Commission staff working document - The former Yugoslav Republic of Macedonia - 2008 progress report accompanying the Communication from the Commission to the European Parliament and the Council - Enlargement strategy and main challenges 2008-2009 {COM(2008) 674}
Date: 2008-11-05
Institutions: European Commission
Subjects: North Macedonia, accession to the European Union, enlargement of the Union, pre-accession strategy, report

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COMMISSION OF THE EUROPEAN 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 PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2008-2009 

{COM(2008) 674} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

4.9. 

Introduction .................................................................................................................. 4 

Preface.......................................................................................................................... 4 

Context ......................................................................................................................... 5 

Relations between the EU and the former Yugoslav Republic of Macedonia............. 5 

Political criteria ............................................................................................................ 6 

Democracy and the rule of law .................................................................................... 7 

Human rights and the protection of minorities .......................................................... 15 

Regional issues and international obligations ............................................................ 22 

Economic criteria ....................................................................................................... 23 

The existence of a functioning market economy ....................................................... 23 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 28 

Ability to assume the obligations of membership...................................................... 30 

Chapter 1: Free movement of goods .......................................................................... 30 

Chapter 2: Freedom of movement for workers .......................................................... 31 

Chapter 3: Right of establishment and freedom to provide services ......................... 32 

Chapter 4: Free movement of capital ......................................................................... 33 

Chapter 5: Public procurement................................................................................... 34 

Chapter 6: Company law............................................................................................ 35 

Chapter 7: Intellectual property law........................................................................... 36 

Chapter 8: Competition policy ................................................................................... 37 

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, veterinary 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 

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4.18.  Chapter 18: Statistics.................................................................................................. 50 

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 coordination of structural instruments .................. 54 

4.23.  Chapter 23: Judiciary and 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, security and defence policy...................................................... 72 

4.32.  Chapter 32: Financial control..................................................................................... 73 

4.33.  Chapter 33: Financial and budgetary provisions........................................................ 74 

STATISTICAL ANNEX.......................................................................................................... 75 

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COMMISSION STAFF WORKING DOCUMENT 

The former Yugoslav Republic of Macedonia 2008 Progress Report 

1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and the Parliament 
on progress made by the countries of the Western Balkans region. 

This report on progress made by the former Yugoslav Republic of Macedonia in preparing for 
EU membership largely follows the same structure as in previous years.  

The report: 

–  briefly  describes  the  relations  between  the  former  Yugoslav  Republic  of  Macedonia  and 

the Union; 

–  analyses  the  situation  in  the  former  Yugoslav  Republic  of  Macedonia  in  terms  of  the 

political criteria for membership; 

–  analyses the situation in the former Yugoslav Republic of Macedonia on the basis of the 

economic criteria for membership; 

–  reviews the former Yugoslav Republic of Macedonia'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 report is from 1 October 2007 to early October 2008. Progress is 
measured on the basis of decisions taken, legislation 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 treatment across all reports and 
permits an objective assessment. 

The  report  is  based  on  information  gathered  and  analysed  by  the  Commission.  In  addition, 
many  sources  have  been  used,  including  contributions  from  the  government  of  the  former 
Yugoslav  Republic  of  Macedonia,  the  Member  States,  European  Parliament  reports1and 
information from various international 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. 

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2 

The rapporteur for the former Yugoslav Republic of Macedonia is Mr Meijer. 
Enlargement Strategy and Main Challenges 2008-2009 

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1.2. 

Context 

The  European  Council  of  December  2005  granted  the  status  of  candidate  country  to  the 
former  Yugoslav  Republic  of  Macedonia.  The  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 priorities for reform, in February 2008. 

1.3. 

Relations between the EU and the former Yugoslav Republic of Macedonia 

The  former  Yugoslav  Republic  of  Macedonia  is  participating  in  the  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 achieved in aligning with the SAA provisions in 
the  field  of  electronic  communications.  The  country  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  authorities  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/the  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  agreements  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  agreement  citizens  of  the  former 
Yugoslav Republic of Macedonia pay a reduced visa fee 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  launched  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 and follow the adoption 
and implementation of the necessary reforms towards the abolition of the visa requirement. 

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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  programmes.  Cross  border  cooperation  is  used  to 
promote dialogue between local and regional authorities of neighbouring countries. 

Transfer  of  responsibility  for  the  implementation  of  CARDS  assistance  from  the  European 
Agency of reconstruction (EAR) to the Commission 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  capacity  with  particular 
emphasis on the rule of law sector, economic development, 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 authorities 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 extensively supported through the 
different  CARDS  programmes,  including  aid  to  establish  the  national  civil  society  forum, 
capacity  building  to  civil  society  organisations  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  Centre  for  Democracy  and  Reconciliation  in  Southeast  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  Greece,  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  participation  in  the  following  Community 
Programmes: 
the 
'Competitiveness  and  Innovation  Framework  Programme',  in  October  2007;  'Progress',  in 
October 2007; and 'Culture', in January 2008. 

Innovation  specific  Programme' 

'Entrepreneurship  and 

(EIP)  of 

2. 

POLITICAL CRITERIA 

This section examines progress made by the former Yugoslav Republic of Macedonia towards 
meeting the Copenhagen political criteria, which require 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  relations  with  enlargement  countries  and 
Member  States,  and  respect  for  international  obligations,  such  as  cooperation  with  the  UN 
International Criminal Tribunal for the former Yugoslavia (ICTY). 

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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,  intimidation  and  stuffing  of  ballot  boxes  in 
predominantly  ethnic  Albanian  areas  prevented  citizens  from  exercising  their  democratic 
rights.  One  person  was  killed  and  several  others  injured.  The  law  was  enforced  selectively, 
and the authorities failed to prevent violence and intimidation. Senior ethnic Albanian police 
officers with affiliation to one of the political parties in government acted in a partial manner: 
policemen  belonging  to  special  police  units  participated  in  irregularities  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  parliamentary  elections  of  July  2006  have  not  been  effectively 
addressed. No sentences have been delivered following the procedures initiated against the 20 
perpetrators of election 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  selected  randomly  from  among  civil  servants  and  public  service 
employees and were trained, which made the election administration more professional. The 
large  number  of  international  and  domestic  observers  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 electoral 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  extensive  policing  and  calls  from  all  political 
leaders; nonetheless, some further irregularities took place and further re-runs had to be held 
on 29 June in 15 polling stations.  

The  voter  turnout  increased  slightly  compared  to  2006,  reaching  57.5%.  Gender  balance  in 
candidate  lists  further  improved  and  surpassed  the  requirement  in  the  Election  Code  as 

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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 Democratic Party of Albanians (DPA), 11, and the Party of European 
Future (PEI), 1. Several smaller parties secured one or more seats as part of the coalitions led 
by VMRO-DPMNE or SDSM.  

ODIHR made 28 recommendations for future action, including reform of the electoral code, 
making  campaign  financing  more  transparent,  strengthening  the  capacity  of  the  State 
Electoral  Commission  (SEC)  and  ensuring  equal  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 Electoral Code was amended, broadly in line with 
OSCE/ODIHR recommendations, in particular as regards the maintenance of the voters' list, 
strengthening  rules  on  financing  of  electoral  campaigns  and  clarifying  procedures  for 
addressing election irregularities. 

In  December  the  Parliament  adopted  some  significant  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 also 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) was 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  been  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 for 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  the  holding  of  regular  meetings  between  party 
coordinators,  with  the  participation  of  the  Deputy  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.  Parliament  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 established. A new administrative organisation 
of the Parliament's services was approved, but a budget and staff were not provided.  

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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 called New Democracy and returned to Parliament 
on 16 September. 

The new Parliament addressed the legislative 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  extraordinary  and  urgent  needs.  Application  of  the 
emergency procedure was in a number 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 priority of the Accession Partnership, there has 
been  sporadic  progress.  Parliament  had  adopted  some  important  reforms  in  December  and 
established the National Council on EU Integration. However, political tension remained high 
and  dialogue  with  the  opposition  was  limited.  The  new  Parliament  was  subsequently 
boycotted by the opposition. Meanwhile, the new Parliament made systematic use of urgent 
procedure  in  order  to  adopt  over  170  laws,  mostly  in  the  absence  of  the  opposition,  thus 
avoiding  the  normal  democratic  debate.  In  response  the  president  initially  refused  to 
promulgate  several  laws.  Parliament  did  not  adopt  the  conclusions  of  the  enquiry  into  the 
clashes  that  occurred  between  MPs  in  September  2007.  These  developments  raise  serious 
concerns about the effective functioning of political institutions. As regards political dialogue 
significant further efforts are required. 

Government 

Prior to the early elections in June, the relations within the government 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  their  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  government  focused  mainly  on  the  process  of 
NATO accession. Nonetheless, in March the government adopted a well prepared action plan 
for  the  fulfilment  of  the  key  priorities  of  the  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 regularly and maintained a joint stance on foreign 
policy.  However,  there  has  been  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  established  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.  

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Decentralisation,  which  is  a  basic  principle  of  the  Ohrid  Framework  Agreement,  has 
continued.  The  law  on  regional  development  entered  into  force  on  1  January  2008.  In 
accordance  with  the  law  on  regional  development  specific  administrative  structures  for  the 
implementation of the regional development law began to be created, with clear distribution 
of  responsibilities.  Regional  development  councils  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 administrative structure to support one of the regional 
development  councils,  were  established.  The  other  seven  regional  centres  have  yet  to  be 
established.  Coordination  capacity  between  different  structures  is  not  yet  sufficiently 
strengthened. 

Another  15  of  the  85  municipalities  entered  the  second  phase  of  the  fiscal  decentralisation 
process, bringing the total to 57 as of June 2008. The debts of the municipalities were further 
reduced. Municipal tax collection increased sizeably 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 Association of Municipalities (ZELS) continued to 
contribute effectively to cooperation between the central authorities and municipalities though 
SDSM mayors temporarily withdrew during 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 capacities of some municipalities are very low and 
the  transparency  and  accountability  of  the  local  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 implementing 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  internal  structuring  of  state  administrative 
bodies  (SABs)  were  issued.  The  CSA  also  improved  the  procedures  for  the  first  stage  of 
recruitment (pre-selection) of candidates into public administration. 

Within the framework of the code of ethics obligation for civil servants to report illegal acts, 
three  cases  were  reported  leading  to  one  prosecution.  Some  progress  has  been  made  in 
implementing  the  law  on  freedom  of  information.  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 Ombudsman were slightly increased. Cooperation of 
public  bodies  with  the  Ombudsman  has  further  improved:  state  bodies  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.  Ministries  will  be  required  to  submit  a  Regulatory 

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Impact  Assessment  (RIA)  with  proposed  laws.  The  government  adopted  a  methodology  on 
RIAs  in  March  2008.  Amendments  to  the  organic  budget  law  introduced  a  new  method  of 
financing,  intended  to  link  strategic  planning  more  closely  with  its  financial  implications. 
Several moves were made to establish within ministries 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  importance  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  ministries,  including  the  units  dealing  with  IPA 
funding,  were  increased.  The  process  of  restructuring  the  Secretariat  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  supplements"  were  introduced  in  August  2008,  in 
recognition of sustained and effective 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 progress was made on decentralisation of the police, 
with  the  appointment  of  eight  regional  commanders,  and  the  selection,  in  consultation  with 
municipal councils, of all 38 local police station commanders. The new rule book, which is a 
key  piece  of  implementing  legislation,  was  adopted  and  the  relevant  training  was  delivered 
country-wide. Initial steps were taken to improve management of available resources, training 
and  budgetary  planning.  A  human  resources  strategy  has  been  adopted.  Budgetary  planning 
improved,  and  has  become  more  efficient  in  the  areas  of  procurement  of  equipment  and 
maintenance  of  facilities.  Efforts  were  made  to  tackle  corruption  in  the  police.  (See  also 
Chapter 24 – Justice, Freedom and Security.)  

Efforts  were  made  towards  ensuring  greater  accountability  of  the  intelligence  services  to 
Parliament. However, further efforts are required, in particular to strengthen judicial 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 recruitment process, in assessing the performance of civil servants and 
in  disciplinary  procedures.  Full  implementation  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  accountability  in  recruitment  decisions  by  individual 
administrative bodies and the CSA lacks mechanisms for assuring the legality and regularity 
of those decisions. Senior management positions are often filled externally without sufficient 
regard to professional qualifications and experience, in contravention with the law on the civil 
service. An important weakness of the current framework is that it does not allow for internal 
promotion based on merit: this has a de-motivating effect and favours bad practices. Too little 

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attention  has  been  given  to  the  need  to  ensure  continuity  and  retain  relevant  expertise.  The 
number of illegal promotions and demotions increased to 500 in 2007 and then decreased to 
57  in  2008  up  to  August.  The  CSA  is  often  not  informed  when  staff  are  reassigned. 
Understanding  of  the  performance  assessment  process  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 insufficient administrative capacity for human resources 
management, policy development, strategic planning, and internal coordination 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  social  dialogue  between  the  government  and  the  organisations 
representing civil servants. 

The  capacity  to  prepare  legislation  is  variable,  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  the  commission  for  protecting  access  to  public 
information  remains  weak.  The  amendment  to  the  code  of  ethics  for  civil  servants  which 
introduced  an  obligation  to  report  all  illegal  acts  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 positions in the Secretariat for European Affairs, the Ministry of 
Justice  and  the  Ministry  of  Local  Self-Government  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, administrative 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  administrative  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  unsystematic  approach,  training  is  sometimes  of  poor 
quality or limited relevance.  

As  regards  the  police  service,  implementation  of  the  recently  adopted  human  resources 
strategy remains a considerable challenge. A career 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  during  the  election  campaign  and  on  election  day. 
Certain  units  were  actively  involved  in  irregularities  whilst  others  were  negligent.  This  was 
due to the politicisation of senior 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  administration,  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 

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interference. In this area 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 officers is a serious concern. In this area the country partially 
meets its priorities. 

Judicial system (See also chapter 23 - Judiciary & fundamental rights) 

Good progress continued in implementing the strategy 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 efficiency of the prosecution 
service  through  the  Law  on  the  Council  of  Public  Prosecutors  and  the  law  on  the  public 
prosecutors'  office,  adopted  end  2007  after  a  long  delay.  Thereby,  a  new  Council  of  Public 
Prosecutors  was  established  in  December  2007  with  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  Prosecutor  and  the  Minister  of  Justice  are  ex 
officio members with a right to vote. The members in turn elect a president for two years (not 
renewable).  

The  State  Public  Prosecutor  himself  continues  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  Prosecutors  were  delayed  but  completed  by 
Parliament in July. The Council is now operational. 

The  new  Administrative  Court  and  the  new  Court  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 organised crime and corruption. Consequently, Basic 
Court  Skopje  1  has  been  attributed  these  cases.  The  Academy  for  training  of  judges  and 
prosecutors is fully functional. The implementation of the laws on litigation procedure and on 
enforcement of civil judgements is gradually improving the efficiency of the judiciary.  

The Judicial Council operated with its full composition, after Parliament finally appointed the 
remaining  member.  The  Judicial  Council  adopted  the  manual  for  the  appraisal  of  judges, 
which  was  compiled  on  the  basis  of  a  wide  consultation  with  the  profession  and  which 
introduces  both  quantitative  and  qualitative  criteria  for  the  appraisal  of  the  judges' 
performance.  Nonetheless,  it  was  enacted  only  after  the  bulk  of  promotions  had  been 
completed. The Council maintained its efforts to combat corruption in the judiciary.  

However,  a  significant  number  of  vacancies  remain  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  criminal  procedure  and  of  certain  practical 
issues with the law enforcement agencies.  

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From January the Constitutional Court functioned with 6 members instead of 9. In November, 
the  president  of  the  Court  and  another  member,  both  from  the  ethnic  Albanian  community, 
resigned  because  they  disagreed  with  the  Court'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  basis  of  a  proposal  of  the  President  of  the 
Republic. 

The Minister of Justice has made a number of public statements concerning the decisions on 
appointment  of  judges  which  could  be  perceived  as  an  attempt  to  unduly  influence  the 
Judicial Council. 

The  budget  of  the  courts  was  too  low  to  cover  their  running  costs  and  their  debts  to  utility 
companies.  This  recurrent  weakness  was  remedied  again  by  providing  a  supplementary 
budget in the course of the year but nonetheless it continues to jeopardize the efficiency of the 
judicial system. 

Overall, good progress has been made in implementing the strategy on judicial reform, a key 
priority  of  the  Accession  Partnership.  The  judicial  council  functions  smoothly  and  the  new 
Council of Public Prosecutors has started to meet. The new Administrative Court and the new 
Court  of  Appeal  in  Gostivar  were  set  up.  However  further  strengthening  of  the  judiciary  is 
required as regards its independence, efficiency, human resources 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 anti-corruption policy, which is a key priority 
of  the  Accession  Partnership.  The  law  on  prevention  of  corruption  was  strengthened,  in 
particular  to  allow  the  State  Anti-Corruption  Commission  (SACC)  to  publish  the  asset 
declarations  without  prior  approval.  The  Group  of  States  Against  Corruption  (GRECO) 
recommendations are being followed up. 

The SACC started to implement the new state programme for prevention and suppression of 
corruption. A new programme and action plan on conflict of interest were also adopted. Since 
the law on conflict of interest entered into force, 41 cases have been initiated. A number of 
misdemeanour  procedures  were  brought  against  officials  who  failed  to  submit  asset 
declarations.  In  2008  the  budget  of  the  SACC  was  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 measures for cases where corruption is suspected. 

Law  enforcement  agencies,  in  particular  the  Ministry  of  Interior  and  the  public  prosecution 
services,  and  also  the  customs  administration,  demonstrated  a  steady  determination  to 
cooperate  and  coordinate.  There  were  convictions  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  monitoring  difficult.  Shortcomings  in  the  legal 

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framework  governing  financing  of  political  parties  and  election  campaigns  were  addressed 
after the election and a track record 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 recommendations 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 regards  awareness-raising and  engagement with the 
public. Some shortcomings in the legal framework hampered the fight against corruption, in 
particular  as  regards  the  use  of  special  investigative  measures  and  the  delivery  and 
enforcement of court decisions. A centralised mutually accessible intelligence system, which 
would  strengthen  operational  coordination  among  law  enforcement  agencies  and  watchdog 
bodies, remains to be established.  

There  is  concern  about  the  politicisation  of  some  corruption  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  obligations  stemming  from  the  ratification  of  Protocol  1  to  the 
European  Social  Charter  has  continued  its  work.  Ratification  of  the  revised  Protocol  No  2 
from 2005, reforming the control mechanism, is still pending. 

The  European  Charter  for  Regional  or  Minority  Languages  and  the  Council  of  Europe's 
Convention on Action against Trafficking in Human 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  Macedonia  had  violated  the  European  Convention  on 
Human Rights (ECHR).  

Between 1 January and 31 December 2007 454 new applications relating to the country were 
made  to  the  ECtHR.  The  number  of  pending  cases  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 protection of human rights met four times and adopted its rules 
of  procedure.  However,  it  is  not  yet  effective  in  coordinating  the  action  of  ministries  and 
bodies  concerned.  It  needs  to  provide  stronger  leadership  to  raise  the  levels  of  respect  for 
fundamental  rights  throughout  the  country.  In  particular,  training  of  public  servants  in  all 
relevant areas needs to be intensified. 

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Civil and Political Rights 

With regard to the prevention of torture and ill-treatment and fight against impunity, the 
Ministry of the Interior has dealt with 52 cases of ill-treatment and no cases of illegal arrest. 
This was a decrease in the number of cases compared with previous years. Criminal charges 
were  brought  against  27  police  officers  involved.  The  prosecutor's  office  conducted  22 
investigations against police misconduct.  

The Ministry of the Interior made further progress 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  Professional  Standards  was  satisfactory  and  led  to  38 
recommendations by the Ombudsman in this area being followed up. 

The  keeping  of  records  of  informative  talks  by  the  police  has  improved,  thus  helping  to 
improve the transparency of implementation of detention procedures. 

However,  the  Ombudsman  regretted  the  lack  of  effective  control  over  special  police  units, 
notably  the  Alpha  units,  which  are  widely  alleged  to  have  used  excessive  and  unjustified 
force, inter alia against Roma. The prosecutor's office should make 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.  There  are  increasing  calls  for  an  independent, 
external mechanism for monitoring of police misconduct to be established.  

Access  to  justice  is  still  limited  in  the  case  of  appeals  against  acts  and  decisions  by  civil 
servants affecting individual citizens' rights and obligations. As in previous years, the second 
instance  Government  commissions  which  decide  on  complaints  about  decisions  of 
administrative bodies were the least responsive 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 refurbished, Stip and Idrizovo prisons are being 
reconstructed and a new prison is being built in Kumanovo. The prison staff received some 
training on fundamental rights and on European best practice on prison rules.  

However,  the  Council  of  Europe's  Committee  for  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  senior  officials  are  political  appointees  who  are  frequently 
changed. Rapid action is needed to eliminate inhuman and degrading conditions of detention, 
particularly in Idrizovo prison, and to address inadequate health care provisions. There is also 
a  lack  of  clear  procedures  for  dealing  with  widespread  allegations  of  ill-treatment  of 
prisoners. Vulnerable prisoners, such as juveniles, are particularly at risk. During 2007 there 
were  eight  deaths  and  two  suicides  in  prisons,  compared  with  six  and  three  respectively  in 
2006.  The  conditions  of  detention  cells  in  most  police  stations  remain  sub-standard. 
Significant additional efforts need to be made to address the recommendations of the CPT. 

No steps were taken to respond to the European Parliament’s recommendation to follow up 
the Khaled El-Masri case. 

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The  legal  framework  for  freedom  of  expression,  including  the  media,  meets  most 
international  standards.  However,  in  practice  the  Broadcasting  Council  and  the  public 
broadcaster lack sufficient resources and financial independence because of the failure of the 
fee  collection  system.  Moreover,  an  amendment  to  the  broadcasting  law  adopted  in  July 
establishes  the  possibility  to  declare  bankruptcy  or  liquidation  of  the  Public  Service 
Broadcaster  at  any  moment.  The  broadcast  media  continue  to  be  dominated  by  private 
television stations, most of which have strong links to political parties. Ownership of the print 
media remains highly concentrated. The media continue to be subject to significant political 
interference.  During  the  elections,  the  Broadcasting  Council  could  not  effectively  address 
issues  of  equal  access  to  the  media  because  Parliament  had  not  adopted  the  necessary 
guidelines. The media generally enabled voters to make an informed choice, although they did 
not treat all political parties equally. The public television broadcaster 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 were 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 through the public announcement of the call for 
proposals,  the  selection  criteria  and  the  results.  An  important  step  forward  in  opening  new 
potential  sources  of  financing  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 resources is a serious constraint on their ability to deliver more 
professional  and  service-oriented  activities.  Government  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  religious  communities  and  groups  which  were  not 
registered before 1998 were set up in June.  

In  April,  the  law  on  primary  education  was  amended  to  enable  religious  education  to  be 
introduced  in  primary  schools  as  of  September  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 dispensed by priests or history of religion taught 
by specialised teachers.  

Overall,  some  more  steps  have  been  taken  to strengthen civil and political rights. However, 
further  vigorous  efforts  are  needed,  in  particular  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. 

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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  opportunities  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  against  domestic  violence  was  adopted  in  April 
2008.  Amendments  to  the  law  on  the  family  provided  clearer  definition  of  family  violence. 
The definition of rape in criminal law was widened thus affording more protection to women. 
A public campaign has been organised for raising awareness especially among young people 
on prevention of and protection from trafficking in human beings. Police carried out activities 
to break up criminal groups involved in illegal migration, including human trafficking. Some 
progress has been made in preventing trafficking of women. 

However,  the  sector  for  equal  opportunities  lacks  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.  Domestic  violence  remains  a  cause  for  concern. 
Measures against sexual harassment remain weak. The practice of family voting instructions 
in the ethnic Albanian community continued to undermine the right of women to vote freely. 
Roma women and girls continue to suffer from double racial 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  communities  is  ongoing  and  childcare  services  are 
improving.  

The  amendments  to  the  Criminal  Code  adopted  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 Convention on Rights of the Child. Implementation of the 2006 
action  plan  for  the  protection  of  children’s  rights  has  been  slow.  17%  of  children  are  not 
covered by the public health insurance, 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  strategy  to  reduce  poverty  is  missing.  Juvenile 
delinquency is very high whilst the law on juvenile 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  mental  health.  The  decentralisation  of  care  is  ongoing  under  the 
National Action Plan on Mental Health initiated in 2007, through the de-institutionalisation of 
psychiatric  patients  and  efforts  to  support  psychiatric  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-treatment of patients at the "Demir 
Hisar" psychiatric hospital were reported. In general, 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 groups has been aggravated by 
the problems linked to the decentralisation of competences to the municipal level. 

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Little progress can be reported in the field of labour rights and trade unions. The Economic 
and  Social  Committee  does  not  fulfil  its  role,  partly  because  the  capacities  of  the  social 
partners are weak, and partly because its membership is unrepresentative. These factors make 
both the tripartite and the bipartite social dialogue very formal, and impede the development 
of an all-inclusive social dialogue. In this context the country still has not been able to select 
its  members  in  the  Joint  Consultative  Committee  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 clearly regulated in the existing legal provisions. 
Mechanisms to identify, pursue and criminalise 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  discrimination.  The  envisaged  national  anti-
discrimination  strategy  should  therefore  also  address  discrimination  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 been strengthened, but progress in dealing with 
restitution  claims  is  slow.  No  progress  has  been  made  in  returning  property  of  the  religious 
communities. 

Overall,  some  steps  have  been  taken  to  strengthen  social  and  economic  rights.  However, 
further  significant  efforts  are  needed,  in  particular  as  regards  children's  rights  and  anti-
discrimination policies. Overall the country partially meets its objectives in this area. 

Minority rights, cultural rights 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  extends  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. Notably it provides for the use of non-majority 
languages  in  Parliament  for  members  and  committee  chairpersons  (the  speaker  and  deputy 
speaker continue to use the single state language). The law extends the provision on the use of 
language to the local offices of the State organs. It clarifies that non-majority languages may 
not be used in the police and the army. De facto, the provisions apply only to the Albanian 
language at national level because of the 20% threshold. The High Commissioner for National 
Minorities has assessed that the law provides a clear and coherent legal 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 communities3 in the country and progress was made as 
regards the use of languages and 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. 

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community relations by listing all planned laws whose enactment should proceed according to 
the ‘Badinter’ principle. 

A  law  on  the  advancement  and  protection  of  the  rights  of  the  smaller  communities  was 
adopted which, in particular, provides for 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 particular as regards the Albanian community. 
The number of ethnic Albanian civil servants increased by 3.75% between January 2007 and 
January  2008.  Six  of  the  15  members  of  the  Judicial  Council  and  one  of  the  six  elected 
members of the Council of Public Prosecutors belong to non-majority communities.  

In 2007 the Ombudsman received only six complaints (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 schools there were severe incidents of violence between students 
from  different  ethnic  communities.  Mutual  understanding  and  intercultural  dialogue  need  to 
be  fostered  between  the  different  components  of  society,  in  particular  in  the  field  of 
education. Smaller ethnic communities, whilst largely integrated, need adequate facilities for 
teaching in their mother tongue.  

The  effectiveness  of  the  committees  for  relations  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  representation  of  the  ethnic  Turkish  and  the  Roma 
communities,  which remain underrepresented within the civil service. Furthermore, the lack 
of  a  single  data  collection  system  for  the  entire  public  sector  blurs  the  picture  of  equitable 
representation.  The  lack  of  enforcement  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. Professional training needs to be strengthened as 
an accompanying measure. 

A  certain  number  of  Roma  and  ethnic  Albanians  lack  personal  documents,  such  as  birth 
certificates and medical insurance or employment cards, which are necessary to access social 
insurance, health care 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 

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two  ethnic  Albanian  judges  resigned  in  protest  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 humanitarian 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 status. The Administrative Court replaced 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 further 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 people 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  attending  school  in  2007,  they  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  raising  concerns  about  segregation  and  unlawful 
discrimination  as  established  in  the  jurisprudence  of  the  European  Court  of  Human  Rights. 
Cases  of  police  violence  and  targeting  against  the  Roma  were  reported.  Several  cases  have 
been brought before the European Court of Human Rights concerning police abuse of Roma 
and the lack of an effective system of investigation concerning cases of ill-treatment. 

Overall, there has been some progress 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  the  Ohrid  Framework  Agreement  needs  to  move 
forward, through a consensual approach and a spirit of compromise. More efforts are needed 
to  address  the  concerns  of  the  smaller  ethnic  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  protection,  healthcare,  housing  and  employment. 
Nonetheless, overall the country is moderately advanced in this area. 

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2.3. 

Regional issues and international obligations 

The  former  Yugoslav  Republic  of  Macedonia  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 former 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,  violation  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  investigations.  The  judicial  reforms 
necessary  to  ensure  proper  handling  of  the  files  were  adopted  and  the  relevant  training  of 
judges  and  prosecutors  has  been  undertaken.  The  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 monitoring 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 part of the process of 
integrating  with  the  European  Union.  The  country  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 European Cooperation Process (SEECP) and the new 
Regional  Cooperation  Council  (RCC).  The  country  assumed  the  first  chairmanship  of  the 
2006  Central  European  Free  Trade  Agreement  (CEFTA)  after  its  entry  into  force.  The  15th 
Summit of the Central European States was held in Ohrid in May. The country continued to 
contribute to the EU ALTHEA mission in Bosnia and Herzegovina. 

As  regards  bilateral  relations  with  other  enlargement  countries  and  neighbouring 
member states, relations with Albania have remained good, with reciprocal 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  involving  these  countries.  Agreements  with 
Bosnia  and  Herzegovina  on  readmission  and  on  police  cooperation  were  concluded.  An 
agreement  with  Croatia  on  mutual  protection  of  national  minorities  entered  into  force.  An 
agreement was concluded with Turkey in the field of health and medical science. 

Overall relations with Serbia have been stable although they have been adversely affected by 
the  recognition  by  the  former  Yugoslav  Republic  of  Macedonia  of  the  independence  of 
Kosovo. The issues between the Orthodox Churches in the two countries remain unresolved. 
Following  Kosovo's  declaration  of  independence,  the  government  of  the  former  Yugoslav 
Republic  of  Macedonia  launched  a  joint  process  of  border  demarcation.  Good  progress  has 
been made and the demarcation is nearing completion. The country accepted as valid the new 

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travel documents issued by the Kosovo authorities. 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  cooperating  on  the  co-financing  of  road  transport 
links  within  the  framework  of  the  EU's  Trans  European  Transport  Network.  Nonetheless, 
relations  between  the  two  countries  were  further  affected  by  the  unresolved  name  issue. 
Actions  which  could  negatively  impact  on  good  neighbourly  relations  should  be  avoided. 
Maintaining  good  neighbourly  relations,  including  a  negotiated  and  mutually  acceptable 
solution to the name issue, under the auspices of the UN, remains essential.  

Relations have remained good with Bulgaria. 

3. 

ECONOMIC CRITERIA 

In examining the economic developments in the former Yugoslav Republic of Macedonia, the 
Commission's  approach  was  guided  by  the  conclusions  of  the  European  Council  in 
Copenhagen in June 1993, which stated that membership of the Union requires the existence 
of  a  functioning  market  economy,  and  the  capacity  to  cope  with  competitive  pressure  and 
market forces within the Union. 

3.1. 

The existence of a functioning market economy 

Economic policy essentials  

The country is fully participating in the EU's Pre-accession Fiscal 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  corner-stones  of  the  country's  economic  policy 
framework. However, in September, the authorities announced their intention not to enter into 
another  IMF  arrangement  for  the  time  being.  Furthermore,  a  number  of  medium-term 
strategies define the policy framework, such as the Public Investment Programme for 2008-
2010  and  the  Public  Debt  strategy  for  2008-2010.  Political  consensus  on  the  essentials  of  a 
market economy has been maintained. Nonetheless, implementation of reforms slowed down 
before  and  after  the  elections.  Overall,  a  broad  political  consensus  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% for 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  demand  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. This trend continued and 
by  mid-2008  had  pushed  up  the  current  account  deficit  to  some  13%  of  GDP.  The  main 

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factors were higher expenditures for imports, mainly for fuel but also machinery. On the other 
hand,  capital  inflows  rose  markedly,  in  particular  FDI,  which  reached  6.5%  of  GDP  on  an 
annualised  base,  compared  to  2.8%  of  GDP  the  previous  year.  Overall,  external  imbalances 
widened  sharply,  putting  an  end  to  several  years  of  overall  balanced  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  However,  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, after early debt repayments had resulted in a declining ratio for most 
of the year. By end June 2008, gross external debt 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 standards (PPS), reached 29% of the EU-27 average 
in  2007,  compared  to  27%  the  year  before.  Overall,  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 significant 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  reversal  of  capital  flows  seems  limited.  However,  the  external 
imbalances render the economy vulnerable to possible disruption in capital flows. 

The  situation  in  the  labour  market  improved  slightly  and  the  unemployment  rate  saw  a 
marginal  decline.  The  number  of  employed  persons  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  from  a  mismatch  between  required  and  available 
qualification. As a result, employment 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 added 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.  The  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 still 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 levels. The persistently 
high  unemployment  points  to  structural  weaknesses,  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 exchange 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,  Interest  rates  of  the 
private  sector  started  to  rise  moderately.  Rates  for  Central  Bank  bills  rose  from  4.8%  in 

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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 sector continued, at some 40% 
(year-on-year) during the first half of 2008, but has slowed down since then. The volume of 
broad money (M4) rose by 32% year-on-year during the first half of 2008, but also moderated 
since  then.  Overall,  exchange  rate  and  monetary  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 December 2007 and continued to rise to nearly 9% 
in  March  and  April  2008  (year-on-year  basis).  Since  then,  year-on-year  inflation  rates  have 
declined, slipping to 7.1% in September 2008. The strong increase in inflation is mainly due 
to higher food and energy prices, which – owing to the high share 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 previous years, was characterised by higher than 
expected revenues and lower than planned investment 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  supplementary  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,  compensation  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 sector. 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,  covering  some  84%  of  the  country's  population. 
Furthermore,  the  tax  base  of  the  municipalities  has  been  widened  by  amendments  to  the 
property  tax  law  and  the  new  Law  on  Roads.  Overall,  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  new  competences  continue  to  represent 
significant  challenges  to  the  municipalities  and  require  close  monitoring  by  the  central 
authorities. 

General government debt has declined to around 21% of GDP by mid 20084. The authorities 
have continued to improve the efficiency of tax 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  quality  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 (ESA 95), thus comparability 
is limited.  

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The country's fiscal and monetary policy mix remained largely in line with the country's need 
to  accelerate  economic  activity.  However,  in  view  of  the  recent  deterioration  in  external 
balances,  the  importance  of  maintaining  a  sound  economic  policy  mix  has  increased.  Fiscal 
policy  benefited  from  a  strong  revenue  performance,  while  the  objective  of  substantially 
balanced  public  sector  accounts  was  largely  achieved.  The  country'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  unregistered  economic  activities.  Overall,  the 
macroeconomic policy mix was largely in line with 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 State-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  companies  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 remained unchanged but is already well advanced  

Market entry and exit 

The government took further steps to improve the 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 registration have been reduced to less than EUR 
50. During the first half of 2008 5.200 new companies were registered, which is about 1% up 
on the same period in 2007. As a result, the number of registered companies grew by some 
6%  during  the  past  year.  As  part  of  the  so-called  "regulatory  guillotine"  project,  the 
authorities  screened  some  2000  pieces  of  legislation,  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 and 2 months. At the same time, the number of 
new bankruptcy procedures has fallen 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 backlog 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  market  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 

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independence  of  a  number  of  those  agencies.  Overall,  further  progress  has  been  made  in 
clarifying  property  rights  and  strengthening  the  independence  of  regulatory  and  supervisory 
institutions. However, weaknesses in the judiciary, 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  addressing  corruption  and  organised  crime,  these 
weaknesses  have  a  negative  bearing  on  the  quality  of  public  services,  the  business 
environment and the country's attractiveness 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 brought 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,  the  Central  Bank  increased  the  bank's  reserve 
requirement by 1 percentage point. The capitalisation 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  lower  level,  achieving  a  market 
capitalisation  of  12%  of  GDP,  which  dropped  to  5%  by  August.  The  assets  of  the  banking 
sector reached 66% of GDP at the end of 2007, compared to 57% a year before. The structure 
of  the  financial  sector  has  improved:  one  small  bank  which  did  not  meet  the  fit-and-proper 
standards has been closed and some foreign investors 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  majority  share  in  the  country'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  and  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 percentage points in September 2008. Profitability 
in  the  sector  was  relatively  high  in  2007,  with  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-performing  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 adequacy ratio of 17% end of 2007. Larger banks report an average 
capital adequacy ratio of 12.7%, while small banks report an average capital adequacy ratio as 
high  as  66.8%.  Overall,  the  financial  sector  continued  to  develop  positively  during  the  past 
year,  with  a  significant  deepening  of  financial  intermediation  and  a  strengthening  of 
regulatory and supervisory standards. However, this sector is still relatively small. 

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3.2. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 
Union 

Existence of a functioning market economy 

less  favourable 
Overall,  macroeconomic  stability  has  been  maintained,  although  a 
international environment prompted a sharp increase in inflation and a widening of external 
imbalances.  Progress  in  reducing  barriers  to  market  entry  and  exit  has  been  maintained  and 
the  number  of  unresolved  property  disputes  has  been  further  reduced.  Financial 
intermediation  has  deepened  and  financial  market  supervision  has  been  strengthened.  The 
financial  independence  of  some  supervisory  and  regulatory  agencies  has  been  strengthened. 
However,  despite  important  progress  in  improving  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, which are crucial elements for fully functioning 
markets. 

Human and physical capital  

The authorities increased their efforts to provide education to a greater number of pupils and 
to  improve  vocational  training  for  adults.  Budgetary  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 higher 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 spending on education and the quality of education 
still  leaves  room  for  improvement.  Despite  these  efforts,  the  overall  level  of  education  and 
training  of  the  labour  force  still  is  relatively  low  and  a  substantial  mismatch  still  exists 
between  the  qualification  profile  of  the  labour  force  and  the  requirements  of  the  enterprise 
sector.  Overall,  measures  have  been  taken  to  improve  the  level  of  qualification,  such  as 
starting to improve vocational training. 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  widened  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 considerable proportion of unemployment is structural and 
mainly  affects  young  people  and  those  lacking  qualification.  Overall,  measures  have  been 
taken to improve the labour market situation, but the mismatch between supply and demand is 
still a sizeable one. 

Overall,  the  country's  capital  endowment  is  relatively  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 improving 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 during 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  greenfield  investment.  In  some  cases,  slow  legal 
procedures  and  fragmentation  of  responsibilities  between  the  central  and  local  governments 

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are  impeding  FDI.  Overall,  the  share  of  investment  in  GDP  remained  relatively  low,  in 
particular  in  the  light  of  the  country's  need  to  accelerate  growth.  Infrastructure  continues  to 
require repair and modernisation. 

Sector and enterprise structure 

The overall trend towards a larger contribution by manufacturing and trade services to output 
generation and the declining share of the agricultural sector has continued. Construction and 
real estate business were those sectors with the largest increase in the number of companies, 
while  the  share  of  manufacturing  declined.  Competition  has  been  increased  in  the 
telecommunication and transport sector by allowing additional suppliers to enter the market. 
However,  the  latest  take-over  in  the  telecommunication  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,  small  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  indications  that  it  has  been  somewhat  reduced,  for  example  by 
improvements  tax  collection,  a  lowering  of  the  tax  burden,  and  financial  incentives  for 
registration. Overall, structural change made limited progress  

State influence on competitiveness 

Direct state influence on competitiveness has been limited. However, competition in product 
markets  is  often  impeded  by  slow  judicial  procedures  and  weak  regulatory  and  supervisory 
agencies  that  lack  the  necessary  independence  and  resource  endowment.  Despite  some 
progress  in  reducing  distortions  in  the  electricity  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.  Overall,  direct  State  influence  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, direct state influence on competitiveness is limited. 
However, in some areas, such as electricity, indirect and direct state interference is still high. 
Furthermore, numerous ad-hoc changes 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 total trade in goods and services accounting for 
some  130%  of  GDP.  Trade  integration  with  the  EU  is  advanced,  with  about  60%  of  all 
exports being directed at the EU-27 and about 47% of imports coming from the EU-27. The 
neighbouring  countries  in  the  Western  Balkan  are  the  second  most  important  trade 
destination, with about 34% of exports and about 11% of imports. The importance of CEFTA 
as  an  export  destination  has  increased  markedly.  The  export  structure  is  still  highly 
concentrated on a limited range of products, with textiles and clothing accounting for about 
24% of total exports, and manufactured iron and zinc products for some 26%. Overall, trade 
integration  with  the  EU  is  well  advanced,  but  the  commodity  mix  is  still  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 effective exchange rate. However, when unit labour costs are taken into 
account, real effective exchange rates are still improving. Real wage increases seem to have 

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remained in line with productivity growth. Standard indicators do not point to any significant 
material changes in export price competitiveness. 

4. 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

This  section  examines  the  former  Yugoslav  Republic  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  the  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 European standards (ENs) has not 
accelerated. By August 2008, a total of 3,674 European 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  compatibility;  gas  appliances;  and  equipment  for 
potentially  explosive  atmospheres  (ATEX).  Altogether  2,975  standards  give  presumption  of 
conformity to technical regulations transposing the “new approach” directives. Of these, over 
300 standards are related to the law on construction products. 

The number of technical committees within 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 European standardisation organisations. 

A Decree on designation and notification of conformity assessment bodies was adopted. Also, 
a Decree on authorisation of legal entities to undertake conformity assessment was adopted, 
which identified the Ministry of Economy as the institution responsible 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 draws on the expertise of 12 lead assessors, 37 technical assessors 
and 37 experts. Three more conformity assessment bodies were accredited, bringing the total 
number  to  20.  The  Institute  has  become  a  member  of  the  European  cooperation  for 
Accreditation.  Bilateral  cooperation  agreements  were  signed  with  the  accreditation  bodies 
from Serbia, Montenegro and Albania. 

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The  capacity  of  the  Bureau  of  Metrology  has  been  strengthened  with  five  new  employees, 
bringing the total to 33. However, it still lacks adequately trained staff to perform its functions 
and  to  operate  the  equipment  that  has  been  delivered.  The  Bureau  has  signed  the  Mutual 
Recognition  Arrangement  with  the  International  Committee  for  Weights  and  Measures 
(CIPM-MRA) and is an associate member of the 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 training sessions were organised for staff 
from  the  Ministry  of  Economy  and  the  horizontal  organisations  on:  implementation  of  the 
rapid  information  system  (RAPEX);  misdemeanour  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 the Law on product safety and 250 
related to the Law on construction products. However, as the Inspectorate is responsible for a 
large  number  of  functions  apart  from  product  safety,  it  has  very  limited  capacity  for  actual 
market surveillance activities concerning technical 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 cosmetics 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 pharmaceuticals and for recognising authorisations issued 
by EU Member States. In addition, implementing legislation aiming to transpose the acquis in 
the  fields  of  metrology  (on  units  of  measurement  and  on  nominal  quantities  for  pre-packed 
products)  and  chemicals  was  adopted.  Preparations  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 was 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  new  developments  can  be  reported  as  regards 
notification procedures, external border checks and 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 field is insufficient. No development has occurred 
with regard to legislation on employment of EU citizens in the public sector and exercise of 
public authority. 

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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  preparatory  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  the  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  progress  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 operations 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  reduced,  still  persists.  Furthermore,  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  authorisation  requirements  for  tourism  and  catering  services  have  been 
simplified  and  made  cheaper;  however,  they  still  do  not  allow  service  providers  freely  to 
exercise  their  activity.  A  principle  of  tacit  approval  was  introduced  in  several  fields.  The 
existing  legislation  imposes  nationality,  residence  and  establishment  requirements  for  many 
service  activities.  There  are  serious  gaps  in  coordination  between  the  various  authorising 
bodies.  Their  administrative  capacity  is  not  satisfactory.  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 prepare the implementing legislation 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,  the  reserved  area  is  to  be  abolished  after 
2012.  The  organisational  and  financial  restructuring  of  Makedonska  Posta  has  been 
completed.  The  Postal  Agency  was  established  as  an  independent  regulatory  authority. 
However,  it  is  not  yet  fully  operational.  It  has  not  developed  the  appropriate  administrative 
capacity  to  regulate  the  postal  market  and  enforce  postal  legislation.  In  the  area  of  postal 
services the country is advanced. 

No progress has been made regarding mutual recognition of professional qualifications. A 
new  Law  on  higher  education  entered  into  force.  It  regulates  only  the  recognition  of  higher 

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education  diplomas  obtained  abroad.  The  legislation does not distinguish between academic 
and  professional  qualifications.  The  administrative  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 recognition of professional qualifications. In the area 
of mutual recognition of professional qualifications the country is not yet prepared.  

Conclusion 

Progress in this chapter has been partial and mainly confined to the area of postal services and 
the  legislative  changes  related  to  the  right  of  establishment.  There  is  a  lack  of  coordination 
between  the  various  bodies  responsible  for  authorising  cross-border  services.  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 other real rights, the residents of EU countries are allowed to obtain 
ownership  rights  on  apartments  and  residential  buildings.  The  right  of  ownership  of 
construction  land,  however,  requires  prior  authorisation,  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  cover  the  security  position  of  the  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 restrictions on residents will have to be removed. 
Pension funds still have to comply with stringent 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 capital in non-domestic securities. 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 and 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  electronic  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 cooperation. The Directorate for prevention of 
money laundering was renamed the Office for prevention 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 institutions. The awareness of the reporting institutions 

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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  administrative  bodies  in  the  country  and  with 
counterpart  institutions  from  the  region.  Within  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 quality of reports of suspicious transactions sent 
to  the  investigating  and  prosecuting  authorities.  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  authorities,  resulted  in  enforcement  action. 
International  cooperation  between  the  Office  and  its  foreign  counterparts  started  to  produce 
initial results; further efforts in this direction are encouraged. Some of the new employees are 
engaged  on  a  temporary  basis  and  it  is  not  clear  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  restrictions  on  short-term  capital  movements  and  cross-
border transfers have not been removed. The administrative 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  utilities  sector  was  enacted.  The  law  fundamentally 
transposes the acquis. A number of significant improvements 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  partnerships  is  not  in  line  with  the  acquis  or  with  good 
international practice. In terms 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 developed its competence and a pro-active approach to 
managing  public  procurement  policy.  The  administrative  capacity  of  the  contracting 
authorities  and  the  level  of  awareness  of  public  procurement  rules  on  the  part  of  economic 
operators have improved, especially in small municipalities, but still need to be strengthened 
in  larger  contracting  authorities.  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. Its members will be elected by parliament after a 
public  competition  which  is  currently  ongoing.  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 

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form of shortened review procedures, but consistency of decisions on complaints is not fully 
satisfactory.  

Conclusion 

Substantial  progress  has  been  made  in  the  area  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 contracting authorities and economic operators on 
the new public procurement rules need to be sustained.  

4.6. 

Chapter 6: Company law 

There  has  been  good  progress  in  the  area  of  company  law.  The  Company  Law  has  been 
amended  to  provide  the  possibility  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 into force upon accession. Provisions on approval 
of interested-party transactions and cross-border mergers are still to be amended. The Central 
Registry became a member of the European Business Registry and, as such, is able to share 
data on companies with 22 countries. The second phase of the regulatory reform advanced. In 
the area of company law, the country meets the requirements. 

There has been modest progress in the area of corporate accounting and auditing. The stock 
exchange  set  more  stringent  audit  and  disclosure  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 accounting and financial 
reporting  requirements.  The  Institute  for  Chartered  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 and audit firms. However, this 
initiative is not in line with the Directive 2006/43/EC on statutory 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 establishment of the system of public oversight.  

Nonetheless,  the  ICA  still  has  only  one  full-time  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  system  for  auditors  has  not  yet  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  translating  and  transposing  the  revisions  of  the 
International  Accounting  Standards  (IAS)  and  of  the  International  Financial  Reporting 
Standards (IFRS): the 2003 edition of the IFRS and the 2004 edition of the IAS are still being 
used.  In  the  area  of  corporate  accounting  and  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 taken 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 reporting and audit requirements.  

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4.7. 

Chapter 7: Intellectual 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  (SMI)  and  to  increase  the  fines  for  breach  of  copyright.  The 
Criminal  Code  was  amended  to  include  new  types  of  breach  of  copyright  related  to  new 
technologies and also to increase the maximum prison term. The private copying levy scheme 
was  set  up.  The  Centre  for  Intellectual  Property  Education  became  a  member  of  the  global 
network  of  intellectual  property  academies  supported  by  the  World  Intellectual  Property 
Organisation.  

One  additional  person  was  employed  by  the  Sector  for  Copyright  and  Related  Rights;  the 
administrative  capacity  of  the  Ministry  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  collective  rights  management  societies  were 
suspended  because  of  a  dispute  with  the  government;  this  case  has  yet  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 Cooperation with its counterparts from the Czech 
Republic,  Hungary,  Slovenia  and  Romania.  The  European  Patent  Convention  has  been 
ratified.  However,  the  International  Convention  for  Protection  of  New  Varieties  of  Plants 
remains to be ratified. Preparations improved in the area of industrial property rights, although 
much remains to be done. 

There has been some progress in the area of enforcement, both at the border and within the 
country.  However,  piracy  and  counterfeiting  remain  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  (IPR)  is  hampered  by  the  lack  of  appropriate 
awareness,  experience  and  qualifications  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  exists  in  the  Community,  including 
effective  means  of  enforcing  such  rights.  The  capacity  of  the  SMI  and  the  Ministry  of  the 
Interior to tackle infringements 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  are  still  insufficient  for  proper  implementation 
of IPR law, and inspectors lack 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,  civil  and  criminal  procedures  initiated  and 
completed  increased  slightly,  but  the  situation  is  not  yet  satisfactory.  The  number  of  cases 
relating to industrial property rights, 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  protection  of  their  rights;  the  number  and  value  of  goods  seized  and 
destroyed  (including  equipment  used  to  counterfeit  goods)  also  increased  slightly.  The  SMI 

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and the Ministry of the Interior were more active in seizing and destroying equipment used to 
counterfeit goods, but their efforts are not yet sufficient. Various seminars were organised for 
the law enforcement bodies, customs officials and inspectors from the SMI and the Ministry 
of  the  Interior.  Collection  and  presentation  of  data  on  IPR  enforcement  by  all  relevant 
agencies  have  improved;  the  amended  rulebook  for  the  courts  provides  for  separate 
registration of data on court proceedings 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 fostering cooperation and 
agreeing  a  common  approach  between  all  the  law  enforcement  bodies.  The  authorities  are 
starting to show greater determination to tackle piracy: the activities of the coordinating body 
were  adequately  supported  in  terms  of  staffing  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 presented via the media and on the website of the State 
Office  for  Industrial  Property.  A  major  public-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 the administrative capacity. The enforcement record is slowly 
improving,  in  terms  of  both  the  number  and  value  of  goods  seized  and  destroyed  and  the 
number of court proceedings initiated and completed. Nevertheless, further efforts are needed 
in order to improve the track record, strengthen the capacity of enforcement bodies, adopt a 
coherent IPR strategy and carry out awareness-raising activities. 

4.8. 

Chapter 8: Competition policy 

There has been good progress 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 enforcement 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  misdemeanour  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 issues 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 prosecutor's office in cartel cases still remains. 
The  suspension  clause  for  both  administrative  and  misdemeanour  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  horizontal  State  aid  was  issued.  The  Law  on  technological-industrial 
development zones has been amended with the aim of aligning it with the acquis. However, 
some  of  its  provisions  need  to  be  amended  in  order  to  avoid  possible  interpretations  in  the 

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application  of  the  law  that  would  be  contrary  to  State  aid  rules.  The  regional  State  aid 
schemes have been developed and are aligned 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 State aid are respected. The CPC 
compiled the inventory of State aid measures for the period January-June 2008. The inventory 
includes  decisions  on  compatibility  of  State  aid  approved  in  2006  and  2007.  However,  the 
administrative capacity is not sufficient for proper monitoring of State aid: the number of staff 
of  the  CPC  is  still  not  adequate  to  respond  to  its  complex  tasks.  An  effective  and 
comprehensive  system  for ex-ante control of State aid is not yet 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, preparations in the area of State aid are advanced.  

The CPC continued to perform its duties independently. 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  the  area  of  antitrust,  including  mergers  and 
State aid. The CPC still needs more and better 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  and  audit  requirements  and  capital  adequacy. 
However,  further  efforts  are  needed  in  order  to  continue  the  alignment  with  the  banking 
acquis, especially with the Capital Requirements Directive.  

The central bank (NBRM) has moved further towards risk-based supervision. Its supervisory 
practices, capacity and expertise were further enhanced: the sector for supervision, legislation 
and  financial  stability  was  strengthened  with  nine  extra  staff,  and  additional  training  was 
given. However, continuing efforts in that respect are needed. Consumer protection has yet to 
be adequately addressed. Preparations in the area of banks and financial conglomerates are on 
track. 

There  has  been  good,  but  uneven,  progress  in  the  area  of  insurance  and  occupational 
pensions. Amendments to the Law on insurance supervision entered into force. Nonetheless, 
insurance  supervision  continues  to  be  weak.  The  independent  insurance  supervision  agency 
has still not become operational. Supervision continues to be the responsibility of the financial 
system department within the Ministry of Finance, 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 foreign insurance supervisors. A properly financed 
guarantee fund for insolvency of insurers is still lacking. Some insurance companies still do 
not have adequate reinsurance. Implementing legislation to the Law on traffic safety has yet to 
be adopted. Enforcement of sanctions against uninsured driving is weak. 

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Amendments to the Law on fully funded pension insurance, regulating the establishment and 
responsibilities of companies for managing pension funds and defining the responsibilities of 
the  Agency  for  supervision  of  fully  funded  pension  insurance  (MAPAS)  were  adopted  by 
parliament. Implementing legislation regulating the 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.  Preparations  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 NBRM’s decisions on classification of assets 
and on limits of credit exposure with the acquis has still to be confirmed. 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 remittance 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  implementing  legislation  was  adopted  which  lays 
down  the  rules  to  be  observed  by  the  various  issuers  of  securities  (companies,  financial 
institutions  and  municipalities).  The  Securities  and  Exchange  Commission  (SEC)  has  been 
exercising  its  enforcement  powers  effectively;  its  enforcement  record  has  improved.  In 
November 2007, the first two management companies 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  banks  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 operational independence is insufficient. Preparations in this area are 
moderately advanced. 

An  action  plan  on  approximation  to  the  EU  supervisory  standards  and  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 

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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 authorisation following notification. 

Further progress was made by the regulatory body in imposing competitive safeguards against 
SMP operators in compliance with Article 146 of the primary law. Interconnection rates were 
drastically  reduced,  number  portability  introduced  and  a  universal  service  provider  pre-
selected. Moreover, certain mandatory obligations for SMP operators (interconnection offers, 
retail rates regulation, cost accounting and accounting separation) have finally been enforced. 
These measures have resulted in growing competition in the fixed and 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  measures  are  needed  to  restore  a  competitive 
situation.  

The emergency number 112 has not yet been introduced. 

The  regulatory  body  recruited  additional  staff  and  enhanced  its  cooperation  with  the 
Commission  for  Protection  of  Competition.  Moreover,  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 for clarification of tasks 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 cyber-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  upgraded.  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  adopted.  The  Broadcasting 
Council  adopted  guidelines  on  communication  of  changes  in  the  ownership  structure  of 
broadcasters and a rulebook on sanctions for non-compliance with the Law on broadcasting 
and  implementing  legislation  regulating  media  coverage  of  the  elections.  Moreover,  a 
the 
Memorandum  of  Understanding  for  strengthening 
Broadcasting Council was signed with the OSCE mission.  

the  monitoring  capacity  of 

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  for  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  service  broadcaster  is  not  secured.  The  funding 
system of the public service broadcasters and the Broadcasting Council (collection of licence 
fees)  should  have  been  operational  since  1  June  2006.  Reports  show  that  the  system  has 
almost completely failed since very few people actually pay the licence fee. According to the 
Broadcasting  Council,  the  fee  collection  is  "0"  since  January  this  year.  Amendments  to  the 

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law  were  enacted  which  provide  for  the  possibility  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  communications,  including 
enforcement  measures.  This  has  brought  more  competitive  conditions  to  the  benefit  of 
consumers.  In  the  media,  the  financial  situation  of  the  Broadcasting  Council  and  the  public 
service broadcaster remain a cause for concern. 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, providing a legal base for transposition of the 
relevant CAP acquis. The final results of the agricultural census were published. The Law on 
agricultural  land  was  enacted  and  its  implementing  legislation  adopted.  It  regulates 
management,  oversight  and  protection  of  agricultural  land.  Additional  employees  were 
recruited in the Departments for policy analysis and the agricultural information system, for 
management of agricultural land and for rural development. The agricultural inspectorate was 
reinforced  with  two  additional  staff  in  Skopje  and  eight  in  regional  units,  out  of  33  new 
recruits  planned  by  2010.  The  inspectorate  was  supplied  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 payments 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 currently filling in registration forms that will 
be subsequently introduced into the system.  

No  progress  can  be  reported  in  setting  up  an  integrated  administration  and  control  system 
(IACS)  since  the  pilot  projects.  Administrative  responsibility  for  collecting  and  sharing  data 
between  different  institutions  has  still  to  be  clarified.  No  progress  has  been  made  in 
establishing  the  land  parcel  identification  system  (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. However, its capacity 
for sound management of State funds 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  accountancy  data  network  (FADN);  adoption  of 
the implementing legislation is progressing slowly. A law on State aid in agriculture has not 
yet been enacted. 

EN 

41 

   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 country. 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 were added to the national list of agricultural plant varieties. 

Progress  can  be  reported  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 agricultural and rural development strategy. The rural 
development  programme  under  the  Instrument  for  Pre-Accession  Assistance  (IPARD 
programme) has been adopted. Substantial progress has been made with the preparations for 
the national accreditation of the IPARD agency. Adoption of the procedures has progressed 
and  the  administrative  capacity  has  been  strengthened.  The  staffing  level  of  the  IPARD 
agency is now 68 employees, out of the 134 planned 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 management 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 and 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 agricultural production is progressing. The programme includes direct 
support  for  organic  production,  together  with  public-awareness  campaigns  about  organic 
production. Manuals have been adopted 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 third countries. Preparations in this area are advanced. 

Conclusion 

There has been progress in the field of agriculture and good progress has been 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 software for the rapid alert system has not yet 
been prepared. Preparations in this area are on track. 

EN 

42 

   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 structure 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  identification  of  bovines  and  registration  of  their  movements  is 
operational  for  the  most  part.  Identification  of  sheep  and  goats  is  underway,  while 
identification  and  registration  of  pigs  is  in  its  preliminary  phase.  Demotions  of  professional 
staff  in  the  Veterinary  Directorate  have  adversely  affected  the  administrative  capacity  for 
identification of animals.  

transposed.  The  acquis  on 

The  animal  health  control  system  does  not  comply  with  EU  legislative  and  institutional 
requirements.  Some  of  the  implementing  legislation  on  the  control  measures  for  animal 
diseases  has  not  yet  been 
transmissible  spongiform 
encephalopathies  has  not  yet  been  transposed.  The  contingency  plans  for  most  of  the 
notifiable  diseases  are  being  prepared  and  published  annually;  their  compliance  with  EU 
standards remains to be confirmed. The Veterinary Directorate improved the official controls, 
but not sufficiently to tackle transmissible animal 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 
insufficient.  The 
implementing  legislation  on  non-commercial  movement  of  pet  animals,  aiming  to  transpose 
the acquis, was adopted. 

implementing 

legislation 

this 

is 

The annual monitoring programme for prohibition of substances and residue control does not 
meet most of the EU requirements. 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 capacity 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  central  and  local  levels  to  put  in  place  an  EU-
compatible control system has been reinforced, but is not sufficient. 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  for  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  sampling  has  still  to  be  confirmed.  The  rules  for  animal  by-
products have not yet been transposed. The necessary collection and treatment systems have 
not  yet  been  set  up.  The  aid  schemes  for  Hazard  Analysis  Critical  Control  Point  (HACCP) 
certification have been extended to 2008. Training for inspectors to assess the compliance of 
agri-food  establishments  with  HACCP  standards  has  started.  HACCP  certification  still 
remains  limited  to  larger  establishments.  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 

43 

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enhanced implementation of the HACCP system. Evaluation of agri-food establishments for 
compliance with EU standards and upgrading programmes is at an early stage. 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 established. The capacity of the laboratory in the Institute for Health 
Protection is insufficient to provide reliable results. The number, training and competence of 
staff in the Food Safety Directorate (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  understanding  has  been  signed  between  the  Veterinary 
Directorate  (VD)  and  the  FSD.  Still,  no  single  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  has  been  established  and  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  being  implemented.  The  staff  of  the  plant  health 
authority has  been  increased,  but  their  numbers and 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  banderols  for  plant  protection  products  and  train 
phytosanitary  inspectors  and  to  monitor  and  eradicate  harmful  plant  organisms.  The 
administrative  capacity  of  the  Phytosanitary  Directorate  is  weak.  Coordination  between  the 
various stakeholders in the area of phytosanitary policy has not improved. The responsibilities 
of  the  plant  health  authority  are  still  divided  between  the  Phytosanitary  Directorate  and  the 
Seed  and  Seed  Materials  Directorate.  The  equipment  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,  veterinary  and  phytosanitary 
policy,  mainly  regarding  legislative  preparedness.  The  administrative  capacity,  in  terms  of 
both  the  number  and  competence  of  staff,  has  been  strengthened,  but  is  not  yet  adequate  to 
ensure  proper  implementation  of  the  acquis.  No  single  authority  has  competence  for  food 
safety control. 

EN 

44 

   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 aquaculture. The law regulates commercial fishing, fish 
production  and  sport  fishing.  Some  of  the  implementing  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  aquaculture  within  the  agriculture  department  of  the 
Ministry  of  Agriculture,  Forestry  and  Water  Economy,  which  is  responsible  for  issuing 
licences for concessions for commercial fishing,  fish production 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,  does  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 area are being launched. 

Conclusion 

There  has  been  progress  in  this  area.  The  administrative  capacity  has  still  to  be  developed. 
Since the country is landlocked, most of the fisheries acquis is not relevant. Preparations for 
implementation of the common fisheries 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  certificates  of  professional 
competence and for engaging in international road transport. Implementing legislation relating 
to  the  laws  on  road  transport  safety,  on  vehicle  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  transport,  was  adopted.  Implementing  legislation  to 
the  Law  on  transport  of  dangerous  goods  by  road  and  rail,  relating  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 

45 

   EN 

The  Law  establishing  an  independent  regulatory  agency  for  rail  transport  contracts  was 
enacted, but has not yet entered into force. Implementing legislation to the Law on railways 
was adopted relating to interoperability, safety of the rail network and licences for transport of 
passengers  and  goods.  Implementing  legislation  was  adopted  on  licences  and  safety 
certificates for managing railway infrastructure, regulation of rail traffic, training of railway 
technicians  and  compliance  of  trains  with  noise  and  environmental  protection  regulations. 
Implementing legislation to the Law on rail transport safety was adopted relating to stations, 
trains, wagons, tracks and safety equipment for workers and passengers. Moreover, rulebooks 
were  issued  dealing  with  a  state  of  emergency  and  interruption  of  rail  transport,  and  on 
classification  and  categorisation  of  railway  lines.  The  safety  authority  has  not  yet  been 
established.  Public  service  obligations  are  still  not  being  compensated  for.  The  system  of 
track-access  charges  has  not  yet  been  introduced.  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 infrastructure 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, fees for testing boats and signs and signals on 
inland waterways. In this area, the country is sufficiently prepared. 

In the area of combined transport, the country continues to implement the Memorandum of 
Understanding  on  the  South-East  European  Core  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 with 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) agreement. Implementing legislation to the Law 
on aviation was adopted, relating to the planning, building and reconstruction of airports and 
devices for airport flight control systems. Implementing legislation 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  and  security  personnel  was  adopted.  The  Civil 
Aviation  Agency  issued  a  rulebook  on  transposition  and  direct  implementation  of  the  Joint 
Aviation  Authorities  international  standards  and  rulebooks,  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 aviation safety and security procedures, have 
still not been implemented. Contrary to the law, 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  investigation  lacks  sufficient  capacity  to  act  as  an 
independent  body  for  investigation  of  accidents  and  serious  incidents.  The  air  traffic 
department  of  the  Ministry  of  Transport  and  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 

46 

   EN 

Conclusion 

Good  progress  can  be  reported  in  the  area  of  transport  policy.  However,  administrative 
capacity in all sectors remains insufficient. Regulatory 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  enacted.  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 sufficient 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 policy for the electricity 
distribution  sector.  Following  a  complaint  from  a  private  investor  against  the  new  Energy 
Law, in September the Secretariat of the Energy Community Treaty decided 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  directly  from  the  market.  The  Energy  Regulatory 
Commission (ERC) approved the distribution grid code. Certain gas and electricity tariffs still 
do not reflect costs, while collection rates are still not sufficient to ensure the viability of the 
system.  Two  members  of  the  ERC  reached  the  end  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  strengthened,  in  particular  as 
regards regulation of prices on markets where competition is not sufficient. The ERC does not 
have  proper  market  regulatory  authority  over  the  operations  of  all  independent  power 
producers (IPP), in particular over the State-owned 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  distribution  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  combined  heating  and  power  plants  that  are  being 
constructed. The government established an electricity exchange, which is not yet operational. 
The  Energy  Department  of  the  Ministry  of  Economy 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. Most of the coal (lignite) reserves are 
being  managed  by  the  electricity  generation  company.  There  is  no  clear  legal  and  financial 

EN 

47 

   EN 

separation  between  the  lignite  excavation  activities  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  for  electricity  produced  from  bio-mass,  geothermal  energy  and 
investors.  The 
photovoltaic  systems  which  offer  advantageous 
implementing legislation on renewable energy sources has been adopted. The administrative 
capacity  for  developing  renewable  energy  sources  has  been  strengthened.  Two  bio-fuel 
refineries  were  commissioned.  In  the  area  of  renewable  energy  the  country  is  moderately 
advanced. 

to  potential 

tariffs 

Some progress has been made in the area of energy efficiency. The manual on guarantees of 
origin  of  electricity  has  been  adopted.  The  Energy  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  include  provisions  on  nuclear  safety.  The 
administrative capacity of the Radiation Safety Directorate (RSD) has been reinforced and is 
now  satisfactory.  The  amended  law  clarifies  the  role  and  responsibilities  of  the  different 
organisations  involved  in  radiation  protection  matters,  but  does  not  provide  for  financial 
independence  of  the  directorate.  An  appropriate  storage  facility  for  materials  has  been 
identified.  The  IAEA  considers  that  the  storage  of  radioactive  waste  now  complies  with 
international standards and recommendations. However, a project on management and storage 
of  low  and  medium  radioactive  waste  was  reported  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  electricity  market.  However,  certain  outstanding  issues 
related to tariffs and electricity distribution still require attention. The administrative capacity 
to  enforce  energy-efficiency  policy  and  radiation  protection  regulations  has  improved,  but 
requires  further  strengthening.  The  degree  of  independence  of  the  energy  regulator  and  the 
radiation protection regulator remains 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 the minimum required by the acquis. 

In the area of direct taxation, profit tax and personal income tax 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 simplified tax procedure. Tax 
relief of 50% was introduced on the personal income tax payable by employees of companies 

EN 

48 

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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  reported  in  the  field  of  operational  capacity  and  computerisation. 
The Public Revenue Office has enhanced its capacity to implement tax legislation and to fight 
tax evasion. It has developed and started to implement an external audit strategy. A strategy 
for  human  resources  development  and  new  working  standards  have  been  prepared  and 
implementation  of  a  new  Code  of  Ethics  has  begun.  In  combination  with  the  ongoing 
computerisation,  the  simplification  of  tax  payments  and  enhanced  communication  with  the 
public have led to a significant increase in registered taxpayers and in the revenue collected. 
A new centre for data collection and 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 and criminal cases initiated by 
the Public Revenue Office. 

The Public Revenue Office started to participate in the Fiscalis 2013 programme. 

Conclusion 

Good  progress  has  been  made  on  strengthening  the  administrative  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 taxation. The administrative 
capacity for tax collection has markedly improved and tax revenue has increased, but efforts 
are still needed to ensure effective implementation and enforcement of tax legislation, in view 
of reducing the informal economy. Significant efforts 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  aligning  the  legal  framework  with  the  acquis  the  area  of 
monetary  policy.  The  central  bank  has  continued  to  monitor  and  report  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  supervisory  bodies  in  the  financial  sector:  the  Securities  and 
Exchange Commission, the Agency for supervision 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  participating  in  the 
EU's  Pre-accession  Fiscal  Surveillance.  It  presented  its  second  Pre-accession  Economic 
Programme  in  December  2007  and  the  third  fiscal  notification  in  April  2008,  but  the  data 
provided  are  not  yet  sufficiently  in  line  with  ESA 95.  The  government  adopted  two  inter-
linked  medium-term  strategies:  a  public  investment  programme  for  2008-10,  aimed  at 
increasing public investment to 6% of GDP in 2008, and a public debt management strategy 
for 2008-10, with the objective of keeping general government debt within the range of 34% 
to  37%  of  GDP  and  overall  public  debt  within  the  range  of  37%  to  40%  of  GDP. 

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Administrative capacity is still inadequate, in particular as regards policy implementation at 
municipal level. Preparations in the 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 reported in the area of statistical infrastructure. The statistical council was 
established with members from various institutions and academia. The government adopted a 
five-year statistical programme for 2008-2012 covering the national 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 2007 and 17 new staff were recruited. Human 
resources management tools, such as assessments and training plans, have been implemented. 
Internal  and  external  communication  has  improved.  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  classifications.  A  classification  of  statistical  regions  in  line  with  the 
relevant  EU  standards  was  agreed  with  Eurostat.  The  latest  international  classification  of 
diseases  was  introduced.  The  pilot  business  census  was  carried  out.  The  basis  for  the 
statistical business register has been developed. 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 population 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,  construction,  energy,  external  trade  and  tourism.  Cooperation 
with the Ministry of Finance and the Central Bank has improved; however, roles have still to 
be clearly defined. As regards agriculture and fisheries statistics, full data from the agriculture 
census  were  published  by  the  end  of  2007,  i.e.  six  months  after  the  census.  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 maintain 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  regulating  low-wage  contracts  was  removed  by 
considerably  lowering  the  tax  wedge  on  wages  in  January  2008.  The  number  of  labour 

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inspectors  was  increased  from  96  to  129,  but  the  inspectorate  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 occupational health and safety at work was adopted. However, administrative 
capacity  is  insufficient  to  ensure  proper  implementation  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 data indicated 47 cases. Alignment with the 
acquis in the area of health and safety at work is moderately advanced. 

There has been little progress in the field of social dialogue. The collective agreement with 
public-sector  employees  was  signed.  The  Economic  and  Social  Council  (ESC)  met  more 
frequently  but  its  composition  remained  unchanged  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 working 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  clarity  is  also  undermining  the  bipartite  social 
dialogue.  Social  partners  are  consulted  on  draft  legislation,  but  lack  the  capacity  to  make 
sufficient  contributions  to  planning,  implementing  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  operational  plan  on  active  labour  market  measures  and  allocated 
€6 million  for  this  purpose.  Labour  market  data  have  improved,  but  labour  market 
participation  and  employment  rates  are  still  very  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 framework 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 July, a law on older "redundant" workers improved the financial 
security  of  people  who  are  unemployed  as  a  result  of  the  privatisation  of  State-owned 
enterprises between 2000 and 2004. Although some progress has been made on strengthening 
administrative  capacity,  the  overall  capacity  remains  insufficient  to  match  the  ambitious 
employment strategies and plans. The work of the Employment Service Agency is still geared 
too  closely  to  administering  unemployment  and  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  preparations  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. Preparations in this area are on track.  

Little  progress  has  been  made  in  the  field  of  social  inclusion.  Eight  Roma  centres  were 
in  2007-2008.  The  government  adopted  a  10-year  national  strategy  for 
opened 

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deinstitutionalisation of social care. 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 market for vulnerable groups, including people with 
disabilities,  remain  insufficient.  Statistical  data  and  analyses  on  poverty  are  deficient. 
Vulnerable groups, such as Roma children, rural girls 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 inclusion policies remains inadequate, as does the 
evaluation  of  policies.  The  decentralisation  of  social  inclusion  policies  is  facing  major 
problems.  The  municipalities  which  have  entered  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 disadvantaged people, including the working poor, the rural 
poor, low-educated, jobless households, women from vulnerable groups living in rural areas, 
the  Roma,  big  families,  people  with  disabilities,  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.  Amendments  to  the  Law  on  pensions  and  disability 
clarified the definition of disability and the related rights. However, administrative capacity is 
insufficient  to  develop  a  sustainable  and  equitable  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  signed  the  UN  Convention  on  the  rights  of 
people  with  disabilities.  Administrative  capacity  in  this  area  remains  weak.  Vulnerable 
groups,  including  some  ethnic  minorities,  are  discriminated  against  in  various  spheres  of 
economic  and  social  life.  The  situation  of  people  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 opportunities within the Ministry of Labour 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  ethnic  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  administrative  capacity  is  slowly  being  strengthened,  it 
remains insufficient to implement properly the legislation and policies adopted. 

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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  unnecessary  and  business-unfriendly  legislation.  The  rulebook  on 
government procedures was amended to introduce 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 number of staff in the SME department of the 
Ministry  of  Economy  was  increased  from  seven  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 implement 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  projects  have  been  approved.  The  investment 
promotion  programme  has  been  strengthened  with  additional  funding  and  more  intense 
promotional activities. The Law on technological-industrial development zones was amended, 
removing  the  discrimination  favouring  companies  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 business 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 profit tax for SMEs simplifies tax procedures, 
but  may  result  in  some  micro-enterprises  incurring  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  introduced  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 clusters 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 sector works satisfactorily. Policy design on key 
sectors  of  the  economy  is  slowly  improving,  particularly  in  the  steel  and  textile  industries. 
The  European  Commission  approved  the  revised  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  enterprise  and  industrial  policy,  in  particular 
regarding the regulatory framework and the sector 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.  

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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  Transport  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  transport  strategy  was  completed.  There  were  no 
developments  on  coordination  of  investment.  Progress  was  made  towards  implementing  the 
priority  projects  along  Pan-European  Corridors  VIII  and  X.  A  12km-long  section  of  the 
Skopje bypass  was completed.  National co-financing was  made available  for  these  projects. 
Progress  is  hampered  by  the  substantial  financial  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 study for a 400 kV connection with Serbia has been prepared 
and  a  Memorandum  of  Understanding  was  signed  between  the  two  transmission  operators. 
The  400kV  connection  with  Bulgaria  was  commissioned  in  mid-2008.  The  government 
adopted a decision to upgrade the existing transmission line to Kosovo from 220 kV to 400 
kV. There were no new developments in the energy 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  South-East  Europe  Transport  Observatory.  The  sizeable  financial 
resources  needed  to  upgrade  the  infrastructure  remain  a  major  impediment.  Preparations  in 
this area are advanced. 

4.22.  Chapter 22: Regional policy and coordination 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  was  completed,  while  legislation  on  State  aid 
and the environment is still not fully aligned. 

Statistical regions that are fully compliant with 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  municipalities  from  the  Eastern  region 
were shifted to the Vardar region. The Vardar region now has more than 150,000 inhabitants 
and thus complies with Eurostat's criterion for the 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 establishing specific administrative structures for 
the  Regional  Development  Law,  with  a  clear  distribution  of 
implementation  of 
responsibilities.  Regional  development  councils  were  set  up  for  all  eight  regions  and 
chairpersons  were  elected  from  among  the  mayors.  The  National  Regional  Development 

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Council  was  established,  along  with  one  regional  centre.  The  other  seven  regional  centres 
have  yet  to  be  established.  The  regional  centres  will  provide  administrative  support  for  the 
regional development councils. The capacity for coordination between the various bodies has 
been strengthened. Preparations for implementation of the Regional Development component 
(III) and Human Resources Development component (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  establishing  implementation systems for  the future  Structural  and Cohesion 
Funds have not been initiated yet. Preparations 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. Preparations 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  human  resources  under  IPA  were  adopted  by  the 
Commission.  The  National  Regional  Development  Strategy  has  not  been  finalised  yet. 
Preparations in this area are slowly advancing. 

There has been some progress 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 components III and IV were held in December 
2007 and in February and June 2008. The membership 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  ministries  within  the  units  for  monitoring  and 
evaluation. The administrative capacity in terms of necessary staff and training remains weak. 
Preparations in this area are slowly advancing. 

Some progress can be reported 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  establishment  of  financial  management 
and  control  systems  for  the  future  Structural  and  Cohesion  Funds  have  not  started  yet. 
Preparations in this area 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 the 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  levels  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 progress 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  members  in  December  2007  and  has  become  more 

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effective.  Also,  the  Council  of  Public  Prosecutors  became  functional  in  August  2008  after 
parliament made the last three appointments. 

The  law  on  the  public  prosecutor's  office,  adopted  after  some  delay  in  December  2007, 
determines the competence, organization, and establishment 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  competences  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,  also  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  State  Public  Prosecutor  and  selection  of  public 
prosecutors.  The  new  procedures  seem  transparent,  fair  and  objective  and  in  line  with 
international standards. The legislative process included a wide process of consultation. 

The  State  Public  Prosecutor  (6-year  term  renewable  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 avoid politicisation of the post. The State Public Prosecutor may 
be dismissed by the parliament upon the proposal of the government and with an opinion of 
the  Council  of  Public  Prosecutors  if  certain  criteria  set  in  the  law  are  met,  for  example 
unlawful and untimely performance of the function. 

The  public  prosecutors,  whose  mandate  is  indefinite,  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 choice between being judges or prosecutors at 
the end of the process. Public Prosecutors may be dismissed by the Council of Prosecutors if 
certain criteria set in the law are met, for example unprofessional performance. A commission 
of five members will be established 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 years (not renewable). The Minister of Justice 
and  the  Public  Prosecutor  are  ex  officio  members  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 communities, and three are elected by the Parliament. 
Its decisions require a majority of all of its members. 

The  Judicial  Council  continued  efforts  to  combat  corruption  and  ensure  impartiality.  It 
dismissed  seven  judges  and  initiated  procedures  against  twelve  others;  five  disciplinary 
procedures  are  ongoing.  The  State  Public  Prosecutor  demoted  two  experienced  prosecutors 
from the specialised unit for the fight against organised crime and corruption. This decision 
was  taken  before  the  Council  of  Public  Prosecutors  became  operational  and  the  criteria  and 
the proportionality of the decision remain to be clarified. 

As  regards  professionalism  and  competence,  the  academy  of  judges  and  prosecutors  has 
carried  out  continuous  and  started  initial  training.  The  first  27  students  for  initial  training 
completed  the  theoretical  training,  and  started  the  practical  training.  However,  63%  of  the 

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academy's  budget  is  funded  by  international  donors.  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  completed  as  approximately  200  laws  have  been 
harmonised.  Out  of  38  administrative  bodies,  only  12  have  established,  between  them,  43 
misdemeanour commissions. To date, these commissions have received over 27,000 cases of 
which over 8,000 have been resolved. 

The  implementation  of  the  2006  law  on  mediation  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 Administrative Court and the 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  decisions  and  the  latter  issued  approximately  1400 
decisions by mid June. 

The budget for the Public Prosecutor's Office was increased slightly, to €4 million. 

However,  a  significant  number  of  vacancies  remain  open  in  the  public  prosecution  service, 
and the Higher Prosecutor's Office in Gostivar has yet to be set up. Furthermore, 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  mixed  record.  At  the  end  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 large 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 Court. The courts of first instance and courts of appeal dealt 
with  almost  2  million  cases  during  2007.  The  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 increased (632 and 187, compared to 597 and 186 in 
2007) the number of employees in the judicial administration has dropped 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  cover  their  running  costs  their  debts  to  utility 
companies.  This  recurrent  weakness  was  remedied again  by  providing a  supplementary 
budget in the course of the year but nonetheless it continues to jeopardize the efficiency of the 
judicial  system.  Computerisation  of  the  courts  continued  to  be  funded  mostly  by  foreign 
donors.  The  centre  designed  to  connect  the  IT  systems  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. 

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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 and the new Court of Appeal in Gostivar were 
set  up.  However  further  strengthening  of  the  judiciary  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 needs 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  amended  to  allow  the  State  Anti-Corruption 
Commission (SACC) to publish the  asset  declarations  of  all  appointed and elected officials, 
directors  of  public  enterprises,  public  institutions  or  other  legal  entities  with  state-owned 
capital, without a letter signed by the person concerned authorising the SACC to do so. Other 
amendments  further  enhanced  the  competence  of  the  Public  Revenue  Office  (PRO)  to 
examine property, obliging all those under investigation to submit 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 period. Failure to do so is punishable by a prison 
sentence. 

A new law on public procurement and related implementing legislation entered into force. It 
provided  for  a  new  remedies  system  and  provisions  to  make  publication  and  awarding  of 
contracts  more  transparent.  A  new  law  on  the  Public  Prosecutor's  Office  extended  the 
jurisdiction of its organised crime unit to corruption-related offences. 

The  SACC  continued  to  monitor  the  implementation  of  the  state  programme  for  prevention 
and  suppression  of  corruption.  Some  of  the  foreseen  activities  were  undertaken.  A 
performance  monitoring  system  was  put  in  place.  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 monitor the asset declarations of elected and appointed officials. 
More than half of the misdemeanour procedures brought against officials who failed to meet 
their  obligations  with  regard  to  asset  declarations  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  implementation  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. 

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The capacity of and cooperation between law enforcement agencies and watchdog bodies has 
continued to strengthen. Increased 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  customs  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  entities  applying  the  new  public 
procurement law was undertaken. 

The 2008 supplementary budget introduced specific budget lines for anti-corruption activities 
in line with the anti-corruption Action 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 campaigns were addressed 
after the elections and a track record of implementation needs to be established. The conflict 
of  interest  law  contains  loopholes,  in  particular  it  does  not  apply  to  civil  servants.  The 
GRECO recommendation to introduce 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  preventive  measures  provided  by  the  anti-corruption 
legal framework, including the law on general administrative procedures and the law on free 
access  to  information,  would  narrow  the  opportunities  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 independent in the way it acts. 

State  Audit  Office  reports  and  recommendations  made  by  the  SACC  are  not  consistently 
followed up. The judiciary remains weak, and delivery and enforcement of court decisions are 
deficient. Efforts to pursue a zero tolerance policy are still not comprehensive and consistent. 
Decisions made in the public administration are not sufficiently transparent. There is a need 
for general training on the freezing and confiscation 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 have been achieved in implementation. However, 
corruption remains a serious cause for concern and key weaknesses remain, 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: Social policy and employment.)  

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In 2007, the Ombudsman's office received 3029 complaints, a number slightly lower than in 
2006 (3076). The largest number of complaints received 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  Ombudsman  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 training on the code of police ethics. However, further significant 
efforts  are  needed  to  investigate  and  prosecute  allegations  of  ill-treatment,  in  line  with  the 
decisions  of  the  European  Court  of  Human  Rights.  The  Committee  for  the  Prevention  of 
Torture has expressed deep concern 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  and  is  being  implemented. 
Amendments have been adopted that are intended to further align the law with the acquis. The 
Directorate for Personal Data protection organised press conferences, interviews and reports, 
as well as a number of workshops and roundtables, with the aim of informing the public about 
the right to personal data protection and privacy. However, the Directorate for Personal data 
Protection remains understaffed. The additional protocol to the Council of Europe convention 
for  the  Protection  of  Individuals  with  regard  to  Automatic  Processing  of  Personal  Data 
regarding supervisory authorities 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, religious communities and religious groups came into 
force  in  May  2008.  The  law  is  intended  to  remove  all  impediments  to  the  free  practice  of 
religious belief. However, it has yet to be fully implemented. 

With regard to freedom of expression including freedom 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  concentrated.  The  media  continue  to  be  subject  to 
significant political interference. 

In  the  area  of  freedom  of  assembly  and  association,  including  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 registered 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 

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insufficient  capacity  to  deal  with  the  expansion  of  the  school  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 properties of the Orthodox Church and the Muslim community. The 
authorities  should  take  practical  measures  to  improve  the  administration  of  the  restitution 
process in line with the Ombudsman recommendations, paying particular attention to possible 
allegations of corruption. 

Limited  progress  can  be  reported  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 strategy on protection from domestic violence. The 
draft  strategy  covers  all  aspects  of  the  issue,  including  prevention  (through  education), 
awareness-raising,  legal  protection,  and  assistance  to  both  victims  and  perpetrators.  The 
definition of rape in the criminal law was amended and is now wider, thus making successful 
prosecutions  more  likely.  However,  discriminatory  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  regards  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 legal 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  adopted  which  establishes  a 
comprehensive  legal  framework  for  the  use  of  minority  languages  in  public  institutions:  de 
facto it applies to the Albanian language because of a 20% population threshold. Agreement 
was  achieved  on  the  scope  of  application  of  the  double  majority  system  for  laws  affecting 
minorities.  There  has  been  progress  in  achieving  equitable  representation  in  public 
administration  for  the Albanian  community. However 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 consensus remains to be found on the law on use of 
flags of the communities. Little progress was achieved regarding the Roma as the action plans 
are  being  implemented  slowly.  There  are  several  cases  pending  at  the  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 council is functioning, the Council of Public Prosecutors 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 independence, budgetary framework, 

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human resources and efficiency. The law on criminal procedure was amended to allow the use 
of  special  investigative  measures  in  corruption  cases.  The  anti-corruption  Action  Plan  was 
allocated  a  specific  budget.  Further  efforts  are  necessary,  notably  as  regards  implementing 
provisions on financing of political parties and election campaigns. Concerning fundamental 
rights,  a  law  on  languages  was  adopted  which  extends  the  use  of  the  Albanian  language  in 
public life. However, little progress can be reported regarding the other minorities, including 
the Roma. Overall, the country is moderately advanced in this area. 

4.24.  Chapter 24: Justice, freedom and security 

Good progress can be reported in the field of migration. Implementing legislation to the Law 
on  employment  of  foreigners  was  adopted.  The  Law  on  aliens  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 integration policy plan are still lacking. A readmission 
agreement  was  signed  with  Bosnia  and  Herzegovina,  bringing  the  number  of  readmission 
agreements  with  non-EU  Member  States  to  five.  Readmission  agreements  were  concluded 
with  Moldova  and  Ukraine  and  are  being  negotiated  with  Serbia  and  Montenegro.  In  the 
course of 2007 the border police detected 1,085 illegal crossings (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  Social  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 visas. 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 protection, 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. There is still a lack 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 processing of visas entered into force. Visas 
are  no  longer  issued  at  the  borders,  save  in  exceptional  cases.  An  agreement  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 dialogue with the EU was launched. Bilateral visa 
facilitation  agreements  were  signed  with  Norway  and  Russia.  New  biometric  passports  and 
temporary and permanent residence permits are being issued in line with international security 
standards. High-quality travel and identity documents have begun to be delivered. A new visa 
sticker  has  been  developed,  based  on  the  Schengen  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  administrative  capacity  of  the  Department  for  consular 
affairs  needs  to  be  strengthened,  especially  its  human  and  budgetary  resources.  Visa 

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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 the related implementing legislation are being implemented. The 
process of border demarcation with Kosovo is almost complete. International cooperation is 
established  at  all  levels  and  contacts  have  been  established  with  FRONTEX  with  a  view  to 
concluding a working arrangement. 

The  national  border  management  coordination  centre  assumed  its  functions  and  is  partially 
operational.  Improvements  have  been  made  to  the  planning  and  conducting  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 the border crossing points (BCPs) is still only 
partially operational. The main database  and  software to connect the BCPs to this database, 
which would permit effective border 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 dilapidated 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  points  and  to  providing  them  with  risk  information  to  combat 
illegal migration effectively. The budgetary support is unsatisfactory. 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  any  of  the  other  conventions  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 implemented. All the implementing legislation has been 
adopted,  and  the  necessary  organisational  arrangements  were  made  by  the  Ministry  of  the 
Interior  to  prepare  for  effective  implementation  of  the  Police  Law,  a  key  priority  of  the 
Accession Partnership. The strategic agreement with EUROPOL entered into force in March 
2008.  Work  on  conclusion  of  an  operational  agreement,  which  would  allow  exchanges  of 
personal  data,  is  ongoing.  All  38  commanders  of  the  main  police  stations  have  been 
appointed,  in  consultation  with  the  municipal  councils,  albeit  with  some  delay.  A 
comprehensive  annual  training  programme  for  2008  was  adopted.  Major  investments  in 
equipment, including replacement of the vehicle fleet, were decided.  

The  human  resources  department of  the  Ministry  of  the  Interior  was reorganised. A  general 
human resources strategy has been designed and its implementation is at an early stage. Merit-
based career development and appraisal are not yet ensured and politicisation, in particular of 
senior  police  officers,  is  a  problem.  The  police  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  not  fully  been  used.  In  early  July,  parliament  enacted 

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amendments to the Law on internal affairs relating 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) with 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 made in the fight against trafficking of human beings. In January 
2008  the  criminal  code  was  changed  to  introduce  harsher  penalties  for  traffickers  and  those 
using  services  of  trafficking  victims.  New  standard  operating  procedures  on  victim 
identification  were  adopted  and  resulted  in  an  increase  in  the  number  of  victims  identified. 
There were also improvements in cooperation between the police, the public prosecutors and 
the courts. Progress has been made in profiling organised crime groups and identifying their 
modus  operandi.  In  2007,  the  government  prosecuted  55  cases  related  to  trafficking  and 
convicted  70  traffickers  involved  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 logistics 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  enforcement  agencies  and  the  judiciary  remained 
satisfactory  at  central  level,  meeting  international  best  practice.  Some  improvements  were 
made  at  field  level.  Cooperation  between  public  prosecutors  and  criminal  police  of  the 
regional  police  headquarters  has  improved,  but  not  sufficiently.  The  sector  for  special 
investigative techniques in the Ministry of the Interior remains understaffed and needs further 
equipment.  In  early  July  the  code  of  criminal  procedure  was  amended.  Use  of  special 
investigative measures is now allowed not only 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,  including  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 the role of the Minister of the Interior and 
the wide conditions for recourse to interception, 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 and 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  underway.  The  numerous  memoranda  of  understanding  in 
place help to address the need for more effective cooperation at inter-agency level. Progress 
has been made with the handling of informants and with measures against trafficking of stolen 

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vehicles. There has been little progress in fight against computer crime, where shortcomings 
in staffing and in equipment remain. 

Preparations  in  the  area  of  police  cooperation  and  the  fight  against  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 prevention of money laundering 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 efficiently supports the investigation 
and  prosecution  capacity  of  the  law  enforcement  agencies.  The  number  of  reports  of 
suspicious  transactions  sent  to  the  Office  has  increased,  but  is  still  low.  Gaps  in  the 
criminalisation of terrorism offences, especially in the field of financing, were closed by the 
Law  on  financing  of  terrorism.  The  2005  Council  of  Europe  Convention  on  Prevention  of 
Terrorism  has  been  ratified.  Preparations  in  the  area  of  the  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 remains very serious as the country lies at 
the crossroads of many Balkan drug trafficking routes. The Interministerial Commission for 
Narcotic Drugs reported growing seizures of illicit substances. Relevant authorities sharpened 
their  focus  on  a  balanced  approach  to  reducing  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  Initiative  (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  through  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  information  with  foreign  customs  administrations  on 
international prosecutions and court 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  investigations  have  led  to  perpetrators  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  authorities  has  further  improved.  Progress  can  be 
reported in the areas of police cooperation and the fight against organised crime, migration, 
asylum,  visa  policy  and  border  management.  However,  the  politicisation  of  senior  police 
officers has led to abuse. The legislation is largely in place and implementation is under way. 

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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 launched. There has been good progress in fulfilling 
the benchmarks of the roadmap for visa liberalisation, notably as regards the introduction of 
biometric passports. Progress has been made with profiling and breaking up criminal groups 
involved  in  human  trafficking,  but  the  country  remains  a  country  of  origin,  transit  and 
destination for trafficking of human beings. Overall administrative capacity has to be further 
strengthened and organised crime remains a serious concern. Overall, 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  activities  and  the  Law  on  promotion  and  support  of  the  technological 
development. Both laws aim at better structuring the organisation and management of national 
research funding and better linking research to social and economic development. However, 
budgetary  constraints  and  weak  institutional  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  Research  Framework  Programme  (FP7)  since  its 
association 
is  continuing.  The  Memorandum  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 expected to stimulate investment in research. 
A  national  action  to  increase  public  funding  in  research  and  stimulate  the  private  sector  to 
contribute  more  to  the  EU  objective  of  investing  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 science and research remains symbolic. 

Conclusion 

Progress has been made on organisation of research cooperation at national level, which now 
needs  to  be  turned  into  more  effective  research  funding  in  support  of  socioeconomic 
development.  Implementation  capacity  is  still  insufficient.  The  first  year  of  participation  in 
FP7  has  produced  good  results.  Substantial  efforts  remain  necessary  to  strengthen  research 
capacity.  Overall,  the  country  is  on  track  in  the  area  of  science  and  research,  but  further 
efforts are necessary, in particular 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  establishes  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  education  was  enacted.  It  establishes  the 
institutional  framework  for  education  for  adults  and  provides  for  a  national  advisory  body 
which  will  coordinate  adult  education.  It  provides  for  training  for  long-term  unemployed 
adults  in  skills  for  which  there  is  strong  demand.  A  new  Law  on  higher  education  was 
enacted. It provides the framework for implementing the Bologna reforms. A programme on 
compulsory  vocational  education  was  prepared  by  the  Centre  for  vocational  education  and 

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training. The budget for education increased. However, it was not sufficient to ensure proper 
implementation  of  the  policy  provisions,  including  the  national  strategy  for  reform  in 
education for 2006-15. Human resources are also inadequate. Progress has been made in the 
preparations  for  management  of  the  Community  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  implement  their  respective  tasks. 
Preparations in this area are advanced. 

There has been good progress in the field of culture. The country has started 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 country 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  yet  adequately  applied.  The  Law  amending  the  Law  on 
environment  was  enacted,  and  implementing  legislation  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 have started to prepare 
projects  aiming  at  reduction  of  the  greenhouse  gas  emissions,  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  protection  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 functioning of the air quality monitoring system. However, it is 
not yet fully operational and needs further improvement. 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. Investments 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 legislation was adopted 
relating to landfills, medical waste, hazardous waste and waste oils, which further transposes 
the  acquis.  The  national  strategy  for  waste  management  was  approved.  The  national  waste 
management  plan  is  not  yet  finalised.  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  collection,  registration  and 
reporting  is  not  yet  in  place.  More  finance  has  been  provided,  mainly  for  preparation  of 

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technical documentation for small infrastructure projects, sanitation and closure of municipal 
dumps.  However,  the  substantial  investment  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 project preparation and implementation of small 
infrastructure  projects.  The  polluter-pays  principle  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  management  plans  for  protected  areas  started  to  be 
implemented,  and  funding  for  them  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 establishment of the eco-label scheme was adopted. The process 
of issuing IPPC permits continues, and the first major "A" installation permit has been issued 
for  a  ferro-nickel  plant.  Some  training  and  information  sessions  have  been  provided  for 
companies and municipal experts in this field. Further 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 classification and notification of chemicals and biocides, as well as 
issuing  authorisations  for  placing  them  on  the  market.  Extensive  training  and  awareness-
raising of both the institutions and the companies concerned are needed. Preparations in this 
area are at an early stage. 

Some progress can be reported in the area of GMOs. The Law on GMOs was adopted. The 
units responsible for risk assessment of GMOs and for placing GMO products on the market 
have not been established nor the necessary laboratories installed. Preparations are moderately 
advanced in this area. 

Little  progress  can  be  reported  in  the  area  of  noise.  Transposition  has  progressed  well  but 
implementation remains at an early stage. 

Some  progress  can  be  reported  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  strengthening  remains  a  priority  for  improving  the 
implementation  and  enforcement  of  the  legislation.  Little  progress  has  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  requirements  are  not  yet  well  integrated  into 
policy-making and implementation in other areas. 

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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, has not yet been completed. The annual programme 
for  investment  in  the  field  of  environment  was  adopted  envisaging  a  significant  budget 
increase  for  investments  compared  to  the  previous  reporting  period.  The  environment 
monitoring and information system is still not adequate. 

Conclusion 

Progress has been made in developing the legislative framework in the field of environment, 
in  particular  as  concerns  horizontal  legislation  and  the  air  and  waste  sectors.  A  substantial 
amount  of  implementing  legislation  has  still  to  be  prepared.  Some  sectors,  such  as  water 
quality or nature protection, are lagging  behind. Administrative capacity at  both  central and 
local levels requires substantial strengthening. Although significant efforts have been made to 
increase  financial  resources,  investments  in  environmental  infrastructure  are  still  largely 
insufficient. Coordination between all institutions involved in environmental protection needs 
to  be  improved.  Overall,  the  country  is  not  yet  sufficiently  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 Council and the consumer protection 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  where  a  dangerous  product 
that  had  already  been  placed  on  the  market  was  recalled  and  any  further  distribution 
prohibited. The competences of the various inspectorates 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 increased slightly. However, proper implementation 
and enforcement are not yet ensured. No progress can be reported on aligning the legislation 
with  the  acquis  on  distance  marketing  of  consumer  financial  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  allocated  for  purchasing  new  medical  equipment 
for  clinics  and  restructuring  public  health  institutions.  Two  new  public  health  programmes 
were promoted. The funding for all 15 public health programmes is progressively increasing; 
yet  resources  allocated  to  the  hospital  sector  are  still  higher  than  those  allocated  to  public 
health and primary healthcare. Implementation of public health programmes continues to be 
hampered by the lack of a proper operational 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. 

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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 comprehensive 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  mental  health  centres  has  been 
increased,  but  they  still  lack  adequately  qualified  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 provided for all women above a certain age. 
There have been no developments regarding 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  consumer  and  health  protection,  in  particular  in 
building  the  institutional  capacity  for  consumer  protection  and  increasing  funding  for 
healthcare.  However,  an  effective  and  transparent  market  surveillance  system  is  not  yet  in 
place.  Human  and  financial  resources  are  not  sufficient  to  allow  full  implementation  of 
legislation, strategies and action plans 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  customs  declarations  and  the  status  of  authorised 
economic operator (AEO). The amended Law on administrative fees abolished or reduced the 
level of customs-related fees, but some fees not in line with the acquis still remain in force. 
Moreover,  the  customs  authorities  are  no  longer  responsible  for  checking  the  labelling  and 
technical specifications of goods, thus reducing 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 technological-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  misdemeanour  proceedings,  in  order  to  ensure 
faster, more efficient settlement. Preparations 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  recruited  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  for  setting  up  a  "single-window" 

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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  implementing  its  strategy  on  integrity  and  combating 
corruption. The toll-free anti-corruption hotline was very successful. A total of 77 disciplinary 
procedures against customs officers were completed (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  for  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 border management. The revenue collected by the 
customs administration continued to increase significantly. 

The customs administration started to participate in the Customs 2013 programme. 

Conclusion 

Substantial progress has been made in this chapter, both as regards legislative alignment and 
administrative capacity. Revenue collection has increased substantially and good results have 
been  achieved  in  combating  cross-border  crime,  including  infringements  of  intellectual 
property  rights.  The  customs  legislation  is  well  aligned  with  the  acquis,  but  still  has  to  be 
further  harmonised.  Administrative  and  operational  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 agricultural and fisheries products is 16.46%.  

The country is continuing to coordinate closely with the European Commission and to align 
with  the  policies  and  positions  of  the  EU  towards  third  countries  and  within  international 
organisations. At the EUROMED Ministerial Conference on Trade, it was decided to include 
the countries of the Western Balkans in the Pan-Euro-Mediterranean system 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 Committee and the EC-EFTA 
Working Group.  

There were no particular developments to report as regards export credits. 

The system for control of dual-use goods is being implemented. Training 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 actively participating 
in  the  work  under  an  enlarged  and  modernised  Central  European  Free  Trade  Agreement 
(CEFTA), which entered into force for all signatory parties in November 2007. The number 

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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  external  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 enlargement 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  statements  towards  third  countries  and  regions. 
With  regard  to  the  administrative  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  CFSP  issues  led  by  the  Ministry  of  Foreign 
Affairs.  In  particular,  the  country  unilaterally  accepted  the  Council  Common  Position 
2008/104/CFSP  on  restrictive  measures  against  extremists  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  against  Trans-national  Organised  Crime;  the 
Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation; 
the Protocol for the Suppression of Unlawful Acts 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 issues 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  was  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 Afghanistan and in the UN-led 
peacekeeping mission in Lebanon (UNIFIL). The administrative capacity of the ESDP unit in 
the Ministry of Defence is satisfactory. 

EN 

72 

   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  use  by  internal  auditors  and  financial 
managers of public bodies in preparing annual reports on financial controls. 

Out  of  the  40  internal  auditors  planned,  24  have  been  recruited  to  various  institutions.  The 
institutional  capacity  of  the  Central  Harmonisation  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 covered 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  audit  reports  in  2006.  It  has  begun  to  carry  out 
follow-up  audits.  The  SAO  and  the  PIFC  Department  in  the  Ministry  of  Finance  signed  a 
protocol on cooperation, with the objective of strengthening the system for management and 
control  of  public  finances.  Cooperation  between  the  SAO  and  parliament  remains  limited. 
Audited institutions still do not adequately follow up recommendations made in audit reports. 
No changes were made to the legislation on external audit. Full independence of the SAO has 
not  yet  been  achieved.  Parliament  appointed  a  new  Chief  State  Auditor,  following  the 
resignation of his predecessor. 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 have been established 
in each line ministry, procedures are being developed and training is under way. The head of 
the  Central  Financing  and  Contracting  Department  (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  police  resigned  and  a  successor  was  appointed  by  the 
government. 

Parliament  enacted  amendments  to  the  Organic  Budget  Law,  one  of  which  defined  the  IPA 
funds as a source of project financing via the budget and treasury and stipulated 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 aligning and implementing the legislation. The acquis, on 
both internal and external audit, has yet to be fully transposed. The administrative capacity of 

EN 

73 

   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  protection  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 areas linked to the application of the EU's own resources 
system.  Efforts  to  align  with  the  relevant  acquis  chapters  (customs,  taxation,  statistics,  and 
financial control) have continued. 

Efforts to combat customs duty and VAT fraud were also stepped up. The customs authority 
intensified  its  activities,  which  contributed  to  increasing  revenue  collection.  The  number  of 
criminal  cases  sent  to  the  public  prosecutor  in  2007  was  twice  that  in  2006.  The  Public 
Revenue Office (PRO) increased its audit and control activities. Further progress on setting up 
effective  instruments  to  combat  customs  duty  and  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  structures  and  implementing  rules  to  ensure  correct  calculation, 
collection, payment and control of own resources 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.  Appropriate  coordination 
structures, implementing rules and administrative strengthening in the area of own resources 
will be needed in due course. 

EN 

74 

   EN 

STATISTICAL ANNEX 

STATISTICAL DATA (as of 29 September 2008) 
The former Yugoslav Republic of Macedonia 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national currency) 
GDP (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per capita) 
SI: GDP (in PPS per capita, EU-25=100) 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year) 
SI: Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% change on previous year) 
SI: Unit labour cost growth (national accounts, % change on previous year) 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100) 
Gross value added by main sectors (%) 

Note
1) 

Note

Agriculture 
Industry 
Construction 
Services 

Final consumption expenditure, as a share of GDP (%) 
Households and NPISH, as a share of GDP (%) 
General government, as a share of GDP (%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 

Industry 
Industrial production volume index (2000=100) 

Inflation rate 
SI: Consumer price index (CPI), (total, % change on previous year) 

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: exports of goods (million euro) 
Balance of payments current account: imports of goods (million euro) 

EN 

Note 

Note 

Note 
2) 
2) 
2) 
2) 

75 

3.0 
: 
1.7 
: 

13.2 
27.1 
6.7 
52.9 
92.6 
72.4 
20.3 
17.4 
4.8 
41.2 
56.1 

1998 
99.2 

1998 
-0.1 

1998 
-249 

1998 
2 002 
25 713 

1999 
2 013 
25 713 

2000 
2 022 
25 713 

2001 
2 031 
25 713 

2002 
2 039 
25 713 

2003 
2 024 
25 713 

2004 
2 030 
25 713 

2005 
2 035 
25 713 

2006 
2007 
2 042 
2 039 
25 713  25 713 

1998 
194 979
3 193 
1594e 
4 500.0 
25.5 
3.4 

1999 
209 010 
3 448 
1713e 
4 800.0 
25.7 
4.3 

2003 

2001 

2000 

3 839 
1890e 

2005 

2006 

286 619  310 915 

2004 
2002 
236 389 233 841  243 970 251 486 265 257
4 325 
4 001 
2130e 
1963e 

5 081 
4 105 
3 893 
2491e 
2029e 
1926e 
5 100.0  5 000.0  5 100.0  5 300.0  5 600.0  6000.0e  6400.0e 
24.6 
2.8 
-2.0 
6.1 
1.3 
: 

24.0 
0.9 
-1.0 
11.4 
-2.2 
: 

-2.0 
10.0
-7.9 
: 

-2.0 
: 
-1.6 
: 

0.0 
: 
-9.0 
: 

2.1 
3.6 
-5.5 
: 

2.3 
3.7 
4.5 
: 

4 676 
2298e 

25.8e 
4.1 

26.3e 
4.0 

24.1 
-4.5 

25.0 
4.1 

25.8 
4.5 

-1.0 
: 
-1.2 
: 

12.9 
26.5 
6.1 
54.5 
90.3 
69.7 
20.6 
16.6 
3.1 
42.2 
52.2 

1999 
96.6 

1999 
-0.7 

1999 
-61 

12.0 
26.9 
6.8 
54.2 
92.6 
74.4 
18.2 
16.2 
6.0 
48.6 
63.5 

11.8 
26.1 
6.0 
56.1 
94.8 
70.0 
24.8u
14.8 
4.2 
42.7 
56.6 

12.4 
24.2 
6.0 
57.5 
99.5 
77.1 
22.4 
16.6 
4.0 
38.0 
58.2 

13.4 
24.4 
6.3 
56.0 
97.0 
76.3 
20.7 
16.7 
3.2 
37.9 
54.8 

13.2
22.7
6.5 
57.7
98.9
78.8
20.0
17.8
4.1 
41.1
61.9

12.8 
23.1 
6.6 
57.6 
96.5 
77.7 
18.8 
17.0 
3.7 
45.5 
62.8 

2000 
100.0 

2001
96.9 

2002 
91.8 

2003 
96.1 

2004
94.0

2005 
100.6 

2000 
5.8 

2001
5.5 

2002 
1.8 

2003 
1.2 

2004
-0.4 

2005 
0.5 

2000 
-106 

2001
-264 

2002 
-401 

2003 
-168 

2004
-363

2005 
-121 

-460 
-750 
-465 
1 152 1 117  1 433 
1 612 1 582  2 183 

-589 
1 291 
1 880 

-856 
1 182 
2 038 

-753 
1 203 
1 956 

-914 
1 345 
2 259 

-859 
1 643
2 501

2007 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2007 
108.0 

2007 
: 

2007 
-171 
-1 173 
2 442 
3 614 

EN 

12.6 
23.5 
6.7 
57.3 
96.7 
78.2 
18.5 
18.2 
3.7 
48.1 
66.8 

2006 
104.2 

2006 
: 

2006 
-45 
-1 020 
1 903 
2 923 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net income (million euro) 
Balance of payments current account: net current transfers (million euro) 

of which government transfers (million euro) 

Foreign Direct Investment (FDI) in the reporting economy (million euro) 

Public finance 
General government deficit/surplus, relative to GDP (%) 
SI: General government debt, relative to GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to GDP (%) 
Gross foreign debt of the whole economy, relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, million euro) 
Total credit by monetary financial institutions to residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 
euro exchange rates: average of period - 1 euro = … national currency 
Effective exchange rate index (2000=100) 
Value of reserve assets (including gold) (million euro) 

External trade 
Trade balance: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Value of imports: all goods, all partners (million euro) 
Terms of trade (export price index / import price index, % change to previous year) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

Demography 
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants) 
Net migration rate: immigrants minus emigrants (per 1000 inhabitants) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

2) 
2) 
2) 
2) 
2) 

Note 

Note 
3) 
3) 

4) 

4) 

Note 

Note 
1) 

-53 
-47 
311 
33 
134 

1998 
: 
: 

1998 
: 
: 
249 
427 
497 
517 
18.1 
: 
: 
61.070 
92.9 
289 

1998 
: 
: 
: 
: 
: 
: 

1998 
6.2 
-1.0 
16.3 
70.6 
74.9 

37 
-67 
435 
68 
83 

1999 
0.3 
32.0 

1999 
43.4 
108.9 
325 
556 
647 
527 
11.6 
: 
: 
60.620 
96.9 
422 

1999 
: 
: 
: 
-2.9 
: 
: 

1999 
5.2 
-0.8 
14.8 
70.7 
75.0 

53 
-70 
661 
144 
233 

2000 
2.3 
48.1 

2000 
42.7 
93.6 
368 
690 
786 
624 
7.2 
17.5 
: 
60.725 
100.6 
759 

2000 
: 
: 
: 
-1.8 
: 
: 

2000 
5.9 
-1.2 
11.8 
70.9 
75.6 

-21 
-31 
377 
55 
500 

2001 
-2.5 
48.8 

2001 
44.2 
108.4 
415 
1 145 
1 267 
620 
11.9 
23.0 
: 
60.913 
136.1 
844 

2001 
: 
: 
: 
1.7 
: 
: 

2001 
5.0 
-1.3 
11.9 
70.9 
75.6 

-24 
-47 
525 
103 
112 

2002 
-0.5 
43.0 

2002 
39.3 
108.5 
432 
1 052 
1 141 
657 
14.4 
23.0 
: 
60.978 
139.2 
771 

2002 
-927 
1 178 
2 105 
9.6 
55.9 
61.7 

2002 
4.8 
-12.2 
10.2 
71.0 
75.8 

-6 
-55 
646 
89 
100 

2003 
0.1 
39.1 

2003 
35.9 
95.7 
445 
1 240 
1 318 
747 
5.8 
14.0 
: 
61.264 
143.2 
715 

2003 
-828 
1 203 
2 031 
-11.2 
58.9 
60.3 

2003 
4.4 
-1.4 
11.3 
71.1 
75.7 

-43 
-33 
628 
56 
261 

2004 
0.4 
36.6 

2004 
47.9 
121.2 
450 
1 450 
1 532 
931 
8.3 
13.0 
: 
61.338 
147.1 
717 

2004 
-1 008 
1 346 
2 354 
-12.3 
60.3 
60.8 

2004 
2.7 
-0.1 
13.2 
71.4 
75.9 

-25 
-92 
853 
53 
77 

2005 
0.2 
39.5 

2005 
53.9 
122.3 
485 
1 686 
1 768 
1 124 
9.2 
13.0 
: 
61.296 
150.6 
1 123 

2005 
-957 
1 644 
2 601 
15.4 
56.9 
54.7 

2005 
2.0 
-0.4 
12.8 
71.4 
76.2 

22 
-28 
982 
59 
345 

2006 
-0.5 
33.1 

2006 
49.1 
104.8 
568 
2 100 
2 208 
1 467 
: 
9.5 
: 
61.189 
151.8 
1 417 

2006 
-1 062 
1 918 
2 980 
-7.6 
61.3 
53.0 

2006 
1.9 
-0.3 
11.5 
71.5 
76.4 

26 
-33 
1 010 
24 
239 

2007 
0.6 
25.8 

2007 
: 
89.3 
748 
2 694 
2 860 
2 040 
: 
7.5 
: 
: 
: 
1 524 

2007 
-1 349 
2 446 
3 795 
28.4 
65.2 
49.6 

2007 
1.5p 
0.1 
10.3 
: 
: 

Labour market 
Economic activity rate (15-64): share of population aged 15-64 that is economically active 
(%) 
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%) 

Share of male population aged 15-64 that is in employment (%) 
Share of female population aged 15-64 that is in employment (%) 

Note 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

60.9 

39.6 
49.8 
29.3 

59.7 

40.2 
49.4 
30.9 

59.7 

40.3 
49.7 
30.9 

61.8 

42.6 
50.6 
34.5 

59.8 

40.4 
48.6 
32.0 

61.3 

38.5 
45.6 
31.3 

58.8 

36.8 
44.4 
28.9 

60.7 

37.9 
45.4 
30.1 

62.2 

39.6 
48.3 
30.7 

62.8 

40.7 
48.8 
32.3 

EN 

76 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%) 
Employment by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

SI: Unemployment rate: share of labour force that is unemployed (%) 

Share of male labour force that is unemployed (%) 
Share of female labour force that is unemployed (%) 

Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed 
(%) 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%) 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI) 
(2000=100) 
SI: Early school-leavers: share of population aged 18-24 having not completed upper 
secondary education and not currently in education or training (%) 

Standard of living 
Number of passenger cars per 1000 population 
Number of subscriptions to cellular mobile telephone services per 1000 population 

Infrastructure 
Density of railway network (lines in operation, per 1000 km²) 
Length of motorways (thousand km) 

Innovation and research 
SI: Spending on human resources (public expenditure on education) relative to GDP (%) 
SI: Gross domestic expenditure on research & development, relative to GDP (%) 
SI: Percentage of households who have Internet access at home (%) 

Environment 
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100) 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004) 
SI: Share of renewable energy in electricity consumption (%) 
SI: Road freight transport as a share of total inland freight transport (modal split of freight 
transport) (%) 

Energy 
Primary production of all energy products (thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand TOE) 
Primary production of natural gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Electricity generation (thousand GWh) 

EN 

26.0 

26.3 

26.2 

27.7 

25.8 

28.5 

24.5 

26.2 

27.9 

28.8 

: 
: 
: 
: 
34.5 
32.5 
37.6 

70.9 

28.6 

: 
: 
: 
: 
32.4 
31.9 
33.3 

62.9 

27.2 

: 
: 
: 
: 
32.2 
30.5 
34.9 

59.9 

26.9 

24.9 
29.2 
5.9 
39.7 
30.5 
29.5 
32.0 

56.1 

26.5 

23.9 
27.5 
5.8 
42.6 
31.9 
31.7 
32.3 

58.4 

27.0 

22.0 
27.3 
6.6 
43.8 
36.7 
37.0 
36.3 

65.7 

31.2 

16.8 
25.8 
7.0 
50.1 
37.2 
36.7 
37.8 

64.8 

31.7 

19.5 
25.8 
6.5 
48.0 
37.3 
36.5 
38.4 

62.6 

32.3 

20.1 
25.0 
7.6 
47.1 
36.0 
35.3 
37.2 

59.8 

31.1 

18.2 
24.9 
6.4 
50.1 
35.0 
34.6 
35.6 

57.7 

30.1 

Note

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

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 

96.8 

100.3 

100.0 

98.1 

103.0 

106.7 

111.4 

113.6 

114.1 

112.5 

: 

: 

: 

: 

32.2 

: 

: 

: 

: 

: 

1998 
144.3 
15.0 

1999 
144.1 
23.7 

2000 
147.9 
49.4 

2001 
152.1 
109.0 

2002 
151.1 
179.7 

2003 
148.2 
300.4 

2004 
122.7b 
491.6 

2005 
124.3 
597.6 

1998 
27.2 
0.1 

1998 
: 
0.4 
: 

1999 
27.2 
0.1 

1999 
: 
0.3 
: 

1998 
: 
754.8 
15.4 

1999 
: 
707.0 
20.5 

2000 
27.2 
0.1 

2000 
: 
0.4 
: 

2000 
: 
659.3 
16.9 

2001 
27.2 
0.2 

2001 
: 
0.3 
: 

2001 
: 
668.5 
9.2 

2002 
27.2 
0.2 

2002 
3.4 
0.3 
: 

2002 
: 
715.6 
11.0 

2003 
27.2 
0.2 

2003 
3.4 
0.2 
: 

2003 
: 
659.6 
17.9 

2004 
27.2 
0.2 

2004 
: 
0.3 
11.0e 

2004 
: 
635.6 
18.9 

2006 
118.7 
695.1 

2006 
27.2 
0.2 

2006 
: 
: 
14.0e 

2005 
27.2 
0.2 

2005 
: 
0.3 
: 

2005 
: 
636.0e 
17.5 

2006 
: 
624.7e 
18.7 

69.0 

69.0 

60.0 

83.0 

89.0 

92.0 

90.0 

88.0 

92.0 

1998 
1 744 
0 
1 480 
0 
1 247 
2 904 
7.0 

1999 
1 698 
0 
1 389 
0 
1 009 
2 837 
6.9 

2000 
1 595 
0 
1 273 
0 
1 104 
2 765 
6.8 

2001 
1 642 
0 
1 419 
0 
1 011 
2 677 
6.4 

2002 
1 577 
0 
1 356 
0 
1 486 
2 892 
6.1 

2003 
1 666 
0 
1 353 
0 
1 029 
2 740 
6.7 

2004 
1 598 
0 
1 293 
0 
1 152 
2 749 
6.7 

2005 
1 578 
0 
1 288 
0 
1 248 
2 863 
6.9 

2006 
1 617 
0 
1 296 
0 
1 323 
2 925 
7.0 

Note

Note

Note

5) 

Note

Note

77 

2007 
: 
: 

2007 
: 
0.2 

2007 
: 
: 
16.5e 

2007 
: 
: 
: 

85.0 

2007 
: 
: 
: 
: 
: 
: 
: 

EN 

 
  
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agriculture 
Agricultural production volume index of goods and services (producer prices, previous 
year=100) 
Total utilised agricultural area (thousand hectare) 
Livestock: cattle (thousand heads, end of period) 
Livestock: pigs (thousand heads, end of period) 
Livestock: sheep and goats (thousand heads, end of period) 
Production and utilisation of milk on the farm (total whole milk, thousand tonnes) 
Crop production: cereals (including rice) (thousand tonnes, harvested production) 
Crop production: sugar beet (thousand tonnes, harvested production) 
Crop production: vegetables (thousand tonnes, harvested production) 
SI: Structural Indicator 
e: estimate 
f: forecast  
p: provisional  
b: break in series 
1. 
2. 
3. 

Note 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

103.8 

101.1 

101.0 

90.2 

97.5 

104.5 

107.0 

100.3 

105.0 

98.0 

1 293 
268 
197 
1 315 
174 
660 
58 
540 

1 284 
270 
226 
1 289 
202 
637 
67 
688 

1 236 
265 
204 
1 251 
220 
565 
56 
680 

1 244 
265 
189 
1 286 
201 
476 
38 
696 

1 316 
259 
196 
1 234 
198 
556 
44 
: 

1 303 
260 
179 
1 239 
192 
466 
40 
: 

1 265 
255 
158 
1 432 
213 
677 
47 
: 

1 229 
248 
158 
1 244 
197 
645 
58 
: 

1 225 
255 
167 
1 249 
235 
595 
0 
: 

1 077 
254 
255 
944 
374 
470 
8 
573 

Source: Eurostat. Break in series 2003. 
For the period 1998-2002, the values in Euro are calculated using the annual average exchange rate; from 2003 the values in Euro are calculated on the basis of the current exchange rate. 
For the period 1999-2003  external debt data are  calculated according to the old methodology,  with partial data coverage; since 2004 Gross Foreign Debt data are  prepared according to the 
External Debt Statistics Guide, with full data coverage. 
End of the year. 
There are no data for 2005 because the ICT survey was conducted in February 2005, as a pilot survey, and covered 2004 as reference year. 

4. 
5. 

EN 

78 

EN