the EU – former Yugoslav Republic of Macedonia 
Joint Parliamentary Committee. The Chair of the National Council for EU Integration was 
again appointed from the main opposition party, in an effort to promote consensus, and all the members of the NCEI were appointed. Also, a Deputy Speaker was nominated from the main 
opposition party. The new law on languages allows fo r the use of Albanian by the chairs of 
committees. Furthermore the Speaker of the new Parliament introduced a number of constructive measures in September such as th e holding of regular meetings between party 
coordinators, with the participation of the De puty Prime Minister responsible for European 
affairs when EU related matters are on the agenda. 
However, the work of the Parliament until its early dissolution had been hampered by 
insufficient dialogue between the parties. Parl iament also failed to nominate members of 
certain bodies. Insufficient efforts were made to adopt the action plan for the functioning of 
Parliament, although a budgetary council was es tablished. A new administrative organisation 
of the Parliament's services was approve d, but a budget and staff were not provided.  
EN 9   EN The SDSM and its coalition partners boycotted the new Parliament from 17 July to 4 August 
in protest at the arrest and detention of their vice-president and the use of emergency 
procedure to enact laws. DPA boycotted the new Parliament from its opening until October. 
Three of its MPs left to create a new party cal led New Democracy and returned to Parliament 
on 16 September. 
The new Parliament addressed the legislativ e backlog by enacting 172 laws by 4 August, all 
by emergency procedure, and mainly in the complete absence of opposition MPs. The emergency procedure is intended to be used to prevent or eliminate major disturbances in the 
economy, in the interests of the security and defence of the country, or in case of major 
natural disasters, epidemics or other extraord inary and urgent needs.  Application of the 
emergency procedure was in a num ber of cases detrimental to the quality of the laws and the 
absence of the opposition undermined  the democratic process.  
As regards political dialogue, which is a key pr iority of the Accession Partnership, there has 
been sporadic progress. Parliament had adopt ed some important reforms in December and 
established the National Council on EU Integrati on. However, political tension remained high 
and dialogue with the opposition was limited. The new Parliament was subsequently boycotted by the opposition. Meanwhile, the new Pa rliament made systematic use of urgent 
procedure in order to adopt over 170 laws, mo stly in the absence of the opposition, thus 
avoiding the normal democratic debate. In re sponse the president initially refused to 
promulgate several laws. Parliament did not ad opt the conclusions of the enquiry into the 
clashes that occurred between MPs in Sept ember 2007. These developm ents raise serious 
concerns about the effective func tioning of political institutions. As regard s political dialogue 
significant further efforts are required. 
Government 
Prior to the early elections in June, the relati ons within the governme nt coalition of VMRO-
DPMNE and DPA were frequently strained. In  March, DPA withdrew from the Government 
for ten days, during which there was a minority  Government. DPA returned after receiving 
assurances from the prime minister on thei r demands. Three ministers resigned between 
December and March and their posts were not filled until the formation of the new 
government in July.  
In the reporting period up to mid-April the g overnment focused mainly on the process of 
NATO accession. Nonetheless, in March the gover nment adopted a well prepared action plan 
for the fulfilment of the key priorities of th e Accession Partnership as well as a revised 
National plan for the adoption of the acquis . 
The working relations between the government  and the president, in the context of 
cohabitation, have been mixed. They met regular ly and maintained a joint stance on foreign 
policy. However, there has b een disagreement about how to reach an agreement in the UN 
talks on the name issue. Furthermore, the president pleaded against the dissolution of 
Parliament, which the government strongly favoured.  
The new coalition government, composed of VMRO-DPMNE, DUI, PEI and several parties 
representing smaller ethnic minorities, was es tablished in July. One of the deputy prime 
ministers is ethnic Albanian and one minister, for the first time , is from the Roma community. 
The government programme includes accession to the European Union amongst its strategic priorities.  
EN 10   EN Decentralisation, which is a basic principl e of the Ohrid Framework Agreement, has 
continued. The law on regi onal development entered into  force on 1 January 2008. In 
accordance with the law on regional developmen t specific administrative structures for the 
implementation of the regional development law began to be created, wi th clear distribution 
of responsibilities. Regional development counc ils were set up for all eight regions and 
chairpersons were elected from among the mayors. The National Regional Development 
Council and one regional centre, as an administ rative structure to support one of the regional 
development councils, were established. The ot her seven regional centres have yet to be 
established. Coordination capaci ty between different structur es is not yet sufficiently 
strengthened. 
Another 15 of the 85 municipa lities entered the second phase of the fiscal decentralisation 
process, bringing the total to 57 as of June 200 8. The debts of the munici palities were further 
reduced. Municipal tax collection increased siz eably although revenue remained insufficient 
in the light of the new competencies. Internal  audit units were established in eight more 
municipalities, reaching a total of 28. The Asso ciation of Municipalitie s (ZELS) continued to 
contribute effectively to cooperation between th e central authorities an d municipalities though 
SDSM mayors temporarily withdrew dur ing the SDSM boycott of Parliament.  
However, no progress was made in the direct  funding of the tasks decentralised to the 
municipalities. Among those municipalities that were not allowed to enter the second phase, 
some still have sizeable debts and have had their accounts blocked by legal proceedings. No steps have been taken to organise and develop the capacity of the municipalities to manage 
state-owned property. The administrative capacitie s of some municipalities are very low and 
the transparency and accountability of the lo cal administration remains insufficient, in 
particular the system of financial control.  The Ministry of Local  Self-Government was 
obliged to function without political guidance because the minister resigned and his position 
remained vacant for the remaining seven months  of the government’s term. The decentralised 
system for financing of education needs to be consolidated and clarified.  
Public administration  
Some progress has been made in further impl ementing the law on civil servants, which is a 
key priority of the Accession Partnership. The Civil Servants  Agency (CSA) continued to 
play an active role in disciplinary proceedings , which have continued to increase: 142 in 2007 
compared to 44 in 2006. CSA guidelines on the inte rnal structuring of state administrative 
bodies (SABs) were issued. The CSA also impr oved the procedures for the first stage of 
recruitment (pre-selectio n) of candidates into public administration. 
Within the framework of the code of ethics obli gation for civil servants to report illegal acts, 
three cases were reported leading to one pr osecution. Some progress has been made in 
implementing the law on freedom of informa tion. Additional training on free access to 
information was delivered to holders of information and to the public . The citizens’ charter 
project was extended to cover an additional nine  SABs. Its effectiveness is being analysed 
regularly. The resources provided to the Ombudsm an were slightly increased. Cooperation of 
public bodies with the Ombudsman has further improved: state bodi es carried out the 
instructions of the Ombudsman in 87.8% of  cases in 2007 compared  with 75% in 2006. 
A consolidated rulebook of the procedures of the government was adopted, which included 
provisions introducing, from 2009, mechanisms to  enhance the preparatory phase, including 
stakeholder consultation, of legislation. Mini stries will be required to submit a Regulatory 
EN 11   EN Impact Assessment (RIA) with proposed laws. The government adopted a methodology on 
RIAs in March 2008. Amendments to the or ganic budget law introduced a new method of 
financing, intended to link strate gic planning more closely with its financial implications. 
Several moves were made to establish within mi nistries sectoral units  for strategic planning, 
policy development, and management of human  resources. Some attention was given to 
enhancing the capacity for and process of strategic planning. 
The Secretariat-General of the Government carried out training on policy development and 
strategic planning. An increased  number of SABs submitted training records to the CSA, and 
there were some indications that the importa nce of training was better appreciated. The 
national system for coordination of training was revised and a three year  training strategy for 
civil servants at local and central levels was adopted in September. 
Staff numbers in EU sectors in some line mini stries, including the un its dealing with IPA 
funding, were increased. The proce ss of restructuring the Secret ariat for European Affairs, 
which had begun in April 2007, was eventually completed in March 2008. The new structure entailed a doubling of staff numbers. In some ministries, capacity has been strengthened in 
priority policy areas. 
Salaries of civil servants were increased  by 10% in October 2007 and by another 10% in 
September 2008. Additional "career supplemen ts" were introduced in August 2008, in 
recognition of sustained and effec tive service, as provided for by the law on the civil service.  
The law on police, which is a key priority of the Accession Partnership, entered into force in 
November 2007. On this basis, progress was made  in implementing the outstanding elements 
of the police reform. In particular, good progres s was made on decentralisation of the police, 
with the appointment of eight regional commande rs, and the selection, in consultation with 
municipal councils, of all 38 local police sta tion commanders. The new rule book, which is a 
key piece of implementing legislation, was adopt ed and the relevant training was delivered 
country-wide. Initial steps were taken to improv e management of availa ble resources, training 
and budgetary planning. A human resources stra tegy has been adopted. Budgetary planning 
improved, and has become more efficient in the areas of procurement of equipment and 
maintenance of facilities. Efforts were ma de to tackle corruption in the police. ( See also 
Chapter 24 – Justice, Freedom and Security .)  
Efforts were made towards ensuring greater accountability of the in telligence services to 
Parliament. However, further effo rts are required, in particular to strengthen judi cial oversight 
of interception of  communications. ( See also Chapter 24 – Justice, Freedom and Security .) 
However, there was limited progress in strengthening the role of the CSA, in particular in 
overseeing the overall recruitmen t process, in assessing the perf ormance of civil servants and 
in disciplinary procedures. Full implementa tion of the provisions regarding performance 
related supplements has not yet been achieved. 
Objective and merit-based criteria are not consistently used in recruitment and promotion. 
There is a lack of transparency and accountab ility in recruitment decisions by individual 
administrative bodies and the CSA lacks mechanis ms for assuring the le gality and regularity 
of those decisions. Senior management positions are often filled externally without sufficient 
regard to professional qualifications and experi ence, in contravention with the law on the civil 
service. An important weakness of the current fr amework is that it does not allow for internal 
promotion based on merit: this has a de-motivat ing effect and favours bad practices. Too little 
EN 12   EN attention has been given to the need to ensure continuity and retain re levant expertise. The 
number of illegal promotions and demotions in creased to 500 in 2007 a nd then decreased to 
57 in 2008 up to August. The CSA is often not informed when staff are reassigned. 
Understanding of the performance assessment pr ocess is still poor, and the capacity in 
ministries to implement it low. A number of assessment reports were not submitted to the CSA on time.  
There are inadequate structures and insuffici ent administrative capacity for human resources 
management, policy development, strategic plan ning, and internal coor dination and planning. 
In particular, there is still no fully functional network of human resource management units in 
line ministries. While some units exist, they deal exclusively with personnel issues and are 
under-equipped to handle training/performance appraisal issues. A framework needs to be 
established for an effective so cial dialogue between the gove rnment and the organisations 
representing ci vil servants. 
The capacity to prepare legislation is vari able, which is reflected in its quality. The 
preparatory phase for legislation needs to be improved.  
The law on access to information remains to be fully implemented, as many public bodies that 
hold information of public interest still either are not fully able or are unwilling to facilitate 
access. The administrative capacity of th e commission for protecting access to public 
information remains weak. The amendment to th e code of ethics for civil servants which 
introduced an obligation to report all illegal ac ts by other civil servants has so far proved 
ineffective. 
Adequate human and financial resources to implement the acquis  (NPAA) are still lacking. In 
particular, a number of key posit ions in the Secretariat for European Affairs, the Ministry of 
Justice and the Ministry of Local Self-Governme nt remain vacant. The co-ordination of the 
NPAA with the strategic plans of ministries and the work programme of the government 
needs to be strengthened. In some cases, admini strative restructuring continues to be used as a 
means of accommodating staff changes rather than fully responding to the policy 
responsibilities of the SABs . There is insufficient admi nistrative capacity in many 
municipalities to implement those parts of the acquis  that are assigned to local level or to 
manage EU funds.  
Comprehensive training for civil servants is not yet in place. Not all annual training 
programmes were submitted to the CSA on time  and funding still depends largely on donor 
contributions. Partly because of the unsystema tic approach, training is sometimes of poor 
quality or limited relevance.  
As regards the police service, implementati on of the recently adopted human resources 
strategy remains a considerable challenge. A car eer development and appraisal system has yet 
to be established. The police failed to prevent and responded inadequately to serious incidents 
in predominantly ethnic Albanian areas duri ng the election campaign and on election day. 
Certain units were actively involved in irregular ities whilst others were negligent. This was 
due to the politicisation of seni or police officers in these areas, as noted by the OSCE/ODIHR 
observation mission. In this respect the law on police was disregarded. 
Overall, some progress has been  made in reforming public ad ministration, which is a key 
priority of the Accession Partnership. However,  greater priority needs to be given to 
establishing a public administration which is transparent, professional and free of political 
EN 13   EN interference. In this ar ea the country is at an  early stage. Progress was made in implementing 
the law on police, which is a key priority of  the Accession Partnership. Nonetheless, the 
politicisation of senior police offi cers is a serious concern. In this area the country partially 
meets its priorities. 
Judicial system (See also chapter 23 - Judiciary & f undamental rights) 
Good progress continued in implementing the strate gy on judicial reform, a key priority of the 
Accession Partnership . The independence and efficiency of the judiciary are gradually being 
strengthened.  
Reforms have been adopted to strengthen the independence and efficien cy of the prosecution 
service through the Law on the Council of Public Prosecutor s and the law on the public 
prosecutors' office, adopted end 2007 after a long delay. Thereby, a ne w Council of Public 
Prosecutors was established in December 2007 w ith powers to nominate public prosecutors 
directly and on an independent basis. The council has 11 members selected for four years 
(renewable once). Six members are elected by the prosecutors themselves and three are 
selected by the Parliament. The State Public Pr osecutor and the Minister of Justice are ex 
officio members with a right to vote. The member s in turn elect a president for two years (not 
renewable).  
The State Public Prosecutor himself conti nues to be appointed by the Parliament upon a 
proposal of the Government (six year term renewable once). However, the individual public 
prosecutors, whose mandate is indefinite, will  now be selected by the Council of Public 
Prosecutors. 
The appointments to the Council of Public Pr osecutors were delayed but completed by 
Parliament in July. The Council is now operational. 
The new Administrative Court and the new Cour t of Appeal in Gostivar were set up and 
started processing cases.  
The 2006 law on courts was amended to provide for only one (instead of five) specialised 
court department to deal with cases of orga nised crime and corruption. Consequently, Basic 
Court Skopje 1 has been attributed these ca ses. The Academy for training of judges and 
prosecutors is fully functional. The implementa tion of the laws on litig ation procedure and on 
enforcement of civil judgements is gradually improving the efficiency of the judiciary.  
The Judicial Council operated w ith its full composition, after Pa rliament finally appointed the 
remaining member. The Judicial Council adop ted the manual for the appraisal of judges, 
which was compiled on the basis of a wide c onsultation with the profession and which 
introduces both quantitative and qualitative cr iteria for the appraisal of the judges' 
performance. Nonetheless, it was enacted only after the bulk of promotions had been 
completed. The Council maintained its effort s to combat corrupti on in the judiciary.  
However, a significant number of vacancies re main open in the public prosecution service, 
and the higher prosecutor's office in Gostivar has yet to begin work. The laws on the public 
prosecutor's office and the Council of Public  Prosecutors are not yet being implemented 
because of pending amendments to the law on cr iminal procedure and of certain practical 
issues with the law enforcement agencies.  
EN 14   EN From January the Constitutional Court functione d with 6 members instead of 9. In November, 
the president of the Court and another memb er, both from the ethnic Albanian community, 
resigned because they disagreed with the Cour t's decision on the law on use of flags of the 
communities. Then in January, another judge left  in order to join the European Court of 
Human Rights. Parliament appointed a judge to one  of the vacant posts in July and in October 
made the remaining two appointments, on the ba sis of a proposal of the President of the 
Republic. 
The Minister of Justice has made  a number of public statemen ts concerning the decisions on 
appointment of judges which could be percei ved as an attempt to unduly influence the 
Judicial Council.  
The budget of the courts was too low to cover th eir running costs and th eir debts to utility 
companies. This recurrent weakness was re medied again by providing a supplementary 
budget in the course of the year but nonetheless it conti nues to jeopardize the efficiency of the 
judicial system.  
Overall, good progress has been made in impl ementing the strategy on judicial reform, a key 
priority of the Accession Partnership. The j udicial council functions smoothly and the new 
Council of Public Prosecutors has started to meet. The new Administra tive Court and the new 
Court of Appeal in Gostivar were set up. Howe ver further strengthenin g of the judiciary is 
required as regards its indepe ndence, efficiency, human res ources and budgetary framework. 
A track record of implementation of the new legislative framework has still to be established.  
In the area of the judiciary the country is moderately advanced.  
Anti-corruption policy (See also chapter 23 - Judiciary & fundamental rights)  
Some progress has been made in implementing an ti-corruption policy, whic h is a key priority 
of the Accession Partnership. The law on prev ention of corruption was strengthened, in 
particular to allow the Stat e Anti-Corruption Commission (SACC) to publish the asset 
declarations without prior approval. The Gr oup of States Agains t Corruption (GRECO) 
recommendations are being followed up. 
The SACC started to implement the new state programme for preventi on and suppression of 
corruption. A new programme and ac tion plan on conflict of intere st were also adopted. Since 
the law on conflict of interest entered into forc e, 41 cases have been initiated. A number of 
misdemeanour procedures were brought agai nst officials who failed to submit asset 
declarations. In 2008 the budget of the SACC wa s increased by 11%, five additional staff 
were allocated and new premises were opened. 
The Code of criminal procedure and the law on monitoring of communications were amended 
to allow use of special investigative measur es for cases where corruption is suspected. 
Law enforcement agencies, in particular the Mi nistry of Interior and the public prosecution 
services, and also the customs administratio n, demonstrated a steady determination to 
cooperate and coordinate. There were convicti ons in some high-profile cases, including the 
former governor of the National Bank and the former director of  the Public Revenue Office. 
Transparency International has reported some improvement in the perception about the extent 
of corruption.  
However, the fragmented legal system that has resulted from the large number of legislative 
acts continues to make implementation and mon itoring difficult. Shortcomings in the legal 
EN 15   EN framework governing financing of political pa rties and election camp aigns were addressed 
after the election and a track reco rd of implementation needs to be established. There are gaps 
in the conflict of interest law, notably as regards civil servants. 
Also, reports from the State Audit Office and r ecommendations from the SACC are too rarely 
followed up. Checking of asset declarations is  sporadic. The SACC needs to be more fully 
engaged and fulfil its leadership role as rega rds awareness-raising and engagement with the 
public. Some shortcomings in the legal framew ork hampered the fight against corruption, in 
particular as regards the use of special in vestigative measures and the delivery and 
enforcement of court decisions. A centralised mutually accessible intelligence system, which 
would strengthen operational coordination am ong law enforcement agencies and watchdog 
bodies, remains to be established.  
There is concern about the po liticisation of some corrupti on cases and the way they are 
handled.  
Overall, some further progress has been made  in implementing anti-corruption policy, which 
is a key priority of the Accession Partnership. The legal and institutional framework has been strengthened and some further results have  been achieved in implementation. However, 
corruption remains a particularly serious problem. Further steps are necessary, in particular as 
regards implementing provisions on financing of political parties and election campaigns. The 
country partially meets its priorities in this area. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law As regards ratification of human  rights instruments,  the inter-ministerial committee set up 
in 2006 to monitor the obligati ons stemming from the ratifica tion of Protocol 1 to the 
European Social Charter has continued its wor k. Ratification of the re vised Protocol No 2 
from 2005, reforming the control mechanism, is still pending. 
The European Charter for Re gional or Minority Languages and the Council of Europe's 
Convention on Action against Trafficking in Hu man Beings have still not been ratified.  
In 2007 the European Court of Human Rights (ECtHR) delivered 16 judgements finding 
that the former Yugoslav Republic of Macedoni a had violated the European Convention on 
Human Rights (ECHR).  
Between 1 January and 31 December 2007 454 new a pplications relating to the country were 
made to the ECtHR. The number of pending cas es before the Court regarding the former 
Yugoslav Republic of Macedonia is 980. 
Little progress can be reported as regards promotion and enforcement of human rights . 
The inter-ministerial body for pr otection of human rights met four times and adopted its rules 
of procedure. However, it is not yet effectiv e in coordinating the ac tion of ministries and 
bodies concerned. It needs to pr ovide stronger leadership to ra ise the levels of respect for 
fundamental rights throughout the country. In particular, training of public serv ants in all 
relevant areas needs to be intensified. 
EN 16   EN Civil and Political Rights 
With regard to the prevention  of torture and ill-treatmen t and fight against impunity, the 
Ministry of the Interior has dealt with 52 case s of ill-treatment and no cases of illegal arrest. 
This was a decrease in the number of cases comp ared with previous years. Criminal charges 
were brought against 27 police officers i nvolved. The prosecutor's office conducted 22 
investigations agains t police misconduct.  
The Ministry of the Interior made further progr ess in implementing the code of police ethics 
by carrying out a programme of training. Cooperation between the Ombudsman and the 
Sector for Internal Control and Professiona l Standards was satisfactory and led to 38 
recommendations by the Ombudsman in  this area being followed up. 
The keeping of records of informative talk s by the police has improved, thus helping to 
improve the transparency of implem entation of detention procedures. 
However, the Ombudsman regretted the lack of effective control over special police units, 
notably the Alpha units, which are widely alle ged to have used excessive and unjustified 
force, inter alia against Roma . The prosecutor's office should ma ke further significant efforts 
to promptly and in an independent manner investigate and prosecute allegations of ill-treatment. The decisions of the ECtHR in this  respect need to be fully implemented. The 
Ministry of Interior needs to conduct its investigations  in accordance with internal procedures, 
national law and international standards. Th ere are increasing calls for an independent, 
external mechanism for m onitoring of police misconduct to be established.  
Access to justice is still limited in the case of appeal s against acts and decisions by civil 
servants affecting individual citizens' rights and obligations. As in prev ious years, the second 
instance Government commissions which d ecide on complaints about decisions of 
administrative bodies were the least responsiv e to the Ombudsman's recommendations. There 
was a slight decrease in the duration of court procedures.  
As regards the prison system , the Government started implementing a programme to improve 
conditions in prisons. The Prilep prison was refu rbished, Stip and Idri zovo prisons are being 
reconstructed and a new prison is being built  in Kumanovo. The pris on staff received some 
training on fundamental rights and on Eur opean best practice on prison rules.  
However, the Council of Europe's Committee fo r the Prevention of Torture continues to be 
deeply concerned about the state of the prison  system. It notes that there is a lack of 
professional management as se nior officials are political appointees who are frequently 
changed. Rapid action is needed to eliminate inhuman and degrading co nditions of detention, 
particularly in Idrizovo prison, and to address inad equate health care provisions. There is also 
a lack of clear procedures for dealing with widespread allegations of ill-treatment of prisoners. Vulnerable prisoners, su ch as juveniles, are particular ly at risk. During 2007 there 
were eight deaths and two suicid es in prisons, compared with six and three respectively in 
2006. The conditions of detention cells in mo st police stations re main sub-standard. 
Significant additional efforts need to be made  to address the recommendations of the CPT. 
No steps were taken to respond to the Europ ean Parliament’s recommendation to follow up 
the Khaled El-Masri case. 
EN 17   EN The legal framework for freedom of expression , including the media, meets most 
international standards. However, in pr actice the Broadcasting Council and the public 
broadcaster lack sufficient resources and financia l independence because of the failure of the 
fee collection system. Moreover, an amendmen t to the broadcasting law adopted in July 
establishes the possibility to declare bankru ptcy or liquidation of the Public Service 
Broadcaster at any moment. The broadcast me dia continue to be dominated by private 
television stations, most of which have strong li nks to political parties.  Ownership of the print 
media remains highly concentrated. The media con tinue to be subject to significant political 
interference. During the elections, the Broad casting Council could not  effectively address 
issues of equal access to th e media because Parliament ha d not adopted the necessary 
guidelines. The media generally enabled voters to  make an informed choice, although they did 
not treat all political parties eq ually. The public television broadcas ter showed bias  in its news 
programmes during the election period, giving undue coverage to government parties. (See 
also Chapter 10 – Information society and media.) 
With regard to freedom of assembly and association, the legal framework  meets most 
international standards. There we re no particular developments. 
Implementation of the Government's strategy and action plan for cooperation with civil 
society organisations is progressing. The transparency of the criteria for allocating grants 
from the state budget to NGOs has improved th rough the public announcem ent of the call for 
proposals, the selection criteria and the result s. An important step forward in opening new 
potential sources of financ ing for NGOs was taken: the adoption of the implementing 
legislation for the law on sponsorship and donations now allows companies and physical persons to donate part of their income tax.  The implementation of the law is slowly 
progressing, despite the complex administrative requirements.  
However, involvement of civil society in the policy development process and in legislative 
drafting is minimal. Civil society organisations  remain heavily dependent on foreign funding. 
The lack of sufficient financial re sources is a serious constraint on their ability to deliver more 
professional and service-oriented activities. G overnment initiatives to support civil society 
development, such as tax relief, have not been forthcoming.  
In the area of  freedom of religion,  the law on the legal status of churches, religious 
communities and religious groups entered into force in May 2008 and implementation has begun. Procedures for registration of the relig ious communities and groups which were not 
registered before 1998 were set up in June.  
In April, the law on primary education was am ended to enable religious education to be 
introduced in primary schools as of Sept ember 2008. The constitutional court undertook a 
review of the amendments but could not reach a conclusion due to a split vote and could therefore not block the implementation of the law. Thus mandatory religious education has 
been introduced for school children starting from 12 years old, with the option to choose 
between two subjects: religious instruction disp ensed by priests or history of religion taught 
by specialised teachers.  
Overall, some more steps have been taken to strengthen civil and polit ical rights. However, 
further vigorous efforts are needed, in partic ular as regards prevention and prosecution of 
torture and ill-treatment  and as regards the prison system. Overall the country is moderately 
advanced in this area. 
EN 18   EN Economic and Social Rights 
As regards women’s rights , equal opportunity committees have been established in 79 
municipalities out of 85. Implementation of the 2007 national action plan  for gender equality 
is progressing. The sector for equal opportunitie s within the Ministry of Labour and Social 
Policy assumed the role of the gender equality body. It is responsible for coordinating gender 
equality issues on the national and local levels . In the Parliament a record 38 out of 120 
members are women. A national strategy agains t domestic violence was adopted in April 
2008. Amendments to the law on the family provide d clearer definition of family violence. 
The definition of rape in criminal law was wi dened thus affording more protection to women. 
A public campaign has been organised for ra ising awareness especially among young people 
on prevention of and protection from trafficki ng in human beings. Poli ce carried out activities 
to break up criminal groups i nvolved in illegal migration, in cluding human trafficking. Some 
progress has been made in prev enting trafficking of women. 
However, the sector for equal opportunities la cks adequate capacity and a clearly defined 
mandate. Limited efforts were made to promote women’s rights in rural areas and to increase 
female participation in the labour market. Dome stic violence remains a cause for concern. 
Measures against sexual harassment remain wea k. The practice of family voting instructions 
in the ethnic Albanian community  continued to undermine the ri ght of women to vote freely. 
Roma women and girls continue  to suffer from double raci al and gender discrimination. 
As regards children's rights , compulsory education was extended by law from 8 to 9 years. A 
health programme to target the poorest commun ities is ongoing and ch ildcare services are 
improving.  
The amendments to the Criminal Code adopt ed in January 2008 strengthened provisions to 
protect children from crimes such as child  pornography, sexual abuse and trafficking of 
juveniles.  
However, further significant efforts are needed to adopt reforms in line with international 
instruments such as the UN C onvention on Rights of the Child. Implementation of the 2006 
action plan for the protection of children’s ri ghts has been slow. 17%  of children are not 
covered by the public health insu rance, scheme, 90% of children do not attend pre-school and 
37% do not attend secondary school; the figures for Roma, ethnic Albanian and/or children 
from deprived backgrounds are particularly high. The number of families living below the poverty line has not declined and a strate gy to reduce poverty is missing. Juvenile 
delinquency is very high whilst the law on juven ile justice has not yet entered into force. 
As regards socially vulnerable people and people with disabilities, important reforms are 
under way in the area of ment al health. The decentralisatio n of care is ongoing under the 
National Action Plan on Mental Health initiated in  2007, through the de-institutionalisation of 
psychiatric patients and effort s to support psychiat ric care in the community. However, the 
staffing and facilities for treatment of patients in community health centres remained insufficient. The de-institutionalisation process needs to be strengthened and adequate financial resources need to be provided. Allegations of ill-treatme nt of patients at the "Demir 
Hisar" psychiatric hospital were reported. In ge neral, persons with disabilities face a number 
of obstacles which prevent their participation in society, such as lack of access to education, 
employment and public services. The situation of vulnerable gr oups has been aggravated by 
the problems linked to the decentralisation of competences to the municipal level. 
EN 19   EN Little progress can be reported in the field of labour rights and trade unions. The Economic 
and Social Committee does not fulf il its role, partly because the capacities of the social 
partners are weak, and partly because its member ship is unrepresentative. These factors make 
both the tripartite and the bipartite social dial ogue very formal, and impede the development 
of an all-inclusive social dialogue . In this context the country stil l has not been ab le to select 
its members in the Joint Consultative Co mmittee with the EU Economic and Social 
Committee.  
In the area of anti-discrimination policies , neither a framework law on anti-discrimination 
has yet been enacted nor has this issue been cl early regulated in the existing legal provisions. 
Mechanisms to identify, pursue and criminalis e all forms of discrimination by state and non-
state bodies against individuals  or groups have not yet been  established. Minorities and 
persons with disabilities continue to suffer from discrimination. Lesbian, gay, bisexual and 
transgender (LGBT) people are also subject to discriminati on. The envisaged national anti-
discrimination strategy should th erefore also address discri mination on grounds of sexual 
orientation and gender identity.  
As regards property rights , the process of returning property confiscated during the period of 
the Socialist Federal Republic of  Yugoslavia has still not been completed. The administrative 
capacities of the state geodetic institute have be en strengthened, but prog ress in dealing with 
restitution claims is slow. No pr ogress has been made in return ing property of the religious 
communities. 
Overall, some steps have been taken to stre ngthen social and economic rights. However, 
further significant efforts are needed, in par ticular as regards child ren's rights and anti-
discrimination policies. Overall the country pa rtially meets its objectives in this area. 
Minority rights, cultural right s and protection of minorities  
In the field of cultural rights, a law on use of languages spoken by at least 20% of citizens 
was adopted in August. It clarifies and ex tends the scope for the use of non-majority 
languages at all levels of state and local self -government within the limits set by the Ohrid 
Framework Agreement and the Constitution. Notabl y it provides for the use of non-majority 
languages in Parliament for members and comm ittee chairpersons (the speaker and deputy 
speaker continue to use the sing le state language). The law exte nds the provision on the use of 
language to the local offices of the State orga ns. It clarifies that non-majority languages may 
not be used in the police and the army. De f acto, the provisions apply only to the Albanian 
language at national leve l because of the 20% threshold. The High Commissioner for National 
Minorities has assessed that the law provides a clear and coherent lega l framework and meets 
international standards. However, the law does not sufficiently address the use of languages of 
the smaller ethnic communities. 
As regards minorities , inter-ethnic tensions were generally at a low level but have intensified 
in some areas and at certain moments. The Ohrid Framework Agreement remains a crucial guarantee of the rights of the ethnic communities
3 in the country and progress was made as 
regards the use of languages a nd equitable representation.  
A law on the parliament's committee on inter-community relations was enacted. It clarifies the 
scope of application of the double majority mechanism concerning laws impacting on 
                                                 
3 Albanian, Bosniak, Roma, Serbian, Turkish, Vlach. 
EN 20   EN community relations by listing al l planned laws whose enactmen t should proceed according to 
the ‘Badinter’ principle. 
A law on the advancement and protection of th e rights of the smaller communities was 
adopted which, in particular, provides fo r a specialised agency to be set up. 
Committees for relations between communities have  been set up at local level in nearly all 
municipalities (19 out of 20) where they are required by law, as well as in some other 
municipalities with sizeable minority populations  but below the legal threshold of 20%. The 
department for implementation of the Ohrid framework agreement in the government was 
upgraded to a secretariat. 
There has been some progress towards implementing the strategy for equitable representation 
of ethnic communities in the public sector, in pa rticular as regards the Albanian community. 
The number of ethnic Albanian civil servants increased by 3.75% be tween January 2007 and 
January 2008. Six of the 15 members of the J udicial Council and one of the six elected 
members of the Council of Public Prosecuto rs belong to non-majority communities.  
In 2007 the Ombudsman received only six complain ts (11 in 2006) concerning discrimination 
and equitable representation. One reason may be that citizens rarely declare this problem 
publicly as a result of either fear or lack of information. 
The right to education in one’s mother tongue has contributed to the delivery of education 
services based on ethnicity even in ethnically mixed municipalities. However, integration of 
ethnic communities remains rather limited, in particular at the local level. Negative trends include the orientation to segregated schooling at primary and secondary level. Furthermore, 
in several mixed secondary schoo ls there were severe incident s of violence be tween students 
from different ethnic communities. Mutual understanding and intercultural dialogue need to be fostered between the different components of society, in particul ar in the field of 
education. Smaller ethnic communities, whilst larg ely integrated, need ad equate facilities for 
teaching in their mother tongue.  
The effectiveness of the committees for rela tions among communities at municipal level is 
hampered by the lack of a clear legal framework and insufficient resources. The Secretariat for implementation of the Ohrid framework agreement remained without a minister for four months and is understaffed.  
There was little progress in equitable repr esentation of the ethnic Turkish and the Roma 
communities, which remain underrepr esented within the civil serv ice. Furthermore, the lack 
of a single data collection system for the entir e public sector blurs th e picture of equitable 
representation. The lack of en forcement mechanisms, such as sanctions, to ensure that 
institutions meet recruitment targets for non- majority communities remains a problem, as 
does the politicisation of some recruitment. Prof essional training needs to  be strengthened as 
an accompanying measure. 
A certain number of Roma and ethnic Albani ans lack personal documents, such as birth 
certificates and medical insurance or employment  cards, which are necessary to access social 
insurance, health car e and other benefits. 
The Constitutional Court decided to annul some provisions of the 2005 law on use of flags of 
the communities. The ethnic Albanian community  was concerned by this development and the 
EN 21   EN two ethnic Albanian judges resigned in prot est from the Constitutional Court. A broad 
consensus on implementation of the Court decision remains to be found. 
As of March 2008 there were 1,840 refugees/asylum seekers in the country, of whom the 
vast majority are Roma and Ashkali refugees from Kosovo who entered the country as of 1999. Only 28 have received recognised refugee status so far and none during the reporting 
period. Most applicants have been granted hum anitarian protection for up to 12 months. The 
government needs to ensure that the ending of temporary protection status is based on 
independent, impartial evaluation of the human rights situation in Kosovo. Concerns persist 
regarding the independence of the government commission that hears appeals against first-
instance decisions on refugee stat us. The Administrative Court re placed the Supreme Court as 
the last instance for asylum cases. It has not yet issued any decision on an asylum case.  
The number of registered internally displaced persons (IDPs) resulting from the 2001 
conflict in the country remained  fairly stable (778). Some are still living in temporary 
accommodation centres and court proceedings are ongoing concerning claims for compensation. 
Little progress can be reported regarding the Roma. The four action plans prepared by the 
Ministry of Labour and Social Policy in the framework of the 2005-15 Decade of Roma 
Inclusion are being implemented slowly. A furt her six Roma information centres were set up, 
bringing the total to eight. The societal hostility  towards Roma continued, but the instances of 
direct attacks have diminished significantly. A Roma has been appointed as minister without 
portfolio in the new government. 
However, inter-ministerial co-ordination, as well as the commitment of line ministries, 
remains weak. Discrimination against Roma pe ople continues. In 2007, Roma had the highest 
rate of unemployment (according to some reports  about 70%), the lowest personal and family 
incomes and the highest mortality rate of  any ethnic group. Although there was a slight 
increase in Roma children atte nding school in 2007, th ey still have the lowest levels of 
participation in primary school, with only 63% attendance and the steps taken to tackle the 
high drop-out rates from the education system are inadequate. There have been instances 
where Roma children with learning difficulties were transferred to special institutions for 
children with mental disorders, thus rais ing concerns about se gregation and unlawful 
discrimination as established in the jurisprude nce of the European Court of Human Rights. 
Cases of police violence and ta rgeting against the Roma were reported. Several cases have 
been brought before the European Court of Hu man Rights concerning police abuse of Roma 
and the lack of an effective system of inve stigation concerning cases of ill-treatment. 
Overall, there has been some pr ogress with regard to cultural rights and minority rights. A law 
on languages was adopted and there has been some progress on equitable representation. 
Nonetheless, effective implementation of th e Ohrid Framework Agreement needs to move 
forward, through a consensual approach and a spir it of compromise. More efforts are needed 
to address the concerns of the smaller ethn ic minorities. Little progress can be reported 
regarding the Roma. They continue to face very  difficult living conditions and discrimination, 
with poor access to education, social prot ection, healthcare, housing and employment. 
Nonetheless, overall the country is moderately advanced in this area. 
EN 22   EN 2.3. Regional issues and international obligations 
The former Yugoslav Republic of Mace donia has cooperated fully with the International 
Criminal Tribunal for the former Yugoslavia (ICTY) . The trial of the Ljuboten case in 
which the ICTY indicted citizens of the form er Yugoslav Republic of Macedonia, concluded 
with Mr Ljube Boskoski, the former Minister of the Interior, being acquitted and Mr Johan 
Tarculovski being sentenced for murder, violati on of the laws or customs of war, wanton 
destruction and cruel treatment. The Prosecutor at  the ICTY has filed an appeal against the 
acquittal of Mr Boskoski. 
The ICTY Trial chamber decided to refer back to the national authorities the four files on 
which the Tribunal had decided not to pursue its investiga tions. The judicial reforms 
necessary to ensure proper ha ndling of the files were adopte d and the relevant training of 
judges and prosecutors has been undertaken. Th e Office of the Public Prosecutor has 
undertaken a legal review of these files and transmitted two of them to the competent court.  
The first hearing of one of the cases started in September.  The OSCE has defined with the 
authorities operational procedures for its mon itoring of the cases, as prescribed by the 2007 
law on cooperation with the ICTY.  
The former Yugoslav Republic of Macedonia still maintains the bilateral immunity agreement 
with the United States of June 2003 granting exemptions from the jurisdiction of the 
International Criminal Court  (ICC)  which does not comply with the EU common positions 
on the integrity of the Rome Statute as well as related EU guiding principles on bilateral immunity agreements. It needs to align with the EU position. 
Regional cooperation  and good neighbourly relations  form an essential pa rt of the process of 
integrating with the European Union. The count ry has continued to participate actively in 
regional initiatives, including in the transition from the Stability Pact to a more regionally 
owned framework with the South East Europe an Cooperation Process (SEECP) and the new 
Regional Cooperation Council (RCC). The country assumed the first chairmanship of the 
2006 Central European Free Trade Agreement (C EFTA) after its entry into force. The 15
th 
Summit of the Central European States was held in Ohrid in May. The country continued to 
contribute to the EU ALTHEA mi ssion in Bosnia and Herzegovina. 
As regards bilateral relations with other enla rgement countries and neighbouring 
member states , relations with Albania  have remained good, with r eciprocal high-level visits 
and the conclusion of agreements on a visa free regime, local border traffic and cooperation in 
border control.  
Relations have remained good with Bosnia and Herzegovina, Croatia, Montenegro and 
Turkey.  Several high-level visits took place invol ving these countries. Agreements with 
Bosnia and Herzegovina on readmission and on police cooperation were concluded. An 
agreement with Croatia on mutu al protection of national minor ities entered into force. An 
agreement was concluded with Turkey in th e field of health and medical science. 
Overall relations with Serbia  have been stable al though they have been a dversely affected by 
the recognition by the former Yugoslav Repub lic of Macedonia of the independence of 
Kosovo. The issues between the Orthodox Churches  in the two countries remain unresolved. 
Following Kosovo's declaration of independen ce, the government of the former Yugoslav 
Republic of Macedonia launched a joint proce ss of border demarcation. Good progress has 
been made and the demarcation is nearing comp letion. The country accepted as valid the new 
EN 23   EN travel documents issued by the Kosovo authoritie s. The government decided to recognise the 
independence of Kosovo in October. 
Relations with Greece  are close and cover many areas, notably economic matters and foreign 
direct investment. The two countries are coope rating on the co-financing of road transport 
links within the framework of the EU's Tran s European Transport Network. Nonetheless, 
relations between the two countries were furt her affected by the unresolved name issue. 
Actions which could negatively impact on goo d neighbourly relations should be avoided. 
Maintaining good neighbourly relations, incl uding a negotiated and mutually acceptable 
solution to the name issue, under the ausp ices of the UN, remains essential.  
Relations have remained good with  Bulgaria.  
3. E CONOMIC CRITERIA  
In examining the economic developments in th e former Yugoslav Republic of Macedonia, the 
Commission's approach was guided by the c onclusions of the European Council in 
Copenhagen in June 1993, which stated that me mbership of the Union requires the existence 
of a functioning market economy,  and the capacity to cope w ith competitive pressure and 
market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials  The country is fully participati ng in the EU's Pre-accession Fis cal Surveillance. It presented 
its second Pre-accession Economic Programme  in December 2007 and submitted the third 
fiscal notification in April 2008. Cooperation with  the International Monetary Fund (IMF) and 
with the World Bank have been important co rner-stones of the country's economic policy 
framework. However, in September, the authorit ies announced their inten tion not to enter into 
another IMF arrangement for the time bein g. Furthermore, a number of medium-term 
strategies define the policy framework, such as the Public  Investment Programme for 2008-
2010 and the Public Debt strate gy for 2008-2010. Political consensu s on the essentials of a 
market economy has been maintained. Nonethel ess, implementation of reforms slowed down 
before and after the elections.  Overall, a broad political co nsensus on the fundamentals of 
economic policy has been maintained.  
Macroeconomic stability  
Output growth accelerated to 6% in the first half of 2008, compared to 5% in 2007 and 4% in 
2006. The main factors underpinning growth were  investments and private consumption. 
Export growth has slowed down, while import growth remained strong, reflecting buoyant 
domestic demand. Industrial production rose by an average of around 10% during the first 
eight months of 2008, compared to some 2.5% fo r the same period the year before. Overall, 
economic activity has remained stronger than in the past.  
The current account deficit widened markedly from autumn 2007, reflecting a less favourable 
global environment with decelerating global de mand and increasing energy prices, but also 
strong domestic demand. In the last quarter of 2007, the current account went from a surplus 
of nearly 2.5% of GDP to a deficit of 3% of GDP for the whole year. Th is trend continued and 
by mid-2008 had pushed up the current account deficit to some 13% of GDP. The main 
EN 24   EN factors were higher expenditures for imports, main ly for fuel but also machinery. On the other 
hand, capital inflows rose markedly, in partic ular FDI, which reached 6.5% of GDP on an 
annualised base, compared to 2.8% of GDP the pr evious year. Overall, external imbalances 
widened sharply, putting an end to several years of overall bala nced current account 
outcomes.  
Official reserve assets of the National Bank of the Republic of Macedonia  (NBRM) increased 
slightly in absolute terms to some €1.6 bi llion by September Howe ver, due to a strong 
increase in expenditures for imports, the import coverage with foreign exchange reserves has 
dropped to around three months of expected imports . Gross external debt started to rise again 
towards the end of 2007, af ter early debt repayments had resu lted in a declini ng ratio for most 
of the year. By end June 2008, gross external de bt had increased by some 6 percentage points 
of GDP (to 50% of GDP, compared to 44% the year before), mainly as a consequence of 
increased borrowing abroad by a few foreign-owned companies. The country's per capita income, measured in purchasing power standa rds (PPS), reached 29% of the EU-27 average 
in 2007, compared to 27% the year before. Over all, the country's position with respect to 
foreign exchange reserves and external indebtedness has still remained sound. However, in view of the recent widening of the trade deficit, the country's external vulnerability has increased significantly.  
So far, the international financial crisis has had only a very limited impact on the economy 
and its financial sector. However,  the recent widening in the current account deficit creates an 
important external financing need requiring signif icant capital inflows, which in the past has 
been mainly financed by workers remittances. The level of foreign debt is relatively low and the risk of a sudden stop or re versal of capital fl ows seems limited. However, the external 
imbalances render the economy vulnerable to possible disrupti on in capital flows. 
The situation in the labour market improved slightly and the unemployment rate saw a 
marginal decline. The number of employed pers ons rose some 3.5% during the first half of 
2008, compared to nearly 4% in the first half  of 2007. The number of unemployed declined 
by about 1.5% during the last year, which brought unemployment down to 33.8% in mid-
2008, which is about 1 percentage less than a year ago. A significant share of unemployment 
is structural in nature, partly resulting fr om a mismatch between required and available 
qualification. As a result, empl oyment growth is fed mainly by an increase in labour supply, 
while the decline in the number of unemployed is significantly less dynamic. There has been a 
significant amount of job creation in low value a dded sectors, such as agriculture. About 20% 
of the unemployed are aged between 15 and 24. The unemployment rate in this age group is 
still very high (56% in the first half of 2008), but has marginally declined in line with the 
overall marginal decrease in unemployment. Th e existence of a substantial informal sector 
might lead to a significant over-estimation of  actual unemployment. However, even when 
taking this factor into account, unemployment is s till an important issue, in particular among 
young people and less educated. Overall, the trend  of a slightly improving labour market 
situation has continued, although unemployment is  still at very high le vels. The persistently 
high unemployment points to structural weakne sses, such as skill mismatches, and an 
insufficient functioning of the labour market. In addition, slow expansion of productive 
capacities hampers job creation. 
The Central Bank has managed to maintain the exch ange rate of the denar at a stable level of 
61.2 denar to the euro and has continued with  a de-facto peg. With the exception of the 
Lombard rate, the Central Bank left the other policy rates unchanged, In terest rates of the 
private sector started to rise  moderately. Rates for Central Bank bills rose from 4.8% in 
EN 25   EN October 2007 to 7% by June 2008. The short-term  lending rates of commercial banks showed 
a moderate decline from 8.2% at  the end of October 2007 to 8.0% in February, but rose to 
8.6% by June 2008. The high growth of credit to the private sect or continued, at some 40% 
(year-on-year) during the first half of 2008, but has slowed dow n since then. The volume of 
broad money (M4) rose by 32% year-on-year dur ing the first half of 2008, but also moderated 
since then. Overall, exchange rate and m onetary policy have remained sound, which has 
helped to maintain confidence in the stability of the financial system.  
Average annual inflation slowed in 2007 to 2.3% , compared to 3.1% in 2006. However, in the 
last months of 2007, sharply increasing food and energy prices led to an acceleration in 
headline inflation, which reached 6.1% in Decemb er 2007 and continued to rise to nearly 9% 
in March and April 2008 (year-on-year basis). Si nce then, year-on-year inflation rates have 
declined, slipping to 7.1% in Se ptember 2008. The strong increase in inflation is mainly due 
to higher food and energy prices, which – owing to the high sh are of consumer spending on 
food – has a significant impact on the costs of  living. Overall, inflation has accelerated 
markedly.  
The fiscal stance has become more expansionary  with a planned general government deficit of 
1.5% of GDP in 2008, compared to an actual fiscal surplus of 0.6% of GDP in 2007. The 
fiscal performance in 2007 and 2008, as in prev ious years, was characterised by higher than 
expected revenues and lower than planned inve stment expenditures. At the end of 2007, the 
authorities adopted additional spending measures  amounting to some 2% of GDP, while in 
July 2008 the parliament approved a supplementa ry budget with further spending measures 
amounting to some 4.25% of GDP in order to  meet fiscal targets. The additional budget 
envisages more funds for education, compensa tion for the high oil prices, job creation and 
support for workers of companies that have gone bankrupt. As in the past, the continued underestimation of revenues and the difficulties in implementing investment projects highlight administrative weaknesses in this sect or. Overall, while fiscal policy programming 
has become more expansionary, actual revenue and expenditure outcomes are tending to show 
unanticipated  surpluses.  
Implementation of fiscal decentralisation continued. By mid-2007, the number of included 
municipalities has been increased to 62, c overing some 84% of the country's population. 
Furthermore, the tax base of the municipali ties has been widened by  amendments to the 
property tax law and the new Law on Roads. Ov erall, the budgets of those municipalities 
amount for some 6% of GDP. Municipal debts have been reduced further, from about 0.75% 
of GDP in 2005 to some 0.25% by 2007. The ne w competences continue to represent 
significant challenges to the municipalities and require close monitoring by the central 
authorities. 
General government debt has declin ed to around 21% of GDP by mid 2008
4. The authorities 
have continued to improve the efficiency of ta x administration and to simplify the tax system. 
Overall, the public sector accounts have remained largely in balance and the efficiency of tax 
collection has been improved. However, the qua lity of public finances continues to be 
hampered by weaknesses in medium-term budgetary planning and priority setting, leading to 
a high proportion of discretionary and short-term spending decisions. 
                                                 
4 Public sector data is not yet presented according to  the European standard (E SA 95), thus comparability 
is limited.  
EN 26   EN The country's fiscal and monetary  policy mix remained largely in line with the country's need 
to accelerate economic activity. However, in vi ew of the recent deteri oration in external 
balances, the importance of maintaining a s ound economic policy mix has increased. Fiscal 
policy benefited from a strong revenue performance, while th e objective of substantially 
balanced public sector account s was largely achieved. The c ountry's resilience to shocks 
remained intact, despite increased pressures due to a sharp increase in food prices and a rapid widening of external imbalances. Employment rose , reflecting the benefits of stronger growth 
but also reflecting progress in reducing unreg istered economic activities. Overall, the 
macroeconomic policy mix was largely in line w ith the aim of maintaining economy stability, 
although very high unemployment remains a key challenge. 
Interplay of market forces  
Privatisation has largely been completed. The share of the private sector in total output is 
about 80% of the value added. The value of Stat e-owned assets stands at some 13% of GDP, 
with five State utilities accounting for some 12% of GDP. The value of State-owned assets in 
the remaining 53 companies amounts to some 1% of GDP. Some 10  000 people or about 
1.3% of the labour force are employed in comp anies with a majority State ownership. No 
further privatisation took place, apart from the privatisation of some radio stations. Overall, 
the free interplay of market forces has rema ined unchanged but is already well advanced  
Market entry and exit 
The government took further steps to improve th e legislation on the "one-stop-shop" system 
for starting a business. As a result, in 2007 the average time to register a company was cut 
from 3 days to 26 hours. Since early 2008, the law requires that  registration should not take 
longer than 4 hours. In addition, the costs of re gistration have been reduced to less than EUR 
50. During the first half of 2008 5.200 new compan ies were registered, which is about 1% up 
on the same period in 2007. As a result, the number of regist ered companies grew by some 
6% during the past year. As part of the so -called "regulatory guill otine" project, the 
authorities screened some 2000 pieces of legi slation, eliminated redundant legislation and 
simplified a number of laws and by-laws. The average duration of bankruptcy procedures has 
fallen from 3 years and 7 months to 2 years an d 2 months. At the same time, the number of 
new bankruptcy procedures has fa llen by about half, compared to the same period a year ago. 
The backlog in bankruptcy cases has been reduced. Overall, some progress has been achieved in further reducing barriers to market entry and exit. However, there is still considerable room 
for improving the overall business environment. 
Legal system 
The law on the real estate cadastre has been amended, resulting in a strengthening of the 
institutional set-up and requiring a formal decision on a registration request within 15 working 
days. The registration of property rights has made good progress and now covers some 82% 
of the country's territory compared to 63% in  September 2007. The authorities plan to finalise 
full registration by 2009. The backlo g of unsolved property disputes  has been reduced further, 
from some 9 000 unresolved property cases at the end of 2007 to 7 700 by July 2008. 
However, in general, legal procedures are still slow and this adversely affects legal certainty 
and impedes the proper functioning of mark et mechanisms. Regulatory and supervisory 
agencies have often lacked sufficient resources and independence to fulfil their role as guardians of the rule of law and providers of  a level playing field for all economic agents. 
However, amendments made to the budget law in September have strengthened the financial 
EN 27   EN independence of a number of those agencies. Ov erall, further progress has been made in 
clarifying property rights and st rengthening the independence of  regulatory and supervisory 
institutions. However, weaknesses in the judici ary, including slow procedures and insufficient 
resources, still hamper the rule of law, for example in the area of contract enforcement. In combination with slow progress in addressi ng corruption and organised crime, these 
weaknesses have a negative bearing on the quality of public services, the business environment and the country's attr activeness to foreign investment. 
Financial sector development 
Financial intermediation increased markedly  in 2007. Total deposits of the non-financial 
private sector reached 47% of GDP, compared to 41% at end 2006. This sharp increase helped 
trigger a marked rise in bank lending to the private sector, which br ought the credit-to-GDP 
ratio to 37% of GDP by end 2007, compared to 26% of GDP the previous  year. In order to 
contain the rapid expansion of credit, th e Central Bank increased the bank's reserve 
requirement by 1 percentage point. The capitali sation of stock and bond markets rose sharply 
in 2007, reaching 92% of GDP at end of 2007, but fell back again during 2008 to 56% in 
August. Bond markets followed a similar pattern, but at a lowe r level, achieving a market 
capitalisation of 12% of GDP, which dropped to 5% by August. The a ssets of the banking 
sector reached 66% of GDP at the end of 2007, co mpared to 57% a year before. The structure 
of the financial sector has improved: one sm all bank which did not m eet the fit-and-proper 
standards has been closed and some foreign i nvestors have entered the market. The share of 
State ownership in the sector continues to be low, amounting to some 5% of the sector's 
assets. The main State assets consist of a ma jority share in the c ountry's only development 
bank and a limited number of remaining minority  shares in other private banks. Despite a 
relatively large number of banks (18 banks a nd 12 savings houses), concentration in this 
sector is rather high, with the five largest banks accounting for some three quarters of the 
sector's assets and deposits. The efficiency of financial intermediation has increased, as 
indicated by a further decrease in spreads between lending and borrowing rates, from 4.6 
percentage points at the end of 2007 to 4.0 pe rcentage points in September 2008. Profitability 
in the sector was relatively high in 2007, w ith an average return -on-equity of 15.2%, 
compared to 12.3% in 2006. The return-on-assets remained at 1.8%, reflecting the strong asset 
growth, which occurred in 2007. 
The stability of the sector has benefited from  the legislation to implement the new banking 
law, which has raised regulatory standards and strengthened supervisory capacities. The 
exposure of the banking sector to non-performi ng loans (risk classes C, D and E) declined, 
and non-performing loans as a share of total loans dropped from 7.6% at end-2006 to 5.7% at end-2007. However, the share of loans with a foreign currency component increased from 
52.7% end of 2006 to 54.7% end of 2007. The banking sector continues to be well capitalised, 
with an average capital adequ acy ratio of 17% end of 2007. Larger banks report an average 
capital adequacy ratio of 12.7%, while small banks  report an average capit al adequacy ratio as 
high as 66.8%. Overall, the financial sector continued to develop positively during the past 
year, with a significant deepening of fina ncial intermediation and a strengthening of 
regulatory and supervisory standards. However,  this sector is still relatively small. 
EN 28   EN 3.2. The capacity to cope wi th competitive pressure and market forces within the 
Union 
Existence of a functioning market economy Overall, macroeconomic stability has been  maintained, although a less favourable 
international environment prompted a sharp incr ease in inflation and a widening of external 
imbalances. Progress in reducing barriers to ma rket entry and exit has been maintained and 
the number of unresolved property disput es has been further reduced. Financial 
intermediation has deepened a nd financial market supervisi on has been strengthened. The 
financial independence of some supervisory a nd regulatory agencies has been strengthened. 
However, despite important progress in impr oving the business environment, the still slow 
speed of judiciary procedures and sometimes  insufficient resources of supervisory and 
regulatory agencies are still impeding the rule of  law, contract enforcement and the creation of 
a level playing field for market participants, wh ich are crucial elements for fully functioning 
markets. 
Human and physical capital  
The authorities increased their efforts to provid e education to a greater  number of pupils and 
to improve vocational training for adults. Budg etary allocations for education have been 
increased from around 3.5% of GDP in 2005 to  nearly 5% in 2007.  For 2008, budgetary 
allocations (including foreign donations) have been  raised to nearly 6% of GDP. Spending for 
decentralised education and highe r education saw the strongest increases. An important share 
of additional spending is devoted  to the renovation and construction of school buildings. The 
number of teachers for primary and secondary  schools has been increased by 1.5% and 2.5% 
in 2008. However, the efficiency of public spen ding on education and the quality of education 
still leaves room for improveme nt. Despite these efforts, the overall level of education and 
training of the labour force stil l is relatively low and a substantial mismatch still exists 
between the qualification profile of the labour fo rce and the requirements of the enterprise 
sector. Overall, measures have been taken to improve the level of qualification, such as 
starting to improve vocational tr aining. However, further efforts to reduce the mismatch with 
labour market demands are still needed.  
The authorities have embarked on a number of  measures to address unemployment. The scope 
of active labour market measures has been wi dened and steps have been taken to remove 
impediments to job creation. For example, work  has started on modernising and simplifying 
the current system of social security financing. Nevertheless , unemployment has remained at 
a very high level.  In particular, a consid erable proportion of unemplo yment is structural and 
mainly affects young people and those lacking qualification. Overall, measures have been 
taken to improve the labour ma rket situation, but th e mismatch between supply and demand is 
still a sizeable one. 
Overall, the country's capital endowment is re latively low and its quality has suffered from 
decades of underinvestment. Recently, domestic  and foreign investment has started to 
increase. Some progress has been made in impr oving the electricity network and a number of 
roads in Corridor X. Inflows of  FDI have reached some 10% of GDP in the first half of 2008, 
compared to some 3% of GDP on average durin g the same period of the previous year. The 
main factors behind this increase were related to foreign investment in the banking sector, 
although there has also been some greenfiel d investment. In some  cases, slow legal 
procedures and fragmentation of responsibili ties between the central and local governments 
EN 29   EN are impeding FDI. Overall, the share of invest ment in GDP remained relatively low, in 
particular in the light of the country's need to  accelerate growth. Infras tructure continues to 
require repair and modernisation. 
Sector and enterprise structure 
The overall trend towards a larger  contribution by manufacturing and trade servi ces to output 
generation and the declining share of the agricu ltural sector has cont inued. Construction and 
real estate business were those sectors with th e largest increase in the number of companies, 
while the share of manufacturing declined . Competition has been increased in the 
telecommunication and transport sector by allowi ng additional suppliers to enter the market. 
However, the latest take-over in the tel ecommunication sector raises doubts, whether 
competition has indeed increased in this sector . The number of new enterprises in the total 
economy has risen by some 6%. In 2006, sma ll and medium-sized companies (SMEs) 
accounted for some 54.3% of GDP and 78.4% of employees. The informal sector remains 
large, although there are indi cations that it has been somewhat reduced, for example by 
improvements tax collection, a lowering of th e tax burden, and financial incentives for 
registration. Overall, structural change made limited progress  
State influence on competitiveness 
Direct state influence on competitiveness ha s been limited. However, competition in product 
markets is often impeded by slow judicial pr ocedures and weak regul atory and supervisory 
agencies that lack the necessary indepe ndence and resource endowment. Despite some 
progress in reducing distortions in the electrici ty sector, energy prices do not yet cover full 
costs, which lead to substantial losses of the State-owned energy providers and requires 
significant budgetary transfers. Ov erall, direct State influen ce on competitiveness is rather 
limited. A weak rule of law and weak institutions are not always able to create a level playing 
field for market participants. Indirect State aid still leads to distortions in relative prices, in 
particular in the electricity sector. Overall, di rect state influence on co mpetitiveness is limited. 
However, in some areas, such as electricity, indirect and direct state interference is still high. 
Furthermore, numerous ad-hoc ch anges to business legislation impede the predictability and 
reliability of the business environment. 
Economic integration with the EU 
The country has a small open economy, with tota l trade in goods and services accounting for 
some 130% of GDP. Trade integration with th e EU is advanced, with about 60% of all 
exports being directed at th e EU-27 and about 47% of impo rts coming from the EU-27. The 
neighbouring countries in the Western Balkan are the s econd most important trade 
destination, with about 34% of exports and a bout 11% of imports. Th e importance of CEFTA 
as an export destination has increased ma rkedly. The export structure is still highly 
concentrated on a limited range of products, wi th textiles and clothing accounting for about 
24% of total exports, and manufactured iron an d zinc products for some 26%. Overall, trade 
integration with the EU is well advanced, but the commodity mix is st ill concentrated on a 
few price-sensitive products. 
International price competitiveness has started to  deteriorate. While the exchange rate against 
the euro has remained stable in nominal terms, the recent strong rise in prices has resulted in 
an increase of the real effectiv e exchange rate. However, when unit labour costs are taken into 
account, real effective exchange rates are still improving. Real wage increases seem to have 
EN 30   EN remained in line with productivity growth. Standa rd indicators do not point to any significant 
material changes in export price competitiveness. 
4. A BILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP  
This section examines the former Yugoslav Re public of Macedonia's ability to assume the 
obligations of membership – that is, the acquis  as expressed in the Treaties, the secondary 
legislation and the policies of the Union. It also analyses th e former Yugoslav Republic of 
Macedonia's administrative capacity to implement the acquis . The analysis is structured in 
accordance with the list of 33 acquis  chapters. In each sector, the Commission's assessment 
covers progress achieved during the reporting period and summarises the country's overall 
level of preparations.  
4.1. Chapter 1: Free movement of goods 
No progress can be reported as regards general principles . An action plan for achieving 
compliance with Articles 28-30 of the EC Treaty has yet to be drafted.  
Some progress can be reported in the field of horizontal measures . The necessary 
administrative infrastructure is largely in place ; however, segregation of tasks has yet to be 
ensured. Framework legislation needs further alignment with the acquis . A comprehensive 
strategy with milestones for implementation of the acquis  for the relevant horizontal 
institutions has not yet been prepared. 
In the area of standardisation , the process of adoption of Eu ropean standards (ENs) has not 
accelerated. By August 2008, a total of 3,674 Europ ean and international standards had been 
adopted as national standards, mostly by endorsement. The adopted standards mostly relate to the areas of low voltage equipment; safety of machinery; personal protective equipment; 
pressure equipment; electromagnetic compatib ility; gas appliances; and equipment for 
potentially explosive atmosphe res (ATEX). Altogether 2,975 st andards give presumption of 
conformity to technical regulations transposing the “new approach” directives. Of these, over 
300 standards are related to th e law on construction products. 
The number of technical committees with in the Institute for Standardisation  has increased to 
31, and membership of the Institute's assembly  rose to 62. The new Council of the Institute 
was appointed with a mandate of four years. The administrative capacity  is still insufficient; 
the recruitment planned in 2007 did not take place. There were no particular developments as 
regards full membership of Europ ean standardisation organisations. 
A Decree on designation and notification of conformity assessment  bodies was adopted. Also, 
a Decree on authorisa tion of legal entities to  undertake conformity assessment was adopted, 
which identified the Ministry of Economy as the institution re sponsible for authorisation and 
for keeping the register of conformity assessment bodies. 
The Law on accreditation  was amended in order to achieve full alignment with EU 
terminology. The Institute for Accreditation  functions with nine permanent employees, which 
is still insufficient. It also dr aws on the expertise of  12 lead assessors, 37 technical assessors 
and 37 experts. Three more conformity assessmen t bodies were accredite d, bringing the total 
number to 20. The Institute has become a member of the European cooperation for Accreditation. Bilateral cooperation agreemen ts were signed with the accreditation bodies 
from Serbia, Montenegro and Albania. 
EN 31   EN The capacity of the Bureau of Metrology  has been strengthened w ith five new employees, 
bringing the total to 33. However,  it still lacks adequately traine d staff to perform its functions 
and to operate the equipment that has been delivered. The Bureau has signed the Mutual 
Recognition Arrangement with the Internat ional Committee for Weights and Measures 
(CIPM-MRA) and is an associate member of th e European Association of National Metrology 
Institutes (EURAMET) and of the European  Cooperation in Legal Metrology (WELMEC). 
Market surveillance  is still very weak. A number of trai ning sessions were organised for staff 
from the Ministry of Economy and the horizon tal organisations on: implementation of the 
rapid information system (RAPEX); misdemea nour procedures and fines related to product 
safety; and implementation of specific directives . In the first eight months of 2008, the State 
Market Inspectorate undertook 470 inspections related to th e Law on product safety and 250 
related to the Law on constructi on products. However, as the Insp ectorate is responsible for a 
large number of functions apart from product sa fety, it has very limited capacity for actual 
market surveillance activities concerning techni cal compliance of products with the directives 
and for analysis of potentially defective products. The administrative capacity of the 
coordination body for cooperation on market  surveillance remains unsatisfactory.  
Progress has been made in the area of "old approach" product legislation . Implementing 
legislation to the Law on safety of cosmetic s and to the Law on pharmaceuticals, aiming to 
transpose the relevant acquis,  was adopted. The latter defines procedures for issuing and 
renewing market authorisations for pharmaceutical s and for recognising authorisations issued 
by EU Member States. In a ddition, implementing legislatio n aiming to transpose the acquis  in 
the fields of metrology (on units of measurem ent and on nominal quantities for pre-packed 
products) and chemicals was adopted. Prepara tions in the area of old approach product 
legislation are advancing. 
There has been some progress in the area of the "new and global approach" product 
legislation . Legislation aiming to transpose the acquis  on gas appliances, simple pressure 
vessels and non-automatic weighing instruments wa s adopted. Preparations in the area of new 
and global approach product legislation are advancing. 
In the area of procedural measures , legislation concerning the acquisition and possession of 
weapons has been adopted. No particular ne w developments can be reported as regards 
notification procedures, external  border checks a nd cultural goods. 
Conclusion 
Some progress has been made in this area. However, most of the sectoral acquis  on free 
movement of goods has still to be transposed and implemented. Administrative infrastructure 
exists, and the capacity of the various institutions  has improved, but it is still insufficient to 
ensure proper enforcement. 
4.2. Chapter 2: Freedom of movement for workers 
Some progress has been made on access to the labour market . Implementing legislation to 
the Law on employment of foreigners was adopted. However, the administrative capacity 
required to implement the legislation in this fiel d is insufficient. No development has occurred 
with regard to legislation on em ployment of EU citizens in the public sector and exercise of 
public authority. 
EN 32   EN No progress has been made towards preparing for participation in the European 
Employment Services Network (EURES) . The employment service agency and its network 
of employment offices have not  yet taken the necessary prep aratory steps. The technical 
capacity and human resources required are lacking. 
Little progress has been made in the field of coordination of social security systems.  No 
further bilateral social security agreements were signed. The administrative capacity required 
to coordinate social security schemes in th e framework of movement of workers remains 
insufficient.  
No progress can be reported with regard to the European Health Insurance Card.   
Conclusion 
There has been little progres s in the area of freedom of movement for workers. The 
administrative capacity for coordinating social security schemes and for participation in 
EURES is insufficient. Overall, preparations are at an early stage. 
4.3. Chapter 3: Right of establishment and freedom to provide services 
Some progress has been made in the area of right of establishment . Work on analysing 
unjustified and discriminatory procedures in legislation ("regulatory guillotine") is ongoing. 
Amendments to the Law on foreign exchange op erations dropped the requirement for foreign 
companies to register as foreign investors with  the Ministry of Economy . As a result, foreign 
investors now register in the Central Registry . The lack of transparency and objectivity in 
granting authorisations, though re duced, still persists. Furtherm ore, decisions are sometimes 
delayed or reversed. In this area, the county is moderately advanced. 
Modest progress can be reported in the area of freedom to provide cross-border services . 
There is still no distinction in the treatment between foreign operators  providing cross-border 
services and those providing services through a permanent establishment in the country. Some 
of the licensing and authorisati on requirements for tourism and catering services have been 
simplified and made cheaper; however, they st ill do not allow service providers freely to 
exercise their activity. A principle of tacit approval was introduced in  several fields. The 
existing legislation imposes na tionality, residence and establishment requirements for many 
service activities. There are se rious gaps in coordination be tween the various authorising 
bodies. Their administrative capacity is not sa tisfactory. Preparations in the area of cross-
border services are being initiated. 
Progress has been made in the area of postal services . The Law on postal services, which is 
aligned with the second Postal  Directive, was enacted and entered into force. Further 
legislative work is needed in order to prepar e the implementing legisl ation envisaged in the 
new Postal Law, which is an important part of  alignment with the second Postal Directive. 
According to the postal strategy for 2007-2010, th e reserved area is to be abolished after 
2012. The organisational and fi nancial restructuring of Makedonska Posta  has been 
completed. The Postal Agency was establishe d as an independent regulatory authority. 
However, it is not yet fully operational. It has not developed the a ppropriate administrative 
capacity to regulate the postal market and enfo rce postal legislation. In the area of postal 
services the country is advanced. 
No progress has been made regarding mutual recognition of pr ofessional qualifications . A 
new Law on higher education entered into force. It regulates only the recognition of higher 
EN 33   EN education diplomas obtained abroad. The legisl ation does not distingui sh between academic 
and professional qualifications. The administrati ve capacity of the information centre for 
recognition of foreign academic diplomas within the Ministry of Education and Science 
remains weak. There is no coordination between  the sectoral institutions responsible for 
implementing and enforcing the mutual recogniti on of professional quali fications. In the area 
of mutual recognition of prof essional qualifications the coun try is not yet prepared.  
Conclusion 
Progress in this chapter has been partial and main ly confined to the area of postal services and 
the legislative changes related to the right of es tablishment. There is a lack of coordination 
between the various bodies responsible for au thorising cross-border se rvices. The level of 
preparedness for mutual recognition of qualifications is quite low.  
4.4. Chapter 4: Free movement of capital 
Good progress has been made in the field of capital movements and payments . The Law on 
Foreign Exchange Operations was amended in  July 2008. Following the amendments to the 
Law on ownership and othe r real rights, the resi dents of EU countries are allowed to obtain 
ownership rights on apartments and resident ial buildings. The right of ownership of 
construction land, however, requires prior auth orisation, and restrictions on acquisition of 
agricultural land remain in place. As regards portfolio investment, non-residents are no longer 
required to open custody accounts with authorised banks for purchases of securities or to pay 
a premium for the right to cove r the security position of th e custody account. However, in 
order for the area of portfolio investment to be  liberalised, as envisaged in the SAA provisions 
governing the second stage, the remaining restric tions on residents will have to be removed. 
Pension funds still have to comply with string ent restrictions and requirements regarding the 
type and volume of domestic securities that  they can purchase on the stock exchange. They 
still may not invest more than 20% of their cap ital in non-domestic se curities. Non-residents 
who hold denar accounts in local banks may not perform the full range of operations. 
Nationals are still not allowed to  open accounts in foreign banks. Preparations in the area of 
capital movements and payments have advanced.  
Some progress has been made in the area of payment systems . A strategy for development of 
the payment system was adopted. The Law on the payment system came into force, and several pieces of implementing legislation were adopted aiming to achieve further alignment. 
The administrative structure for implementing the legislation has been set up. The central 
bank (NBRM) has strengthened the function of  monitoring of the payment system, in 
accordance with the Law on the payment system a nd the best practice of EU Member States' 
central banks. However, the charges for cross- border electronic payment transactions continue 
to be disproportionate to those for domestic el ectronic payment transactions. In the area of 
payment systems, the country partially meets its targets. 
Progress has been made in the fight against  money laundering . The Law on prevention of 
money laundering and financing of terrorism was enacted, aiming to transpose the relevant acquis and 49 FATF recommendations . The law introduces, for the first time, provisions on 
the financing of terrorism and on international coope ration. The Directorat e for prevention of 
money laundering was renamed the Office for pr evention of money laundering and financing 
of terrorism; its role remains purely analytical. The Office operates several IT applications for 
easier analysis of suspicious transactions and has established direct, but sometimes limited, 
access to the databases of some public institution s. The awareness of the reporting institutions 
EN 34   EN has increased, but is still not satisfactory, with only two thirds of the banks providing regular 
reports to the Office. The Office signed memoranda of cooperation and on sharing of 
intelligence information with relevant admini strative bodies in the country and with 
counterpart institutions from the region. With in the country, inter-agency cooperation has 
steadily improved. A credible enforcement record  has still to be established, although there 
has been a slight increase in the number and qual ity of reports of suspic ious transactions sent 
to the investigating and prosecuting author ities. Between October 2007 and October 2008 
only two reports, out of 13 reports  and 18 notifications on other criminal acts sent by the 
Office to the investigating and prosecuting au thorities, resulted in enforcement action. 
International cooperation between the Office a nd its foreign counterparts started to produce 
initial results; further efforts in this directi on are encouraged. Some of the new employees are 
engaged on a temporary basis and it is not cl ear either whether they are appropriately 
qualified or for how long they will be employed. Preparations in the area of the fight against 
money laundering are moderately advanced. 
Conclusion 
Good progress has been made in the area of free movement of capital, especially with 
approximation of legislation. Some restricti ons on short-term capita l movements and cross-
border transfers have not been removed. The ad ministrative capacity and enforcement record 
on combating money laundering are not sufficient.  
4.5. Chapter 5: Public procurement 
Good progress has been made as regards general principles : the new Law on public 
procurement (LPP) also covering the utilitie s sector was enacted. The law fundamentally 
transposes the acquis . A number of significant improvement s have been made, such as the e-
procurement possibilities. The threshold for small purchases has been raised and the possibility to apply framework agreements has been introduced. The new legislation on 
concessions and public-private partne rships is not in line with the acquis  or with good 
international practice. In te rms of general principles, the country is well on track. 
Progress has been made in the area of award of public contracts . Appropriate implementing 
legislation has been developed and compliance of  contracting procedures with the new public 
procurement rules has increased. All public companies now comply with the new regulations. The Public Procurement Bureau, though lacking sufficient staff (despite taking on two new 
employees) and suitable premises, has develope d its competence and a pro-active approach to 
managing public procurement policy. The admi nistrative capacity of the contracting 
authorities and the level of awareness of pub lic procurement rules on the part of economic 
operators have improved, especially in small muni cipalities, but still need  to be strengthened 
in larger contracting authoritie s. Preparations in the area of  award of public contracts are 
advanced. 
The new remedies  system introduced by the LPP marks a major improvement. However, 
further changes will be necessary to achieve  alignment with the amended EC Remedies 
Directives. The State Appeals Commission, which is to be set up under the LPP, will have 
legal personality and an independent status. It s members will be elected by parliament after a 
public competition which is currently ongoi ng. However, establishment of this new 
institution, scheduled for 30 June  2008, is still pending. In the meantime, an improvement has 
been observed after the appointment of the Complaints Committee in September 2007 in the 
EN 35   EN form of shortened review procedures, but consis tency of decisions on complaints is not fully 
satisfactory.  
Conclusion 
Substantial progress has been made in the ar ea of public procurement. However, the newly 
adopted legislation on concessions  and public-private partnerships  is not yet aligned with the 
acquis . Current efforts on training for the contra cting authorities and economic operators on 
the new public procurement rules need to be sustained.  
4.6. Chapter 6: Company law 
There has been good progr ess in the area of company law . The Company Law has been 
amended to provide the possibil ity of voluntary liquidation of companies and of electronic 
submission and registration of annual accounts in  the Central Registry. Provisions transposing 
the acquis  on pre-emptive rights will come in to force upon accession. Provisions on approval 
of interested-party transactions  and cross-border mergers are s till to be amended. The Central 
Registry became a member of the European Busi ness Registry and, as such, is able to share 
data on companies with 22 countri es. The second phase of the re gulatory reform advanced. In 
the area of company law, the c ountry meets the requirements. 
There has been modest progress in the area of corporate accounting and auditing . The stock 
exchange set more stringent audit and disclosu re requirements for all listed companies. The 
financial systems department in the Ministry of  Finance, though lacking staff, has sufficient 
administrative capacity to prepare instructions  and properly enforce ac counting and financial 
reporting requirements. The Institute for Charte red Auditors (ICA) moved to new premises 
and increased transparency by publishing data on its website. The ICA has taken initial steps 
towards establishing an oversight system for statutory auditors a nd audit firms. However, this 
initiative is not in line with  the Directive 2006/43/EC on statutor y audit, which puts an end to 
self-regulation. The Directive also  requires public authorities such  as the responsible ministry 
to be involved in the preparatory work for es tablishment of the system  of public oversight.  
Nonetheless, the ICA still has only one full-ti me employee. The ICA has not yet begun to 
implement the programme for the education, training and examination of auditors. The 
programme for effective and independent quality  assurance for audit reporting is not being 
carried out. The disciplinary sy stem for auditors has not ye t been finalised. The ICA is 
reluctant to put into action the programme for recognition of chartered auditors' qualifications 
obtained abroad. There are still delays in translati ng and transposing the revisions of the 
International Accounting Standards (IAS) an d of the International Financial Reporting 
Standards (IFRS): the 2003 editi on of the IFRS and the 2004 edit ion of the IAS are still being 
used. In the area of corporate accounting an d auditing, the country partially meets its 
priorities.  
Conclusion 
Good progress has been made in the area of company law. Legislative alignment is at an 
advanced level. However, steps should be take n to align with the Directive on statutory audit 
to ensure effective and independent quality assurance for audit reporting and an appropriate oversight system. There are delays in planned reforms to develop capacity for ensuring proper 
enforcement of financial repor ting and audit requirements.  
EN 36   EN 4.7. Chapter 7: Intell ectual property law 
There has been some progress in the area of copyright and related rights . The Copyright 
Law was amended to transfer responsibility for inspection from the Ministry of Culture to the 
State Market Inspectorate (SM I) and to increase the fines for breach of copyright. The 
Criminal Code was amended to include new t ypes of breach of copyright related to new 
technologies and also to increa se the maximum prison term. Th e private copying levy scheme 
was set up. The Centre for Intellectual Prope rty Education became a member of the global 
network of intellectual propert y academies supported by the World Intellectual Property 
Organisation.  
One additional person was employed by the Sect or for Copyright and Related Rights; the 
administrative capacity of the Mi nistry of Culture to manage copyright policy is therefore 
sufficient. It established a website on copyright protection; however, this site is not regularly 
updated. The activities of  two of the three co llective rights manage ment societies were 
suspended because of a dispute with the gover nment; this case has ye t to be heard by the 
administrative court. Overall, in this area the country has started to address its priorities. 
Little progress has been made in the field of industrial property rights . Two additional 
employees were taken on in the State Office for Industrial Property and some training was 
provided. The Office signed Memoranda of Coopera tion with its counterparts from the Czech 
Republic, Hungary, Slovenia and Romania. The European Pa tent Convention has been 
ratified. However, the Internat ional Convention for Protection of New Varieties of Plants 
remains to be ratified. Preparations improved in  the area of industrial pr operty rights, although 
much remains to be done. 
There has been some progress in the area of enforcement , both at the borde r and within the 
country. However, piracy and counterfeiting re main widespread. The country still lacks a 
comprehensive strategy and an action plan for building up the capacity necessary to 
implement and enforce the acquis  on both copyright and industrial property rights. 
Enforcement of intellectual property rights (I PR) is hampered by the lack of appropriate 
awareness, experience and qualif ications of the inspectors and judges in this field. The 
country has nevertheless stepped up its efforts to  ensure a level of protection of intellectual 
and industrial property rights similar to that which ex ists in the Community, including 
effective means of enforcing such rights. The capacity of the SMI and the Ministry of the 
Interior to tackle infringeme nts of IPR has been increased  by training, employing additional 
staff and increasing cooperation with the relevant  stakeholders. In this regard, the authorities 
signed memoranda of understanding with a collecting society and two chambers of 
commerce. However, the resources allocated ar e still insufficient for proper implementation 
of IPR law, and inspectors l ack expertise and equipment. 
The specialised departments of the 13 basic courts now exercise their powers for cases related 
to IPR law. The customs authority and the SMI began to use their powers to impose fines for 
misdemeanours. The number of misdemeanour, ci vil and criminal procedures initiated and 
completed increased slightly, but the situation is not yet satisfactory. The number of cases 
relating to industrial property righ ts, in particular trademarks, is  still too low. Fines and other 
sanctions have been increased, but are not always applied effectively. 
There was a slight increase in the number of requests from owners of rights to the relevant 
State institutions for protecti on of their rights; the number and value of goods seized and 
destroyed (including equipment used to count erfeit goods) also increased slightly. The SMI 
EN 37   EN and the Ministry of the Interior were more activ e in seizing and destroying equipment used to 
counterfeit goods, but their efforts are not yet su fficient. Various seminars were organised for 
the law enforcement bodies, customs officials an d inspectors from the SMI and the Ministry 
of the Interior. Collection and presentation of  data on IPR enforcem ent by all relevant 
agencies have improved; the amended rule book for the courts provides for separate 
registration of data on court pr oceedings related to IPR law. Nevertheless, a comprehensive 
statistical approach needs to be adopted in order to demonstrate the IPR enforcement track 
record. 
The coordinating body for IPR achieved the first tangible results in fo stering cooperation and 
agreeing a common approach be tween all the law enforcement bodies. The authorities are 
starting to show greater determ ination to tackle piracy: the activities of the coordinating body 
were adequately supported in terms of staffi ng and logistics by all the institutions. Similar 
efforts are now necessary to protect industrial property rights and to combat counterfeiting. 
The results of all the measures were presente d via the media and on th e website of the State 
Office for Industrial Property. A major pub lic-awareness campaign was conducted. The 
academy for training of judges and prosecutors organised specialised training for 96 judges 
and prosecutors. 
Conclusion 
Progress was made in the area of intellectual property law, especially with strengthening the 
legal framework and enhancing th e administrative capacity. The enforcement record is slowly 
improving, in terms of both the number and va lue of goods seized and destroyed and the 
number of court proceedings initiated and comp leted. Nevertheless, further efforts are needed 
in order to improve the track record, strengt hen the capacity of enforcement bodies, adopt a 
coherent IPR strategy and carry ou t awareness-raising activities. 
4.8. Chapter 8: Competition policy 
There has been good progr ess in the area of anti-trust, including mergers . The Commission 
for Protection of Competition (CPC) issued the manuals necessary for implementing the 
competition law. The CPC began to build up an en forcement record, in particular in the field 
of concentrations and abuse of dominant position. Between 1 October 2007 and 30 September 
2008 the CPC took 26 administrative decisions, of  which 25 concerned mergers and 1 abuse 
of a dominant position, and imposed 18 misd emeanour fines, of which four relate to 
administrative decisions issued in 2008. The administrative court confirmed one CPC 
decision on abuse of a dominant position. 
The number of staff dealing with anti-trust issu es and their level of training increased, but is 
still insufficient. The training of judges and the administrative capacity  of the courts to 
enforce the competition law have been reinforced, but are not yet adequate. The overlap of competences between the CPC and the public prosecu tor's office in cartel cases still remains. 
The suspension clause for bot h administrative and misdemea nour decisions has not been 
removed, which diminishes the deterrent effect of the sanctions. 
Progress has been made in the area of State aid . A new Regulation on the conditions and 
procedure for granting horizonta l State aid was issued. The Law on technological-industrial 
development zones has been amended w ith the aim of aligning it with the acquis . However, 
some of its provisions n eed to be amended in order to av oid possible interpretations in the 
EN 38   EN application of the law that w ould be contrary to State aid rules. The regional State aid 
schemes have been developed and are a ligned with the State aid legislation. 
The CPC issued 6 ex-ante  and 8 ex-post  decisions approving State aid and 15 opinions at the 
request of State aid providers.  The decisions of the CPC on St ate aid are respected. The CPC 
compiled the inventory of State aid measures  for the period January -June 2008. The inventory 
includes decisions on compatib ility of State aid approved in 2006 and 2007. However, the 
administrative capacity is not sufficient for prope r monitoring of State aid: the number of staff 
of the CPC is still not adequate to res pond to its complex tasks. An effective and 
comprehensive system for ex-ante  control of State aid is not ye t in place. Some bodies that 
grant State aid are still reluctant to report on the form and intensity of the State aid that they 
provide. Overall, prepara tions in the area of State aid are advanced.  
The CPC continued to perform its duties indepe ndently. Its financial independence has been 
secured by eliminating the requirement to seek  approval from the Ministry of Finance for 
some of its expenditure. However, the Ministry  still determines the size of the CPC's budget, 
which it reduced in 2008. 
Conclusion 
Good, but uneven, progress can be reported in th e area of antitrust, including mergers and 
State aid. The CPC still needs more and bett er qualified staff and adequate funding. The ex-
ante control of State aid is not sufficiently effective. 
4.9. Chapter 9: Financial services 
Good progress has been made in the area of banks and financial conglomerates . 
Implementing legislation to the Law on banking was adopted, relating to supervision of commercial banks. The law was approximated to the EU banking directives in the areas of 
risk management, exposure limits, reporting an d audit requirements and capital adequacy. 
However, further efforts are needed in orde r to continue the alignment with the banking 
acquis , especially with the Capita l Requirements Directive.  
The central bank (NBRM) has moved further towa rds risk-based supervision. Its supervisory 
practices, capacity and expertise were further en hanced: the sector for supervision, legislation 
and financial stability was strengthened with nine extra staff, and additional training was 
given. However, continuing efforts in that resp ect are needed. Consumer  protection has yet to 
be adequately addressed. Preparations in the ar ea of banks and financia l conglomerates are on 
track.  
There has been good, but uneve n, progress in the area of insurance and occupational 
pensions.  Amendments to the Law on insurance superv ision entered into force. Nonetheless, 
insurance supervision continues to be weak. The independent insuranc e supervision agency 
has still not become opera tional. Supervision conti nues to be the responsib ility of the financial 
system department within the Ministry of Fina nce, whose capacity is  still poor. Enforcement 
was weak: there were no on-site  inspections, and the IT system necessary for off-site 
supervision is still lacking. No memoranda of  understanding were concluded with other 
supervisors in the financial sector or with fo reign insurance supervisor s. A properly financed 
guarantee fund for insolvency of insurers is st ill lacking. Some insurance companies still do 
not have adequate reinsurance. Implementing legi slation to the Law on traffic safety has yet to 
be adopted. Enforcement of sanctions against uninsured driving is weak. 
EN 39   EN Amendments to the Law on fully funded pension insurance, regulating the establishment and 
responsibilities of companies for managing pens ion funds and defining the responsibilities of 
the Agency for supervision of fully funded pension insurance (MAPAS) were adopted by 
parliament. Implementing legislation regulating th e payment of fees to the mandatory pension 
funds, the charges payable for transfer of members between two pension funds and the 
procedure for mandatory enrolment of people in  the fully funded pension funds was adopted 
by the government. MAPAS became a member of the International Organisation of Pension 
Supervisors. Its capacity has been further strengthened by three additional employees and 
staff training and seems to be adequate. Prepar ations in the area of insurance, with the 
exception of pensions, are lagging behind. 
There has been some progress in the field of financial market infrastructure. A Law on 
financial collateral was enacted regulating the security of transactions between financial 
institutions, which aims  at aligning with the acquis . Legislation is not yet fully in line with the 
acquis  on settlement finality. Alignment of the N BRM’s decisions on classification of assets 
and on limits of credit exposure with the acquis  has still to be confir med. Some provisions of 
the Law on rapid money transfer  are not in line with the acquis , and amount to an effective 
barrier to access to the money re mittance market. Preparations in the area of financial market 
infrastructure are advanced. 
Progress has been good in the field of securities markets  and investment services.  The Law 
on securities was further amended, and implem enting legislation was adopted which lays 
down the rules to be observed by  the various issuers of secu rities (companies, financial 
institutions and municipalities). The Securi ties and Exchange Commission (SEC) has been 
exercising its enforcement powers effectively; its enforcement record has improved. In November 2007, the first two management compan ies were established. They managed three 
open-ended investment funds with assets of  €1.43 million. The SEC approved the first issue 
of corporate bonds by one of the commercial ba nks operating in the country. Legislation is 
still not in line with the acquis , especially as regards the Capital Adequacy Directives. The 
responsibilities of the NBRM and the SEC still overlap in  the area of licensing and 
supervision of trading in securities. The number of staff of the SEC and its IT capacity are 
still inadequate, and its operationa l independence is insufficient. Preparations in this area are 
moderately advanced. 
An action plan on approximation to the EU s upervisory standards a nd best international 
practice (BASEL, IAIS and IOSCO principles ) for the banking, insurance and securities 
sectors to implement the recommendation of the EC peer assessment mission has been 
adopted jointly by the NBRM, SEC,  insurance sector supervisors and the Ministry of Finance. 
Conclusion 
There has been progress in legislative alignment with the acquis. Deficiencies persist in the 
administrative capacity of the supervisory bodies, in particular as regards insurance, where enforcement is particularly insufficient. The overall state of preparation is moderately 
advanced. 
4.10. Chapter 10: Information society and media 
Progress has been made in the area of electronic communications and information 
technologies . The Law on electronic communications  (the primary law) has completed 
alignment with EU rules with respect to appeal  procedures and the authorisation regime. As a 
EN 40   EN result of the amendments, the concession contracts with operators with significant market 
power (SMP) will cease to be valid on the entry into force of the amended law, when they will 
be replaced by authorisa tion following notification. 
Further progress was made by the regulatory bod y in imposing competitive safeguards against 
SMP operators in compliance with Article 146 of  the primary law. Inte rconnection rates were 
drastically reduced, number por tability introduced and a universal service provider pre-
selected. Moreover, certain mandatory obligatio ns for SMP operators (i nterconnection offers, 
retail rates regulation, cost accounting and accounti ng separation) have finally been enforced. 
These measures have resulted in growing comp etition in the fixed a nd broadband markets and 
a significant decrease in prices.  
Whereas greater competition was brought to the mobile market with the entry of a third 
market player, the recent stake of Deutsche  Telekom in OTE/Cosmote is dramatically 
increasing its dominant position. Corrective measur es are needed to restore a competitive 
situation.  
The emergency number 112 has not yet been introduced. The regulatory body recruited additional sta ff and enhanced its cooperation with the 
Commission for Protection of Competition. Mo reover, there were improvements in the 
enforcement record: the regulatory body imposed  over 100 fines and other measures in 
infringement cases. However, there is a need fo r clarification of task s between the regulatory 
body and the ministry. 
Progress can be reported in the area of information society services . Laws on conditional 
access and electronic commerce were  enacted. Provisions on cybe r-crime were incorporated 
into the Criminal Code. A secretariat for the information society was established, headed by a minister without portfolio, which is responsible for developing an information society. The e-
procurement system of the government was upg raded. Free and public Internet access was 
introduced in 15 towns, and free ICT training is given. Preparations are moderately advanced 
in this area. 
There has been some progress in the field of audiovisual policy. A strategy for the 
development of broadcasting activity and an action plan were adopt ed. The Broadcasting 
Council adopted guidelines on co mmunication of changes in th e ownership structure of 
broadcasters and a rulebook on sanctions for non-compliance with the Law on broadcasting 
and implementing legislation regulating medi a coverage of the elections. Moreover, a 
Memorandum of Understanding for strengt hening the monitoring capacity of the 
Broadcasting Council was signed with the OSCE mission.  
Full implementation of the Broadcasting Law was not ensured. Despite legal provisions 
regulating the independence of the Broadcasting Council and the public service broadcaster, 
both remain vulnerable to  political interference
, largely because their financial stability has 
not been ensured. Selection of replacements fo r three, out of the nine, members of the 
Broadcasting Council whose mandate had expired has been delayed. The financial situation of 
the Broadcasting Council and the public servi ce broadcaster is not secured. The funding 
system of the public service broadcasters and the Broadcasting Council (c ollection of licence 
fees) should have been operational since 1 Ju ne 2006. Reports show that the system has 
almost completely failed since very few people actually pay the licence f ee. According to the 
Broadcasting Council, the fee collection is "0" since January this year. Amendments to the 
EN 41   EN law were enacted which provide for the possib ility of initiating bankruptcy of the public 
service broadcaster.  
Administrative capacity  remains weak. The Broadcasting Council is understaffed. Decisions 
of the Broadcasting Council are sometimes  not respected by the broadcasters. 
There is no legislative provision relating to concentration of ownership of the media. 
Conclusion 
Significant progress can be reported in the area of electronic comm unications, including 
enforcement measures. This has brought more  competitive conditions to the benefit of 
consumers. In the media, the financial situ ation of the Broadcasting Council and the public 
service broadcaster remain a cause for conc ern. Overall, preparations are advanced. 
4.11. Chapter 11: Agriculture 
Significant progress  has been achieved in the area of  horizontal issues. A Framework Law on 
agriculture and rural development was enacted, pr oviding a legal base fo r transposition of the 
relevant CAP acquis . The final results of the agricultura l census were published. The Law on 
agricultural land was enacted and its implem enting legislation adopted. It regulates 
management, oversight and protection of agricultural land. Additional employees were recruited in the Departments for policy analys is and the agricultural information system, for 
management of agricultural land and for rural de velopment. The agricultural inspectorate was 
reinforced with two additional staff in Skopj e and eight in regional units, out of 33 new 
recruits planned by 2010. The inspectorate was s upplied with additional IT equipment. The 
human resources of the ministry  are still insufficient to deal  with its existing and future 
responsibilities. 
In 2008, a total of €41.3 milli on was allocated to the  direct support schemes. Direct support 
includes an income support scheme, premium pa yments schemes for crops and livestock, plus 
agricultural insurance payments . The rulebook on implementation of the single register of 
agricultural holdings was adopted. The software and hardware for the electronic farm register 
have been designed and procured. Farmers are cu rrently filling in registration forms that will 
be subsequently introdu ced into the system.  
No progress can be reported in setting up an integrated administration and control system 
(IACS)  since the pilot projects.  Administrative responsibility fo r collecting and sharing data 
between different institutions has still to be  clarified. No progress has been made in 
establishing the land parcel identification syst em (LPIS). The real estate cadastre presently 
covers some 80% of the country's territory. 
The capacity of the paying agency  (Agency for Financial Support of Agriculture and Rural 
Development) has been strengthened. Manuals on  its internal organisation were adopted, new 
premises and equipment were supplied and the new staff was trained. Ho wever, its capacity 
for sound management of State f unds has yet to be confirmed. 
Implementation of the strategy and operational plan for development of a sustainable and 
efficient agricultural information system is  slow. Little progress has been made on 
implementing the Law establishing a farm acc ountancy data network (FADN); adoption of 
the implementing legislation is  progressing slowly. A law on State aid  in agriculture has not 
yet been enacted. 
EN 42   EN Concerning the common market organisations , preparations in the area of arable crops, 
fibre and sugar  are at an early stage. 
Progress can be reported in the area of animal products.  The Law on livestock breeding was 
enacted. Alignment of the law with the acquis  remains to be confirmed. Preparations in this 
field are starting. 
Progress can be reported in the area of specialised crops.  The pilot vineyard register is being 
extended to cover the entire territory of the c ountry. Most of the implementing legislation to 
the Law on  tobacco  and tobacco products has been enacted. The list of  seed  varieties was 
amended and more seed varieties we re added to the national list of  agricultural plant varieties. 
Progress can be report ed in the field of rural development.  As part of the national 
agricultural and rural development strategy, the government adopted a €2.95 million programme for revitalisation of villages, aimed at reconstruction of water supply systems and 
irrigation systems as part of the national agri cultural and rural devel opment strategy. The rural 
development programme under the Instrume nt for Pre-Accession Assistance (IPARD 
programme) has been adopted. Substantial progre ss has been made with the preparations for 
the national accreditation of th e IPARD agency. Adoption of th e procedures has progressed 
and the administrative capacity has been st rengthened. The staffing level of the IPARD 
agency is now 68 employees, out of the 134 pl anned for 2010. Some progress has been made 
in setting up the monitoring system, on the legislative framework for operation of the 
managing authority and on appointment of the mana gement staff. Preparations in the area of 
rural development are advanced. 
Progress can be reported in the field of quality  policy  for products with high export potential. 
A budget of €150,000 has been allocated in 2008, compared with €30,000 in 2007, for 
implementing the programme to support quality a nd food safety standards for target products. 
Preparations in this area are advanced. 
Progress can be reported on organic farming. Implementation of the  2007-11 strategy for 
development of organic agricu ltural production is progressing. The programme includes direct 
support for organic production, together with  public-awareness campaigns about organic 
production. Manuals have been adop ted on registration of producers,  processors and traders of 
organic products, on the labelling of organic products and on the list of officially recognised 
certification bodies from thir d countries. Preparations in this area are advanced. 
Conclusion 
There has been progress  in the field of agriculture and good progress has be en made on rural 
development. Policy development has been followed by increases in the administrative capacity of the relevant institutions and by effective implementation. Alignment with the 
acquis is still at an early stage. 
4.12. Chapter 12: Food safety, veterinary and phytosanitary policy 
Some progress has been made as regards the general principles. The implementing legislation 
further transposes most of the food and feed  law; alignment remains to be confirmed. The 
national strategy on food safety was adopted. The Food Safety Directorate began to cooperate 
with the European Food Safety Authority. The so ftware for the rapid alert system has not yet 
been prepared. Preparations in this area are on track. 
EN 43   EN Progress has been made in the area of veterinary policy . In particular, implementing 
legislation has been adopted, aiming to  transpose part of the veterinary acquis . The legislation 
on control systems in the internal market and on control systems for imports only partially 
transposes the acquis . The organisational struct ure of the border controls has been upgraded, 
but is not sufficient. An EU-compatible control system is not yet in place, particularly for 
import control. Some progress has been made in the area of identification and registration of 
animals . The system for iden tification of bovines and regist ration of their movements is 
operational for the most part. Identificatio n of sheep and goats is underway, while 
identification and registration of pigs is in its preliminary phase. Demotions of professional 
staff in the Veterinary Direct orate have adversely affected the administrative capacity for 
identification of animals.  
The animal health control system does not co mply with EU legislative and institutional 
requirements. Some of the implementing legislation on the control measures for animal 
diseases  has not yet been transposed. The acquis  on transmissible spongiform 
encephalopathies has not yet been transposed. The contingency plans for most of the notifiable diseases are being prepared and pu blished annually; their compliance with EU 
standards remains to be confirmed. The Veterina ry Directorate improved the official controls, 
but not sufficiently to tackle transmissible anim al diseases systematically. Some progress has 
been made in the area of  intra-Community trade in live animals, semen, ova and embryos  with 
the enactment of a Law on livestock breeding, aiming to transpose part or the relevant acquis . 
The administrative capacity for implementi ng this legislation is insufficient. The 
implementing legislation on non-commercial movemen t of pet animals,  aiming to transpose 
the acquis , was adopted. 
The annual monitoring programme for prohibition of substances and residue control  does not 
meet most of the EU requirement s. The implementing legislation on import requirements for 
live animals and animal products  has not been issued. No new  international veterinary 
agreements have been signed. The implementing legislation to the Law on animal welfare  has 
not yet been issued. The Law on livestock breeding, aiming to transpose the acquis  on 
zootechnical issues , was enacted. The 2008 allocation for veterinary expenditure  on measures 
to eradicate and monitor animal diseases is €4.3 9m; almost a quarter of the total amount is to 
cover liabilities carried over from 2007. The cap acity and independence of the laboratory of 
the veterinary faculty, though improved, are not  sufficient. The number of veterinary 
inspectors has been increased: their management and training are still not satisfactory. The 
capacity of the veterinary service at both centr al and local levels to put in place an EU-
compatible control system has been  reinforced, but is not sufficien t. In the area of veterinary 
policy the country partially meets its objectives. 
Little progress has been made in connection with the placing on the market of food and 
feed.
 The legislation on hygiene rules , specific rules fo r animal products , control rules  and 
specific control rules for animal products  still only partially meets the EU requirements. 
Some of this legislation will not come into force until a later date. Alignment with the acquis  
on inspection surveillance and sampli ng has still to be confirmed. The rules for animal by-
products  have not yet been transposed. The necessa ry collection and treat ment systems have 
not yet been set up. The aid schemes for Haza rd Analysis Critical Control Point (HACCP) 
certification have been extende d to 2008. Training for inspectors  to assess the compliance of 
agri-food establishments with HACCP standa rds has started. HACCP  certification still 
remains limited to larger esta blishments. Many agri-food establishments have not taken 
sufficient steps towards meeting the deadline of September 2009, which is when the HACCP 
certification will become mandatory for the domestic market. There is no strategy for 
EN 44   EN enhanced implementation of the HACCP system . Evaluation of agri-food establishments for 
compliance with EU standards and upgrading program mes is at an early st age. It is still the 
producers and importers who provide for the funding of checks . Preparations in this area are 
being initiated. 
Progress can be reported in the area of food safety rules . The implementing legislation on 
food additives  and ionising radiation  was updated. In addition, the existing legislation aims to 
transpose the acquis  on labelling , extraction solvents , flavourings , food supplements , fortified 
food, food for particular nutritional uses , quick-frozen foodstuffs , contaminants,  novel food 
and mineral water . The legislation on food contact material  and GMOs  has yet to be adopted. 
The registers for fortified food, food for particular nutritional uses, food additives and mineral 
water have not yet been establis hed. The capacity of the laboratory in the Institute for Health 
Protection is insufficient to provide reliable resu lts. The number, training and competence of 
staff in the Food Safety Director ate (FSD) are still insufficient. The number of legal staff in 
the FSD has not been increased to enable it to pursue misdemeanours. In order to improve 
coordination, a memorandum of understandin g has been signed betw een the Veterinary 
Directorate (VD) and the FSD. Still, no singl e authority has competence for food safety 
control. Because of the overlapping legal competences between the FSD and the VD, the 
overall organisational structure and coordination remain poor and ineffective. In the area of 
food safety rules, the country partially meets its objectives. 
No progress was made on specific rules for feed . The legislation has not yet been transposed. 
Preparations in this area still need to be launched. 
Progress has been made in the area of phytosanitary policy . A new Law on plant health 
(harmful organisms) , aiming to transpose the  acquis , was enacted. The Law on fertilisers and 
plant protection products , aiming to transpose the relevant  acquis, was enacted. The register 
of plant protection products ha s been established a nd the register of operators is being 
prepared. New implementing legislation on quality of seeds and propagating material and 
plant variety rights , aiming to transpose the  acquis , has been adopted. Some  of this legislation 
is to be implemented only upon the country's  accession to the EU. The programme for 
surveillance of seed and seed materials is be ing implemented. The staff of the plant health 
authority has been increased, but their numbers a nd training are still not sufficient. Most of 
the funds from the 2008 programme for plant health  protection will be used to set up regional 
and border laboratories, to introduce bandero ls for plant protection products and train 
phytosanitary inspectors and to monitor and erad icate harmful plant organisms. The 
administrative capacity of the Phytosanitary Di rectorate is weak. Coordination between the 
various stakeholders in the area of phytosanit ary policy has not improved. The responsibilities 
of the plant health authority are still divide d between the Phytosanitary Directorate and the 
Seed and Seed Materials Directorate. The equi pment for border controls is still inadequate. 
The laboratory capacity is still under-used. No further international phytosanitary agreements 
have been signed. In the area of phytosanitary policy, the country has started to address its 
priorities. 
Conclusion 
There has been modest progress in the area of food safety, veteri nary and phytosanitary 
policy, mainly regarding legislative preparedness. The administrative capacity, in terms of both the number and competence of staff, has b een strengthened, but is not yet adequate to 
ensure proper implementation of the acquis . No single authority ha s competence for food 
safety control. 
EN 45   EN 4.13. Chapter 13: Fisheries 
Substantial progress has been  made in the field of resource and fleet management  with the 
enactment of the Law on fisheries and aquacultu re. The law regulates commercial fishing, fish 
production and sport fishing. Some of the imp lementing legislation has been adopted. 
Preparations in this area  are moderately advanced. 
Little progress has been made in the area of inspection and control . The administrative 
capacity of the unit for fisheries and aquacultur e within the agriculture department of the 
Ministry of Agriculture, Forestry and Wa ter Economy, which is re sponsible for issuing 
licences for concessions for comm ercial fishing, fish producti on and sport fishing, has been 
slightly increased but is still insufficient. The agricultural inspectorate, which plays the 
principal role in the control and inspection of fisheries, do es not have sufficient capacity. 
Preparations in this area  are at an early stage. 
No progress has been achieved in the field of market policy. The administrative structure for 
implementing market policy  is not yet in place.  Preparations  are at an early stage. 
No developments can be reported in the field of structural policy .  
Little progress has been achieved in the field of State aid . The new Law on fisheries and 
aquaculture regulates State aid . Preparations in this ar ea are being launched. 
Conclusion 
There has been progress in this area. The admini strative capacity has s till to be developed. 
Since the country is landlocked, most of the fisheries acquis is not relevant. Preparations for 
implementation of the common fisherie s policy are at an early stage. 
4.14. Chapter 14: Transport policy 
Good progress has been made in the area of road transport . Implementing legislation to the 
Law on road transport introduced  new conditions for issuing ce rtificates of professional 
competence and for engaging in international road  transport. Implementing legislation relating 
to the laws on road transport safety, on ve hicle licence plates and on traffic signs and 
signalling was adopted. The Law amending the Law on public roads was enacted. 
Implementing legislation to the Law on road passenger transport, relating to the driving 
licence for international road passenger transpor t, was adopted. Implementing legislation to 
the Law on transport of danger ous goods by road and rail, rela ting to training of safety 
inspectors for the transport of dangerous goods, was adopted. However, the Law on road 
transport is still only partly aligned with the acquis on market access. The current system for 
road taxation and charging does not meet the requirements of the acquis. Inspection capacity 
remains insufficient. The Agency for public roads has not yet been set up. Implementing 
legislation on digital tachographs was adopted. Road safety rules are not properly enforced 
and effective road safety campaigns are lacking. Preparations in the area of road transport are 
advanced. 
Progress can be reported in the area of rail transport . In December 2007, the government 
signed the Addendum to the Memorandum of Understanding on the Development of the 
South East Europe Core Regional Transport Network for a South-East European Railway 
Transport Area, aiming at gradual opening of  the rail transport market. Implementing 
legislation to the laws on railways, on safety  of railways and on rail transport was adopted. 
EN 46   EN The Law establishing an independent regulator y agency for rail transport contracts was 
enacted, but has not yet entered into force. Im plementing legislation to the Law on railways 
was adopted relating to interopera bility, safety of the rail networ k and licences for transport of 
passengers and goods. Implementing legislat ion was adopted on licences and safety 
certificates for managing railway infrastructure, regulation of rail traffic, training of railway 
technicians and compliance of trains with noi se and environmental protection regulations. 
Implementing legislation to the Law on rail trans port safety was adopted relating to stations, 
trains, wagons, tracks and safety equipment fo r workers and passengers. Moreover, rulebooks 
were issued dealing with a state of emerge ncy and interruption of rail transport, and on 
classification and categorisati on of railway lines. The safety authority has not yet been 
established. Public service obligations are st ill not being compensated for. The system of 
track-access charges has not yet been in troduced. The government adopted the 2008 
investment programme for the railway sector, which allocates €3 million to railway reconstruction and maintenance for the first six months of the year, compared with 
€2.5million for the whole of 2007. This amount is not  sufficient to meet all the needs, though 
it may be as much as the railway infra structure company is able to manage. 
The State took over 77% of the former railway company's arrears by acquiring shares in the 
two new companies for infrastructure and transport, which retained the remaining arrears. Preparations in the area of rail transport are advanced. 
Good progress has been made on inland waterways with the adoption of implementing 
legislation on licences for sailing small boats, f ees for testing boats an d signs and signals on 
inland waterways. In this area, th e country is sufficiently prepared. 
In the area of combined transport, the country continues to implement the Memorandum of 
Understanding on the South-East European Co re Regional Transport Network, which is 
aimed at improving and developing the capacity of  the SEE road and rail network. It is also 
continuing to strengthen cooperation w ith the SEE Transport Observatory (See Chapter 21 – 
Trans European networks) . Preparations are on track. 
Progress can be reported in the area of air transport . The country is applying the multilateral 
European Common Aviation Area (ECAA) agreem ent. Implementing legislation to the Law 
on aviation was adopted, relating to the planning , building and reconstruction of airports and 
devices for airport flight cont rol systems. Implementing legisl ation relating to the introduction 
of the Eurocontrol Safety Oversight and also on inspection and safety of airports and on 
training and qualifications of air safety a nd security personnel was adopted. The Civil 
Aviation Agency issued a rulebook on transpos ition and direct implementation of the Joint 
Aviation Authorities internati onal standards and ru lebooks, on supervision of public air 
transport and on health standards and certificates of staff involved in air traffic control. 
However, parts of the ECAA first phase acquis , notably those relating to market access 
conditions for ground handling services and to av iation safety and security procedures, have 
still not been implemented. Contrary to the la w, the Civil Aviation Agency still retains both 
regulatory and operational responsibility and is not yet adequately staffed for its operational 
function. The committee for air accident investiga tion lacks sufficient capacity to act as an 
independent body for investigation of accident s and serious incidents. The air traffic 
department of the Ministry of Transport a nd Communication lacks sufficient well-qualified 
staff. Preparations in this area are moderately advanced. 
No particular development in the area of state aid  and satellite navigation
 can be reported. 
EN 47   EN Conclusion 
Good progress can be re ported in the area of transport policy. However, administrative 
capacity in all sectors remains insufficient. Re gulatory bodies and safety authorities have yet 
to become operational in the fields of land, air and rail transport. The reforms undertaken in 
railways still need further implementation.  In the area of transport policy, preparations are 
advanced. 
4.15. Chapter 15: Energy 
There has been some progress with security of supply . A new Law on mandatory reserves of 
oil and oil reserves was en acted. However, at the end of August 2008, the Commodity 
Reserve Bureau held oil stocks equivalent to only 42 days' average consumption, compared 
with 56 days in 2007. At present there are not su fficient financial resources to secure 90 days' 
consumption. The new law provides that from 2009 the reserves will be managed by a new 
Directorate for mandatory reserves of oil and oil derivatives. A strategy for long-term 
development of the energy sector has still to be completed. Preparations in this area are at an 
early stage. 
Some progress has been made with regard to the internal energy market . By enacting 
amendments to the Energy Law in July 2008, the country further aligned its legislation with 
the Community legislation in the energy field. Renewable energy sources  are now covered by 
the energy law, as are energy efficiency issues  and a better metering po licy for the electricity 
distribution sector. Following a complaint from a private investor against the new Energy 
Law, in September the Secretariat of the En ergy Community Treaty deci ded to open a Dispute 
Settlement Procedure in accordance with Article  12 of its 'Rules of Procedure for Dispute 
Settlement'. The procedure is currently ongoing.  The government adopted a timetable for 
gradual opening of the electricity market to competition. Since 1 January 2008 eligible 
consumers, which account for a little more than 40% of total consumption, have been under an obligation to purchase their electricity di rectly from the market. The Energy Regulatory 
Commission (ERC) approved the dist ribution grid code. Certain gas and electricity tariffs still 
do not reflect costs, while collection rates are sti ll not sufficient to ensure the viability of the 
system. Two members of the ERC reached the e nd of their mandate and were replaced by 
parliament. The administrative capacity of the ERC for regulating the markets and protecting 
customers is not sufficient. Its independence has not been strengthene d, in particular as 
regards regulation of prices on markets where competition is not sufficient. The ERC does not have proper market regulatory authority ove r the operations of all independent power 
producers (IPP), in particular over the State-ow ned Negotino thermal power plant. The tender 
for privatisation of this plant was cancelled. The practice of including representatives from the 
electricity generation company on evaluation panels for tenders  is not consistent with 
safeguarding competition on the energy market. The activities of the natural gas transmission system operator and the natural gas distribut ion system operator are not unbundled and are 
performed by the same company. The ownership of  the gas system has still not been resolved. 
Gas will be a primary input in the two combin ed heating and power plants that are being 
constructed. The government established an elec tricity exchange, which is not yet operational. 
The Energy Department of the Ministry of Ec onomy is still understaffed. In the area of the 
internal energy market  the country partially meets its objectives. 
There has been modest progress in the area of State aid . The new horizontal legislation 
prohibits State aid  for restructuring of the coal industry. Mo st of the coal (lignite) reserves are 
being managed by the electricit y generation company. There is no clear legal and financial 
EN 48   EN separation between the lignite excavation acti vities and operation of the thermal plants. 
Preparations in the area of  State aid are advanced. 
Some progress has been made in the field of renewable energy . The ERC adopted the 
manuals on feed-in tariffs fo r electricity produced from bio-mass, geothermal energy and 
photovoltaic systems which offer advantageous  tariffs to potential investors. The 
implementing legislation on renewable energy so urces has been adopted. The administrative 
capacity for developing renewable energy so urces has been strengthened. Two bio-fuel 
refineries were commissioned. In the area of renewable energy the country is moderately 
advanced. 
Some progress has been made in the area of energy efficiency . The manual on guarantees of 
origin of electricity has been adopted. The En ergy Agency recruited additional staff. In the 
area of energy efficiency, the country has started to address its objectives. 
Further progress has been made regarding nuclear safety and radiation protection . The Law 
on radiation protection was amended to in clude provisions on nuclear safety. The 
administrative capacity of the Radiation Safety Directorate (RSD) has be en reinforced and is 
now satisfactory. The amended law clarifies the role and responsibilit ies of the different 
organisations involved in radiation protecti on matters, but does not provide for financial 
independence of the directorate. An appropria te storage facility for materials has been 
identified. The IAEA considers that the stor age of radioactive waste now complies with 
international standards and recommendations. Ho wever, a project on management and storage 
of low and medium radioactive waste was report ed to be underway. Issues to be addressed 
include dismantling of radioactive lightning rods  and management of institutional radioactive 
waste. Efforts have been made to prevent and combat illicit trafficking of radiation sources. 
The training of the customs and police services  has been improved, but maintenance of portal 
monitors is not sufficient. The country has not yet acceded to the Joint Convention on the 
safety of spent fuel management and on the safety of radioactive waste management. 
Conclusion 
Progress has been made in the energy sector, in particular as regards transposition of 
legislation and liberalisation of the electricit y market. However, certain outstanding issues 
related to tariffs and electricit y distribution still require atte ntion. The admini strative capacity 
to enforce energy-efficiency policy and radi ation protection regulations has improved, but 
requires further strengthening. The degree of in dependence of the energy regulator and the 
radiation protection regulator rema ins inadequate. In the field of energy, the country is not yet 
sufficiently prepared. 
4.16. Chapter 16: Taxation 
No progress has been made in the area of indirect taxation.  A reduced rate of value-added  
tax (VAT) was introduced for public cleaning services and waste treatment, which is allowed 
under the acquis . However, a reduced rate for agricultural machinery, computers and thermal 
solar systems, deviating from the acquis , is still applied. The excise  duties on several products 
are still lower than th e minimum required by the acquis.  
In the area of direct taxation , profit tax and personal income ta x were reduced further, from 
12% to 10%, with effect from 1 January 2008 . Micro-enterprises and self-employed people 
with a gross annual income of less than €49 000 are subject to a simplif ied tax procedure. Tax 
relief of 50% was introduced on the personal income tax payable by employees of companies 
EN 49   EN operating in the technological/industrial development zones. Preparations in  the area of direct 
taxation are moderately advanced. 
There has been some progress in the field of administrative cooperation and mutual 
assistance. Double taxation agreements with Austria and Lithuania have been ratified. In 
total, there are currently 22 agreements with EU Member States.  
Good progress can be repor ted in the field of operational capacity and computerisation.  
The Public Revenue Office has enhanced its capac ity to implement tax legislation and to fight 
tax evasion. It has developed a nd started to implement an external audit strategy. A strategy 
for human resources development and new wo rking standards have been prepared and 
implementation of a new Code of Ethics has begun. In combina tion with the ongoing 
computerisation, the simplification of tax pa yments and enhanced communication with the 
public have led to a significant increase in re gistered taxpayers and in the revenue collected. 
A new centre for data collection a nd processing has been established. 
The fight against tax evasion and corruption benefited from closer cooperation with the 
public, resulting in an increase in the number of misdemeanour a nd criminal cases initiated by 
the Public Revenue Office. 
The Public Revenue Office started to part icipate in the Fiscalis 2013 programme. 
Conclusion 
Good progress has been made on strengthening the administrati ve capacity of the Public 
Revenue Office, but no progress on legislative alignment. The level of legislative alignment in 
indirect taxation is sufficient but needs to be improved in direct taxati on. The administrative 
capacity for tax collection has markedly improve d and tax revenue has increased, but efforts 
are still needed to ensure effective implementati on and enforcement of tax legislation, in view 
of reducing the informal economy. Significant effo rts have been made to curb corruption, and 
need to be continued. 
4.17. Chapter 17: Economic and monetary policy 
No progress can be reported in a ligning the legal fr amework with the acquis  the area of 
monetary policy.  The central bank has continued to  monitor and repor t on the main 
developments and potential risks for participants in the financial system. A separate unit for financial stability has been established, and some staff assigned to it. Also, an inter-
institutional body has been established, to promote financial stability in the country. It brings 
together the regulatory and supe rvisory bodies in the financia l sector: the Securities and 
Exchange Commission, the Agency for supervisi on of fully funded pension insurance and the 
Ministry of Finance. Preparations in the area of monetary policy are on track. 
Progress has been made in the area of economic policy. The country is part icipating in the 
EU's Pre-accession Fiscal Surveillance. It  presented its second Pre-accession Economic 
Programme in December 2007 and the third fis cal notification in April 2008, but the data 
provided are not yet sufficien tly in line w ith ESA 95. The government adopted two inter-
linked medium-term strategies: a public i nvestment programme for 2008-10, aimed at 
increasing public investment to 6% of GDP in 2008, and a pub lic debt management strategy 
for 2008-10, with the objective of keeping genera l government debt within the range of 34% 
to 37% of GDP and overall public debt w ithin the range of 37% to 40% of GDP. 
EN 50   EN Administrative capacity is still inadequate, in particular as regards policy implementation at 
municipal level. Preparations in th e area of economic policy are on track. 
Conclusion 
There has been some progress in economic and monetary policy. Legislative alignment with 
the acquis  and administrative capacity has improved, but some gaps remain. 
4.18. Chapter 18: Statistics 
Progress can be report ed in the area of statistical infrastructure . The statistical council was 
established with members from various institu tions and academia. The government adopted a 
five-year statistical programm e for 2008-2012 covering the nationa l statistical system. There 
has been some improvement in the capacity of  the State Statistical Office (SSO). The budget 
for 2008 was increased by 15% compared with 2 007 and 17 new staff were  recruited. Human 
resources management tools, such as assessment s and training plans, have been implemented. 
Internal and external communication has im proved. However, the human and financial 
resources of the SSO remain relatively weak. 
Good progress has been made in the area of classifications and registers. The SSO began 
revising the economic classificatio ns. A classification of statisti cal regions in line with the 
relevant EU standards was agreed with Eurost at. The latest international classification of 
diseases was introduced. The pilot business census was carried out. The basis for the 
statistical business register has been develope d. However, no routines have been established 
yet to ensure that the register  contains up-to-date information. 
Progress has been made in the area of sector statistics . As regards demographic and social 
statistics, preparations have begun for the popul ation census, which is planned for 2011. The 
planning is not yet thorough enough to ensure that the census will be carried out in a timely manner. Labour force survey results for 2006 were  transmitted to Eurostat. In the field of 
macroeconomic statistics, work on improving the national accounts continued, but further 
alignment with the acquis  is needed. In the area of business statistics, the short-term 
indicators on building permits  were published. Furthermore, several pilot surveys were 
conducted on manufacturing, cons truction, energy, external trad e and tourism. Cooperation 
with the Ministry of Finance and the Central Bank has improved; however , roles have still to 
be clearly defined. As regards ag riculture and fisheries statistics, full data from the agriculture 
census were published by the end of 2007, i.e. si x months after the ce nsus. For all sector 
statistics the gaps in quality have been addressed to only a limited extent. Reporting of 
statistical data to Eurostat needs to be further enhanced. 
Conclusion 
Overall, progress has been made towards improving both the statistical infrastructure and 
sector statistics. Alignment of the classifications with the acquis  has advanced well. Further 
efforts are needed in order to achieve and ma intain sufficient quality in the statistics. 
4.19. Chapter 19: Social policy and employment 
Little progress has been  made in the area of labour law . In August, amendments to the Law 
on labour relations were enacted. However, the legislation still does not  effectively regulate 
all forms of employment. One obstacle to re gulating low-wage contracts was removed by 
considerably lowering the tax wedge on wa ges in January 2008. The number of labour 
EN 51   EN inspectors was increased from 96  to 129, but the insp ectorate still lacks proper facilities. 
Cooperation between the relevant institutions is low. Administrative capacity to ensure proper 
implementation and enforcement of the labour law is  weak. Preparations in this area are being 
launched. 
Progress can be reported in the area of health and safety at work . Implementing legislation 
to the Law on occupationa l health and safety at work was adopted. However, administrative 
capacity is insufficient to ensure proper im plementation and enforcement of the legal 
provisions. The number of injuries and deaths  in the workplace remains significant. The data 
provided by the labour inspectorate, indicating that 18 fatal accidents occurred in 2007, were 
challenged by non-governmental sources, whose da ta indicated 47 cases. Alignment with the 
acquis  in the area of health and safety at work is moderately advanced. 
There has been little pr ogress in the field of social dialogue . The collective agreement with 
public-sector employees was signed. The Ec onomic and Social Council (ESC) met more 
frequently but its composition remained uncha nged and contrary to the provisions of the 
labour law. The eligibility of the trade union representatives is challenged by others who 
consider that they have a stronger claim. A work ing group has been set up to draft the criteria 
for eligibility of the trade unions in the ESC. Until the criteria have been established and the 
labour law amended accordingly, it will not be possible to ensure a functional and representative social dialogue. The lack of cl arity is also undermining the bipartite social 
dialogue. Social partners are consulted on draf t legislation, but lack the capacity to make 
sufficient contributions to planning, implem enting and evaluating employment policies. 
Preparations in this area  are at an early stage. 
Some progress has been made in the area of employment policy . In order to implement the 
National Employment Strategy for 2010 and the National Action Plan for Employment, the 
government adopted an operationa l plan on active la bour market measures and allocated 
€6 million for this purpose. Labour market data have improved, but labour market 
participation and employment rates are still ve ry low and the unemployment rate very high 
compared with the EU averages ( see Economic criteria ). Estimates suggest that one third of 
all jobs remain in the informal economy. The recently adopted Law on adult education provides the institutional framew ork for education and training  for the long-term unemployed. 
However, a plan for vocational education and training that properly reflects labour market 
conditions is still missing. In Ju ly, a law on older "redundant" workers improved the financial 
security of people who are unemployed as a re sult of the privatisation of State-owned 
enterprises between 2000 and 2004. Although some progress has be en made on strengthening 
administrative capacity, the overall capacity re mains insufficient to match the ambitious 
employment strategies and plans. The work of the Employment Service Agency is still geared 
too closely to administering unemployment a nd the health insurance of the registered 
unemployed. The Agency requires a major upgrade of its hardware and software and further 
capacity-building to make a more decisive shift towards active measures eventually. 
Preparations in this area have started. 
Some progress has been made in the pr eparations for participation in the  European Social 
Fund . Measures have been taken to complete the setting up of administrative capacity in the 
Operating Structure, and training activities are ongoing. However, the capacity of the Ministry 
of Education is still weak. Prepara tions in this area are on track.  
Little progress has been made in the field of social inclusion
. Eight Roma centres were 
opened in 2007-2008. The government adopted  a 10-year national strategy for 
EN 52   EN deinstitutionalisation of social car e. Day-care centres for street children and drug addicts have 
been opened. However, no targeted steps have been taken to prevent social exclusion. Policy 
measures to improve access to the labour mark et for vulnerable groups , including people with 
disabilities, remain insufficien t. Statistical data  and analyses on pove rty are deficient. 
Vulnerable groups, such as Roma children, rural gi rls and children with disabilities, continue 
to show a high drop-out rate in  the early years of education. In general, administrative 
capacity in the field of social inclusion is insufficiently developed. Coordination between the 
institutions involved in implementing social in clusion policies remains inadequate, as does the 
evaluation of policies. The decen tralisation of social inclus ion policies is facing major 
problems. The municipalities which have entere d the second phase of decentralisation have 
insufficient capacity to take on the social policy responsibilities transferred to them. 
Participation by non-governmental players and people experiencing poverty in drafting and 
coordinating social inclusion policies is limited. Overall, the measures taken are insufficient to address the needs of the most disadvantag ed people, including the working poor, the rural 
poor, low-educated, jobless households, women fr om vulnerable groups liv ing in rural areas, 
the Roma, big families, people with disabili ties, children living in homes and others. 
Preparations in the area of social inclusion are at an early stage. 
Limited progress can be reported in the field of social protection . The three pillars of the 
pension system are now operational. Amendmen ts to the Law on pensions and disability 
clarified the definition of disabil ity and the related rights. Howeve r, administrative capacity is 
insufficient to develop a sustainable and equita ble social protection system. Preparations in 
this area are moderately advanced. 
Little progress has been  made in the area of anti-discrimination . As the draft framework law 
on anti-discrimination has not yet been enacted, the existing legislation is still not fully in line 
with the acquis . Moreover, the country has not signe d the UN Convention on the rights of 
people with disabilities. Admi nistrative capacity in this ar ea remains weak. Vulnerable 
groups, including some ethnic mi norities, are discriminated ag ainst in various spheres of 
economic and social life. The situation of pe ople with disabilities has not improved. The 
limited statistics available do not allow different types of discrimination to be monitored as 
required by the acquis . Preparations in this area have been launched. 
There has been some progress in the field of equal opportunities . The number of 
municipalities with equal opportunities committees increased from 30 in 2007 to 73 in 2008. The section for equal opportunitie s within the Ministry of La bour and Social Policy took on 
the role of coordinating gender equality issues at national and local levels. However, it lacks adequate capacity and a clearly defined mandate. Limited efforts have been made to promote 
women’s rights in rural areas and to increase female participation in the labour market. The 
administrative capacity in this area remains insufficient.  Notwithstanding some progress 
towards gender equality for women from ethni c minorities, discriminatory customs and 
traditions, along with stereotypes, remain very  present. Preparations in this area are 
moderately advanced (See also Political criteria  – Economic and social rights) .  
Conclusion  
Limited progress can be reported in social policy and employment . A moderate level of legal 
alignment has been reached. While administrati ve capacity is slowly being strengthened, it 
remains insufficient to implement properl y the legislation an d policies adopted. 
EN 53   EN 4.20. Chapter 20: Enterprise and industrial policy 
In the area of enterprise and industrial policy principles, the country has made good 
progress. By September 2008, 39 of the 64 primary laws, and 382 of the 481 pieces of implementing legislation identified in the first phase of the regulatory guillotine process had been abolished as unnecessa ry and business-unfriendly le gislation. The rulebook on 
government procedures was amended to introdu ce a systematic assessment of the impact of 
new regulations from 2009 on. The process of  starting up a company has been further 
simplified, shortened and made cheaper. The numb er of staff in the SME department of the 
Ministry of Economy was increased from seve n to nine. Implementation of the European 
Charter for Small Enterprises is proceeding at a moderate pace. The SME Agency still lacks sufficient human and financial resources to impl ement all the measures in the SME strategy 
and action plan and in the European Charter.  Preparations in this area are moderately 
advanced. 
Some progress has been made in the area of enterprise and industrial policy instruments . 
The country has joined the 'Entrepreneurship and Innovation' pillar of the Competitiveness 
and Innovation Programme and the first project s have been approved. The investment 
promotion programme has been strengthened  with additional funding and more intense 
promotional activities. The Law on technologi cal-industrial development zones was amended, 
removing the discrimination favouring companie s listed in the Fortune Global 500 and the 
Business Week Global 1200. Only one zone is operational, although decisions have been 
made to set up a total of four. Three new busin ess incubators have been established, making a 
total of ten. Only two of the ten regional business support centres  planned have been 
established. The single SME information portal and the on-line applications for SMEs have 
not yet been developed. The new legislation on pr ofit tax for SMEs simplifies tax procedures, 
but may result in some micro-enterprises incu rring higher tax liabilities, contrary to the 
intended effect. The access of SMEs to financial services is inadequate and is still hampered 
by the high interest rates and rigid lending criteria of the commercial banks. The credit 
guarantee scheme is still unused and the government is slow to address the design flaws of the 
scheme. Business education has been introdu ced in the secondary school curriculum. The 
acquis on combating late payments has still not been  transposed. Preparations in this area are 
moderately advanced. 
There has been good progress with sector policies . A total of ten cluste rs are functioning. The 
funding provided by the State for co-financing  cluster development is modest. The SME 
forum set up for consultation with the private se ctor works satisfactoril y. Policy design on key 
sectors of the economy is slowly improving, partic ularly in the steel and textile industries. 
The European Commission approved the revi sed restructuring programme for the steel 
industry. A new tourism development strategy was adopted. Preparations in this area are 
advancing well. 
Conclusion 
Good progress has been made in the field of en terprise and industrial policy, in particular 
regarding the regulatory framework and the sect or policies. Implementation of the European 
Charter for Small Enterprises is proceeding at a moderate pace. Alignment with the acquis  in 
this chapter is moderately advanced.  
EN 54   EN 4.21. Chapter 21: Trans-European networks 
In the area of transport networks, the country has made good progress . It continued to 
participate actively in implementation of the Memorandum of Understanding, signed in 2004, 
for development of the Core Regional Transp ort Network and in the South-East Europe 
Transport Observatory (SEETO) by starting to implement the multi-annual plan for 2008-
2012. The annual revision of the national transpor t strategy was completed. There were no 
developments on coordination of investment. Progress was made towards implementing the 
priority projects along Pan-European Corridor s VIII and X. A 12km-long section of the 
Skopje bypass was completed. National co-financi ng was made available for these projects. 
Progress is hampered by the substantial fi nancial resources needed to upgrade the 
infrastructure. In this area, preparations are advanced. 
In relation to energy networks, progress was made with implementation of the Energy 
Community Treaty. A technical st udy for a 400 kV connection with  Serbia has been prepared 
and a Memorandum of Understanding was sign ed between the two transmission operators. 
The 400kV connection with Bulgar ia was commissioned in mid-2008 . The government 
adopted a decision to upgrade the existing tr ansmission line to Kosovo from 220 kV to 400 
kV. There were no new developments in the en ergy connections with Greece and Albania. In 
this area, preparations are moderately advanced. 
No progress can be reported in the area of telecommunication networks. In this area, the 
country is not prepared. 
Conclusion 
Progress has been made in the area of trans- European networks. The country continues to 
participate actively in the Sout h-East Europe Transport Observ atory. The sizeable financial 
resources needed to upgrade th e infrastructure remain a major impediment. Preparations in 
this area are advanced. 
4.22. Chapter 22: Regional policy and coor dination of structural instruments 
Some progress has been made in the legislative framework . The Law on regional 
development entered into force. Amendments to the budget law further improved the legislative framework for financial management and control. Alignment of legislation in the 
areas of public procurement and competition wa s completed, while legislation on State aid 
and the environment is still not fully aligned. 
Statistical regions that are fully compliant w ith the NUTS Regulation have been agreed with 
Eurostat. They will serve as the basis for collecting, processing and publishing the regional and local statistics which will be used in drawing up regional policy in the country. For statistical regions equivalent to NUTS 3 level, two municipa lities from the Eastern region 
were shifted to the Vardar region. The Vard ar region now has more than 150,000 inhabitants 
and thus complies with Eurostat's criterion for th e number of inhabitants in a region. In this 
area, preparations are further advancing. 
There has been progress in the institutional framework . In accordance with the Law on 
regional development, a start was made on establis hing specific administ rative structures for 
implementation of the Regional Developmen t Law, with a clear distribution of 
responsibilities. Regional development counc ils were set up for all eight regions and 
chairpersons were elected from among the mayors. The National Regional Development 
EN 55   EN Council was established, along with one regional  centre. The other se ven regional centres 
have yet to be established. The regional centr es will provide administrative support for the 
regional development councils. The capacity for coordination between th e various bodies has 
been strengthened. Preparations for implemen tation of the Regional Development component 
(III) and Human Resources Development componen t (IV) of the Instrument for Pre-accession 
(IPA), as pre-cursors to the Structural and Cohesion Funds, have been slowly advancing. 
Implementation of IPA components III and IV is  not likely to be possible until mid-2009. 
Preparations for establ ishing implementation systems for the future Structural and Cohesion 
Funds have not been initiated yet. Prepara tions in this area are at an early stage. 
There has been progress in the area of administrative capacity . The administrative capacity 
of the line ministries has been strengthened with  the establishment of IPA units and units for 
monitoring and evaluation, but is still inadequate. The capacity at  regional and local levels has 
still to be developed. The administrative capacity  at all levels in terms of necessary staff, 
training and equipment remains weak. Preparatio ns in this area are at an early stage. 
In the area of programming , some progress has been made . The operational programmes on 
transport and the environment and on huma n resources under IPA were adopted by the 
Commission. The National Regional Developmen t Strategy has not been finalised yet. 
Preparations in this ar ea are slowly advancing. 
There has been some pr ogress in the area of monitoring and evaluation . Operating structures 
have set up sectoral monitoring committees  (SMC) to monitor implementation of the 
operational programmes. Three meetings for co mponents III and IV were held in December 
2007 and in February and June 2008. The membersh ip and rules of procedure of the SMC for 
the regional development programme have  been agreed with the Commission.  Systems and 
mechanisms for monitoring and evaluating the quality and impact of regional development 
programmes have been developed in the line mi nistries within the units for monitoring and 
evaluation. The administrative capac ity in terms of necessary staff and training remains weak. 
Preparations in this ar ea are slowly advancing. 
Some progress can be re ported in the area of financial management and control (see also 
Chapter 32 – Financial control ), with the establishment of relevant systems and procedures 
under IPA components III and IV.  Preparations for establishmen t of financial management 
and control systems for the future Structural  and Cohesion Funds have not started yet. 
Preparations in this ar ea are slowly advancing. 
Conclusion 
Some progress can be reported in  the area of regional policy and coordination of structural  
instruments with structures set up as a result of th e Regional Development Law and as part of 
the preparations for implementation of IPA.  Substantial work still lies ahead for 
implementation of the components of IPA serving as pre-cursors to the Structural Funds. The 
administrative capacity at regional and local le vels and in the line ministries is still poor. 
Overall, alignment with the acquis  in this chapter is  not very advanced. 
4.23. Chapter 23: Judiciary and fundamental rights 
There has been some prog ress in the area of the judiciary . 
The independence of the judiciary was strengthened as , after a serious delay, the Judicial 
Council reached its full strength of 15 memb ers in December 2007 and has become more 
EN 56   EN effective. Also, the Council of Public Pr osecutors became functional in August 2008 after 
parliament made the last three appointments. 
The law on the public prosecutor's office, a dopted after some delay in December 2007, 
determines the competence, organization, and es tablishment of the public prosecutor's office. 
The number of basic public prosecutors’ offices  remains at 22. The new specialized unit for 
combating organized crime and corruption shall have competence over the entire country. The 
public prosecutors now have increased compet ences in leading and coordinating the pre-
investigative procedure: they can request staff to be assigned from other law enforcement 
agencies, and can act on behalf of the Ministry  of Interior, Financial Police and the Customs 
Administration if these bodies fail to act  on matters within their competence.  
The law on the council of public prosecutors, al so adopted after some delay in December 
2007, is closely interlinked with the law on the public prosecutor' s office. It introduces new 
procedures for the appointment of the Stat e Public Prosecutor and selection of public 
prosecutors. The new procedures seem transpar ent, fair and objective  and in line with 
international standards. The legislative pro cess included a wide process of consultation. 
The State Public Prosecutor (6-year term re newable once) is appointed by the Parliament 
upon a proposal of the Government. The Council of  Public Prosecutors is consulted by the 
government on the candidates for the position of State Public Prosecutor before they are 
submitted to the parliament. The Council may, in certain circumstances, block the 
nominations, thus helping to avoi d politicisation of the post. Th e State Public Prosecutor may 
be dismissed by the parliament upon the proposal of the government and with an opinion of 
the Council of Public Prosecuto rs if certain criter ia set in the law are met, for example 
unlawful and untimely performance of the function. 
The public prosecutors, whose mandate is inde finite, are selected and appointed by the 
Council of Public Prosecutors, on the basis of the results obtained during the training in the 
Judicial Academy. The candidates make their c hoice between being judges or prosecutors at 
the end of the process. Public Prosecutors ma y be dismissed by the Council of Prosecutors if 
certain criteria set in the law are met, for ex ample unprofessional perf ormance. A commission 
of five members will be estab lished to deal with such cases. 
The new Council of Public Prosecutors will have 11 members selected for four years 
(renewable once) who elect a president for two y ears (not renewable). Th e Minister of Justice 
and the Public Prosecutor are ex officio memb ers with a right to vote. One member comes 
from the Public Prosecutor's Office, one from  each area of competence under the four higher 
prosecutor's offices, one from the ethnic commun ities, and three are elected by the Parliament. 
Its decisions require a majority of all of its members. 
The Judicial Council continued effort s to combat corruption and ensure impartiality . It 
dismissed seven judges and initiated procedures  against twelve others; five disciplinary 
procedures are ongoing. The State Public Pros ecutor demoted two experienced prosecutors 
from the specialised unit for the fight agains t organised crime and corruption. This decision 
was taken before the Council of Public Prosecu tors became operational and the criteria and 
the proportionality of the deci sion remain to be clarified. 
As regards professionalism and competence , the academy of judges and prosecutors has 
carried out continuous and star ted initial training. The first 27 students for initial training 
completed the theoretical traini ng, and started the practical tr aining. However, 63% of the 
EN 57   EN academy's budget is funded by international donor s. A more balanced and sustainable 
financial framework needs to be established. 
Efforts to improve the efficiency of the judiciary continued. Adoption of amendments related 
to the law on misdemeanours has been comple ted as approximately 200 laws have been 
harmonised. Out of 38 administrative bodies, only 12 have established, between them, 43 
misdemeanour commissions. To date, these comm issions have received over 27,000 cases of 
which over 8,000 have been resolved. 
The implementation of the 2006 law on mediati on proceeded slowly. Only 30 cases have 
started and 20 have been completed. 
The Judicial Council assumed full responsibility for recruiting judges and presidents of the 
courts. 115 judges were recruited, of whom 12 as presidents of courts, as  well as the President 
of the Supreme Court. Most vacancies have now been filled. 
A total of 37 new posts were created for the Ad ministrative Court and th e Court of Appeal in 
Gostivar but some of these posts are still vacant, which hinders the efficiency of these courts. The former issued approximately 1700 decisi ons and the latter issued approximately 1400 
decisions by mid June. 
The budget for the Public Prosecutor's Offi ce was increased slightly, to €4 million. 
However, a significant number of vacancies re main open in the public prosecution service, 
and the Higher Prosecutor's Office in Gostivar ha s yet to be set up. Fu rthermore, prosecutors 
are not using their competences to the full, in  particular as regards the coordination of 
investigations in the pre-trial phase. 
The new system of enforcement has had a mi xed record. At the e nd of 2007, only 27% of 
court decisions transferred to bailiffs had been  implemented, compared with 45% at the end of 
2006. The ratio increased to 45% again in the course of 2008. The deadline for transferring 
the enforcement cases to bailiffs was extended from end-2007 to end-2008, which delayed proper and full execution of a la rge number of court rulings. 
Of the 27 basic courts, 22 managed to reduce the very big backlog of cases, which again 
mainly comprised enforcement and misdemeanour cases as well as administrative cases dealt 
with by the new Administrative Cour t. The courts of first instance  and courts of appeal dealt 
with almost 2 million cases during 2007. Th e Public Prosecutor's Office received 
35,671 cases in 2007, i.e. 11.8% more than in 2006. 
Judicial reform continues to be hampered by a shortage of human resources. Whilst the 
number of judges and prosecutors has increas ed (632 and 187, compared to 597 and 186 in 
2007) the number of employees in the judicial  administration has dropp ed by 6%. Some basic 
courts still lack basic IT equipment, as do most of the public prosecutor's offices. 
The budget of the courts was too low to cove r their running costs th eir debts to utility 
companies. This recurrent weakness was remedied again by providing a supplementary budget in the course of the year but nonetheless it conti nues to jeopardize the efficiency of the 
judicial system. Computerisation of the cour ts continued to be funded mostly by foreign 
donors. The centre designed to connect the IT sy stems of all judicial institutions became 
operational with all 12 employees, but is not fully utilised as the IT offices in the courts are 
not staffed. 
EN 58   EN Progress continued in implementing the strategy on judicial reform . The judicial council is 
complete and the two remaining laws needed to  complete the legislative framework for the 
judiciary – the laws on the public prosecutor's office and on the council of public prosecutors – were enacted. The new Administrative Court an d the new Court of Appeal in Gostivar were 
set up. However further strengthening of the j udiciary is required as regards its budgetary 
framework, human resources and efficiency. A track record of implementation of the new 
legislative framework and of the functioning of the new institutions need s to be established. 
There has been some progress in the area of anti-corruption policy  and measures. The legal 
and institutional framework has continued to be strengthened. Co-operation and coordination 
among the relevant bodies has increased. 
Further progress was made in implementing the second set of recommendations of the 
Council of Europe Group of States Against Corruption (GRECO): two thirds have been 
implemented, and those outstanding are in  the process of being implemented. 
The law on criminal procedure was amended to permit the use of special investigation 
measures for corruption cases. This represents a significant strengthening of the tools available to the law enforcement agencies. 
The law on prevention of corruption was am ended to allow the State Anti-Corruption 
Commission (SACC) to publish the asset declarations of all appoi nted and electe d officials, 
directors of public enterprises, public instituti ons or other legal enti ties with state-owned 
capital, without a letter signed by the person c oncerned authorising the SACC to do so. Other 
amendments further enhanced the competence of the Public Revenue Office (PRO) to 
examine property, obliging all t hose under investigation to subm it evidence of the sources of 
the funds with which property had been acquired.  All public bodies were  obliged to submit all 
data requested by the PRO within a fixed perio d. Failure to do so is punishable by a prison 
sentence. 
A new law on public procurement and related imple menting legislation entered into force. It 
provided for a new remedies system and prov isions to make publication and awarding of 
contracts more transparent. A new law on the Public Prosecutor's Office extended the 
jurisdiction of its orga nised crime unit to corruption-related offences. 
The SACC continued to monitor the implementa tion of the state programme for prevention 
and suppression of corruption. Some of th e foreseen activities were undertaken. A 
performance monitoring system was put in pl ace. A new state programme on conflict of 
interest and a related action plan  were adopted. Forty-seven cases of conflict of interest were 
initiated, of which 38 were completed. In eleven  cases a conflict of interest was determined.  
The SACC has continued to monito r the asset declarations of el ected and appointed officials. 
More than half of the misdemeanour procedures  brought against official s who failed to meet 
their obligations with regard to asset declar ations following the 2006  elections have been 
completed. The SACC benefited from additional human and financial resources as well as from new premises.  
A government council to coordinate, monitor and ensure the implem entation of the anti-
corruption measures and activities contained in the government’s anti-corruption plan was 
established and began to hold regular meetings . The supplementary budget made a specific 
allocation for the implementation of the plan. 
EN 59   EN The capacity of and cooperation between law enforcement agencies and watchdog bodies has 
continued to strengthen. Increase d coordination in investigations  has led to some high-profile 
cases being pursued. Progress was made towards adopting a unified methodology and system 
for collecting and sharing intelligence, in particular  in the Ministry of Interior. There has been 
some evolution in the perception of corruption . 
Training was given to custom s officers and police officers  within the framework of anti-
corruption programmes . A steady number of customs officers, police, tax officials, judges and 
prosecutors have faced disciplinary measures for bribery and abuse of office. Some resulted in 
dismissals and prison sentences . Continuous training for entit ies applying the new public 
procurement law was undertaken. 
The 2008 supplementary budget introduced specific  budget lines for anti-c orruption activities 
in line with the anti-corruption Acti on Plan, for a total of € 1.5 million. 
However, the legal framework still needs to be completed and rationalised. Deficiencies in the 
legal provisions on the financing of political parties and electoral cam paigns were addressed 
after the elections and a track record of impl ementation needs to be established. The conflict 
of interest law contains loophol es, in particular it does not apply to civil servants. The 
GRECO recommendation to introdu ce guidelines for MPs when they are deciding on requests 
to lift immunity has not been implemented. The OECD Convention on combating bribery of 
foreign public officials has not yet been signed. 
More effective implementation of the preven tive measures provided by the anti-corruption 
legal framework, including the law on general administrative pr ocedures and the law on free 
access to information, would narrow the opportuniti es for corruption. Too little attention is 
given to monitoring legislation to ensure that it is consistent. 
The approach to tackling corruption is still not  comprehensive. The SACC is not sufficiently 
fulfilling its leadership role and should be more  active in particular in awareness-raising and 
engagement with the public. It needs to catch  up with its backlog of work, cooperate more 
with other bodies and ensure it is seen to be impartial and independe nt in the way it acts. 
State Audit Office reports and recommendations made by th e SACC are not consistently 
followed up. The judiciary remains weak, and deliv ery and enforcement of court decisions are 
deficient. Efforts to pursue a zero tolerance po licy are still not comprehensive and consistent. 
Decisions made in the public ad ministration are not sufficiently transparent. There is a need 
for general training on the freezing and confisca tion of proceeds from criminal activity. The 
public procurement remedy system is not yet in  place, and reforms in the health care sector 
have not achieved the expected results in fighting corruption. 
Also, mutual access to databases relating to the fight against corruption and organised crime is 
still limited. A scoping exercise to identify the nature and extent of corruption in the public 
sector is missing. 
Further progress has been made in strengthening the legal and institutional framework for 
fighting corruption and some further results ha ve been achieved in implementation. However, 
corruption remains a serious cause for concern and key weaknesses remai n, notably as regards 
financing of political parties and election campaigns. 
Some progress has been made in the area of fundamental rights . (See also under political 
criteria and Chapter 19: Socia l policy and employment.)  
EN 60   EN In 2007, the Ombudsman's office  received 3029 complaints, a number slightly lower than in 
2006 (3076). The largest number of complaints r eceived in 2007 related to the judiciary for 
delayed procedures 27.2%; followed by labour  relations, 12.1%; police procedures, 11.4%; 
property rights, 10.4%; and urban planning and construction, 6.7%. 
About a quarter of the complaints reviewed in 2007 were found by the Ombudsman to involve 
justified complaints. Of these,  cases involving police actions accounted about half, although 
the absolute number decreased in comparison to 2006. The responsiveness of the state bodies 
in implementing the instructions of the Om budsman has increased: they implemented the 
recommendations in 88% of cases. The Ministry of  Interior complied with the instructions of 
the Ombudsman in 97% of cases. 
As regards the prohibition of torture and inhuman or degrading treatment or punishment , 
there has been some further trai ning on the code of police ethics . However, further significant 
efforts are needed to investigate and prosecute allegations of ill-treat ment, in line with the 
decisions of the European Court of Human Rights. The Committee for the Prevention of 
Torture has expressed deep conc ern about conditions in prisons which in some cases, such as 
at Idrizovo prison, are inhuman and degrading. 
With regard to respect for private and family life , in particular the right to the protection of 
personal data, the law on data  protection was amended a nd is being implemented. 
Amendments have been adopted  that are intended to furt her align the law with the acquis . The 
Directorate for Personal Data pr otection organised press confer ences, interviews and reports, 
as well as a number of workshops and roundtable s, with the aim of in forming the public about 
the right to personal data protection and privacy . However, the Directorate for Personal data 
Protection remains understaffed. Th e additional protocol to the Council of Europe convention 
for the Protection of Individuals with regard  to Automatic Processing of Personal Data 
regarding supervisory authori ties and trans-border data flow  was ratified in September. 
Good progress can be reported in the field of freedom of thought, conscience and religion. 
The law on the legal status of churches, religi ous communities and religious groups came into 
force in May 2008. The law is in tended to remove all impedime nts to the free practice of 
religious belief. However, it ha s yet to be fully implemented. 
With regard to freedom of expression including fr eedom and pluralism of the media , the legal 
framework continues to meet most international standards.  However, poor implementation 
leads to weaknesses in practice. The economic and financial autonomy of the public service 
broadcaster and the regulatory body has still not been ensured. Most of the broadcast media 
are related to political or business interests, which affect their content. Ownership of the 
leading print media remains highly concentrat ed. The media continue to be subject to 
significant political interference. 
In the area of freedom of assembly and association, in cluding the right to form political 
parties and the right to establish trade unions , as of May 2008, 43 trade unions and 5 
associations of employers were regist ered in accordance with the labour law. 
No progress can be reported in the field of treatment of socially vulnerable and disabled 
people and the principle of non-discrimination. The framework law on non-discrimination has 
yet to be adopted. 
With respect to the right to education , compulsory education was extended by law from eight 
to nine years, between the ages of six and 15 as of September 2008. However, there is 
EN 61   EN insufficient capacity to deal with the expansion of the sc hool population and the allocated 
budget is insufficient. 
The right to property is protected, but the process of restitution of property confiscated during 
the Yugoslav regime is still not  complete. Final decisions have been taken on approximately 
24.000 of the 30.744 applications filed between  2000 and 2007. No progress has been made 
on the issue of returning prope rties of the Orthodox Church and the Muslim community. The 
authorities should take practical  measures to improve the admi nistration of the restitution 
process in line with the Ombudsman recommenda tions, paying particular attention to possible 
allegations of corruption. 
Limited progress can be re ported in the field of gender equality and women’s rights. Equal 
opportunity committees have been established in  73 municipalities. The Ministry of Labour 
and Social Policy has drafted the national strate gy on protection from domestic violence. The 
draft strategy covers all as pects of the issue, includi ng prevention (through education), 
awareness-raising, legal prot ection, and assistance to both victims and perpetrators. The 
definition of rape in the criminal law was am ended and is now wider, thus making successful 
prosecutions more likely. However, discrimi natory practices against women continue, 
including violence within the family. 
Concerning children's rights , compulsory education is being widened. The Criminal Code has 
been strengthened to protect children from crimes such as child pornography and sexual 
abuse. However, significant efforts are needed to  improve the situation in  practice, especially 
for children from deprived backgrounds as re gards access to education, health care and 
juvenile justice. 
As regards liberty and security as well as the right to a fair trial , the legal framework for 
witness protection is not adequate. No state funds  are available for lega l aid in civil cases. 
There was some progress in the field of minority rights and cultural rights but further 
significant efforts are required . A law on languages was adopt ed which establishes a 
comprehensive legal framework for the use of minority languages in public institutions: de 
facto it applies to the Albanian language b ecause of a 20% population threshold. Agreement 
was achieved on the scope of application of th e double majority system  for laws affecting 
minorities. There has been progress in achi eving equitable representation in public 
administration for the Albanian community. Ho wever the integration of ethnic communities 
remains limited and the ethnic fragmentation of primary and secondary education is a 
concern. The smaller communities have not been  sufficiently supported as regards education 
and public employment. A broad political consen sus remains to be found on the law on use of 
flags of the communities. Little progress was ac hieved regarding the Roma as the action plans 
are being implemented slowly. There are seve ral cases pending at th e European Court of 
Human Rights concerning police abuse of Roma. 
There were no developments in relation to EU citizens’ rights .  
Conclusion 
Some progress has been made in the area of judiciary and fundamental rights. As regards 
judicial reform, the judicial c ouncil is functioning, the Council of Public Prosecu tors has been 
established and the law on the public prosecutor' s office has been adopted. However, a track 
record of the functioning of these new institutions needs to  be established. Further 
strengthening of the judiciary is  required as regards its inde pendence, budgetary framework, 
EN 62   EN human resources and efficiency. The law on criminal procedure was amended to allow the use 
of special investigative measures in corrup tion cases. The anti-corruption Action Plan was 
allocated a specific budget. Further efforts ar e necessary, notably as regards implementing 
provisions on financing of po litical parties and el ection campaigns. Concerning fundamental 
rights, a law on languages was adopted which ex tends the use of the Albanian language in 
public life. However, little progress can be re ported regarding the other minorities, including 
the Roma. Overall, the country is m oderately advanced in this area. 
4.24. Chapter 24: Justice, freedom and security 
Good progress can be repor ted in the field of migration. Implementing legislation to the Law 
on employment of foreigners  was adopted. The Law on al iens and the associated 
implementing legislation entered into force. The readmission agreement with the European 
Community entered into force. As the number of returned people rose compared with the 
previous year, efforts should be put into integration of readmitted persons. Secondary 
legislation on migration policy and an integrat ion policy plan are still lacking. A readmission 
agreement was signed with Bosnia and Herz egovina, bringing the nu mber of readmission 
agreements with non-EU Member States to five. Readmission agreements were concluded 
with Moldova and Ukraine and are being nego tiated with Serbia and Montenegro. In the 
course of 2007 the border pol ice detected 1,085 illegal cro ssings (compared with 3,302 over 
the previous reporting period) and prevented 1,919  illegal attempts to cross the green border. 
The Law on employment of foreigners and the Law on aliens are not yet being fully 
implemented. Administrative capacity improved, but  remains unsatisfactory. Staffing levels at 
the Ministry of Labour and Soci al Policy are still insufficient.  In this area the country is 
advanced.  
There has been further progress in the area of asylum . The new reception centre is 
operational. The first steps have  been taken to develop the central database for aliens, 
covering asylum, migration and vi sas. However, asylum procedures are not yet fully in line 
with European standards. The identity documents  stipulated in the implementing legislation 
were still not being issued to people covered by the law. The decision-making procedures and 
appeals system require further improvement. Amendments to the Law on asylum  and 
temporary protection, notably in the area of subsidiary protecti on, have yet to be enacted. The 
authorities have still not fully  taken over from the international community responsibility for 
providing financial and material assistance for asylum-seekers. Th ere is still a l ack of properly 
trained staff, proper equipment and adequate budgetary support. In this area, legislative 
alignment is advanced and development of the administrative capacity is well on track. 
Further progress has been made in the area of visa policy . The Law on aliens and the 
implementing legislation regulating issuance and pr ocessing of visas entered into force. Visas 
are no longer issued at the borders, save in exceptional cases. An ag reement on a visa-free 
regime with Albania was ratified  by parliament. Visas for citizens of Albania will be issued at 
the borders until the agreement enters into force. A visa  facilitation agreement with the EC 
entered into force, and a visa liberalisation dial ogue with the EU was launched. Bilateral visa 
facilitation agreements were signed with Norw ay and Russia. New biometric passports and 
temporary and permanent residence permits are being issued in lin e with international security 
standards. High-quality travel and identity docum ents have begun to be delivered. A new visa 
sticker has been developed, based on the Sc hengen visa model. A national IT visa 
management system and a visa centre are in operation. The relevant staff are undergoing the 
necessary training. However, the administrativ e capacity of the Department for consular 
affairs needs to be strengthened, especially  its human and budgetary resources. Visa 
EN 63   EN provisions are still not fully aligned with the EU  negative list. Preparations in this area are 
well advanced. 
There has been progress in the area of external borders and Schengen. The integrated 
border management strategy and action plan were almost fully implemented. The Law on 
State border surveillance and th e related implementing legisla tion are being implemented. The 
process of border demarcation with Kosovo is almost complete. International cooperation is 
established at all levels and contacts have b een established with FRONTEX with a view to 
concluding a working arrangement. 
The national border management coordination cen tre assumed its functions and is partially 
operational. Improvements have been made to the planning and cond ucting of training for 
border police, but there is still too much variation in the level and sorts of training that the 
different border officers receive. An overall strategy on human resource management for the 
border police has not yet been adopted and an in  depth analysis of the staffing situation is 
lacking. The data communication network for th e border crossing points (BCPs) is still only 
partially operational. The main database and so ftware to connect the BCPs to this database, 
which would permit effective borde r control in line with Schengen criteria, are still lacking. 
The first steps have been taken to develop the database. Some of the premises and offices, 
especially of the small BCPs and border police stations, remain in d ilapidated condition and 
are not adequately equipped. Although BCPs generally seem to have enough equipment for 
checking documents, added value will be derived only if proper use is made of the equipment in combination with profiling. More attention should be paid to profiling by the border police at the road border crossing point s and to providing them with risk information to combat 
illegal migration effectively. Th e budgetary support is unsatisfact ory. In this area the country 
is advanced. 
Little progress can be reported in the area of judicial cooperation in civil and criminal 
matters . The country has neither ratified the Convention of 19 October 1996 for the 
protection of children nor signed or ratified an y of the other conventio ns mentioned in this 
section in last year's report. Also the Second Additional Protocol to the European Convention 
on mutual assistance in criminal matters remains to be ratified. In this area , the country is not 
prepared. 
Progress has been significant in the area of police cooperation . The decentralisation element 
of the police reform strategy has been implemen ted. All the implementing legislation has been 
adopted, and the necessary orga nisational arrangements were ma de by the Ministry of the 
Interior to prepare for effective implementatio n of the Police Law, a key priority of the 
Accession Partnership. The stra tegic agreement with EUROPOL entered into force in March 
2008. Work on conclusion of an operational agr eement, which would allow exchanges of 
personal data, is ongoing. All 38 commanders of the main police stations have been 
appointed, in consultation with the munici pal councils, albeit with some delay. A 
comprehensive annual training programme fo r 2008 was adopted. Majo r investments in 
equipment, including replacement of the vehicle fleet, were decided.  
The human resources department of the Ministry of the Interi or was reorganised. A general 
human resources strategy has been designed and its  implementation is at an early stage. Merit-
based career development and appr aisal are not yet ensured and pol iticisation, in particular of 
senior police officers, is a problem. The po lice academy has trained a new generation of 
police cadets using up-to-date methodology, but overall the focus was too much on academic 
training and its potential has no t fully been used. In early  July, parliament enacted 
EN 64   EN amendments to the Law on internal affairs re lating to the police academy. The amendments 
created a Training Centre as a new organisational unit within the Bureau for Public Security 
(Ministry of the Interior) w ith the tasks of carrying out basic and continuous training. 
Although some progress has been made as regards the institutional response to small arms and 
light weapons, the issue poses a considerable challenge. Regulations on private possession of 
arms are still insufficiently enforced, and the level of illicit arms possession is alarmingly high, with an impact on crime and private violence. 
Some progress has been ma de in the fight against trafficking of human beings . In January 
2008 the criminal code was cha nged to introduce harsher penalt ies for traffickers and those 
using services of trafficking victims. New standard operating pr ocedures on victim 
identification were adopted and resulted in an  increase in the number of victims identified. 
There were also improvements in cooperation be tween the police, the public prosecutors and 
the courts. Progress has been made in profili ng organised crime groups and identifying their 
modus operandi. In 2007, the government prosecu ted 55 cases related to trafficking and 
convicted 70 traffickers involve d in 30 cases, compared with 54 convictions in 18 cases in 
2006. The Council of Europe Convention on Action against Trafficking in  Human Beings has 
not yet been ratified. Shortcomings in the logi stics and funding of the department for witness 
protection have not been fully addressed. 
Progress has been made in the fight against organised crime . The legislative activity aimed 
at progressive implementation of the Action Plan for the fight against organized crime 
continued. Cooperation between law enforcem ent agencies and the judiciary remained 
satisfactory at central level, meeting interna tional best practice. Some improvements were 
made at field level. Cooperation between pub lic prosecutors and criminal police of the 
regional police headquarters has improved, but  not sufficiently. The sector for special 
investigative techniques in the Ministry of th e Interior remains understaffed and needs further 
equipment. In early July the code of crim inal procedure was amended. Use of special 
investigative measures is now allowed not onl y for crimes committed by organised groups but 
also for crimes either punishable by at least four years of imprisonment or specifically 
identified. This will close the gap in the law with regard to use of special investigative measures for corruption-related crimes, in cluding monitoring of communications. The new 
Law on interception of communications addresses the shortcomings of the previous law. It 
introduces, however, some new elements, such as th e role of the Minister of the Interior and 
the wide conditions for recourse to intercepti on, where proper implementation will be crucial 
to ensure the primacy of the judiciary and to avoid a too wide interpretation of the conditions 
for wiretapping. 
Serious deficiencies remain in the judicial a nd parliamentary oversight of the Administration 
for security and counter-intelligence. The sector for criminal intelligence analysis has become 
fully operational: it has been staffed, equipped and trained.
  
The capacity of the organised crime department  to gather, collate and analyse criminal 
intelligence data has been expanded to the eight regional headquarters. However, it is not yet 
acting as the national cooperation centre, because no common database has been established. 
An integrated intelligence system for inter-agency use in combating organised crime is not yet in place, but preparatory work is underw ay. The numerous memoranda of understanding in 
place help to address the need for more effec tive cooperation at inter-agency level. Progress 
has been made with the handling of informants and with measures  against trafficking of stolen 
EN 65   EN vehicles. There has been little progress in fight against comput er crime, where shortcomings 
in staffing and in equipment remain. 
Preparations in the area of police cooperati on and the fight agains t organised crime are 
moderately advanced. 
Progress has been made in fight  against terrorism . The Law on prevention of money 
laundering and financing of terrorism came  into force; its alignment with the acquis  remains 
to be confirmed. Inter-agency cooperation has steadily improved, notably in connection with 
the financing of terrorism: the Office for pr evention of money launder ing now has access to 
the databases of the Public Revenue Office and of the Administration for Security and 
Counter-Intelligence of the Ministry  of the Interior and efficien tly supports the investigation 
and prosecution capacity of the law enforcem ent agencies. The number of reports of 
suspicious transactions sent to the Office ha s increased, but is still low. Gaps in the 
criminalisation of terrorism offences, especially in the field of financin g, were closed by the 
Law on financing of terrorism. The 2005 Counc il of Europe Convention on Prevention of 
Terrorism has been ratified. Pr eparations in the area of th e fight against terrorism are 
advanced. 
In the area of drugs  little progress can be reported. The country already largely fulfils the 
acquis  requirements, although the question of drugs re mains very serious as the country lies at 
the crossroads of many Balkan drug trafficking routes. The In terministerial Commission for 
Narcotic Drugs reported growing seizures of illicit substances. Relevant authorities sharpened 
their focus on a balanced approach to reduc ing both demand and supply. The national drug 
strategy, which is in line with the EU drug strategy for 2005-12, and the related action plans 
are gradually being implemented. The law on narcotic drugs has not been enacted yet. Preparations in this area  are moderately advanced. 
There has been progress in the area of customs cooperation.  Cooperation with the South-east 
European Cooperative Initiativ e (SECI) was enhanced, as the customs administration 
participated in international operations and exchange of information on seizures, as well as in 
exchange of intelligence information thr ough the SECI's Regional Centre for Combating 
Trans-border Crime. Efforts were stepped up to cooperate effectively with the Regional 
Intelligence Liaison Offices (RILO) within the World Customs Organization to which 28 
cases of seizure of foreign currency were  reported. The customs administration has 
established practices for exchanging informa tion with foreign customs administrations on 
international prosecutions and c ourt cases in criminal matters. 
There has been limited progress in the area of protection  against counterfeiting of the Euro . 
Cooperation between the National Bank and the Ministry of the Interior has improved. A 
satisfactory proportion of investig ations have led to perpetrato rs being prosecuted, but the 
number of investigations carried  out is still rather low. Preparations in this area are not 
advanced. 
Conclusion 
In the area of justice, freedom and security,  there has been some further progress. The 
operational capacity of the competent author ities has further improved. Progress can be 
reported in the areas of police cooperation and the fight agains t organised crime, migration, 
asylum, visa policy and border management. Ho wever, the politicisation of senior police 
officers has led to abuse. The legislation is la rgely in place and implementation is under way. 
EN 66   EN The visa facilitation and readmission agreements between the EC and the former Yugoslav 
Republic of Macedonia entered into force in January 2008. The visa liberalisation dialogue 
with the European Commission has been launch ed. There has been good progress in fulfilling 
the benchmarks of the roadmap for visa libera lisation, notably as rega rds the introduction of 
biometric passports. Progress has been made with profiling and breaking up criminal groups 
involved in human trafficking, but the countr y remains a country of origin, transit and 
destination for trafficking of hu man beings. Overall administrative capacity has to be further 
strengthened and organised crime remains a serious concern. Overal l, preparations in this area 
are moderately advanced. 
4.25. Chapter 25: Science and research 
Progress has been made in the area of research policy with the adoption of the  Law on 
scientific research activiti es and the Law on promotion a nd support of the technological 
development. Both laws aim at better structur ing the organisation and management of national 
research funding and better linking research to  social and economic development. However, 
budgetary constraints and weak institutiona l capacity remain major impediments to 
development of research.  
With respect to participation in framework programmes, the positive trend of increasing 
participation under the Seventh EC Resear ch Framework Programme (FP7) since its 
association is continuing. The Memorandu m of Understanding has been smoothly 
implemented. As regards integration into the European Research Area , the country is part of 
the Euraxess Jobs Portal (formerly known as Mobility Portal) and Euraxess Service Network 
(formerly known as the ERA-MORE network) and is in the process of setting up its national 
Euraxess Portal and Network. Further action is e xpected to stimulate in vestment in research. 
A national action to increase public  funding in research  and stimulate the private sector to 
contribute more to the EU objective of inves ting 3% of GDP in research by 2010 is still 
missing. The budgetary allocation for science in 2008 is still less than 1% of GDP. The level 
of private investment in scienc e and research remains symbolic. 
Conclusion 
Progress has been made on organisation of resear ch cooperation at national level, which now 
needs to be turned into more effective re search funding in support of socioeconomic 
development. Implementation capacity is still insufficient. The first year of participation in FP7 has produced good results. Substantial effo rts remain necessary to strengthen research 
capacity. Overall, the country is  on track in the area of scie nce and research, but further 
efforts are necessary, in particul ar as regards the integration into the European Research Area 
4.26. Chapter 26: Education and culture 
Progress can be reported in the field of education, training and youth . In August, a new Law 
on elementary education was enacted. It establ ishes the right to primary education of the 
children of permanently residing EU citizens on the same conditions as children who are 
citizens of the country. The Law on adult e ducation was enacted. It establishes the 
institutional framework for education for a dults and provides for a national advisory body 
which will coordinate adult education. It pr ovides for training for long-term unemployed 
adults in skills for which there is str ong demand. A new Law on higher education was 
enacted. It provides th e framework for implementing the Bologna reforms. A programme on 
compulsory vocational educati on was prepared by the Centre for vocational education and 
EN 67   EN training. The budget for education increased. Howeve r, it was not suffici ent to ensure proper 
implementation of the policy provisions, in cluding the national strategy for reform in 
education for 2006-15. Human resour ces are also inadequate. Progr ess has been made in the 
preparations for management of the Commun ity Lifelong Learning and Youth in Action 
Programmes. Work plans for preparatory measures  to be implemented in the second half of 
2008 and in 2009, including adequate training for the National Agency, have been submitted. The administrative framework remains to be completed, and the National Agency and the 
National Authorities should build  their capacity to implem ent their respective tasks. 
Preparations in this area are advanced. 
There has been good progress in the field of culture . The country has starte d to participate in 
the EU Culture Programme.  Preparations in this area are advanced. 
Conclusion  
Progress has been good in the area of education and culture. Capacity to implement the 
enacted legislation remains insufficient. The coun try should continue its efforts to prepare for 
management of the Lifelong Learning and Youth in Action programmes.  Preparations in this 
field are advanced.  
4.27. Chapter 27: Environment 
Some progress has been made in the area of horizontal legislation. The implementing 
legislation intended to transpose the acquis on strategic environmental assessment has been 
adopted, but is not yet fully aligned. The EIA requirements relating to informing and 
consulting the public are not ye t adequately applied. The  Law amending the Law on 
environment was enacted, and implementing legisl ation was adopted, so as to transpose the 
requirements for public access to environmental information. The implementing legislation relating to public participation is not yet fully aligned. Some activities ha ve started to prepare 
projects aiming at reduction of the greenhouse gas emissi ons, in line with the clean 
development mechanism (CDM) under the Kyoto Protocol. Steps were taken to strengthen the 
capacity of the Directorate for Protection and Rescue. The government recently applied to 
participate in the Community civil protectio n mechanism. Preparations in the area of 
horizontal legislation are advanced.  
Some progress has been made in the area of air quality . Implementing legislation on 
assessing ambient air quality was adopted, but is only partially aligned with the acquis . A 
recovery and recycling system for ozone-depleting substances has been established. Progress 
has been made towards proper f unctioning of the air quality mon itoring system. However, it is 
not yet fully operational and needs further im provement. A national system to support work 
on inventories is still not in place. Cooperation between the institutions involved is not sufficient to ensure proper collection of data. Inve stments in this field need to be substantially 
increased. Preparations in the area of air quality are moderately advanced. 
Some progress has been made on waste management . Implementing legisl ation was adopted 
relating to landfills, medical waste, hazardous wa ste and waste oils, which further transposes 
the acquis . The national strategy for waste manage ment was approved. The national waste 
management plan is not yet fi nalised. The process of  issuing waste permits has started. A 
coordination waste management committee was established with the aim to enhance the 
government's activities in this area. A system to deal with data co llection, registration and 
reporting is not yet in place. More finance ha s been provided, mainly for preparation of 
EN 68   EN technical documentation for small infrastructure  projects, sanitation a nd closure of municipal 
dumps. However, the substantial investme nt required to align standards with the acquis  has 
not yet been planned. Preparations in  this area are moderately advanced. 
Little progress has been made in the field of water quality . The new Law on water was 
enacted. The monitoring system has improved but  still lacks sufficient coverage and data 
collection. The first annual report on water quality and quantity was submitted to the 
European Environment Agency. The new Law on water has not yet been adopted by parliament. Some investments were made for pr oject preparation and im plementation of small 
infrastructure projects. The polluter-pays prin ciple is not applied, thus impairing the 
sustainability of investment in wastewater treatment. The substantial investments required for 
compliance with the acquis  have not yet been planned. Preparations in the area of water 
quality are moderately advanced. 
Little progress can be reported as concerns nature protection. Transposition of the acquis in 
this field has advanced slightly. The manageme nt plans for protected areas started to be 
implemented, and funding for th em has been increased. A  national strategy and action plan 
for nature protection have not yet been completed. 
Some progress has been made in the area of industrial pollution control and risk 
management. Implementing legislation  related to the Integrated Pollution Prevention and 
Control (IPPC) Directive and esta blishment of the eco -label scheme was adopted. The process 
of issuing IPPC permits continues, and the firs t major "A" installation permit has been issued 
for a ferro-nickel plant. Some training and in formation sessions have been provided for 
companies and municipal experts in this field. Fu rther efforts are still needed in this area. 
Little progress can be reported in the area of chemicals. The commission for chemicals was 
established, in charge of cla ssification and notification of chem icals and biocides, as well as 
issuing authorisations for placing them on the market. Extensive training and awareness-
raising of both the institutions and the companie s concerned are needed. Preparations in this 
area are at an early stage. 
Some progress can be re ported in the area of GMOs . The Law on GMOs was adopted. The 
units responsible for risk asse ssment of GMOs and for placi ng GMO products on the market 
have not been established nor th e necessary laboratories installed. Preparations are moderately 
advanced in this area. 
Little progress can be re ported in the area of noise. Transposition  has progressed well  but 
implementation remains at an early stage . 
Some progress can be re ported in the area of forestry  where a programme for expanded 
reproduction of forests was adopted. 
Administrative capacity in terms of human and financial resources is insufficient at both 
State and local levels and its strengthen ing remains a priority for improving the 
implementation and enforcement of the legislat ion. Little progress ha s been made towards 
improving coordination between administrative bodies in charge of environment-related 
issues . Further efforts are needed in this respect, in particular in the area of water quality and 
nature protection. Environmental protection requ irements are not yet well integrated into 
policy-making and implementation in other areas. 
EN 69   EN The Strategy for approximation to and implementation of the environmental acquis  was 
adopted. An environmental investment  strategy, based on estimates of the cost of alignment 
and of priority measures for investment, ha s not yet been completed. The annual programme 
for investment in the field of environment was adopted e nvisaging a significant budget 
increase for investments compared to the previous reporting period. The environment monitoring and information syst em is still not adequate. 
Conclusion 
Progress has been made in devel oping the legislative framework in the field of environment, 
in particular as concerns horizontal legislati on and the air and waste sectors. A substantial 
amount of implementing legislation has still to be prepared. Some sect ors, such as water 
quality or nature protection, are lagging behi nd. Administrative capacity  at both central and 
local levels requires substantial strengthening. Although significant effort s have been made to 
increase financial resources, investments in environmental infrastructure are still largely insufficient. Coordination between all institut ions involved in environmental protection needs 
to be improved. Overall, the country is not yet sufficientl y prepared in the field of 
environment. 
4.28. Chapter 28: Consumer and health protection 
Progress can be reported in the area of consumer protection . The administrative capacity of 
the Consumer Protection Counc il and the consumer protecti on NGO was further strengthened. 
The budgetary support for the consumer protection NGO was increased fivefold. The consumer protection NGO, which is now fully  funded by the State budget, conducted a broad 
campaign on consumers' rights. However, the administrative capacity  of the coordinating 
body for effective and transparent market surveillance has not been strengthened. 
As regards product-safety related issues , some pieces of implementing legislation to the law 
on product safety were issued. There is only one recorded case wher e a dangerous product 
that had already been placed on the market was recalled and any further distribution 
prohibited. The competences of the various insp ectorates have still not been clarified. 
As regards non-safety related issues , the remaining implementing legislation to the Consumer 
Credit Law was issued. Use of mediation increas ed slightly. However, proper implementation 
and enforcement are not yet ensured. No progre ss can be reported on a ligning the legislation 
with the acquis on distance marketing of consumer fina ncial services and injunctions. The 
implementing legislation to the law on consumer loans was adopted to regulate the supervision of the financial institutions extending consumer loans and the methodology for 
calculation of total costs related to consumer loans.  
Progress was made in the field of public health . Amendments to the law on patients' rights 
have been enacted. Substantial sums were al located for purchasing new medical equipment 
for clinics and restructuring public health in stitutions. Two new public health programmes 
were promoted. The funding for all 15 public he alth programmes is progressively increasing; 
yet resources allocated to the hospital sector are still higher than t hose allocated to public 
health and primary healthcare. Implementation of  public health programmes continues to be 
hampered by the lack of a proper operat ional structure and adequate finances. 
The Law on protection against smoking and the law on tobacco and tobacco products have 
been amended, aiming to align with the acquis . Preparations in this  field have started. 
EN 70   EN As regards communicable diseases,  two new vaccines against Human Papilloma Virus and 
Haemophilus Influenza Type B have been included in the compulsory immunisation 
programme. An early warning system has been introduced in five cities, but the IT system is not working properly, and there is no comprehensiv e healthcare database. Preparations in this 
area have started. 
In the area of human tissues and cells the Law on artificial fertilisation was enacted. 
Implementation of the blood safety and quality strategy was postponed owing to insufficient 
financial resources. Preparations  in this field have started. 
With regard to mental health,  the funding of community ment al health centres has been 
increased, but they still lack adequately quali fied and trained staff and sufficient financial 
resources.  
The public health programmes address the socio-economic determinants of health  and health 
inequalities  by providing funds for prevention of health problems caused by an unhealthy 
lifestyle and free treatment for uninsured patients. Institutional care for socially vulnerable and disabled people has not improved. To help lower the number of deaths from cancer , 
annual screening for breast and cervical cancer is pr ovided for all women above a certain age. 
There have been no developments regardin g prevention of excessive consumption of alcohol , 
nor in the area of health and environment . Preparations in these areas are being initiated. 
Conclusion 
Progress has been made in the area of consum er and health protection, in particular in 
building the institutio nal capacity for consumer protection and increasing funding for 
healthcare. However, an effective and transpar ent market surveillance system is not yet in 
place. Human and financial resources are not sufficient to allow full implementation of 
legislation, strategies and action pl ans in the area of public health. 
4.29. Chapter 29: Customs union 
Good progress has been made on customs legislation. Amendments to the Customs Code 
introduced risk criteria for the control of cust oms declarations and the status of authorised 
economic operator (AEO). The amended Law on ad ministrative fees abolished or reduced the 
level of customs-relate d fees, but some fees not in line with the acquis  still remain in force. 
Moreover, the customs authorities are no longe r responsible for checking the labelling and 
technical specifications of goods, thus reduci ng waiting times at border crossings. The 2008 
customs tariff was adopted, taking into account the obligations stemming from the SAA and 
the changes in the EU Combined Nomenclature . Tariff quotas are now allotted on a "first 
come, first served" principle, which is in line with the acquis . The legislation  in the area of 
transit has yet to be aligned. The Law on technol ogical-industrial  development zones has been 
amended with the aim of aligning it with the acquis . However, some of its provisions still 
need to be amended in order to achieve full alignment. In October 2007, the customs administration took over court powers for misd emeanour proceedings, in order to ensure 
faster, more efficient settlement. Prep arations in this area are advanced. 
Significant progress has been made in the area of administrative and operational capacity. 
By May 2008, the customs administration had r ecruited 140 new staff. As a result of the 
strategy for professional advancement, employees  benefited from a large number of training 
activities, including induction training for new employees. The four mobile scanners 
purchased in 2007 were put into  service. In preparation fo r setting up a "single-window" 
EN 71   EN system at border crossings, an IT system for issuing authorisations and transit records has 
been developed. However, a comprehensive IT strategy and a strategy for interconnectivity 
with the Community IT systems have yet to be developed. Adoption of the single administrative document has not been addressed.  
The customs administration continued implemen ting its strategy on in tegrity and combating 
corruption. The toll-free anti-co rruption hotline was very successful . A total of 77 disciplinary 
procedures against customs officers were comp leted (compared with 10 in 2006), of which 40 
resulted in dismissals, 14 in suspensions and 23  in fines. Significant results were achieved in 
combating cross-border crime and trade in  counterfeit goods. The country was granted 
observer status on the EFTA committees fo r the Convention on common transit and on 
simplification of formalities in trade in goods. Cooperation was enhanced with a number of 
State institutions and also with trading and freight forwarding companies, by signing 
memoranda of understanding on integrated borde r management. The revenue collected by the 
customs administration continue d to increase significantly. 
The customs administration started to pa rticipate in the Customs 2013 programme. 
Conclusion 
Substantial progress has been made  in this chapter, both as re gards legislative alignment and 
administrative capacity. Revenue collection has increased substantially and good results have 
been achieved in combating cross-border crim e, including infringements of intellectual 
property rights. The customs legisl ation is well aligned with the acquis , but still has to be 
further harmonised. Administrative and operati onal capacity has improved significantly and 
the fight against corruption has led to tangible results. 
4.30. Chapter 30: External relations 
Progress can be reported in the area of the common commercial policy . The country 
continued gradually to reduce customs duties, in line with its WTO  obligations and with the 
Stabilisation and Association Agreement with  the EU. For 2008, the average customs duty on 
industrial products is 7% and the duty on agri cultural and fisherie s products is 16.46%.  
The country is continuing to coordinate clos ely with the European Commission and to align 
with the policies and positions of the EU towa rds third countries and within international 
organisations. At the EUROMED Ministerial Conf erence on Trade, it was decided to include 
the countries of the Western Balkans in the Pa n-Euro-Mediterranean sy stem of cumulation of 
rules of origin. Preparations have started for negotiations with the participating countries. The 
country has been granted observer status in  the EC-EFTA Joint Co mmittee and the EC-EFTA 
Working Group.  
There were no particular devel opments to report as regards export credits.  
The system for control of dual-use goods  is being implemented. Tr aining was organised for 
the employees of the institutions that have access to the tracing system. Preparations in this area are on track. 
In the area of bilateral agreements with third countries , the country is ac tively participating 
in the work under an enlarged and modernised Central European Free Trade Agreement (CEFTA), which entered into force for all si gnatory parties in N ovember 2007. The number 
EN 72   EN of bilateral investment agreements ratified rose to 30, of which 27 are in force and 15 are 
agreements with EU Member States.  
There is no progress to report in the areas of development policy and humanitarian aid.  
Conclusion 
There has been some progress in the area of exte rnal relations, in particular as a result of 
implementation of the CEFTA. The institutional capacity is not yet sufficient, especially in 
the areas of development policy and humanitarian aid. 
4.31. Chapter 31: Foreign, security and defence policy 
The regular political dialogue between the EU and the country has continued to cover foreign 
policy issues. For neighbourly relations with other en largement countries and member states, 
see the section under Political criteria. 
As regards the common foreign and security policy (CFSP) , the country has continued to 
align itself with EU common positions and stat ements towards third countries and regions. 
With regard to the administra tive capacity, the unit for CFSP in the Ministry of Foreign 
Affairs, which is responsible for coordination,  was strengthened with the recruitment of 
additional staff. 
The implementation of the law on international restrictive measures  is ongoing and is 
reviewed regularly by the working group on C FSP issues led by the Ministry of Foreign 
Affairs. In particular, the country unila terally accepted the Council Common Position 
2008/104/CFSP on restrictive measures against ex tremists on its territory and introduced 
measures against those persons who are not citizens of the country. 
With regard to non-proliferation,  the country has ratified the Protocol against the Illicit 
Manufacturing of and Trafficking in Firearms , their Parts and Components and Ammunition 
supplementing the United Nations Convention ag ainst Trans-national Organised Crime; the 
Convention for the Suppression of  Unlawful Acts against the Sa fety of Maritime Navigation; 
the Protocol for the Suppression of Unlawful Ac ts against Safety of Fixed Platforms Located 
on the Continental Shelf. The unit for arms control in the Ministry of Foreign Affairs was 
established in 2007 has now been allocated staff. 
The country continued to engage actively in cooperation with international organisations 
(UN, OSCE, Council of Europe, etc.). ( As regards the International Criminal Court, see 
Political criteria – Regional issu es and international obligations) . 
As regards security measures (classified information),  the Certified Computer Unit for Access 
to the EU network for Electronic Exchange of  Classified CFSP Information (ACN) has not 
yet been installed. The administrative capacity wa s strengthened but is still not sufficient. 
There is a lack of human resources and budgetary support. 
The country is showing continued commitment to  participation in military and civilian crisis 
management operations in the framework of the European Security and Defence Policy 
(ESDP) . The country continued to participate in  the EU led military mission EUFOR/Althea. 
The country continued to participate in the NATO mission in Afghanist an and in the UN-led 
peacekeeping mission in Lebanon (UNIFIL). The admi nistrative capacity of  the ESDP unit in 
the Ministry of Defe nce is satisfactory. 
EN 73   EN Conclusion 
There has been some progress in the area of foreign security and defence policy. Whilst the 
legal framework is largely in place, further efforts are required to implement it fully. Further efforts are needed to strengthen administrative capacity. 
4.32. Chapter 32: Financial control 
Progress has been made in the area of Public Internal Financial Control and External 
Audit.  A manual on PIFC has been adopted, for us e by internal auditors and financial 
managers of public bodies in prepari ng annual reports on financial controls. 
Out of the 40 internal auditors  planned, 24 have been recruite d to various institutions. The 
institutional capacity of the Central Harmoni sation Unit will need to be strengthened. 
Establishment of internal audit units was completed at central level, where 39 units were set up with 84 internal auditors. At local government  level, 47 units were established with 33 
internal auditors. Two units were established in public enterprises. A number of training 
activities were organised and new IT equipment was provided for internal auditors. Overall, 
internal audit capacity has improved, but is still inadequate. The role of centralised inspection 
will need to be regulated. 
The operational capacity of the State Audit Office (SAO) has improved, but this was not 
reflected in the coverage of its audits: in 2007, the SAO cove red 57% of public  expenditure, 
compared with 65% in 2006. In 2007, the SAO carried out 98 audits and produced 188 audit 
reports, compared with 131 audits and 245 aud it reports in 2006. It ha s begun to carry out 
follow-up audits. The SAO and the PIFC Depart ment in the Ministry of Finance signed a 
protocol on cooperation, with th e objective of strengthening th e system for management and 
control of public finances. Cooperation betw een the SAO and parliament remains limited. 
Audited institutions still do not  adequately follow up recommenda tions made in audit reports. 
No changes were made to the legislation on ex ternal audit. Full independence of the SAO has 
not yet been achieved. Parliament appointed  a new Chief State Auditor, following the 
resignation of his predece ssor. Preparations in this area are advanced. 
There has been some progress on protection of EU financial interests. The structures for 
managing and monitoring IPA funds have been put in place. IPA units ha ve been established 
in each line ministry, procedures are being deve loped and training is under way. The head of 
the Central Financing and Contracting Depart ment (CFCD) was appointed, and some new 
permanent staff was recruited to the CFCD and the National Fund (NF). Auditors for the 
CFCD and the NF were appointed  and are deployed in the PIFC  Department in the Ministry 
of Finance. The head of the financial polic e resigned and a successo r was appointed by the 
government. 
Parliament enacted amendments to the Organi c Budget Law, one of which defined the IPA 
funds as a source of project financing via the bu dget and treasury and st ipulated that use of 
these funds must comply with the Commission' s Financial Regulation. The amendments also 
regulate budget planning of EU funds, national co-financing of  projects financed by the IPA 
and the flow of IPA funds through the National Fund. Preparations in this area are advanced. 
Conclusion 
Limited progress has been made on aligni ng and implementing the legislation. The acquis , on 
both internal and external audit, has yet to be fully transposed. The administrative capacity of 
EN 74   EN the institutions responsible for public internal financial control and external audit has been 
strengthened, but is still inadequate to meet the obligations arising from the acquis . The SAO 
is still not fully independent. Progress on prot ection of the EU's financial interests has 
accelerated. 
4.33. Chapter 33: Financial and budgetary provisions 
No significant divergences from the EU system  remain concerning the basic principles and 
institutions in the underlying policy ar eas linked to the application of the  EU's  own resources 
system . Efforts to align with the relevant acquis  chapters (customs, ta xation, statistics, and 
financial control) have continued. 
Efforts to combat customs duty and VAT  fraud were also stepped up. The customs authority 
intensified its activities, whic h contributed to increasing revenue collection. The number of 
criminal cases sent to the public prosecuto r in 2007 was twice that  in 2006. The Public 
Revenue Office (PRO) increased its audit and co ntrol activities. Furthe r progress on setting up 
effective instruments to combat customs duty a nd VAT fraud is vital for protection of the 
financial interests of the EU. 
Although the acquis  in this area does not require transposition, it is important to establish, in 
due course, coordination struct ures and implementing rules to ensure correct calculation, 
collection, payment and control of own resour ces and reporting to the EU for implementation 
of the own resources rules. The capacity within the relevant authorities to apply the rules 
under this chapter correctly  is not yet sufficient. 
Conclusion 
Some progress has been made, in  particular on combating VAT and customs fraud. Overall, 
preparations for alignment with the acquis  are under way. Appropr iate coordination 
structures, implementing rules and administrative strengthening in the area of own resources 
will be needed in due course. 
 
EN 75   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 29 September 2008)            
The former Yugoslav Republic of Macedonia            
            
Basic data Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Population (thousand) 1) 2 002 2 013 2 022 2 031 2 039 2 024 2 030 2 035 2 039 2 042 
Total area of the country (km²)  25 713 25 713 25 713 25 713 25 713 25 713 25 713 25 713 25 713 25 713 
            
National accounts Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross domestic product (GDP) (million national currency)  194 979 209 010 236 389 233 841 243 970 251 486 265 257 286 619 310 915 : 
GDP (million euro)  3 193 3 448 3 893 3 839 4 001 4 105 4 325 4 676 5 081 : 
GDP (euro per capita)  1594e 1713e 1926e 1890e 1963e 2029e 2130e 2298e 2491e : 
GDP (in Purchasing Power Standards (PPS)  per capita)  4 500.0 4 800.0 5 100.0 5 000.0 5 100.0 5 300.0 5 600.0 6000.0e 6400.0e :  
SI: GDP (in PPS per capita, EU-25=100)  25.5 25.7 25.8 24.1 24.0 24.6 25.0 25.8e 26.3e : 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year)  3.4 4.3 4.5 -4.5 0.9 2.8 4.1 4.1 4.0  : 
SI: Employment growth (national account s, % change on previous year)  3.0 -1.0 0.0 -2.0 -1.0 -2.0 -2.0 2.1 2.3 : 
Labour productivity growth: GDP growth per person employed (%  change on previous year)  : : : : 11.4 6.1 10.0 3.6 3.7 : 
SI: Unit labour cost growth (national accounts, % change on previ ous year)  1.7 -1.2 -9.0 -1.6 -2.2 1.3 -7.9 -5.5 4.5 : 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  13.2 12.9 12.0 11.8 12.4 13.4 13.2 12.8 12.6 : 
Industry  27.1 26.5 26.9 26.1 24.2 24.4 22.7 23.1 23.5 : 
Construction  6.7 6.1 6.8 6.0 6.0 6.3 6.5 6.6 6.7 : 
Services  52.9 54.5 54.2 56.1 57.5 56.0 57.7 57.6 57.3 : 
Final consumption expenditure, as  a share of GDP (%)  92.6 90.3 92.6 94.8 99.5 97.0 98.9 96.5 96.7 : 
Households and NPISH, as a share of GDP (%)  72.4 69.7 74.4 70.0 77.1 76.3 78.8 77.7 78.2 : 
General government, as a share of GDP (%)  20.3 20.6 18.2 24.8u 22.4 20.7 20.0 18.8 18.5 : 
Gross fixed capital formation, as a share of GDP (%)  17.4 16.6 16.2 14.8 16.6 16.7 17.8 17.0 18.2 : 
Changes in inventories, as a share of GDP (%)  4.8 3.1 6.0 4.2 4.0 3.2 4.1 3.7 3.7 : 
Exports of goods and services, relative to GDP (%)  41.2 42.2 48.6 42.7 38.0 37.9 41.1 45.5 48.1 : 
Imports of goods and services, relative to GDP (%)  56.1 52.2 63.5 56.6 58.2 54.8 61.9 62.8 66.8 : 
            
Industry Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Industrial production volume index (2000=100)  99.2 96.6 100.0 96.9 91.8 96.1 94.0 100.6 104.2 108.0 
            
Inflation rate Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Consumer price index (CPI), (tot al, % change on previous year)  -0.1 -0.7 5.8 5.5 1.8 1.2 -0.4 0.5 : : 
            
Balance of payments Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Balance of payments: current account total (million euro) 2) -249 -61 -106 -264 -401 -168 -363 -121 -45 -171 
Balance of payments current account: trade balance (million eur o) 2) -460 -465 -750 -589 -856 -753 -914 -859 -1 020 -1 173 
Balance of payments current account: exports of goods (million euro) 2) 1 152 1 117 1 433 1 291 1 182 1 203 1 345 1 643 1 903 2 4 42 
Balance of payments current account: imports of goods (million euro) 2) 1 612 1 582 2 183 1 880 2 038 1 956 2 259 2 501 2 923 3 6 14 
 
EN 76   EN Balance of payments current accoun t: net services (million euro) 2) -53 37 53 -21 -24 -6 -43 -25 22 26 
Balance of payments current account: net income (milli on euro) 2) -47 -67 -70 -31 -47 -55 -33 -92 -28 -33 
Balance of payments current account: net current tr ansfers (million euro) 2) 311 435 661 377 525 646 628 853 982 1 010 
of which government transfers (million euro) 2) 33 68 144 55 103 89 56 53 59 24 
Foreign Direct Investment (FDI) in the reporting economy (million euro) 2) 134 83 233 500 112 100 261 77 345 239 
            
Public finance Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
General government deficit/surplus, relative to GDP (%)  : 0.3 2.3 -2.5 -0.5 0.1 0.4 0.2 -0.5 0.6 
SI: General government debt, relative to GDP (%)  : 32.0 48.1 48.8 43.0 39.1 36.6 39.5 33.1 25.8 
            
Financial indicators Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross foreign debt of the whole economy, relative to GDP (%) 3) : 43.4 42.7 44.2 39.3 35.9 47.9 53.9 49.1 : 
Gross foreign debt of the whole economy, relative to total exports (%) 3) : 108.9 93.6 108.4 108.5 95.7 121.2 122.3 104.8 89.3 
Money supply: M1 (banknotes, coins, overnight dep osits, million euro)  249 325 368 415 432 445 450 485 568 748 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  427 556 690 1 145 1 052 1 240 1 450 1 686 2 10 0 2 694 
Money supply: M3 (M2 plus marketable instruments, m illion euro)  497 647 786 1 267 1 141 1 318 1 532 1 768 2 208 2 860 
Total credit by monetary financial institutions to resi dents (consolidated) (million euro) 4) 517 527 624 620 657 747 931 1 124  1 467 2 040 
Interest rates: day-to-day money rate, per annum (%)  18.1 11.6 7.2 11.9 14.4 5.8 8.3 9.2 : : 
Lending interest rate (one year), per annum (%) 4) : : 17.5 23.0 23.0 14.0 13.0 13.0 9.5 7.5 
Deposit interest rate (one year), per annum (%)  : : : : : : : : : : 
euro exchange rates: average of period - 1 euro = … nati onal currency  61.070 60.620 60.725 60.913 60.978 61.264 61.338 61.296 61.189 : 
Effective exchange rate index (2000=100)  92.9 96.9 100.6 136.1 139.2 143.2 147.1 150.6 151.8 : 
Value of reserve assets (inc luding gold) (million euro)  289 422 759 844 771 715 717 1 123 1 417 1 524 
            
External trade Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Trade balance: all goods, all partners (million euro)   : : : : -927 -828 -1 008 -957 -1 062 -1 349 
Value of exports: all goods, all partners (million euro)  : : : : 1 178 1 203 1 346 1 644 1 918 2 446 
Value of imports: all goods, all partners (million euro)  : : : : 2 105 2 031 2 354 2 601 2 980 3 795 
Terms of trade (export price index / import price index, % change to  previous year)  : -2.9 -1.8 1.7 9.6 -11.2 -12.3 15.4 -7.6 28.4 
Share of exports to EU-27 countries in value of total exports (%)  : : : : 55.9 58.9 60.3 56.9 61.3 65.2 
Share of imports from EU-27 countries in value of total imports (%)  : : : : 61.7 60.3 60.8 54.7 53.0 49.6 
            
Demography Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Natural growth rate: natural change (births minus deaths) (per  1000 inhabitants) 1) 6.2 5.2 5.9 5.0 4.8 4.4 2.7 2.0 1.9 1.5p 
Net migration rate: immigrants minus emigr ants (per 1000 inhabitants)  -1.0 -0.8 -1.2 -1.3 -12.2 -1.4 -0.1 -0.4 -0.3 0.1 
Infant mortality rate: deaths of children under one year of age per 1000 live births  16.3 14.8 11.8 11.9 10.2 11.3 13.2 12.8 1 1.5 10.3 
Life expectancy at birth: male (years)  70.6 70.7 70.9 70.9 71.0 71.1 71.4 71.4 71.5 : 
Life expectancy at birth: female (years)  74.9 75.0 75.6 75.6 75.8 75.7 75.9 76.2 76.4 : 
            
Labour market Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Economic activity rate (15-64): share of pop ulation aged 15-64 that is economically active 
(%)  60.9 59.7 59.7 61.8 59.8 61.3 58.8 60.7 62.2 62.8 
SI: Employment rate (15-64): share of population aged 15-64 that  is in employment (%)  39.6 40.2 40.3 42.6 40.4 38.5 36.8 37.9 39.6 40.7 
Share of male population aged 15-64 that is in employment (%)  49.8 49.4 49.7 50.6 48.6 45.6 44.4 45.4 48.3 48.8 
Share of female population aged 15-64 that is in employment (%)  29.3 30.9 30.9 34.5 32.0 31.3 28.9 30.1 30.7 32.3 
 
EN 77   EN SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%)  26.0 26.3 26.2 27.7 25.8 28.5 24.5 26.2 27.9 28.8 
Employment by main sectors (%)                      
Agriculture  : : : 24.9 23.9 22.0 16.8 19.5 20.1 18.2 
Industry  : : : 29.2 27.5 27.3 25.8 25.8 25.0 24.9 
Construction  : : : 5.9 5.8 6.6 7.0 6.5 7.6 6.4 
Services  : : : 39.7 42.6 43.8 50.1 48.0 47.1 50.1 
SI: Unemployment rate: share of labour force that is unemployed (%)  34.5 32.4 32.2 30.5 31.9 36.7 37.2 37.3 36.0 35.0 
Share of male labour force that is unemployed (%)  32.5 31.9 30.5 29.5 31.7 37.0 36.7 36.5 35.3 34.6 
Share of female labour force that is unemployed (%)  37.6 33.3 34.9 32.0 32.3 36.3 37.8 38.4 37.2 35.6 
Unemployment rate of persons < 25 years: shar e of labour force aged <25 that is unemployed 
(%)  70.9 62.9 59.9 56.1 58.4 65.7 64.8 62.6 59.8 57.7 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%)  28.6 27.2 26.9 26.5 27.0 31.2 31.7 32. 3 31.1 30.1 
            
Social cohesion Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Average nominal monthly wages and salaries  (national currency)  9 394.0 9 664.0 10 193.0 10 552.0 11 279.0 11 824.3 12 293.3 12 597.0 13 517.0 14 584.0 
Index of real wages and salaries (index of nom inal wages and salaries divided by the CPI) 
(2000=100)  96.8 100.3 100.0 98.1 103.0 106.7 111.4 113.6 114.1 112.5 
SI: Early school-leavers: share of popul ation aged 18-24 having not completed upper 
secondary education and not currently in education or training (%)  : : : : 32.2 : : : : : 
            
Standard of living Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Number of passenger cars per 1000 population  144.3 144.1 147.9 152.1 151.1 148.2 122.7b 124.3 118.7 : 
Number of subscriptions to cellular mobile telephone se rvices per 1000 population  15.0 23.7 49.4 109.0 179.7 300.4 491.6 597.6  695.1 : 
            
Infrastructure Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Density of railway network (lines in operation, per 1000 km²)  27.2 27.2 27.2 27.2 27.2 27.2 27.2 27.2 27.2 : 
Length of motorways (thousand km)  0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 
            
Innovation and research Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  : : : : 3.4 3.4 : : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  0.4 0.3 0.4 0.3 0.3 0.2 0.3 0.3 : : 
SI: Percentage of households who have Internet access at home (%) 5) : : : : : : 11.0e : 14.0e 16.5e 
            
Environment Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)  754.8 707.0 659.3 668.5 715.6 659.6 635.6 63 6.0e 624.7e : 
SI: Share of renewable energy in electricity consum ption (%)  15.4 20.5 16.9 9.2 11.0 17.9 18.9 17.5 18.7 : 
SI: Road freight transport as a share of total in land freight transport (modal split of freight 
transport) (%)  69.0 69.0 60.0 83.0 89.0 92.0 90.0 88.0 92.0 85.0 
            
Energy Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Primary production of all energy products (thousand TOE)  1 744 1 698 1 595 1 642 1 577 1 666 1 598 1 578 1 617 : 
Primary production of crude oil (thousand TOE)  0 0 0 0 0 0 0 0 0 : 
Primary production of hard coal and lignite (thousand TOE)  1 480 1 389 1 273 1 419 1 356 1 353 1 293 1 288 1 296 : 
Primary production of natural gas (thousand TOE)  0 0 0 0 0 0 0 0 0 : 
Net imports of all energy products (thousand TOE)  1 247 1 009 1 104 1 011 1 486 1 029 1 152 1 248 1 323 : 
Gross inland energy consumption (thousand TOE)  2 904 2 837 2 765 2 677 2 892 2 740 2 749 2 863 2 925 : 
Electricity generation (thousand GWh)  7.0 6.9 6.8 6.4 6.1 6.7 6.7 6.9 7.0 : 
            
 
EN 78   EN SI: Structural Indicator 
e: estimate f: forecast  
p: provisional  
b: break in series 1. Source: Eurostat. Break in series 2003. 
2. For the period 1998-2002, the values in Euro are calculated using the annual average exchange ra te; from 2003 the values in Euro are calculated on the basis of the current exchange rate. 
3. For the period 1999-2003 external debt data are calculated accord ing to the old methodology, with partial data coverage; sin ce 2004 Gross Foreign Debt data are prepared according to the 
External Debt Statistics Guide, with full data coverage. 
4. End of the year. 
5. There are no data for 2005 because the ICT survey was conducted in February 2005, as a pilot survey, and covered 2004 as ref erence year. Agriculture Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Agricultural production volume index of goods  and services (produc er prices, previous 
year=100)  103.8 101.1 101.0 90.2 97.5 104.5 107.0 100.3 105.0 98.0 
Total utilised agricultural area (thousand hectare)  1 293 1 284 1 236 1 244 1 316 1 303 1 265 1 229 1 225 1 077 
Livestock: cattle (thousand heads, end of period)  268 270 265 265 259 260 255 248 255 254 
Livestock: pigs (thousand heads, end of period)  197 226 204 189 196 179 158 158 167 255 
Livestock: sheep and goats (thousand heads, end of period)  1 315 1 289 1 251 1 286 1 234 1 239 1 432 1 244 1 249 944 
Production and utilisation of milk on the farm (total  whole milk, thousand tonnes)  174 202 220 201 198 192 213 197 235 374 
Crop production: cereals (including  rice) (thousand tonnes, harvested production)  660 637 565 476 556 466 677 645 595 470 
Crop production: sugar beet (thousand tonnes, har vested production)  58 67 56 38 44 40 47 58 0 8 
Crop production: vegetables (t housand tonnes, harvested production)  540 688 680 696 : : : : : 573