Commission staff working document - The former Yugoslav Republic of Macedonia 2009 progress report accompanying the Communication from the Commission to the European Parliament and the Council - Enlargement Strategy and Main Challenges 2009-2010 {COM(2009) 533 final}
Date: 2009-10-14
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, 14.10.2009 
SEC(2009) 1335 

COMMISSION STAFF WORKING DOCUMENT 

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 
2009 PROGRESS REPORT 

accompanying the 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2009-2010 

{COM(2009) 533 final} 

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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 .................................................................................... 6 

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

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

Economic criteria ....................................................................................................... 24 

The existence of a functioning market economy ....................................................... 24 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 29 

Ability to assume the obligations of membership...................................................... 31 

Chapter 1: Free movement of goods .......................................................................... 31 

Chapter 2: Freedom of movement for workers .......................................................... 33 

Chapter 3: Right of establishment and freedom to provide services ......................... 33 

Chapter 4: Free movement of capital ......................................................................... 34 

Chapter 5: Public procurement................................................................................... 35 

Chapter 6: Company law............................................................................................ 36 

Chapter 7: Intellectual property law........................................................................... 37 

Chapter 8: Competition Policy................................................................................... 38 

Chapter 9: Financial Services..................................................................................... 39 

4.10.  Chapter 10: Information society and media ............................................................... 41 

4.11.  Chapter 11: Agriculture.............................................................................................. 42 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy .................................. 44 

4.13.  Chapter 13: Fisheries.................................................................................................. 46 

4.14.  Chapter 14: Transport policy ..................................................................................... 47 

4.15.  Chapter 15: Energy .................................................................................................... 48 

4.16.  Chapter 16: Taxation.................................................................................................. 50 

4.17.  Chapter 17: Economic and Monetary Union ............................................................. 51 

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4.18.  Chapter 18: Statistics.................................................................................................. 51 

4.19.  Chapter 19: Social Policy and Employment .............................................................. 52 

4.20.  Chapter 20: Enterprise and Industrial Policy ............................................................. 54 

4.21.  Chapter 21: Trans European Networks ...................................................................... 56 

4.22.  Chapter 22: Regional Policy and Coordination of Structural Instruments ................ 56 

4.23.  Chapter 23: Judiciary and fundamental rights ........................................................... 57 

4.24.  Chapter 24: Justice, Freedom and Security................................................................ 63 

4.25.  Chapter 25: Science and Research ............................................................................. 67 

4.26.  Chapter 26: Education and Culture ............................................................................ 68 

4.27.  Chapter 27: Environment ........................................................................................... 68 

4.28.  Chapter 28: Consumer and Health Protection............................................................ 70 

4.29.  Chapter 29: Customs Union ....................................................................................... 72 

4.30.  Chapter 30: External Relations .................................................................................. 73 

4.31.  Chapter 31: Foreign, Security and Defence Policy.................................................... 73 

4.32.  Chapter 32: Financial Control.................................................................................... 75 

4.33.  Chapter 33: Financial and Budgetary Provisions....................................................... 75 

STATISTICAL ANNEX.......................................................................................................... 77 

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COMMISSION STAFF WORKING DOCUMENT 

The former Yugoslav Republic of Macedonia 2009 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  early  October  2008  to  mid-September  2009. 
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 EU Member States, European Parliament reports1 and 
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. 

1 

2 

The rapporteur for the former Yugoslav Republic of Macedonia was Mr Erik Meijer. Since September 
2009, the new rapporteur is Mr Zoran Thaler. 
Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 of 14.10.2009). 

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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. 

As concerns the Stabilisation and Association Agreement (SAA) with the EU, the country 
is currently implementing all the commitments undertaken with the agreement, which is a key 
priority  of  the  Accession  Partnership.  In  particular,  the  country  continues  to  fulfil  all  the 
commitments  foreseen  under  the  first  stage  of  implementation  of  Title  V  (Movement  of 
workers,  establishment,  supply  of  services,  capital)  of  the  SAA.  On  this  basis,  the 
Commission  in  October  made  a  proposal  on  the  transition  to  the  second  stage  of  the 
Association, pursuant to article 5 of the SAA. 

The regular political and economic dialogue between the EU and the country has continued 
through the SAA structures. The Stabilisation and Association Committee met in June and the 
Stabilisation and Association Council in July. Seven sectoral sub-committees have been held 
since November 2008. 

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 
2008  Progress  Report  and  comments  made  by  the  Commission,  the  government  adopted  a 
revised national programme for the adoption of the acquis in May. 

The Accession Partnership identifies eight key priorities for progress in the accession process 
by  the  former  Yugoslav  Republic  of  Macedonia.  The  Commission  assesses  these  key 
priorities as benchmarks in this Progress Report. A recommendation on the start of accession 
negotiations will depend on the results achieved. 

The visa facilitation and readmission agreements between the former Yugoslav Republic of 
Macedonia and the European Community continued to be implemented. In the framework of 
the visa liberalisation dialogue process, the country made important progress in the areas of 
justice,  freedom  and  security  and  fulfilled  the  roadmap  benchmarks.  On  the  basis  of  this 
progress, the Commission in July 2009 proposed lifting the visa obligation for citizens of the 
former Yugoslav Republic of Macedonia.  

As  regards  financial  assistance,  the  new  Instrument  for  Pre-Accession  Assistance  (IPA) 
started  on  1  January  2007.  The  2009-2011  Multi-Annual  Indicative  Planning  Document 
(MIPD) for the country was adopted in June 2009. In 2009, the national programme amounted 
to  € 81  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. 

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The  EU  financial  assistance  portfolio  managed  by  the  Commission  Delegation  in  Skopje 
this  total  had  been  contracted  and  more 
amounts  to  € 91.  By  July  2009,  more  than  25%  of 
than  21%  disbursed.  Assistance  focuses  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, and the ability to assume the obligations of EU 
membership.  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. 

Extensive EU financial support has been provided to civil society through different national 
and  regional  horizontal  IPA  programmes  under  the  Civil  Society  Facility,  including  aid  to 
establish the national civil society forum, capacity building to civil society organisations, and 
the establishment of regional NGO support centres to the amount of € 8 million. The national 
programmes  provide  significant  support  to  improve  the  development  and  sustainability  of 
civil  society  organisations  and  further  capacity  building  of  the  government  unit  for  NGO 
cooperation.  The  Cross  Border  Cooperation  programmes  with  Bulgaria  and  Greece  also 
promote social, economic and cultural projects by civil society organisations. 

In response to the economic crisis, an IPA crisis package has been created, comprising €200 
million for the Western Balkan region which are expected to leverage investments of at least 
€1  billion,  co-financed  by  the  partner  financial  in stitutions.  The  country  will  benefit  from  a 
share  of  multi-beneficiary  funds  for  competitiveness,  SMEs,  energy  efficiency  and  banking 
sector  regulation.  As  a  candidate  country,  the  former  Yugoslav  Republic  of  Macedonia  has 
been  allocated  more  than  €40  million  since  2007  from  funding  under  IPA  Component  III, 
mainly  for  reinforcing  the  competitiveness  of  the  economy  -  thus  helping  to  cope  with  the 
crisis - through major infrastructure projects in the fields of transport, environment, as well as 
support to SMEs. 

The former Yugoslav Republic of Macedonia has so far signed memoranda of understanding 
for  participation  in  the  following  Community  Programmes: 
'Entrepreneurship  and 
Innovation  specific  Programme'  (EIP)  of  the  'Competitiveness  and  Innovation  Framework 
Programme', 'Progress', 'Culture', 'Europe for Citizens', 'Fiscalis 2013' and 'Customs 2013'. 

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 
International Criminal Tribunal for the former Yugoslavia (ICTY). 

2.1. 

Democracy and the rule of law 

Constitution 

The Constitution was amended in January to lower the threshold for the voter turn-out in the 
second round of presidential elections from 50% to 40%. 

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Parliament  

The  work  of  the  parliament  proceeded  on  the  basis  of  dialogue  between  the  governing 
coalition  and  the  opposition,  a  key  priority  of  the  Accession  Partnership.  The  strengthened 
spirit  of  consensus  resulted  in  the  adoption  with  broad  consensus  of  several  laws  related  to 
EU integration. Weekly meetings between the parties' parliamentary coordinators have been 
held,  with  the  presence  of  the  Deputy  Prime  Minister  for  EU  integration  for  EU  related 
matters.  

For  the  first  time  the  parliament  and  its  bodies  examined  thoroughly  the  European 
Commission's  Progress  Report.  The  National  Council  for  EU  Integration  (NCEI)  and  the 
Committee  on  EU  Affairs  continued  to  promote  public  hearings  thus  increasing  the 
participation of civil society. These discussions accompanied the adoption by the government 
of an Action Plan to address the findings of the 2008 Progress Report. The NCEI, which is 
chaired  by  the  opposition,  continued  to  meet  on  a  monthly  basis,  with  a  high  level  of 
participation  of  its  members.  The  NCEI  has  secured  additional  staff  which  will  enhance  its 
functioning. 

A  new  Committee  on  Local  Self-Government  was  established.  The  e-parliament  was 
introduced  which  introduces  a  fully  automatised  legislative  process  from  the  moment  of 
submission  of  the  documents  by  the  Government,  and  until  their  publishing  in  the  Official 
gazette. 

The parliament was in recess from 26 February until 10 April because of the presidential and 
local  elections.  Following  the  elections  it  resumed  work  promptly.  Three  new  Members  of 
Parliament were sworn into office to replace those who were elected as mayors. 

The new rules of procedure of the parliament have increased efficiency and effectiveness in 
handling  parliamentary  business.  Nonetheless,  the  Venice  Commission  has  pointed  to  the 
need  to  further  improve  the  rules,  in  particular  as  regards  the  rights  of  the  opposition.  The 
transparency of the legislative process was further improved with the introduction of public 
hearings in parliament. 

Parliament  reviewed  the  annual  reports  of  the  institutions  required  to  report  to  it.  The 
emergency  procedure  was  applied  only  for  a  number  of  laws  intended  to  address  the 
consequences  of  the  global  economic  crisis.  Several  measures  from  the  action  plan  for  the 
parliament  were  implemented  in  advance  of  its  adoption,  such  as  establishment  of  the 
Budgetary Council and the Council for the Parliamentary TV Channel. Most of the vacancies 
in the new administrative service of the parliament have been filled. The budgetary resources 
of the parliament were increased by 11%. 

A  new  Law  on  the  Parliament  was  enacted  in  August  which  aims  to  further  strengthen  and 
codify  the  functioning  of  the  parliament.  In  particular  it  creates  a  legal  obligation  for 
coordination between the Speaker and the political parties as well as for relations between the 
Members  of  Parliament  and  their  constituencies;  strengthens  the  powers  of  the  Speaker  to 
maintain  order;  establishes  a  specific  budget  for  the  running  of  parliament;  establishes  a 
Parliamentary Institute to provide analysis and research to MPs; provides for public hearings 
to strengthen oversight over the work of the parliament.  

The Committee on inter-ethnic relations played a limited role in addressing issues of concern 
such  as  the  introduction  of  ethnic  shifts  in  education  in  some  parts  of  the  country.  The 

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Committee limited its activity to the application of double majority ('Badinter majority') rules 
in Parliament for non-majority community related legislation.  

The  parliamentary  committee  for  the  oversight  of  the  work  of  the  intelligence  agencies  and 
the  newly  established  committee  for  the  oversight  of  implementation  of  the  Law  on 
Monitoring of Communications have held no hearings so far.  

In August, the 'Democratic Party of Albanians' (DPA), which has 5 Members of Parliament, 
began  a  boycott  of  parliament,  alleging  lack  of  implementation  of  the  Ohrid  Framework 
Agreement. 

The  investigations  of  irregularities  in  the  2006  parliamentary  elections  were  completed 
without any cases being brought to court, raising concerns about impunity of the perpetrators. 
However, progress was made in prosecuting the perpetrators of the irregularities in the 2008 
parliamentary elections. Following the instruction from the President of the Supreme Court to 
give priority to these cases, a total of 29 perpetrators have been sentenced to prison terms by 
the courts. The cases involving 96 perpetrators are still pending. Seven  police  officers  were 
dismissed  after  being  sentenced  to  imprisonment.  Five  cases  are  being  considered  by  the 
appeal courts.  

The presidential and local elections were held in two rounds on 22 March and 5 April. The 
OSCE/ODIHR  and  Council  of  Europe  observation  missions  concluded  that  the  elections 
‘…met most OSCE commitments and other international standards for democratic elections.’  

Most  of  the  28  OSCE/ODIHR  recommendations  issued  after  the  parliamentary  elections  in 
2008  were  implemented.  A  restrained  but  visible  police  presence  contributed  to  a  peaceful 
atmosphere  on  the  election  days.  The  political  climate  was  calm  and  the  conduct  of  voting 
showed  a  marked  improvement  over  the  2008  parliamentary  elections.  The  elections  were 
administered  by  a  three  tiered  administration  comprising  the  State  Election  Commission 
(SEC) the Municipal Elections Commissions (MECs) and the Election Boards at local level. 
Overall, these bodies responded well to the challenge of organizing these complex elections. 
The  composition  of  electoral  boards  reverted  to  a  mixed  professional-political  model, 
including  one  member  nominated  by  the  parties  in  government  and  one  by  the  parties  in 
opposition.  The  State  Electoral  Commission  (SEC)  organised  training  for  all  involved  in 
administering elections. The Administrative Court upheld all except one of the SEC decisions 
when deciding upon complaints against them. Civil society organisations fielded a significant 
number of domestic non-party observers. 

However,  the  number  of  credible  reports  of  pressure  on  or  intimidation  of  citizens, 
particularly public servants, throughout the election period detracted from the overall quality 
of the election process. 

The  SEC  did  not  handle  complaints  regarding  the  first  round  of  voting  within  the  legal 
deadlines  and  delayed  issuing  the  final  results  of  the  first  round,  which  complicated 
preparations  for  the  second  round.  It  was  inconsistent  in  some  decisions  concerning 
complaints  about  election  material.  The  Administrative  Court  sessions  on  election-related 
lawsuits  were  not  open  to  the  public,  except  during  the  reading  of  their  content,  despite  a 
requirement in the Electoral Code that decisions be taken in public sessions.  

The media, as a whole, generally complied with the guidelines and regulations issued by the 
Broadcasting  Council  and  allowed  voters  to  make  an  informed  choice.  Nonetheless,  some 
media  did  not  provide  equal  access  to  all  political  parties  and  extensive  coverage  of 

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government  projects  during  the  campaign  period  amplified  the  advantage  of  the  incumbent 
parties.  

Certain  OSCE/ODIHR  recommendations  were  not  fulfilled.  In  particular,  the  inaccuracy  of 
the voter lists, particularly as regards the inclusion of large numbers of citizens living abroad, 
created scope for possible irregularities. Parliament nominated the three remaining members 
of the Broadcasting Council only after the elections had taken place. 

Seven candidates took part in the first round of the presidential elections, which saw a voter 
turn-out of 57%. For the first time, one of the ethnic Albanian candidates received significant 
support from voters across the ethnic spectrum. In the second round face-off between the two 
leading  candidates,  backed  respectively  by 
'Internal  Macedonian  Revolutionary 
Organisation-Democratic  Party  for  Macedonian  National  Unity'  (VMRO-DPMNE)  and  the 
'Social  Democratic  Union'  (SDSM),  the  required  40%  turn-out  of  voters  was  achieved  by  a 
margin of 3 percentage points. The participation of ethnic Albanian voters to the second round 
was very low. 

the 

Elections  in  the  85  municipalities  in  which  the  country  is  divided  (plus  the  city  of  Skopje) 
resulted in 57 mayoral posts for VMRO-DPMNE, up from 21 in 2005. SDSM, in opposition, 
lost  29  municipalities  and  now  governs  seven.  The  two  main  ethnic  Albanian-dominated 
municipalities  (Tetovo  and  Gostivar)  were  won  by  DPA  and  an  independent  candidate, 
respectively, while all the others were won by the 'Democratic Union for Integration' (DUI). 
None  of  the  13  women  who  ran  for  mayor  were  elected.  Five  of  the  33  candidates  from 
smaller communities were elected. 

Overall,  as  regards  political  dialogue,  which  is  a  key  priority  of  the  Accession  Partnership, 
there  has  been  good  progress.  The  political  climate  has  improved  and  the  work  of  the 
parliament has become more effective, including the legislative process. New parliamentary 
procedures  are  being  implemented  and  the  Law  on  Parliament  was  adopted.  The  National 
Council  for  European  Integration,  chaired  by  the  opposition,  meets  regularly.  Continued 
efforts  to  deepen  political  dialogue,  including  on  inter–ethnic  issues,  would  consolidate  the 
engagement  of  all  parties.  Good  progress  was  made  in  the  conduct  of  elections,  which  met 
most international standards. Allegations of intimidation need to be addressed.  

Government  

During  its  first  year,  the  government  coalition  between  VMRO-DPMNE  and  DUI  has  been 
stable and, overall, has functioned effectively. It has maintained EU related reforms, including 
as regards visa liberalisation, as a high priority. A reshuffle took place in July, with changes 
to  five  ministerial  posts,  including  the  Deputy  Prime  Minister  responsible  for  European 
integration.  However,  relations  within  the  government  coalition  were  not  strong  and 
sometimes suffered from weak inter-ministerial coordination.  

Cohabitation within the executive remained strained, with divergent public stances on how to 
solve  the  name  issue,  until  a  new  President  backed  by  VMRO-DPMNE  was  sworn  in  for  a 
five-year term on 12 May.  

The  government  adopted  its  annual  revision  of  the  national  plan  for  adoption  of  the  acquis 
(NPAA),  in  response  to  the  findings  of  the  2008  Progress  Report.  The  Secretariat  for 
European Affairs ensured the participation of relevant Ministries in the exercise, notably by 
allowing direct on-line updating. 

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Decentralisation,  which  is  a  basic  principle  of  the  Ohrid  Framework  Agreement,  continued. 
The Law on Inter-Municipality Cooperation, which is intended to help municipalities exercise 
their  powers  more  effectively,  was  enacted  in  June.  Another  six  of  the  85  municipalities 
entered phase 2 of the fiscal decentralisation process, which provides for a more substantial 
transfer  of  competencies  to  the  local  level,  leaving  17  in  phase  1.  Municipal  tax  collection 
improved. Municipalities received a higher share of the revenue collected from management 
of  State-owned  land.  Efforts  were  made  to  strengthen  the  capacity  of  municipalities  in  the 
areas  of  property  tax  administration,  public  financial  management,  debt  management  and 
financial control. Internal audit units were established in ten more municipalities, bringing the 
total up to 38. In 36 municipalities service centres and their branch offices were established. 
Staff was trained and working procedures were put in place. Municipalities performed better 
in the field of education. 

However, revenue remains insufficient to allow municipalities to perform their tasks properly. 
Management  of  State-owned  land  is  still  centralised.  The  municipalities  which  remain  in 
phase 1 have sizeable debts. The accounts of 22 municipalities, 12 of which are in phase 2, 
have been blocked by legal proceedings relating to arrears. There is no consistent set of data 
on  arrears  accumulated  by  municipalities.  The  Association  of  Municipalities  (ZELS) 
continues  to  hold  important  responsibilities  for  taking  forward  the  decentralisation  process. 
The administrative capacity of some municipalities, particularly the smaller ones, remains low 
in  the  areas  of  financial  management,  tax  administration  and  financial  control.  In  some 
municipalities  property  tax  collection  is  not  adequately  monitored  or  enforced  and  the 
databases  of  taxpayers  are  not  updated.  The  transparency  and  accountability  of  local 
government administrations remain inadequate. In several instances, trained staff of municipal 
service centres was replaced following the election of a new mayor.  

Exchanges of data between the cadastre, the civil registry, the Public Revenue Office and the 
municipalities  need  to  be  strengthened.  The  Ministry  of  Local  Self-Government  is  not 
facilitating the decentralisation process sufficiently. The local government budget unit in the 
Ministry  of  Finance  lacks  capacity  to  support  fiscal  decentralisation.  The  inter-ministerial 
working group on implementation of decentralisation did not meet for a year prior to August 
2009. 

Overall, the government coalition has been stable and functioned effectively in its first year. It 
maintained  EU  related  reforms,  including  as  regards  visa  liberalisation,  as  a  high  priority. 
Decentralisation,  which  is  a  basic  principle  of  the  Ohrid  Framework  Agreement,  continued 
with  a  further  transfer  of  competencies  to  municipalities.  However,  increased  efforts  are 
needed, in particular as regards the financial framework for municipalities. 

Public administration  

Further  progress  was  made  in  the  reform  of  the civil  service,  which  is  a  key  priority  of  the 
Accession Partnership. 

A  High  Committee  on  public  administration  reform,  chaired  by  the  Prime  Minister, was 
established in July with the aim of leading the reform process.  

Subsequently,  the  amendments  to  the  Law  on  the  Civil  Service  adopted  in  September 
significantly  improved  the  legal  framework  by  strengthening  the  role  of  the  Civil  Servants 
Agency  (CSA)  and  strengthening  merit  based  recruitment  in  the  civil  service.  The  Civil 
Servants Agency has been empowered to draft by-laws, oversee the internal organisation of 

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the administrative bodies, approve the recruitment of civil servants and inspect the progress 
towards equitable representation. The scope of the law on the civil service has been extended 
to include the Public Revenue Office, the State Audit Office and the Customs Office. 

The new recruitment criteria require that state secretaries must have a minimum of three years 
experience  of  senior  management  in  public  administration.  Procedures  for  recruitment  of 
other  civil  servants  have  been  streamlined  and  made  more  transparent:  clear  deadlines  have 
been introduced, all decisions will be published on the CSA website and a re-publication of a 
vacancy may only take place after six months. Furthermore, elements of a vertical promotion 
system  have  been  introduced,  whereby  positions  may  be  filled  by  means  of  internal 
announcements open to career officials. 

The CSA continued to oversee disciplinary proceedings, which remain at a high level. As a 
result  of  121  disciplinary  proceedings,  42  civil  servants  were  fined,  5  were  reassigned  to 
lower positions and another 5 were dismissed. 

New  methods  were  introduced  for  strategic  planning  and  preparation  of  annual  work 
programmes  to  ensure  alignment  with  the  budget  and  with  government  EU  planning 
documents,  notably  the  national  programme  for  adoption  of  the  acquis.  Also,  strategic 
planning sectors or units have been established in every ministry.  

The provisions regarding career-related supplements are not being consistently applied. 

A civil servants' training system has been established. The Training Council and the Training 
Department of the CSA are overseeing implementation of a three-year training strategy which 
is financed by a specific budget allocation. A larger number of annual training programmes 
were submitted to the Civil Servants Agency on time by the State administrative bodies, thus 
helping improve consistency and effectiveness.  

The capacity of the recently established human resources units within the ministries began to 
be strengthened by providing initial training and establishing a working group to create and 
coordinate a network. New staff have been appointed to these units. 

The EU sectors in some line ministries were strengthened with a total of 20 additional staff. 
The 2009 version of the NPAA envisages a total of 1,168 new civil service posts, for which 
appropriate budgetary provision was made. Staff in municipalities is gradually being trained 
to implement parts of the acquis assigned to local level and to manage EU funds.  

The regulatory impact assessment (RIA) procedure came into force in January, requiring all 
legislative proposals to be accompanied by an RIA.  

The citizens’ charter project is being regularly implemented  in all 15  ministries and 9 State 
administrative bodies. Its effectiveness is analysed regularly. 

Some  progress  was  made  on  implementing  the  Law  on  Access  to  Information.  A  training 
programme  was  given  to  the  information  holders  and  a  website  was  created  for  the  public. 
The  number  of  complaints  received  by  the  National  Commission  for  Protecting  Access  to 
Information rose from 350 in 2007 to 670 in 2008, of which 426 resulted in the information 
being made available.  

Cooperation between public bodies and the Ombudsman remains good. State bodies continue 
to carry out the large majority of the Ombudsman’s recommendations. 

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Further steps were taken to implement the outstanding elements of the police reform, a key 
priority of the Accession Partnership. They included making the national coordination centre 
for integrated border management fully operational and further decentralising the police, with 
the appointment of mid-ranking officers in the regional headquarters and police stations. Out 
of  the  38  police  station  commanders,  four  were  replaced  at  the  request  of  the  municipal 
councils  by  a  procedure  that  formally  complied  with  the  Law  on  Police.  Until  July,  the 
absence of a well-developed human resources management system meant that the procedure 
did  not  fully  adhere  to  best  international  standards.  Thereafter,  the  Ministry  of  Interior 
adopted  a  rulebook  regulating  the  dismissal  of  commanders  of  police  which  establishes  an 
administrative procedure to be followed. Management of the available resources, training and 
budgetary planning improved. Efforts to tackle corruption continued.  

The new Law on Internal Affairs, which regulates the management of the police service, was 
enacted  in  July.  It  provides  for  significant  progress  in  the  human  resources  management 
system by introducing a career and appraisal system. It also introduces a legal provision that 
prevents police officers from holding office in political parties. Furthermore, it also clarifies 
the  distribution  of  responsibilities  between  the  Administration  for  Security  and  Counter-
intelligence  of  the  Ministry  of  the  Interior  and  the  Bureau  for  Public  Security  in  the  fight 
against organised crime. The law also enhances the accountability of the intelligence agencies 
to parliament. 

(See also Chapter 24 – Justice, Freedom and Security.) 

However, additional efforts are needed to ensure full implementation of the Law on the Civil 
Service. In particular, the capacity of ministries and municipalities to perform staff appraisals 
needs  to  be  strengthened.  Full  reporting  to  the  Civil  Servants  Agency  in  line  with  the  legal 
obligations is a prerequisite for the transparency and accountability of decisions of individual 
administrative bodies on the appointments and promotions of civil servants.  

The Civil Servants Agency reported that since September 2008 there have been 77 unlawful 
promotions, out of which 38 were in the Ministry of Economy. Only one decision has been 
annulled so far, raising concerns about respect of the Law on the Civil Service.  

The increased recruitment of temporary staff, which does not fall under the Law on the Civil 
Service,  undermines  merit-based  recruitment.  Many  of  the  temporary  staff  are  junior,  lack 
appropriate office space and have no clear job descriptions. This practice takes place across 
State  administrative  bodies  (SABs)  and  municipalities,  and  is  discouraging  for  regular  civil 
servants.  

Despite the obligation in the Code of Ethics, no civil servant reported an illegal act by another 
civil servant during the reporting period. 

Planning of the human resource needs across the entire civil service needs to be significantly 
strengthened,  in  particular  in  order  to  reduce  use  of  temporary  staff  and  ensure  a  coherent 
approach to equitable representation. Availability of appropriate training facilities needs to be 
ensured  at  central  and  local  level  so  that  the  training  strategy  may  be  delivered.  Also,  a 
framework  for  effective  social  dialogue  between  the  government  and  the  organisations 
representing civil servants remains to be established.  

Further efforts are needed to improve accountability in the public administration, in particular 
in the decision-making process. The capacity to implement the Regulatory Impact Assessment 
procedures needs to be developed. 

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Overall,  some  progress  was  made  on  implementing  public  administration  reform,  including 
reform  of  the  civil  service,  which  is  a  key  priority  of  the  Accession  Partnership.  The 
amendments  to  the  Law  on  the  Civil  Service  strengthened  the  provisions  aiming  to  ensure 
merit  based  recruitment  and  promotion  of  civil  servants.  A  functioning  training  system  has 
been established and some additional staff has been allocated in key areas. However, further 
efforts to ensure transparency, professionalism and independence of public administration are 
required. Respect for the provisions and the spirit of the law needs to be ensured in practice. 
Further progress has been made as regards reform of the police, which is a key priority of the 
Accession  Partnership.  All  the  new  local  and  regional  commanders  are  operational, 
management has improved and the law on internal affairs has introduced a career system into 
the police service. The reform of the police is well advanced. 

Judicial system  

Progress was made on implementing reform of the judiciary, a key priority of the Accession 
Partnership.  

Further  progress  was  made  towards  ensuring  the  independence  of  judiciary.  Since  October 
2008 the Judicial Council appointed a total of 38 new judges as well as 4 new presidents of 
courts. The first cycle of appraisal of the judges was completed in June. The Council of Public 
Prosecutors  assumed  full  responsibility  for  appointing  new  public  prosecutors  (21)  and 
completed extending the expired term of office to over 159 prosecutors elected in 2003 for 6 
years period. 

These  appointments  were  made  in  line  with  the  new  procedures  which  provide  for 
independent  appointments  by  the  two  Councils.  The  most  recent  appointments  by  the  two 
Councils include also the first successful graduates coming from the Academy for training of 
judges and prosecutors.  

Also the Judicial Council completed the first performance appraisal of the serving judges and 
presidents  of  courts  and  found  that  most  of  them  have  performed  according  to  the  required 
standards.  

Efforts were made to improve efficiency. The President of the Judicial Council assumed the 
chairmanship of the Court Budget Council and promoted better use of the court budget. The 
budget was increased by 8% compared with 2008, which represents a significant rise, despite 
the difficult economic context. The IT centre connecting all judicial institutions is operational 
and the automated case management system has been installed in all courts. 

The administrative court and the court of appeal in Gostivar were established in 2008. Since 
then  they  have  settled  approximately  3200  and  2070  cases  respectively.  The  new  Higher 
Prosecutor’s Office in Gostivar was established, after some delay, and five prosecutors were 
appointed to it. Amendments to the laws on litigation procedure and on enforcement of civil 
judgments, designed to improve execution of court rulings, were enacted in June. 

However,  the  absence  of  a  human  resource  management  system  has  slowed  down  the 
recruitment  of  graduates  from  the  academy  for  training  judges  and  prosecutors  into  the 
judiciary.  The  judiciary  continues  to  face  budgetary  constraints.  The  Skopje  2  basic  court, 
which is the court with the largest number of cases, and the four courts of appeal along with 
the  administrative  court  were  unable  to  reduce  their  backlogs.  The  administrative  court,  the 
court of appeal in Gostivar and most of the Public Prosecutor’s offices remained understaffed, 
which  affected  their  performance.  Not  all  the  enforcement  cases  were  transferred  to  the 

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bailiffs  by  the  end  of  2008  thus  delaying  enforcement  of  a  number  of  court  rulings. 
Implementation  of  the  2006  Law  on  Mediation  has  had  a  limited  impact  so  far.  Full 
implementation of the 2007 Law on Public Prosecutor’s Offices requires parallel changes to 
the Law on Criminal Procedure.  

the  governing  party,  questioned 

the 
In  April,  VMRO-DPMNE, 
Constitutional Court which had ruled against the introduction of religious education into state 
schools.  The  Constitutional  Court  responded  with  a  press  release  denouncing  the 
'unprecedented pressure' and 'attempts to harm its reputation' it was being subjected to. This 
incident  raised  concerns  about  the  independence  of  the  judiciary,  although  the  government 
provided assurance that it would respect the rulings. 

legitimacy  of 

the 

Some  documented  irregularities  regarding  recent  judicial  proceedings  have  raised  questions 
about the independence and impartiality of parts of the judiciary.  

Overall, further progress was made on reform of the judiciary, which is a key priority of the 
Accession Partnership. The first graduates from the Academy of Judges and Prosecutors have 
been appointed, the new courts and judicial bodies are being staffed and are taking up their 
activities and the budget has been increased very significantly. Continued efforts are needed 
to  ensure  the  independence  and  impartiality  of  the  judiciary,  in  particular  through  the 
implementation of the provisions regarding appointments and promotions.  

(See also Chapter 23 - Judiciary and fundamental rights) 

Anti-corruption policy  

Good  progress  has  been  made  in  strengthening  and  implementing  the  anti-corruption 
framework, which is a key priority of the Accession Partnership. Amendments to the Electoral 
Code  introduced  more  specific  provisions  on  transparency  of  election  campaign  financing. 
Most of the recommendations of the Group of States against Corruption (GRECO) are being 
followed up. The Government Council for monitoring implementation of the anti-corruption 
action  plan  met  frequently,  underlining  the  political  priority  attached  to  the  issue.  Progress 
was made towards establishing a national intelligence database.  

The  amendments  to  the  Law  on  Financing  of  Political  Parties  were  adopted  in  July.  They 
enhance  the  transparency  of  donations,  strengthen  the  provisions  against  illegal  donations, 
tighten reporting obligations of the political parties and introduce more dissuasive sanctions. 
The  supervisory  authorities,  the  Public  Revenue  Office  and  the  State  Audit  Office,  have  an 
important role to play in ensuring full implementation. 

Amendments  to  the  Criminal  Code  including  new  provisions  on  extended  confiscation  of 
proceeds  of  crime,  illicit  enrichment  and  criminal  liability  of  legal  persons  for  trading 
influence were enacted.  

The databases of the State Commission for Prevention of Corruption (SCPC) and the Public 
Revenue  Office  were  interconnected.  This  allows  information  to  be  exchanged  swiftly  and 
more  accurate  records  of  asset  declarations  to  be  compiled.  In  2008,  47  procedures  for 
checking officials’ assets were initiated. 

The  SCPC  began  to  implement  the  action  plan  on  conflict  of  interest.  Several  cases  on 
conflict of interest were initiated in the reporting period. In 11 of them a conflict of interest 

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was found. Amendments to the law on conflict of interest were adopted in September which 
extend its scope of application and strengthen the control mechanism.  

The SCPC adopted a strategic plan on public relations in order to raise public awareness of its 
role. 

Prison  sentences  were  imposed  in  first  instance  court  decisions  in  some  high-profile  cases, 
including a former Prime Minister, a former Deputy Prime Minister and the former mayor of 
a Skopje municipality. Appeal procedures are under way in these cases. 

However,  the  fragmented  legal  system  continued  to  generate  difficulties  when  it  came  to 
implementation.  

impact. 

In  particular, 

The legislation on financing of political parties and election campaigns has so far not had a 
substantial 
reports  and 
the  mechanism 
recommendations  from  the  SCPC  and  the  State  Audit  Office  is  not  fully  effective.  A 
consistent track record on checking asset declarations, following up irregularities on election 
finance  thresholds  and  reporting  donations  has  yet  to  be  developed.  Interception  of 
communications is used in a rather low number of corruption cases, notably corruption cases 
not connected to organised crime. The capacity of the specialised anti-corruption units within 
the  prosecution  service  and  the  Ministry  of  the  Interior  should  be  further  strengthened. 
Sentences were suspended in a high number of court decisions on abuse of office.  

following  up 

for 

The SCPC should make efforts to be more pro-active in pursuing anti-corruption policy. It is 
limited by the part-time role of its members. Public trust in the independence and impartiality 
of the SCPC remains low.  

Overall, good progress was made on implementing anti-corruption policy. The electoral code, 
the law on financing of political parties and the law on conflict of interest were amended to 
strengthen  transparency  and  new  provisions  on  illicit  enrichment  were  adopted.  There  were 
further  indictments  and  convictions  in  high  level  cases  and  cooperation  between  law 
enforcement agencies improved. Nevertheless, corruption remains prevalent and continues to 
be  a  serious  problem  in  many  areas.  Continued  efforts  are  needed,  in  particular  as  regards 
implementation of the legal framework.  

(See also Chapter 23 – Judiciary and fundamental rights) 

2.2. 

Human rights and the protection of minorities 

Observance of international human rights law 

There was progress on ratification of human rights instruments. The Optional Protocol to 
the Convention against Torture was ratified. So too was the Council of Europe Convention on 
Action against Trafficking in Human Beings. The European Charter for Regional or Minority 
Languages  was  signed,  but  has  yet  to  be  ratified.  Revised  Protocol  No  2  to  the  European 
Social Charter was not ratified.  

The European Court of Human Rights (ECtHR) found that the former Yugoslav Republic 
of Macedonia had violated the European Convention on Human Rights in 13 cases. A total of 
501 new applications were made to the ECtHR since October 2008. As of September 2009, 
there were 1093 cases pending before the ECtHR regarding the former Yugoslav Republic of 
Macedonia, mostly related to trial in a reasonable period of time. Two new laws were enacted 

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–  one  on  representing  the  country  before  the  ECtHR,  the  other  on  enforcement  of  ECtHR 
judgments. 

The  legal  and  institutional  framework  for  the  protection  of  human  rights  and  minorities  is 
broadly  in  place.  The  Office  of  the  Ombudsman  continues  to  make  a  valuable  contribution. 
However,  limited  further  progress  was  made  on  promotion  and  enforcement  of  human 
rights.  The  officials  in  the  law  enforcement  agencies  are  receiving  continuous  training  on 
human  rights.  The  parliamentary  permanent  oversight  committee  on  human  rights  tackled  a 
wide range of issues with relevant stakeholders, but its work has not yet been followed up by 
the  government.  The  inter-ministerial  body  for  protection  of  human  rights  made  limited 
progress  on  promoting  the  human  rights  agenda.  The  country  remains  without  a  focal 
institution for protection of human rights.  

Civil and political rights 

With regard to prevention of torture and ill-treatment and the fight against impunity, in 
2008 the Sector for Internal Control and Professional Standards in the Ministry of the Interior 
dealt with 34 cases of ill-treatment, far fewer than in 2007, when there were 52. There was no 
case of illegal arrest. Criminal charges were brought against 75 police officers. The number of 
written complaints received from the public rose to 594, from 496 in the previous year. The 
number  of  anonymous  complaints  to  the  Sector  for  Internal  Control  and  Professional 
Standards dropped from 104 in 2007 to 67 in 2008.  

The Ministry of the Interior’s decision to disband temporarily all special "Alpha" police units, 
save the one in Skopje, brought a drastic decrease in complaints of ill-treatment, as confirmed 
in the Ombudsman’s report. Control over the police in general, and special units in particular, 
was  more  effective,  partly  because  of  increased  use  of  internal  audits  to  ensure  that 
professional  standards  were  respected.  Investigations  were  carried  out  in  accordance  with 
international standards, which have already been largely transposed in the national legislation 
and practices. An independent external mechanism to monitor cases of police misconduct is 
still  missing,  although  oversight  of  police  work  has  been  further  improved,  notably  by 
strengthening the powers of the Public Prosecutor in the investigative phase. The decisions of 
the European Court of Human Rights were not implemented. 

Access to justice remained limited, as the Law on Legal Aid was not enacted. The duration of 
court  cases  was  shortened:  the  basic  courts  resolved  39%  of  cases  within  three  months  and 
another  45%  within  a  year.  The  second  instance  government  commissions  which  decide  on 
complaints  about  decisions  by  administrative  bodies  were,  as  in  previous  years,  the  least 
responsive to the Ombudsman’s instructions.  

Some  progress  was  made  with  the  prison  system.  Some  steps  were  taken  on  long-term 
planning.  The  government  adopted  an  action  plan  for  construction,  refurbishment  and 
maintenance of prisons for 2009. The refurbishment works for the section for chronically ill 
and disabled detainees within Idrizovo  prison were  finalised  and  a  new  remand  wing  in  the 
Skopje prison was completed. The Ombudsman’s mail-box system installed in prisons proved 
effective.  Somewhat  more  account  was  taken  of  merit-based  criteria  in  the  appointment  of 
prison directors. 

However,  additional  efforts  are  needed  to  address  the  dire  state  of  some  prisons,  notably 
Idrizovo,  where  inhuman  and  degrading  conditions  persist.  Overcrowding  remains  a  major 
problem.  The  healthcare  system  in  prisons  is  inadequate.  In  2008  there  were  eleven  deaths 

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including  four  suicides  in  prisons,  compared  with  eight  and  two  respectively  in  2007.  The 
Council  of  Europe’s  Committee  for  Prevention  of  Torture  has  repeatedly  raised  concerns 
about ill-treatment of inmates and the deleterious conditions in prisons. 

No effective mechanisms are in place to prevent and combat corruption among prison staff. 
Political  interference  in  appointments  to  some  prison  management  positions  persists,  which 
disrupts  the  continuity  and  sustainability  of  strategic  planning.  Prison  staff  is  not 
systematically  trained.  The  treatment  of  vulnerable  prisoners  is  not  satisfactory.  The 
procedures  for  dealing  with  allegations  of  ill-treatment  of  prisoners  are  still  not  effective. 
Little  progress  was  made  in  improving  the  living conditions in  the  Tetovo  Correctional and 
Educational Centre (located since 2001 in Skopje prison). The juveniles continue to mix with 
adult  prisoners.  Access  for  juveniles  to  vocational  training  is  poor.  The  conditions  of 
detention cells in many police stations remain sub-standard.  

The European Parliament’s recommendation to follow up the Khaled El-Masri case of alleged 
extra-judicial detention has still not been responded to. 

With  regard  to  freedom  of  expression,  overall  the  situation  is  satisfactory.  However,  the 
public broadcaster still lacks financial independence, as the rate of collection of the viewing 
licence fees is close to zero. The Broadcasting Law still allows the public service broadcaster 
to be declared bankrupt or liquidated at any moment. The ownership of the printed media is 
still highly concentrated and non-transparent. Political interference in the media is a source of 
concern as it leads to self-censorship and limits freedom of expression.  

(See also Chapter 10 – Information society and media). 

With  regard  to  freedom  of  assembly  and  association,  the  overall  situation  is  satisfactory. 
However,  there  were  two  occasions  when  peaceful  and  legal  public  events  were  violently 
disrupted.  One  was  a  student  protest  in  Skopje  against  the  government’s  plan  to  build  a 
church on the main square, the other a debate in Struga organised by a civic group.  

Involvement  of  civil  society  organisations  in  policy-making  and  in  legislative  drafting 
progressed  moderately.  The  government  introduced  mechanisms  for  consulting  civil  society 
organisations. Changes in the government’s rulebook stipulate that draft legislation should be 
accessible  on  the  relevant  ministry’s  webpage  for  public  consultation  and  that  civil  society 
can  participate  in  working  groups  for  drafting  laws.  A  new  government  decision  improved 
selection procedures and evaluation criteria for public financing of civil society organisations. 
An evaluation grid, a scoring system and an obligation to inform all applicants of the outcome 
were introduced.  

However,  progress  on  implementing  the  government’s  strategy  and  action  plan  for 
cooperation  with  civil  society  organisations  slowed.  Implementation  of  the  Law  on 
Sponsorship  and  Donations  progressed  slowly,  because  of  the  complex  administrative 
requirements  and  lack  of  public  awareness.  Civil  society  organisations  remained  heavily 
dependent  on  foreign  funding.  The  lack  of  sufficient  financial  resources  continued  to  be  a 
serious  constraint.  The  government  only  partially  respected  the  existing  consultation 
mechanisms and, overall, failed to engage in a meaningful dialogue with civil society. Most of 
the draft legislation and regulatory impact assessment forms were not available to the general 
public  for  review.  There  is  no  systematic  and  transparent  mechanism  for  consulting  civil 
society  on  national  development  policies,  legislation,  programmes  or  other  strategic 
documents.  

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As  regards  freedom  of  religion,  implementation  has  begun  of  the  2008  Law  on  the  Legal 
Status of Churches, Religious Communities and Religious Groups. However, several religious 
communities  or  groups,  including  the  Bektashi,  remained  without  any  regulated  status.  The 
Constitutional  Court  annulled  the  provisions  on  religious  education  in  the  Law  on  Primary 
Education, finding them contrary to the principle of separation of church and State. According 
to  the  Court,  the  Constitution  guarantees  the  right  to  practise  a  religion,  but  citizens  should 
not be influenced by the state as to whether or how to practise a religion.  

Overall,  some  steps  have  been  taken  to  strengthen  civil  and  political  rights,  in  particular  to 
address allegations of ill-treatment by police. However, further significant efforts are needed, 
in  particular  as  regards  the  prison  system  and  transparency  and  independence  of  the  media. 
The country is moderately advanced in this area. 

Economic and social rights 

As regards women’s rights, efforts were made to deal with the problem of domestic violence. 
A  national  body  was  set  up  to  coordinate  implementation  of  the  national  strategy  against 
domestic  violence  (2008/2011).  Implementation  of  the  strategy  has  started,  but  some 
ministries show little interest in it. Progress was made towards coordinating the fight against 
human trafficking better at national level. Coordination remains weak at local level.  

The participation of women in political life is limited. No woman was elected for one of the 
85 vacant positions as mayor in the recent local elections, compared to 3 under the previous 
elections.  

A  strategic  approach  to  equal  opportunities  is  missing.  Little  progress  was  made  on 
implementing the Law on Equal Opportunities between Men and Women, although specific 
funds  were  allocated  for  the  first  time  in  2009  for  the  work  of  the  Department  of  Equal 
Opportunities. 71 coordinators have been appointed at local level, plus 13 within ministries. 
Most of them lack experience in the field and are not familiar with equal opportunities policy. 
Despite  the  requirement  in  the  law,  no  mediator  has  been  appointed  yet  to  deal  with 
complaints  about  unequal  treatment.  The  national  action  plan  for  gender  equality  lacks 
coherence. (See Chapter 19 – Social policy and employment) 

The  national  action  plan  for  Roma  women  received  no  dedicated  funds  for  2008.  As  is  the 
case with the Equal Opportunities Law, the realisation of the operational plans largely depend 
on  external  contributions.  The  Department  for  Equal  Opportunities  does  not  have  adequate 
capacity  to  fulfil  its  responsibility  to  monitor  ministries  and  its  inter-ministerial  role  in 
coordinating  gender  issues.  The  practice  of  family  voting,  along  with  other  discriminatory 
customs, traditions and stereotypes are still widespread and undermine women’s basic rights. 
Little has been done to address women’s rights in rural areas. Insufficient attention is paid to 
women’s  health,  discrimination  in  the  workplace  and  sexual  harassment.  Roma  women  and 
girls still suffer from both racial and gender discrimination. 

As regards children’s rights, an action plan has been adopted on preventing and combating 
sexual abuse of children and paedophilia for the period 2009/2012. Attendance in primary and 
secondary  schools  has  increased,  accompanied  by  increased  investments;  94%  of  primary 
school  pupils  go  on  to  attend  secondary  school.  However,  disparities  persist,  affecting 
children from vulnerable groups. Roma children have the lowest literacy rate and still a very 
low  rate  of  enrolment,  attendance  and  completion  of  both  primary  (61%)  and  secondary 
education (17% according to recent study in 2008). The Council of Europe Convention on the 

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Protection  of  Children  against  Sexual  Exploitation  and  Sexual  Abuse  has  not  been  ratified. 
Reforms in line with international instruments such as the UN Convention on Rights of the 
Child  are  not  being  implemented.  Implementation  of  the  2006/2015  action  plan  for  the 
protection of children’s rights remains slow.  

The  number  of  reported  cases  of  physical  and  sexual  abuse  of  children  and  paedophilia 
increased.  The  number  of  some  1000  street  children  has  not  decreased,  95%  of  them  are 
Roma.  Children  with  disabilities  are  highly  disadvantaged:  appropriate  social  services  are 
lacking  and  these  children  are  not  integrated  into  formal  education  and  regular  recreation 
programmes.  Poor  physical  access  also  seriously  constrains  their  integration  into  society. 
Juvenile delinquency remains very high, particularly among Roma. Some progress was made 
on  implementing  and  monitoring  the  action  plan  on  juvenile  justice.  However,  the  funds 
allocated to this action plan are still insufficient. The law on juvenile justice which had been 
adopted  in  July  2007  entered  into  force  in  June  2009.  The  law  establishes  the  institutional 
framework  for  the  juvenile  justice  system,  based  on  modern  principles.  However,  further 
efforts  are  needed  to  prevent  juvenile  delinquency  and  to  increase  the  capacity  of  law 
enforcement agencies to deal with juveniles.  

As regards socially vulnerable people and people with disabilities, reforms are under way 
in line with the priority goals set in the 2008/2018 national strategy to de-institutionalise the 
system  of  social  care.  The  de-institutionalisation  process  is  slowly  being  reinforced  and 
financial resources are being provided, but remain inadequate. Provision of services via non-
institutional  forms  of  social  care,  such  as  day-care  centres,  small  communal  houses  and 
support  for  families  accepting  people  with  disabilities,  has  been  initiated.  The  first 
partnerships in social care provision between the national and local authorities, civil society 
and  the  private  sector  were  set  up.  However,  the  staffing  and  facilities  for  treatment  of 
patients in community health institutions have not improved. The allegations of ill-treatment 
of  patients  in  the  Demir  Kapija  psychiatric  hospital  reported  in  2008  were  not  followed  up. 
Municipalities  have 
the  social  policy 
responsibilities that were transferred to them as part of the second phase of decentralisation. 
In  general,  social  integration  of  people  with  disabilities  has  not  improved;  their  access  to 
education,  employment  and  public  services  remains  limited.  Overall,  long  term  social 
inclusion policies for the socially vulnerable, including people with disabilities, have not been 
initiated and participation by relevant stakeholders is lacking. 

insufficient  administrative  capacity 

to  fulfil 

Little progress can be reported in the field of labour rights and trade unions. Members of 
the  Joint  Consultative  Committee  with  the  EU  Economic  and  Social  Committee  have  been 
nominated. The first meeting Joint Consultative Committee was held on 25 September. The 
criteria for membership of the Economic and Social Committee have not been clarified, and it 
still does not fulfil its role. Tripartite, bipartite and social dialogue remained very weak. The 
capacity of the social  partners  remained low. An all-inclusive social dialogue remains to be 
established.  

Little  progress  has  been  made  in  the  area  of  anti-discrimination  policy.  Mechanisms  to 
identify,  pursue  and  criminalise  all  forms  of  discrimination  by  State  and  non-State  bodies 
against  individuals  or  groups  do  not  yet  exist.  A  framework  law  on  anti-discrimination 
remains  to  be  adopted.  Discrimination  based  on  sex,  ethnic  origin,  disability  and  sexual 
orientation persists. Minorities, the Roma community and people with disabilities, particularly 
children,  suffer  most  from  discrimination  in  various  walks  of  economic,  social  and  cultural 
life. Neither the Constitution nor the existing legislation identifies sexual orientation as a basis 

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of  discrimination.  Lesbian,  gay,  bisexual  and  transgender  (LGBT)  people  are  not  protected 
against direct or indirect discrimination and are stigmatised, particularly in rural areas.  

As regards property rights, the process of returning property confiscated during the period of 
the Socialist Federal Republic of Yugoslavia is yet to be completed. A rulebook on internal 
organisation  of  the  cadastre  put  in  place  a  new  structure.  Administrative  capacity  was 
strengthened  with  the  aid  of  some  training.  However,  progress  on  dealing  with  restitution 
claims  was  slow.  Property  dispute  procedures  tended  to  be  delayed  beyond  the  legal 
deadlines, and in some cases both the decision on a claim and the appeal against it were dealt 
with by the same people. There has again been no progress on returning property of 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.  Domestic  violence  remains  a  cause  for  concern.  The  protection  of 
women against all forms of violence needs to be strengthened. Commitment to relevant social 
inclusion  policies  and  stakeholder  dialogue  are  still  lacking.  The  country  partially  meets  its 
objectives in this area. 

Minority rights, cultural rights and protection of minorities  

In the field of cultural rights, there has been some progress on implementing the Law on Use 
of  Languages  spoken  by  at  least  20%  of  the  citizens.  As  provided  for  by  the  law,  some 
chairpersons  of  parliamentary  committees  began  using  Albanian.  Little  progress  can  be 
reported regarding use of the languages of the smaller ethnic communities. There is a lack of 
facilities for teaching in their mother tongue. 

As regards minorities, inter-ethnic tensions were generally low. They intensified at times, in 
particular  in  schools.  The  Ohrid  Framework  Agreement  remains  a  crucial  guarantee  of  the 
rights of the non-majority communities3 in the country.  

The  capacity  of  the  Secretariat  for  the  Implementation  of  the  Ohrid  Framework  Agreement 
needs to be strengthened so that it may coordinate effectively the implementation of policies 
such as equitable representation and the provisions on the law on languages. It also needs to 
provide more regular and comprehensive information about progress in implementation. 

As provided for in the Law on Protection and Enhancement of the Rights of Ethnic Minorities 
which represent less than 20% of the population, a specialised agency for protecting the rights 
of  these  minorities  was  set  up  as  an  independent  State  administrative  body.  The  agency  is 
intended  to  act  as  an  advisory  body  to  the  government  on  minority  issues.  Already  two 
successive directors have been appointed and the agency is still not operational, in the absence 
of adequate staff and budget. 

Committees for inter-ethnic relations have been set up in most municipalities where they are 
required  by  law  and  also  in  14  other  municipalities  with  sizeable  minority  populations. 
However,  elections  of  members  were  often  not  transparent  and  the  effectiveness  of  these 
committees is limited by poor operational capacity, unclear competences and weak status. The 
public are largely unaware of their role and their recommendations are often disregarded by 

3 

Albanian, Bosniak, Roma, Serbian, Turkish and Vlach. 

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the municipal councils. In several municipalities, the composition of the committees does not 
reflect the ethnic structure of the local population. 

Initial  steps  were  taken  to  enhance  cooperation  between  the  Parliamentary  Committee  for 
inter-ethnic relations and the committees for inter-ethnic relations in the municipalities. 

Some progress was made on implementing the strategy for equitable representation of ethnic 
communities in the public sector. The law on civil servants establishes an obligation on public 
bodies  to  comply  with  their  annual  recruitment  targets  for  non-majority  communities.  The 
number  of  civil  servants  from  the  non-majority  ethnic  communities  increased  to  26%  at 
central level by September 2009. However, recruitment targets for non-majority communities 
in  the  public  administrations  have  not  yet  been  met;  no  sanctions  are  provided  by  the 
regulatory framework. The ethnic Turkish and Roma communities are still particularly under-
represented.  A  single  data  collection  system  for  the  entire  public  sector  has  not  yet  been 
established.  

There is no strategic human resources planning to ensure gradual fulfilment of the recruitment 
targets  for  non-majority  communities.  In  order  to  meet  these  targets,  a  number  of  civil 
servants from non-majority communities were recruited irrespective of the SABs’ needs and 
failed to meet the required criteria. Some were not provided offices or equipment.  

The  high  schools  in  Struga  municipality,  where  ethnic  shifts  were  introduced  following 
fighting  between  pupils  from  different  ethnic  communities,  partly  restored  ethnically  mixed 
education at the start of the 2009-10 school year. 

Nonetheless,  several  other  municipalities  are  maintaining  separate  ethnic  shifts.  This  raises 
concerns  about  long  term  damage  to  inter  ethnic-  relations.  The  recommendations  of  the 
OSCE High Commissioner for National Minorities, which aim to support integration of ethnic 
communities through education, should be fully taken into account.  

The authorities have taken practical measures to address the issue of social inclusion of Roma, 
but  with  limited  results  so  far.  Between  3,000  to  5,000  Roma,  ethnic  Albanians  and  ethnic 
Turks  still  lack  personal  documents,  such  as  birth  certificates  and  medical  insurance  or 
employment cards, which are necessary to benefit from social insurance, healthcare and other 
social services.  

A  broad  consensus  on  implementation  of  the  Constitutional  Court  decision  to  annul  some 
provisions of the Law on Use of Flags of the Communities has not emerged. 

In  July  2009  there  were  about  1,700  refugees/asylum-seekers  in  the  country,  of  whom  the 
vast  majority  were  Roma  from  Kosovo4:  25  were  recognised  refugees,  1,093  were  under 
humanitarian protection and, by decision of the Ministry of the Interior, are being transferred 
to subsidiary protection, 93 were asylum-seekers and 481 were from minorities from Kosovo 
whose  asylum  claims  had  been  rejected  or  whose  humanitarian  protection  status  had  been 
terminated  by  a  final  decision.  In  2008  the  number  who  had  received  recognised  refugee 
status  reached  36.  A  new  Law  on  Asylum  and  Temporary  Protection  brought  national 
standards even closer to European ones. The government commission hearing appeals against 
first instance decisions on refugee status was abolished and the administrative court became 
the  final  instance  body  on  refugee  status.  Yet  there  are  shortcomings  in  its  procedures  for 

4 

Under UNSCR 1244/99. 

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decisions  on  appeals,  notably  on  decisions  on  terminating  temporary  protection  status  for 
people  from  Kosovo  and  on  the  period  for  which  residence  is  granted  to  people  under 
subsidiary protection.  

The number of registered internally displaced persons (IDPs) decreased from 778 in 2007 to 
736 in 2008.  

Little progress can be reported regarding the Roma. The four action plans in the framework 
of  the  2005-2015  Decade  of  Roma  Inclusion  were  recently  revised  and  continued  to  be 
the  action  plans. 
implemented  slowly.  State  funds  were  allocated 
Implementation  of  the  Roma  strategy  and  of  the  2005-2015  Decade  of  Roma  Inclusion  has 
been placed under the responsibility of a new unit within the Ministry of Labour and Social 
Policy  and  is  coordinated  by  a  Roma  minister  without  portfolio.  SABs  initiated  several 
projects related to the priority fields of the Roma strategy.  

implement 

to 

However,  the  commitment  on  the  part  of  line  ministries  and  of  municipalities  is  still 
insufficient. The inter-ministerial coordination working group on implementation of the Roma 
strategy was not operational for most of the reporting period. Adequate financial resources for 
implementation of the action plans were lacking. The administrative capacity of the office of 
the Roma minister without portfolio and of the unit for implementation of the Roma strategy 
and  the  2005-2015  Decade  of  Roma  Inclusion  needs  to  be  significantly  strengthened. 
Representation  of  Roma  in  many  areas  of  public  life,  at  both  local  and  national  levels, 
remained low. 

Roma  continued  to  be  the  most  disadvantaged  ethnic  group.  Unemployment  among  Roma 
was still the highest (as high as 73% compared to around 30% among the general population). 
Roma continued to have the lowest incomes (about 63% live below the poverty line) and the 
highest  mortality  rate.  An  estimated  two  thirds  of  Roma  households  live  below  the  poverty 
line. The number of Roma children attending school was still low and the drop-out rate high. 
Segregation of Roma pupils was still practised. The practice of sending Roma children with 
learning  difficulties  to  special  institutions  for  mentally  disabled  children  continued.  The 
number of Roma street children is growing. No cases of police violence or targeting of Roma 
were  reported  through  official  channels.  Reportedly,  Roma  suffer  disproportionately  from 
police abuse, but are reluctant to lodge complaints. There are no disaggregated data on Roma.  

Overall, there has been some progress with cultural rights and minority rights. There has been 
some  progress  on  equitable  representation  and  the  government  undertook  initial  steps  to 
address  the  issue  of  implementation  of  the  law  on  languages  and  to  foster  inter-ethnic 
integration in the education system. Nonetheless, integration of ethnic communities remains 
limited.  Effective  implementation  of  the  Ohrid  Framework  Agreement  needs  to  be 
maintained, in a spirit of consensus. The concerns of the smaller ethnic communities should 
be  more  thoroughly  addressed.  Little  progress  can  be  reported  regarding  the  Roma.  They 
continue  to  face  very  difficult  living  conditions  and  discrimination,  particularly  regarding 
access  to  personal  documents,  education,  social  protection,  healthcare,  employment  and 
adequate housing.  

(See also Chapter 23 – Judiciary and fundamental rights) 

2.3. 

Regional issues and international obligations 

The  former  Yugoslav  Republic  of  Macedonia  continued  to  cooperate  fully  with  the 
International Criminal Tribunal for the former Yugoslavia (ICTY). No decision has yet 

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been taken on the ICTY prosecutor’s appeal against the acquittal of a former Minister of the 
Interior,  in  the  Ljuboten  case  in  2008.  Of  the  four  cases  that  the  ICTY  referred  back  to  the 
national authorities, three have reached the domestic court system. Two of these cases are still 
with  the  investigative  judge.  The  third  case  went  to  trial,  but  has  encountered  numerous 
procedural  obstacles.  The  fourth  case,  which  relates  to  senior  members  of  DUI  remains 
extremely  sensitive  and  is  still  in  the  Office  of  the  Public  Prosecutor.  Ethnic  Albanian 
political parties assert that all the cases are covered by the 2002 Amnesty Law. 

The  former  Yugoslav  Republic  of  Macedonia  still  maintains  the  2003  bilateral  immunity 
agreement  with  the  United  States  granting  exemptions  from  the  jurisdiction  of  the 
International Criminal Court. This does not comply with the EU Common Positions on the 
integrity  of  the  Rome  Statute  or  the  related  EU  guiding  principles  on  bilateral  immunity 
agreements. The country 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 actively participate in 
regional  initiatives,  including  the  South-East  European  Cooperation  Process  (SEECP),  the 
Regional Cooperation Council (RCC), the Central European Free Trade Agreement (CEFTA), 
the  Energy  Community  Treaty  and  the  European  Common  Aviation  Area  Agreement 
(ECAAA).  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  remained  good  with  Albania,  Bosnia  and  Herzegovina,  Croatia, 
Montenegro  and  Turkey.  Several  high-level  visits  involving  these  countries  took  place. 
Implementation of the agreement with Albania on the free movement of citizens without visas 
has started and the agreement on joint patrolling of common borders entered into force. With 
Bosnia  and  Herzegovina  an  agreement  on  cooperation  on  security  matters  and  a  new 
readmission agreement were ratified. An agreement with Croatia on the exchange and mutual 
protection  of  classified  data  was  ratified.  Cooperation  with  Montenegro  has  been 
strengthened.  An  agreement  on  dual  citizenship  was  signed,  as  were  agreements  on 
cooperation  on  EU  affairs,  air  traffic,  tourism,  agriculture  and  protection  in  the  event  of 
natural disasters. Defence cooperation has been intensified. Negotiations on an agreement on 
social security are ongoing.  

A  strategy  was  signed  to  intensify  bilateral  relations  with  Turkey,  providing  for  closer 
cooperation in the areas of security, defence, customs, economy, trade, education and culture.  

Relations with Serbia improved, following difficulties linked to the country’s recognition of 
Kosovo5’s independence. A new ambassador to Belgrade was appointed in April. There have 
been  several  high-level  visits  involving  the  authorities  of  both  countries.  Economic 
cooperation  is  continuing  to  improve.  Unresolved  issues  concerning  relations  between  the 
Orthodox churches in the two countries had no major political implications.  

The demarcation of the former Yugoslav Republic of Macedonia's border with Kosovo has not 
yet  been  fully  completed,  but  the  authorities  have  maintained  a  constructive  approach 
throughout the process. (See also Chapter 24 – Justice, freedom and security). 

5 

Under UNSCR 1244/99. 

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Relations  with  Greece  continue  to  be  close,  notably  in  the  form  of  trade,  investment  and 
tourism,  but  relations  between  the  two  governments  were  affected  by  the  unresolved  name 
issue.  The  country  is  engaged  in  talks  under  the  auspices  of  the  UN  on  resolving  it.  The 
government  initiated  legal  proceedings  against  Greece  before  the  International  Court  of 
Justice in The Hague regarding the bilateral interim accord of 1995. The government named a 
motorway  which  forms  part  of  trans-European  transport  corridor  X  after  ‘Alexander  of 
Macedon’. This was received as a provocation by Greece, which consequently suspended its 
financial  contribution  towards  construction  of  the  motorway.  Actions  and  statements  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 with Bulgaria have remained good, with several meetings at senior political level. 
However, some controversial issues arose, related to ethnic self-identification of individuals 
and political representation of groups on an ethnic basis in the two countries.  

Overall,  the  former  Yugoslav  Republic  of  Macedonia  is  participating  actively  in  regional 
cooperation and further developing its bilateral relations with its neighbours. The name issue 
continues to affect relations with Greece. 

3. 

ECONOMIC CRITERIA 

In  examining  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 participating in the EU pre-accession fiscal surveillance procedure. It presented 
its third Pre-accession Economic Programme in January 2009 and submitted its fourth fiscal 
notification  in  April  2009.  However,  the  programme  and  its  assumptions  quickly  became 
outdated, as a result of the rapidly changing international environment. Another corner-stone 
of  the  country’s  economic  policy  framework  has  been  cooperation  with  the  World  Bank. 
Furthermore,  a  number  of  medium-term  strategies  define  the  policy  framework,  such  as  the 
national  development  plan,  the  public  investment  programme  for  2009-2011  and  the  public 
debt strategy for 2009-2011. Although the government was geared strongly to the local and 
presidential  elections,  structural  reforms  continued  in  a  number  of  areas.  Overall,  a  broad 
political consensus on the fundamentals of economic policy has been maintained. 

Macroeconomic stability  

GDP growth decelerated from 5.9% in 2007 to 5% in 2008. However, after strong growth in 
the first three quarters of 2008 of nearly 6% on average, output growth dropped to 2% in the 
fourth quarter, reflecting the negative impact of the global financial crisis. Economic activity 
continued to slow down in the first half of 2009, with a year-on-year output drop by 1% and 
1.5%  in  the  first  and  second  quarters.  Production  and  employment  in  key  export-oriented 
industries, such as steel and textiles, have started to decline. Exports declined markedly in late 

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2008  and  early  2009,  while  investment  and  imports  began  to  decline  substantially  in  the 
second quarter only. Industrial production declined by an average of around 11% during the 
first  half  of  2009,  mainly  as  a  result  of  lower  output  of  basic  metals.  Average  per-capita 
income (in PPS) has increased, from 31.2% of the EU-27 average in 2007 to 32.5% in 2008. 
Overall,  after  strong  growth  in  the  first  three  quarters  of  2008,  economic  activity  slightly 
contracted in the first half of 2009, mainly reflecting lower external demand. However, so far 
the slowdown has been limited.  

The  current  account  deficit  declined  from  some  16%  of  GDP  in  the  first  of  half  of  2008  to 
about 14% in the first half of 2009. The main reason was a significant decline in imports, in 
particular in mid-2009, while the drop in exports remained limited. However, falling private 
transfers from abroad prevented a stronger decline in external imbalances. At the same time, 
capital  inflows,  such  as  FDI  declined.  Overall,  external  imbalances  remained  elevated,  as 
strong  public  spending  during  the  first  months  of  the  year  kept  imports  high,  while  capital 
inflows  were  affected  by  the  global  crisis.  This  contributed  to  pressure  on  the  country’s 
foreign exchange reserves.  

The  official  reserve  assets  of  the  National  Bank  of  the  Republic  of  Macedonia  (NBRM) 
dropped sharply in early 2009 but recovered by July to about €1,4 bn (20% of GDP). This is 
some 20% below their peak in September 2008. The import coverage has dropped to around 
five  months  of  imports.  Major  factors  driving  this  decline  were  dividend  payments, 
government purchases of equipment, foreign exchange withdrawals by private households in 
spring 2009, reflecting increased uncertainty, and Central Bank intervention to defend the de 
facto  peg  to  the  euro.  Gross  external  debt  has  continued  to  rise  (from  51%  of  GDP  in 
September  2008  to  53%  in  June  2009),  mainly  reflecting  increased  borrowing  abroad  by 
private companies. In July, the authorities issued an €175 million eur obond (2.5% of GDP), in 
order  to  strengthen  foreign  exchange  reserves  and  to  cover  public  sector  financing  needs. 
External vulnerability has increased, as exports and capital inflows dropped while substantial 
public  spending  boosted  imports.  Public  borrowing  on  the  domestic  financial  market  has 
contributed  to  a  rise  in  lending  rates,  while  private  and  public  borrowing  on  foreign  capital 
markets  has  increased  the  country’s  external  indebtedness.  Overall,  the  crisis  and  increased 
public  spending  had  a  negative  impact  on  level  of  foreign  exchange  reserves  and  external 
debt.  

Unemployment  remained  very  high.  It  dropped  slightly  from  34.9%  on  average  in  2007  to 
33.7%  in  2008.  The  Labour  Force  Survey  (LFS)  and  national  statistics  point  to  a  slight 
decline in unemployment when compared to a year before. For example, unemployment rates 
dropped from 34.8% in the first quarter of 2008 to 32.8% in the first quarter of 2009, while 
until May 2009, the number of registered and actively labour seeking unemployed is below 
the  previous  year  levels.  However,  data  from  June  and  July  indicate  a  increase  in 
unemployment,  probably  related  to  the  crisis.  Recent  government  measures  to  fight 
unemployment have focused on youth unemployment and may have contributed to the slight 
drop in the unemployment rate. In the age group of 15-27 years, unemployment has declined a 
bit faster than in other age groups, from 58.4% in the first quarter of 2008 to 54.4% in the first 
quarter of 2009. The existence of a substantial informal sector still seems to lead to significant 
over-estimation of actual unemployment. However, even when taking this factor into account, 
very high unemployment remains an important issue, in particular among young people and 
the  less  educated.  Overall,  the  trend  towards  a  slightly  improving  labour  market  situation, 
notably among youth, seems to have continued. However, the level of unemployment of some 
33% remains very high. 

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Monetary  and  exchange  rate  policy  have  remained  stability-oriented.  The  Central  Bank  has 
managed to maintain the de facto peg, keeping the exchange rate stable at 61.2 denar to the 
euro. In April the Central Bank raised interest rates for short-term Central Bank bills from 7% 
to 9%, largely to neutralise the impact of the government’s expansive fiscal policy. Private-
sector  weighted  interest  rates  started  to  rise  in  spring  2009.  Rates  for  denar  loans  increased 
from 9.6% in August 2008 to 10.2% in July 2009, while the rates for denar deposits rose in 
the same period from 6.0% to 7.2%. Spreads have continued to narrow, from 3.6% in August 
2008  to  3.0%  in  July.  The  originally  high  growth  in  credit  to  the  private  sector  decelerated 
from 38.4% in September 2008 to 14.2% in July 2009, reflecting lower growth in deposits but 
also  Central  Bank  measures  to  tighten  credit  expansion.  Overall,  the  exchange  rate  and 
monetary policy have remained sound, notably by maintaining the level of the de facto peg to 
the euro, which has helped to maintain confidence in the stability of the financial system.  

Inflation  reached  8.3%  in  2008  compared  with  2.3%  in  2007.  However  in  the  first  eight 
months of 2009, the average price level was 0.3% below the level a year before, mainly due to 
lower  prices  for  food  and  transport.  This  profile  is  in  line  with  the  decelerating  economic 
activity. Overall, inflation has decelerated markedly. 

The fiscal policy stance has become more expansionary, envisaging a further increase in the 
deficit from an actual deficit of 0.9% of GDP in 2008 to a target of 2.8% in 2009. In the last 
quarter of 2008, the government embarked on a large spending programme, which turned the 
previously accumulated surplus of some 2% of GDP into a year-end deficit of close to 1%. 
The main spending measures at the end of 2008 were income transfers to farmers, subsidies to 
the  State-owned  electricity  companies  and  additional  budgetary  allocations  to  other  policy 
areas. Between December 2008 and May 2009, the government announced three crisis-related 
packages.  The  first  consisted  mainly  of  a  payment  amnesty  of  accrued  tax  arrears  and  the 
transformation  of  tax  arrears  of  three  former  State-owned  enterprises  into  State  shares.  In 
addition, reinvested earnings were exempted from profit taxation, which lowered tax revenues 
by some 1% to 2% of GDP. Furthermore, deadlines for tax collection were eased. In March 
the  authorities  announced  their  annual  update  of  their  five-year  investment  programme, 
planning to raise public investment from some 3% of GDP to about 7%. In May and August 
the  authorities  responded  to  lower  than  expected  revenue  by  submitting  to  parliament  two 
rebalancing budget proposals, cutting public spending  in  total  by  some  12%  compared  with 
the initial budget proposal. However, compared with the actual spending in 2008, the revised 
budget  still  envisages  substantial  spending  increases.  The  impact  of  automatic  stabilisers  is 
likely  to  be  very  limited.  General  government  debt  declined  from  26%  of  GDP  in  2007  to 
21% in 2008. The main factors behind this decline were strong nominal GDP growth and a 
low  fiscal  deficit.  However,  as  a  result  of  deficit  financing,  public  debt  increased  to  about 
25% of GDP by mid-20096. Overall, increased public spending coupled with a crisis related 
decline  in  revenues  led  to  a  significantly  higher  public  sector  financing  gap  and  increased 
public debt.  

In  the  area  of  fiscal  reforms,  the  government  proceeded  with  lowering  the  tax  wedge  on 
labour  by  reducing  social  contributions  and  simplifying  collection.  Furthermore,  the 
authorities have continued to improve the efficiency of tax administration and to simplify the 
tax system. Fiscal decentralisation has continued. The legal framework for local cooperation 
the  central  government’s 
and  also  for  auditing  has  been  strengthened.  However, 

6 

Public-sector  data  are  not  yet  presented  in  accordance  with  the  European  standard  (ESA 95),  thus 
limiting comparability. 

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administrative  capacity  for  monitoring  and  auditing  fiscal  decentralisation  remains  limited. 
The  new  responsibilities  continue  to  pose  significant  challenges  to  the  municipalities  and 
require  close  monitoring  by  the  central  authorities.  Overall,  the  quality  of  public  finances 
continues  to  be  hampered  by  weaknesses  in  medium-term  budget  planning  and  priority-
setting, leading to a high proportion of discretionary and short-term spending decisions.  

The  overall  macroeconomic  policy  mix  suffered  from  the  low  quality  of  government 
spending,  with  many  measures  geared  more  to  election-related  promises  than  to  combating 
the  crisis.  Some  spending  contributed  to  an  increase  in  the  trade  deficit.  As  a  result,  the 
country’s  external  vulnerability  increased  and  the  de  facto  peg  of  the  denar  to  the  euro  –
 which  is  the  core  monetary  policy  anchor -  came  under  pressure.  Inflation  decelerated, 
reflecting  declining  international  energy  and  commodity  prices.  Additional  measures  to 
address structural unemployment, which is a key Accession Partnership priority, seem to have 
produced  some  initial  positive  results.  However,  the  very  high  level  of  unemployment 
remains  a  key  challenge.  Overall,  the  expansionary  fiscal  policy  was  poorly  targeted  and 
contributed to the pressure on external balances and the foreign exchange anchor. However, 
macroeconomic stability was maintained. 

Interplay of market forces  

Privatisation  is  largely  completed  and  the  economy  is  mainly  driven  by  market  forces.  The 
private  sector  accounts  for  some  82%  of  total  output  generation  and  some  77%  of  total 
employment. However, during the last year some of the anti-crisis measures led to an increase 
in the State’s involvement. For example, the measure to offer debt-equity swaps to troubled 
companies with substantial payment  arrears increased the number of companies under State 
ownership from  58 to 70  (15%), leading to a rise in the share of State capital from 11% of 
GDP in mid-2008 to 13% in mid-2009.  

More than 90% of the State capital is concentrated in five companies, mainly public utilities, 
such  as  for  electricity  production  and  transmission.  The  persisting  practice  of  setting 
electricity prices below cost recovery is a significant burden on public spending and distorts 
the domestic price structure. Overall, the State’s role in the economy has increased slightly as 
a result of some of the anti-crisis measures. However, market forces are still the predominant 
feature of the economy.  

Market entry and exit 

The  government  has  continued  improving  legislation  on  market  entry  and  exit.  The  second 
phase of establishing a ‘one-stop shop’ for business start-ups has been launched, focusing on 
facilitating the exchange of information between the various data-collecting institutions, such 
as the central registry, the Employment Agency and the health insurance funds. Updating the 
legal framework for electronic registration and reporting has been another important step. The 
costs  of  registration  have  been  reduced  further.  The  second  phase  of  the  ‘regulatory 
guillotine’  to  reduce  unnecessary  administrative  burdens  has  been  completed,  adopting 
measures to accelerate and simplify customs procedures. With regard to closing enterprises, 
voluntary liquidation has been introduced and the backlog of overdue cases has been reduced 
further. However, the number of newly created enterprises dropped by some 20% in the first 
eight  months  of  2009,  compared  with  the  same  period  the  year  before.  The  number  of 
enterprises  exiting  the  market  has  increased.  This  reflects  to  a  large  extent  impact  of  the 
international financial crisis. However, the number of new bankruptcies was lower in the first 
eight  months  than  a  year  before.  The  average  duration  of  bankruptcy  procedures  has  fallen 

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slightly,  from  two  years  and  two  months  to  around  two  years.  The  backlog  in  bankruptcy 
cases has been further reduced. Overall, further progress has been made on reducing barriers 
to market entry and exit.  

Legal system 

Some further measures have been taken to improve the business environment, which is a key 
Accession Partnership priority. The legal system for a functioning market economy is largely 
in  place.  Good  progress  has  continued  to  be  made  with  registration  of  property  rights,  by 
further extending the coverage of the real estate cadastre to more than 90% of the country’s 
territory compared with 82% in September 2008. The backlog of unresolved property disputes 
has  been  reduced  further,  from  some  7,500  in  autumn  2008  to  some  2,400  by  September 
2009. However, in general, legal procedures are still slow and sometimes the quality of court 
decisions  is  low.  This  is  continuing  to  have  a  negative  impact  on  legal  certainty  and  is 
impeding  the  proper  functioning  of  market  mechanisms,  with  an  adverse  impact  on  the 
business  environment  and  the  country’s  attractiveness  to  foreign  investment.  The  financial 
independence and administrative capacity of regulatory bodies were strengthened. However, 
some regulatory and supervisory agencies are not yet fulfilling their role as guardians of the 
rule  of  law  and  providers  of  a  level  playing  field  for  all  economic  operators.  The  large 
informal  sector  is  fuelled  by  weaknesses  in  tax  and  expenditure  policies,  as  well  as  in  law 
enforcement, including the fight against corruption and organised crime. The informal sector 
remains  an  important  challenge,  as  it  reduces  the  tax  base  and  the  efficiency  of  economic 
policies. Overall, clarification of property rights has further advanced. However, weaknesses 
in the judiciary, including slow procedures and insufficient resources, are continuing to have 
an  adverse  impact  on  the  business  environment,  for  example  in  the  area  of  contract 
enforcement.  Corruption  has  been  addressed  by  policy  measures,  but  remains  prevalent  in 
many areas.  

Financial sector development 

The  financial  sector  remained  stable  and  so  far  has  withstood  well  the  turbulence  on 
international financial markets. Deposits are the sector’s main source of liquidity. The value 
of its financial assets declined slightly, from 65% of GDP in September 2008 to 63% in mid-
2009. The volume of credits rose slightly, from 41% of GDP in September 2008 to about 42% 
in mid-2009. Deposits have declined as a share of GDP, from 45% in September 2008 to 41% 
in mid-2009. As a result, the coverage of credits by deposits has declined, but is still slightly 
above 100%. Two  voluntary pension insurance  funds started operation  in  2009,  but  overall, 
financial  intermediation  by  the  non-banking  sector  has  remained  very  low.  After  a  strong 
decline in 2008, the capitalisation of bond and stock markets has recovered slightly in recent 
months, reaching some 29% of GDP (stocks 25% and bonds 4%), which is the level recorded 
at the end of 2006.  

The  structure  of  the  sector  has  remained  largely  unchanged.  However,  the  share  of  foreign 
capital in it has increased, due to foreign investments in three domestic banks. The share of 
State ownership in the sector remains low, at some 6.5% 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. 

There are 18 banks and 11 savings banks operating in the market, 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  the  continued  narrowing  of  spreads 

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between  lending  and  borrowing  rates,  from  3.5  percentage  points  in  September  2008  to  3.2 
percentage  points  in  April  2009.  Following  the  outbreak  of  the  crisis,  profitability  in  the 
sector dropped sharply, with the average return on equity declining from 16.5% in September 
2008 to 1.8% in March 2009. The return on assets declined from 1.9% in September 2008 to 
0.2% in March 2009. In order to contain the originally rapid expansion of credit and to lower 
the  pressure  on  foreign  exchange  reserves,  the  Central  Bank  introduced  a  number  of 
administrative measures.  

Despite increased uncertainty, the stability of the sector has been maintained, benefiting from 
the stricter regulatory standards and stronger supervisory capacity introduced in the last few 
years.  The  exposure  of  the  banking  sector  to  non-performing  loans  rose  slightly  in  the  first 
half of 2009. Their share in total loans rose to 7.5% at the end of March 2009, compared with 
6.6% in September 2008, thus returning to the level recorded in 2006. Loans with a foreign 
currency component remained largely stable at some 54% of total loans. The capitalisation of 
the banking sector remained high, with an average capital adequacy ratio of 17% in the first 
quarter  of  2009.  Large  banks  reported  an  average  capital  adequacy  ratio  of  14%  and  small 
banks  as  high  as  60%.  Overall,  the  financial  sector  maintained  a  sound  performance, 
weathering  relatively  well  the  negative  impact  of  the  global  financial  crisis.  The  size  of  the 
sector remained stable, with total assets accounting for some 60% of GDP.  

3.2. 

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

Existence of a functioning market economy 

Overall,  macroeconomic  stability  has  been  maintained  despite  the  negative  impact  of  the 
global  financial  turbulence.  Further  progress  has  been  made  on  improving  conditions  for 
market  entry  and  exit,  registration  of  property  rights  and  addressing  impediments  to  job 
creation.  However,  the  slow  pace  of  judiciary  procedures  and  the  at  times  deficiencies  of 
supervisory  and  regulatory  agencies  are  still  hampering  the  functioning  of  the  market 
economy,  in  particular  with  respect  to  contract  enforcement  and  establishment  of  a  level 
playing field for market participants. Structural unemployment remains very high, pointing to 
structural  weaknesses,  such  as  skills  mismatches,  and  insufficient  functioning  of  the  labour 
market.  

Human and physical capital  

The authorities maintained their efforts to provide education to a greater number of pupils and 
to improve vocational training for adults. Budgetary allocations for education increased, from 
around  3%  of  GDP  in  2007  to  about  4%  in  2008.  A  significant  share  of  the  additional 
spending has been on renovation and construction of school buildings and the purchase of IT 
equipment. The number of teachers in primary and secondary schools has been increased by 
some  4%,  in  particular  in  the  area  of  primary  education.  However,  there  is  still  room  for 
improvement in the efficiency of public spending on education and the quality of education. 
Despite  these  efforts,  the  overall  level  of  education  and  training  of  the  labour  force  is  still 
relatively low and the mismatch between the qualification profile of the labour force and the 
requirements of enterprises still seems substantial. Overall, measures to improve the level of 
qualification have continued. However, further sustained efforts are necessary.  

The country’s capital endowment has remained relatively low and its quality is still suffering 
from  previous  periods  of  under-investment.  Some  further  progress  has  been  made  on 

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improving  the  electricity  network  and  upgrading  further  parts  of  European  North-South 
transport corridor - Corridor X. Largely as a consequence of the crisis, inflows of FDI have 
decelerated after relatively strong growth in recent years, falling to some 5% of GDP in the 
first quarter of 2009, compared with about 12% the year before. In some cases, persistently 
slow  legal  procedures  and  fragmentation  of  responsibilities  between  central  and  local 
governments are an impediment to FDI. Overall, the country’s capital stock remains relatively 
low,  in  particular  in  the  light  of  the  need  to  accelerate  growth.  Infrastructure  continues  to 
require repair and modernisation. 

Sectoral and enterprise structure 

In  terms  of  output  generation,  the  overall  trend  towards  a  larger  contribution  by 
manufacturing,  construction  and  trade  in  services  and  a  declining  share  of  agriculture  has 
continued.  In  terms  of  employment,  services  and  agriculture  grew  in  importance,  while  in 
terms  of enterprise  creation the trading sector appears to be the most dynamic. To a certain 
extent,  this  increase  in  trading  companies  might  reflect  a  relative  reduction  in  unregistered 
economic  activities  more  than  a  structural  change.  However,  this  overall  picture  could  also 
point to a trend of increasing employment in activities with low capital and skill requirements 
but  also  low  value  added  and,  thus,  also  low  income.  The  informal  sector  remains  large, 
although there are indications that it has been reduced somewhat, for example by improving 
tax collection, lowering the tax burden, reforming collection of social security contributions 
and  providing  financial  incentives  for  registration.  Liberalisation  of  the  telecommunication 
industry  continued.  However,  gas  and  electricity  markets  remain  dominated  by  single 
suppliers,  undermining  effective  competition.  Overall,  limited  progress  has  been  made  on 
structural change towards diversification and activities with higher value-added. Competition 
in network industries remains constrained by dominant incumbent suppliers 

State influence on competitiveness 

Direct  State  influence  on  competitiveness  is  low  but  has  increased,  partly  as  a  result  of 
government intervention to shield troubled companies from the negative impact of the crisis. 
Indirect State aid is still leading to distortion in relative prices, in particular in the electricity 
sector. Energy prices still do not cover the full costs, which distorts the price structure, leads 
to  substantial  losses  on  the  part  of  State-owned  energy  providers  and  requires  significant 
budgetary  transfers.  Official  data  on  State  aid  point  to  a  low  level  of  about  1%  of  GDP. 
However,  this  figure  is  not  comparable  to  State  aid  data  compiled  in  accordance  with  EU 
standards. Overall, State influence on competition is low in most areas.  

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 in 2008. Trade integration with the EU is advanced, with about 60% of 
all exports being directed to and about 50% of imports originating from EU-27. CEFTA is the 
country’s second most important trading partner, with about 37% of exports and about 11% of 
imports.  The  importance  of  CEFTA  as  an  export  destination  has  continued  to  increase.  The 
export structure remains highly concentrated on a limited range of products, with textiles and 
clothing accounting for about 24% of total exports and manufactured iron products for some 
26%. Overall, trade integration with the EU is well advanced, but the commodity mix remains 
concentrated on a few price-sensitive products. 

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International price competitiveness remained unchanged. The exchange rate against the euro 
has  remained  stable  in  nominal  terms,  while  de  facto  wage  increases  took  into  account 
international price developments.  

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 

There has been some progress in the area of general principles. An action plan for achieving 
compliance  with  Articles  28  to  30  of  the  EC  Treaty  was  adopted  by  the  government  in 
August. Activities for its implementation still need to be launched. 

Some progress can be reported on horizontal measures. A working group for development 
and implementation of framework laws and related implementing legislation was established. 
The framework legislation is still not fully aligned with the acquis. A comprehensive strategy 
with milestones for implementation of the acquis for the relevant horizontal institutions has 
yet  to  be  prepared.  Separation  of  tasks  has  improved,  but  very  few  independent  bodies  for 
testing, certification and inspection exist.  

In  the  area  of  standardisation,  the  pace  of  adoption  of  European  standards  (ENs)  has 
accelerated, but the country is still far from the target set for 2010. By August 2009 a total of 
6,011 European and international standards had been adopted as national standards, mostly by 
endorsement.  They  relate  mainly  to  the  new  approach  directives  regulating  electromagnetic 
compatibility, machinery and construction products. A total of 3,300 national standards give 
presumption  of  conformity,  following  the  new  approach  directives.  Of  these,  326  relate  to 
construction products.  

The  number  of  technical  committees  within  the  Institute  for  Standardisation  (ISRM)  has 
increased to 32 and the membership of the ISRM assembly has risen to 70. The administrative 
capacity of the institute was strengthened by recruiting six new members of staff, making a 
total  of  19,  but  this  is  still  not  sufficient.  In  order  to  accelerate  the  process  of  adoption  of 
standards,  two  ad  hoc  technical  boards  were  established.  No  further  progress  was  made 
towards full membership of the European standardisation organisations.  

The Ministry of Economy authorised six legal entities to undertake conformity assessment of 
motor vehicles and two to undertake conformity assessment of lifts.  

Operation of the Institute for Accreditation (IARM) was enhanced by changes to a number of 
internal  acts  regulating  the  accreditation  procedure.  Six  new  technical  committees  and  a 
training  centre  were  established.  The  number  of  full-time  staff  rose  to  13,  which  is  still 
insufficient.  The  institute  also  draws  on  the  expertise  of  12  lead  assessors,  51  technical 
assessors and 44 experts. So far 36 conformity assessment bodies have been accredited by the 
IARM.  The  Institute  for  Accreditation  became  an  associate  member  of  International 

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Laboratory  Accreditation  Cooperation  (ILAC)  and  signed  cooperation  agreements  with  the 
accreditation  bodies  of  Bulgaria  and  Kosovo.  In  February  2009  it  applied  to  sign  the 
European  co-operation  for  Accreditation  (EA)  multilateral  agreement  covering  testing 
laboratories, inspection bodies and product certification bodies. 

In  the  area  of  metrology,  a  rulebook  on  maintenance  and  preservation  of  national 
measurement standards and reference standards as well as a rulebook on requirements for pre-
packaging were adopted. The capacity of the Bureau of Metrology was strengthened with the 
aid  of  a  new  organisational  structure,  including  sectors  for  calibration,  for  verification  of 
measuring instruments and for type-approval of vehicles and a unit for human resources. The 
number  of  staff  rose  to  37.  The  bureau  signed  a  bilateral  cooperation  agreement  with  the 
national  metrology  institutes  of  Albania,  Bulgaria  and  Slovenia,  and  memoranda  of 
understanding  with  the  IARM  and  ISRM.  The  bureau  does  not  have  enough  laboratory 
equipment or trained staff to function efficiently. 

Market  surveillance  remains  weak.  The  State  Market  Inspectorate  (SMI)  improved  its 
organisational structure by establishing three new specialised departments for product safety, 
human resources and misdemeanours which, however, still lack adequate staffing. The SMI's 
operational  capacity  was  strengthened  with  IT  equipment.  In  the  first  semester  of  2009  the 
SMI undertook 365 inspections related to the Law on General Product Safety and 85 related 
to  the  Law  on  Construction  Products.  The  wide  scope  of  responsibilities,  understaffing, 
inadequate powers of the inspectors and poor funding seriously limit the ability of the SMI to 
conduct  checks  on  technical  compliance  of  products  and  to  detect  potentially  defective 
products.  The  State  Technical  Inspectorate,  too,  is  understaffed  (it  has  12  employees,  of 
whom  only  seven  are  inspectors)  and  under-equipped.  The  functioning  of  the  coordination 
body for market surveillance has improved since a new chairperson was appointed. However, 
its administrative capacity remains insufficient.  

Preparations in the area of horizontal measures are moderately advanced.  

There  has  been  some  progress  in  the  old  approach  product  legislation.  A  Law  on  Motor 
Vehicles  and  secondary  legislation  in  the  form  of  twelve  rulebooks  have  been  adopted  to 
transpose  part  of  the  relevant  acquis.  In  addition,  a  number  of  manuals  have  been  issued, 
notably  on  hazardous  chemicals,  pharmaceuticals  and  homeopathic  medicine.  They  aim  to 
transpose the relevant EC directives; their alignment remains to be confirmed. In the case of 
the old approach product legislation, the country is slowly advancing.  

Some progress can be reported in the new and global approach product legislation. Further 
alignment  with  the  sector-specific  acquis  continued,  with  the  adoption  of  implementing 
legislation on medical devices, electromagnetic compatibility and safety of lifts. In the case of 
the new and global approach product legislation, the country is also advancing slowly. 

There has been no progress in the area of procedural measures.  

Conclusion 

Some progress has been achieved in the area of free movement of goods. A significant part of 
the horizontal and sectoral acquis has yet to be transposed. The administrative infrastructure 
and capacity are still inadequate for full and efficient implementation and enforcement of the 
legislation. 

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4.2. 

Chapter 2: Freedom of movement for workers 

Little progress can be reported on access to the labour market. No progress has been made 
concerning employment of EU citizens in the public service and exercise of public authority. 
Preparations in this area are starting.  

There has been some progress towards preparing for participation in the EURES (European 
employment  services)  network.  Implementing  legislation  was  adopted  that  allowed  the 
Employment Agency to bring into operation an electronic system ensuring on-line access to 
all job vacancies communicated to the agency. The classification of vacancies complies with 
the  EURES  requirements.  However,  the  human  resources  available  are  insufficient  to 
implement the system. Preparations in the area of EURES are on track.  

There  has  been  progress  in  the  area  of  coordination  of  social  security  systems.  Bilateral 
social security agreements with Belgium and Luxembourg were ratified, bringing the total to 
ten.  However,  the  capacity  available  remains  insufficient  to  coordinate  social  security 
schemes. In this area, the country is moderately advanced.  

Progress  can  be  reported  towards  introduction  of  the  European  health  insurance  card. 
Agreements  on  applying  the  card  were  concluded  with  Bulgaria,  Poland  and  Germany, 
bringing the total to five. However, the capacity available remains insufficient to introduce the 
card. Preparations for introduction of the European health insurance card are at an early stage. 

Conclusion 

There  has  been  some  progress  in  the  area  of  freedom  of  movement  for  workers.  Alignment 
with the acquis is at an early stage. The administrative capacity is insufficient for participation 
in EURES, for coordination of social security systems and for introduction of the European 
health insurance card.  

4.3. 

Chapter 3: Right of establishment and freedom to provide services 

Some  progress  has  been  made  on  the  right  of  establishment.  Efforts  have  been  made  to 
increase the transparency and objectivity of decisions granting authorisations, although some 
decisions,  particularly  in  certain  sectors,  are  delayed  or  reversed.  In  this  area  the  country  is 
moderately advanced.  

Little  progress  can  be  reported  on  the  freedom  to  provide  cross-border  services.  The 
legislative requirements which impose nationality, residence and establishment requirements 
for  some  service  activities  have  been  removed.  However,  not  enough  work  has  been 
undertaken to differentiate between the treatment of foreign operators providing many cross-
border services and of those providing services via a permanent establishment in the country. . 
The administrative capacity of the various authorising bodies is not satisfactory. Coordination 
between them needs to be reinforced. In the area of cross-border services the country is not 
yet prepared. 

Good  progress  can  be  reported  in  the  area  of  postal  services.  Legislation  implementing  the 
new  Postal  Law  has  been  adopted  with  the  aim  of  aligning  with  the  first  two  Postal 
Directives. Alignment remains to be confirmed. The Postal Agency became fully operational 
and self-financing. Its administrative capacity has been strengthened with the employment of 
four  additional  experts  raising  the  total  number  of  staff  to  eleven.  The  agency  has  signed  a 
memorandum  of  understanding  with  the  Commission  for  Protection  of  Competition.  The 

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Postal  Agency  performs  the  duties  of  regulating  the  postal  market  and  enforcing  postal 
legislation  independently.  It  ensures  transparent  and  non-discriminatory  application  of  the 
postal legislation. Preparations in the area of postal services are advanced. 

No  progress  has  been  made  regarding  mutual  recognition  of  professional  qualifications. 
Work  on  alignment  of  training  with  the  requirements  of  Directive  2005/36/EC  on  the 
recognition of professional qualifications has started, but tangible results have yet to be seen. 
Preparations  for  recognition  of  foreign  professional  qualifications  are  being  launched.  The 
Ministry  of  education  has  published  the  procedures  and  the  format  for  registration  of 
professional  qualifications  obtained  abroad.  No  procedure  has  been  set  as  regards  the 
recognition  of  professional  qualifications  and  its  differentiation  from  the  recognition  of 
academic qualifications. The current administrative structures allow academic recognition of 
foreign  professional  qualifications  only.  Nationality  and  reciprocity  clauses  still  exist. 
Alignment with the Lawyers’ Directives (77/249/EEC and 98/5/EC) has yet to be achieved. 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 postal services and right of 
establishment. No substantial progress can be reported on mutual recognition of professional 
qualifications.  There  is  a  lack  of  coordination  between  the  various  bodies  responsible  for 
authorising cross-border services.  

4.4. 

Chapter 4: Free movement of capital 

Some  progress  was  made  in  the  area  of  capital  movements  and  payments.  The  country 
already met the requirements of the first stage of the SAA in 2008. Some of the implementing 
legislation on foreign-exchange operations has been adopted. It partly transposes the acquis. 
Amendments  to  the  Law  on  Pension  Insurance  slightly  eased  the  stringent  restrictions  and 
requirements  regarding  the  type  and  volume  of  domestic  securities  in  which  pension  funds 
may invest. EU citizens are allowed to purchase building land, but restrictions remain on the 
purchase  of  agricultural  land.  There  are  ceilings  on  the  amounts  that  non-residents  can 
transfer  through  their  denar  and  foreign  exchange  accounts.  The  Law  on  Foreign  Exchange 
Operations  imposes  some  restrictions  on  the  amount  of  cash  that  may  be  carried  across  the 
borders  which  are  not  fully  aligned  with  the  acquis.  Nationals  are  still  not  allowed  to  buy 
shares  in  non-domestic  companies,  to  open  accounts  in  foreign  banks  or  to  purchase  real 
estate  abroad.  As  provided  for  by  the  Foreign  Exchange  Act,  the  remaining  restrictions  on 
residents  regarding  portfolio  investments  will  be  removed  automatically  when  the  second 
stage of the Stabilisation and Association Agreement begins. Overall, preparations in the area 
of capital movements and payments are advanced. 

There was no further progress in the field of payment systems. A new Payment Services Law 
was adopted, but it is not aligned with Directive 2007/64/EC. Full implementation of the law 
was  postponed,  as  the  Ministry  of  Finance  amended  the  regulations  on  the  payment 
instruments and prolonged the deadline for their implementation in the country from 1 August 
2009  to  1  January  2010.  The  definition  of  ‘global  electronic  money  system’  in  the  Law  on 
Fast  Money  Transfers  creates  an  effective  barrier  to  entry  to  the  money  remittance  market. 
The  charges  for  cross-border  electronic  payment  transactions  are  still  disproportionate  to 
those for domestic electronic payments. In the area of payment systems, the country has only 
partly met its targets. 

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Some  progress  has  been  made  in  the  fight  against  money-laundering.  Relevant 
implementing legislation has been adopted. The central bank issued a manual on the setting 
up  and  implementation  of  the  anti-money-laundering  programme,  requiring  each  bank  to 
adopt  a  programme  on  combating  money  laundering,  including  a  centralised  database  and 
continuous  training  to  relevant  staff.  The  Council  of  Europe  Convention  on  Laundering, 
Search,  Seizure  and  Confiscation  of  the  Proceeds  from  Crime  and  on  the  Financing  of 
Terrorism  (the  ‘Warsaw  Convention’)  was  ratified  and  entered  into  force  in  September.  A 
new  three-year  strategy,  covering  the  period  2009-2011,  was  adopted  on  prevention  of 
money-laundering  and  financing  of  terrorism.  It  includes  measures  to  implement  the  2008 
Moneyval  recommendations  issued  to  the  country.  The  Office  for  Prevention  of  Money-
Laundering  and  Financing  of  Terrorism  has  adopted  several  implementing  measures  which 
tighten up the reporting requirements and has enhanced the database and connectivity with the 
reporting institutions. The office developed guidelines for supervision of the reporting entities 
for  the  purpose  of  detecting  and  reporting  suspicious  transactions.  It  signed  memoranda  of 
cooperation on sharing information with its counterparts from the United Kingdom, Portugal, 
Belgium, Monaco, Turkey and eight other non-EU-Member States, bringing the total of such 
memoranda to 31. The administrative capacity of the office has been reinforced by recruiting 
four  new  members  of  staff.  The  awareness  of  some  of  the  reporting  institutions  is  still  not 
adequate and the office does not have sufficient access to the databases of some of them. The 
number  of  reports  of  suspicious  transactions  was  very  low  and  there  is  no  credible 
enforcement record. More than half of the employees in the office are on a temporary contract 
and it is not clear for how long they will be employed. Overall, the preparations in the area of 
money laundering are moderately advanced. 

Conclusion 

Progress in the area of free movement of capital was uneven and mainly confined to the fight 
against  money-laundering.  The  obligations  stemming  from  the  first  stage  of  the  SAA 
regarding  free  movement  of  capital  were  met  in  2008.  There  are  restrictions  on  short-term 
capital  movements  and  on  cross-border  transfers  and  no  progress  was  observed  as  regards 
payment systems. The legislative preparedness and administrative capacity to combat money-
laundering have increased, but there is no proper feedback on enforcement by the courts. 

4.5. 

Chapter 5: Public procurement 

Progress  has  been  made  as  regards  general  principles.  The  Law  on  Public  Procurement 
(LPP) was amended. It is fundamentally aligned with the acquis, although it does not reflect 
the  full  flexibility  of  the  arrangements  on  utilities  permitted  under  the  acquis.  The  current 
Law  on  Concessions  and  Public-Private  Partnerships  is  not  aligned  with  the  acquis  and 
diverges from good international practice. The Public Procurement Bureau (PPB) cooperates 
with  the  State  Audit  Office,  the  State  Commission  for  Prevention  of  Corruption  and  the 
Commission  for  Protection  of  Competition.  However,  several  major  tenders  have  been 
cancelled or failed. Statistics on corruption cases related to public procurement handled by the 
courts  are  missing.  The  general  level  of  awareness  as  regards  conflicts  of  interest  is  still 
insufficient. The unit responsible for concessions in the Ministry of Economy responsible for 
concessions lacks sufficient human and budgetary resources. In the area of general principles, 
the country is well on track. 

Progress has been made on award of public contracts. The legislation implementing the LPP 
was adopted in full, including the common procurement vocabulary. The level of alignment of 
the  adopted  legislation  has  yet  to  be  confirmed.  A  unified  nomenclature  for  public  tenders 

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above certain thresholds became obligatory for all State institutions and all public companies. 
The PPB became a separate legal entity. It was moved to suitable premises and recruited two 
new members of staff, but the staffing remains insufficient. The administrative capacity of the 
contracting  authorities  and  economic  operators  has  increased  and  the  electronic  system  for 
public procurement is used more frequently. Standard tender documentation and user-friendly 
manuals  are  available  on  the  website  of  the  PPB,  which  is  regularly  updated.  Numerous 
training courses were provided for contracting authorities and economic operators. A training 
centre for public procurement has been established and approximately 40 trainers have been 
trained. Activities to raise awareness on conflicts of interest are needed. 

Progress  can  be  reported  as  regards  the  remedies  system.  The  State  Appeals  Commission 
(SAC) has been established. The president and four members were appointed by parliament, 
after  an  open  competition,  for  a  five-year  term  of  office  and  five  staff  were  recruited. 
However, the SAC’s move to its new premises was delayed and it has a limited budget which 
does  not  cover  expenses  for  technical  advice  from  external  experts.  Alignment  with  the 
amended  EC  Remedies  Directives  has  yet  to  be  achieved.  A  fee  for  filing  complaints  was 
introduced,  but  the  number  of  complaints  submitted  remained  high.  The  SAC  holds  weekly 
sessions. Decisions are taken at a satisfactory pace and published on the website of the PPB. 
However,  the  perception  of  economic  operators  is  that  decisions  focus  on  procedural  issues 
and  are  biased  in  favour  of  the  contracting  authorities.  Overall,  as  regards  the  remedies 
system, the country has started to address the most urgent priorities.  

Administrative capacity and coordination mechanisms of the main stakeholders in the public 
procurement  system  still  need  further  strengthening,  in  particular  to  reduce  the  scope  for 
corruption. 

Conclusion 

Good progress has been made in the area of public procurement. Significant steps have been 
taken towards aligning the legislation with the acquis. However, further work is needed on the 
legislation on concessions and public-private partnerships. Contracting authorities have been 
making  increasing  use  of  the  e-procurement  system.  The  work  of  the  Public  Procurement 
Bureau is well perceived by stakeholders, but the success of the remedies system depends on 
an  authoritative  track  record  of  review  decisions.  Further  work  is  required  to  enhance  the 
administrative capacity at all levels. 

4.6. 

Chapter 6: Company law 

There has been good progress in the area of company law. Links between the central registry, 
the  employment  agency  and  the  health,  pension  and  disability  funds  are  operational.  A 
disaster recovery system was put in place by the central registry. However, the provisions in 
the Company Law on approval of interested-party transactions and cross-border mergers have 
still not been amended.  

Little  progress  was  made  on  corporate  accounting.  A  rulebook  on  the  requirements  for 
submitting annual accounts in electronic form was adopted. Soft and hard copies of the annual 
accounts  are  now  submitted  via  the  central  registry,  either  electronically  or  directly.  The 
Department  for  Financial  Systems  in  the  Ministry  of  Finance  is  now  sufficiently  staffed  to 
prepare  instructions  and  properly  enforce  accounting  and  financial  reporting  requirements. 
The  delays  in  translating  and  transposing  international  accounting  standards  (IAS), 

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international  financial  reporting  standards  (IFRS)  and  the  accounting  acquis  have  persisted. 
The 2003 edition of the IFRS and the 2004 edition of the IAS were still being used. 

No progress can be reported as regards auditing. The provisions of the Directive on Statutory 
Audit  regarding  the  public  oversight  system  have  yet  to  be  transposed.  Chartered  auditors’ 
qualifications  obtained  abroad  are  still  not  recognised.  The  Institute  for  Chartered  Auditors 
(ICA)  now  has  two  full-time  employees,  but  remains  understaffed.  Overall,  in  the  area  of 
accounting and auditing the country has started to meet its priorities. 

Conclusion 

Good progress has been made in the area of company law. However, alignment of the legal 
framework for accounting and auditing is lagging behind. The administrative capacity of the 
Institute for Chartered Auditors is still not satisfactory and no public oversight system aligned 
with the acquis has been established yet. 

4.7. 

Chapter 7: Intellectual property law 

Some progress has been made on copyright and neighbouring rights. The amendments to 
the  Criminal  Code  regarding  breach  of  copyright  and  increasing  the  maximum  prison  term 
have  had  a  positive  impact.  The  number  of  court  proceedings  has  increased.  They  lasted 
between one month and about three years. The website on copyright protection established by 
the Ministry of Culture is not regularly updated. 

The  administrative  court  instructed  the  second-instance  commission  to  annul  within  one 
month its decisions suspending the activities of two of the three collective rights management 
societies.  However,  this  has  yet  to  be  done.  The  Constitutional  Court  annulled  some 
provisions of the rulebook on the levy scheme and the rulebook on the calculation of royalties 
of  the  Association  for  Protection  of  Copyright  on  Musical  Works  (ZAMP).  Concerns  have 
been  expressed  about  this  decision,  which  relates  to  interpretation  of  Article  146(6)  of  the 
current Copyright Law. The court stated that copyright royalties should be calculated only on 
the profit, not on the income, from using a copyright work. Overall, in the area of copyright 
and related rights the country is moderately advanced. 

There has been good progress in the area of industrial property rights. The country became 
a  member  of  the  European  Patent  Organisation.  The  State  Office  for  Industrial  Property 
(SOIP) is responsible for implementing the European Patent Convention (EPC). A new Law 
on Industrial Property provides the basis for implementing the EPC. Alignment has yet to be 
confirmed.  Several  pieces  of  legislation  implementing  the  new  Law  on  Industrial  Property 
have been adopted. 

A  Law  on  Plant-Breeders’  Rights  was  enacted.  Alignment  has  yet  to  be  confirmed.  The 
International  Convention  for  Protection  of  New  Varieties  of  Plants  has  been  ratified.  More 
staff were recruited to the SOIP, bringing the total number to 34. The SOIP and the Ministry 
of  Economy  undertook  a  number  of  public  awareness-raising  activities.  The  SOIP,  in 
cooperation with the European Patent Office, organised seminars on patent applications and 
drafting patent claims. Alignment of the trademark law is not satisfactory. Overall, in the area 
of legislative alignment on industrial property rights the country is advanced.  

There  has  been  good  progress  on  enforcement,  both  at  the  borders  and  throughout  the 
country.  However,  piracy  and  counterfeiting  remain  widespread.  A  national  strategy  and  an 

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action  plan  for  building  up  the  capacity  needed  to  implement  and  enforce  the  acquis  in  the 
area of copyright, related rights and industrial property rights was adopted.  

The Coordination Body for Intellectual Property (CBIP) was active, taking frequent and well-
coordinated  action  across  the  country.  The  government  was  informed  about  CBIP  activities 
twice  a  month  and  provided  support.  Appropriate  criminal  and  misdemeanour  procedures 
were  initiated  and  outlets  were  closed.  Seized  goods  that  had  been  the  subject  of  a  court 
decision were publicly destroyed with media coverage. However, the efforts made to combat 
counterfeiting  are  not  sufficient.  The  goods  seized  were  mainly  audio/video  CDs,  clothing, 
cigarettes and alcohol. Equipment used to produce counterfeit goods and computers running 
unlicensed  software  are  confiscated  but  not  destroyed.  Cooperation  with  the  Agency  for 
Managing Confiscated Property has yet to be established. 

Some  progress  was  made  on  the  awareness,  experience  and  qualifications  of  inspectors  and 
judges.  The  State  Market  Inspectorate  was  provided  with  extensive  IT  equipment  to 
strengthen its capacity and received training on intellectual property rights (IPR). The customs 
administration  increased  its  IPR  enforcement  activities.  IPR  protection  has  been  made  an 
integral  part  of  the  training  curriculum  of  the  academy  for  training  judges  and  prosecutors 
from the 2009-2010 academic year on. 

The Ministry of Justice has supported the work of the specialised IPR departments of the 13 
basic courts and  submitted  monthly statistics  on  IPR-related  court proceedings  to the SOIP. 
The  number  of  misdemeanour,  civil  and  criminal  proceedings  is  unsatisfactory.  About  40 
copyright  and  industrial  property  cases  were  completed  in  2008.  Fines  and  other  sanctions 
were  imposed  in  about  half  of  them.  However,  fines  were  not  imposed  effectively  and 
averaged  €250,  ranging  from  €15  to  €10,000.  A  reliab
le  enforcement  record  has  yet  to  be 
established  and  the  method  for  collecting  statistical  data  on  enforcement  is  weak.  Some 
awareness-raising  activities  have  been  carried  out,  but  the  overall  level  of  awareness  about 
IPR  is  still  unsatisfactory.  Although  the  country  has  started  to  address  its  priorities,  the 
resources allocated are still insufficient for proper IPR enforcement. 

Conclusion 

Some  progress  has  been  made  towards  strengthening  the  legal  framework  and  enhancing 
administrative capacity and institutional cooperation in the area of intellectual property law. 
The  track  record  regarding  the  number  and  value  of  goods  seized  and  destroyed  and  the 
number  of  court  proceedings  initiated  and  completed  is  not  yet  satisfactory.  Overall, 
enforcement, though improving, is not yet satisfactory. 

4.8. 

Chapter 8: Competition Policy 

Some progress can be reported in the area of anti-trust, including mergers. Amendments to 
the  Criminal  Code  were  enacted  that  include  separating  the  powers  of  the  Commission  for 
Protection of Competition (CPC) from those of the public prosecutor’s office in cartel cases. 
The CPC issued three more manuals necessary for implementing the Competition Law. The 
enforcement  record  in  mergers  has  been  strengthened,  whilst  it  remains  low  in  the  area  of 
cartels. However, the administrative court annulled most of the CPC’s decisions on abuse of 
dominant positions. The pace at which the administrative court takes these decisions varies. 
Delays  tend  to  occur  in  misdemeanour  cases  only  when  decisions  are  not  likely  to  be 
favourable  to  the  company  concerned.  The  suspension  clause  for  sanctions  under  both 

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administrative and misdemeanour decisions has still not been removed, which diminishes the 
deterrent effect of the sanctions. 

The number of staff in the CPC dealing with anti-trust and mergers has increased by two, but 
capacity remains weak. Some training was given, but this was not sufficient to respond to the 
complex  task  of  ensuring  fully  transparent  and  non-discriminatory  application  of  the 
Competition  Law.  The  CPC  moved  to  more  suitable  premises.  It  continued  to  perform  its 
duties independently, although its budget for 2009 was further reduced. The number of judges 
in the administrative court working on competition cases is adequate, but they have not been 
included in the regular training programmes on competition policy. Preparations in the area of 
anti-trust, including mergers, are advancing. 

There has been some progress in the field of State aid.  The  regional  aid  map  was  adopted. 
Amendments to the Law on Technological-Industrial Development Zones, aimed at bringing 
it in line with the acquis, were adopted by the government and submitted to the parliament for 
enactment  in  September.  The  number  of  ex  ante  State  aid  decisions  increased.  Efforts  have 
been made to establish an effective and comprehensive system for ex ante control of State aid. 
The number of reporting institutions has increased. However, the ex ante control of State aid 
is partial and confined to a few large State aid providers. Some institutions, in particular those 
providing indirect aid, are still reluctant to send notifications to the CPC. The awareness of 
State  aid  regulations  among  government  institutions,  business  and  the  general  public  has 
somewhat increased, but remains inadequate. The administrative capacity of the CPC, though 
increased, still needs to be strengthened to ensure proper monitoring of State aid. In the area 
of State aid the country is advanced. 

There  has  been  some  progress  on  market  liberalisation  in  network  industries.  The  CPC 
signed a memorandum of cooperation with the Postal Agency.  

Conclusion 

Some  progress  was  made  in  the  areas  of  anti-trust,  mergers  and  State  aid.  A  credible 
enforcement  record  has  been  built  up,  in  particular  in  the  fields  of  concentrations,  although 
the fight against cartels needs to be strengthened. The number of ex ante State aid decisions 
increased. The human and financial resources of the CPC are still inadequate. 

4.9. 

Chapter 9: Financial Services 

There  has  been  progress  in  the  area  of  banks  and  financial  conglomerates.  Legislation 
implementing  the  Banking  Law  came  into  force,  including  decisions  on  the  credit  registry, 
exposure  limits,  liquidity  risk  and  currency  risk.  The  central  bank  (NBRM)  has  transposed 
further  parts  of  the  Basel  II  framework,  which  is  implemented  in  the  EU  by  the  Capital 
Requirements Directive. A decision on managing interest rate risks in the banking book was 
adopted and will enter into force in 2010. A decision on the method for determining capital 
adequacy was amended and  rules on allocating capital for operational risk  were  introduced. 
Those provisions will enter into force from the end of 2011. Use of external ratings will be 
tested in 2009-2010. Standardised approaches for determining capital requirements for credit 
risk are not expected to be available before 2011 and advanced approaches not before 2013. 
Since 1 January 2009 banks have been under an obligation to apply most of the 2004 edition 
of  the  international  financial  reporting  standards.  Alignment  with  the  acquis  on  financial 
conglomerates  and  deposit  guarantee  schemes  has  yet  to  be  achieved.  Transposition  of  the 
Capital Requirements Directive has not yet been completed.  

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Since  2008  the  NBRM  has  been  applying  risk-based  supervision  and  using  supervisory 
reviews.  The  administrative  capacity  of  the  supervisory  department  in  the  NBRM  is 
satisfactory,  in  terms  of  number  of  staff  and  training,  for  the  current  level  of  banking 
regulation in the country. However, it will not be sufficient to implement advanced banking 
regulations.  Consumer  protection  is  not  sufficiently  addressed.  In  the  area  of  banks  and 
financial conglomerates the country is moderately advanced.  

In  the  cases  of  insurance  and  occupational  pensions,  limited  progress  can  be  reported  on 
pensions. The guarantee funds of the insurance companies have been increased to €3 million. 
Transposition  and  implementation  of  the  relevant  acquis  are  lagging  behind.  The  insurance 
market  is  not  properly  regulated  and  supervised.  The  management  of  the  independent 
supervisory authority has been appointed, but it is not yet operational. The regulatory function 
is still the responsibility of the sector for financial services in the Ministry of Finance, whose 
capacity remains poor. In 2008 it performed six on-site inspections and imposed sanctions on 
four entities. The IT system necessary for off-site supervision has not been set up yet. There 
are  no  memoranda  of  understanding  with  other  supervisors  in  the  financial  sector  and  with 
foreign insurance supervisors. Some insurance companies still lack adequate reinsurance. As 
regards  car  insurance,  the  legislation  implementing  the  Law  on  Road  Safety  has  not  been 
adopted  yet.  The  provisions  in  the  Law  on  Compulsory  Insurance  of  Road  Vehicles 
authorising  the  Ministry  of  Finance  to  set  the  premiums  create  an  effective  barrier  to 
competition  between  insurance  companies.  The  proportion  of  uninsured  vehicles  has 
decreased from 30% to 17%. According to implementing legislation, adopted by the Ministry 
of  Interior,  as  from  July  2010  all  vehicles  registered  in  the  country  will  be  obliged  to  carry 
stickers once they have passed the regular technical inspection. 

As regards pensions, amendments were enacted to the Law on Pension Insurance, raising the 
ceiling  on  the  proportion  of  their  capital  that  pension  funds  may  invest  in  non-domestic 
securities from 20% to 30%. However, in September 2009 MAPAS amended several manuals 
on pension insurance, thereby postponing the liberalisation of the investments by the pension 
insurance  funds  due  to  the  global  financial  crisis.  The  Agency  for  Supervision  of  Fully 
Funded  Pension  Insurance  (MAPAS)  has  issued  the  relevant  legislation  implementing  the 
law.  Two  voluntary  pension  insurance  funds  are  now  in  operation.  The  operational  and 
financial independence of MAPAS is not secured. The director and the supervisory board are 
appointed by the government. The government approves the annual report and then sends it to 
parliament for information only. The budget of MAPAS is part of the budget of the Ministry 
of Finance. Preparations in the area of insurance, with the exception of pension insurance, still 
need to be launched. 

No progress has been made on financial market infrastructure. The country is at an early 
stage  with  transposition  of  the  Settlement  Finality  Directive  and  the  Financial  Collateral 
Directive. Preparations in the area of financial market infrastructure have not yet started. 

Good progress has been made in the area of securities markets and investment services. A 
new Law on Investment Funds entered into force. It reflects the basic principles of the acquis 
on  undertakings  for  collective  investment  in  transferable  securities  (UCITS)  regarding  the 
structure and operational requirements of UCITS and management companies. The Securities 
and  Exchange  Commission  (SEC)  issued  22  pieces  of  legislation  implementing  the  Law  on 
Securities, including measures transposing the acquis on prospectuses. Alignment remains to 
be confirmed. The SEC has signed memoranda of understanding with the financial police, the 
Office  for  Prevention  of  Money-Laundering  and  Financing  of  Terrorism  and  the  Public 
Revenue  Office  and  also  a  memorandum  of  cooperation  with  its  counterpart  in  Serbia.  The 

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SEC  became  a  signatory  of  Annex  B  to  the  International  Organisation  of  Securities 
Commissions (IOSCO) Memorandum. E-trading was introduced to improve transparency on 
the  market.  The  SEC  is  self-financing,  which  ensures  its  operational  independence.  The 
number of employees is now sufficient. The members of the SEC have not become full-time 
employees of the SEC, contrary to the Law on Securities. The IT system of the SEC, though 
upgraded  to  ensure  electronic  connectivity  with  all  stakeholders  on  the  securities  market,  is 
not adequate. The overlap between the responsibilities of the NBRM and the SEC in the area 
of  licensing  and  supervision  of  trading  in  securities  has  not  been  addressed.  The  NBRM 
issued new legislation which further overlaps with responsibilities of the SEC. In the area of 
securities markets and investment services the country is moderately advanced. 

Conclusion 

There has been some progress in the area of financial services, mainly related to legislative 
developments  on  the  banking  sector,  securities  markets  investment  services  and  pensions. 
However, the insurance market is not yet properly regulated and supervised. 

4.10.  Chapter 10: Information society and media 

There  has  been  good  progress  in  the  area  of  electronic  communications  and  information 
technologies.  The  concession  contracts  with  operators  with  significant  market  power  were 
terminated  in  accordance  with  the  Law  on  Electronic  Communications.  Parliament  adopted 
the  national  strategy  on  the  next  generation  of  broadband  internet.  Deutsche  Telekom  sold 
Cosmofon,  thereby  complying  with  a  request  from  the  Commission  for  Protection  of 
Competition  to  put  an  end  to  the  dominant  position  that  had  resulted  from  its  purchase  of 
Cosmofon’s  parent  company,  OTE/Cosmote.  The  emergency  number  112  has  still  not  been 
introduced.  

The director of the Agency for Electronic Communications (AEC) was appointed following 
an open competition and after several failed attempts. The AEC recruited additional staff. The 
administrative  capacity  of  the  AEC  is  now  satisfactory,  but  the  AEC  has  not  yet  allocated 
sufficient  resources  for  conducting  market  analyses.  The  AEC  signed  memoranda  of 
cooperation  with  the  Commission  for  Protection  of  Competition  and  the  Broadcasting 
Council.  It  also  adopted  an  amendment  to  the  manual  on  number  portability,  inter  alia 
reducing  to  two  days  the  time  within  which  operators  have  to  submit  requests  for  number 
portability to the new operator, together with porting fees Requests for number portability in 
both  the  fixed  and  mobile  telephony  sectors  increased.  The  AEC  adopted  implementing 
legislation  on  retail  tariffs,  bit-stream  access  and  wholesale  line  rental.  It  also  granted 
authorisations  for  transmission  of  digital  television  services  via  the  public  communication 
network  (DVB-T)  and  for  a  second  3G  licence  and  for  radio  frequencies  for  broadband 
wireless  internet  access.  The  administrative  capacity  of  the  competent  Ministry  is  not 
sufficient. The laws regulating issues related to authorisation of construction works and right 
of  way  are  unclear,  particularly  the  division  of  responsibilities  between  the  Ministry  of 
Transport  and  Telecommunications  and  municipalities.  This  hinders 
in 
telecommunications  networks.  In  the  area  of  electronic  communications  the  country  is  now 
well advanced. 

investment 

Progress  was  made  in  the  area  of  information  society  services,  where  a  good  level  of 
alignment  has  already  been  achieved.  The  secretariat  was  upgraded  into  the  Ministry  of  the 
Information  Society  and  the  capacity  of  the  newly  established  ministry  was  strengthened. 
Preparations in this area are on track. 

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Progress  was  made  on  audiovisual  policy.  The  Broadcasting  Council  adopted  a  manual  on 
balanced  media  presentation  during  election  campaigns,  in  accordance  with  the  Electoral 
Code and the Law on Broadcasting. The manual regulates access to the media and the time 
allocated  to  different  candidates  and  establishes  the  principles  for  balanced  media  coverage 
during  elections.  The  Broadcasting  Council  implemented  these  provisions  during  the 
the  obligations  of  public 
presidential  and 
communication  network  operators  regarding  the  broadcasting  of  programme  services  and 
provision of audiovisual media services were signed by 51 of the 53 operators.  

local  election  campaigns.  Protocols  on 

The remaining three members of the Broadcasting Council were nominated, but only after the 
elections.  The  administrative  capacity  of  the  Broadcasting  Council  improved  but  is  still  not 
adequate to monitor the market effectively. The system for collecting the broadcasting fee has 
not  been  established  yet.  The  sustainability  and  financial  independence  of  the  public 
broadcaster  is  therefore  not  ensured.  The  legal  provisions  opening  up  the  possibility  of 
initiating bankruptcy proceedings against the public service broadcaster are still in force. The 
Broadcasting  Council  and  the  public  service  broadcaster  continue  to  be  subject  to  political 
interference,  partly  because  of  their  dependence  on  financing  from  the  State  budget.  This 
dependence also undermines the authority of the Broadcasting Council vis-à-vis broadcasters. 
Public  expenditure  on  State  advertising  is  a  significant  source  of  revenue  for  some 
broadcasters, but is not sufficiently transparent and therefore has the potential to undermine 
editorial  independence.  The  Broadcasting  Law,  including  the  provisions  relating  to 
concentration of ownership of the media, was not fully implemented. It is not yet aligned with 
the Audiovisual and Media Services Directive. In the area of audiovisual policy the country 
has partly met its objectives. 

Conclusion 

Progress  can  be  reported  in  the  field  of  electronic  communications  and  information  society 
services. Competition on the electronic communications markets increased as a result of the 
liberalisation  process,  to  the  benefit  of  consumers.  In  the  area  of  audiovisual  policy,  the 
administrative capacity of the Broadcasting Council was strengthened, but the sustainability 
of  the  public  service  broadcaster  has  not  been  ensured.  The  Broadcasting  Council  and  the 
public  service  broadcaster  continue  to  be  subject  to  political  interference.  Overall, 
preparations in the area of information society and media are advanced. 

4.11.  Chapter 11: Agriculture 

Progress  has  been  made  on  horizontal  issues. A  law  laying  down  the  operating  procedures 
for the State Agricultural Inspectorate was enacted. This includes responsibilities relating to 
coordination  of  pre-accession  assistance  for  agriculture  and  rural  development.  Additional 
staff  have  been  recruited  in  various  departments  throughout  the  Ministry  of  Agriculture, 
Forestry and Water Economy (MAFWE) and its agencies. However, the human resources of 
the MAFWE remain insufficient to deal with its existing and future responsibilities. One key 
concern  is  its  capacity  to  maintain  and  further  develop  the  vineyard  register  and  other 
management instruments.  

For  2009  a  total  of  €63.9  m illion  was  allocated  to  direct  support  schemes.  These  include  a 
basic  income  support  scheme  supplemented  by  top-ups  under  certain  conditions,  premium 
payments  schemes  for  selected  strategic  crops  and  livestock,  other  direct  payment  schemes, 
including insurance schemes, and horizontal support payments for specific groups of farmers 
or  areas.  To  qualify  for  any  of  the  support  schemes,  farmers  must  be  registered  in  the 

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integrated register of agricultural holdings. Preparations towards the establishment of a fully 
functional farm register, with a supporting automated IT system, are at an advanced stage. 

Some  progress  can  be  reported  towards  setting  up  an  integrated  administration  and  control 
system (IACS). The MAFWE is developing the backbone of a comprehensive IACS system, 
including a pilot scheme to develop a land parcel identification system (LPIS). Administrative 
responsibility  for  verifying  eligibility  for  aid  has  been  clarified.  The  real  estate  cadastre 
presently covers 87% of the country and approximately 81% of its agricultural land.  

The  capacity  of  the  paying  agency  (the  Agency  for  Financial  Support  of  Agriculture  and 
Rural  Development  –  AFSARD)  has  been  significantly  strengthened  in  the  field  of  rural 
development,  particularly  with  respect  to  its  control  activities.  The  Law  establishing 
AFSARD  was  amended  to  make  necessary  revisions  to  the  regulations  for  conferred 
management  of  EU  financial  assistance  under  component  V  (IPARD)  of  the  Instrument  for 
Pre-Accession Assistance. The number of staff employed in AFSARD has increased, as has 
their  capacity  to  discharge  their  responsibilities.  The  process  of  national  accreditation  of 
AFSARD  and  its  supporting  structures  has  been  completed.  However,  development  of 
administrative structures that meet the standards required for implementation of the European 
Agricultural Guarantee Fund (EAGF) (direct payments) is at an early stage. 

The  basis  for  development  of  a  sustainable  and  efficient  agricultural  information  system 
exists. A pilot price reporting system is in operation, although consistency with EU standards 
has yet to be achieved. The legislation on a farm accountancy data network (FADN) provides 
the basic institutional preconditions for a functional FADN, although it is not yet fully in line 
with EU requirements. A law on State aid in agriculture has not yet been enacted. The current 
measures differ from the Community provisions in certain areas.  

Preparations in the area of horizontal issues are still at an early stage. 

There has been some progress on arable crops, fibre and sugar. Selected crops have been 
identified  as  the  most  important  and  alignment  of  legislation  with  the  acquis  has  been 
initiated. Preparations in this area remain at an early stage.  

There has been little  progress in the field of  animal products. Some work  on alignment of 
legislation has started. Preparations are not very advanced. 

Progress  can  be  reported  in  the  area  of  specialised  crops.  Several  pieces  of  implementing 
legislation were adopted. However, the existing legislation on wine needs to be aligned with 
the  recently  revised  acquis.  Equipment  for  laboratory  controls  and  registration  of  producers 
has  been  procured  and  is  in  operation.  However,  the  administrative  capacity  to  manage  the 
control  systems  that  are  being  developed  is  a  significant  limiting  factor.  Revised  legislation 
covering support for tobacco production has been enacted. Alignment with the acquis in the 
area of specialised crops is moderately advanced. 

There  has  been  good  progress  in  the  field  of  rural  development.  The  rural  development 
programme  2007-2013  under  IPARD  has  been  adapted  to  increase  the  financial  allocations 
available  under  the  various  investment  measures.  The  IPARD  management  and  control 
system is in place and the IPARD Agency as well as the MAFWE Managing Authority have 
received national accreditation. The adoption and systematisation of procedures for the proper 
implementation  of  the  programme  has  progressed  and  the  administrative  capacity  has  been 
further  strengthened.  Implementing  national  legislation  on  the  setting  up  of  the  IPARD 

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programme management and control systems has been adopted. The rural development policy 
is gradually being aligned with EU requirements. Preparations in this area are advancing.  

Progress can be reported in the field of quality policy. National registration of designation of 
origin  and  geographical  indications  has  commenced.  A  law  on  the  quality  of  agricultural 
products has not yet been enacted. Preparations in this area are advanced. 

There  has  been  good  progress  with  organic  farming.  Implementation  of  the  2007-2011 
strategy for development of organic agricultural production progressed. A budget of €815,000 
has  been  allocated  in  2009  for  implementing  the  programme.  The  numbers  of  nationally 
certified producers and associated areas of land have increased significantly. Preparations in 
this area are advanced. 

Conclusion 

Progress  has  been  achieved  in  the  field  of  agriculture  and  rural  development.  The 
administrative capacity of AFSARD and IPARD operational structures has been strengthened, 
although  in  other  areas  administrative  capacity  remains  weak.  Alignment  with  the  acquis 
requires further sustained efforts, in particular on thorough implementation of the legislation 
adopted. 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

Some progress has been made as regards the general principles. The Veterinary Directorate 
has  been  designated  as  the  competent  authority  for  coordination  in  the  food  safety  sector. 
However, this has yet to be followed up by removing the overlap between the two framework 
laws  in  this  sector,  and  putting  in  place  procedures  for  close  and  effective  cooperation 
between the various institutions involved in food safety. No tangible steps have been taken to 
establish a multiannual national control plan. Different authorities operate on the basis of their 
own  individual  annual  control  and  monitoring  plans.  Risk  assessment  and  procedures  for 
reduced-frequency checks have still not been introduced. The Food Directorate gained online 
access to the EU rapid alert system for food and feed (RASFF) via the RASFF desk. 

Progress  has  been  made  in  the  area  of  veterinary  policy.  Implementing  legislation  was 
adopted on control systems in the internal market and for imports that further transpose the 
acquis.  Alignment  remains  to  be  confirmed.  TRACES-like  (TRAde  Control  and  Expert 
System) software has been developed and is being used at the border inspection posts (BIPs). 
The implementing legislation for approving BIPs has not yet been transposed. The capacity of 
the  border  controls  has  been  upgraded,  but  is  not  sufficient.  An  EU-compatible  control 
system, particularly for import control, is still not in place.  

The adoption of the legislation on identification and registration of the movements of sheep 
and goats has been completed. The system for bovines is largely operational, but deficiencies 
have  to  be  noted  with  registration  of  movements.  Control  of  movements  is  very  limited.  A 
strategy and a work plan have been developed for extending identification and registration to 
pigs.  Administrative  capacity  in  the  Veterinary  Directorate  for  identification  of  animals  has 
deteriorated.  

Some progress has been made on control measures for animal diseases. The contingency plan 
for eradication of foot-and-mouth disease has been adopted. Its compliance with EU standards 
remains  to  be  confirmed.  Slaughtered  animals  are tested in accordance with  the programme 
for eradication of transmissible spongiform encephalopathies (TSE). The acquis on TSE has 

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not been fully transposed. The capacity of the Veterinary Directorate for official controls is 
still not sufficient 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 adoption of legislation transposing the acquis. Alignment remains 
to  be  confirmed.  The  administrative  capacity  for  implementing  this  legislation  is  still 
insufficient.  Some  implementing  legislation  on  non-commercial  movements  of  pet  animals 
remains to be adopted. The EC-approved annual programme for monitoring the prohibition of 
substances  and  residue  control  has  not  been  amended  to  add  new  products.  Legislation 
intended to transpose the acquis on import requirements for live animals and animal products 
has  been  adopted.  Alignment  remains  to  be  confirmed.  No  new  international  veterinary 
agreements have been signed. Legislation implementing the Law on Animal Welfare has still 
not been adopted. The capacity for further transposition and implementation of the acquis on 
zootechnical issues is very weak. The 2009 allocation for veterinary expenditure on measures 
for  animal  health  and  veterinary  public  health  is  €4.43  million.  Additional  financing  is 
earmarked for possible implementation of contingency plans. The capacity of the laboratories 
of the veterinary faculty has been improved, although in some areas they are under-equipped 
and  their  independence  is  still  insufficient.  The  laboratories  are  participating  in  proficiency 
tests and annual workshops organised by the Community reference laboratories. The capacity 
of the veterinary inspectors has improved, but their number, management and training are still 
not satisfactory. The capacity of the veterinary service at both central and local levels is still 
not  sufficient  to  put  in  place  an  EU-compatible  control  system.  In  the  area  of  veterinary 
policy, the country has started to address its objectives. 

Some  progress  has  been  made  on  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. The rules for 
animal by-products have been transposed. Alignment remains to be confirmed. The necessary 
collection  and  treatment  systems  have  not  yet  been  set  up.  The  strategy  for  treatment  of 
animal by-products, including categorisation of risk material, is in an initial phase. 

Guidelines for implementing the hazard analysis critical control point (HACCP) system, good 
hygiene  practices  and  good  manufacturing  practices  have  been  developed  and  training  has 
been  provided  for  food  business  operators.  The  aid  schemes  for  HACCP  certification  have 
been  extended  to  2009.  Many  food  business  operators  have  not  taken  sufficient  steps  to 
implement HACCP principles, which became compulsory on the national market with effect 
from 1 January 2009 for food of non-animal origin and 1 September 2009 for food of animal 
origin. There is no strategy for enhanced implementation of the HACCP system. Evaluation 
of  food-processing  establishments  for  compliance  with  EU  standards  and  upgrading 
programmes  is  at  an  early  stage.  Funding  of  checks  is  still  provided  by  the  producers  and 
importers. Preparations in this area are being initiated. 

Limited progress can be reported on food safety rules. The existing legislation transposes the 
acquis  on  labelling,  food  additives,  flavourings,  food  supplements,  food  for  particular 
nutritional uses, quick-frozen foodstuffs, contaminants, novel food, GMOs, ionising radiation 
and mineral waters. The registers for food for particular nutritional uses and for mineral water 
have not yet been established. The implementing legislation on extraction solvents, materials 
coming  into  contact  with  food  and  fortified  food  has  yet  to  be  adopted.  The  management 
capacity  of  the  Food  Directorate  is  weak.  The  capacity  of  the  laboratory  of  the  Institute  for 
Health Protection has been increased, but is still insufficient to provide reliable results. The 
capacity of the Food Inspectorate has been strengthened, but the number, training and skills of 

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its  staff  are  still  insufficient.  In  the  area  of  food  safety  rules,  the  country  has  partly  met  its 
objectives. 

Little  progress  was  made  on  specific  rules  for  feed.  The  legislation  has  not  yet  been 
transposed. Preparations in this area are being initiated. 

Some  progress  can  be  reported  on  phytosanitary  policy.  The  implementing  legislation  on 
plant  health  (harmful  organisms)  and  plant  protection  products  has  yet  to  be  adopted.  The 
plant  passport  system  and  register  of  producers,  traders  and  importers  of  plant  and  plant 
products  has  not  yet  been  established.  Responsibility  for  inspection  and  control  of 
phytosanitary legislation has been transferred from the Phytosanitary Directorate to the State 
Agricultural  Inspectorate.  Implementing  legislation  on  the quality  of  seeds  and  propagating 
material  has  yet  to  be  adopted.  A  new  Law  on  Plant  Variety  Rights  has  been  enacted.  The 
administrative capacity of the Phytosanitary Directorate is weak.  

Coordination  between  the  various  authorities  responsible  for  phytosanitary  policy  has  not 
improved.  The  responsibilities  of  the  plant  health  authority  are  still  divided  between  the 
Phytosanitary  Directorate  and  the  Directorate  for  Seed  and  Propagating  Material.  The 
equipment  and  facilities  for  border  controls  are  still  inadequate.  The  capacity  of  the  State 
phytosanitary laboratory is still under-used.  

As regards international phytosanitary agreements, no action has been taken to implement the 
international  standards  for  phytosanitary  measures,  in  particular  for  surveillance,  export 
certification and determining pest status. In the case of phytosanitary policy, the country has 
partly met its objectives. 

Conclusion 

There  has  been  some  progress  on  food  safety  and  on  veterinary  and  phytosanitary  policy, 
mainly regarding legislative preparedness. The Veterinary Directorate has been designated as 
the competent authority for coordination between institutions involved in food safety, with a 
view to improve the efficiency of the system. The administrative capacity, in terms of both the 
number and skills of staff, is still insufficient to ensure proper implementation of the acquis.  

4.13.  Chapter 13: Fisheries 

Progress has been made in the field of resource and fleet management. A rulebook on the 
register  of  producers’  organisations  in  the  fisheries  sector  was  adopted.  The  acquis 
requirement on fleet registration is not applicable.  

Some  progress  has  been  made  in  the  area  of  inspection  and  control.  The  administrative 
capacity  of  the  Fisheries  and  Aquaculture  Unit  within  the  Ministry  of  Agriculture,  Forestry 
and  Water  Economy  (MAFWE)  and  of  the  Agricultural  Inspectorate,  which  plays  the 
principal role in control and inspection of fisheries, is not sufficient. Preparations in this area 
are at an early stage. 

Some progress has been made on structural action. The 2009 fisheries support programme 
allocated  €407,000  for  support  measures.  Also,  a  sub-measure  within  IPARD  with  a  total 
budget of €456,000 will support investments in  aquaculture and fish farms. 

No  progress  has  been  achieved  with  market  policy.  The  administrative  structure  for 
implementing market policy is not yet in place. The MAFWE does not yet have a register of 

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all State aid approved in the fisheries sector and has not adopted the relevant regulations on 
block  exemptions.  A  significant  part  of  the  2009  fisheries  support  programme  is  designed 
principally to increase indigenous fish stocks.  

There  are  no  formal  international  agreements.  Informal  working  agreements,  including 
scientific  cooperation,  are  in  place  with  Albania  and  Greece  covering  management  of 
resources in the three lakes whose waters they share. 

Conclusion 

There has been some progress in the area of fisheries. Administrative capacity still requires 
further  strengthening.  Since  the  country  is  landlocked,  much  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.  The  amended  Law  on  Public 
Roads was enacted. It aims at transposing the acquis on road tolls and electronic systems for 
paying  tolls.  It  also  brought  the  legislation  into  line  with  the  Law  on  Misdemeanours.  The 
Agency for Public Roads was set up. Parliament adopted a strategy to enhance road safety. It 
was  prepared  by  the  Road  Safety  Council,  which  held  broad  consultations  with  relevant 
institutions.  However,  road  safety  rules  are  not  properly  enforced  and  effective  road  safety 
campaigns are lacking. Also, there is no clear division of responsibilities between the bodies 
dealing with road safety. The Law on Road Transport is not fully aligned with the acquis on 
market access. In September 2009, the Law on Public Roads was amended. The road fee for 
foreign heavy vehicles was abolished. The amendments, which are in line with the Transport 
agreement and the SAA, constitute an important step towards harmonisation of the legislation 
with the acquis in the field of road charging. Preparations are being made for the introduction 
of  digital  tachographs,  which  will  be  compulsory  by  mid-2010.  Two  by-laws  have  been 
adopted.  The  administrative  capacity  of  the  inspectorate  is  still  insufficient.  Preparations  in 
the area of road transport are advanced. 

Progress  can  be  reported  on  rail  transport.  Further  to  the  unbundling  of  the  infrastructure 
manager  and  train  operators,  a  system  of  track-access  charges  was  introduced.  The 
infrastructure  manager  has  published  the  network  statement.  The  procedure  for  establishing 
an  independent  regulatory  agency  for  rail  services  has  begun.  The  acting  director  has  been 
appointed by the steering board nominated by parliament. 

A  safety  authority  has  not  yet  been  established,  as  required  by  the  railway  safety  directive. 
Compensation is still  not being paid for  public service  obligations. A  decision was taken in 
February  to  resolve  the  status  of  the  debts  of  the  national  rail  transport  company  and  the 
national  railway  infrastructure  company.  The  licensing  procedure  for  the  rail  transport 
company is in progress. The €3 million allocated  for the first six months of the year for the 
2009 railway investment programme is insufficient. Preparations in the area of rail transport 
are advanced. 

Good  progress  has  been  made  on  inland  waterways  transport  with  the  adoption  of 
implementing  legislation  on  the  ship’s  master  examination  and  certificate.  The  government 
adopted  a  decree  on  fees  for  the  entry  and  stay  of  foreign  vessels  on  inland  waterways. 
Consideration  needs  to  be  given  to  potential  security  requirements  for  inland  port  facilities 
and ports. In this area, the country is sufficiently prepared. 

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No progress can be reported on combined transport. Preparations are on track. 

Some  progress  can  be  reported  with  air  transport.  In  December  the  country  became  a  full 
member of the Joint Aviation Authorities. A working arrangement with EASA was signed in 
July 2009. Legislation implementing the Law on Aviation was adopted, covering professional 
competence, examinations and licences for cabin personnel. The amended Law on Aviation, 
aiming at full alignment with ECAA obligations, was adopted. Parts of the first phase of the 
European Common Aviation Area (ECAA) agreement relating to conditions for access to the 
ground  handling  market  and  to  aviation  safety  and  security  procedures  have  not  yet  been 
implemented. Overall, administrative capacity in the air transport sector remains insufficient. 
The Civil Aviation Agency has not yet been turned into an independent body. The staffing of 
the  Civil  Aviation  Agency  has  not  been  strengthened.  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 
Communications still lacks qualified staff. Further approximation to the acquis is required in 
the  area  of  air  traffic  management.  In  that  context  it  is  important  to  ensure  appropriate 
commitment with the context of the ISIS7 Programme set up by the European Commission to 
assist States of South East Europe to transpose Single European Sky legislation. In addition, 
participation in the Single European Sky Committee (SSC) by national authorities need to be 
encouraged. Preparations in this area are advanced. 

No developments occurred in the areas of State aid. 

Conclusion 

Good  progress  has  been  made  in  the  area  of  transport  policy,  in  particular  as  regards  road 
transport,  including  road  charging.  In  general,  legislative  alignment  is  advancing  in  all 
sectors. However, the administrative capacity in every sector of transport is insufficient, both 
in  numbers  and  in  terms  of  qualifications.  An  independent  regulatory  body  and  safety 
authority for rail transport remains to be established. As regards aviation, an independent civil 
aviation authority and accident and incident investigation body are still lacking.  

4.15.  Chapter 15: Energy 

There has been some progress on security of supply. The government adopted a regulation 
that  defines  the  criteria  and  conditions  for  declaring  an  electricity  crisis.  The  Government 
appointed the Director of the Directorate for Mandatory Reserves of Oil and Oil Derivatives. 
In  September  2009,  oil  stocks  were  equivalent  to  42  days  of  average  consumption.  The 
legislation is not yet fully aligned with the directives on security of electricity and natural gas 
supply. The strategy for long-term development of the energy sector has not been adopted yet. 
In the case of security of supply, the country has partly met its objectives. 

Little  progress  has  been  made  with  regard  to  the  internal  energy  market.  The  country 
advanced  further  towards  implementing  some  of  the  obligations  stemming  from  the  Energy 
Community  Treaty,  notably  by  adopting  the  Gas  Transmission  Code  in  line  with  the 
Regulation on access to the natural gas transmission networks. The first of the three planned 
combined  heat  and  power  plants  started  operation.  The  Government  adopted  an  Energy 
Poverty  Action  Plan  that  envisages  the  introduction  of  a  social  protection  package  for  the 
most  vulnerable  consumers  from  mid-2010  onwards.  The  Energy  Regulatory  Commission 

7 

Implementation of Single European Sky In South Eastern Europe 

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(ERC) adopted rulebooks on electricity prices, the issuing of licences, district heating, natural 
gas  and  geothermal  energy.  Certain  electricity  and  gas  tariffs  do  not  reflect  costs  and  vary 
significantly between different categories of customer, while collection rates are insufficient 
to secure the viability of the system. The dispute-settlement procedure, opened in September 
2008  by  the  Secretariat  of  the  Energy  Community,  on  the  compliance  of  the  recent 
amendments  to  the  Law  on  Energy  with  the  obligations  stemming  from  the  Energy 
Community  Treaty  is  still  in  progress.  The  Secretariat  issued  a  reasoned  opinion  for  non-
compliance  of  the  country  with  the  Energy  Community  Treaty  pointing  in  particular  at  the 
position and structure of the state-owned generating company that discriminates against non-
domestic  electricity  and  forecloses  the  regulated  market  to  the  detriment  of  consumers,  and 
the fact that regulated distribution tariffs breach the principle of cost-reflectivity. Furthermore, 
market rules remain to be adopted. 

Natural gas supply has not been unbundled from natural gas transmission, as required by the 
Natural  Gas  Directive.  The  ownership  of  the  gas  system  has  still  not  been  resolved.  ERC 
adopted an amended rulebook on gas prices, extending the 2008 regulated tariffs by one year. 

A new President of ERC was appointed in June 2009. The process for recruitment of four new 
staff  is  underway,  but  the  administrative  capacity  will  still  be  insufficient  to  monitor  the 
market effectively. The independence of ERC has not always been respected. The practice of 
including  representatives  of  the  electricity  generation  company  on  evaluation  panels  for 
tenders continued. The Energy Department of the Ministry of Economy remains understaffed. 
In the case of the internal energy market, the country is not yet sufficiently prepared. 

There  has  been  no  progress  on  State  aid.  Most  of  the  coal  (lignite)  reserves  are  still  being 
managed  by  the  electricity  generation  company.  There  is  still  no  clear  legal  and  financial 
separation between the lignite excavation activities and operation of the thermal power plants. 
Preparations in the area of state aid are moderately advanced. 

Some progress has been made in the field of renewable energy. The rulebook for obtaining 
the status of preferential producer was adopted in February 2009. The first photovoltaic solar 
power plant was put into operation. The Government signed a concession agreement for the 
construction  of  16  small  hydro  power  plants.  However,  none  of  the  tenders  for  the 
construction of large hydroelectricity power plants succeeded. Further efforts to reinforce the 
administrative capacity for developing renewable energy sources are important. In the area of 
renewable energy, the country is moderately advanced. 

Limited progress has been made on energy efficiency. A rulebook on the energy performance 
of buildings, aimed at partial alignment with the acquis, was adopted in November 2008. It 
will  serve  as  the  framework  for  developing  energy-efficiency  standards  for  buildings.  The 
administrative  capacity  of  the  Energy  Agency  is  still  insufficient  to  effectively  promote 
energy  efficiency  and  renewable  energy  sources;  its  role  and  interaction  with  other 
Government  institutions  needs  to  be  clarified.  An  energy-efficiency  action  plan  in  line  with 
the commitments of the Energy Efficiency Task Force of the Energy Community remains to 
be  adopted.  The  Energy  Agency  still  lacks  adequate  premises.  In  the  area  of  energy 
efficiency, the country is at an early stage. 

Progress has been made regarding nuclear safety and radiation protection. The Radiation 
Safety Directorate (RSD) prepared several implementing regulations. The RSD has started a 
process for licensing use of radioactive materials in medical practices. Cooperation between 
the customs administration and the police to prevent trafficking in radiation sources has been 

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intensified.  The  country  has  acceded  to  the  Joint  Convention  on  the  Safety  of  Spent  Fuel 
Management  and  on  the  Safety  of  Radioactive  Waste  Management.  The  financial 
independence  of  the  RSD  is  not  secured.  Preparations  in  the  area  of  nuclear  safety  and 
radiation  protection  are  moderately  advanced.  The  existence  of  hundreds  of  radioactive 
lightning rods spread all over the country still constitutes a radiological thread that needs to be 
addressed. 

Conclusion 

Some progress has been made in the energy sector. However, amendments to the Energy Law, 
as  well  as  a  correct  implementation  of  the  legislation,  are  necessary  in  order  to  meet  the 
obligations  under  the  Energy  Community  Treaty.  Electricity  tariffs  still  do  not  reflect  costs 
and the dispute with the distribution system operator, a major foreign investor, has not been 
resolved.  As  a  consequence,  an  effectively  functioning  electricity  market  has  yet  to  be 
established. The degree of independence of the energy regulator and the radiation protection 
regulator  needs  to  be  further  improved.  The  promotion  of  energy  efficiency  and  renewable 
energy sources needs to be prioritised. 

4.16.  Chapter 16: Taxation 

No progress has been made in the area of indirect taxation. A reduced rate of value-added 
tax  (VAT)  for  some  products,  which  deviates  from  the  acquis,  is  still  being  applied.  The 
excise duties on several products are still lower than the minimum required by the acquis.  

There  was  limited  progress  on  direct  taxation.  The  Law  on  Profit  Tax  was  amended  to 
exempt  retained  profits  from  taxation  and  to  tax  only  earnings  that  are  distributed  as 
dividends.  The  profit  tax  rate  for  micro-enterprises  and  self-employed  people  with  a  gross 
annual income of less than €49,000 was lowered further, to 1%. The Law on Tax Procedures 
was  amended  to  allow  companies  to  pay  tax  arrears  in  instalments.  The  concept  of  gross 
salary  was  introduced,  which  led  to  increased  administrative  compliance  and  greater 
discipline on payment of social contributions and personal income tax. Preparations in these 
areas are moderately advanced. 

There  has  been  some  progress  in  the  field  of  administrative  cooperation  and  mutual 
assistance.  Double  taxation  agreements with Ireland  and Estonia were ratified, bringing  the 
number  of  agreements  with  EU  Member  States  to  24.  A  joint  memorandum  of  cooperation 
was signed with the tax administrations of Albania, Bulgaria, Kosovo and Turkey.  

Good  progress  has  been  made  on  operational  capacity  and  computerisation.  The  Public 
Revenue  Office  (PRO)  further  strengthened  its  capacity  to  implement  tax  legislation  and  to 
fight tax evasion. A new system for integrated collection of social contributions and personal 
income tax, managed by the PRO, was introduced. As part of the reorganisation of the PRO, 
five regional directorates and eight local units were established and 72 new tax counters were 
opened across the country. Efforts were stepped up to curb corruption and reduce the informal 
economy. The capacity of the PRO at central level was strengthened by establishing a contact 
centre for taxpayers in the capital and a centre for collection of tax arrears. The control policy 
is  being  implemented  more  rigorously  and  the  capacity  for  verifying  tax  returns  was 
strengthened. The human resources development strategy has been implemented. A number of 
training  sessions  were  organised  for  professional  development  of  staff  and  a  mentoring 
programme  was  introduced.  The  PRO  website  was  redesigned  to  enhance  communication 

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with the public. A code of conduct for business taxation has yet to be developed and applied. 
Preparations in this area are advanced.  

Conclusion 

Good progress was made on taxation. The level of legislative alignment in indirect taxation is 
well advanced. Further efforts are required as regards direct taxation. The operational capacity 
of the Public Revenue Office has been strengthened and tax collection has improved. 

4.17.  Chapter 17: Economic and Monetary Union 

Some  progress  can  be  reported  in  the  field  of  monetary  policy.  The  institutional  and 
administrative  capacity  of  the  central  bank  improved.  The  central  bank  adopted  rules  on 
calculating and announcing the interbank rate on the deposit market and, on 15 October 2008, 
it started calculating and announcing a reference interest rate on the interbank deposit market 
(MKDONIA). This information provides a basis for interbank trade and for the interest rate 
policy of banks. At this stage, there are still some shortcomings in the legal framework in all 
key  areas,  such  as  the  full  independence  of  the  central  bank,  the  prohibition  of  monetary 
financing of the public sector and the prohibition of preferential access for the public sector to 
financial markets. Preparations in the area of monetary policy are on track. 

Progress can be reported in the area of economic policy. The government submitted its third 
pre-accession  economic  programme,  covering 
the  period  2009-2011.  It  presents  a 
comprehensive  macroeconomic  and  fiscal  framework  and  a  broad  agenda  for  structural 
reforms. Although the quality of the programme has somewhat improved compared with the 
previous  year,  it  still  lacks  a  discussion  of  policy  priorities  and  a  link  to  the  EU  accession 
process. Due to the rapidly changing external environment, it was of only limited relevance as 
a core document for economic policy-making.  

Progress was made in the area of monetary statistics and their compliance with international 
standards.  The  central  bank’s  reporting  on  the  balance  of  payments  improved,  with  more 
precise estimates of income from direct investment. General government debt in 2008 totalled 
20.9% of GDP, below the range of 34% to 37% of GDP set in the public debt management 
strategy. In June 2009 the Parliament adopted a new public debt management strategy for the 
period  2009-2011.  Administrative  capacity  for  policy  implementation  is  still  inadequate  at 
municipal level. Preparations in the area of economic policy are on track. 

Conclusion 

Some progress has been made in the area of economic and monetary policy. Alignment with 
the  acquis  remains  incomplete.  Administrative  capacity  for  policy  implementation  diverges 
widely between the central and local levels. Overall, preparations in the area of economic and 
monetary policy are on track. 

4.18.  Chapter 18: Statistics 

Progress can be reported in the area of statistical infrastructure. The State Statistical Office 
(SSO)  set  out  its  objectives  in  the  strategic  plan  for  2009-2011.  Its  budget  and  number  of 
employees  increased,  but  needs  to  be  increased  further.  Human  resource  management  tools 
have  been  further  developed,  including  a  wider  range  of  training  and  a  mentoring  scheme. 
Preparations in the area of statistical infrastructure are advanced. 

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Good progress was made in the fields of classifications and registers. The national statistical 
classification  of  economic  activities  complying  with  the  new  version  of  the  European 
industrial  activity  classification  NACE  Rev.  2  as  well  as  new  national  versions  of  the 
PRODCOM and CPA product classifications were adopted by the government. Data from the 
2008 business census are being used to update the statistical business register. Some progress 
has  been  made  on  establishing  routines  to  keep  the  register  up  to  date.  Development  of  a 
statistical farm register has started.  

Good progress has been made on sector statistics. Progress was made in the preparations for 
the  2011  population  and  housing  census.  The  pilot  census  was  conducted  in  May  2009.  As 
regards  business  statistics,  new  surveys  were  introduced  and  business  censuses  were 
conducted.  Preliminary  results  on  retail  trade  capacity  and  tourism  capacity  have  been 
published.  Further  improvements  have  been  made  in  the  area  of  social  statistics.  Data  from 
the labour force survey and the household budget survey were transmitted to Eurostat. A pilot 
survey on income and living conditions was conducted. Further improvements are needed in 
agricultural  statistics.  Work  continued  on  improving  the  exhaustiveness  of  the  national 
accounts,  but  further  alignment  with  ESA  95  is  needed.  Preliminary  work  on  harmonised 
indices  of  consumer  prices  has  started.  Cooperation  with  the  Ministry  of  Finance  and  the 
central  bank  improved.  A  memorandum  of  understanding  on  cooperation  in  the  field  of 
macroeconomics and financial statistics was agreed by SSO, the Ministry of Finance and the 
central bank. Data transmission to Eurostat has increased, but needs to be further improved, in 
particularly for macroeconomic and business statistics. 

Conclusion 

Good progress has been made on improving sector statistics and aligning classifications with 
the  acquis.  The  statistical  infrastructure  has  been  strengthened,  but  the  resource  situation 
remains  weak.  Further  efforts  are  needed  to  meet  the  Accession  Partnership  priorities,  in 
particular for macroeconomic and agricultural statistics. 

4.19.  Chapter 19: Social Policy and Employment 

Little  progress  has  been  made  on  labour  law.  The  national  labour  legislation  has  been 
reviewed with a view to transposing the acquis, but it is still not effectively aligned with all 
EU  requirements.  Cooperation  between  the  relevant  institutions  has  not  improved. 
Administrative  capacity  remains 
implementation  and 
enforcement of the labour law. Preparations in this area are moderately advanced.  

to  ensure  proper 

insufficient 

Little progress can be reported in the area of health and safety at work. The 2007 Law on 
Health  and  Safety  at  Work  is  not  being  fully  implemented.  The  National  Council  for 
Occupational  Safety  and  Health  provided  for  in  the  law  has  not  been  set  up  yet.  The 
administrative  capacity  of  the  labour  inspectorate  remains  insufficient  to  ensure  proper 
implementation and enforcement of the legal provisions. The number of 35 inspectors remains 
insufficient  and  working  facilities  inadequate.  Nevertheless,  the  labour  inspectorate  carried 
out more inspections than in the previous reporting period. Harmonised criteria and methods 
for recording data on accidents at work are lacking. Alignment with the acquis in the area of 
health and safety at work is moderately advanced.  

There  has  been  little  progress  in  the social  dialogue.  A  functional  and  representative  social 
dialogue  is  still  lacking.  The  membership  of  the  Economic  and  Social  Council  (ESC) 
remained  unchanged,  thus  weakening  its  position  and  role.  The  government  organised  a 

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considerable number of consultations of social partners that are not currently members of the 
ESC. The lack of clarity regarding the eligibility criteria is also an impediment to the bipartite 
dialogue.  The  trade  unions  and  employers’  associations  still  have  limited  capacity  to 
contribute to development, implementation and evaluation of employment and social policies. 
Members of the Joint Consultative Committee with the EU Economic and Social Committee 
have finally been nominated. Preparations in this area remain at an early stage.  

Some  progress  has  been  made  in  the  area  of  employment  policy.  The  2009/2010  national 
action plan for employment was adopted. It sets priorities for active labour market measures 
and  lifelong  learning.  The  government  also  adopted  the  2009  national  operational  plan  on 
active  programmes  and  measures  to  be  implemented  by  the  Employment  Services  Agency. 
Successful  implementation  of  this  plan  is  critical  in  the  context  of  the  financial  and  social 
crisis. The first signs of the impact of the financial crisis were seen by the end of 2008, when 
employment  growth  decreased.  Labour  market  participation  remains  very  low  and  the 
unemployment  rate  of  32,7  %  (350,000)  registered  unemployed  in  the  first  quarter  of  2009 
very high (see also Economic Criteria). 

The administrative capacity of the Employment Services Agency has been strengthened. Staff 
were  trained  and  sufficient  IT  equipment  was  supplied.  The  budget  allocated  to  the 
operational plan for 2009 was doubled compared with 2008. However, the allocation is still 
insufficient to cover all the needs identified. 

The Law on Health Insurance was amended in May 2009 with the aim of providing accessible 
social  insurance  for  all  citizens.  These  legislative  changes  are  also  expected  to  lead  to  the 
Employment  Services  Agency  handing  over  responsibility  to  the  Health  Insurance  Fund  so 
that  the  Agency  will  be  able  to  concentrate  on  its  core  tasks.  Employment  in  the  grey 
economy does not seem to have diminished. Implementation of the Law on Adult Education 
has been delayed and a plan for vocational education and training that properly reflects labour 
market  conditions  is  still  missing.  A  disproportionate  share  of  the  budget  for  employment 
policy is earmarked for passive measures. The work of the Employment Services Agency is 
still  geared  too  closely  to  administering  the  unemployment  and  health  insurance  of  the 
registered unemployed. Overall, the financial and human resources available do not match the 
ambitious employment strategies and plans. Preparations in this area are still at an early stage  

Good  progress  has  been  made  in  the  preparations  for  participation  in  the  European  Social 
Fund. The institutional arrangements for implementation of IPA component IV were defined, 
following  submission  of  the  accreditation  package  to  the  Commission  in  March  2009.  The 
administrative  capacity  in  the  Ministry  of  Labour  and  Social  Policy  was  strengthened.  The 
capacity  of  the  Ministry  of  Education  and  Science  remains  insufficient.  The  Commission 
decision conferring management powers for IPA component IV was adopted. Preparations in 
this area are on track. 

Limited progress has been made on social inclusion. In line with the government’s national 
strategy  for  deinstitutionalisation  of  social  care,  two  small  communal  houses  were  opened, 
which  together  accommodate  nine  people  with  disabilities.  The  introduction  of  compulsory 
education  for  children  aged  up  to  18  is  thought  to  have  contributed  to  diminishing  social 
exclusion. Steps were taken to reduce the high drop-out rate in the early years of education. A 
project implemented by the Ministry of Labour and Social Policy enabled 243 Roma children 
aged  4  and  5  to  be  included  in  pre-school  education.  However,  many  Roma  children,  rural 
girls and children with disabilities still do not complete their education. The policy measures 
to improve access to the labour market for vulnerable groups, including disabled people, are 

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still  insufficient.  Statistical  data  and  analyses  on  poverty  remain  deficient.  Administrative 
capacity in the field of social inclusion has not improved. It is particularly inadequate in the 
municipalities  that  have  taken  on  greater  responsibility  for  social  inclusion  policies  in  the 
second  phase  of  decentralisation.  Coordination  between  the  institutions  involved  in 
implementing  social  inclusion  policies  remains  inadequate.  Participation  by  all  stakeholders 
in developing long-term social inclusion policies is lacking. Very few steps have been taken 
to prevent social exclusion in general. Preparations in this area are at an early stage.  

Some progress can be reported in the field of social protection. A law extending the coverage 
of  health  insurance  was  adopted  in  May  2009,  and  a  new  Law  on  Social  Protection  was 
enacted in September 2009. A national strategy for development of social protection has also 
been prepared. However, administrative capacity is still 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. The UN Convention on the 
Rights of People with Disabilities has been signed but not ratified. The Framework Law on 
Non-Discrimination  has  not  yet  been  enacted  and  the  existing  legal  provisions  are  not  fully 
aligned  with  the  acquis.  Administrative  capacity  in  this  area  remains  insufficient.  The 
monitoring  mechanisms  required  by  the  acquis  have  not  yet  been  established.  Statistics  on 
direct and indirect forms of discrimination are not yet available. Discrimination based on sex, 
ethnic origin, religion, disability and sexual orientation persists. Ethnic minorities, particularly 
the Roma community, suffer from discrimination in various spheres of economic, social and 
cultural  life.  The  situation  of  people  with  disabilities  has  not  improved.  Preparations  in  this 
area have started. 

Some  progress  can  be  reported  on  equal  opportunities.  Civil  servants  were  trained  in 
awareness of equal opportunities issues. The administrative capacity of the section for equal 
opportunities in the Ministry of Labour and Social Policy was strengthened, and its mandate 
for coordinating gender issues with the relevant bodies was clarified. However, only limited 
progress  has  been  made  towards  implementing  the  Law  on  Equal  Opportunities.  Also  the 
capacity of the section for equal opportunities remains insufficient to fulfill its role, as well as 
administrative  capacity  to  promote  the  human  rights  of  women  in  rural  areas.  Support  for 
activities  and  initiatives  aimed  at  combating  discriminatory  customs  and  traditions  and 
stereotypes remains insufficient. Participation of women in decision-making at both national 
and  local  levels  is  low.  Female  participation  in  the  labour  force  remains  very  low. 
Preparations in this area are ongoing.  

Conclusion 

Limited  progress  has  been  made  in  the  area  of  social  policy  and  employment.  An  effective 
and representative social dialogue is still lacking. The measures taken to improve access to the 
labour market for vulnerable groups, including persons with disabilities, remain insufficient. 
Consultation  with  relevant  stakeholders  on  social  policies  needs  to  be  reinforced.  The 
administrative capacity has slowly been strengthened, but remains insufficient to implement 
properly the legislation and policies adopted. 

4.20.  Chapter 20: Enterprise and Industrial Policy 

Good  progress  was  made  on  enterprise  and  industrial  policy  principles.  The  government 
started  a  new  phase  of  the  regulatory  guillotine  project,  focusing  in  particular  on  customs, 
transport  and  agriculture.  The  electronic  register  of  all  legal  acts  was  established  and  is 

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operational.  Its  upgrading  and  further  development  are  to  be  regularly  pursued.  Since  1 
January 2009 all draft laws are, in principle, subject to a regulatory impact assessment (RIA). 
However, wider stakeholder participation in law drafting and sufficient systemic analysis of 
legal  acts  by  public  bodies  are  yet  to  be  ensured.  The  industrial  strategy  for  2009-2020  to 
promote  growth  and  innovation  was  adopted.  It  is  based  on  five  main  pillars:  international 
cooperation  and  foreign  investment;  research  and  innovation;  eco-friendly  products  and 
services; SME development and entrepreneurship; and collaboration in clusters and networks. 
No budget was allocated for implementation of the strategy in 2009. The human and financial 
resources  of  the  SME  Department  and  the  SME  Agency  remained  the  same  as  in  2008  and 
were  still  insufficient  to  improve  the  country’s  performance  on  implementing  the  SME 
strategy  and  the  European  Charter  for  Small  Enterprises.  Preparations  in  this  area  are 
moderately advanced. 

There has been good, but uneven, progress with regard to enterprise and industrial policy 
instruments. Annual programmes to support competitiveness, entrepreneurship, clusters and 
networking  were  adopted  for  2009,  totalling  about  €0.8  million.  Public  funding  for  the 
programmes  remains  modest  and  is  almost  the  same  as  in  2008.  The  SME  support 
infrastructure  was  expanded,  as  10  regional  business  support  centres  were  established, 
bringing  the  total  to  29.  Nevertheless,  not  all  the  centres  are  operating  effectively. 
Cooperation between the government and the chambers of commerce improved significantly. 
The Agency for Foreign Investment and its overseas-based promoters, with a budget of about 
€4.5  million  for  2009,  continued  an  intensive  campa ign  to  attract  foreign  investors.  An 
amendment  to  the  Law  on  Obligations  partially  transposed  the  acquis  on  late  payment. 
Alignment  remains  to  be  confirmed.  SMEs’  on-line  access  to  government  services  was 
improved by introducing on-line application systems for company registration, export/import 
licences, payment of tax and social contributions, etc. The single SME information portal has 
not  yet  been  established.  The  design  flaws  of  the  credit  guarantee  scheme  have  not  been 
rectified  and  the  scheme  remains  little  used.  Good  progress  has  been  made  in  the  field  of 
education  and  training  for  entrepreneurship.  The  Ministries  of  Economy  and  of  Education 
took  important  steps  towards  a  more  concerted  cooperation  on  policies  and  measures. 
‘Business  and  entrepreneurship’  is  now  a  compulsory  subject  in  the  curricula  for  secondary 
and vocational education. Also, in connection with availability of skills, a working group has 
been  formed  to  identify  training  needs  for  SMEs.  In  this  area,  the  country  is  moderately 
advanced. 

Some progress can be reported with regard to sector policies. Implementation of the national 
programme for restructuring the steel industry progressed slowly, because of a steep decline 
in  production  and  exports.  The  2009  programme  for  development  of  tourism  is  being 
implemented  with  a  significantly  bigger  budget.  The  Agency  for  Tourism  was  formally 
established,  but  proper  staffing  and  operation  are  not  yet  ensured.  The  programme  for 
restructuring  the  textile  industry,  which  is  designed  to  help  textile  companies  find  new 
markets, to introduce new technologies and to support human resource development, started 
modestly, with about €46,000 for 2009. Public  funding for cluster development was limited. 
Preparations in this area are on track. 

Conclusion 

Good, but uneven, progress has been made in the field of enterprise and industrial policy. The 
financial  resources  and  administrative  capacity  of  public  bodies  for  implementation  of 
enterprise  and  industrial  policy  instruments  are  modest.  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 some progress. It has continued to 
participate  actively  in  implementation  of  the  2004  memorandum  of  understanding  on 
development of the core regional transport network and in the South East Europe Transport 
Observatory (SEETO), particularly by updating and  implementing  the  multi-annual  plan  for 
2009-2013. Construction of a new section of motorway along corridor X near the border with 
Serbia  (Tabanovce-Kumanovo)  began.  Sound  preparation  of  transport  projects  needs  to  be 
strengthened,  in  particular  on  Corridor  X.  Special  attention  needs  to  be  given  to  a 
comprehensive environmental  impact assessment. Substantial financial resources are needed 
to  upgrade  the  infrastructure,  in  particular  as  regards  rail  Greece  has  suspended  its  bilateral 
contribution to the financing of Corridor X. In this area, preparations are advanced. 

Progress  has  been  made  on  energy  networks.  The  new  400 kV  transmission  line  with 
Bulgaria entered into operation, improving the overall stability of the electricity transmission 
network.  Preparations  for  construction  of  a  new  400 kV  transmission  line  with  Serbia  have 
started. The transmission system operator subscribed to the memorandum of understanding on 
establishment  of  a  coordinated  auction  office  in  the  South-East  Europe  region.  The 
government endorsed the concept of the Energy Community gas ring. A feasibility study was 
launched  to  identify  priority  gas  interconnections.  In  this  area  the  country  is  moderately 
advanced. 

No  progress  can  be  reported  on  telecommunications  networks.  The  country  is  not  yet  a 
member of the ICT Policy Support Programme.  

Conclusion 

Progress  was  made  in  the  area  of  trans-European  networks.  The  country  is  continuing  to 
participate actively in the South-East Europe Transport Observatory. Preparations in this area 
are advanced. 

4.22.  Chapter 22: Regional Policy and Coordination of Structural Instruments 

Limited progress has been made with the legislative framework. The eight statistical regions 
became planning regions. Decisions were adopted on the classification of planning regions for 
2008-2012  and  on  determining  the  level  of  development  of  planning  regions,  i.e.  the  socio-
economic,  demographic  and  development  indexes  which  will  have  an  impact  on  the  future 
European territorial cooperation objective. In this area, preparations are moderately advanced.  

There  has  been  good,  but  uneven,  progress  in  the  institutional  framework.  The  national 
authorities  have  submitted  the  accreditation  package  for  the  operational  programmes  under 
the  IPA  regional  development  component  (III)  and  the  human  resources  development 
component  (IV).  In  July  2009,  conferral  of  management  powers  was  granted  under  the 
Regional  Development  Operational  Programme.  However,  the  coordination  capacity  of  the 
National  Development  Council  is  still  weak.  Preparations  for  establishing  systems  for 
implementation  of  the  future  Structural  and  Cohesion  Funds  have  not  yet  been  initiated. 
Preparations in this area are slowly advancing. 

There has been good, but uneven, progress with administrative capacity. The administrative 
capacity of the line ministries to manage EU pre-accession programmes, i.e. of IPA units and 
monitoring and evaluation units, has been further strengthened. However, in order to be able 

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to  absorb  IPA  funds,  substantial  further  strengthening  of  administrative  capacity  is  needed. 
Preparations in this area are slowly advancing.  

Little progress has been made with programming. Administrative capacity for programming 
and project preparation remains insufficient. Further substantial efforts are needed to build up 
a pipeline of quality and mature projects under IPA. Preparations for programming under the 
future Structural and Cohesion Funds have not been initiated yet. Preparations in this area are 
advancing.  

There  has  been  progress  on  monitoring  and  evaluation.  Sectoral  committees  to  monitor 
implementation  of  the  IPA  operational  programmes  meet  regularly,  twice  a  year.  The 
administrative capacity of the monitoring and evaluation units in the line ministries, in terms 
of both number of staff and their training, has improved, but not sufficiently. Preparations in 
this area are moderately advanced.  

Some progress can also be reported in the area of financial management and control. The 
administrative  capacity,  in  terms  of  the  necessary  staff  and  training,  has  improved,  but  not 
sufficiently. Preparations for establishment of financial management and control systems for 
the  future  Structural  and  Cohesion  Funds  have  not  yet  started.  Preparations  in  this  area  are 
advancing.  

Conclusion 

Some  progress  can  be  reported  in  the  area  of  regional  policy  and  coordination  of  structural 
instruments, notably in the form of enhanced efforts and preparations for implementation of 
the components of IPA serving as pre-cursors to the Structural Funds. Administrative capacity 
needs  to  be  substantially  strengthened  and  a  solid  pipeline  of  quality  and  mature  projects 
needs to be built up under IPA in view to secure absorption of EU funding in the short and 
longer term. Overall, alignment with the acquis in the area of regional policy and coordination 
of structural instruments is advancing. 

4.23.  Chapter 23: Judiciary and fundamental rights 

There has been some progress in the area of the judiciary. 

The  Judicial  Council  and  the  Council  of  Public  Prosecutors  have  striven  to  ensure  the 
independence  of  the  judiciary.  By  mid-July  the  Judicial  Council  had  completed  the  first 
appraisal of the performance of serving judges and found that most of them have been up to 
the standards.  

The  Council  of  Public  Prosecutors  assumed  full  responsibility  for  appointing  new  public 
prosecutors and extending the term of office of prosecutors appointed in 2003 for a six-year 
period,  which  was  about  to  expire.  Since  October  2008  a  total  of 38  new  judges  were 
recruited,  as  well  as  4  new  presidents  of  courts  and  21  new  public  prosecutors  had  been 
recruited and the term of office of 159 public prosecutors had been extended. The most recent 
appointments  by  the  two  councils  include  also  the  graduates  of  the  first  generation  of  the 
Academy for training of judges and prosecutors.  

The Judicial Council continued to combat corruption and ensure impartiality, dismissing 12 
judges for abuse of office. However, some documented irregularities regarding recent judicial 
proceedings  have  raised  questions  about  the  independence  and  impartiality  of  parts  of  the 
judiciary. 

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As regards professionalism and competence, the first 27 students of the Academy for Training 
of  Judges  and  Prosecutors  (ATJP)  graduated.  The  ATJP  provided  continuous  training,  with 
over  200  events.  By  July  the  Judicial  Council  and  the  Council  of  Public  Prosecutors  had 
appointed 23 of the graduates from the academy.  

Efforts  were  made  to  improve  the  efficiency  of  the  judiciary.  The  budget  for  the  Public 
Prosecutor’s  Office  was  again  increased  to  €4.5  million.  The  budget  of  the  courts  was 
increased by 8%, despite the difficult economic context. The part of the budget of the ATJP 
funded by foreign donors decreased to 16.5% thanks to an increase in State budget funding. 
The increase in the budget was used to recruit extra staff and purchase new equipment. The 
President of the Judicial Council assumed the chairmanship of the Court Budget Council and 
a new method for use of the court budget is being implemented. 

The Council of Judicial Administration was set up to follow implementation of the 2008 Law 
on  Judicial  Administration  and  improve  human  resources  management.  The  number  of 
employees in the judicial administration increased and 82% of them received a salary increase 
of 20%. The IT centre connecting all judicial institutions and allowing regular exchanges of 
information between them and with the public is operational. The IT offices in the courts were 
staffed with 38 experts. All courts have operational websites and some  have already  started 
publishing  their  decisions.  In  2009,  personal  computers  for  the  courts  for  the  Public 
Prosecutor’s Offices were purchased with State funds. The automated court case management 
system (ACCMIS)  has  been installed in all courts. In 14 basic  courts all current cases have 
been  transferred  to  this  system,  which  allows  automated  generation  of  reliable  statistics  on 
courts. 

In 2008 the courts received 12.3% fewer cases than in 2007. The Public Prosecutor’s Office 
received  5%  more  cases  than  in  2007.  Of  the  27  basic  courts,  26  managed  to  reduce  their 
combined  backlog  by  16%.  The  number  of  cases  resolved  within  six  months  also  increased 
somewhat. In the first quarter of 2009 the misdemeanour commissions resolved 68.3% of new 
cases.  

Since they were established last year the Court of Appeal in Gostivar has settled over 4,500 
cases  and  the  Administrative  Court  over  7,000.  Initial  analysis  of  key  aspects  of  their 
operations  has  started.  The  new  Higher  Public  Prosecutor’s  Office  in  Gostivar,  which  now 
consists  of  five  public  prosecutors,  including  the  head  of  the  office,  has  started  processing 
cases. 

However,  the  absence  of  a  human  resources  management  system  has  slowed  down  the 
recruitment of graduates from the ATJP into the judiciary. The Skopje 2 basic court, which is 
the  court  with  the  largest  number  of  cases,  and  the  four  courts  of  appeal  along  with  the 
Administrative  Court  were  unable  to  reduce  their  backlogs.  The  Administrative  Court,  the 
Court  of  Appeal  in  Gostivar  and  most  of  the  Public  Prosecutor’s  Offices  need  further 
strengthening  in  order  to  build  up  their  capacity.  A  number  of  courts  continue  to  face 
budgetary  restrictions.  Implementation  of  the  2006  Law  on  Mediation  has  had  a  limited 
impact,  with  77  measures  taken  so  far.  Full  implementation  of  the  2007  Law  on  Public 
Prosecutor’s  Offices  requires  parallel  changes  to  the  Law  on  Criminal  Procedure  to  allow 
prosecutors to coordinate fully the investigative phase.  

Overall,  some  progress  has  been  made  on  implementation  of  the  2004  strategy  for  judicial 
reform,  a  key  priority  of  the  Accession  Partnership.  Further  progress  was  made  towards 
establishing  the  independence  of  the  judiciary,  although  continued  efforts  are  needed.  The 

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new  posts  and  new  IT  equipment  helped  to  make  the  judiciary  somewhat  more  efficient. 
However,  a  number  of  courts  continue  to  face  budgetary  restrictions.  A  track  record  on 
implementation  of  the  legislation  on  the  court  system  and  procedures  is  gradually  being 
established.  

(See also 2.1. Democracy and the rule of law) 

Good progress can be reported in the area of anti-corruption policy. The Electoral Code was 
amended  to  clarify  the  rules  on  financing  election  campaigns,  the  transparency  of  election 
funds, including for election advertising, and registration of donations. The Law on Managing 
Confiscated  Property  and  Items  Seized  in  Criminal  and  Misdemeanour  Proceedings  entered 
into force. 

The  amendments  to  the  Law  on  Financing  of  Political  Parties  were  adopted  in  July.  They 
enhance  the  transparency  of  donations,  strengthen  the  provisions  against  illegal  donations, 
tighten reporting obligations of the political parties and introduce more dissuasive sanctions.  

Amendments  to  the  Criminal  Code  including  new  provisions  on  extended  confiscation  of 
proceeds  of  crime,  illicit  enrichment  and  criminal  liability  of  legal  persons  for  trading 
influence were enacted.  

Amendments  to  the  law  on  conflict  of  interest  were  enacted.  The  amendments  introduce  a 
new  definition  of  the  scope  of  the  law,  expressly  including  civil  servants;  strengthen  the 
powers of the SCPC for control and prevention of conflict of interest; introduce the obligation 
of  the  officials  to  submit  a  conflict  of  interest  declaration  and  provide  for  misdemeanour 
sanctions for non-observance of the law. 

The  supervisory  authorities,  the  Public  Revenue  Office  and  the  State  Audit  Office,  have  an 
important role to play in ensuring full implementation. 

The  unit  specialising  in  cases  of  organised  crime  and  corruption  within  the  General  Public 
Prosecutor’s Office became a Basic Prosecutor’s Office. 

There  were  further  indictments  and  convictions  in  high-profile  cases.  The  reforms  in  the 
healthcare  system  started  to  produce  results  in  addressing  small-scale  corruption  and  steps 
were taken to tackle larger-scale corruption in hospitals.  

The databases of the State Commission for Prevention of Corruption (SCPC) and the Public 
Revenue  Office  (PRO)  were  interconnected.  This  allows  more  accurate  records  of  asset 
declarations  to  be  compiled.  In  2008  the  SCPC  initiated  45  misdemeanour  procedures  for 
failure to submit asset declarations. In one of these cases a fine was imposed, in two others the 
charges were dismissed and the rest are pending. The PRO started 48 procedures in 2008 to 
check  the  origin  of  assets  declared.  In  nine  cases  a  decision  was  given.  Four  of  these  cases 
were  concluded  by  taxing  the  unjustified  income  at  70%  and  in  two  cases  criminal  charges 
were brought. The customs administration took over responsibility for registering and keeping 
records of asset declarations by customs officers. Cases that raise reasonable doubts about the 
origin of the assets are referred to the PRO. 

Interception of communications, an effective tool for detection and investigation of corruption 
cases, was introduced in 2009 and is starting to be used. 

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The  SCPC  began  to  implement  the  action  plan  on  conflict  of  interest.  Guidelines  were 
developed  to  help  officials  and  the  general  public  identify  potential  conflicts  of  interest. 
Training  was  organised  for  judges  and  prosecutors  on  the  content  of  the  guidelines.  Since 
2008, 73 cases on conflict of interest were initiated and 43 were completed. In 11 of them a 
conflict of interest was found. Training also started on freezing and confiscation of proceeds 
of crime and on the criminal liability of legal persons. 

The  SCPC  adopted  a  strategic  plan  on  public  relations  which  outlined  action  to  be  taken  to 
improve  communication  with  the  public  and  the  media,  including  appointment  of  a 
spokesperson. The SCPC took steps to enhance cooperation with other bodies. 

Cooperation  between  law  enforcement  agencies  was  further  strengthened.  Three  more 
institutions (the State Electoral Commission, the Council of Public Prosecutors and the State 
Appeals  Commission  for  Public  Procurement)  signed  the  anti-corruption  cooperation 
protocol, bringing the total number of signatories to 15. The signatories analysed the results of 
the  first  year  of  implementation  of  the  protocol  and  decided  on  improvements.  Further 
progress was made towards setting up a national intelligence database.  

The police and customs hotlines are fully operational. Disciplinary measures continued to be 
applied to a steady number of customs and police officers for corrupt behaviour. The customs 
administration  implemented  measures  to  prevent  and  suppress  corruption  among  customs 
officers.  In  2008  the  sector  for  internal  control  in  the  Ministry  of  the  Interior  brought  67 
criminal charges against 75 police officers for a total of 70 criminal acts, of which 61 showed 
elements of corrupt behaviour. Training on the police code of ethics continued.  

The  State  Appeals  Commission  for  Public  Procurement  is  operational (See  also  Chapter 5), 
thus providing a channel for addressing allegations of corruption in this field. The Agency for 
Managing Confiscation of Assets was set up. Public awareness of the right to access to public 
information has increased. 

However,  widespread  corruption  remains  a  cause  for  concern.  Further  efforts  are  needed  to 
streamline  the  legal  framework.  The  Law  on  Conflicts  of  Interest  still  has  some  loopholes, 
especially  as  regards  its  scope  and  the  effectiveness  of  the  control  mechanism.  The  OECD 
Convention  on  Combating  Bribery  of  Foreign  Public  Officials  has  not  been  signed.  A 
regulatory  framework  laying  down  the  status  and  ethical  principles  applicable  to  public 
officials other than civil servants is not in place. No reports on suspicions of corruption were 
filed by civil servants. 

The  legislation  on  financing  of  political  parties  and  election  campaigns  remains  to  be 
effectively implemented. In particular, the reports and recommendations from the State Audit 
Office and the SCPC have not been followed up. So far, no sanctions have been reported for 
political  parties  which  breached  the  rules  on  financing,  notably  as  regards  submission  of 
financial  reports,  the  threshold  for  election  campaign  expenditure  and  registration  of 
donations.  Since  2005  the  SCPC  has  referred  ten  notifications  to  the  public  prosecutor 
concerning expenditure in electoral campaigns. To date there have been no prosecutions. The 
GRECO recommendations regarding guidelines for MPs when deciding on requests for lifting 
immunity have not yet been implemented. 

A  consistent  track  record  on  checking  asset  declarations  has  not  yet  been  established.  The 
anti-corruption  structures,  notably  the  Basic  Prosecutor’s  Office  for  combating  organised 
crime and corruption, the Higher Prosecutor’s Offices and the anti-corruption unit within the 

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Ministry  of  the  Interior,  need  to  be  reinforced.  Joint  training  of  prosecutors  and  judges, 
including  judges  of  the  Supreme  Court,  on  investigative  measures  and  administration  of 
evidence for cases of corruption and organised crime needs to be intensified. 

The SCPC needs to make further efforts to ensure its visibility and raise the level of public 
trust  in  its  independence  and  impartiality.  It  still  has  fully  to  address  its  remaining  backlog 
and to reduce the duration of internal procedures. 

An exercise should be conducted to identify the extent and nature of corruption in the public 
sector  to  help  define  practical  measures  to  combat  corruption  in  specific  sectors.  Statistics 
relevant to anti-corruption policy need to be further developed.  

Overall, good progress was made on implementing anti-corruption policy. The electoral code, 
the law on financing of political parties and the law on conflict of interest were amended to 
strengthen transparency and new provisions on illicit enrichment were introduced. There were 
further  indictments  and  convictions  in  high  level  cases  and  cooperation  between  law 
enforcement agencies improved. Nevertheless, corruption remains prevalent and continues to 
be  a  serious  problem  in  many  areas.  Continued  efforts  are  needed,  in  particular  as  regards 
implementation of the legal framework.  

(See also 2.1. Democracy and the rule of law) 

Some progress  has  been  made  in  the  area of fundamental rights. (See also  under Political 
criteria and Chapter 19: Social policy and employment.)  

In 2008 the Ombudsman’s Office received 3,022 complaints, almost the same number as in 
2007.  Violations  were  found  in  less  than  a  quarter.  The  largest  number  concerned  property 
rights, which accounted for 24.9% of all violations, followed by 8.7% for the Ministry of the 
Interior, particularly in connection with obtaining citizenship, 8.2% for social rights and 2.5% 
for prisons. There were 21 complaints about violation of the right to equitable representation, 
compared  with  six  in  2007.  In  response  to  the  intervention  of  the  Ombudsman,  the 
administrative bodies took appropriate steps in 84.4% of the cases.  

As regards the prohibition of torture and inhuman or degrading treatment or punishment, the 
Ombudsman’s  mail-box  system  installed  in  prisons  proved  effective.  Some  progress  was 
made on long-term planning to improve prison facilities. Inhuman and degrading conditions 
in  prisons  have  not  been  addressed.  Allegations  of  ill-treatment  are  still  not  sufficiently 
investigated  and  prosecuted.  The  Council  of  Europe’s  Committee  for  the  Prevention  of 
Torture reiterated its deep concern about deleterious conditions and unsatisfactory healthcare 
in some prisons.  

With regard to respect for private and family life, in particular the right to the protection of 
personal data, the directorate for personal data protection continued to perform satisfactorily 
but was still understaffed.  

Little  progress  can  be  reported  in  the  field  of  freedom  of  thought,  conscience  and  religion. 
The  2008  Law  on  the  Legal  Status  of  Churches,  Religious  Communities  and  Religious 
Groups  is  being  implemented  slowly.  Registration  of  the  Bektashi  religious  group  is  still 
pending, as are applications from six other religious communities or groups.  

With regard to freedom of expression, including freedom and pluralism of the media, the legal 
framework  is  satisfactory,  but  the  parts  relating  to  the  financial  autonomy  of  the  public 

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broadcaster  and  the  regulatory  body  are  not  being  implemented.  Ownership  of  the  printed 
media  is  still  highly  concentrated.  The  broadcast  media  are  still  closely  associated  with 
political  and  business  interests,  which  makes  them  subject  to  political  influence  (See  also 
Chapter 10).  

In  the  area  of  freedom  of  assembly  and  association,  including  the  right  to  form  political 
parties  and  the  right  to  establish  trade  unions,  two  new  trade  unions  were  registered  (the 
independent  trade  union  of  local  self-government  employees  and  the  trade  union  of 
employees  in  the  public  administration  and  in  the  State  bodies),  thus  raising  the  number  of 
registered trade unions to 44.  

While some progress was made on treatment of socially vulnerable and disabled people, little 
was made on the principle of non-discrimination. Implementation of the 2008-2018 strategy 
for de-institutionalisation began. However, the Framework Law on Anti-Discrimination was 
not enacted.  

With respect to the right to education, the introduction of nine years of primary education and 
compulsory  secondary  education  led  to  increased  enrolment.  The  new  centre  for  adult 
education was established. The education budget was increased, but remained insufficient.  

The right to property is protected, but the process of restitution of property confiscated during 
the  Yugoslav  regime  has  been  ongoing  since  2000.  Processing  of  25,288  out  of  a  total  of 
30,744 applications has been completed, of which 8,785 in 2008. No progress was made with 
returning  properties  to  the  Orthodox  Church  and  the  Muslim  community.  The  government 
established  a  committee  to  coordinate  the  process  of  restitution,  chaired  by  the  Minister  of 
Finance, but it has not contributed significantly to advancing the process. The Ombudsman’s 
Office  noted  that  the  procedures  for  restitution  of  property  had  been  delayed  and  that  there 
were  cases  where  the  same  people  decided  in  both  the  first  and  the  second  instance 
commissions.  

Very limited progress can be reported in the field of gender equality and women’s rights. The 
national  action  plan  for  gender  equality  lacks  coherence.  Implementation  of  the  national 
strategy against domestic violence (2008-2011) is hindered by lack of coordination between 
the relevant institutions.  

Implementation of the national action plan for the protection of the rights of the child remains 
slow. Nothing has been done to improve access to education, healthcare and juvenile justice 
for children from deprived backgrounds.  

As regards liberty and security and the right to a fair trial, the system for witness protection 
was brought up to international standards, though some shortcomings persist in logistics and 
funding. No progress was made in the area of legal aid in civil cases.  

Some  progress  was  made  on  minority  rights  and  cultural  rights.  There  has  been  progress 
towards implementing the Law on Use of Languages spoken by at least 20% of the citizens 
and  the  strategy  for  equitable  representation  in  the  public  administration.  However,  the 
smaller  communities  remain  at  a  disadvantage.  Dialogue  and  confidence-building  between 
communities  at  local  level  were  further  hindered  by  the  introduction  of  ethnically  divided 
shifts in schools. A broad consensus on the Law on the Use of Flags of the Communities has 
not emerged. Measures to improve the social inclusion of the Roma have yielded only limited 
results. The country is moderately advanced in the area of fundamental rights. 

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Conclusion 

There has been good progress on combating corruption and some progress on the reform of 
the judiciary and on safeguarding fundamental rights. The newly established institutions and 
increased  budgetary  resources  have  improved  the  overall  efficiency  of  the  judiciary,  but 
continued  efforts  are  needed  to  secure  independence.  As  regards  anti-corruption,  further 
progress  can  be  reported  on  prosecuting  high-level  cases,  on  strengthening  the  institutional 
framework and on cooperation between law enforcement agencies. The electoral code, law on 
financing of political parties and the law on conflict of interest were amended to strengthen 
transparency  and  new  provisions  on  illicit  enrichment  were  introduced.  Nonetheless, 
corruption  remains  prevalent  and continues  to  be  a  serious  problem  in  many  areas.  Most  of 
the  legislative  and  policy  measures  relating  to  fundamental  rights  are  in  place,  but 
implementation is uneven and further efforts are required.  

4.24.  Chapter 24: Justice, Freedom and Security 

Significant  progress  was  made  on  visa  policy.  In  the  framework  of  the  visa  liberalisation 
dialogue  opened  between  the  EU  and  the  former  Yugoslav  Republic  of  Macedonia  in 
February  2008,  the  country  has  made  important  progress  in  the  JLS  areas  and  fulfilled  the 
roadmap benchmarks, allowing the Commission to include the former Yugoslav Republic of 
Macedonia in its proposal of July 2009 for visa free travel. Concerning document security, the 
issuance  of  new  biometric  passports  in  line  with  community  and  international  security 
standards continued on schedule, as did the issuance of the new identity cards and residence 
permits.  As  of  September  2009,  more  than  531.000  biometric  travel  documents  had  been 
issued. 

The  visa  facilitation  and  readmission  agreements  between  the  former  Yugoslav  Republic  of 
Macedonia and the European Community continued to be implemented. The country has not 
yet fully aligned its legislation with the EU negative list in the interest of a regional approach, 
it maintains a visa-free regime for citizens of some countries of the region. 

The  administrative  capacity  of  the  department  for  consular  affairs  has  been  further 
strengthened. Shortcomings still remain in the field of human and budgetary resources. The 
national  visa  system  became  fully  operational.  Rules  on  unilateral  recognition  of  Schengen 
visas  and  residence  permits  were  introduced,  in  order  to  facilitate  the  movement  of  third 
countries nationals and to stop the issuance of visas at the borders In this area, the country is 
well advanced. 

Some  progress  was  made  in  the  area  of  migration.  Parliament  adopted  a  resolution  on 
migration policy, which set out the principles for an active return policy. Implementation of the 
migration policy, including an active return policy, has been ensured. The Law on Aliens was 
amended to remove the requirement for EU citizens to possess travel insurance when entering 
the country. At the end of 2008 Albania, Bosnia and Herzegovina, Croatia, Montenegro, the 
former Yugoslav Republic of Macedonia and Serbia signed a memorandum of understanding 
on setting up a system for sharing statistical data on illegal migration and participating in the 
regional system of advance notification. 

The  Law  on  Employment  of  Foreigners  was  implemented.  All  the  implementing  legislation 
on migration was adopted. In all, the country has ratified six readmission agreements with non-
EU-Member  States:  Albania,  Bosnia-Herzegovina,  Croatia,  Moldova,  Norway  and 
Switzerland.  The  readmission  agreement  with  the  Community  worked  well.  In  the  first  six 

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months of 2008, 269 people were received in accordance with the readmission agreement and 
bilateral  agreements.  The  admission  procedure,  chiefly  for  short  stays,  is  satisfactory.  A 
central  database  of foreigners residing temporarily  in the country is being prepared.  Further 
efforts  are  needed  to  improve  the  data  collection  system.  The  policy  for  reintegration  of 
returnees  is  not  being  fully  implemented.  Resources  to  recruit  new  staff,  notably  in  the 
Ministry  of  Labour  and  Social  Policy,  and  to  procure  proper  equipment  are  still  lacking.  In 
this area, the country is well advanced. 

There has been good progress in the area of asylum. Amendments to the Law on Asylum and 
Temporary Protection were adopted, but the law is still not fully aligned with the acquis. The 
provisions concerning subsidiary protection were applied. The administrative court, which has 
jurisdiction over refugee cases previously handled by the Supreme Court, is operational, but 
there  are  some  shortcomings  in  its  decision-making,  notably  in  appeal  cases  (See  also 
Political  criteria  -  Judiciary  and  Chapter  23).  The  administrative  court  needs  to  be  given 
powers by law to conduct independent judicial review of the substance of asylum decisions. 
Further  efforts  are  required  by  the  authorities  to  take  on  full  responsibility  for  providing 
financial and material assistance for refugees and asylum-seekers. The administrative capacity 
has improved. Identity documents have started to be issued, though at a slow pace. However, 
asylum procedures are still not fully in line with European standards. A central database for 
aliens,  covering  asylum,  migration  and  visas,  will  have  to  be  developed.  In  this  area  the 
country is advanced. 

Good  progress  can  be  reported  in  the  field  of  external  borders  and  Schengen.  A  working 
arrangement  with  FRONTEX  was  signed.  Implementation  of  the  integrated  border 
management  strategy  and  action  plan  has  been  completed,  except  for  the  construction  and 
reconstruction of police stations and the extension of the TETRA radio communication system. 
However, an overall system for strategic and operational risk analysis is still lacking, and thus 
preventing  effective  fight  against  illegal  migration.  The  border  demarcation  process  with 
Kosovo has not yet been fully completed. In order to find a solution for the border villages on 
the  last  stretch  to  be  demarcated,  the  government  decided  in  August  2009  to  increase  the 
flexibility margin in a new bilateral border agreement with Kosovo. A new action plan on the 
Schengen  acquis  for  the  period  2009-2011  was  adopted  in  September  2009.  19  border 
crossing  points  were  connected  to  the  data  communication  network  of  the  Ministry  of  the 
Interior  and  now  have  access  to  the  database.  Yet  police  stations  responsible  for  border 
surveillance still have no access to the database. The National Coordination Centre for Border 
Management is fully operational. The division of tasks between the coordination centre and 
the  field  offices  was  fine-tuned,  notably  with  the  aid  of  training  and  adoption  of  an 
operational manual and works well in practice. A human resources management strategy was 
adopted  which  encompasses  all  the  organisational  units  of  the  police,  but  without  dealing 
specifically  with  the  needs  of  border  police.  The  capacity  of  the  training  centre  has  been 
enhanced  and  the  basic  training  curricula  are  satisfactory,  but  curricula  also  need  to  be 
developed for middle- and higher-level border police officers. A central database of false and 
genuine  documents  is  not  available,  nor  is  a  central  database  of  specimen  documents.  First 
steps were taken to rehabilitate premises and offices at border crossing points. However, the 
situation is not yet fully satisfactory. A budget was allocated to upgrade the equipment of the 
border police, but it is still not sufficient, notably for border surveillance at night hours at the 
green  border.  Technical  equipment  for  document  analysis,  training  on  how  to  use  it  and 
budgetary  support  are  still  not  adequate.  Preparations  in  the  area  of  external  borders  and 
Schengen are advanced. 

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Good progress can be reported on judicial cooperation in civil and criminal matters. The 
cooperation agreement with Eurojust was signed in November 2008. The Law on Ratification 
of the Agreement was enacted in April 2009. The second Additional Protocol to the European 
Convention  on  Mutual  Assistance  in  Criminal  Matters  was  ratified.  The  Convention  of  29 
May 1993 on Protection of Children and Cooperation in respect of Intercountry Adoption was 
ratified.  The  Convention  of  18  May  1970  on  the  Taking  of  Evidence  Abroad  in  Civil  or 
Commercial  Matters  was  ratified.  The  Additional  Protocol  to  the  Convention  for  the 
protection  of  individuals  with  regard  to  automatic  processing  of  personal  data  regarding 
supervisory  authorities  and  transborder  data  flow  was  ratified.  In  this  area,  the  preparations 
are starting. 

Progress has been good in the area of police cooperation and the fight against organised 
crime.  The  police  was  further  decentralised  (see  also  the  section  on  the  Political  Criteria). 
Training  and  equipment  needs  were  met,  mainly  by  local  authorities.  Cooperation  with 
EUROPOL  further  improved  and  preparations  are  being  made  to  sign  an  operational 
agreement.  The  sector  for  special  investigative  techniques  of  the  department  for  organised 
crime in the Ministry of the Interior was staffed and equipped. 

The  human  resources  management  system  improved.  A  merit-based  career  and  appraisal 
system and provisions aimed at depoliticisation of Ministry of the Interior officials, including 
senior police officers, was introduced by the new Law on Internal Affairs enacted in July. The 
training system improved, notably for basic and specialised training. Shortcomings remain in 
the  in-service  training  and  in  development  of  curricula  for  mid-level  officers.  The  Training 
Centre,  the  successor  of  the  Police  Academy,  organised  regional  training  and  training  for  a 
new  generation  of  police  cadets.  Its  mission  was  revised  by  an  amendment  to  the  Law  on 
Internal Affairs and is now confined to basic and continuous training. 

The  Interpol  office  became  operational  24  hours  a  day,  seven  days  a  week.  All  border 
crossing points and the four regional headquarters of the border police were connected to the 
Interpol databases. The number of international arrest warrants issued and executed increased. 

Witness  protection  capacity  improved.  In  2008,  the  witness  protection  programme  was 
activated  in  one  case.  Some  shortcomings  in  logistics  and  funding  remain.  Improvements 
were  made  to  protection  of  victims.  International  agreements  to  relocate  witness  as  well  as 
victims outside of the country are in place. In this area, preparations are advanced. 

The country meets EU and international standards in the area of explosives. As regards small 
arms and light weapons, 166 perpetrators were reported, a small decrease compared to the 243 
perpetrators during the previous reporting period. Improvements were made to enforcement of 
the  regulations  on  private  possession  of  arms.  The  number  of  illegal  weapons  seized  and 
destroyed  remained  stable.  The  level  of  illicit  arms  possession  is  still  alarmingly  high. 
Significant further efforts are needed in this area. 

The Council of Europe Convention against Trafficking in Human Beings was ratified in April 
2009.  Further  legislative  measures  will  be  required  to  ensure  effective  implementation.  The 
strategy and action plan to combat human trafficking were largely implemented. A new action 
plan,  covering  the  period  2009-2013,  remains  to  be  adopted.  Compulsory  confiscation  of 
assets  belonging  to  perpetrators  of  criminal  acts  related  to  human  trafficking  was  introduced 
into  the  Criminal  Code.  The  law  on  social  protection  which  provides  institutional  protection 
for the victims of human trafficking was enacted. Cooperation between the police, the public 
prosecutors  and  the  courts  further  improved.  In  2008,  25  people  were  prosecuted,  of  whom 

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nine  for  trafficking  in  minors.  Of  the  25  people  prosecuted,  16  were  sentenced  to  between 
three  and  eight  years  in  prison.  In  2008,  160  people  were  prosecuted  for  smuggling  illegal 
migrants, up from 91 in 2007. Improvements were made to the budget planning. 

Improvements  were  made  in  the  fight  against  computer  crime.  The  Council  of  Europe 
Convention  on  Cybercrime  is  being  implemented.  The  relevant  unit  of  the  Organised  Crime 
Department has seven officers out of the twelve authorised. Improvements were made to the 
investigative  capacity  to  fight  credit  card  abuse.  Capacity  to  combat  child  pornography  and 
hacking is still low, especially on the ground. Shortcomings remain in equipment, notably in 
the field. The number of investigations carried out improved, as did their quality. 

The  weaknesses  in  parliamentary  control  over  the  security  and  counter-intelligence 
administration  have  been  addressed.  Deficiencies  in  judicial  control  over  the  security  and 
counter-intelligence  administration  with  regard  to  executing  the  orders  of  the  public 
prosecutor  to  monitor  communications,  notably  concerning  the  location  of  the  relevant 
equipment,  have  been  addressed.  The  Law  on  Monitoring  of  Communications  is  being 
implemented  smoothly,  although  the  relevant  parliamentary  committee  has  not  been  very 
active.  Work  on  establishing  an  integrated  intelligence  system  for  inter-agency  use  is  in 
progress. This should remedy the existing shortcomings in sharing intelligence and in mutual 
access  to  databases  at  interagency  level.  The  sixth  action-oriented  measure  for  the  fight 
against organised crime has not been implemented yet. The sector for criminal analysis in the 
Organised Crime Department does not yet act as the national cooperation centre, because no 
common database has been established. Despite considerable challenges in the area of police 
cooperation  and  the  fight  against  organised  crime,  the  country  is  advanced  and  is  a  front-
runner in the region. 

Good  progress  can  be  reported  in  the  fight  against  terrorism.  A  strategy  for  prevention  of 
money-laundering  and  financing  of  terrorism  was  adopted.  Implementing  legislation  and 
administrative  instructions  were  adopted.  The  2005  Council  of  Europe  Convention  on 
Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the Financing 
of  Terrorism  was  ratified.  In  2008,  134  suspicious  transactions  were  referred  to  the  Anti-
Money Laundering Office. The number is still low. Gaps in the criminalisation of terrorism 
offences,  especially  in  the  field  of  financing,  have  been  addressed.  Preparations  in  this  area 
are well advanced. 

Good  progress  can  be  reported  in  the  fight  against  drugs.  The  Law  on  Chemicals  was 
enacted  and  the  Law  on  Precursors  was  amended  with  the  aim  of  aligning  with  the  acquis. 
The  Law  on  Narcotics  was  enacted  and  its  implementing  legislation  adopted.  A  new  action 
plan, covering the period 2008-2012, was adopted. It is in line with the EU drugs strategy for 
2005-2012. Data on drug seizures in 2008 showed a stable trend in terms of quantity. Overall, 
the  amount  of  drugs  seized  remained  rather  low.  National,  regional  and  international 
cooperation has reached international standards. The country already largely meets the acquis 
requirements. 

Good progress has been made in the area of customs cooperation. A law was enacted which 
ratified the amendments to the Convention establishing a Customs Cooperation Council of the 
European Union, enabling the European Community to become a full member of the World 
Customs  Organisation  (WCO).  Cooperation  with  the  SECI  was  enhanced.  The  customs 
administration participated in five major international operations coordinated by the SECI and 
the WCO and exchanged information on seizures and intelligence information via the SECFs 
Regional  Centre  for  Combating  Transborder  Crime.  Customs  officers  participated  in  a 

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number of working meetings and trainings. Efforts were stepped up to cooperate effectively 
with  the  Regional  Intelligence  Liaison  Offices  within  the  World  Customs  Organisation,  to 
which 195 cases of seizure of counterfeit goods, foreign currency, illegal drugs and cigarettes 
were  reported.  Cooperation  with  the  Balkan  Info  system  of  the  German  Customs  Criminal 
Office  was  intensified.  As  a  result,  the  customs  administration  received  and  checked  128 
reports on possible drug trafficking. Preparations in this area are on track. 

(For counterfeiting of the euro see chapter 32.) 

Conclusion 

In all policy fields in the area of justice, freedom and security, important reforms have been 
undertaken  toward  meeting  the  benchmarks  set  in  the  framework  of  the  visa  liberalisation 
dialogue,  which  has  been  completed  in  May  2009.  Significant  progress  was  made  on  visa 
policy. Good progress can be reported on asylum, the fight against organised crime and drugs, 
as well as on external borders and Schengen. Administrative capacity to implement the police 
reform  has  improved,  but  is  still  constrained  by  the  not  fully  developed  human  resources 
management. The country has achieved a greater degree of alignment with the acquis for both 
its  legislative  and  administrative  capacity.  Efforts  are  being  made  to  improve  further 
international  police  cooperation  at  both  regional  and  European  Union  levels,  chiefly  with 
Europol and Frontex. Overall, preparations in this area are on track. 

4.25.  Chapter 25: Science and Research 

Little  progress  can  be  reported  in  the  area  of  research  policy,  in  particular  as  regards  the 
strategy  to  increase  the  national  research  capacity.  The  budget  for  the  2009  research  and 
technological  development  programme,  originally  €2.45  m illion,  was  reduced  to  about  €1.8 
million  when  the  budget  was  revised  in  April  2009.  The  public  and  private  funding  for 
science  and  research  remained  below  0.5%  of  GDP  and  private-sector  participation  in 
particular is very low. Some reform of the research institutes took place by integrating them 
into the universities. New equipment procured in September 2009 will strengthen the capacity 
of  universities  and  research  institutes.  However,  the  small  budget,  weak  administrative 
capacity and lack of funding for the research facilities hinder significantly the development or 
research capacity in the country. Preparations in this area are moderately advanced.  

Good  progress  was  achieved  in  the  area  of  Framework  Programmes.  The  number  of 
projects  selected  and  funded  under  the  Seventh  EC  research  framework  programme  (FP7) 
increased compared to last year. However, the capacity of the unit responsible for promotion 
and national coordination of FP7 within the Ministry of Education and Science is weak and 
prevents  to  engage  in  more  promotion  activities  on  FP7.  In  this  area,  preparations  are 
advanced. 

Given the lack of a national research strategy and weak administrative capacity, little progress 
can  be  reported  on  the  integration  into  the  European  Research  Area.  The  Agency  for 
European  Educational  Programmes  and  Mobility,  designated  as 
the  main  body 
responsible for establishing the national EURAXESS Jobs Portal, as well as the EURAXESS 
Services Network, have not be realised within the contractual time frame. Preparations in this 
area are moderately advanced. 

Conclusion 

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Some progress has been made in the area of science and research. Administrative capacity to 
support  participation  in  the  Framework  Programmes  is  not  sufficiently  developed.  Greater 
participation  in  the  Framework  Programmes  is  also  hampered  by  the  weak  capacity  of  the 
research  institutes  and  their  poor  links  with  industry.  Overall,  preparations  in  the  area  of 
science and research are on track. 

4.26.  Chapter 26: Education and Culture 

Some progress can be reported in the field of education, training and youth. The new Law 
on  Higher  Education  entered  into  force.  The  new  school  system  introduced  nine  years  of 
primary education and compulsory secondary education, which resulted in an increase in the 
number  of  pupils  enrolled  in  secondary  schools.  An  action  plan  has  been  adopted  for 
implementing the National Strategy for Youth. The centre for adult education was established. 
However,  it  is  not  yet  operating  adequately,  and  implementation  of  the  Law  on  Adult 
Education has been delayed. The programme on compulsory vocational education has not yet 
been  implemented.  The  2009  budget  for  education  is  insufficient  to  implement  the  national 
strategy  for  reform  in  education  for  2006-2015.  Efforts  need  to  continue  to  improve  the 
country's performance in relation to the EU common education benchmarks of the Education 
and Training 2020 strategic framework, in particular to increase participation in pre-primary, 
reduce  the  high  drop-out  rate,  ensure  equitable  access  to  higher  education,  increase  the 
number  of  graduates  and  improve  the  quality  of  teaching.  Future  challenges  include 
strengthening life-long learning and improving recognition of prior learning. 

Progress has been made by the National Agency for the European Educational Programmes to 
build  its  capacity  as  the  implementing  body  for  the  Lifelong  Learning  and  Youth  in  Action 
Programmes.  Preparatory  measures,  including  training  of  the  staff  and  the  launch  of  pilot 
projects,  have  started.  The  National  Agency  needs  to  continue  its  efforts  to  strengthen  the 
competencies  of  its  staff  in  all  aspects  of  programme  management,  and  the  Ministry  of 
Education  and  Science  needs  to  set  up  an  efficient  control  system  providing  adequate 
assurance  on  the  functioning  of  the  National  Agency  Preparations  in  the  area  of  education, 
training and youth are moderately advanced. 

Some  progress  can  be  reported  also  in  the  field  of  culture.  The  country  continued  to 
participate  in  the  Culture  programme,  and  started  to  participate  in  the  Europe  for  Citizens 
programme,  on  the  basis  of  a  Memorandum  of  Understanding  signed  in  March  2009. 
Preparations in the area of culture meet the EU requirements. 

Conclusion 

Some  progress  has  been  made  in  the  areas  of  education,  training,  youth  and  culture,  in 
particular  as  regards  participation  in  Community  programmes.  However,  the  budget  for 
education  remains  insufficient  to  implement  the  national  reform  strategy  and  further  efforts 
are  needed  to  improve  the  country's  performance  in  relation  to  the  Education  and  Training 
2020  common  benchmarks,  to  prepare  for  the  management  of  the  Lifelong  Learning  and 
Youth in Action programmes and to set up an efficient control system. Overall, preparations 
in the area of education and culture are advanced. 

4.27.  Chapter 27: Environment 

Good  progress  was  made  in  the  area  of horizontal legislation.  Implementing legislation  on 
environmental  assessment  and  public  participation  was  adopted.  The  national  strategy  and 
plan on protection and rescue were adopted. The administrative capacity for implementing the 

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Environmental  Impact  Assessment  (EIA)  and  Strategic  Environmental  Assessment  (SEA) 
Directives  has  improved,  but  is  still  not  sufficient,  particularly  at  local  level.  The  EIA 
requirements  for  public  consultation  are  still  not  adequately  applied.  The  requirements 
relating to informing and consulting the public need to be improved. Progress was made in the 
area of climate change, in particular on implementation of the clean development mechanism 
under the Kyoto Protocol. The Protection and Rescue Directorate was strengthened in terms of 
both staff and training. Preparations in this area are advanced. 

Some progress was made in the area of air quality. Transposition in this area is moderately 
advanced.  The  list  of  ambient  air  quality  zones  and  agglomerations  was  adopted.  The 
inventory  of  air  pollutant  emissions  is  being  compiled,  in  accordance  with  the  CORINAIR 
methodology.  The  administrative  capacity  is  still  weak,  particularly  at  local  level.  Further 
equipment is also needed. Cooperation between the ministries and institutions involved in air 
quality is still not sufficient, in particular on collection and analysis of data. The air quality 
monitoring  system  is  still  not  fully  effective.  Preparations  in  the  area  of  air  quality  are 
moderately advanced. 

Some  progress  was  made  in  the  area  of  waste  management.  Amendments  to  the  Waste 
Management Law were enacted, including provisions on sanctions and the level of fines for 
misdemeanours. The national waste management plan was adopted. Administrative capacity 
at central  and  local levels is still  largely insufficient. Municipal waste management  systems 
have not been set up yet. Investment in this area needs to be increased. The waste management 
coordination  committee  has  not  been  effective.  A  system  to  deal  with  data  collection, 
registration  and  reporting  is  still  not  in  place.  Preparations  in  this  area  are  moderately 
advanced. 

Little progress can be reported in the case of water quality. The transposition process needs 
to  be  stepped  up.  The  administrative  capacity  to  deal  with  integrated  water  management  is 
very  weak  in  terms  of  organisational  structure  and  number  of  qualified  staff.  The  current 
institutional set-up, involving many institutions, makes implementation of the new Water Law 
very  difficult  to  coordinate.  The  water  monitoring  system  is  still  not  fully  effective.  No 
progress was made towards applying the polluter-pays principle. This creates problems for the 
sustainability of projects in this sector. Significant efforts are still needed in this area. 

Little  progress  was  made  on  nature  protection.  Amendments  to  the  Hunting  Law  were 
adopted.  Efforts  need  to  be  continued  in  order  to  align  further  with  the  EU  acquis.  Some 
progress  can  be  reported  on  implementing  the  management  plans  for  protected  areas.  A 
national  strategy  and  action  plan  for  nature  protection  has  still  not  been  completed.  The 
administrative  capacity  is  insufficient  and  adequate  equipment  is  lacking.  Overall,  the 
coordination  between  the  various  institutions  responsible  for  nature  protection  is  not 
sufficient.  However,  some  efforts  have  been  made  to  develop  coordination  between  the 
Ministry of the Environment and the customs administration on implementation of the CITES 
Convention. Preparations in this area are moderately advanced. 

Little  progress  was  made  on  industrial  pollution  control  and  risk  management. 
Transposition  of  the  Seveso  II  Directive  on  control  of  major  accident  hazards  involving 
dangerous  substances  has  progressed.  The  lack  of  administrative  capacity  in  this  area  is  a 
major issue, especially at local level. It results in substantial delays in issuing IPPC (integrated 
pollution prevention and control) permits. Training for IPPC inspectors is still not provided. 
The stakeholders are not sufficiently involved in this process. The operators of industrial sites 
have not yet prepared contingency plans. Significant efforts need to be made in this area. 

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Little progress was made in the area of chemicals. The EU acquis in this sector has still not 
been  transposed.  The  staff  of  the  national  information  centre  was  increased.  Some  training 
and  awareness-raising  activities  for  the  institutions  and  companies  concerned  have  started. 
Preparations in this area are at an early stage. 

Little progress was made in the area of GMOs. Transposition of the EU acquis in this field 
has  not  yet  been  completed.  The  National  Commission  for  GMO  Management  and  the 
Scientific Committee for GMOs were established. However, the administrative capacity needs 
to be further strengthened. The department responsible for risk assessment of GMOs and for 
placing GMO products on the market have still not been established, nor have the necessary 
laboratories been installed. Preparations are moderately advanced in this area. 

Some  progress  was  made  in  the  area  of  noise.  Implementing  legislation  was  adopted. 
Preparation of strategic maps and action plans on noise began with development of a plan for 
noise  measurement  in  Skopje.  The  administrative  capacity  is  still  not  sufficient.  The  units 
responsible for dealing with noise issues at central and local levels have not been established 
yet. Preparations in this area are at an early stage. 

Some progress was made in the area of forestry. The priority measures in the programme for 
expanded reproduction of forests have started to be implemented. 

As  regards  administrative  capacity,  the  government  adopted  a  plan  to  strengthen  the 
environmental  management  capacity  at  central  and  local  levels  for  the  period  2009-2014. 
However,  the  lack  of  a  financial  assessment  and  of  a  mechanism  for  monitoring  and 
evaluating  the  plan  could  hamper  its  implementation  and  sustainability.  The  administrative 
capacity for implementing and enforcing environmental legislation is still far from sufficient 
at both central and local levels. This is particularly true of the inspectorates. The coordination 
between administrative bodies responsible for environment-related issues is not yet effective. 
Enforcement of legislation has improved in terms of fines and sanctions, but the system is not 
yet efficient and no credible record has been established. The environmental monitoring and 
information  system  is  still  not  adequate.  No  funds  are  foreseen  in  the  2009  budget  for  new 
environmental  projects.,  The  amount  provided  is  still  far  from  sufficient  to  meet  the  needs. 
The  national  environmental  investment  strategy  was  adopted.  Environmental  protection 
requirements  are  still  not  well  integrated  into  policy  making  and  implementation  in  other 
areas.  The  precautionary  principle,  the  principle  of  preventive  action  and  the  polluter-pays 
principle are only partially applied. 

Conclusion 

Progress  has  been  made  towards  further  transposing  the  EU  acquis  in  the  field  of  the 
environment, in particular for horizontal legislation and waste management. Some sectors, like 
water  quality  or  IPPC,  are  still  lagging  behind.  Implementation  of  the  legislation  remains  a 
considerable  challenge.  Administrative  capacity  is  weak  at  both  national  and  local  levels. 
Significant further efforts are still needed to further align with the EU acquis in this sector and, 
moreover, to ensure the required investments. Overall, preparations in the field of environment 
are moderately advanced.  

4.28.  Chapter 28: Consumer and Health Protection 

Some  progress  has  been  made  on  consumer  protection.  As  regards  the  horizontal  aspects, 
the  consumer  protection  programme  for  2009-2010  was  adopted.  Instead  of  the  Ministry  of 
Economy, the State institutions involved are now required to finance from their own resources 

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the  activities  planned  in  the  area  of  consumer  protection.  Four  new  regional  consumer 
protection  organisations  were  established,  working  under  the  umbrella  organisation  based  in 
Skopje.  Budgetary  support  for  the  consumer  protection  NGOs  was  increased,  but  is  quite 
modest in comparison with the complex tasks that consumer protection entails. The umbrella 
consumer  protection  NGO  focused  mainly  on  publicity  campaigns,  and  less  on  taking  up 
consumers' claims. Preparations in this area are ongoing. 

Some  progress  has  been  made  as  regards  product-safety  related  issues.  Legislation 
implementing the Law on Product Safety was adopted. Alignment with the acquis remains to 
be  confirmed.  Market  surveillance  remains  weak  and  does  not  ensure  effective  and 
transparent  consumer  protection.  The  administrative  capacity  of  the  coordinating  body  for 
market  surveillance  is  poor.  The  powers  of  the  various  inspectorates  have  still  not  been 
clarified. The poor funding, understaffing and inadequate powers of the inspectors seriously 
limit the ability of the inspectorates to conduct checks on products. Preparations in this area 
are on track. 

Some progress has been made with regard to non-safety-related issues, where implementation 
and enforcement of the consumer credit legislation have been ensured. The acquis on distance 
marketing of consumer financial services, on injunctions and on unfair commercial practices 
has not yet been transposed. Mediation is still used only to a limited extent. Preparations in 
this area are on track. 

There has been some progress in the area of public health. Regarding the horizontal aspects, 
a  new  Law  on  Health  Data  defined  the  general  principles  for  collecting  and  processing 
comprehensive  healthcare  data.  A  new  public  health  programme  for  rare  diseases  was 
introduced. Still, the funding for the public health programmes remained the same as in 2008, 
except  for  the  compulsory  immunisation  programme,  which  was  increased  fourfold. 
Implementation  of  public  health  programmes  continues  to  be  hampered  by  the  lack  of  a 
proper operational structure and adequate finance, which results in some programmes being 
curtailed or suspended. The hospital sector still receives higher budgetary allocations than the 
public health and primary healthcare sectors. Preparations in this area are on track. 

Some  progress  has  been  made  in  the  area  of  tobacco  control,  notably  as  regards  tobacco 
advertising.  Progress  in  the  area  of  tobacco  products  has  been  less  significant.  The  country 
signed  a  licensing  agreement  on  use  of  EU  pictorial  warnings  on  tobacco  products,  which 
were introduced in September. Preparations in this area are on track. 

Some progress can be reported in the field of communicable diseases. The outbreak of mumps 
at  the  beginning  of  2009  revealed  deficiencies  in  the  immunisation  programme  against 
communicable  diseases  in  the  mid-1990s.  Consequently,  emergency  immunisation  against 
mumps of the population aged between 14 and 21 was carried out. The European Centre for 
Disease  Prevention  and  Control  (ECDC)  and  the  WHO  provided  support  to  contain  the 
outbreak of mumps. Measures have been taken to strengthen the IT system across the entire 
health  sector,  including  the  national  early  warning  system  (EWARN).  There  is  still  no 
comprehensive healthcare database. Preparations in this area are on track. 

Some progress can be reported in the area of blood. Implementing legislation on blood safety 
was adopted. Alignment with the acquis remains to be confirmed. Proper implementation of 
the blood safety strategy is lagging behind. There were no developments to report in the area 
of human tissues and cells. Preparations in this area are at an early stage. 

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Little progress was made with regard to mental health. Mental health institutions continue to 
lack  staff  and  financial  resources.  Institutional  care  for  socially  vulnerable  and  disabled 
people  improved  slightly.  However,  more  efforts  and  resources  are  required  to  improve 
community  mental  healthcare  as  an  alternative  to  institutional  care.  A  special  focus  on 
children  and  young  people  with  mental  health  problems,  who  require  healthcare  tailored  to 
their needs, is also required. Preparations in this area are at an early stage. 

The national public health programmes continued to address the socio-economic determinants 
of health and health inequalities by providing funds for prevention of health problems caused 
by unhealthy lifestyle and free treatment for uninsured patients. A strategy on promotion of 
adolescent health was adopted. Implementation of the national strategy to reduce harm caused 
by  alcohol  has  been  continuing,  with  an  action  plan  focusing  on  young  people.  Financial 
resources for combating cancer are insufficient. There have been no developments in the area 
of health and the environment. Preparations in these areas are ongoing. 

Conclusion 

Some  progress  has  been  made  in  the  area  of  consumer  and  health  protection.  As  regards 
consumer policy, there is still no effective and transparent market surveillance system. In the 
field  of  public  health,  the  human  and  financial  resources  available  are  not  yet  sufficient  to 
ensure proper implementation of legislation, strategies and action plans. 

4.29.  Chapter 29: Customs Union 

Some  progress  has  been  made  on  customs  legislation.  The  2009  customs  tariff  takes  into 
account  the  obligations  arising  from  the  Stabilisation  and  Association  Agreement  and  the 
changes in the EU Combined Nomenclature. The protocol amending the Kyoto International 
Convention  on  the  Simplification  and  Harmonisation  of  Customs  Procedures  was  ratified. 
Legislation implementing the Customs Code, regulating authorised economic operators, was 
adopted.  A  number  of  customs-related  fees,  including  the  fees  for  customs  escort  of  goods 
and for temporary customs warehousing, were abolished. However, some fees that are not in 
line  with  the  acquis  remain  in  force.  Some  of  the  provisions  of  the  Law  on  Technological-
Industrial Development Zones are still not fully aligned with the acquis. Preparations in this 
area are advanced. 

Significant  progress  has  been  made  on  administrative  and  operational  capacity.  The 
strategy  for  training  and  professional  advancement  has  been  implemented.  Employees 
benefited from a large number of training activities, including training on ethics. Operational 
capacity was further enhanced, in particular  for investigation and intelligence. Risk analysis 
and  risk-based  control  systems  and  procedures  were  introduced.  The  'one-stop  shop'  system 
linking 16 State agencies came into operation. It allows companies to submit electronically a 
single request in order to obtain all the documents required for import, export and transit. The 
customs  administration  still  has  to  develop  a  comprehensive  IT  strategy  to  ensure  future 
interconnectivity/interoperability with the Community IT customs systems. 

Efforts to combat corruption and cross-border crime and trade in counterfeit goods led to an 
increased  number  of  misdemeanour  and  criminal  cases.  The  number  of  disciplinary 
proceedings  and  criminal  charges  initiated  against  customs  officers  also  increased,  although 
the  sanctions,  in  particular  dismissals,  were  generally  not  upheld  at  the  appeal  stage.  The 
customs  administration  signed  new  memoranda  of  cooperation  with  trade  and  transport 

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associations  and  with  State  agencies  involved  in  the  fight  against  crime  and  corruption. 
Preparations in this area are well on track. 

Conclusion 

Progress  in  this  chapter  has  been  substantial,  in  particular  as  regards  administrative  and 
operational capacity. The customs legislation is sufficiently aligned with the acquis, except in 
the  case  of  transit.  The  administrative  capacity  of  the  customs  administration  to  implement 
legislation and to tackle cross-border crime is continuing to improve. Preparations in this area 
are on track. 

4.30.  Chapter 30: External Relations 

There  has  been  good  progress  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  (SAA)  with  the  EU.  Customs  duties  were  reduced 
for 498 products and entirely abolished for 286 more. The average customs duty on industrial 
products  remained  7%  and  the  duty  on  agricultural  and  fisheries  products  was  reduced  to 
15.98%. 

The  country  continued  to  coordinate  closely  with  the  Commission  and  to  align  with  EU 
policies and positions in international trade negotiations. The protocol on rules of origin to the 
bilateral  free-trade  agreement  with  Turkey  was  ratified.  It  is  in  line  with  the  corresponding 
protocol  to  the  SAA.  The  country  has  stepped  up  preparations  for  negotiations  with  the 
countries participating in the Pan-Euro-Mediterranean system of cumulation of origin. 

There were no particular developments regarding export credits. 

The  government  adopted  a  decree  establishing  the  new  list  of  dual-use  goods  and 
technologies,  which  entirely  transposes  the  list  of  dual-use  goods  and  technologies  in  the 
relevant Council Regulation. The system for control of dual-use goods is not fully functional.  

In the area of bilateral agreements with third countries, the country ratified the investment 
agreement  with  India  and  the  protocol  amending  the  investment  agreement  with  Romania. 
The number  of  bilateral investment  agreements ratified rose to 31, of which 28 are in force 
and 15 are with EU Member States. 

No  progress  can  be  reported  in  the  areas  of  development  policy  and  humanitarian  aid. 
Preparations in both these areas are not very advanced. 

Conclusion 

There has been some progress in the alignment with the EU's external relations policy. The 
institutional capacity and coordination between the relevant institutions is not yet sufficient to 
enable the country to participate fully in the EU development and humanitarian aid policies. 
Overall, preparations in this area are on track. 

4.31.  Chapter 31: Foreign, Security and Defence Policy 

The  regular  political  dialogue  between  the  EU  and  the  country  continued  to  cover  foreign 
policy  issues.  (Concerning  neighbourly  relations  with  other  enlargement  countries  and 
Member States, see the section on Political criteria.) 

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As regards the common foreign and security policy (CFSP), the country continued to align 
itself  with  EU  common  positions  and  statements  on  third  countries  and  regions.  In  the 
reporting period, the country aligned itself with all the relevant EU declarations and common 
positions, except in four cases related to Ethiopia, the USA, Israel and Nigeria. In particular, 
the country aligned itself with the EU declaration on deployment of the European Union rule 
of law mission (EULEX) in Kosovo. The CFSP coordination unit was strengthened with one 
new recruit, bringing the total staff up to five. 

Implementation of restrictive measures is continuing. A working group on CFSP issues led by 
the  Ministry  of  Foreign  Affairs  is  continuing  to  review  the  implementation  process.  So  far, 
implementation  of  the  international  restrictive  measures  has  shown  the  need  for  further 
coordination between the competent authorities. 

With  regard  to  non-proliferation,  in  December  2008  the  former  Yugoslav  Republic  of 
Macedonia signed the Convention on Cluster Munitions. The country issued its third national 
report on implementation of the EU Code of Conduct on Arms Export and also the report on 
implementation  of  the  UN  Action  Plan  for  the  Prevention,  Fight  and  Eradication  of  Illicit 
Trafficking of Light and Small Weapons. The National Commission for Small Firearms and 
Light Weapons is continuing its work. 

A  special  sector  was  established  in  the  Ministry  of  the  Interior  to  deal  with  illegal  trade  in 
weapons,  ammunition  and  explosive  materials.  As  a  result  of  its  work,  300  persons  were 
charged with related offences in 2008. The administrative capacity of the unit for arms control 
in the Ministry of Foreign Affairs was strengthened with the recruitment of additional 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 the section 
on 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)  was 
installed.  Staff  and  budgetary  support  were  allocated  for  satisfactory  operation  and 
maintenance of the electronic system. 

In  the  framework  of  the  European  Security  and  Defence  Policy  (ESDP),  the  country 
showed  continued  commitment  to  participation  in  civil  and  military  crisis  management 
operations. The country withdrew its military forces from the EU-led EUFOR/Althéa military 
mission, but continued to participate with a medical team, along with a preventive medicine 
non-commissioned  officer  and  a  legal  adviser  at  EUFOR  headquarters  in  Bosnia  and 
Herzegovina. The country continued to participate in the NATO mission in Afghanistan and 
in  the  UN-led  peacekeeping  mission  in  Lebanon  (UNIFIL).  The  country  indicated  its 
readiness to take part in EU battle group (EUBG) 11/2012 made up of military forces from 
Germany (lead nation), Austria, the Czech Republic, Ireland and Croatia. 

Conclusion 

There has been some progress in the area of foreign, security and defence policy, in particular 
in  terms  of  strengthening  the  administrative  capacity.  The  country  aligned  with  most  EU 
declarations and common positions and has shown continued commitment to participation in 
ESDP operations. Continued efforts are needed to ensure progress in implementing restrictive 
measures and in ensuring non-proliferation. 

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4.32.  Chapter 32: Financial Control 

Some  progress  can  be  reported  in  the  area  of  public  internal  financial  control  (PIFC).  A 
revised  Law  on  PIFC  was  adopted  in  July.  Establishment  of  internal  audit  units  in  line 
ministries has been stepped up. However, 10 units at the local level have not yet been staffed. 
Adequate  training  schemes  on  internal  audit  are  missing.  The  institutional  capacity  of  the 
central harmonisation units (CHUs) in the Ministry of Finance has been improved, but is not 
yet  sufficient.  The  PIFC  policy  paper  needs  tod  be  amended  to  include  a  medium-  to  long-
term plan for development of PIFC and an action plan to ensure its full implementation. 

As  regards  external  audit,  the  State  Audit  Office  (SAO)  updated  its  development  strategy 
(2008-2012)  and  other  key  methodological  guidelines  on  audit  quality  and  reporting.  The 
operational capacity of the SAO has been improved, with the recruitment of 14 new auditors, 
but  the  coverage  of  public  expenditure  audited  decreased  in  2008  and  remains  insufficient. 
The  SAO's  functional  and  financial  independence  remains  to  be  safeguarded,  either 
constitutionally  or  by  equivalent  means.  Cooperation  with  parliament  is  still  not  fully 
satisfactory  and  adequate  procedures  for  dealing  with  the  SAO's  reports  and  audit 
recommendations are still lacking. Preparations in the area of public internal financial control 
and external audit are on track. 

Some  progress  can  be  reported  on  protection  of  the  EU's  financial  interests.  A 
memorandum of understanding on preventing, investigating and reporting on irregularities in 
implementation  of  IPA  funds  was  signed  between  the  national  authorising  officer  and  the 
Anti-Fraud  Coordination  Service  (AFCOS)  within  the  financial  police.  Preparations  in  this 
area are on track. 

No  progress  can  be  reported  in  the  fight  against  counterfeiting  of  the  euro.  Limited 
improvements  were  made  in  the  national  cooperation  mechanism  for  reporting  suspicious 
banknotes, as the National Bank issued instructions to all banks. In 2008, 380 banknotes were 
seized, up from 321 in 2007. Investigative capacity is weak. Significant shortcomings remain 
in equipment, staffing and training, notably for the National Bank. 

Conclusion 

Some  progress  has  been  made  towards  aligning  and  implementing  the  legislation.  The 
administrative  capacity  of  the  institutions  responsible  for  financial  control  has  been  further 
strengthened. The SAO is not yet functionally and financially independent. Preparations in the 
area of protection of the EU's financial interests are continuing. 

4.33.  Chapter 33: Financial and Budgetary Provisions 

In the field of traditional own resources, revenue collection from customs and agricultural 
duties  levied  on  imports  has  improved.  The  institutional  capacity  of  the  customs 
administration has been strengthened and anti-corruption measures have been stepped up. 

As regards VAT resources, the administrative capacity of the Public Revenue Office (PRO) 
has  improved.  Efforts  were  made  to  combat  customs  duty  and  VAT  fraud  and  thereby 
contribute  to  more  efficient  revenue  collection.  Internal  audit  and  financial  management 
control capacity has been strengthened, but is still insufficient.  

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In the case of GNI resources, some progress was made towards producing more exhaustive 
national  accounts  and  applying  the  rules  and  definitions  in  EU  accounting  standards.  Little 
progress was made towards improving the estimates on the informal economy. 

Although the acquis in this area does not require transposition, establishment of appropriate 
administrative  infrastructure  is  important,  in  due  course,  to  ensure  correct  calculation, 
collection, payment and control of own resources and reporting to the EU for implementation 
of  the  rules  on  own  resources.  The  number  of  Internal  Audit  Units  in  budget  users  has 
increased.  However,  the  capacity  within  the  relevant  authorities  to  apply  the  rules  is  not  yet 
sufficient. 

Conclusion 

Some  progress  has  been  made  towards  aligning  with  the  acquis  in  the  areas  of  customs, 
statistics  and  financial  control.  Improvements  were  made  to  the  operational  capacity  of  the 
customs  authority  and  the  PRO,  particularly  on  combating  customs  and  VAT  fraud. 
Appropriate  coordination  structures  and  administrative  strengthening  will  be  needed  for 
implementation of the rules on own resources in due course. 

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STATISTICAL ANNEX 

STATISTICAL DATA (as of 14 September 2009) 
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-27=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-27=100) 
Gross value added by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

Final consumption expenditure, 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) 

Note

Note

Note

Note

Note
1) 
1) 

1999 
2 013 
25 713 

2000 
2 022 
25 713 

2001 
2 031 
25 713 

2002 
2 039 
25 713 

2003 
2 024b 
25 713 

2004 
2 030 
25 713 

2005 
2 035 
25 713 

2006 
2 039 
25 713 

2007 
2 042 
25 713 

2008 
2 045 
25 713 

2002 

2001 

2000 

1999 

2003 
209 010 236 389  233 841 243 970 251 486 265 257 286 619 310 915 354 322 
4 105 
2 029 

3 448 
1 713 
4 800.0  5 100.0  5 000.0  5 200.0  5 300.0  5 800.0  6 400.0  6 900.0  7 800.0  8 200,0 

2008 
: 
: 
: 

4 325 
2 130 

3 893 
1 926 

3 839 
1 890 

4 001 
1 963 

4 676 
2 298 

5 081 
2 491 

5 791 
2 834 

2004 

2005 

2006 

2007 

26.8 
4.3 
-0.6 
5.0 
-1.5 
47.3 

12.9 
26.5 
6.1 
54.5 
90.3 
16.6 
3.1 
42.2 
52.2 

1999 
96.6 

1999 
-0.7 

1999 
-61 
-465 

26.9 
4.5 
0.3 
4.2 
-7.0 
48.2 

12.0 
26.9 
6.8 
54.2 
92.6 
16.2 
6.0 
48.6 
63.5 

2000 
100.0 

2000 
5.8 

2000 
-106 
-750 

25.1 
-4.5 
-1.7 
-2.9 
-0.8 
46.2 

11.8 
26.1 
6.0 
56.1 
94.8 
14.8 
4.2 
42.7 
56.6 

2001 
96.9 

2001 
5.5 

2001 
-264 
-589 

25.2 
0.9 
-0.6 
1.4 
-0.4 
46.4 

12.4 
24.2 
6.0 
57.5 
99.5 
16.6 
4.0 
38.0 
58.2 

2002 
91.8 

2002 
1.8 

2002 
-401 
-856 

25.6 
2.8 
-1.9 
4.8 
2.7 
48.1 

13.4 
24.4 
6.3 
56.0 
97.0 
16.7 
3.2 
37.9 
54.8 

2003 
96.1 

2003 
1.2 

2003 
-168 
-753 

26.6 
4.1 
-2.2 
6.4 
-9.9 
51.4 

13.2 
22.7 
6.5 
57.7 
98.9 
17.8 
4.1 
41.1 
61.9 

2004 
94.0 

2004 
-0.4 

2004 
-363 
-914 

28.5 
4.1 
2.1 
2.0 
-8.6 
54.3 

12.8 
23.1 
6.6 
57.6 
96.5 
17.0 
3.8 
45.5 
62.8 

29.4 
4.0 
3.2 
0.8 
6.2 
55.1 

12.6 
23.5 
6.7 
57.3 
96.7 
18.2 
3.7 
48.1 
66.8 

31.2 
5.9 
4.3 
1.5 
-12.9 
57.0 

11.0 
25.7 
7.0 
56.4 
94.6 
20.2 
4.0 
53.4 
72.3 

32.5 
: 
3.2 
1.7 
1.0 
57.9 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2005 
100.6 

2006 
104.2 

2007 
108.0 

2008 
113.9 

2005 
0.5 

2005 
-121 
-859 

2006 
3.2 

2007 
2.3 

2008 
8.3 

2006 
-45 
-1 020 

2007 
-415 
-1 175 

2008 
-851 
-1 737 

EN 

77 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 
Net foreign direct investment (FDI) (million euro) 
Foreign direct investment (FDI) abroad (million euro) 

of which FDI of the reporting economy in EU-27 countries (million euro) 

Foreign direct investment (FDI) in the reporting economy (million euro) 

of which FDI of EU-27 countries 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 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index, 1998 = 100) 
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) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 

1) 
1) 
1) 
1) 

1) 

1) 

Note 

Note 
2) 
2) 

3) 

3) 

Note 

Note 

37 
-67 
435 
68 
83 
0 
: 
83 
: 

53 
-70 
661 
144 
234 
1 
: 
233 
: 

-21 
-31 
377 
55 
499 
-1 
: 
500 
: 

-24 
-47 
525 
103 
112 
0 
: 
112 
: 

-6 
-55 
646 
89 
100 
0 
: 
100 
43 

-43 
-33 
628 
56 
260 
-1 
: 
261 
125 

-25 
-92 
853 
53 
75 
-2 
: 
77 
41 

22 
-28 
982 
59 
345 
0 
: 
345 
255 

1999 
0.3 
32.0 

2000 
2.3 
48.1 

2001 
-2.5 
48.8 

2002 
-0.5 
43.0 

2003 
0.1 
39.1 

2004 
0.4 
36.6 

2005 
0.2 
39.5 

2006 
-0.5 
33.1 

1999 
43.4 
108.9 
325 
556 
647 
527 
11.6 
18.5 
: 
60.620 
86.6 
422 

1999 
: 
: 
: 
97.1 
: 
: 

1999 
5.2 
16.2 

2000 
42.7 
93.6 
368 
690 
786 
624 
7.2 
17.5 
: 
60.725 
100.0 
759 

2000 
: 
: 
: 
95.4 
: 
: 

2000 
5.9 
13.2 

2001 
44.2 
108.4 
415 
1 145 
1 267 
620 
11.9 
23.0 
: 
60.913 
105.9 
844 

2001 
: 
: 
: 
97.1 
: 
: 

2001 
5.0 
13.2 

2002 
39.3 
108.5 
432 
1 052 
1 141 
657 
14.4 
23.0 
: 
60.978 
109.9 
771 

2002 
2 105 
1 178 
-927 
106.4 
55.9 
61.7 

2002 
4.8 
11.7 

2003 
35.9 
95.7 
461 
1 260 
1 324 
761 
5.8 
14.0 
: 
61.264 
114.3 
715 

2003 
2 031 
1 203 
-828 
94.5 
58.9 
60.3 

2003 
4.4 
12.8 

2004 
47.9 
121.2 
470 
1 475 
1 542 
951 
8.0 
13.0 
: 
61.338 
117.3 
717 

2004 
2 354 
1 346 
-1 008 
82.9 
60.3 
60.8 

2004 
2.7b 
13.2 

2005 
53.9 
122.3 
501 
1 708 
1 777 
1 153 
9.2 
13.0 
: 
61.296 
119.6 
1 123 

2005 
2 601 
1 644 
-957 
95.6 
56.9 
54.7 

2005 
2.0 
12.8 

2006 
49.1 
104.8 
591 
2 130 
2 221 
1 504 
5.6 
9.5 
: 
61.189 
119.9 
1 417 

2006 
2 980 
1 918 
-1 062 
88.4 
61.3 
53.0 

2006 
1.9 
11.5 

26 
-278 
1 012 
24 
507 
1 
: 
506 
355 

2007 
0.6 
25.8 

2007 
48.9 
93.3 
772 
2 728 
2 872 
2 093 
3.5 
7.5 
: 
61.184 
119.4 
1 524 

2007 
3 795 
2 446 
-1 349 
107.3 
65.2 
49.6 

2007 
1.5 
10.3 

0 
-93 
979 
48 
422 
9 
: 
413 
276 

2008 
-0.9 
21.4 

2008 
51.0 
98.4 
881 
2 913 
3 184 
2 803 
4.0 
8.5 
: 
61.265 
120.6 
1 495 

2008 
4 643 
2 689 
-1 954 
106.1 
59.5 
48.2 

2008 
1.8 
: 

EN 

78 

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Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

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 (%) 

Note

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

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) 

70.9 
75.7 

1999 
59.7 
40.2 
49.4 
30.9 

71.0 
76.4 

2000 
59.7 
40.3 
49.7 
30.9 

71.2 
76.4 

2001 
61.8 
42.6 
50.6 
34.5 

71.2 
76.6 

2002 
59.8 
40.4 
48.6 
32.0 

71.3 
76.3 

2003 
61.3 
38.5 
45.6 
31.3 

71.4 
75.9 

2004 
58.8 
36.8 
44.4 
28.9 

71.6 
75.9 

2005 
60.7 
37.9 
45.4 
30.1 

71.7 
75.9 

2006 
62.2 
39.6 
48.3 
30.7 

: 
: 

2007 
62.8 
40.7 
48.8 
32.3 

: 
: 

2008 
63.5 
41.9 
50.7 
32.9 

26.3 

26.2 

27.7 

25.8 

28.5 

24.5 

26.2 

27.9 

28.8 

31.7 

: 
: 
: 
: 
32.4 
31.9 
33.3 

62.9 
27.2 

: 
: 
: 
: 
32.2 
30.5 
34.9 

59.9 
26.9 

25.0 
29.3 
6.0 
39.8 
30.5 
29.5 
32.0 

56.1 
26.5 

24.0 
27.5 
5.9 
42.7 
31.9 
31.7 
32.3 

58.4 
27.0 

22.1 
27.4 
6.6 
43.9 
36.7 
37.0 
36.3 

65.7 
31.2 

16.9 
25.9 
7.0 
50.3 
37.2 
36.7 
37.8 

64.8 
31.7 

19.6 
25.8 
6.5 
48.1 
37.3 
36.5 
38.4 

62.6 
32.3 

20.2 
25.1 
7.6 
47.2 
36.0 
35.3 
37.2 

59.8 
31.1 

18.3 
25.0 
6.5 
50.3 
35.0 
34.6 
35.6 

57.7 
30.1 

19.7 
24.8 
6.5 
49.0 
33.8 
33.5 
34.2 

56.4 
28.7 

Note

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

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  16 096.0 
100.3 

100.0 

103.0 

106.7 

111.4 

113.6 

118.1 

124.5 

126.9 

98.1 

Note

Note

Note

4) 

Note

: 

: 

: 

32.2 

: 

: 

: 

: 

: 

: 

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 
122.7 
491.6 

2005 
124.3 
597.6 

2006 
118.7 
695.1 

2007 
121.9 
884.2 

2008 
128.6 
1 157.9 

1999 
27.2 
0.1 

1999 
: 
0.3 
: 

2000 
27.2 
0.1 

2000 
: 
0.4 
: 

2001 
27.2 
0.2 

2001 
: 
0.3 
: 

2002 
27.2 
0.2 

2002 
3.4 
0.3 
: 

2003 
27.2 
0.2 

2003 
3.4 
0.2 
: 

2004 
27.2 
0.2 

2004 
: 
0.3 
11.0 

2005 
27.2 
0.2 

2005 
: 
0.3 
: 

2006 
27.2 
0.2 

2006 
: 
0.2 
14.0 

2007 
27.2 
0.2 

2007 
: 
0.2 
16.5 

1999 
: 
707.0 

2000 
: 
659.3 

2001 
: 
668.5 

2002 
: 
715.6 

2003 
: 
659.6 

2004 
: 
635.6 

2005 
: 
636.0 

2006 
: 
624.7 

2007 
: 
612.7 

2008 
27.2 
0.2 

2008 
: 
: 
29.0 

2008 
: 
: 

EN 

79 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) (%) 

20.5 

16.9 

9.2 

11.0 

17.9 

18.9 

17.5 

18.7 

11.2 

: 

69.0 

60.0 

87.0 

92.0 

94.0 

91.0 

93.0 

92.0 

88.0 

84.0 

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) 

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) 

Note 

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 

2007 
1 504 
0 
1 254 
0 
1 469 
3 038 
6.5 

2008 
: 
: 
: 
: 
: 
: 
: 

Note 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

101.1 
1 284 
270 
226 
1 289 
202 
637 
67 
688 

101.0 
1 236 
265 
204 
1 251 
220 
565 
56 
680 

90.2 
1 244 
265 
189 
1 286 
201 
476 
38 
696 

97.5 
1 316 
259 
196 
1 234 
198 
556 
44 
: 

104.5 
1 303 
260 
179 
1 239 
192 
466 
40 
: 

107.0 
1 265 
255 
158 
1 432 
213 
677 
47 
: 

100.3 
1 229 
248 
158 
1 244 
197 
645 
58 
: 

105.0 
1 225 
255 
167 
1 249 
235 
595 
0 
: 

98.0 
1 077 
254 
255 
944 
374 
470 
8 
573 

104.5 
1 064 
254 
247 
950 
368 
613 
0 
: 

SI = Structural Indicator 
: = not available 
p = provisional 
e = estimate 
f = forecast 
b = break in series 
1) 
2) 
methodology, with partial data coverage. 
End of the year. 
3) 
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) 

For the period 1999-2002, 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. 
Since 2004 gross foreign debt data are prepared according to the External Debt Statistics Guide, with full data coverage. For the period 1999-2003 external debt data are calculated using the old 

EN 

80 

EN