Special Report Strengthening 
administrative capacity 
in the former Yugoslav 
Republic of Macedonia: 
limited progress in 
a difficult contextEN 2016  NO 11
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Strengthening 
administrative capacity 
in the former Yugoslav 
Republic of Macedonia: 
limited progress in 
a difficult context
(pursuant to Article 287(4), second subparagraph, TFEU)Special ReportEN 2016  NO 11
02
 Audit team
The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or 
management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming developments and political and 
public interest.
This performance audit was produced by Audit Chamber III — headed by ECA Member Karel Pinxten — which specialises 
in external actions spending areas. The audit was led by ECA Member Hans Gustaf Wessberg, supported by the Head of 
his private office, Peter Eklund; Emmanuel-Douglas Hellinakis, Attaché; Torielle Perreur-Lloyd, Head of Task; Stéphanie 
Girard, Ainhoa Perez Infante, Aurelia Petliza, auditors.
From left to right:  A. Perez Infante, E.-D. Hellinakis, T. Perreur-Lloyd, H. G. Wessberg,  
A. Petliza, P . Eklund, S. Girard.

03
 Contents
Paragraph
 Abbreviations and acronyms
I–IX  Executive summary
01–13  Introduction
01–05  The road to accession
06–10  The national context of reform
11–13  EU pre-accession financial assistance
14–21  Audit scope and approach
22–66  Observations
22–44  Part I — The effectiveness of pre-accession financial assistance in contributing towards 
strengthening administrative capacity
23–36  Pre-accession financial assistance did not successfully address some of the significant weaknesses in 
administrative capacity in key areas
37–38  Most planned outputs were delivered but they were not always exploited
39–40  The impacts of projects were often limited and not always sustainable
41–44  Obstacles to progress on strengthening administrative capacity
45–55  Part II — The use of decentralised management as a means of building capacity
46–49  The country was not ready for the volume and complexity of IPA funds for which management 
was decentralised
50–51  The Commission has taken action but further de-commitment is probable
52–55  Decentralising management could have been used more widely as a capacity-building tool for the 
public administration
04 Contents 
56–66  Part III — The contribution of political dialogue to strengthening administrative capacity
57–60  Although well organised, political dialogue did not contribute significantly to an overall strengthening 
of administrative capacity
61–66  Other dialogue mechanisms addressed the need to strengthen administrative capacity but did not result 
in progress towards removing the underlying obstacles
67–73  Conclusions and recommendations
 Annex I — Key dates in EU–former Yugoslav Republic of Macedonia relations
 Annex II — Projects audited
 Reply of the Commission
05
 Abbreviations and acronyms
CSO : Civil Society Organisation
DG Neighbourhood and Enlargement Negotiations : Directorate-General for Neighbourhood and Enlargement 
Negotiations
DG Regional and Urban Policy : Directorate-General for Regional and Urban Policy
HLAD : High Level Accession Dialogue
IPA: Instrument for Pre-accession Assistance
ITSF : IPA Training and Support Facility
PAR : Public Administration Reform
PIFC : Public Internal Financial Control
PPB : Public Procurement Bureau
ReSPA : Regional School of Public Administration
SA: Stabilisation and Association
SAA : Stabilisation and Association Agreement
SAC : State Appeals Commission
SAP : Stabilisation and Association Process
SCPC : State Commission for Prevention of Corruption
SIGMA : Support for Improvement in Governance and Management
06
 Executive  
summary
I
The former Yugoslav Republic of Macedonia has been a candidate for EU membership since 2005. Every year since 
2009, the Commission has reported that the country meets the mandatory political criteria for moving to the next 
stage of the accession process. The Council has agreed that the country meets the political criteria but has not 
decided on a framework for opening negotiations. In November 2015 the Commission stated that it was prepared to 
extend its recommendation to open accession negotiations with the country. However, this was made conditional 
upon the resolution of the current political crisis in the country and the implementation of a number of urgent 
reform priorities.
II
During the 2007-2013 period the EU allocated 615 million euros under the Instrument for Pre-Accession Assistance 
(IPA I) to help the country prepare for accession. The country also received financial support under multilateral pro -
grammes covering the whole of the Western Balkans.
III
We audited projects financed from IPA I in three major sectors: public administration reform (12 % of the total allo -
cation), transport (18 %) and environment (16 %). We found that, despite the priority assigned to capacity-building 
by the Commission, relatively limited progress was made in strengthening the country’s administrative capacity 
during the audited period. The projects we audited generally delivered the planned outputs but these were often 
not fully exploited. In some cases projects had limited impact and were not sustainable.
IV
All of the projects audited in the PAR sector included activities designed to strengthen administrative capacity but 
often did not effectively address many of the weaknesses. For some key areas in which strong legislation already 
existed (internal control, the development of a professional, independent civil service) there was little assistance 
under IPA during the period audited and there was not sufficient progress on implementing that legislation. In 
other key areas (such as the fight against corruption and public procurement) IPA projects had little impact in the 
absence of active support from the national authorities.
V
In the transport and environment sectors few of the audited projects addressed capacity-building to bring align -
ment with the EU acquis . While others aimed to strengthen administrative capacity through ‘learning by doing’, 
further examination revealed that the investments in infrastructure did not include activities clearly designed to 
directly support this objective.
Executive summary 07
VI
The audited projects did not always fit into a coherent, cohesive and coordinated approach towards strengthening 
administrative capacity. Some projects did not follow on from previous assistance in the same sector or were not 
adequately followed up with further support. There was often a gap of 4 years or more between establishing the 
need for assistance and the delivery of project results.
VII
The Commission decentralised the management of 76 % of the IPA I allocation of funds to the national administra -
tion and supported the setting up and operation of structures to manage these funds. This resulted in improved 
capacity in the parts of the public administration concerned. However, we found that the experience of decentralis -
ing management presented an opportunity for capacity-building in the rest of the public administration which the 
Commission did not take up during the audited period.
VIII
The mechanisms for political dialogue were well-suited to supporting reform in the country. The fact that overall 
administrative capacity did not improve significantly during the period audited was largely due to the insufficient 
political will of the national authorities to tackle some of the obstacles to strengthening administrative capacity. In 
addition, the leverage for the Commission to encourage reform, especially in sensitive areas, was greatly reduced 
during this period in the absence of the framework provided by accession negotiations.
IX
We make a number of recommendations in support of strengthening administrative capacity.
08
 Introduction
The road to accession
01 
The former Yugoslav Republic of Macedonia and the EU signed a Stabilisation 
and Association Agreement (SAA) in 2001, the first in the Western Balkans. At the 
Thessaloniki Summit in 2003, the European Union (EU) granted all countries of 
the Western Balkans1 a clear prospect of EU membership, subject to their meet -
ing the Copenhagen criteria2 and the conditions of the Stabilisation and Associa -
tion Process (SAP)3. In 2005 the country formally became a full candidate for EU 
membership.
02 
By 2009 the country had successfully aligned many important parts of its national 
legislation with EU legislation. The Commission acknowledged this progress 
and recommended opening formal accession negotiations. However, member -
ship negotiations cannot start until the governments of all EU Member States 
agree in the form of a unanimous decision by the EU Council. Despite agreeing 
that the country had met the political criteria for opening accession negotia -
tions, the Council did not take such a decision following the Commission’s 2009 
recommendation.
03 
The Council continued to take no action despite positive recommendations deliv -
ered by the Commission in each of the next 5 years. Issues regarding the coun -
try’s official name4 and, more recently, relations with neighbours, have proven 
to be an impediment to reaching a decision. The country’s formal road towards 
accession has been blocked for more than 6 years. In the meantime, it has seen 
many of the other Western Balkan nations catch up and even overtake it5.
04 
In 2013 the country entered a period of political crisis and there was a breakdown 
of domestic political dialogue6 which exposed serious shortcomings in demo -
cratic governance. In 2015, intercepted communications suggesting breaches of 
fundamental rights, politicisation and corruption were released into the public 
domain7. The Commission and some Members of the European Parliament have 
been closely involved in facilitating a political agreement to overcome this crisis.1 The countries at that time 
were Albania, Bosnia and 
Herzegovina, Croatia, the 
former Yugoslav Republic of 
Macedonia, and Serbia and 
Montenegro.
2 The Copenhagen criteria set 
by the European Council in 
June 1993 consist of:  
(a) political criteria;  
(b) economic criteria;  
(c)  the ability to assume 
the obligations of 
membership.
3 The SAP, the EU’s policy on the 
Western Balkans, was 
established with the aim of 
eventual EU membership. The 
western Balkan countries are 
involved in a progressive 
partnership with a view to 
stabilising the region and 
establishing a free-trade area.
4 This has been addressed 
through United Nations 
mediation since 1994.
5 Croatia is now an EU Member 
State. Montenegro, Serbia and 
Albania have become 
candidate countries for EU 
membership, and 
Montenegro and Serbia have 
opened accession 
negotiations.
6 The main opposition party 
boycotted parliament.
7 See the introduction to the 
2015 Progress Report 
(SWD(2015) 212 final of 
10 November 2015).
09 Introduction 
05 
In 2014 the Commission announced that there would be no new EU Member 
States before 20208. This overall slow-down in the enlargement process was due 
both to the need for consolidation within the EU following the recent rounds of 
enlargement and to the challenges faced in integrating a region still emerging 
from violent conflict in the 1990s. See key dates shown at Annex I .
The national context of reform
06 
The Commission assists the former Yugoslav Republic of Macedonia to enact 
reforms and prepare for membership of the EU. The reform process consists 
of introducing and implementing national legislation which is aligned with EU 
legislation. The Commission helps to draft new legislation and to strengthen the 
administrative capacity to implement it.
07 
The Commission and other stakeholders have reported that, although the public 
administration of the former Yugoslav Republic of Macedonia is continuing to 
work towards integration with the EU, there is reduced commitment to reform 
from the national authorities at a higher level9. There is often a lack of will to en -
gage in some of the significant financial investment which is necessary to make 
progress on reform, for example on environmental measures. There has also 
been inadequate political leadership to tackle sensitive areas such as the fight 
against corruption.
08 
In the absence of formal accession negotiations, the Commission has used the 
chapters on which negotiations are usually based as a guide10 for assessing an -
nual progress in the country11. Although pointing to weaknesses in administrative 
capacity, up to 2012 the Commission concluded that the overall reform process 
was generally proceeding well in the country. In the 2013 report the Commission 
pointed to the failure to make progress in some areas and backsliding in oth -
ers. The 2014 report made a more negative assessment and issued the follow -
ing warning: ‘…The Commission urges the authorities to take decisive action to 
address concerns about increased politicisation and growing shortcomings with 
regard to the independence of the judiciary and freedom of expression so that its 
recommendation can be sustained in future years’12.8 Opening Statement by the 
President of the European 
Commission to the European 
Parliament Plenary Session, 
Strasbourg, 15 July 2014.
9 See 2015 Progress Report: 
‘Strong political will is 
necessary to guarantee the 
independence of 
administration.’ (section 2.2), 
The capacity to effectively 
address [the fight against 
corruption] is currently being 
undermined by a lack of 
political will and political 
interference in the work of the 
relevant bodies, which is 
hampering their ability to act 
proactively and non-
selectively, especially in 
high-level cases (section 2.3) 
and on Chapter 23: 
‘The current lack of political 
will to tackle the remaining 
challenges at the highest level 
is holding back the capable 
administration from reaching 
its full effectiveness’.
10 The chapters of the acquis  
(currently 35) form the basis of 
the accession negotiations. 
They correspond to the 
different areas of the acquis  in 
which reforms are needed in 
order to meet  accession 
conditions. 
11 Without opening and closing 
them as it would if the 
accession process  had already 
started.
12 2014 Progress Report on the 
former Yugoslav Republic of 
Macedonia, p. 1.
10 Introduction 
09 
In its 2015 Progress Report, published in November 2015, the Commission repeat -
ed its recommendation to open accession negotiations with the former Yugoslav 
Republic of Macedonia. However, this positive recommendation was conditional 
on the successful implementation of the Przino Agreement13 and substantial pro -
gress in the implementation of the urgent reform priorities14.
10 
Table 1  shows our summary of weaknesses in administrative capacity in some 
key areas of reform which were highlighted in the Commission’s 2011-2015 pro -
gress reports.13 The main four political parties 
signed the Przino Agreement 
in June 2015. This agreement 
consisted of conditions to be 
met including free and fair 
elections and the 
appointment of a special 
prosecutor to investigate the 
issues surrounding or arising 
from the interception of 
communications.  See also 
paragraph 65 and Annex I .
14 In June 2015 the Commission 
issued ‘Urgent reform 
priorities for the former 
Yugoslav Republic of 
Macedonia’ drawn up on the 
basis of the findings of the 
Senior Experts’ Group. It 
contains a list of urgent reform 
priorities to be fulfilled by the 
former Yugoslav Republic of 
Macedonia in the fields of rule 
of law and fundamental rights, 
de-politicisation of the public 
administration, freedom of 
expression and electoral 
reform.
11 Introduction Table 1Assessments of administrative capacity in the annual progress reports (2011-2015) 
for the areas audited
Chapter Institutions 2011 2012 2013 2014 2015
5 Public procurementMinistry of Economy, Concessions and Private–Public 
Partnerships Unit
State Appeals Commission
14 Transport policyRoad/State Transport Inspectorate
Rail Safety Authority
Air/Civil Aviation Agency
21 Trans-European Networks Institutions involved in construction
22Regional policy and 
coordination of 
structural  instrumentsNational Fund, Central Financing and Contracting 
Department and line ministries
Programming
Monitoring and evaluation
Financial management, control and audit
23Judiciary and  
fundamental rightsInstitutions involved in implementing anti-corruption policy
Courts dealing with high-level cases
27Environment and  
climate changeRegulating bodies (horizontal legislation)
Bodies involved in air quality
Bodies involved in waste management
Bodies involved in enforcing legislation
Administrative capacity still weak/limited and needs substantial/urgent improvement.
Administrative capacity has increased but still needs further improvement.
Administrative capacity has increased: no need for further improvement.
Source:  ECA using European Commission progress reports.
12 Introduction 
EU pre-accession financial assistance
11 
The EU provides financial and technical help for the enlargement countries 
(the Western Balkans and Turkey) by means of the Instrument for Pre-accession 
Assistance (IPA)15. IPA I covered the period 2007-2013 with a total allocation of 
10 billion euros, of which 615 million (6 %) was for the former Yugoslav Republic 
of Macedonia. IPA II has followed this with a total indicative allocation of 11.7 bil -
lion euros over the period 2014-2020, including 664 million euros (6 %) for the 
former Yugoslav Republic of Macedonia.
12 
Under IPA I financial assistance for the country can be presented in seven sectors 
of expenditure as shown in Table 2 .15 IPA I was established by 
Council Regulation (EC) 
No 1085/2006 of 17 July 2006 
establishing an Instrument for 
Pre-Accession Assistance (IPA) 
(OJ L 210, 31.7.2006, p. 82) and 
Commission Regulation (EC) 
No 718/2007 of 12 June 2007 
implementing Council 
Regulation (EC) No 1085/2006 
establishing an Instrument for 
Pre-Accession Assistance (IPA) 
(OJ L 170, 29.6.2007, p. 1).Table 2IPA assistance to the former Yugoslav Republic of 
Macedonia 2007-2013 (million euro)
Sector/Funding area Total allocation per sector Percentage
Justice and home affairs 64 10 %
Public administration reform 71 12 %
Social development 67 11 %
Private sector development 45 7 %
Transport 110 18 %
Environment 99 16 %
Agriculture and rural development 111 18 %
Other 48 8 %
TOTAL 2007-2013 615 100 %
Source:  European Commission.
13 
When IPA I began in 2007, most funds were managed directly by the Commission. 
However, by 2010 the management of 76 % of the country’s IPA allocation had 
been decentralised. Under decentralised management the funds allocated are 
managed by dedicated structures within the public administration of the coun -
try. However, the Commission remains accountable for these funds so it carries 
out checks of the transactions.
13
 Audit scope and approach
14 
The audit objective was to assess whether EU pre-accession assistance contrib -
uted effectively to strengthening administrative capacity to implement reform 
in the former Yugoslav Republic of Macedonia. We approached this by looking at 
both financial and non-financial assistance towards strengthening administrative 
capacity under IPA I16.
15 
The audit addressed three main questions:
(a) Did the Commission ensure that IPA projects contribute effectively towards 
strengthening administrative capacity?
(b) Did the Commission use the decentralised management mode effectively to 
build capacity?
(c) Did the Commission’s non-financial assistance effectively support the 
strengthening of administrative capacity?
16 
We chose three major sectors for our audit in which strong administrative capac -
ity is central to successful implementation of reform and which covered 46 % of 
the total allocation: public administration reform (PAR), transport, and environ -
ment (see Table 2 ). The audit included analysis of documents and interviews with 
representatives of the Commission and the beneficiary country. We used the evi -
dence provided in project and programme documents, evaluations and assess -
ments of IPA I and the country, and the Commission’s annual progress reports.
17 
To answer audit question (a), reported in part 1 of the observations, we exam -
ined a sample of 17 projects from the PAR, transport, and environment sectors. 
The projects selected in the PAR sector included activities in the key areas of 
procurement, anti-corruption, internal control, capacity-building for decentral -
ised management and assistance for training of the public administration. Project 
activities aimed to strengthen administrative capacity, for example by supporting 
the development of strategies, programmes, curricula, manuals and procedures, 
providing advice on strengthening institutions and bodies in key areas of reform, 
and the provision of training courses.16 IPA II projects were not yet 
being implemented at the 
time of the audit.
14 Audit scope and approach 
18 
Most projects in the transport and environment sectors did not include strength -
ening administrative capacity as a main objective. We audited those that did, 
and also projects which had the contributory objective of building up capacity 
through ‘learning by doing’.
19 
Most of the projects we looked at were restricted to the country, but some, 
for example in procurement, were multi-beneficiary projects available to all of 
the countries of the Western Balkans. We also looked at the contribution of the 
Regional School of Public Administration (ReSPA), which is likewise financed by 
a multi-beneficiary programme. The 17 audited projects are shown in Annex II .
20 
To answer audit question (b), reported in part 2 of the observations, we reviewed 
the procedures followed to assess the country’s readiness to manage a decen -
tralised implementation system for IPA assistance and examined how the Com -
mission used experience of this management mode to strengthen administrative 
capacity in the country.
21 
To answer audit question (c), reported in part 3 of the observations, we looked at 
non-financial assistance and reviewed the mechanisms for political dialogue set 
up under the Stabilisation and Association Agreement as well as other structures 
for dialogue, such as the High Level Accession Dialogue.
15
 Observations
Part I — The effectiveness of pre-accession financial 
assistance in contributing towards strengthening 
administrative capacity
22 
We examined whether IPA projects successfully addressed the strengthening 
of administrative capacity in key areas of public administration reform (pro -
curement, corruption and internal control) and in the sectors of transport, and 
environment. For the projects in the sample, we examined whether the planned 
outputs17 were delivered and then used by the national authorities, and whether 
impacts18 were sustainable. We also examined the obstacles to progress towards 
strengthening administrative capacity.
Pre-accession financial assistance did not successfully 
address some of the significant weaknesses in administrative 
capacity in key areas
Key areas of public administration reform
23 
The Commission assessed the public procurement legislation in place in the 
country by 2007 to be moderately strong and relatively well-aligned with EU 
legislation19. However there has been backsliding on reform and the failure to im -
plement the legislation in place20. The 2015 Progress Report pointed to the need 
to ‘remove inconsistencies with the acquis  including on blacklisting companies, 
conditions for using awarding criteria; ensuring harmonisation with EU procure -
ment rules on defence and security as well as the 2014 EU procurement direc -
tives, especially on concessions’21.
24 
During the period audited the Commission highlighted inadequate transparency 
in the public procurement system and the lack of reliable data on irregularities22. 
Although these are identified as high risk areas in progress reports from 2011 
onwards23, the audited projects (see Annex II) did not address these weaknesses.17 An output is what is produced 
or accomplished with the 
resources allocated to an 
intervention, for example 
capacity-building training 
courses delivered. See 
European Court of Auditors 
Special Report 21/2015 
‘Review of the risks related to 
a results-oriented approach 
for EU development and 
cooperation action’  
(http://eca.europa.eu ).
18 Impacts are longer-term 
socioeconomic consequences 
that can be observed for 
a certain period after an 
intervention has been 
completed, for example, 
improvements in 
administrative capacity. Ibid.
19 SEC(2007) 1432 final of 
6 November 2007, 
2007 Progress Report’, 
pp. 28-29.
20 OECD ‘Peer assistance in 
public procurement, 
concessions and public-
private partnerships, Final 
report’, October 2011 and 2015 
Progress Reports and SWD 
(2015) 212 final, pp. 35-36.
21 Ibid.
22 SEC(2009) 1335 final ‘2009 
Progress Report’, p. 35, 
SEC(2010) 1332 final 
‘2010 Progress Report’, p. 14, 
SEC(2011) 1203 final 
‘2011 Progress Report’, p. 14, 
SWD(2012) 332 final 
‘2012 Progress Report’, p. 12, 
COM(2013) 700 final 
‘2013 Progress Report’, p. 11 
and 42, SWD(2014) 303 final 
‘2014 Progress Report’, p. 25. 
See also Thematic evaluation 
on IPA support to the fight 
against corruption 
2014/348-486/2, p. 74.
23 Page 14 of 2011 Progress 
Report, p. 12 of 2012 Progress 
Report, p. 11 and 42 of 2013 
Progress Report, p. 25 of 2014 
Progress Report.
16 Observations 
25 
The Commission also reported the need to improve the efficiency of the public 
procurement system. The projects audited provided training courses which main -
ly focused on public procurement legislation and did not address sufficiently 
the need to strengthen the capacity to carry out efficient public procurement. 
The first project in the audited sample (see Annex II ) supported training by the 
Public Procurement Bureau (PPB), the body mainly responsible for strengthening 
the capacity of contracting authorities. However, the training by the PPB did not 
significantly improve their administrative capacity24.
26 
The PPB had already an electronic procurement system which was set up in 2008. 
With a view to improving the overall efficiency of public procurement, project 1 
included a review of the system, but did not provide support to improve it.
27 
The Commission and other stakeholders have consistently pointed to weaknesses 
in the fight against corruption which should be tackled as a matter of priority25. 
The national authorities made political commitments to fight corruption, for 
example in the context of the SAA. The work programme of the government for 
the period 2011-2015 committed the country to an ‘uncompromising fight against 
corruption’. This led to the adoption of state programmes and associated ac -
tion plans, but these have not been translated into effective action and concrete 
results. The Commission has used several methods to address the fight against 
corruption. However, in the absence of formal accession negotiations with the 
former Yugoslav Republic of Macedonia, the Commission has not been in a posi -
tion to apply the more comprehensive approach normally set out for candidate 
countries in their respective negotiating frameworks26. This also meant that dur -
ing the period audited, the Commission’s approach towards supporting capacity-
building in this key area was not sufficiently clear.
28 
The Commission has used IPA I projects to address some isolated capacity-
building needs. We audited two projects in the PAR sector which aimed to build 
capacity and which had been, or were being implemented at the time of the 
audit (see Annex II ). Project 5 aimed to strengthen the work of the SCPC, which is 
the main body with responsibility for the prevention of corruption. However, the 
project did not address the fact that the SCPC was not in a position to exercise 
its mandate effectively in the face of inadequate commitment by the national 
authorities in this area. It lacked independence because, for example, clear cri-  
teria are not applied in the appointment and dismissal of its senior manage -
ment27. According to the Commission’s 2011 Progress Report it is also not 
adequately resourced with only half the staff needed to carry out its role 
effectively28.24 OECD (2013), ‘The Former 
Yugoslav Republic of 
Macedonia Priorities 
Report 2013’, SIGMA Country 
Assessment Reports, 2013/09, 
OECD Publishing, p. 13.
25 See, for example, L. 
Grozdanovska Dimishkovska, 
‘Nations in Transition’, 
pp. 424-425 and Macedonia 
2013 Human Rights Report 
from the US Department of 
State, p. 17 ( http://www.state.
gov/documents/
organization/220516.pdf ).
26 Notably through screening 
reports and related action 
plans and the opening and 
closing benchmarks of the 
negotiating chapters.
27 See the EU-funded report 
‘Establishing Comparative 
Indicator-based Monitoring of 
Anti-corruption Progress in EU 
candidate, potential candidate 
countries and Kosovo’, p. 35. 
The Commission 2011 
Progress Report states: 
‘questions have been raised 
about the criteria used by 
parliament in the selection of 
the seven new members of 
the SCPC’ and the Commission 
2013 Progress Report states: 
‘the dismissal of the former 
president of the SCPC without 
clear legal basis raised 
concern’.
28 See also the Thematic 
evaluation on IPA support to 
the fight against corruption 
2014/348-486/2 ‘Efficient 
Prevention and Fight against 
Corruption’, p. 125 — 
‘the effectiveness depends on 
government overcoming 
factors such as the lack of 
independence and budgetary 
constraints of the SCPC and 
overall lack of administrative 
capacity of project 
beneficiaries’.
17 Observations 
29 
In the absence of an effective government strategy in the fight against corrup -
tion, the Commission has supported CSOs in the role they can play to bring 
suspicion of corruption to public attention. Project 6 provided support in helping 
to develop and disseminate best practice amongst CSOs in this role. However, we 
found that the Commission’s approach in this key area could be improved with 
regard to strengthening the potential contribution of CSOs which work towards 
increasing transparency and sharing knowledge.
30 
Using pre-IPA assistance, the Commission helped the national authorities to 
put sound legislation on internal control in place. When IPA I began, the Public 
Internal Financial Control (PIFC) law was assessed as being a good basis to reform 
management financial and control structures and internal audit29. During the au -
dited period, IPA projects focussed on financial management and control capac -
ity in the operating structures set up for decentralised management of IPA funds 
but not in the rest of the public administration.
31 
The national authorities, for their part, made little progress on strengthening 
administrative capacity in this area and did not implement the PIFC law fully. For 
example, the Commission pointed out in its 2015 Progress Report that most in -
ternal audit units do not have a sufficient number of auditors and that while they 
conduct their audits based on strategic and annual plans, these are not based on 
operational and systematic risk. In addition to this, internal audit work focuses 
mainly on compliance and does not include analyses of systems weaknesses 
or look at value-for-money aspects and quality assurance needs to be better 
implemented.
32 
The inadequate capacity of internal audit units has weakened internal control 
and reduced the attention paid by managers to the findings of internal auditors. 
Donors other than the Commission have provided support for strengthening 
the skills of internal auditors during the audited period. For example, the United 
States Agency for International Development financed training for internal audi -
tors at the Chartered Institute of Public Finance and Accountancy (CIPFA) Centre 
of Excellence in Slovenia. However, internal audit capacity and internal control 
more generally remain weak.29 SEC(2008) 2695 final, '2008 
Progress Report,' p. 59.
18 Observations 
33 
The importance of strong internal control has increased under IPA II because 
the Commission is working with the country to prepare a programme of sector 
budget support for public finance management for 2016.
Transport and environment
34 
The main objective of the IPA allocations for the transport and environment 
sectors (18 % and 16 % of the 2007-2013 allocations respectively — see Table 2 ) 
was to improve regional infrastructure. Some of these funds were earmarked for 
strengthening the capacity of the public administration to draft and implement 
legislation in line with the EU acquis . The percentage of funds used on capacity-
building in the transport sector (1 %) was far lower than in the environment sec -
tor (15 %), despite the fact that both sectors suffered from similar weaknesses in 
capacity (see Graph 1 ).Graph 1IPA allocations per sector (2007-2013) (in million euro)
Source:  European Commission.0 20 40 60 80 100 120
Direct capacity building projects Other projectsJustice and home aﬀairs
PAR and EU integration
Agriculture and Rural Development
Environment and Climate changeCompetitiveness
Employment
TransportMulti-beneﬁciary
Other
CBC
19 Observations 
35 
While there was no specific IPA allocation for building the capacity of the operat -
ing structure for decentralised management30 IPA funds for both transport and 
environment sectors included ‘learning by doing’ as a contributory objective. 
However, few activities in audited projects 12 to 17 (see Annex II ) clearly provid -
ed support in this way. For example, the fact that the office provided to the con -
sultants was at a different location from that of national staff involved in project 
15 did not facilitate transfer of know-how. Project 17, on the other hand, provided 
an example of successful transfer of know-how because staff in the public admin -
istration were able to make good use of advice received through JASPERS techni -
cal assistance when preparing the terms of reference for the project31.
36 
Under IPA II, the Commission reduced the country’s overall allocation by 4 mil -
lion euros because the national authorities declined to receive support for 
technical assistance and capacity-building in the transport sector. While these 
funds are lost for the country, if it undertakes to address administrative capacity-
building needs and carry out horizontal reforms, funds may be reallocated within 
the existing programme.
Most planned outputs were delivered but they were not 
always exploited
37 
Before making final payments for IPA projects which have been completed, the 
Commission receives a final report from the claimant. For the 11 closed projects 
in the audited sample, our audit demonstrated that all or most of the outputs 
planned had been delivered. However, for 12 of the audited projects some of 
the outputs were only partially being used, or not at all. Box 1  gives examples of 
project outputs not being used by the national authorities.30 The operating structure 
includes the contracting 
authority and the line 
ministries.
31 JASPERS is a technical 
assistance partnership 
between DG Regional and 
Urban Policy, the EIB and the 
EBRD which provides 
independent advice to help 
beneficiary countries prepare 
high-quality major projects.
20 Observations 
38 
Sometimes the outputs were not used because further investment was required. 
See Box 2 .Box 1 Box 2Outputs not used by the national authorities
Projects 8 and 9 funded ReSPA, a school established in 2006 in Montenegro to provide support for capacity-
building for all of the countries of the Western Balkans. Every year the Commission pays 1.2 million euros to 
fund ReSPA’s activities. Each of the participating countries, of which the former Yugoslav Republic of Mac -
edonia is one, contributes 150 000 euros annually towards the school’s running costs. Although a national 
representative sits on the ReSPA Governing Board, we found that the country made little use of the training 
courses, comparative assessments and networking provided by the school. This was because they were not 
seen as relevant to or valued by staff in the country’s public administration.
Project 12 aimed to strengthen the administrative and operational capacity of the State Transport Inspector -
ate to enforce road transport legislation. The project was closed in July 2014, but by the date of the audit, 
9 months later, the Inspectorate had not yet exploited half of the project outputs, for example, the strategic 
development plan or action plan, or the Terms of Reference prepared to make calls for tenders.
Project 15 set up two regional waste management bodies and a public waste management information sys -
tem. Although the project was completed in June 2012, the management information system was not being 
used by the time of the audit.
Further investment required to make use of outputs
Project 7 aimed to improve the national system for training coordination and the implementation of the regu -
latory framework relating to management of the public administration. A major output of this project was that 
it carried out functional analyses to identify gaps in administrative capacity. This exercise has huge potential 
for informing a capacity-building strategy. However, the project was only a pilot and while it provided guid -
ance for continuing the analyses, the country may not in fact complete the work and use it to address gaps in 
capacity without further financial assistance.
Project 7 also developed electronic learning tools as a flexible method of strengthening administrative 
capacity. However, to achieve its full potential this output needs to be made more widely available and to be 
integrated into an overall training strategy.
Project 11 provided technical assistance for strengthening the capacity of the operating structures set up to 
manage IPA funds under the decentralised management mode. The outputs delivered were qualified train -
ers, training curricula, modules and training kits, and a toolkit and resource library developed to strengthen 
capacity in monitoring and evaluation. After the project closed, the national authorities used the qualified 
trainers, but only for a limited period of time. Further use of these trainers would have required additional 
investment in national staff and more resources. The national authorities did not take up the monitoring and 
evaluation tools, which it will cost money to update and place online.
21 Observations 
The impacts of projects were often limited and not always 
sustainable
39 
Eleven of the audited projects achieved limited impact which often could not be 
sustained. Some of these projects did not include provision for their own sustain -
ability. In other cases, the national authorities did not take action to ensure the 
sustainability of the impacts. See Box 3 .Box 3Examples of limited and unsustainable impacts
Project 5 assisted the State Commission for the Prevention of Corruption (SCPC) to draft documents in support 
of a strategy to prevent corruption. This had little impact on the country’s fight against corruption because 
it was not embedded in a wider national anti-corruption strategy and because the SCPC did not have the 
independence and resources to monitor effectively the implementation of its own strategy in all institutions 
concerned. The potential impact of the project was further weakened because it took 3 years for the Commis -
sion to follow it up with another project.
Project 6 targeted the capacity of CSOs to tackle corruption and 
organised crime. The development of best practice and networking 
was positive. However, when EU funding ends the project is unlikely 
to be sustainable. This is because the only institution which has ex -
pressed an interest in providing ongoing support in this area lacks 
both the necessary authority and capacity to continue the work.
Project 10 assisted with the setting-up of a centralised IPA Train -
ing and Support Facility (ITSF). The ITSF has had relatively little 
impact in strengthening administrative capacity. One reason is 
that few of the trainers trained by the project actually gave courses 
as intended. This was either because they were not released from 
their other work or because they were not motivated to take on 
what is considered to be an additional and unrewarding task. After 
the original contracts with trainers expired, the national authori -
ties did not facilitate new arrangements for providing the ITSF 
with trainers. Neither the national authorities nor the Commission 
have provided financial support to meet the shortfall in trainers. 
Another reason was that the national authorities did not formally 
centralise training on IPA in the ITSF, so much training continues to 
take place at the individual line ministries (see photo).
IPA Training and Support Facility premises, Skopje  
(project 10)
Source : European Court of Auditors.
22 Observations 
40 
Many of the audited projects did not achieve an impact because of obstacles that 
arose from inflexibilities in the structure and organisation of the public admin -
istration. For example, in some of projects involving contracting authorities, we 
found that there was not enough flexibility between ministries to allow exchang -
es of staff and experience. In addition, administrative staff trained by three of the 
audited projects to train other staff were frequently not released to run courses 
and the activity of training other staff was not compensated in any way. For over 
half of the audited projects we found that trained staff were not always encour -
aged or permitted to use the skills obtained and excessive rotation of staff and 
high turnover led to a lack of qualified staff. Box 3Project 16 delivered training for staff measuring air quality but did not address the main obstacle to a fully 
operational air quality monitoring system, which is the lack of capacity in terms of functioning equipment. In 
addition, the calibration laboratory assisted under the project has not yet been accredited or staffed.
Project 17 delivered a means of enforcing the ‘polluter pays’ principle and strengthening the capacity to do so, 
but this has not yet been implemented by the national authorities. The same project prepared for the introduc -
tion of tariffs to ensure the sustainability of waste treatment plants, but the country has still not set up a regu -
latory body to enforce tariffs. The project had not produced a sustainable impact by the time of the audit.
23 Observations 
Obstacles to progress on strengthening administrative 
capacity
41 
The Commission did not have an overall strategy of support for strengthening 
administrative capacity in the country, and the audited projects did not always 
fit together as part of a coherent, cohesive and coordinated approach. Some pro -
jects did not follow on from previous assistance in the same sector and were not 
adequately followed up with further support. Often the reason for this was the 
fact that the Commission has to make choices about the limited resources avail -
able for a wide range of EU policies in the country. In addition, individual projects 
were often very ambitious and had numerous objectives.
42 
The objectives of IPA assistance were also hampered by the fact that the as -
sistance was not sufficiently responsive, flexible and targeted. For example, the 
impact of the audited projects was often weakened because the time taken be -
tween establishing the need for assistance and the delivery of results was 4 years 
or more. In some cases needs had changed before results were delivered. This 
was partly due to the lengthy process of mobilising IPA funds. It was also because 
when projects were selected they were not always sufficiently mature, which 
lowered the efficiency of implementation.
43 
Under IPA I the Commission did not have at its disposal funds which it could 
mobilise quickly to address issues as they arose. An example of how funds can 
be used in this way emerged during the recent political crisis. The Commission 
successfully employed funds at short notice and in exceptional circumstances to 
provide flexible, targeted, fast-track expert input to support urgent and sensitive 
policy priorities.
24 Observations 
44 
The continued existence of obstacles to improving administrative capacity in the 
country meant that the objectives of pre-accession assistance were not always 
achieved. A major issue has been the lack of high-level political will and com -
mitment by the national authorities to support for IPA projects. For example, 
at a political level, there is continued resistance to moves to develop a public 
administration that is independent, strong and representative (see Box 4 ).Box 4Resistance to developing a public administration that is independent, strong and 
representative
With the support of the Commission, in February 2015 the country put in place a new legal framework for 
a professional public service. The main thrust of the legislation was to ensure that recruitment of public em -
ployees is based on merit and equal treatment. While it still suffers from some gaps, the legislation represents 
a major step towards developing a strong, independent, professional civil service. Two days before the law 
entered into force, the parliament adopted a new law on transformation of temporary positions into perma -
nent contracts. This law circumvents the principles of merit-based recruitment and has allowed thousands of 
temporary staff to become permanent civil servants or public employees without open competition.
Project 7 trained 600 administrative officers who were among 2 400 staff recruited by the national authorities 
from the non-majority communities32 following the Ohrid Framework Agreement33 on equitable representa -
tion. Although salaried, the individuals concerned did not have active employment. The aim of providing this 
training was to increase the likelihood that the participants would be offered posts. At the time of the audit, 
the majority of the staff trained under the project were still being paid but not actively employed. The objec -
tive of achieving equitable representation in the public administration had not been met.
32 Ethnic Albanians, Serbs, Turks, Roma, etc.
33 The Ohrid Framework Agreement was a peace deal signed by the government and representatives of the ethnic Albanian community on 
13 August 2001. The agreement ended the armed conflict between the ethnic Albanian National Liberation Army and the national security 
forces and set the groundwork for improving the rights of ethnic Albanians.
25 Observations 
Part II — The use of decentralised management as 
a means of building capacity
45 
We examined the introduction of decentralised management under IPA I and 
how the Commission resolved the issues which arose using this management 
mode. We also examined whether the Commission’s use of decentralised man -
agement strengthened administrative capacity.
The country was not ready for the volume and complexity of 
IPA funds for which management was decentralised
46 
The former Yugoslav Republic of Macedonia asked the Commission to decentral -
ise the management of IPA funds to the national authorities in 200834. By 2010, 
the country was responsible for contracting and implementing 470 million eu -
ros (76 %) of its total IPA I financial envelope, subject to either ex ante  or ex post  
checks by the Commission. The national authorities were required to set up 
operating structures to manage the decentralised IPA funds.
47 
The process of decentralisation was carried out in accordance with the regula -
tions. However, the Commission was not required to assess whether the national 
authorities were ready to manage the volume and complexity of IPA funds to be 
decentralised. For the decentralised management mode to work effectively it is 
necessary for there to be sufficient capacity in the operating structures.
48 
Soon after decentralisation began, the national authorities were unable to 
respect the deadlines for presenting contract dossiers for ex ante  checks by the 
Commission. This was often because they submitted documents of insufficient 
quality which had to be returned. This was the case for one third of these docu -
ments in 2014. The rate of contracting slowed. By the end of 2014, the delays had 
led to the de-commitment35 of 70 million euros of funds under IPA I (11 % of the 
IPA funds allocated to the country), and 244 million euros remained to be com -
mitted (about 40 % of the total). In many cases the de-commitments resulted in 
the loss of projects designed to fund key reforms. For example, 33 million euros 
was allocated for 2010, but the cancellation of 12 out of 31 projects presented for 
funding meant that 10 million euros (33 %) was effectively lost for funding reform 
in the country.34 See articles 11 and 14 of 
Regulation (EC) No 718/2007.
35 The Commission de-commits 
funds committed for a project 
when they are not used by the 
deadline set. These funds are 
lost for the project concerned.
26 Observations 
49 
The Commission attributed the delays to a highly centralised decision-making 
process, which prevents timely decisions, as well as a lack of material resources 
and sufficient and sufficiently qualified staff, allegations of political interfer -
ence in procurement and poor interinstitutional cooperation. Weaknesses of this 
type had already been highlighted by the Commission in the rest of the public 
administration before management had been decentralised. If the Commission 
had taken more account of weaknesses already identified in the public adminis -
tration, it might have concluded that the decision to decentralise management 
should be delayed or that a smaller proportion of IPA funds should be decentral -
ised within the constraints of the applicable regulations.
The Commission has taken action but further de-commitment 
is probable
50 
Drawing on previous experience with other enlargement countries, the Com -
mission expected the early years of decentralised management to be a period 
of learning and transfer of knowledge. It worked with the country to address 
the reasons for the delays in contracting and implementing IPA funds. However, 
significant further de-commitment of IPA I funds was expected in 2015, 2016 and 
2017.
51 
In 2015 the Commission took measures to improve the situation for IPA I funds, 
for example by re-centralising the management of some IPA projects and speed -
ing up contracting procedures by reducing the number of ex ante  checks. For 
IPA II, the Commission is currently assessing the optimum level of decentralisa -
tion and plans to be more selective regarding the kinds of project it will decen -
tralise for management by the national authorities.
Decentralising management could have been used 
more widely as a capacity-building tool for the public 
administration
52 
When management was decentralised in 2010, the main objective was to prepare 
the country for the future management of the EU’s structural and agricultural 
funds. The focus was therefore on setting up structures to operate decentralised 
management and strengthening the capacity of administrative staff to operate 
these structures.
27 Observations 
53 
Decentralising management required significant investment of resources by 
the country as well as the Commission. For example, the country assigned 436 
administrative staff to work in the operating structures, at an annual salary cost 
of 4.7 million euros (2014 figures). Both the Commission and the country provided 
training in setting up operating structures and in programming, contracting and 
implementing IPA projects.
54 
Decentralised management has strengthened capacity in the operating struc -
tures. Internal control is stronger and operational decisions are mostly taken at 
an appropriate level, with less political interference than in other parts of the 
public administration. Rigorous ex ante  controls by the EU Delegation have pro -
vided further opportunity for ‘learning by doing’36. The operating structures have 
become ‘centres of excellence’ in terms of administrative capacity.
55 
While strengthening administrative capacity was not included as an objective of 
decentralising management, the Commission could have made more use of the 
experience gained to encourage the national authorities to transfer knowledge 
to the rest of the public administration, for example through ‘learning by doing’. 
The operating structures for decentralised management were seen as organisa -
tions that were parallel to and even separate from the rest of the public admin -
istration. For example, they were not included in the country’s 2010-2015 PAR 
strategy. In examining the sample of projects audited we noted little transfer of 
the operating structures’ cumulative knowledge and experience to the rest of the 
public administration. Thus the experience of decentralising management has 
not contributed significantly towards an overall improvement in administrative 
capacity in the country.36 Ex ante  control is a necessary 
part of decentralised 
management at this stage to 
protect the EU’s financial 
interests.
28 Observations 
Part III — The contribution of political dialogue to 
strengthening administrative capacity
56 
We examined how the main structures created under the SAA for political dia -
logue between the Commission and the former Yugoslav Republic of Macedonia 
were used to contribute towards strengthening administrative capacity. We 
also examined the contribution made by political dialogue outside these formal 
structures and through alternative structures set up during the audited period 
to compensate for the absence of the framework for dialogue that would be pro -
vided by accession negotiations.
Although well organised, political dialogue did not 
contribute significantly to an overall strengthening of 
administrative capacity
57 
The main structures for political dialogue were set up under the SAA. They are 
the Stabilisation and Association (SA) Council, the SA Committee, seven SA sub-
committees and the Special Group on PAR. The Commission and the country 
meet regularly in these fora to address the need for progress on reform and the 
country’s insufficient capacity.
58 
At the highest level, dialogue takes place in the SA Council37, both to assess 
progress towards meeting the political and economic criteria for accession 
(Copenhagen criteria) and on financial cooperation. During the audited period, 
discussion often centred on the need to tackle the continuing obstacles to 
strengthening administrative capacity. Some of the key areas addressed were:
(a) the need for policy improvements and better enforcement to obtain more 
concrete results in the fight against corruption;
(b) the need to respect and build up the independence of the public administra -
tion, and
(c) the need to apply the principles of transparency, merit and equitable repre -
sentation at all levels in the country.37 Meetings are attended by the 
High Representative of the 
Union for Foreign Affairs and 
Security Policy/Vice President 
of the Commission (or her 
representative), the 
Commissioner for European 
Neighbourhood Policy and 
Enlargement Negotiation and 
Ministers or State Secretaries 
from the country.
29 Observations 
59 
Representatives of the Commission and the country also discussed weaknesses 
in administrative capacity at the annual meetings of the SA sub-committees and 
PAR Special Group. Although the nature of discussions in all of the SAA structures 
for political dialogue intensified during the audited period, the issues remained 
the same.
60 
While the political dialogue structures set up under the SAA were well-suited to 
the accession process while it stayed on track, during the audited period they 
did not contribute successfully towards strengthening administrative capacity. 
This was partly because the national authorities lacked the political will to make 
progress. It was also because the absence of formal progress towards acces -
sion reduced the Commission’s potential leverage to encourage the country to 
strengthen administrative capacity. For example, the framework provided by 
accession negotiations typically includes a screening exercise for each policy 
field (future negotiating chapter) to determine how well prepared the country is 
in that field. Based on this exercise, the Commission can recommend that certain 
conditions (‘opening, interim and closing benchmarks’) be met before each chap -
ter can be opened for negotiation or closed. This structure does not currently 
exist in the country.
Other dialogue mechanisms addressed the need to 
strengthen administrative capacity but did not result in 
progress towards removing the underlying obstacles
61 
The Commission has consistently engaged with the former Yugoslav Republic 
of Macedonia in bilateral dialogue on specific topics of interest to the country. 
Administrative staff from the ministries and the Commission have frequent ex -
changes on a broad range of issues. This has given the country the opportunity 
to learn about EU methods and to understand EU policy on enlargement, and 
progress has been made in some sensitive areas. For example, the Commission 
helped the country to prepare and maintain a ‘track record’ of corruption cases. 
This has had the positive effect of increasing the information available on corrup -
tion allegations which are followed up by the national authorities. However, the 
record does not provide information on allegations not followed up.
30 Observations 
62 
The Commission’s approach towards supporting enlargement countries changed 
in 2014, when dialogue was centralised in Directorate-General (DG) for Neigh -
bourhood and Enlargement Negotiations. In most policy fields the country no 
longer engages in dialogue with the relevant Commission directorates-general, 
but with sector-specific centres of thematic expertise created as part of the 2015 
reorganisation of DG for Neighbourhood and Enlargement Negotiations. Another 
change is that, under IPA II, decentralised management in the transport and 
environment sectors is no longer supported by theDG for Regional and Urban 
Policy38. This is a matter of concern to those parts of the public administration 
concerned, which feel that they are now deprived of a major source of support 
for strengthening administrative capacity in the country.
63 
In the absence of the framework provided by accession negotiations (see para -
graph 60) the country lost momentum for reform in many important areas. To 
counter this, the Commission has explored alternative ways of taking political 
dialogue forward. In 2012, it set up the High Level Accession Dialogue (HLAD) as 
a bridge to opening negotiations. Dialogue centred on targets agreed between 
the Commissioner for European Neighbourhood Policy and Enlargement Nego -
tiations and the Prime Minister39. The HLAD covered similar issues to those raised 
in the SAA structures, including the need to strengthen administrative capacity 
and tackle obstacles to implementing reform. Dialogue took place at senior po -
litical level and at technical level. Following allegations of fraud in the 2012 leg -
islative elections, the main opposition party boycotted parliament for more than 
two years. As a result, the HLAD was discontinued at political level from 2013 
until September 2015, although some progress was made on technical issues.
64 
Recognising the need to move forward despite the absence of a framework for 
dialogue, in 2013 the Commission stated that ‘upon invitation by the European 
Council’, it would be ready to begin preparatory work for ‘an analytical examina -
tion of the EU acquis  beginning with the chapters on the judiciary and fundamen -
tal rights, and justice, freedom and security’40. This was not acted upon by the 
Council.38 The DG for  Regional and 
Urban Policy will resume this 
role when the country is 
considered to have moved 
closer to accession.
39 The targeted areas include 
those within the scope of the 
audit: rule of law (including 
corruption policy) and 
fundamental rights, electoral 
reform, inter-ethnic relations, 
public administration reform 
(including human resource 
management, administrative 
procedures and 
decentralisation) and 
economic governance 
(including public finance 
management).
40 COM(2013) 700 final 
’Enlargement Strategy and 
Main Challenges 2013-2014’.
31 Observations 
65 
Following the publication in 2015 of wiretapped recordings of official telephone 
conversations suggesting the involvement of government members in electoral 
fraud and other corrupt activities, the Commission promoted a return to the 
negotiating table to prevent further degeneration of the situation. During 2015 
the Commission engaged in intensive dialogue with the country to find a way out 
of the current domestic crisis, which resulted in the EU-facilitated Przino Agree -
ment between the main political parties. The Commission also presented the 
document ‘Urgent Reform Priorities’ to address systemic issues (see paragraph 9) 
in key areas such as rule of law and the judiciary, de-politicisation of the public 
administration and freedom of expression.
66 
The engagement of the Commission in the current crisis provides it with the 
opportunity to obtain government commitments on tackling the long-standing 
obstacles to strengthening administrative capacity in the country.
32
 Conclusions and 
recommendations
67 
We conclude that there was relatively limited progress in strengthening admin -
istrative capacity in key areas during the audited period. Working in a difficult 
context, the Commission did not, for many of the projects examined, sufficiently 
ensure the effectiveness of their contribution towards strengthening administra -
tive capacity.
68 
All of the projects audited in the PAR sector included activities designed to 
strengthen administrative capacity but they did not succeed in addressing suf -
ficiently many weaknesses. For some key areas in which strong legislation already 
existed (for example, internal control and the development of a professional, 
independent civil service) there was little assistance under IPA during the period 
audited and there was no significant progress on implementing that legislation. 
In other key areas (such as the fight against corruption and public procurement 
procedures) IPA projects had little impact in the absence of active support from 
the national authorities (see paragraphs 23 to 33).
Recommendation 1  
Concrete assistance for ranked priorities
The Commission should concentrate its assistance for strengthening administra -
tive capacity on ranked priorities that take account of significant weaknesses in 
key areas. Examples of areas in which we noted a need for improvement during 
our audit are:
(i) efficiency of the public procurement system, for example by further develop -
ing electronic procurement;
(ii) transparency of public spending, for example by improving the availability 
and quality of data on corruption cases reported in order to allow scrutiny by 
civil society and the wider public;
(iii) internal control, for example by improving the standing and professional 
skills of internal auditors.
69 
In the environment and especially in the transport sectors few of the audited 
projects addressed capacity-building to improve alignment with the EU acquis . 
Others aimed to strengthen administrative capacity through ‘learning by do -
ing’ but did not include activities clearly designed to support this objective (see 
paragraphs 34 to 36).
33 Conclusions and recommendations 
Recommendation 2  
Intensified efforts to strengthen capacity
In the transport and environment sectors, the Commission should:
(i) intensify efforts to strengthen administrative capacity to contract, implement 
and manage projects, for example by providing tailored training for contract -
ing authorities, better promoting ‘learning by doing’ activities and providing 
wider access to JASPERS;
(ii) secure strong commitment from the national authorities to bring national 
legislation into line with EU legislation and strengthen the link between 
capacity-building and EU support.
70 
The projects we audited were generally sound and well-managed, but results 
were often only partially achieved or not adequately followed up. Most projects 
delivered the planned outputs, but these were often not fully exploited. Fre -
quently the projects achieved only limited impacts and were not always sustain -
able. Impact was also weakened because the projects were ambitious and spread 
across a wide range of priorities (see paragraphs 37 to 40).
Recommendation 3  
Improved follow-up of outputs and sustainability of impacts
The Commission should make better use of policy instruments to reinforce the 
commitment by the national authorities to the reform process, including a pro -
longed and active follow-up of outputs and impacts. This should be closely fol -
lowed up in the IPA monitoring committees.
71 
The audited projects did not always fit into a coherent, cohesive and coordinated 
approach towards strengthening administrative capacity. Some projects did not 
follow on from previous assistance in the same sector and were not adequately 
followed up with further support. There was often a gap of 4 years or more be -
tween establishing the need for assistance and the delivery of project results (see 
paragraphs 41 to 44).
34 Conclusions and recommendations 
Recommendation 4  
Better targeted assistance
IPA projects should be sequenced and part of a coherent approach. When plan -
ning projects, the Commission should:
(i) better rank priorities in sequential steps and reflect this when programming 
and implementing IPA funds;
(ii) use a larger part of the IPA allocation to provide fast-track, flexible and tar -
geted support on urgent and sensitive issues of policy and acquis .
72 
Decentralised management of IPA funds has allowed for a valuable transfer of 
knowledge. However, there would have been fewer delays and de-commitments 
if decentralisation had been implemented more gradually. While strengthening 
administrative capacity was not included as an objective of decentralising man -
agement, the experience gained could have been used more effectively by the 
national authorities to contribute towards an overall improvement in administra -
tive capacity in the public administration (see paragraphs 46 to 55).
Recommendation 5  
More use of decentralised management to strengthen 
capacity
The Commission should use the decentralised management mode more selec -
tively with regard to the volume of funds and the complexity and sensitivity of 
projects to decentralise. Once examples of good practice have been established 
in the operating structures set up for decentralised management, the Commis -
sion should encourage the national authorities to extend these practices to other 
parts of the administration, for example, to encourage the delegation of deci -
sion-making to the appropriate level and to strengthen internal control systems.
73 
The mechanisms for political dialogue were well-suited to support reform in 
the country, but did not contribute significantly towards strengthening overall 
administrative capacity during the audited period. This is because of the lack 
of political will in the country to tackle some of the obstacles to reform, and 
reduced leverage for the Commission to encourage reform in sensitive areas in 
the absence of the framework for dialogue provided by accession negotiations. 
The Commission continued to be closely involved during 2015 in the facilitation 
of a political agreement to overcome the political crisis in the country. This has 
given the Commission an opportunity to rekindle momentum for reform (see 
paragraphs 57 to 66).
35 Conclusions and recommendations 
Recommendation 6  
Use of political dialogue to secure commitment to 
strengthening administrative capacity
In the context of the renewed opportunity for strengthening administrative 
capacity to better implement reform, the Commission should use political 
dialogue to:
(i) secure a firm commitment to strengthening the capacity to tackle corruption 
and improve transparency;
(ii) require the country to further build on its ‘track record’ of corruption cases so 
that it becomes a meaningful tool for assessing progress in the fight against 
corruption;
(iii) increase the focus on monitoring results in reversing the backsliding on pub -
lic administration reform, including the implementation of legislation in areas 
such as public procurement and PIFC;
(iv) agree targets and deadlines, for a structured approach to tackle obstacles to 
strengthening administrative capacity to implement key areas of the acquis .
This report was adopted by Chamber III, headed by Mr Karel PINXTEN, Member of 
the Court of Auditors, in Luxembourg at its meeting of 1 March 2016.
 For the Court of Auditors
 Vítor Manuel da SILVA CALDEIRA
 President

36
 Annexes
Key dates in EU–the former Yugoslav Republic of Macedonia relations
1999 • 26 May - Stabilisation and Association Process for countries of Southeast Europe.
2000 • 24 January - The Council adopts negotiating directives for a Stabilisation and Association Agreement (SAA).
2001 • 9 April - Signature of the SAA, the first in the region.
2003• 21 June - At the EU–Western Balkans Summit in Thessaloniki the EU reiterates its support for the European future of the Western Balkan 
countries.
2004• 22 March - The country applies for EU membership.
• 1 April - The SAA enters into force.
2005 • 16 December - Acting on the Commission´s recommendation, the Council grants the country candidate status.
2007 • 30 October - IPA framework agreement and financing agreement for 2007 IPA national programme signed.
2008 • 1 January - Visa facilitation and readmission agreements enter into force.
2009• 7 October - The Commission recommends progressing to stage 2 of the SAA.
• 14 October - The Commission recommends the opening of accession negotiations
• 8 December - General Affairs Council (GAC) Conclusions. No decision on the Commission´s first recommendation to open accession 
negotiations.
• 19 December - Visa-free travel to the Schengen area granted.
2010• 9 November  - The Commission recommends the opening of accession negotiations.
• 14 December - GAC Conclusions. No decision on the Commission´s recommendation to open negotiations.
2011• 12 October - The Commission recommends the opening of accession negotiations.
• 5 December - GAC Conclusions. No decision on the Commission´s recommendation to open negotiations.
2012• 15 March - Commissioner Füle launches the High Level Accession Dialogue (HLAD) with the Commission.
• 7 May and 17 September - Commissioner Füle attends HLAD plenary meetings.
• 10 October - The Commission recommends the opening of accession negotiations.
• 11 December - GAC Conclusions. No decision on the Commission´s recommendation to open negotiations.
• 24 December - During a heated debate on the 2014 budget, the Speaker orders the removal from the national parliament of opposition 
MPs and all journalists. Main opposition party begins a boycott of parliamentary sessions.
2013• 16 October - The Commission recommends the opening of accession negotiations.
• 17 December - GAC Conclusions. No decision on the Commission´s positive recommendation.
2014• 8 October - The Commission states that the country ‘continues to sufficiently meet’ the criteria for EU membership and, for the 6th con -
secutive year, recommends opening negotiations.
• 16 December - GAC Conclusions. No decision on the Commission´s 6th recommendation to open accession negotiations.Annex I
37 Annexes 
2015• 31 January - Prosecutor brings charges of ‘conspiring with a foreign intelligence service to topple the government’ against the main 
opposition leader. The EU voices concerns about the deterioration in political dialogue in the country and calls for an independent and 
transparent investigation.
• 10 February - Opposition leader begins releasing wiretaps, claiming the government conducted illegal surveillance of up to 
20 000 citizens.
• 18 February - Commissioner Hahn visits Skopje and also expresses deep concern at the reported surveillance of thousands of citizens, 
calling for the matter to be investigated thoroughly.
• 21 April - GAC voices its grave concern over the deteriorating situation in the country, and urges political leaders to rapidly address 
concerns.
• 9-10 May - Clashes in the northern town of Kumanovo leave 8 police and 14 alleged members of an ethnic Albanian armed group dead.
• 2 June - Commissioner Hahn meets with leaders from the 4 main political parties and they sign the Przino Agreement.
• 22 and 23 June - EU Foreign and General Affairs Council calls upon all parties to honour their 2 June agreement and implement all Com -
mission recommendations.
• 15 July - Agreement on a protocol to implement the Przino Agreement. Main elements include the return of the opposition party to 
parliament on 1 September, a technocratic government from 15 January and parliamentary elections on 24 April 2016.
• 15 September - Appointment of a special prosecutor to investigate the issues arising from the interception of communications.
• 18 September - Commissioner Hahn visits Skopje for a plenary meeting of the HLAD.
• 2 October - Prime Minister Gruevski reaffirms that the country’s priorities are membership of the EU and NATO and resolution of the long-
standing naming dispute.
• 5 November - The Commission states that it is prepared to extend its recommendations to open accession negotiations. This shall, how -
ever be conditional on the continued implementation of the June/July political agreement and substantial progress in the implementa -
tion of the urgent reform priorities.
Source:  European Commission.Annex I
38 Annexes 
Projects audited
Project No  
(in text)Project name Contract NoContracted amount  
(euro)
Procurement
1. Support to the Public Procurement System 260-590 986 442
2. Support for Improvement in Governance and Management 253-091 + 296-87410 204 081
3 061 225
3.Programme for the support for improvement in Governance and management (SIGMA), 
Sub programme for strengthening institutional capacity in the IPA region.319-423 10 000 000
4. Training in Public Procurement in the Western Balkans and Turkey 248-580 3 962 000
Corruption
5.Support for the drafting of the follow up strategic documents and corresponding action 
plans for the prevention and repression of corruption and conflict of interest252-831 165 968
6. Exchange of EU best practices in the area of anticorruption monitoring on local level 10-39880 138 500
Capacity-building initiative
7.Technical Assistance to the Ministry of Information Society and Administration and 
Strengthening the implementation of the National System for Training Coordination10-14592 1 095 000
8. Running of ReSPA and organisation of ReSPA activities 256-128 2 400 000
9. Running of ReSPA and organisation of ReSPA activities 331-241 3 500 000
10.Technical assistance for the IPA training and support facility for the former Yugoslav Repub -
lic of Macedonia in the frame of the IPA 2007 regulation240-984 969 000
11.Strengthening the capacity of the institutions to manage and implement the operational 
programmes260-772 1 599 710
Transport
12.Strengthening the administrative and operational capacity of the State transport 
Inspectorate09-42802 732 750
13.Supervision of the remaining link along Corridor X to the level of motorway section Demir 
Kapija-Smokvica09-24859/1 8 977 500
14.Preparation of detailed design and tender documentation for construction of new Railway 
Section Kichevo-Border with Republic of Albania as part of Corridor VIII and tender docu -
mentation for supervision of construction works done in Beneficiary Country11-28412/1 7 752 425
Environment
15.Strengthening the central and local level administrative capacities for implementation and 
enforcement of waste management legislation244-793 1 297 150
16.Strengthening the central and local level capacities for environmental management in the 
area of air quality245-323 1 000 000
17. Technical assistance for Development of National Water Tariff Study 10-10139/1 785 000
Source:  Extracted from European Commission database.Annex II
39 Reply of the  
Commission
Executive summary
V
The objective of the IPA I investments in infrastructure in environment and transport was to strengthen administra -
tive capacity through learning-by-doing type of projects. That means the country indirectly develops procurement 
know-how in these sectors in line with the Structural Funds legal framework.
VI
While acknowledging that the Decentralised Implementation System (DIS) could slow down the process of estab -
lishing needs and delivery of results, the Commission would like to point out that the process of programming the 
financial assistance and implementing these programmes and measuring results is a sequenced and complex exer -
cise which takes several years in general regardless the type of projects or management mode.
VII
The objective of the DIS was to set up a functioning system for the decentralised management of EU funds. The 
national authorities could be encouraged to use it as a good practice for the entire public administration. The 
former Yugoslav Republic of Macedonia is currently preparing a comprehensive pub  lic finance management (PFM) 
reform programme, which will be based on a comprehensive diagnostic of the PFM subsystems and is expected to 
increase the capacity of the whole public administration in this area.
Introduction
12
The Commission agrees with this presentation of sectors of expenditure. The Commission would like to provide the 
following additional information. According to IPA I regulation, assistance shall be programmed and implemented 
according to the following components:
1. Transition Assistance and Institution Building — the component covers all sectors;
2. Cross-Border Cooperation — the component covers the sector of territorial cooperation;
3. Regional Development — the component covers the sectors of environment and transport;
4. Human Resources Development — the component covers the sector of education, employment and social policies;
5. Rural Development — the component covers the sector of agriculture.
The last three components provided for Structural Funds type of projects and were accessible only for candidate 
countries accredited to manage funds in a decentralised manner.
Reply of the Commission 40
13
The IPA I support to Structural Funds type of projects, e.g. investments in environment and transport was legally 
possible only under DIS for the country. Under decentralised management the funds allocated are managed by 
dedicated structures within the public administration of the country specifically accredited for that purpose.
Observations
27
In the absence of a negotiating framework the Commission is using the available tools to support capacity-building 
in this area. The country has adopted an action plan in 2015 that foresees concrete measures with deadlines and 
has assigned responsibilities in a number of priority areas, including the fight against corruption. The Commission 
is regularly monitoring progress in the implementation of this action plan and is following it up at the highest level. 
The Commission is addressing this area in its progress report and in the Urgent Reform Priorities. Moreover, under 
the Urgent Reform Priorities action plan prepared by the country, a special place is dedicated to the fight against 
corruption where clear targets and deadlines are stated. The fight against corruption is also addressed through the 
High Level Accession Dialogue (HLAD) where again targets and deadlines are set to deal with the issue. The success -
ful achievement of all targets set ultimately depends on the national authorities which need to demonstrate the 
necessary political will in this respect.
29
The Commission has a clear approach on how to support CSOs as outlined in the communication from the Com -
mission (COM (2012)492 of 12 September 2012) and in the ‘Guidelines for EU support to civil society in enlargement 
countries, 2014-2020’ and has an intensive dialogue with them in all key sectors including the fight against corrup -
tion. The Commission constantly explores new innovative ways of supporting CSOs.
Box 2 — First indent 
With regard to project 7 the country adopted legislation on 14 February 2014 that makes it compulsory to carry out 
functional analysis before each change to the organisation chart. It will be important that the national authorities 
ensure proper implementation of the law.
Box 2 — Third indent 
The current legal framework in the country does not allow the public administration to pay additional funds for 
those that are conducting these trainings.
Box 3 — Fourth indent
While the Commission agrees with the observation to project 16, it is necessary to point out that substantial tech -
nical support is provided by the EU in terms of capacity building and in terms of equipment in this area. However, 
the air quality is a very complex problem which requires investment of substantial financial and human resources 
to establish a credible system, but also requires regular maintenance and the renewal of the equipment by the 
national authorities.
Reply of the Commission 41
The EU has supplied 13 out of 17 air quality monitoring stations (AQMS) which constitute the backbone of the 
national air quality monitoring network. Currently, the ongoing twinning project in air quality area (under IPA 2012) 
is assisting the Ministry in preparation of documents for the accreditation of the calibration laboratory.
Box 3 — Fifth indent
With regard to project 17, on 15 January 2016 the ‘Law on setting prices on water service’ was adopted by the 
national Parliament (Official Gazette n.07/16 published on 18.01.2016) and the regulatory body is about to be set up. 
This is a process which needs longer to complete.
The implementation deadline of the law will be September 2016, while the adoption of a new water tariff method -
ology is planned for the end of October 2016. The application of the new water tariff methodology shall start on 
1 January 2018 and on 1 January 2019 respectively for the municipalities above and below 10 000 people.
41
To further strengthen and improve the coherence and coordination, under the new IPA II financial perspective, the 
Commission introduced a sector based approach. This would provide for more thorough addressing of the sectors. 
This would also ensure coherence of assistance and coordination of stakeholders and donors.
42
Indeed, IPA assistance is programme based where the process of establishing the needs, preparing the financial 
assistance programmes and implementing these programmes and respectively delivering results is a sequenced 
and complex exercise which takes several years. Under IPA II the Commission programmes its assistance based 
on the maturity of the projects in order to shorten this period. In addition, the Structural Funds type of assistance 
under IPA I underwent an accreditation process which was done in the period when the programmes were already 
adopted, which also affected the procurement/implementation and absorption of those funds.
47
The Commission would like to provide the following additional information. The 2005-2006 CARDS programmes 
were used to support the newly employed staff in the operating structures and provide the training necessary to 
ensure that staff had the required knowledge to operate under the DIS. In the following years, the Operating Struc -
tures’ capacity was weakened due to high staff turnover. The Commission always underlined the need for a proper 
staff retention policy, even making it part of the 2013 DIS Action Plan. The government needs to be fully committed 
to ensure sufficient capacity in the operating structures.
49
The Commission would like to provide the following additional information. According to the applicable Regula -
tions 1085/2006 and 718/2007, the Structural Funds type of assistance is not available to the country in any mode 
other than decentralised. Under IPA II the Commission has become more selective in decentralising management of 
funds to the country.
Reply of the Commission 42
50
Along with the reduction of the number of the ex ante  checks and the more selective decentralisation of funds 
under IPA II, the Commission is closely monitoring the procurement plans prepared by the national authorities 
and has also advised of the country to prioritise projects in order to mitigate the risk of further de-commitments. 
The Commission is monitoring the implementation of the DIS action plan prepared by the national authorities to 
address the issues related to the IPA implementation.
Conclusions and recommendations
67
While the Commission agrees in general with the Court’s overall conclusion, many of the outputs were delivered, 
and the assistance provided to the country in some cases contributed to strengthening administrative capacity. As 
an example, in the area of public procurement, IPA assistance was the cornerstone for setting up the State Appeals 
Commission.
Recommendation 1
The Commission accepts the recommendation. The Public Expenditure and Financial Accountability assessment 
confirms that these areas need to be strengthened to ensure that the Public Financial Management (PFM) system 
functions well. Further EU assistance should be in line with measures to be defined in the PFM reform programme, 
currently under preparation.
69
The objective of IPA I investments in environment and transport infrastructure was to strengthen administrative 
capacity through learning-by-doing type of projects. This means the country indirectly develops procurement 
know-how in these sectors in line with the Structural Funds legal framework.
Recommendation 2
The Commission accepts the recommendation. In addition, the Commission will continue providing trainings and 
JASPERS support to the country.
Recommendation 3
The Commission accepts the recommendation. The Commission is currently following up on outputs and sustain -
ability at the IPA Sectoral and Joint Monitoring committees. This will be further enhanced with the set-up of the 
performance framework under IPA II where indicators with targets and baselines are introduced at project and pro -
gramme level. Additionally the Commission is reviewing the implementation of each programme upon its closure 
and reserves the right to recover funds if there are deviations between the expected results and funds used.
71
The process of programming the financial assistance and implementing these programmes and measuring results is 
a sequenced and complex exercise. Under IPA II, the Commission introduced a sector-based approach which would 
provide for sectors to be more thoroughly addressed. It would also ensure coherence of assistance and proper 
stakeholder and donor coordination. The Commission pays much more attention to the maturity of the projects in 
order to mitigate the risk of having gaps between programming and implementation of the projects. To this end the 
single project pipeline was introduced under IPA II.
Reply of the Commission 43
Recommendation 4
The Commission accepts the recommendation. Under IPA II, the Commission introduced a sector-based approach 
which provides for sectors to be more thoroughly addressed. It also ensures coherence of assistance and proper 
stakeholder and donor coordination.
Recommendation 5
The Commission accepts the recommendation. Under IPA II the Commission has become more selective regarding 
the volume of funds and the complexity of projects. The decentralisation is based on the assessment on the capac -
ity of the relevant national structures to implement projects.
Recommendation 6
The Commission accepts the recommendation.
Recommendation 6(i) 
The national authorities should not just strengthen the administrative capacity but demonstrate firm political com -
mitment to tackling corruption and improving transparency which can be measured through the existing tools such 
as the Progress Report, HLAD and the Urgent Reform Priorities.
Recommendation 6(ii) 
The Commission worked in the past decade to help the country prepare a ‘track record’ of corruption cases and will 
continue to provide support to further build on the country’s ‘track record’.
Recommendation 6(iv) 
In the absence of a negotiating framework, the Commission will continue to use existing tools, such as the progress 
report, HLAD and the Urgent Reform Priorities to measure the capacity of the national authorities to implement key 
areas of the acquis . For instance the action plan prepared by national authorities in relation to the Urgent Reform 
Priorities contains targets and deadlines for the implementation of the priorities in key areas. Moreover, the new 
approach on the form of the progress report allows for better setting of targets for some pilot chapters. However, 
concrete and lasting results will only be achieved if the national authorities demonstrate the necessary political 
commitment to implement these activities.

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In this report the Court examines whether the 
Commission’s support to the former Yugoslav Republic of 
Macedonia has contributed effectively towards building 
up the administrative capacity of the country to prepare it 
for membership of the EU. The Court concludes that there 
was relatively limited progress during the period audited 
(2007-2013). This was largely due to insufficient political 
will in the country to tackle some of the obstacles to 
strengthening administrative capacity and to reduced 
leverage in key areas for the Commission in the absence of 
a framework for accession negotiations. At the same time, 
the Court points to shortcomings in the Commission’s 
management of the audited projects.
EUROPEAN
COURTOF AUDITORS