COMMISSION STAFF WORKING PAPER THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 2011 PROGRESS REPORT
Date: 2011-10-12
Institutions: European Commission
Subjects: North Macedonia, accession criteria, pre-accession aid

EUROPEAN COMMISSION 

Brussels, 12.10.2011 
SEC(2011) 1203 final 

COMMISSION STAFF WORKING PAPER 

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 2011 PROGRESS 
REPORT 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL  

Enlargement Strategy and Main Challenges 2011-2012 

{COM(2011) 666 final} 
{SEC(2011) 1200 final} 
{SEC(2011) 1201 final} 
{SEC(2011) 1202 final} 
{SEC(2011) 1204 final} 
{SEC(2011) 1205 final} 
{SEC(2011) 1206 final} 
{SEC(2011) 1207 final} 

 
 
 
 
  
 
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 .................................................................................................................. 3 

Preface.......................................................................................................................... 3 

Context ......................................................................................................................... 3 

Relations between the EU and the former Yugoslav Republic of Macedonia............. 4 

Political criteria ............................................................................................................ 5 

Democracy and the rule of law .................................................................................... 5 

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

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

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

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

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

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

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

Chapter 2: Freedom of movement for workers .......................................................... 32 

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 and rural development......................................................... 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 

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

4.18.  Chapter 18: Statistics.................................................................................................. 52 

4.19.  Chapter 19: Social policy and employment ............................................................... 53 

4.20.  Chapter 20: Enterprise and industrial policy.............................................................. 55 

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 ........................................................... 58 

4.24.  Chapter 24: Justice, freedom and security ................................................................. 65 

4.25.  Chapter 25: Science and research .............................................................................. 69 

4.26.  Chapter 26: Education and culture............................................................................. 70 

4.27.  Chapter 27: Environment ........................................................................................... 71 

4.28.  Chapter 28: Consumer and health protection............................................................. 74 

4.29.  Chapter 29: Customs Union ....................................................................................... 75 

4.30.  Chapter 30: External relations.................................................................................... 76 

4.31.  Chapter 31: Foreign, Security and Defence Policy.................................................... 77 

4.32.  Chapter 32: Financial control..................................................................................... 78 

4.33.  Chapter 33: Financial and budgetary provisions........................................................ 79 

Statistical Annex ...................................................................................................................... 80 

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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, i.e. the acquis expressed in the Treaties, the secondary legislation, 
and the policies of the Union. 

This report covers the period from October 2010 to September 2011. 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 
enables an objective assessment.  

The  report  is  based  on  information  gathered  and  analysed  by  the  Commission.  Many  other 
sources  have  also  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. 

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.  In  October  2009,  the 
Commission recommended to the Council to open negotiations with the country, as well as to 
move to the second phase of SAA Implementation. These recommendations were reiterated in 
2010. The Council has not yet concluded its deliberations on the Commission's proposals.  

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2 

The rapporteur for the former Yugoslav Republic of Macedonia is Mr Richard Howitt. 
Enlargement Strategy and Main Challenges 2011-2012 - COM(2011) 666.  

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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. 

The  country  has  been  implementing  the  commitments  undertaken  within  the  Stabilisation 
and  Association  Agreement  (SAA)  with  the  EU,  the  key  priority  of  the  Accession 
Partnership,  including  all  the  commitments  provided  for  under  the  first  stage  of 
implementation of Title V (Movement of workers, establishment, supply of services, capital). 
The  Commission's  2009  proposal  on  transition  to  the  second  stage  of  the  Association, 
pursuant to Article 5 of the SAA, has been under consideration by the Council.  

The SAA structures have continued to serve as the basis for regular political and economic 
dialogue between the country and the EU. Since October 2010, experts from both sides have 
met at least once a year in seven sub-committees and a special group. Meetings of the highest 
joint  bodies,  namely  the  Stabilisation  and  Association  Committee  and  the  Stabilisation  and 
Association  Council,  have  been  scheduled  for  October  and  December  2011  respectively. 
Moreover, the multilateral economic dialogue between the Commission,  EU Member States 
and  Candidate  Countries  in  the  context  of  the  pre-accession  fiscal  surveillance  continued, 
including  a  meeting  at  Ministerial  level  in  May  in  Brussels.  These  meetings  focused  on  the 
main  challenges  posed  by  the  Copenhagen  political  and  economic  criteria  and  reviewed  the 
progress made towards fulfilling the Accession Partnership priorities. 

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 and 
the  2010  Progress  Report,  the  government  adopted  its  annual  revision  of  the  national 
programme for the adoption of the acquis in December 2010.Visa liberalisation for citizens 
travelling to the Schengen area has been in force since 19 December 2009. The rules for visa-
free  travel  have  been  respected  by  the  vast  majority  of  travellers.  To  ensure  the  continued 
implementation  of  the  commitments,  a  post  visa  liberalisation  monitoring  mechanism  was 
established in view of increased numbers of asylum seekers from the region. The Commission 
presented its first monitoring report to the European Parliament and the Council in June 2011. 
An agreement on readmission with the European Union has been in force since January 2008. 

Financial assistance is provided through the Instrument for Pre-Accession Assistance (IPA). 
In 2011, management of IPA was decentralised to the country authorities. The Multi-Annual 
Indicative  Planning  Document  for  2011-13  provides  for  a  total  EU  contribution  of  €  305 
million and adopts a sector-based approach. In addition, the country continues to benefit from 
various regional and horizontal programmes. Cross border cooperation is also used to promote 
capacity  building  and  dialogue  between  the  local  and  regional  authorities  of  neighbouring 
countries, namely Bulgaria, Greece, Albania and Kosovo3.  

Since 2007 the Commission has committed an amount of over €288 million for projects to be 
implemented  in  the  country,  including  92  million  in  2010.  The  EU  financial  assistance 
portfolio managed by the EU Delegation in Skopje amounts to € 115 million. By June 2011, 
85% of this total had been contracted and more than 60% disbursed. This assistance focuses 
on  strengthening  administrative  capacities  with  particular  emphasis  on  the  rule  of  law  and 

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under UNSCR 1244/99 

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public administration sectors, tax and customs reforms, local infrastructure improvements for 
socio-economic  economic  development,  and  the  ability  to  assume  the  obligations  of  EU 
membership.  Furthermore,  support  is  given  to  the  implementation  of  the  National  Strategy 
and an Action Plan of the Decade of Roma Inclusion and the Ohrid Framework Agreement. In 
the  context  of  pre-accession,  the  EU  has  already  transferred  the  management  of  four  out  of 
five  components  of  IPA  to  the  national  authorities  under  the  Decentralised  Implementation 
System  (DIS).  Further  fine  tuning  of  the  necessary  management  and  control  systems  is  still 
needed in order to ensure higher quality standards when carrying out this responsibility. 

Civil  society  has  received  extensive  financial  support  from  the  EU  under  the  IPA  Civil 
Society  Facility  and  national  programmes,  as  well  as  through  the  European  Instrument  for 
Democracy and Human Rights. Aid objectives include the wider involvement of civil society 
in decision making and an increased capacity of independent civil society organisations. The 
national programmes currently being implemented provide significant support to improve the 
development and sustainability of civil society organisations and further capacity building of 
the  government  unit  for  NGO  cooperation.  Under  DIS,  civil  society  can  now  start  to  be 
involved in the monitoring of the overall implementation of EU aid. 

The former Yugoslav Republic of Macedonia participates in the following EU Programmes: 
'Entrepreneurship  and  Innovation  programme'  (EIP)  of  the  'Competitiveness  and  Innovation 
Framework Programme', the 'Seventh Research Framework Programme', 'Progress', 'Culture', 
'Europe for Citizens', 'Fiscalis 2013' and 'Customs 2013'.  

2. 

POLITICAL CRITERIA  

This  section  examines  the  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 compliance with international obligations, such 
as cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY). 

2.1. 

Democracy and the rule of law  

Parliament  

Dialogue  between  the  political  forces,  which  is  a  key  priority  of  the  accession  partnership, 
was  temporarily  interrupted  by  a  parliamentary  boycott  during  the  course  of  the  year.  This 
was brought to an end by early elections leading to a new parliament.  

The Parliament worked until January 2011 on the basis of dialogue between political parties. 
Several key laws related to the EU acquis were enacted.  

The Committee on EU Affairs and the National Council for EU Integration, which is chaired 
by the opposition, continued to hold regular sessions. They discussed, in particular, the 2010 
Progress Report, the related Action Plan and the annual revision of the National Programme 
for  the  adoption  of  the  acquis  (NPAA),  as  well  as  its  implementation.  The  Committee 
examined all draft laws under the National Plan for the Adoption of the Acquis.  

Efforts  to  strengthen  the  institutional  capacity  of  the  parliament  continued,  in  line  with  the 
2009  Law  on  Parliament.  Five  further  public  oversight  hearings  were  successfully  held  and 

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the Government implemented their conclusions. The operational budget of the parliament was 
increased  by  40%.  This  allowed  thirty  permanent  posts  to  be  created  within  the  Parliament 
service, as well as the renovation of the building.  

The  amendments  to  the  rules  of  procedure  adopted  in  2010,  which  aim  to  strengthen 
parliamentary cooperation, were implemented. The right of the opposition to table issues on 
the Parliament's  agenda was confirmed in practice. All seven agenda items proposed by  the 
opposition were discussed in plenary. 

The  implementation  of  the  Law  on  languages  has  moved  forward.  Draft  laws  and  other 
motions in the parliament are translated into Albanian. The use of Albanian in oral procedure 
continues in committees and in hearings, including by the chair, as well as in the plenary. The 
parliamentary TV channel is also interpreted into Albanian. The amendments adopted in July 
provide  that  all  officials  elected  or  appointed  by  the  Parliament  may  use  Albanian  when 
addressing the parliament and its bodies.  

The improved responsiveness of all members of the parliamentary Committee on inter-ethnic 
relations enabled three sessions to be held before the Parliament was dissolved.  

However,  at  the  end  of  January  the  main  opposition  party,  the  Social  Democratic  Union  of 
Macedonia  (SDSM),  led  a  boycott  of  the  parliament  by  a  majority  of  opposition  parties. 
SDSM  stated  it  was  protesting  against  undemocratic  rule.  This  included  action  by  the 
authorities, on charges of tax evasion, against a television channel known to be critical of the 
government.  The  boycott  continued  until  the  early  elections  in  June.  Convening  several 
meetings  of  political  party  leaders,  the  President  of  the  Republic  made  efforts  to  mediate  a 
resolution, but was not successful. 

The  ruling  Internal  Macedonian  Revolutionary  Organisation  (VMRO-DPMNE)  and 
Democratic  Union  for  Integration  (DUI)  coalition,  which  had  a  two-thirds  and  a  'Badinter 
majority'4,  were  able  to  continue  to  enact  laws  despite  the  boycott.  Amendments  to  the 
Constitution, the Electoral Code and the Law on Lustration were among over 200 acts enacted 
without the opposition.  

The Parliamentary Institute, whose function is to enable all parties to have greater access to 
information and analysis, is still not operational and its staff have yet to be recruited. This is 
essential in order to allow Members of Parliament to properly fulfil their role.  

Parliamentary  oversight  of  intelligence  and  counter-intelligence  services  remains  weak.  In 
2010, only one session of the parliamentary Committee was convened. There is insufficient 
cooperation  between  the  parliamentary  Committee  and  the  Bureau  for  Security  and 
Counterintelligence.  

Implementation  of  the  Law  on  Lobbying  continues  to  create  selective  access  by  interest 
groups  to  policy  making.  Lobbying  can  only  be  undertaken  at  the  invitation  of  the  relevant 
legislative  body,  and  is  permitted  for  civil  associations  but  not  for  foundations.  So  far  no 
lobbyist has registered.  

The committee of inquiry on an incident in the Parliament in July 2010 did not complete its 
work before the dissolution of the parliament, and the responsibilities were not clarified. No 

4 

majority among both the majority and non-majority communities  

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practical  steps  were  undertaken  to  prevent  future  similar  occurrences.  A  code  of  ethics  for 
Members of Parliament has not been established.  

The parliament voted for its dissolution on 14 April, 34 months into its 4-year mandate, and 
early parliamentary elections were called for 5 June. A cross party agreement was reached on 
a  code  of  conduct  for  the  elections.  The  parliamentary  elections  resulted  in  the  third 
consecutive victory of the VMRO-DPMNE-led coalition (56 seats), followed by the SDSM-
led coalition (42), DUI (15), DPA (8) and NDP (2).  

The  finding  of  the  OSCE/ODIHR  election  observation  mission  was  that  the  elections  were 
competitive, transparent, and well-administered throughout the country. On election day, the 
voters were able to freely express their choice  in a peaceful  atmosphere  from a diverse and 
pluralistic  choice  of  candidates.  Freedom  of  expression,  movement  and  assembly  was 
respected. The media provided extensive coverage of the campaign, enabling voters to make 
an informed choice. The number of women who were heads of list increased from six in 2008 
to 15 in 2011. Out of 1679 candidates, 34% were women. There was a high voter turnout of 
63%.  The  political  parties  largely  endorsed  the  elections  and  SDSM  was  returned  to  the 
parliament.  Few  official  complaints  were  filed  with  State  Election  Commission.  The  five 
lawsuits with the Administrative Court were all rejected.  

However, gaps and ambiguities remain, especially in relation to provisions for complaints, out 
of country voting and use of administrative resources. ODIHR reported credible allegations of 
insufficient  separation  between  state  and  political  party,  and  pressure  on  civil  servants. 
Political  parties  campaigned  almost  exclusively  along  ethnic  lines,  reflecting  the  ethnic 
polarisation  of  society.  The  public  broadcaster,  contrary  to  legal  obligations  and  its  public 
mandate, favoured the government and strongly criticised the opposition in its coverage.  

Some  of  the  ODIHR  recommendations  from  2009  were  addressed  prior  to  the  elections.  In 
particular, the amended Electoral Code provided that the Broadcasting Council could issue a 
rulebook  on  the  conduct  of  broadcasters;  the  campaign  financing  rules  were  tightened;  the 
counting  process  was  improved.  The  Electoral  Code  was  amended  by  a  slim  majority  and 
only  two  months  before  the  election,  which  is  not  consistent  with  best  practice.  Also,  the 
recommendation  for  a  thorough  audit  of  the  Voters'  List  has  not  been  implemented.  This 
contains over 1.8 million voters for a population of 2.05 million, and concerns remain that the 
list is inflated. Questions remain about the arrangements for out-of-country voting.  

The  new  Parliament,  still  under  the  technical  government,  enacted  in  shortened  procedure 
amendments to the Laws on Use of Flags of Communities, Languages, Broadcasting Council, 
Judicial Council, Council of Public Prosecutors and adopted an authentic interpretation of the 
Law on Amnesty. 

Overall, there has been progress in the conduct of elections. The elections were competitive 
and well-administered throughout the country. The government needs to implement fully the 
conclusions and recommendations of the OSCE/ODIHR election observation mission. Some 
progress has been made on the reform of the parliament. The implementation of the law on 
languages and of  the  rulebook of  procedure has  moved  forward,  and  the  operational  budget 
has been increased. However, political dialogue needs to be further strengthened in order that 
problems can be resolved through the institutional framework. The boycott by the opposition 
hampered the functioning of the parliament.  

Government  

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The new government coalition has actively taken forward the EU reform process and given it 
new impetus. The early election had delayed the adoption of certain measures. A revised 2011 
National Programme for the Adoption of the Acquis (NPAA) was adopted in December 2010. 
Nonetheless,  the  NPAA  does  not  specify  deadlines,  staffing  requirements  and  budgetary 
implications.  

The coalition partners enacted the sensitive Law on the census in November 2010. Following 
the decision to hold early elections, the coalition agreed to postpone the census from April to 
October.  Reaching  agreement  between  coalition  partners  on  the  decision  concerning  the 
ethnic composition of the census enumeration teams was also postponed.  

Coalition  relations  were  challenged  in  January  by  the  construction  of  a  church-shaped 
museum inside the Kale Fortress in Skopje, in a historic and ethnically mixed area. Protests 
over the construction led to an inter-ethnic clash.  

The new governing coalition was formed swiftly after the elections and was sworn in on 28 
July.  The  Government  Work  programme  2011-15  maintains  the  same  five  priorities  as  the 
previous  government:  increasing  economic  growth;  integration  into  the  EU  and  NATO; 
fighting against corruption and economic crime; maintaining good interethnic relations on the 
basis of the Ohrid Framework Agreement; investment in education, science and a knowledge 
based society.  

Decentralisation  of  government  -  which  is  a  basic  principle  of  the  Ohrid  Framework 
Agreement - continued. The action plans for implementing decentralisation were approved up 
to  2013.  An  additional  five  municipalities  (bringing  the  total  to  79  out  of  85)  entered  the 
second  and  last  phase  of  the  fiscal  decentralisation  process,  enabling  a  more  substantial 
transfer  of  competencies  and  financial  management  to  the  local  level.  Under  the  Law  on 
financing  the  units  of  local  self-government,  the  share  of  VAT  transferred  to  municipalities 
increased to 3.7% in 2011.  

The  Law  on  management  of  state-owned  land  was  adopted  and  entered  into  force  in  July 
2011.  Capacity-building  programmes  are  being  implemented  to  assist  municipalities  in  the 
areas of property tax administration, human resources and financial control. Financial affairs 
units  were  established  in  three  more  municipalities;  52  municipalities  established  internal 
audit units and in 46 municipalities an internal auditor is operating. More than 1000 municipal 
civil  servants  have  been  trained,  and  progress  was  made  in  implementing  annual  training 
programmes. 

However,  four  of  the  six  municipalities  which  remain  in  phase  1  of  the  decentralisation 
process have sizeable debts, and two lack financial management capacity. Additional efforts 
are  needed  in  order  to  prepare  them  for  moving  to  phase  2.  Blocked  accounts  remain  a 
problem  for  municipalities  in  both  phases  1  and  2.  Mechanisms  to  address  the  significant 
disparities  in  delivery  of  public  services  are  limited,  and  rural  and  small  municipalities  are 
especially  disadvantaged.  Some  municipalities  remain  weak  in  the  areas  of  monitoring  or 
enforcing collection of the property tax. 

Progress  in  meeting  the  objectives  of  decentralisation  needs  to  be  accelerated  through  the 
impetus  of  the  Ministry  of  Local  Self  Government  (MoLSG).  The  Ministry  of  Finance  also 
needs  to  strengthen  its  capacity  to  develop  policy  on  local  government  budget  issues.  The 
inter-ministerial committee for monitoring the financing of municipalities meets infrequently. 

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There  is  a  lack  of  transparency  and  coordination  of  central  funding  for  municipal  projects, 
particularly for infrastructure projects. 

Administrative  bottlenecks  continue  to  impede  the  opening  of  new  schools.  Social  care 
services are still operated centrally by the Ministry of Labour and Social Policy and they have 
yet  to  be  decentralised.  Exchange  of  data  between  the  land  registry,  the  civil  registry,  the 
revenue  office  and  the  municipalities  has  yet  to  be  strengthened  within  a  unified  data-base 
system. 

Significant additional efforts are needed at central and local levels in order to strengthen the 
administrative capacity of certain municipalities, particularly in the areas of financial control, 
strategic  planning,  human  resources  management  and  economic  development.  The  State 
Audit  Office  reported  numerous  shortcomings  by  the  MoLSG  in  applying  financial  control 
standards and procurement rules, as well as poor follow-up of previous recommendations. 

Overall,  the  government  coalition  has  overcome  difficulties  and  strengthened  its  internal 
cooperation.  The  new  government  has  given  fresh  impetus  to  the  EU  reform  process.  The 
decentralisation process needs a stronger impetus. In particular, the financial framework for 
local service delivery needs to be more transparent and equitable.  

Public administration  

There  was  progress  as  regards  the  framework  for  public  administration,  which  is  a  key 
priority  of  the  Accession  Partnership.  The  political  responsibility  for  public  administration 
(PA) reforms remained with the High Committee on Public Administration, led by the Prime 
Minister.  A  new  recomposed  Committee  was  appointed  in  August.  The  Special  Group  on 
Public Administration Reform meets regularly with the EU. The government adopted a new 
PA reform strategy for the period 2010-2015, as well as a financial assessment and an action 
plan for its implementation.  

The  managerial  and  operational  responsibility  for  the  overall  PA  was  transferred  to  the 
Ministry of Information Society and Administration (MISA). The Civil Servants Agency was 
transformed 
(AA),  while  maintaining  oversight 
responsibilities. Overall, the new institutional set-up provides a good starting point for driving 
the PA reforms forward. The budgetary, spatial, and administrative capacity of the MISA is 
not sufficient, particularly as regards administrative inspection. 

into  an  Administrative  Agency 

The Law on public  servants entered  into force in April 2011, and was further amended and 
harmonised with the Law on civil servants. MISA adopted most of the relevant implementing 
legislation  on  both  the  civil  and  public  service.  The  Law  on  civil  servants  was  amended  to 
introduce  new  elements  in  selection  and  promotion  rules.  However,  these  amendments  fall 
short of providing strategic solutions to all the existing challenges. The legal framework in the 
area of civil servants and public employees remains fragmented, allowing certain institutions 
to  be  regulated  differently,  including  in  the  area  of  salary-related  provisions.  Major 
shortcomings  remain,  in  particular  regarding  the  rules  on  recruitment,  appraisal  and 
promotion;  appointment  of  senior  managers;  and  termination  of  employment.  Further 
improvements  to  the  key  laws  are  necessary  in  order  to  ensure  that  the  principles  of 
transparent,  apolitical,  merit-based  recruitments  and  promotions  are  embedded  in  the  legal 
framework.  

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The  Law  on  general  administrative  procedures  was  amended  to  increase  accountability  by 
streamlining administrative and appeal procedures, including the procedures for the setting-up 
and functioning of second-instance appeal commissions. A State second instance Commission 
for  decision-making  in  administrative  procedures  and  labour  relations  procedures  was 
established.  In  general,  however,  the  amendments  to  the  Law  have  not  rectified  all  its 
shortcomings. The law does not define the right to an administrative appeal as a principle with 
clearly defined exceptions. The principle of 'silence is consent' is subject to a complex appeal 
procedure  which  undermines  the  application  of  the  principle  in  practice.  To  bring  about  a 
systemic change, a new, contemporary and well-structured law would be necessary. 

The registry  of public  servants  foreseen by the Law on public servants to  bring  together  all 
data on staff-related needs, requirements and procedures into one database, is not operational. 
The  AA  started  handling  complaints  by  public  servants  as  a  second  instance  body.  While  the 
administrative  capacity  of  the  human  resources  units  in  some  ministries  was  increased,  a 
number of these units at local and central level, on the other hand, remain understaffed. There 
is still insufficient capacity to perform proper staff appraisals.  

Although the government took steps to address the excessive use of temporary staff, a number 
of  questions  remain  open.  A  large  quantity  of  temporary  positions  were  converted  into 
permanent  positions  in  the  reporting  period,  while  many  posts  remain  temporary;  however 
despite  requests  no  official  figures  on  the  existing  or  transferred  positions  have  been  made 
available  by  the  authorities.  A  lack  of  consistency  in  applying  requirements  regarding 
education or experience was observed in a number of cases; some requirements appeared to 
be  tailor-made  for  particular  candidates.  Similarly,  hiring  of  new  temporary  staff  in  many 
instances  did  not  comply  with  the  procedures  laid  down  by  law.  The  accumulation  of  such 
examples raises serious concerns that the principle of merit-based and apolitical recruitment 
has not been satisfactorily followed.  

The  payroll  system  in  the  PA  remained  fragmented,  affecting  the  unity  and  mobility  of  the 
civil  and  public  service.  The  practice  of  paying  ad  hoc  allowances  to  public  servants  for 
assuming certain types of tasks  pertaining to their job duties continued to lack transparency 
and proper justification.  

About 1,600 civil servants from the non-majority communities have been assigned to the civil 
service  since  February  2011  to  comply  with  the  principle  of  equitable  representation. 
However,  the  trend  of  recruiting  employees  from  these  communities  on  a  quantitative  basis 
without  regard  to  the  real  needs  of  the  institutions  continued.  The  practice  shows  an 
insufficient  level  of  co-ordination  on  equitable  representation  between  MISA  and  the 
Secretariat  for  implementation  of  the  Ohrid  Framework  Agreement.  The  recruitment 
procedure remains vulnerable to undue political influence.  

MISA  took  practical  steps  to  improve  the  services  offered  to  citizens.  A  'one-stop-shop' 
system for electronic exchange of documents among key institutions was established. A new 
'scoreboard'  grading  system  for  use  by  citizens  was  introduced  in  selected  institutions.  The 
government adopted the Code of conduct for cooperation with the civil society organisations. 
The knowledge and use of the citizens' charter among the public remains rather tenuous.  

Regarding  financial  management,  managerial  accountability  has  yet  to  be  linked  to  public 
internal financial control. The reports of the State Audit Office continue to highlight a number 
of  shortcomings  with  regard  to  the  application  of  internal  financial  control  standards, 
procurement  rules  and  human  resources  policy.  The  quality  of  strategic  planning  within 

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central  and  local  institutions  is  insufficient,  and  is  still  confined  to  budgetary  planning.  The 
General  Secretariat  of  the  government  does  not  perform  an  effective  administrative 
governance role. Regulatory impact assessment is not applied systematically.  

A  High  Administrative  Court  was  established  to  consider  appeals  (see  also  the  section  on 
'judicial system').  

The public bodies carried out the recommendations of the Ombudsman in 80% of cases. The 
second  instance  government  commissions  and  Ministry  of  Interior  remained  the  least 
responsive bodies, followed by the Ministry of Finance and local self-government units.  

The  Constitutional  Court  increased  the  number  of  annulments  of  new  legislation  by  5%  to 
nearly  30%  of  laws.  This  raises  concerns  about  the  quality  of  legislative  drafting  by  the 
central and local administration. 

The  number  of  complaints  received  by  the  National  Commission  for  Protecting  Access  to 
Information  rose  by  two  thirds  in  2010.  More  than  half  of  the  complaints  were  successful. 
However, the work of the Commission was hindered by budget cuts and lack of co-operation 
by some state administration bodies. Information related to public expenditure continued to be 
only partially available to the public. 

There  was  some  progress  on  police  reform  with  the  entry  into  force  of  the  Act  on 
Systematisation.  It  provides  the  basis  for  strengthening  the  efficiency  of  police;  however 
additional  human  resources  are  needed  in  order  to  implement  it.  After  conducting  a 
performance evaluation process, a merit-based career and appraisal system was introduced. At 
the  same  time,  a  large  number  of  positions  were  filled  without  publishing  vacancies,  which 
raised doubts about a transparent and merit-based process.  

Overall, progress was made in the area of public administration reform in terms of policy co-
ordination  and  legislative  developments.  A  Ministry  responsible  for  public  administration 
reform  was  created  and  the  Law  on  General Administrative Procedure was amended. An e-
government  interoperability  system  was  launched  among  several  institutions.  Progress  in 
implementing  the  reforms  was  limited.  Significant  additional  efforts  are  needed  in  order  to 
guarantee  transparency,  professionalism  and  independence  of  the  public  administration  in 
practice. Further improvements of the current legal framework are necessary, in particular as 
regards the Law on general administrative procedures. 

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

Further  amendments  were  made  to  the  legal  framework,  which  was  a  key  priority  of  the 
accession partnership.  

The  Minister  of  Justice's  voting  rights  on  the  Judicial  Council  were  removed  in  line  with 
European Standards and his ex officio participation on the Council of Public Prosecutors was 
abolished. 

A  judicial  reform  package  was  enacted  consisting  of  a  new  Criminal  Procedure  Code  and 
amendments to the Law on courts, the Law on the Judicial Council, the Law on administrative 
disputes, the Law on the court budget and the Law on the court service, and amendments to 
the Law on Litigation entered into force.  

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The  purpose  of  the  new  Criminal  Procedure  Code  is  to  improve  the  efficiency  of  criminal 
procedures  by  strengthening  the role  of  the  public  prosecutor,  establishing  a  judicial  police, 
streamlining the investigation phase and introducing new investigative techniques. It aims to 
considerably  improve  the  capacity  to  tackle  complex  organised  crime  and  corruption  cases. 
Training  of  law  enforcement  agents,  prosecutors  and  judges  on  implementing  the  new 
provisions  has  begun,  although  there  are  concerns  that  the  organisational  and  institutional 
arrangements for such a major reform as not sufficiently advanced. The new framework will 
apply as from November 2012. 

Amendments  to  the  Law  on  Litigation  entered  into  force  in  September  2011,  introducing 
electronic  service  of  documents,  audio  recordings  of  hearings,  tighter  procedural  deadlines, 
the  use  of  a  preparatory  hearing  and  an  obligation  on  courts  to  inform  the  parties  of  the 
possibility of mediation. The changes aim at improving the civil procedure in order to shorten 
the duration of court proceedings, as well as promoting alternative dispute resolution.  

The  Law  on  Administrative  Disputes  was  amended  in  order  to  establish  a  High 
Administrative  Court  with  jurisdiction  to  decide  on  appeals  against  decisions  of  the 
Administrative  Court,  which  itself  hears  appeals  against  decisions  of  misdemeanour 
commissions in the administrative bodies, government second instance commissions and acts 
of local self-government bodies. The court became operational in July 2011. 15 judges have 
been  appointed,  the  court  service  staff  has  been  recruited  and  adequate  premises  and 
equipment were secured. 

The  amendments  to  the  Law  on  the  court  budget  introduced  an  increase  in  state  budget 
allocations  from  0.4%  to  0.8%  of  GDP,  to  be  phased  in  by  2015.  There  is  also  a  provision 
protecting  the  court  budget  in  the  event  of  a  rebalancing  of  the  national  budget  and  a 
requirement  that  at  least  2.5%  must  be  spent  on  vocational  training  for  the  judiciary  and 
judicial  staff.  However,  in  practice,  inadequate  funding  of  the  courts  is  hampering  further 
progress.  

The  amendments  to  the  Act  on  Courts  and  the  Act  on  the  Judicial  Council  refined  or 
introduced measures to ensure the competence of judges, including minimum educational and 
professional requirements, psychological and ethics testing and annual evaluation criteria. The 
complaints mechanisms available to parties to court proceedings, both under the competence 
of  the  Supreme  Court  (in  the  case  of  unreasonable  length  of  proceedings)  and  the  Judicial 
Council  (in  the  case  of  judicial  misconduct)  were  refined.  Measures  aimed  at  improving 
transparency  and  public  confidence  were  introduced.  However,  the  entry  into  effect  of  new 
minimal requirements of judicial experience for Appeal Court and Supreme Court judges was 
delayed until mid-2013 and new grounds for dismissal of judges linked to poor efficiency or 
performance may have a negative impact on independent decision-making. 

In 2010, the Judicial Council appointed 43 first instance judges and 27 higher instance judges. 
The  principle  of  equitable  representation  was  observed,  as  was  gender  balance.  In  the  same 
period, the Council of Public Prosecutors appointed 23 public prosecutors.  

The Parliament dismissed the former President of the Constitutional Court in April after the 
Supreme  Court,  on  appeal,  confirmed  the  finding  of  the  Lustration  committee  that  he  had 
cooperated with secret services of the former Socialist Federal Republic of Yugoslavia.  

The  Academy  for  Training  of  Judges  and  Prosecutors  (ATJP)  continued  to  make  a  vital 
contribution to the professionalism and competence of the judiciary. The third generation of 

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candidates  successfully  completed  their  initial  training  at  the  end  of  2010,  and  the  fourth 
generation  began  theirs.  The  ATJP  also  continued  to  provide  ongoing  in-service  training. 
However, the ATJP's human resources and premises need to be reinforced in light of the high 
number of training activities it carries out each year.  

Greater  efforts  are  needed  in  order  to  ensure  merit-based  recruitment,  drawing  on  qualified 
graduates  from  the  ATJP  rather  than  from  other  sources.  22  of  the  candidate  judges  and 
prosecutors  who  graduated  in  the  last  3  years  have  not  yet  been  recruited.  Moreover,  the 
current threshold for recruitment of non-graduates to first instance judicial posts (50%) was 
considerably  exceeded  and  the  transitional  period,  after  which  all  newly  appointed  first 
instance judges must be ATJP graduates, was extended to January 2013.  

Overall,  further  amendments  were  made  to  the  legal  framework  as  regards  independence, 
efficiency  and  transparency  of  justice.  In  November  a  judicial  reform  package  was  adopted 
and  in  July,  the  Minister  of  Justice's  voting  rights  on  the  Judicial  Council  were  removed. 
However, considerable efforts are now needed in order to strengthen the quality of justice, in 
particular  through  continuous  training  and  merit-based  recruitment  procedures,  and  to 
safeguard the independence of judges in the context of evaluation and dismissal procedures. 
Further  organisational  and  institutional  coordination  is  also  needed  to  ensure  the  smooth 
implementation  of  the  new  legal  framework  and  structures  introduced  by  the  Criminal 
Procedure Code.  

Anti-corruption policy (See also Chapter 23 – Judiciary and fundamental rights) 

Further  amendments  to  the  legal  framework,  which  are  a  key  priority  of  the  accession 
partnership, were made. 

Legislative  amendments  were  adopted  with  a  view  to  implementing  GRECO's  third  round 
recommendations concerning incrimination and transparency of party funding. The amended 
Criminal  Code  refines  the  scope  of  incrimination  for  bribery  and  trading  in  influence  and 
introduces  criminal  liability  for  failure  to  report  funds  used  to  finance  electoral  campaigns. 
The  amended  Electoral  Code  introduced  a  requirement  to  submit  financial  reports  for  all 
election  campaigns  to  the  relevant  authorities.  The  new  Criminal  Procedure  Code,  which 
becomes  applicable  in  November  2012,  strengthens  the  role  of  the  public  prosecutor  in  the 
pre-trial procedure and introduces a number of special investigative measures. However, the 
Law on financing of political parties still remains to be amended.  

In  2010,  the  Sector  for  Internal  Control  and  Professional  standards  within  the  Ministry  of 
Interior brought criminal charges against 29 police officers for criminal offences, including 16 
cases  of  alleged  abuse  of  an  official  position.  Five  police  officers  from  one  border  crossing 
point  were  charged  as  part  of  a  single  operation.  On  the  whole  the  number  of  instances  of 
corruption  among  the  border  police  has  been  decreasing  as  a  result  of  anti-corruption 
programmes,  anticorruption  training,  CCTV  monitoring  and  salary  increases.  The  Customs 
Administration  should  be  prioritized  as  a  high  corruption  risk  in  the  development  and 
implementation of future anti-corruption programmes. 

The  case  of  high  level  corruption  concerning  the  former  Director  of  the  Public  Revenue 
Office  was  completed  when  the  conviction  was  confirmed  by  the  Supreme  Court.  The  four 
other high-level corruption cases in which the defendants (including a former prime minister, 
a  former  minister  of  defence  and  a  former  governor  of  the  National  Bank)  had  previously 
been  sentenced  to  imprisonment,  were  quashed  on  appeal  and  returned  to  the  first  instance 

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courts for retrial, due to insufficient examination of the facts. The capacity of the judiciary to 
deal with sensitive high level corruption cases remains weak.  

The lack of systematic content checks on asset declarations and conflict of interest statements 
hampers the effectiveness of the reporting obligation in deterring corruptive practices in the 
public  administration.  The  SCPC,  in  cooperation  with  a  number  of  other  institutions,  has 
introduced  a  methodology  for  carrying  out  verifications  of  asset  declarations;  the  process 
needs  to  be  taken  forward.  Legislative  changes  are  still  necessary  before  systematic  content 
checks  can  be  carried  out  on  conflict  of  interest  statements.  Conflicts  of  interest  are  not 
sanctioned in practice.  

The legal framework and the measures taken as regards the financing of political parties are 
deficient. The governing coalition parties spent more on election financing in 2011 than their 
declared  income.  Questions  have  also  been  raised  about  the  legality  of  SDSM's  campaign 
financing.  However  the  institutional  structure  for  addressing  campaign  financing  and  the 
sanctioning system remain unclear. 

Transparency of public expenditure remains unsatisfactory. The SCPC recommended pressing 
criminal charges for the misuse of public funds, but none of the cases forwarded in 2009 and 
2010  to  the  Public  Prosecutor's  Office  have  been  resolved.  Existing  legislation  on  public 
access to information has yet to be amended in order to ensure full transparency. The internal 
control  mechanisms  in  public  administration  remain  critically  weak.  Legal  and  institutional 
protection  of  whistle  blowers  continues  to  be  problematic  and  insufficient,  discouraging 
reporting of suspicious cases. 

The  competent  bodies  tasked  with  combating  corruption  continue  to  lack  a  pro-active 
approach  and  failed  to  dispel  widespread  allegations  of  corruption  in  key  areas  of  concern, 
such as public procurement and financing of political parties. A convincing track record has 
yet to be established for prosecutions and convictions. The new Criminal Code provisions on 
extended confiscation, illicit enrichment and criminal liability of legal persons have yet to be 
implemented.  

The  State  Commission  for  the  Prevention  of  Corruption  (SCPC),  the  Anti-corruption  Unit 
within  the  Organised  Crime  Department  of  the  Ministry  of  Interior  and  the  Basic  Public 
Prosecutor's  Office  for  the  Fight  against  Organised  Crime  and  Corruption  all  remain 
understaffed  and  underfinanced.  The  specialisation  of  law  enforcement  agents  and  the 
judiciary at local level, particularly in the area of petty corruption, remains insufficient.  

The Law on prevention of corruption was amended to confer professional status on the SCPC; 
however, public confidence in its independence remains fragile. Questions have been raised 
about the criteria used by parliament in the selection of the seven new members of the SCPC 
in  April.  The  SCPC  itself  concluded  in  its  2010  annual  report  that  the  significant  cut  in  its 
budget and mandate called into question the political will to combat corruption effectively.  

Cooperation between the Ministry of Justice, SCPC and law enforcement agencies needs to be 
strengthened. Meaningful analysis of the level and type of corruption in various areas has yet 
to  be  carried  out.  Collection  and  processing  of  relevant  data  for  measuring  the  extent  and 
nature  of  corruption,  as  well  as  the  effectiveness  of  anti-corruption  measures,  remain 
deficient. Corruption remains a serious concern. 

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Overall,  further  amendments  were  made  to  the  legal  framework  for  anti-corruption  policy, 
which  is  a  key  priority  of  the  accession  partnership.  GRECO  recommendations  were 
addressed  and  the  legal  framework  is  well  advanced.  Limited  progress  was  made  in 
implementation.  A  track  record  in  handling  high  level  corruption  cases  has  yet  to  be 
established.  The  verification  of  declarations  of  assets  and  conflicts  of  interest  needs  to  be 
systematised and institutionalised. Transparency of public expenditure and of the funding of 
political  parties  remains  insufficient.  More  pro-active  inter-institutional  cooperation  is 
necessary. Corruption remains prevalent in many areas and continues to be a serious problem.  

2.2. 

Human  rights  and  the protection of minorities (see  also Chapter  23 –  Judiciary 
and fundamental rights) 

Observance of international human rights law 

No  progress  was  made  as  regards  the  ratification  of  international  human  rights 
instruments.  The  European  Charter  for  regional  or  minority  languages  has  still  not  been 
ratified.  

During  the  reporting  period,  the  European  Court  of  Human  Rights  (ECtHR)  delivered  8 
judgements  finding  that  the  former  Yugoslav  Republic  of  Macedonia  had  violated  rights 
guaranteed  by  the  European  Convention  on  Human  Rights  (ECHR).  A  total  of  374  new 
applications allocated to a decision body have been made to the ECtHR since October 2010. 
In September 2011, 1,111 allocated applications regarding the former Yugoslav Republic of 
Macedonia were pending before the ECtHR. 

Limited progress can be reported in the promotion and enforcement of human rights. The 
implementation of legal framework was uneven, while the institutional set up was expanded 
with  the  recent  establishment  of  the  Commission  for  protection  against  discrimination.  The 
three new units within the Ombudsman Office remain understaffed, with three employees in 
each.  

In  November  2010  the  country  concluded  its  chairmanship  of  the  Council  of  Europe 
Committee  of  Ministers.  The  country's  programme  focused  on  the  three  priorities  of 
strengthening  human  rights  protection,  fostering  integration  while  respecting  diversity,  and 
promoting youth participation.  

Civil and political rights  

As  regards  the  prevention  of  torture  and  ill-treatment  and  the  fight  against  impunity, 
legislative provisions in this area are yet to be translated into a consistent and comprehensive 
practice.  Systemic  deficiencies  remain  with  regard  to  combating  impunity  within  the  law 
enforcement  agencies.  Allegations  continued  of  ill-treatment  by  the  special  'Alpha'  mobile 
police unit, which now operates only in Skopje. A member of the unit was charged with the 
murder of a young man during a post-election rally in the centre of Skopje on 6 June. This has 
increased calls for the Alpha unit to be disbanded. 

The  effectiveness  of  prosecutors  and  judges  in  taking  appropriate  action  when  there  are 
indications of ill-treatment by the police remains a concern. The complaints system remains 
weak and the data-collection system is poor. The number of allegations regarding ill-treatment 
or the use of means of restraint towards persons detained in police custody remains high. In 
2010, 238 complaints were filed with the Ombudsman with regard to police behaviour, 23% 

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of  which  related  to  ill-treatment.  There  are  still  a  significant  number  of  police  stations  with 
substandard cells. 

Knowledge  of  international  and  European  standards  among  police  officers  is  low  and 
safeguards  against  ill-treatment  in  police  stations  are  not  adequately  enforced.  Decisions  by 
the ECtHR requiring an independent mechanism for oversight of the police, in the light of ill 
treatment of the Roma population, have still not been implemented. Ill-treatment of the Roma 
remains a concern.  

In the field of prison system reform, the government adopted an annual programme for the 
construction, refurbishment and maintenance of prisons for 2011. Parts of the prisons where 
degrading  and  inhumane  conditions  had  been  reported,  including  the  semi-open  wing  of 
Idrizovo prison, were renovated.  

The  country  has  yet  to  develop  an  effective  national  strategy  for  the  prison  system. 
Overcrowding  and  poor  health-care  remain  causes  for  concern.  Most  of  the  prisons  remain 
underfunded,  understaffed  and  unable  to  cover  their  basic  maintenance  expenses.  However 
the  conditions  of  some  prisons,  in  particular  the  Idrizovo  closed  ward,  remain  below  the 
required  standard.  Conditions  in  the  Tetovo  Educational-Correctional  Institution  for 
rehabilitating minors continue to raise serious concerns. An effective independent inspection 
mechanism is needed in order to safeguard against human rights violations in prisons. 

There has been no response to the European Parliament's recommendation of 2007 on follow-
up to the Khaled El-Masri case of alleged extra-judicial detention. 

The  first  year  of  implementation  of  the  Law  on  legal  aid  has  helped  to  improve  access  to 
justice. Two types of legal aid are provided: initial counselling provided by the local units of 
the  Ministry  of  Justice  and  registered  civil  society  organisations  (CSO),  and  legal  aid  in 
judicial and in administrative procedures. However, only two CSOs were able to register as 
providers of legal aid. Also, no legal aid was provided for asylum seekers.  

The overall constitutional and legal framework for the protection of freedom of expression is 
generally  in  place,  but  attention  needs  to  be  paid  to  ensuring  that  its  implementation  is 
consistent, transparent and in line with the case law of the European Court of Human Rights.  

As  regards  the  media,  the  first  independent  trade  union  of  journalists  and  media  employees 
has been established with the aim of improving working conditions. The collection rate of the 
monthly broadcasting fee has been increased to strengthen the financial viability of the public 
service  broadcaster.  Nonetheless,  additional  efforts  are  needed  to  ensure  its  sustainable 
funding  as  well  as  that  of  the  Broadcasting  Council.  The  public  service  broadcaster  is 
currently failing to play its statutory role.  

Media  ownership  remains  opaque,  highly  concentrated  and  with  strong  political  links.  The 
government is one of the biggest advertisers in the country and there are concerns that funds 
are directed to television channels which are supportive of the government. Certain television 
channels  are  major  donors  to  political  parties.  The  investigation,  on  charges  of  tax  evasion, 
and subsequent closure of a television channel A1TV and newspapers which are critical of the 
government  has  raised  concerns  about  the  proportionality  and  selectivity  of  the  procedure. 
The diversity of the media landscape has been weakened. Printing of the newspapers Vreme, 
Shpic and Koha e Re stopped in early July. Editors and journalists are faced with increasing 
undue political pressure and intimidation.  

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Defamation has not been decriminalised and the penalties specified by law include unlimited 
fines or imprisonment (although in practice no journalists were sentenced to imprisonment). 
Individual  journalists  are  held  personally  liable  for  reporting  content  and  therefore  are 
exposed  to  potentially  very  high  fines.  In  this  context,  intimidation  of  journalists  and 
increasing self-censorship remains a cause for concern. 

Amendments  to  the  Law  on  the  Broadcasting  Council  have  increased  the  number  of 
appointees from bodies controlled by the government. The amendments were adopted without 
consulting  the  Broadcasting  Council  or  any  public  debate.  The  amendments  raise  concerns 
about weakening of the independence of the body and increasing bureaucratisation. There is 
currently no Press Council for the print media.  

In September the government launched a round table process with journalists and the media in 
order to establish a dialogue on issues of concern and find solutions.  

With  regard  to  freedom  of  assembly  and  association,  the  overall  situation  is  satisfactory. 
The  government's  strategy  and  action  plan  for  cooperation  with  civil  society  organisations 
continues to be implemented. The Code of Good Practices for Participation of Civil Society 
Organisations  in  Policy  Making  Processes  was  adopted  in  July  2011.  Involvement  of  civil 
society  in  the  policy  development  process  and  in  legislative  drafting  is  making  modest 
progress.  A  consistent  approach  encouraging  all-inclusive  public  participation  in  decision 
making, including appropriate institutional mechanisms, needs to be further developed.  

The  system  for  the  allocation  of  state  financing  to  civil  society  organisations  needs  further 
improvement, in particular as regards public benefit organisations. Civil society organisations 
remain  heavily  dependent  on  foreign  funding  and  the  lack  of  sufficient  financial  resources 
remains a serious constraint.  

Officials  of  political  parties  and  Members  of  Parliament  and  some  media  launched  public 
attacks  on  critically  oriented  CSOs,  with  allegations  of  politicisation  of  CSOs  and  money 
laundering.  The  Executive  Director  of  the  Open  Society  Institute  was  found  guilty  by  the 
Lustration Committee of collaboration with the former Yugoslav State Security Service. Two 
members of the committee have been boycotting its work in protest at this decision.  

As  regards  freedom  of  thought,  conscience  and  religion,  28  religious  entities  were 
registered under the Law on the legal status of churches, religious communities and religious 
groups, while 6 were rejected, including the application from the Bektashi community from 
Tetovo on the grounds of using the same name as the already registered Bektashi community 
from Kičevo.  

Overall,  whilst  civil  and  political  rights  are  broadly  respected,  further progress  was  limited. 
Parts  of  the  prisons  were  renovated.  The  financial  viability  of  the  public  broadcaster  is 
beginning to be addressed. However, weaknesses with regard to combating impunity within 
the  law  enforcement  agencies  remain.  The  country  has  yet  to  develop  an  effective  national 
strategy  for  the  prison  system.  Editors  and  journalists  have  faced  increasing  undue  political 
pressure  and  intimidation.  In  this  context,  journalists  and  editorial  policies  are  easily 
influenced, resulting in widespread self-censorship.  

Economic and social rights (see also Chapter 19 – Social policy and employment) 

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As  regards  women's  rights  and  gender  equality,  implementation  of  the  national  strategy 
against  domestic  violence  has  continued.  Awareness  of  domestic  violence  among  the 
population improved and some initiatives have been undertaken to respond better to the needs 
of victims. The capacity of the national coordination body for the national strategy to combat 
domestic  violence  was  strengthened.  Some  progress  was  made  to  address  women's  health 
needs.  The  equal  opportunity  issue  is  not  a  political  priority  of  the  government. 
Discriminatory  customs,  traditions  and  stereotypes  are  widespread  and  undermine  women's 
basic rights. Participation of women in political life at local level remains low. Roma women 
and  girls  still  suffer  from  both  racial  and  gender  discrimination.  Some  very  limited  actions 
targeting Roma women have been implemented and a more pro-active approach is needed to 
implement the existing national action plans. 

Some  progress  was  made  in  the  area  of  children's  rights.  The  National  Strategy  on 
Prevention of Juvenile Delinquency was adopted by the recently established National Council 
for Prevention of Juvenile Delinquency. Adequate financial and administrative resources and 
close  inter-institutional  cooperation  are  needed  to  properly  implement  the  amended  Law  on 
Juvenile Justice. The number of specialized staff to deal with juvenile victims and children in 
conflict with the law is insufficient, and further training is much needed. Police detention and 
educational-correctional centers fail to meet standards on administration of juvenile justice, in 
particular on the employment of psychologists and social workers in courts. The Ombudsman 
reported  violations  of  basic  human  rights  of  juveniles  in  detention,  including  limited  or  no 
access to medical service, no access to education and enforcement of solitary confinement.  

The  percentage  of  children  living  under  the  poverty  line  rose  further  to  nearly  37%. 
Institutional  support  for  the  prevention  of  abuse  and  protection  of  children's  rights  is  not 
adequate. Care and response services for the victims are very limited and suffer from a lack of 
sufficient professional skills. The number of reported cases of sexual abuse and paedophilia 
remained  approximately  the  same,  but  reported  cases  are  considered  to  be  only  a  small 
proportion of the total problem. For the first time, the Ombudsman investigated the trafficking 
of children inside and outside the country. Street children, almost exclusively Roma, remain a 
phenomenon  often  linked  to  begging.  Strategies  need  to  be  developed  and  implemented  to 
further engage them in the educational system. There is a pressing need to employ specialised 
staff as psychologists and educational specialists dealing with children with disabilities.  

Concerning socially vulnerable persons and/or persons with disabilities, efforts have been 
made towards deinstitutionalisation, such as including civil society in the provision of mental 
health  care  services  and  opening  further  communal  housing  units.  However,  material 
conditions  and  inhumane  and  degrading  treatment  in  psychiatric  institutions,  notably  Demir 
Kapija,  Demir  Hisar  and  Negorci,  remain  a  concern.  The  implementation  of  the  national 
strategy  on  equality  of  rights  of  people  with  disabilities  2010-2018  has  not  progressed. 
Overall, social integration of people with disabilities remains limited.  

Some progress can be reported in the area of anti-discrimination policies. The Commission 
for  protection  against  discrimination  has  become  operational  and  has  started  to  act  on  the 
complaints  submitted.  The  majority  of  the  complaints  were  on  political  and  ethnic  grounds. 
However,  the  law  on  anti-discrimination  remains  to  be  fully  aligned  with  the  acquis. 
Discrimination  on  grounds  of  sexual  orientation  is  still  omitted.  Also,  the  capacities  of  the 
Commission need to be strengthened. The Lesbian, Gay, Bisexual and Transgender (LGBT) 
community continue to be subjected to discrimination and stigmatisation. University and high 
school text books treat homosexuality as a disease. There is a major need to raise awareness 

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not  only  of  the  new  provisions  contained  in  the  enacted  law,  but  also  with  reference  to  the 
principles of respect and tolerance of diversity.  

As regards labour and trade unions rights, there are 39 trade unions listed in the register of 
the  Ministry  of  Labour  and  Social  Policy  and  7  employers'  associations.  The  criteria  for 
representative  participation  of  social  partners  in  the  bipartite  and  tripartite  social  dialogue 
provisioned in the labour law were implemented. The signing of collective agreements in the 
public sector by the trade unions was initiated. However, the capacity of social partners has 
not  improved,  as  trade  unions  still  do  not  have  stable  finances  and  management  capacity. 
Participation  by  social  partners  in  the  policy  development  process  continues  to  be  weak. 
Bipartite and tripartite social dialogue has not improved.  

As regards property rights, the process of returning property confiscated during the period of 
the  Socialist  Federal  Republic  of  Yugoslavia  continues  to  extend  substantially  beyond  the 
legal deadlines. The Constitutional Court annulled the retroactive effect of the amendments to 
the Law on denationalisation. Return of property was substituted by reimbursement in bonds. 
The  Constitutional  court  also  annulled  the  provisions  of  the  Law  on  denationalisation  that 
excluded its applicability to religious communities. The enforcement of restitution claims for 
which a final decision has been taken remains unsatisfactory. The backlog of property dispute 
proceedings continued to cause delays.  

Overall, social and economic rights are broadly in place, and some further progress was made. 
Awareness  of  domestic  violence  among  the  population  improved.  New  criteria  for 
representative participation of the social partners were implemented. The National Council for 
Prevention of Juvenile Delinquency and the Commission for protection against discrimination 
have become operational. The law on anti-discrimination remains to be fully aligned with the 
acquis, notably as regards discrimination on grounds of sexual orientation. The capacity of the 
anti-discrimination Commission needs to be strengthened.  

Respect for and protection of minorities, cultural rights 

As  regards  minorities,  the  10th  anniversary  of  the  Ohrid  Framework  Agreement  (OFA) 
provided  an  important  opportunity  for  enhanced  dialogue  between  the  communities  in  the 
country.  The  President  of  the  Republic  and  the  Prime  Minister  both  participated  in  events 
marking this milestone. An institutional framework has been developed to protect the rights of 
minorities and to support inter-ethnic dialogue.  

The current Secretariat for the Implementation of the Ohrid Framework Agreement (SIOFA) 
strategic  plan  embraces  a  more  comprehensive  understanding  of  different  policy  aspects 
deriving  from  OFA,  such  as  integrated  education,  use  of  languages,  decentralisation  and 
cooperation with civil society. The SIOFA budget for 2011 was significantly increased.  

However,  SIOFA  faced  problems  in  recruiting  sufficiently  qualified  senior  staff.  Limited 
funds  were  allocated  to  increase  its  capacities  and  efficiency.  SIOFA  strategic  planning 
capacities and internal control standards remained low.  

Some progress was made in the implementation of the Law on the use of Languages spoken 
by at least 20% of the citizens. In parliament, implementation of the Law on Languages made 
headway, with the recruitment of more skilled translators and interpreters.  

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However,  no  clear  mechanism  for  the  overall  monitoring  and  assessment  of  the 
implementation  of  the  Law  on  languages  has  been  established  to  date.  Some  institutions 
continue to face a shortage of qualified and experienced interpreters. Optional teaching of the 
languages  of  smaller  ethnic  communities  is  not  equally  available  because  of  the  limited 
availability of textbooks and the shortage of qualified teachers. 

Efforts were made to promote and implement the Strategy on Integrated Education, in close 
cooperation with the OSCE. An inter-ministerial coordination working group was established. 
There are close consultations with the international donor community on the implementation 
and  concrete  planned  activities  of  the  strategy  in  order  to  guarantee  efficiency  and  avoid 
duplication. However, the Ministry of Education and Science lacks the human and financial 
capacities necessary to support the implementation of the strategy. Despite government efforts 
to  promote  the  principles  of  integrated  education,  the  practice  of  separating  pupils  along 
ethnic  lines  or  language  shifts  continued  in  a  number  of  schools.  Cases  of  inter-ethnic 
violence in secondary schools persisted.  

Inter-ethnic relations were strained by certain incidents. The urban plan 'Skopje 2014' created 
inter-ethnic  sensitivities.  Members  of  non-majority  communities  complained  about  the 
neglect of their respective historical and cultural monuments. In February the construction of 
a  museum  in  the  shape  of  a  church  inside  the  Kale  fortress  in  Skopje  led  to  a  violent 
confrontation between members of the two main ethnic communities. The direct involvement 
of politicians of one of the parties of the government coalition in the events caused concern.  

Committees for relations among communities were established in the 20 municipalities where 
they are required by law, as well as in 14 other municipalities on a voluntary basis. A small 
number  of  them  improved  their  capacities  and  visibility  among  their  community.  However, 
the majority of them continue to face lack of resources, unclear competencies and insufficient 
representation of ethnic communities living in the municipality.  

The  administrative  capacities  and  visibility  of  the  agency  for  protecting  the  rights  of 
minorities which represent less than 20% of the population have increased slightly. However, 
due  to  an  unclear  mandate  and  significant  reduction  of  the  budget  in  2011,  the  Agency  is 
unable to accomplish most of its tasks defined by the law.  

The overall number of civil servants from the non-majority ethnic communities reached 30%, 
which  is  broadly  in  line  with  the  demographic  structure.  Efforts  were  made  to  increase  the 
representation  of  the  smaller  communities  in  the  civil  service,  notably  the  Roma  and  the 
Turkish  community.  In  2010  there  was  a  46%  increase  of  members  of  Roma  and  a  12% 
increase in the Turkish community. However, more efforts are needed in order to improve the 
quality of the recruitment process. A large number of newly recruited civil servants received 
salaries, even though they were not assigned any tasks or responsibilities. Representation of 
the non-majority communities at senior level remains very low.  

Some progress can be reported in the area of Roma inclusion. In July, the country took over 
the  one-year  Presidency  of  the  Decade  of  Roma  Inclusion.  It  also  held  a  seminar  with  the 
European  Commission  which  adopted  new  recommendations  for  action  and  agreed  to  meet 
regularly to monitor progress. Efforts were made to implement the action plan for education 
by carrying out projects in the area of education and in the social sphere. Enrolment rates of 
Roma children in secondary and university education steadily increased. Changes were made 
in the law on social protection in order to address the over-representation of Roma in special 

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schools  for  children  with  learning  disabilities.  The  Roma  health  mediator  programme  was 
initiated in 8 municipalities.  

Some  active  labour  market  measures  targeting  Roma  continued  to  be  implemented.  Despite 
budgetary restrictions the financial support for Roma programmes was maintained at the 2009 
and 2010 levels.  

However, no measures were taken to systematically address the issue of personal documents, 
which  represents  a  major  obstacle  to  accessing  social,  housing  and  health  benefits.  Also, 
Roma children continue to be over represented in classes for children with special educational 
needs. A recent report concluded that about half the children were Roma whereas they make 
up only 2.6% of the population. This is not inline with ECtHR judgements which reaffirm the 
right  of  Roma  children  to  non-discriminatory  schooling.  The  pace  of  implementation  of  the 
Roma  Strategy  and  the  action  plans  in  the  framework  of  the  2005-2015  Decade  of  Roma 
Inclusion, which had reached its halfway point, continued to slow down. There are no clear 
evaluation and monitoring mechanisms in place. State funds allocated to the implementation 
of the Action Plans remain insufficient to meet the needs. There was no improvement in the 
administrative capacities of the office of the Roma minister without portfolio and of the unit 
for implementation of the Roma Strategy. No significant steps were taken to produce official 
data on Roma.  

High  unemployment  rates  persist,  especially  among  Roma  women  and  youth,  and  lead  to 
precarious housing and living conditions, poor health as well as low school attendance, low 
income and high mortality rates among Roma.  

Allegations of police brutality and excessive use of force towards the Roma continued. Many 
Roma are reluctant to lodge complaints, especially when ill treatment by police is involved.  

In  June  2011,  there  were  1,554  refugees  and  internally  displaced  persons  (IDPs)  in  the 
country,  the  majority  of  whom  continue  to  be  Roma  from  Kosovo;  of  these  only  24  were 
recognised  refugees  and  a  long  term  solution  for  the  remainder  needs  to  be  found.  The 
government  provides  some  financial  assistance  to  Roma  refugees  from  Kosovo.  Positive 
decisions  have  been  adopted  by  the  Administrative  Court  in  judicial  review  and  appeal 
procedures.  These  decisions  continued  to  be  handed  down  on  procedural  and  not  on 
substantive  grounds.  However,  the  mechanism  for  determining  refugee  status  still  faces 
shortcomings.  Roma  refugees  from  Kosovo  continue  to  encounter  particularly  difficult 
conditions.  

The number of registered IDPs decreased from 621 in 2009 to 611 in 2010. The majority of 
the complaints lodged by IDPs against the State for damage caused by the 2001 conflict are 
still pending in court. 

Overall, some progress was achieved as regards the respect for and protection of minorities 
and cultural rights. The Ohrid Framework Agreement continues to be an essential element for 
democracy and rule of law. In parliament, implementation of the Law on Languages moved 
forward. Representation of the Roma and Turkish community in the civil service increased. 
The integration of the Roma in the education system improved, with increased enrolment in 
secondary  and  university  education.  Continued  dialogue  amongst  all  the  communities  is 
necessary in order to foster trust, especially in the areas of education, culture and language. 
Roma  continue  to  face  very  difficult  living  conditions  and  discrimination  and  additional 
efforts are necessary.  

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2.3. 

Regional issues and international obligations 

The  former  Yugoslav  Republic  of  Macedonia  continues  to  cooperate  fully  with  the 
International  Criminal  Tribunal  for  the  former  Yugoslavia  (ICTY).  There  are  no 
remaining cases or appeals pending in The Hague. The four cases that the ICTY transferred 
back  to  the  national  authorities  in  2008  reached  the  domestic  court  system.  In  July  the 
Parliament  adopted  an  Authentic  Interpretation  of  the  Amnesty  Law  which  stated  that  the 
amnesty  should  cover  the  suspects  of  all  cases  that  will  not  be  processed  by  the  ICTY. 
Consequently, in September, one of the cases was dismissed by the Criminal Court in Skopje 
at the request of the Public Prosecution. It was also stated in the hearing that injured persons 
in  the  case  could  demand  compensation  through  a  separate  lawsuit.  The  status  of  the  other 
case files remains to be determined. Ethnic Albanian political parties assert that all the cases 
are covered by the 2002 Amnesty Law.  

The  former  Yugoslav  Republic  of  Macedonia  has  aligned  with  the  Council  Decision 
advancing  universal  support  for  the  International  Criminal  Court  and  promoting  the  widest 
possible participation in it5. However, it still maintains the 2003 bilateral immunity agreement 
with  the  United  States  granting  exemptions  for  US  citizens  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 
country's  process  of  moving  towards  the  European  Union.  The  country  remained  fully 
engaged  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.  The  country  signed  the  additional  protocol  for  further  liberalisation  of 
agriculture  under  the  CEFTA  agreement.  The  country  continued  to  contribute  to  the  EU 
ALTHEA  mission  in  Bosnia  and  Herzegovina.  In  March,  within  the  framework  of  the 
SEECP,  the  former  Yugoslav  Republic  of  Macedonia  endorsed  the  Regional  Strategic 
Document and Action Plan on Justice and Home Affairs 2011-2013. The country supports the 
RECOM initiative on reconciliation. 

The former Yugoslav Republic of Macedonia continues to play a constructive role as regards 
bilateral  relations  with  neighbouring  Member  States  and  other  enlargement  countries. 
Relations with Albania remained good and an agreement for full liberalisation of bilateral and 
transit  transportation  between  the  two  countries  was  signed.  Relations  with  Bosnia  and 
Herzegovina continued to be good and negotiations started on agreements on cooperation in 
the  field  of  health  and  medical  sciences,  mutual  enforcement  of  court  decisions  in  criminal 
matters and on legal aid in civil and criminal matters. Relations with Croatia remained good. 
As regards Montenegro, agreements were signed for economic and social cooperation, and for 
cooperation in the fields of education, science and technology, and on extradition of citizens 
involved  in  organised  crime,  corruption  and  money  laundering.  Furthermore,  a  bilateral 
investment protection agreement and an agreement for coordination of social security systems 
were concluded.  

5 

Council Decision 2011/168/CFSP of 29 March 2011. 

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Relations  with  Serbia  remained  good.  A  bilateral  readmission  agreement  was  signed. 
Furthermore, a protocol for joint border patrols was signed and a joint contact centre for the 
police  and  border  patrol  was  established.  The  country  provided  humanitarian  assistance  to 
Serbia  after  the  Kraljevo  earthquake.  Serbia  continued  to  maintain  its  policy  of  non-
recognition  of  the  border  demarcation  agreement  between  the  former  Yugoslav  Republic  of 
Macedonia and Kosovo. Unresolved issues remain concerning relations between the Orthodox 
churches. 

Relations with Kosovo intensified further. An agreement for customs cooperation envisaging 
the setting-up of a joint customs checkpoint in line with European standards, an agreement for 
avoidance of double taxation, and three agreements on criminal law matters were signed. Joint 
monitoring patrols along the border have been launched. 

The close political and economic cooperation with Turkey was maintained. 

Relations with Greece remained close, particularly in the economic sphere, but they continued 
to be adversely affected by the unresolved name issue. The country remains engaged in talks, 
under  the  auspices  of  the  UN,  as  well  as  through direct  meetings  of  the  prime  ministers,  in 
order to resolve it. The government erected a statue in the centre of Skopje which was seen by 
Greece  as  a  provocation  because  of  its  resemblance  to  Alexander  the  Great.  Actions  and 
statements  which  could  adversely  affect  good  neighbourly  relations  should  be  avoided.  The 
hearings  started  on  the  legal  proceedings  initiated  by  the  country  against  Greece  before  the 
International  Court  of  Justice  in  The  Hague  regarding  the  bilateral  interim  accord  of  1995. 
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. The law ratifying the agreement on economic 
cooperation between the two countries was enacted. A joint police and customs cooperation 
centre  was  established  and  a  protocol  for  joint  border  patrols  was  signed.  In  September  the 
countries  also  signed  a  memorandum  of  cooperation  on  European  and  Euro-Atlantic 
integration. Ethnicity-based issues continue to be an area of concern. 

Overall, the former Yugoslav Republic of Macedonia is a constructive partner in the region. 
Bilateral relations with neighbouring and other enlargement countries continued to improve. 
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 

A broad consensus regarding the fundamental features of the country's economic policy setup 
has been maintained. A number of programmes describe the medium-term policy framework. 
In  January  2011,  the  authorities  submitted  their  fifth  Pre-accession  Economic  Programme, 

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which presented a feasible, albeit sometimes optimistic macroeconomic and fiscal framework 
and  displayed  improved  drafting  capacities.  The  authorities  adopted  a  public  investment 
programme for 2011-13, a fiscal strategy for 2011-2013 and a public debt strategy for 2011-
13.  In  late  2010,  the  government  agreed  with  the  IMF  on  a  pre-cautionary  credit  line.  This 
was  aimed  at  strengthening  international  markets  confidence.  Communication  with  the 
business community has improved and a number of economic and financial committees have 
been  established  to  improve  the  economic  dialogue.  Cooperation  with  the  World  Bank  and 
other IFIs continued. Structural reforms were further pursued in a number of areas. Overall, a 
broad political consensus on the fundamentals of economic policy has been maintained. 

Macroeconomic stability 

Real GDP rose by 1.8% in 2010, compared to a decrease of 0.9% the previous year. In 2011, 
output continued growing by 5.2% in the first half of the year. The main sources for growth 
shifted from net exports in the first half of 2010 and the first quarter of 2011. In the second 
quarter  of  2011,  private  consumption  was  the  main  driver  for  growth,  increasing  by  8.4% 
year-on-year,  while  equipment  investment  declined  by  7.5%.  As  a  result  of  the  drop  in 
investment, import growth slowed down in the second quarter, from 36.5% in the first quarter 
to 4.5% in the second. Export growth also decelerated, from 34.8% in the first quarter to 8.9% 
in  the  second.  The  strong  growth  in  the  half  quarter  of  2011  reflects  a  weak  base  in  the 
previous  year.  The  performance  of  industrial  production  and  retail  trade  points  to  a  marked 
year-on-year acceleration in the first half of 2011. Industrial production recovered in the first 
seven months of 2011, rising by 8.6% compared to the same period the year before. However, 
the  overall  level  of  industrial  production  is  still  lower  than  before  the  crisis.  Average  per 
capita GDP remained largely stable in 2010, at 35% of the EU-27. Overall, economic activity 
started to regain strength and depth since  autumn 2010.  However, government  spending for 
construction played an important part in the strong rise of gross fixed capital formation.  

The current account deficit widened, reflecting increased domestic economic activity. After a 
decline from -6.7% of GDP in 2009 to -2.8% in 2010, the mid-2011 current account deficit 
rose to some 3.5% of the estimated GDP of 2011. Higher imports were the main reason for 
the  increase  in  the  trade  deficit.  However,  the  rise  in  the  current  account  deficit  was 
accompanied by an even bigger increase in capital inflows, accounting in June 2011 to some 
4.5% of the estimated annual GDP. The two main sources were capital inflows related to the 
partial use of the IMF pre-cautionary facility, amounting to some 3% of the estimated GDP 
and  FDI  inflows,  which  in  the  first  quarter  of  2011  were  significantly  higher  than  a  year 
before.  However,  in  the  second  quarter,  FDI  inflows  were  less  buoyant,  bringing  the  FDI 
inflows during the first half of 2011 to 2% of the estimated GDP for 2011. 

Gross external debt was about 60% of GDP in the first quarter of 2011, compared to 56% of 
GDP a year before. The main source for the increase was public debt, which contributed 2.6 
percentage points of GDP to the increase. Private bank lending pushed up the external debt 
ratio  by  1.4  percent  points.  Foreign  reserves  rose  to  €2.0 billion  (29%  of  GDP)  in  August, 
reflecting a marked increase in FDI inflows, but also the partial drawing of the country's pre-
cautionary credit line with the IMF. As a result, the reserve coverage of prospective imports 
recovered to close to three and a half months, although the strong increase in imports limited 
the  improvement.  Overall,  external  accounts  registered  a  marked  increase  in  the  current 
account  deficit,  although  this  was  more  than  offset  by  higher  capital  inflows,  in  particular 
FDI, but also by loans from the IMF and other international financial institutions.  

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Unemployment  was  very  high  during  2010,  at  32%  on  average.  In  2011,  the  labour  market 
situation  improved  slightly,  as  unemployment  fell  to  31.4%  in  the  first  quarter  of  2011. 
Employment  increased  by  5.5%  year-on-year  in  the  first  quarter  of  2011,  (i.e.  by  34,000 
persons), compared to a decline of 0.4% in the previous year. The main sectors where there 
were employment gains were agriculture, but also manufacturing. However, new employment 
in  agriculture  is  largely  due  to  new  registrations  of  subsistence  farmers.  The  number  of 
unemployed persons fell by 4.8% in the first quarter of 2011, i.e. a drop of 15,000. There is a 
positive  trend  in  youth  unemployment  (age  bracket  15-24  years),  falling  from  57.1%  in  the 
first quarter of 2010 to 52.5% in the first quarter of 2011. Youth unemployment as a share in 
total  unemployment  dropped  from  20.1%  in  2010Q1  to  17.7%  in  2011Q1.  A  key  factor  for 
this decline was a big reduction in youth unemployment among women. Furthermore, easier 
access  to  higher  education  courses  helped  reduce  unemployment  rates.  Even  though  the 
existence of a substantial informal sector means that actual unemployment may be overstated, 
the  very  high  unemployment  remains  an  important  issue,  in  particular  among  young  people 
and the less educated. Overall, the situation in the labour market has improved slightly, but 
unemployment  continues  to  be  very  high,  particularly  among  the  young  and  less  well 
educated.  

Monetary  policy  cautiously  supported  the  gradual  recovery,  while  the  exchange  rate  policy 
remained  oriented  towards  maintaining  price  stability  and  the  de  facto  peg  to  the  euro.  The 
Central Bank has continued to lower its key policy rates, such as the rate on 28-day Central 
Bank bills from 4.5% to 4.0%.  Overall, the exchange rate policy and monetary policy have 
remained sound.  

Inflation accelerated in the last quarter of 2010, reaching 3.0% at the end of the year, while 
the  annual  average  in  2010  was  1.6%,  as  compared  to  -0.8  %  in  2009.  The  main  factors 
driving the strong increase towards end-2010 were higher prices for energy, base metals and 
food. During the first three months of 2011, consumer price inflation continued to accelerate, 
driven  by  prices  for  food  and  transport  services.  However  since  then,  inflation  has  been 
slowing down, declining to 3.6% in August. This brought average inflation to 4.2 for the first 
eight months of the year. Core inflation, which excludes the impact of energy and food prices 
on the overall price level, was close to zero in 2010, but increased to around 1.3% in the first 
five months of 2011.  

The  overall  fiscal  policy  stance  has  been  oriented  towards  achieving  the  deficit  targets.  In 
order  to  reach  the  2.5%  deficit  target  for  2010,  the  authorities  responded  to  lower  than 
anticipated  revenues  by  reducing  spending  on  goods  and  services  and  strongly  limiting  the 
planned increase in capital spending. Consequently, the 2010 deficit target of 2.5% of  GDP 
was reached, although revenues were 7.8% lower than envisaged. The deficit target for 2011 
is 2.5%. In the first seven months of 2011, revenues as a share in GDP were on a similar level 
as  a  year  before,  while  spending  was  slightly  higher.  This  brought  the  accumulated  central 
government deficit in July to about 2% of the year's estimated GDP, compared to a deficit of 
1¼% of GDP the year before. However, a part of this increase reflects front-loaded spending, 
mainly  in  construction,  related  to  early  elections  in  June.  The  authorities  have  a  solid  track 
record of meeting prudent fiscal target. However, the quality of public spending suffers from 
still  weak  planning  capacities  and  short-term  oriented  spending  decisions,  which  delay  the 
accumulation  of  productive  investment.  Higher  deficits,  but  also  increased  public  spending 
financed by debt, contributed to an increase in the public debt ratio, from 31.9% in December 
2009 to 35.7% in December 2010.  

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Fiscal  decentralisation  has  continued.  By  mid-2011,  79  out  of  85  municipalities  have 
advanced to the second stage of decentralisation. Furthermore, additional measures have been 
taken to strengthen the fiscal viability of indebted municipalities. The efficiency of the public 
administration  still  suffers  from  insufficient  staffing,  lengthy  procedures,  a  high  degree  of 
political  interference  leading  to  high  turnover  of  qualified  staff.  Overall,  fiscal  policy  was 
oriented towards achieving its fiscal target, despite lower than expected revenue performance. 
The spending profile maintained its focus on transfers, although lowering its current spending 
for  goods  and  transfers.  Capital  spending  was  raised  slightly,  however  the  growth  and 
employment stimulating effect of this investment was reduced by the high import content of 
the spending.  

As in the past, the overall macroeconomic policy mix was largely sound, Monetary conditions 
were still relatively favourable to growth, while taking into account the country's policy of a 
de facto peg to the euro. Public spending was largely kept in line with revenues. The structure 
of spending was broadly maintained, focussing on transfers, with a small increase in capital 
investment and a further reduction in current spending for goods and services. However, some 
of the capital investment could have been spent in a more growth supportive manner. Overall, 
the  general  policy  mix  continued  to  be  sound,  remaining  stability  oriented  while  trying  to 
support the recovery. However, the quality of public finances has not improved significantly 
and the issue of high unemployment, in particular among the young, remains a major policy 
challenge. 

Interplay of market forces 

Privatisation  is  largely  completed  and  the  economy  is  mainly  driven  by  market  forces.  The 
share of state activities has remained largely unchanged, however, largely as a result of a fall 
in private activities, the share of the private sector declined, from 87% of total value added in 
2008  to  86%  in  2009.  In  terms  of  employment,  the  share  of  private  sector  employment 
dropped  from  77.8%  in  2009  to  77.2%  in  2010.  The  share  of  administered  and  regulated 
prices  in  the  CPI  basket  was  down  from  14.4%  in  2009  to  13.1%  in  2010,  partly  due  to 
changes  in  the  CPI  basket.  Most  of  those  administered  and  regulated  prices  are  cost 
recovering.  The  asset  value  of  fully  or  partly  state-controlled  companies  has  remained  at 
around  13.5%  of  GDP.  The  majority  of  this  capital  -  nearly  80%  -  is  concentrated  in  five 
companies,  mainly  public  utilities  such  as  the  production  and  transmission  of  electricity, 
where the state is majority owner and telecommunication, where the state is a minority owner 
in the highly profitable incumbent telecom company. Overall, as a result of the crisis, the role 
of  the  state  has  increased,  while  state  ownership  has  remained  concentrated  mainly  on 
telecommunication, energy and public utilities.  

Market entry and exit 

The  government  has  continued  taking  steps  to  facilitate  market  entry  and  exit.  The  second 
phase of the 'one-stop-shop' has been completed, improving in particular the possibilities for 
the electronic registration of mortgages, bankruptcy proceedings, documentation delivery etc. 
The costs of registration have been reduced further. The implementation of the third phase of 
the so-called 'business guillotine' aimed at simplifying regulation has continued. Contact with 
the business community was strengthened. The process of closing down unviable companies 
has  continued.  In  the  second  half  of  2010,  the  number  of  bankruptcy  procedures  was  about 
one quarter higher than a year before. However, during 2011, the number of new bankruptcies 
has declined again towards pre-crisis levels. As a result of the rapid increase in the number of 
bankruptcy  procedures,  the  backlog  of  pending  bankruptcy  procedures  has  increased  in  the 

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second half of 2010, from 338 cases at the end of 2009 to 358 cases at the end of 2010. There 
is still room for a further shortening of bankruptcy procedures. Overall, some further progress 
has been achieved in reducing barriers to market entry and exit.  

Legal system 

The legal system for a functioning market economy is largely in place. Steps have been taken 
to  increase  the  efficiency  of  courts,  to  improve  the  transparency  of  court  decisions,  to 
accelerate  legal  procedures  and  to  improve  enforcement  of  contracts,  for  example  by 
transferring  jurisdiction  on  payment  orders  to  notaries.  The  registration  of  real  estate 
ownership  rights  is  practically  completed.  The  number  of  pending  court  cases  has  been 
reduced  from  6014  cases  end-2009  to  5492  cases  end-2010.  Furthermore,  the  duration  of 
court procedures has been reduced, with the percentage of cases solved within three months 
rising from 25% in 2009 to 36% in 2010, while the percentage of cases lasting more than one 
year has declined, from 17% in 2009 to 13% in 2010. Contract enforcement is still difficult, 
hampering  the  business  environment,  in  particular  for  small-and-medium-sized  enterprises. 
The introduction of electronic procurement has increased the transparency of public spending. 
However, despite strengthened legal and financial independence of regulatory and supervisory 
bodies, the administrative capacities and the enforcement record of some of those institutions, 
such  as  the  railway  regulatory  agency,  the  energy  and  the  telecom  regulators,  the  agencies 
regulating  and  supervising  the  fully  funded  pension  funds  and  the  securities  and  exchange 
commission  still  need  to  be  strengthened.  Overall,  the  functioning  of  the  legal  system  has 
improved,  which  should  have  a  positive  impact  on  the  business  and  investment  climate. 
However, weaknesses in the rule of law, particularly in the judiciary, which is characterised 
by  slow  procedures,  insufficient  resources  and  unreliable  enforcement  of  contracts,  and  the 
prevalence of corruption, continue to adversely affect the business environment.  

Financial sector development 

The  financial  sector's  significance  and  its  intermediation  function  has  increased,  reflecting 
additional  capital  from  foreign  investors  but  also  increased  deposits  and  lending.  In  the 
banking sector, total assets as a share of GDP were up from 67% mid of 2010 to 69% of the 
estimated GDP by mid 2011. Credits as a share of GDP increased from to 43.5% in October 
2010 to some 45% of the estimated GDP end of August 2011, while the level of deposits rose 
from  48%  end  of  October  2010  to  around  50%  of  the  projected  GDP  in  August  2011. 
Deposits  continue  to  be  the  sector's  main  source  of  liquidity.  The  coverage  of  loans  by 
deposits  is  still  above  100%.  The  sector  continues  to  be  predominantly  owned  by  foreign 
companies  with  14  out  of  17  banks  dominated  by  foreign  owners.  The  share  of  foreign 
ownership  has  increased  from  68.6%  end  of  2009  to  78%  mid  of  2011.  The  share  of  state 
ownership in the sector remains low, at 7% of the sector's assets. The main state asset is the 
majority  share  in  the  country's  only  development  bank  and  a  limited  number  of  remaining 
minority shares. Market concentration remains high, but has decreased slightly during the past 
year. The assets of the five biggest banks as a share of total assets declined only marginally, 
from 77.4% end of 2009 to 77.2% end of 2010. However, the three biggest banks lost some 
market  shares  to  medium-sized  banks.  The  efficiency  of  the  banking  sector  has  remained 
largely unchanged. Profitability of the sector as a whole remains low, with slightly negative 
returns-on-assets and equity in the first quarter, and slight profits in the second quarter (0.2% 
return-on-assets,  and  2.1%  return-on-equity).  However,  larger  banks  performed  better  than 
smaller ones. Credit growth accelerated since autumn last year, reaching some 8% in August. 
Private-sector weighted interest rates declined following their peak in the last quarter of 2009. 
Rates for denar loans declined from 9.2% in September 2010 to 8.9% in July 2011, while the 

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rates  for  denar  deposits  declined  from  6.8%  to  5.8%.  As  a  result  of  the  faster  decline  of 
deposit  rates,  spreads  widened  from  2.4  percentage  points  in  September  2010  to  3.1 
percentage points in July 2011. Financial stability has been maintained, with sound liquidity, 
solvency  and  capital  adequacy  ratios.  The  share  of  non-performing-loans  has  started  to 
decline again, from a peak of 10.6% in September 2010 to 9.3% by end-June 2011 

Banking regulation and supervision is largely in line with international standards. However, 
the  proper  functioning  of  regulatory  and  supervisory  agencies,  such  as  the  Agency  for  the 
supervision of fully funded pension insurance (MAPAS) or the security exchange commission 
(SEC),  is  still  hampered  either  by  still  insufficient  financial  independence  and/or  by 
insufficient  human  and  IT  resources.  Furthermore,  sometimes  institutional  competences  are 
not sufficiently defined. As a result, the leverage of those institutions has not yet reached an 
adequate level. Transparency of the credit market has improved through the establishment of 
a private credit bureau, providing credit history reports. 

The relevance of other financial market intermediaries is limited, with assets accounting for 
some 10% of the financial sector's assets or some 8% of GDP. Insurance institutions account 
for  some  4%  of  the  sector's  assets,  while  leasing  companies  and  pension  funds  account  for 
about 3% each. The value of the capital market accounts for some 30% of GDP  

Overall,  the  financial  sector  continued  its  gradual  process  of  deepening  and  widening. 
However,  the  level  of  financial  intermediation  and  competition  in  the  market  are  still  low, 
impeding  more  dynamic  growth  in  the  private  sector,  particularly  for  SMEs.  Furthermore, 
some  regulatory  and  supervisory  agencies  have  not  yet  reached  a  sufficient  level  of 
independence, resource endowment and leverage.  

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 continued global economic 
turbulence.  Market  entry  and  exit  procedures  have  been  improved  and  the  rule  of  law  has 
been  strengthened.  However,  structural  imbalances  on  the  labour  market  are  still  very 
pronounced and the business environment is still suffering from slow judiciary, and a number 
of weak and not fully independent regulatory and supervisory institutions.  

Human and physical capital endowment 

The level of human capital endowment is still low. The authorities continued to improve both 
the physical infrastructure for education and the regulatory framework in order to improve the 
performance  of  the  educational  system.  The  number  of  teachers  was  increased  by  4.4%  in 
2010,  in  particular  in  primary  and  lower-secondary  schools.  Enrolment  rates  have  been 
improved. Budgetary allocations for education were marginally increased, from 3.7% of GDP 
in the 2010 budget to 3.8% in the budget for 2011. As in the past, spending has been focused 
on renovation and construction of school buildings and the purchase of IT equipment. Despite 
continued  efforts,  the  overall  level  of  education  and  training  of  the  labour  force  is  still 
relatively low and the mismatch of skills is still substantial. There remains significant room 
for  improving  the  efficiency  of  public  spending  on  education  and  for  raising  the  quality  of 
education. Overall, measures to improve the level of qualification have continued. However, 

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the  still  low  level  of  education  calls  for  further  sustained  efforts  in  order  to  improve  the 
country's human capital endowment. 

The country's capital endowment continues to be relatively low and its quality is hampered by 
previous  decades  of  underinvestment.  The  low  level  of  education  and  the  weak  capital 
endowment contribute to a low general level of productivity. Some further progress has been 
made on improving transport infrastructure. Gross fixed capital formation showed a marked 
acceleration in the second half of 2010 and in particular in the first quarter of 2011. However, 
overall investment levels in 2010 and early 2011 were still lower than a year before. The stock 
of  foreign  investment  stands  at  51%  of  GDP.  Foreign  direct  investment  inflows  increased 
markedly in the fourth quarter of 2010 and the first quarter of 2011, but were less buoyant in 
the second quarter. Overall, the interest of foreign investors in the country has improved. In 
some  cases,  persistently  slow  legal  procedures,  such  as  those  involving  work  permits  for 
foreign  employees,  or  fragmentation  of  responsibilities  between  central  and 
local 
governments continue to be an impediment to FDI. Spending on strengthening the knowledge-
based economy has remained low. The accumulation of the public capital stock is impeded by 
weak implementation capacities, but also the use of funds for less productive purposes, such as 
the  beautification  of  the  capital.  Overall,  the  country's  capital  stock  continued  to  be  low. 
Infrastructure improved, but it continues to require repair and modernisation.  

Sectoral and enterprise structure 

There were no major changes in the area of enterprise restructuring. Network industries, such 
as  railways,  energy  production  and  transmission,  are  still  state  owned  to  a  considerable 
degree.  Recent  amendments  to  the  energy  law  adopted  in  spring  2011  should  increase 
competition  and  transparency  in  the  electricity  sector.  Gas  and  electricity  markets  are 
dominated by a very small number of suppliers, which undermines effective competition. In 
the  telecommunication  sector,  the  number  of  service  providers  has  increased,  leading  to  a 
lower market share of the incumbent operator for fixed-line and mobile telephony. There was 
no significant structural change in the transport sector. 

The  focus  of  economic  activity  has  continued  to  move  away  from  manufacturing  towards 
services, in particular retail trade, and – recently - also towards construction. Manufacturing 
increased its share from 12.4% of GDP in the fourth quarter of 2009 to 14.4% in the fourth 
quarter  of  2010,  and  construction  rising  from  5.6%  to  7.8%  of  GDP.  At  the  same  time,  the 
share  of  value  added  in  agriculture  declined,  from  12.8%  to  10.9%  of  GDP.  In  terms  of 
employment,  agriculture  registered  the  highest  employment  gains  in  the  fourth  quarter, 
increasing  its  share  from  16.7%  of  total  employment  to  19.2%  while  the  share  of 
manufacturing  in  total  employment  dropped  from  23.9%  to  22.5%  in  the  fourth  quarter  of 
2009. The increase in agriculture employment and the simultaneous reduction of the sector's 
productivity  suggests  an  important  share  of  'administrative'  job  creation  and  not  new 
capacities.  

Small  and  medium-sized  companies  (SMEs)  are  by  far  the  most  important  group  of 
companies, providing employment for some 82% of private sector employees or 56% of total 
employment.  In  2010,  in  line  with  the  general  decline  in  economic  activity,  the  number  of 
SMEs  fell  by  8.3%.  This  mainly  reflected  a  sharp  drop  in  the  number  of  micro-enterprises, 
while  the  number  of  larger  SMEs  increased.  In  terms  of  employment,  the  number  of 
employees increased by 1.5% in 2010, while among large companies employment declined by 
14%. The availability of an EIB financed SME facility worth €100 million improved access to 

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financing. Furthermore, the government is subsidizing interest costs for export oriented SMEs 
and has increased budgetary allocations for SME support schemes.  

The informal sector, fuelled by weaknesses in tax and expenditure policies as well as in law 
enforcement,  and  the  fight  against  corruption, remains  a  major  challenge.  It  reduces  the  tax 
base and the efficiency of economic policies.  

Overall, structural change towards diversification and activities with higher value-added has 
remained  limited.  Competition  in  network  industries  remains  constrained  by  dominant 
incumbent  suppliers.  SMEs  still  face  difficulties  in  accessing  capital  and  markets  despite 
increased support.  

State influence on competitiveness 

The overall level of systematic state intervention is limited. Official data point to a relatively 
low level of State aid, i.e. less than 1% of GDP. However, this figure is not comparable with 
the  State  aid  data  compiled  in  accordance  with  EU  standards.  The  institutional  setup  for 
monitoring  State  aid  and  competition  issues,  the  Competition  Commission,  is  in  place. 
However, the current resource endowment is still insufficient to cover the agency's full range 
of responsibilities. Overall, state influence on competitiveness remained limited. 

Economic integration with the EU 

The country has a small, open economy, with total trade in goods and services recovering to a 
level of 114% of GDP in 2010, following the 2009 recession. Trade integration with the EU is 
advanced,  with  about  63%  of  all  exports  currently  going  to  and  about  53%  of  imports 
originating from the EU. The CEFTA region is the country's second most important trading 
region,  accounting  for  around  24%  of  exports  and  around  10%  of  imports.  The  export 
structure continues to be highly concentrated on a limited range of products, with textiles and 
clothing accounting for about 17% of total exports and manufactured iron products for 26% in 
2010. The stock of FDI increased to about 51% of GDP, with the Netherlands, Slovenia and 
Austria being the biggest investors. In total, EU  countries accounted for  about 60% of total 
FDI inflows. Switzerland, Turkey and Serbia are the most  important  non-EU investors.  The 
exchange  rate  against  the  euro  has  remained  stable  in  nominal  terms.  Price  competitiveness 
has remained largely unchanged. Overall, trade integration with the EU is well advanced, but 
exports  remain  concentrated  on  a  few  price-sensitive  products.  International  price 
competitiveness remained largely unchanged. 

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. 

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4.1. 

Chapter 1: Free movement of goods 

There was some progress in the area of general principles. Out of the 42 identified measures 
within  the  action  plan  for  achieving  compliance  with  Articles  34  to  36  of  the  TFEU,  14 
measures having an equivalent effect to quantitative restrictions on imports and exports have 
already been amended or repealed. There is a clear delay in the implementation of the action 
plan.  

Progress can be reported in the field of horizontal measures. The Strategy with milestones 
for  implementation  of  the  acquis  for  the  relevant  horizontal  institutions  is  closely  followed 
and implemented via annual plans of operation of the quality infrastructure institutions.  

In  the  area  of  standardisation,  good  progress  was  achieved.  European  and  international 
standards  were  adopted  in  the  fields  of  machinery,  construction  products  and  processes, 
chemicals,  food  and  electro-technical  devices.  21,131  European  standards  (ENs)  have  been 
adopted  as  national  standards,  mostly  by  endorsement.  A  total  of  2,998  national  standards 
give  a  presumption  of  conformity  to  New  Approach  directives.  The  notification  of  EU 
standards  and  standardisation  related  documents 
the  European  Committee  for 
Standardisation  (CEN)  and  the  European  Committee  for  Electrotechnical  Standardisation 
(CENELEC) continued, as did the withdrawal of conflicting standards. 

to 

The number of the assembly members of the Institute of Standardisation (ISRM) increased to 
90  stakeholders.  The  administrative  capacity  remains  insufficient,  especially  with  regard  to 
the  commitment  of  the  ISRM  to  become  a  full  member  of  the  CEN/CENELEC.  The  ISRM 
has signed cooperation agreements with the standardisation institutes of France, Azerbaijan, 
and  Ukraine.  The  government  does  not  allocate  sufficient  funds  for  membership  fees  in  the 
European standardisation organisations, contrary to the Law on Standardisation. The shortfall 
is covered by the modest revenues of the ISRM. 

Following  the  new  Law  on  accreditation  and  the  recommendations  of  the  European  co-
operation for Accreditation (EA), the Institute of Accreditation (IARM) amended its Charter 
and a number of rulebooks and documents on procedures. The IARM currently employs 16 
full time employees, 16 lead assessors, 49 assessors, 57 experts, and 44 candidate assessors. 
By 1 September 2011, the IARM has accredited a total of 76 conformity assessment bodies 
and withdrawn 11 accreditations. Most of the accreditations granted in 2010 refer to testing 
and calibration laboratories and inspection bodies. The 2011 operational budget of the IARM 
has  increased  by  77%  compared  to  2010.  Significant  resources  are  allocated  for  the 
procurement  of  equipment.  The  multilateral  agreements  for  testing  laboratories,  calibration 
laboratories,  inspection  bodies  and  product  certification  bodies  with  the  EA  have  not  been 
signed yet.  

As  regards  conformity  assessment,  the  number  of  conformity  assessment  bodies  has  further 
increased to a total of eight. The Law on Product Safety has been revised in 2011, but it is still 
not  in  conformity  with  the  horizontal  framework  acquis  of  2008  (i.e.  the  New  Legislative 
Framework).  

In the area of metrology, the Ministry of Economy set eighteen new standards for measuring 
instruments and adopted regulations on alcohol meters and alcohol hydrometers, as well as on 
essential requirements  for  bottles  used as measuring containers, with the aim of transposing 
the relevant EU acquis. In 2010 the number of calibration certificates issued by the Bureau of 
Metrology (BoM) increased by 35% compared to 2009. The 2011 operational budget of the 

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BoM was increased by about 59% to nearly €1.6 million. Most of the budget is allocated to 
the  procurement  of  equipment  for  the  BoM  laboratories.  However,  the  equipment  in  the 
laboratories is not regularly calibrated and none of them have been accredited. The planned 
increase of staff did not take place and administrative capacity remains insufficient.  

In  2010,  the  State  Market  Inspectorate  (SMI)  conducted  a  total  of  331  surveillance  actions. 
Subsequently,  it  imposed  a  total  of  75  corrective  measures  and  initiated  10  misdemeanour 
procedures.  The  SMI  enhanced  the  efficiency  of  its  market  surveillance  activities  by 
modifying  its  internal  operational  practices.  Furthermore  it  improved  its  visibility  by 
launching  a  website  and  enabling  electronic  submission  of  complaints  by  citizens.  It  also 
issued  brochures  for  consumers  and  businesses  and  a  'Guide  through  SMI'.  The  National 
Programme for coordination and taking effective measures for market surveillance for 2011-
2012  was  adopted  in  November  2010  and  the  Memorandum  of  Understanding  and 
Cooperation  between  the  customs  authorities  and  the  market  surveillance  authorities  was 
signed in February 2011. The members of the coordinative body for market surveillance were 
appointed  and,  as  from  January  2011,  joint  actions  were  undertaken  by  market  surveillance 
authorities  for  the  surveillance  of  some  products  (e.g.  toys,  medicinal  devices  and 
telecommunications  equipment).  However,  the  market  surveillance  authorities  still  have 
limited  human  and  financial  capacities  to  conduct  comprehensive  checks  on  technical 
compliance of products. Preparations in the area of horizontal measures are advanced. 

Little progress can be reported in the area of the 'Old Approach' product legislation. A new 
Law on chemicals was enacted, but full transposition of the EU acquis in this area has yet to 
be ensured through implementing legislation. Preparations in the area of old approach product 
legislation are advancing. 

There  was  some  progress  in  the  area  of  product  legislation  under  the  'New  and  Global 
Approach'.  The  rulebooks  on  toy  safety  and  recreational  craft,  as  well  as  radio  equipment 
and telecommunications terminal equipment and by-laws on medical devices came into force. 
Their  alignment  with  the  acquis  remains  to  be  confirmed.  In  the  area  of  New  and  Global 
Approach product legislation, the country is advanced.  

No progress can be reported in the area of procedural measures. In this area, the country is 
advanced.  

Conclusion 

There has been some progress in the area of free movement of goods, especially in the area of 
adoption  of  EN  standards  and  operational  activities  of  the  SMI.  The  budget  for  the 
implementation  of  the  comprehensive  strategy  on  the  horizontal  institutions  has  increased. 
However, the framework legislation is still not fully aligned with the horizontal acquis in the 
area of free movement of goods. The quality infrastructure institutions still have insufficient 
funds for development and financing the cooperation with their relevant EU counterparts. Full 
membership and efficient exchange of information with the relevant EU bodies are yet to be 
ensured. Overall, preparations in the area of free movement of goods are moderately advanced  

4.2. 

Chapter 2: Freedom of movement for workers 

No  progress  can  be  reported  in  the  field  of  access  to  the  labour  market.  The  government 
adopted a decision determining the number of work permits to be issued to foreigners in 2011 
at 3000, and 1146 work permits  were issued to foreign citizens in the first  half of  the  year. 

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The  Law  on  public  servants  remains  to  be  modified  in  order  to  give  EU  citizens  access  to 
posts in the public service. Preparations in this area are starting. 

Some  progress  was  made  towards  preparing  for  the  country's  participation  in  the  EURES 
(European  Employment  Services)  network.  The  action  plan  outlining  the  measures  and 
activities for participation in EURES is being implemented. The administrative capacity of the 
Employment  Service  Agency  was  strengthened  by  the  employment  of  two  more  staff 
members. Preparations in this area remain on track.  

Little  progress  can  be  reported  in  the  area  of  coordination  of  social  security  systems. 
Training  has  been  carried  out  to  strengthen  the  capacity  of  the  public  authorities.  An 
agreement  with  Montenegro  for  coordination  of  social  security  systems  came  into  force. 
Preparations in this area are moderately advanced. 

There  was  little  progress  in  the  area  of  the  European  health  insurance  card  (EHIC).  An 
agreement on the use of the EHIC entered into force with Belgium in July 2011. Preparations 
in this area are at an early stage.  

Conclusion 

There was little progress in the area of freedom of movement for workers. Alignment with the 
acquis is at an early stage.  

4.3. 

Chapter 3: Right of establishment and freedom to provide services 

Progress can be reported in the area of the right of establishment. Implementing legislation 
was  adopted  aimed  at  simplifying  the  procedures  for  granting  authorisations.  Efforts  were 
made to eliminate unnecessary formalities and administrative barriers. Electronic submission 
of application for establishment was enabled. The licensing regime under the amended Law 
on Construction is not yet harmonised with the acquis.  

Regarding the services directives, which have effects on both establishment and cross-border 
services,  the  Law  on  tourism  was  amended  as  to  provide  for  automatic  licensing;  however, 
licensing requirements for tourist guides remain. The action plan for harmonisation with the 
Services  Directive  was  updated  and  its  implementation  is  on  track.  The  horizontal  law 
transposing the Services Directive has not yet been adopted and the 'Point of single contact' 
has still to be designated. Coordination among the authorising bodies under the leadership of 
the Ministry of Economy has improved. Local authorities and also judicial authorities are not 
yet part of the coordination process which is aimed at increasing knowledge of European case 
law among the relevant services.  

There was some progress in the area of the freedom to provide cross-border services. The 
Law on trade was amended in order to align with the Services Directive. The Law on the real 
estate  cadastre  was  amended,  removing  the  reciprocity  and  nationality  requirements  and 
providing for cross-border services. Foreign operators need to establish either a subsidiary or 
a branch in order to provide services in the country, which is incompatible with the acquis. 
There is no general legal provision in place allowing the cross border provision of services. 
Although  reciprocity  requirements  for  legal  persons  from  the  EU  were  removed,  the 
nationality requirement is still present in several service sectors, including in the veterinary, 
private education, tourism and regulated professions. There is an increased awareness of the 

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obligations  arising  from  the  acquis.  However,  the  administrative  capacities  of  the  various 
authorising bodies remain weak. Preparations are starting in the area of cross-border services.  

Significant  progress  can  be  reported  in  the  area  of  postal  services.  A  new  law  on  postal 
services was enacted on 6 December 2010 and the level of alignment with the postal acquis is 
well  advanced.  Further  work  is  required,  in  particular  on  further  market  opening;  period  of 
designation;  financing  of  net  costs  of  universal  service  obligation.  Besides  the  adopted 
primary  legislation,  the  Postal  Agency  continued  with  the  adoption  of  the  relevant 
implementing  legislation.  The  postal  market  is  growing  and  there  are  many  operators  now 
active  in  the  market.  However,  it  is  also  important  to  strengthen  supervision  of  the  market 
with a view to preventing the circumvention of existing legal requirements. Full liberalisation 
of the postal services is expected  by 2015. The designated universal  postal service provider 
that holds a monopoly for services weighing below 50 grams has enhanced its performance, 
but further improvement of its services is necessary. Preparations started for privatisation of 
the part of the designated universal postal service provider, which is currently fully owned by 
the state. The Postal Agency as a national regulatory authority is sufficiently staffed and self-
financed.  The  regulator  has  improved  capacities  to  supervise  the  provision  of  the  universal 
postal  service  and  has  also  imposed  regulatory  remedies  in  that  regard.  It  set  up  dispute 
settlement procedures and increased its capacities to enforce its decisions. Cooperation with 
the competition authority is at a satisfactory level. The policy-making capacity of the Ministry 
of Transport and Communications in the field of postal services remains weak. In the area of 
postal services the country is well on track. 

There  was  progress  in  the  area  of  mutual  recognition  of  professional  qualifications.  The 
Law  on  recognition  of  professional  qualifications  was  enacted,  distinguishing  between 
professional  and  academic  qualifications.  However,  the  law  is  not  fully  in  line  with  the 
Directive  on  Recognition  of  Professional  Qualifications,  in  particular  with  regard  to 
temporary  mobility.  In  addition,  requirements  concerning  nationality,  language  and 
reciprocity  remain  in  the  legislation  regulating  various  professions.  The  action  plan  for 
upgrading the system for mutual recognition was implemented. A coordination group among 
the  authorising  bodies  has  not  been  formed  yet.  A  National  Coordinator  of  the  bodies  and 
institutions responsible for recognition of professional qualifications has not been nominated 
yet  as  required  by  the  Professional  Qualifications  Directive.  Alignment  with  the  Lawyers' 
Directives and the acquis on commercial agents and toxic products has yet to be achieved 

Conclusion 

In  the  area  of  the  right  of  establishment  and  freedom  to  provide  services,  the  country  is  on 
track, particularly in the area of postal services. The level of coordination among the various 
bodies responsible for authorising cross-border services has improved. In the area of mutual 
recognition  of  professional  qualifications  the  country  is  at  an  early  stage.  Overall, 
preparations in the area of the right of establishment and freedom to provide services are at an 
early stage. 

4.4. 

Chapter 4: Free movement of capital 

The  country  already  met  the  requirements  of  the  first  stage  of  the  Stabilisation  and 
Association  Agreement  (SAA)  in  the  field  of  capital  movements  and  payments  in  2008. 
Further liberalisation is conditional on the transition to the second stage of the SAA, pending 
a  decision  by  the  Council.  Progress  was  limited  to  relaxing  some  of  the  restrictions  on 
residents  regarding  portfolio  investments  in  foreign  markets;  however,  all  restrictions 

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remained. The restrictions for the amounts of cash that may be carried across borders and on 
the  amounts  of  transfers  that  non-residents  can  perform  through  their  local  and  foreign 
currency  accounts  are  not  aligned  with  the  acquis.  EU  citizens  are  not  allowed  to  purchase 
agricultural land. This constitutes an effective barrier to the free movement of capital. Foreign 
investment  has  not  kept  pace  with  neighbouring economies.  Modernisation  of  infrastructure 
has to be reinforced. The legal provisions preventing nationals from buying foreign securities, 
opening  accounts  in  foreign  banks,  or  purchasing  real  estate  abroad  remain.  Preparations  in 
the area of capital movements and payments are moderately advanced. 

There was no progress in the area of payment systems. Preparations for transposition of the 
Payment  Services  Directive  were  launched.  Most  of  the  charges  for  cross-border  electronic 
payment  transactions  remain  disproportionate  to  those  for  domestic  electronic  payment 
transactions. In the area of payment systems, the country partially meets its targets. 

Some progress can be reported in the area of the fight against money laundering. The Office 
for Prevention of Money Laundering and Financing of Terrorism (OPMLTF) and the central 
bank have issued additional implementing legislation on the prevention of money laundering 
and financing of terrorism. Reporting from the financial institutions on all transactions above 
€  15,000  and  from  the  customs  administration  for  cash  transfers  over  €  10,000  is  now 
automatic,  via  a  secured  channel.  The  OPMLFT  started  to  perform  inspections  in  the 
reporting institutions (over 54 legal entities in 2010), issued misdemeanour fines, and carried 
out  temporary  seizures  of  assets.  Cooperation  with  the  investigative  and  prosecuting  bodies 
and with the foreign financial intelligence units, which are members of the Egmont group, has 
improved.  (However,  in  2010  the  number  of  reports  on  suspicious  transactions  fell  by  a 
further  15%;  half  of  them  being  sent  by  banks.  The  OPMLFT  sent  28  reports  and  140 
notifications  to  the  investigating  and  prosecuting  institutions.  Statistical  data-base  on  the 
number of court cases and sentences on money laundering has been established (see chapter 
24  –  Justice,  freedom  and  security).  Overall,  preparations  in  the  area  of  combating  money 
laundering are moderately advanced. 

Conclusion 

Progress in the area of free movement of capital was uneven and focused on enforcement in 
the area of combating money laundering and financing of terrorism. There are still restrictions 
on  short-term  portfolio  investments  and  on  cross-border  payment  transfers.  There  are  plans 
for the further liberalisation of the capital movements and payments after the transition to the 
second stage of the SAA. Preparations in the area of free movement of capital are on track.  

4.5. 

Chapter 5: Public procurement 

Progress was made as regards general principles. The unit responsible for concessions in the 
Ministry of Economy improved its cooperation with other institutions involved in the public 
procurement  system.  The  Public  Procurement  Bureau  (PPB)  established  a  separate  IT  and 
accounting unit. The PPB coordinates and monitors the implementation of the strategy for the 
development  of  the  public  procurement  system  for  2010-2012.  In  2010,  354  representatives 
from both contracting authorities and economic operators were trained in the training centre 
of the PPB. Conflict of interest, ethics and anti-corruption in procurement procedures became 
a separate training module of the annual training programme. The PPB continued to cooperate 
with the State Audit Office, the State Commission for Prevention of Corruption (SCPC) and 
the  Commission  for  Protection  of  Competition  (CPC).  However,  court  statistics  on  public 
procurement related court cases need to be strengthened. The trend of tender cancellations and 

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failures  continued.  The  capacity  of  the  unit  responsible  for  concessions  in  the  Ministry  of 
Economy remains insufficient to deal with large-scale projects. Coordination with other state 
bodies should be strengthened in the field of Public Private Partnerships. As regards general 
principles, the country is well on track. 

Some  progress  was  made  regarding  transparency  in  the  award  of  public  contracts.  The 
ceiling for mandatory e-procurement was raised from 30% of the total estimated value of all 
public contracts to 70%. In 2010, 693 contracting authorities and economic operators received 
specialised training on the use of the integrated electronic system for public procurement. The 
rulebook on the use of this system was amended to define the criterion of economically most 
advantageous tender. A customer support centre became operational. The public prosecutor's 
office  pressed  criminal  charges  against  mayors  and  directors  of  medical  institutions  for 
violating  the  law  on  public  procurement.  However,  some  of  the  works  contracts  under 
"Skopje 2014" were amended as regards the criteria prevailing at the time of their award by 
multiplying the amounts contracted and increasing the scope of works. The SCPC confirmed 
that  state  funds  were  often  misused  for  public  awareness  campaigns,  and  supplies  were 
delivered  while  the  respective  tender  was  still  ongoing.  With  regard  to  the  award  of  public 
contracts, the country is moderately advanced. 

Progress  can  be  reported  as  regards  the  remedies  system.  About  12%  of  all  the  tenders 
launched  in  2010  were  the  subject  of  appeals.  The  State  Appeals  Commission  (SAC) 
maintained  the  level  of  case  resolution  of  around  95%  in  2010.  The  website  of  the  SAC  is 
regularly updated with both the cases received and the respective decisions taken. The Law on 
public procurement was amended to ensure timely enforcement in case of appeal of decisions 
of  the  SAC.  The  number  of  staff  increased  to  12,  but  the  SAC  remains  seriously  under-
budgeted  and  understaffed.  Full  alignment  with  the  amended  EU Directive  on  remedies  has 
yet to be achieved. As regards the remedies system, the country is moderately advanced. 

Conclusion 

Progress  was  made  in  the  area  of  public  procurement.  The  legislation  on  concessions  and 
public-private  partnerships  still  remains  to  be  aligned  with  the  acquis.  Procurement 
procedures  have  been  made  more  transparent  and  enforcement  was  stepped  up,  but  the 
administrative capacity of the contracting authorities is still weak. The legal environment for 
the  enforcement  of  remedies  was  improved.  The  administrative  capacity  in  the  field  of 
remedies  and  concessions  remains  weak.  Overall,  preparations  in  the  area  of  public 
procurement are well advanced.  

4.6. 

Chapter 6: Company law 

Good progress can be reported in the area of company law. The Company Law was amended 
with  the  aim  of  aligning  it  with  the  company  law  directives  on  disclosure  requirements  in 
respect of certain types of companies; on the exercise of certain rights of shareholders in listed 
companies;  on  cross-border  mergers  of  limited  liability  companies  and  on  consolidated 
accounts of companies with limited liability. The Law on the one-stop shop was amended to 
introduce  electronic  company  registry;  alignment  with  the  acquis  remains  to  be  confirmed. 
Alignment with the Tenth Company Law Directive on cross-border mergers is significant, but 
the transposition of Article 16 on employee participation has yet to be achieved. In the area of 
company law the country remains well on track.  

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Little progress was made on corporate accounting. The rulebook on the form and content of 
the  annual  accounts  has  been  adopted.  Full  alignment  with  the  Seventh  Company  Law 
Directive,  including  the  conditions  for  preparation  of  consolidated  accounts,  has  still  to  be 
achieved. A Law on public oversight in the area of accounting has still not been adopted. 

Good progress can be reported as regards auditing. A new Audit Law was enacted with the 
aim  of  partially  aligning  with  the  Directive  on  statutory  audits  of  annual  accounts  and 
consolidated accounts. The law provides for the establishment of a public oversight body to 
supervise and promote the audit profession. The Council for audit promotion and supervision 
is  in  the  process  of  being  established  as  an  independent  regulatory  body.  The  Institute  for 
Chartered  Auditors  (ICA)  undertakes  quality  control  reviews  and  has  become  an  affiliated 
member of the International Federation of Accountants (IFAC). The ICA now has the status 
of a legal entity; however, it remains understaffed. Chartered auditors' qualifications obtained 
abroad have yet to be recognised. Overall, in the area of corporate accounting and auditing the 
country is moderately advanced.  

Conclusion 

Good  progress  was  made  in  the  area  of  company  law.  The  Company  Law  was  amended  to 
further align it with the acquis. A quality control system and a public oversight body are being 
established;  however,  the  legal  framework  in  the  area  of  auditing  remains  only  partially 
aligned with the acquis. The Institute for Chartered Auditors is now an affiliated member of 
the  International  Federation  of  Accountants,  but  its  administrative  capacity  remains  weak. 
Qualifications obtained abroad have yet to be recognised. Overall, preparations in the area of 
company law partially meet their targets. 

4.7. 

Chapter 7: Intellectual property law 

There was some development in the area of copyright and neighbouring rights. The Law on 
copyright  and  neighbouring  rights  improved  the  framework  for  the  licensing  of  collective 
rights management (CRM) societies and set a deadline of September 2011 for renewal of the 
old  licences.  Alignment  of  the  law  with  EU  acquis  remains  to  be  confirmed.  However,  the 
CRM societies remain inactive and/or are still to obtain their licences under the new Law on 
copyright. The administrative capacity of the unit responsible for copyright in the Ministry of 
Culture  remains  weak.  In  the  area  of  copyright  and  neighbouring  rights,  the  country  is 
moderately advanced. 

Good  progress  was  made  in  the  area  of  industrial  property  rights.  The  Law  on  industrial 
property was amended to better protect the geographical names of agricultural products and to 
increase  the  competences  of  the  State  Market  Inspectorate  (SMI)  when  seizing  counterfeit 
items.  Furthermore,  the  Law  on  ratification  of  the  Lisbon  Agreement  for  the  Protection  of 
Appellations of Origin and their International Registration was adopted. The State Office for 
Industrial Property (SOIP) signed a 2010-2012 action plan for cooperation with the European 
Patent  Organization.  Some  management  staff  of  the  SOIP  resigned;  however,  a  total  of  33 
staff is sufficient. Activities to raise awareness of intellectual property rights (IPR) continued. 
Under the TEMPUS programme, the Centre for Intellectual Property Education launched the 
first specialised master studies on IPR starting with the 2010-2011 academic year. As part of 
the  curriculum  for  continuous  training  of  the  Academy  for  Judges  and  Prosecutors,  405 
members  of  the  judiciary  were  trained  on  IPR  in  2010.  In  the  area  of  industrial  property 
rights, the country remains well advanced.  

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Progress  can  be  reported  as  regards  enforcement.  The  Coordination  Body  for  Intellectual 
Property (CBIP) in 2010 undertook 23 coordinated actions throughout the country to combat 
piracy and counterfeiting. The CBIP continued to seize counterfeit goods, mainly audio/video 
CDs,  clothing,  cigarettes  and  alcohol,  but  also  toys,  software  and  broadcasting  equipment. 
Cooperation  with  the  Agency  for  Managing  Confiscated  Property  continued  and  about 
180,000 goods that were the subject of a court decision were publicly destroyed in 2010. The 
distribution  of  competences  between  the  law  enforcement  institutions  (SMI,  the  Customs 
administration  and  the  Ministry  of  Interior)  remains  unclear.  Seizure  of  counterfeit 
pharmaceutical  products  started  in  cooperation  with  the  Bureau  on  pharmaceuticals,  but 
consumers'  awareness  of  their  health  risks  and  threats  to  their  safety  remains  limited.  The 
number of misdemeanour, civil and criminal proceedings increased; 91 out of 152 cases dealt 
with  by the  specialised IPR departments of the  13 basic courts were completed in  2010. 34 
fines  of  between  €200  and  €1,600  were  imposed  on  legal  entities,  and  10  individuals  were 
sentenced to 6 months' imprisonment. However, counterfeit products continued to be sold on 
temporary  stalls  in  the  streets,  markets  and  outlets.  The  trade  in  counterfeit  medicines  and 
fake products via the internet is not subject to criminal prosecution. There is still no reliable 
enforcement record. A methodology for collecting statistical data has yet to be developed. A 
system  for  exchanging  data  between  the  law  enforcement  institutions  has  yet  to  be 
established. Counterfeit channels remain untraced and little was done to tackle the 'counterfeit 
pyramid'.  A  central  body  is  needed  in  order  to  bring  together  the  various  institutions  and 
authorities involved in enforcement related activities and to fully assess the current situation 
and develop a national strategy and action plan. 

Conclusion 

Some  progress  was  made  in  terms  of  the  IPR  legal  framework.  The  framework  for  the 
licensing  of  collective  rights  management  societies  was  improved.  The  powers  of  the  State 
Market  Inspectorate  when  seizing  counterfeit  items  were  increased.  Law  enforcement 
institutions  continue  to  cooperate,  but  their  respective  responsibilities  with  regard  to 
enforcement of intellectual property rights remain unclear. Although the actions of the CBIP 
continued on a regular basis, counterfeiting and piracy remains widespread. The track record 
on  investigation,  prosecution  and  judicial  handling  of  piracy  and  counterfeit  is  not 
satisfactory.  Counterfeit  and  piracy  are  not  addressed  as  an  aspect  of  organised  crime.  The 
level  of  awareness  of  intellectual  property  rights  among  the  public  remains  low.  Overall, 
preparations in the area of Intellectual property law are advancing.  

4.8. 

Chapter 8: Competition policy 

Good progress can be reported in the area of anti-trust, including mergers. The new law on 
protection  of  competition  entered  into  force  in  November  2010.  It  strengthens  the 
enforcement powers of the Commission for Protection of Competition (CPC) in the anti-trust 
area by introducing leniency measures, and removes the suspension clause for sanctions under 
administrative  decisions.  However,  in  the  case  of  misdemeanour  procedures  the  suspension 
clause can still delay the enforcement of the decisions of the CPC.  

The number of staff in the CPC dealing with anti-trust and mergers increased by one, but is 
still  insufficient.  The  enforcement  record  remains  low  in  the  area  of  cartels.  The  general 
budget  of  the  CPC  for  2011  has  decreased  slightly  compared  to  last  year  and  remains 
inadequate. Judges in the Administrative Court working on competition cases received some 
training  on  anti-trust  and  mergers.  Overall,  preparations  in  the  area  of  anti-trust,  including 
mergers, are at an advanced stage. 

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The  percentage  of  CPC  decisions  confirmed  by  the  Administrative  Court  has  increased. 
Compared to 2010, the enforcement record has increased in the field of mergers but remains 
low  in  the  area  of  cartels.  Since  October  2010,  the  CPC  has  adopted  one  decision  on  a 
prohibited  agreement,  four  decisions  in  cases  involving  abuse  of  dominant  position  and 
fourteen decisions on mergers.  

There was some progress in the field of State aid. The new law on State aid was enacted. It 
allows  for  simpler  administrative  procedures  before  the  CPC.  The  number  of  staff  dealing 
with State aid is sufficient. The number of decisions taken by the CPC in the field of State aid 
has increased - since October 2010, it has adopted six decisions. However the quality of the 
decisions, in particular with regard to the question of the qualification of the aid, needs to be 
improved.  Awareness  activities  were  organized  for  State  aid  providers,  particularly  on  the 
provisions  of  new  law.  The  number  of  reporting  institutions  increased,  in  particular  among 
large providers of aid. However, some are still reluctant to notify aid to the CPC. 

There  was  little  progress  in  the  field  of  market  liberalisation.  Recent  amendments  to  the 
energy law, adopted in spring 2011, have led to an increase in competition and transparency 
in the electricity sector. In the energy sector, most of the (lignite) coal reserves are still being 
managed by the electricity generation company and there is still no clear legal and financial 
separation between the lignite excavation activities and operation of the thermal power plants. 
Gas  and  electricity  markets  are  dominated  by  single  suppliers  who  undermine  effective 
competition.  

Conclusion 

Some progress was made in the area of competition. In the field of mergers and State aid the 
enforcement  record  has  improved  in  quantitative  terms,  but  it  remains  low  in  the  field  of 
cartels. The quality of the decisions in the area of State aid needs to be further improved. The 
CPC does not have adequate budgetary resources. The number of staff is adequate to cover 
State aid matters, but insufficient in the area of anti-trust and mergers. Overall, preparations in 
the area of Competition Policy are moderately advanced.  

4.9. 

Chapter 9: Financial Services 

There  was  good  progress  in  the  area  banks  and  financial  conglomerates.  The  law  on  the 
deposit guarantee fund, increasing the amount of guaranteed deposits, was adopted. It will be 
fully  applied  by  the  time  of  accession.  The  law  on  financial  companies  which  regulates  the 
non-bank credit institutions was also adopted. 

Preparation of legislation in the area of banks and financial conglomerates is well advanced. 
However,  further  efforts  are  needed  in  order  to  keep  track  of  the  latest  regulatory 
developments at international level. Moreover, financial intermediation is hampered by weak 
competition in the sector and a high risk-aversion of the banking sector.  

New  legislation  has  been  introduced  requiring  the  banks  and  the  financial  institutions  to 
provide  consumers  with  full  information  on  their  products  and  services.  However,  the 
implementation of this legislation remains a challenge and the protection of consumers is not 
properly addressed. 

The central bank, the National Bank of the Republic of Macedonia (NBRM), issued several 
pieces  of  implementing  legislation  relating  to  credit  and  operational  risk  management  and 

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management  of  banks  under  administration.  Cooperation  continued  with  the  supervisory 
authorities of those countries whose banks own some of the largest banks in the country. The 
capacity  of  the  NBRM  for  proper  implementation  and  enforcement  of  regulations  is 
satisfactory. The Basel II Accord for risk-based supervision is being applied gradually: pillars 
2  and  3  are  fully  applied.  However  pillar  1,  crucial  for  Basel  II,  will  only  be  applied  from 
January  2012  onwards.  The  transposition  of  the  Capital  Adequacy  Directive  for  investment 
funds and credit institutions has not been completed. 

Good,  but  uneven,  progress  can  be  reported  in  the  area  of  insurance  and  occupational 
pensions. The law on insurance supervision was amended in order to bring it into line with 
the law on prevention of money laundering and the Criminal Code. Some of the acquis under 
the Solvency I directive, including the acquis on risk-based supervision and off-site reporting 
requirements, was transposed; alignment remains to be confirmed. The enforcement record of 
the Insurance Supervisory Agency (ISA) improved; it now performs both on-site and off-site 
supervision. The capacity  of  the  ISA and its cooperation with  the supervisory  authorities of 
the insurance companies that have local subsidiaries are adequate. Foreign-owned insurance 
companies  reinsure  most  of  the  risk  undertaken  by  the  local  subsidiaries,  in  particular  that 
related to larger clients. The guarantee fund for insolvency of insurers is now sufficient; the 
required  capital  and  solvency  margin  are  above  the  required  levels.  However,  there  is  no 
enforcement  record  in  combating  offences  committed  by  uninsured  drivers.  The  legislation 
implementing the Law on vehicles, which regulates vehicle registration and insurance, will be 
applied from the 1 January 2012. The provisions in the Law on compulsory insurance of road 
vehicles authorising the Ministry of Finance to set the premiums for motor vehicle insurance, 
which constitute an effective barrier to competition among the insurance companies, have not 
been removed. 

The  law  on  fully-funded  pension  insurance  was  amended  in  order  to  lower  the  sanctions. 
Further legislation implementing the Law on fully funded pension insurance was issued by the 
Agency  for  the  supervision  of  fully  funded  pension  insurance  (MAPAS).  The  MAPAS 
launched the preparations for the introduction of risk-based supervision. The new regulations 
will  be  modelled  on  International  Organisation  of  Pension  Supervisors  best  practices; 
however, they are not linked to the Basel principles. The country's pension scheme, which is 
based on defined contributions, differs from the model applied in most of the EU countries; 
hence the respective EU acquis for supervision of the institutions for occupational retirement 
provisions cannot be applied. Pension funds can now invest a small part of their portfolio in 
equity capital and in municipal bonds, in order to stimulate SMEs and local development. The 
limitation  on  investing  in  non-domestic  securities  continues,  which  is  contrary  to  the 
principles  of  EU  law.  However,  the  limit  was  relaxed  to  50%  (30%  in  2010).  The  financial 
independence of MAPAS was not fully ensured, despite the separation of the MAPAS budget 
from the Ministry of Finance, which still gives prior approval regarding the management of 
MAPAS assets. No previous experience related to financial supervision or capital markets is 
required  for  appointment  to  the  MAPAS  management.  Its  overall  administrative  capacity  is 
weak,  and  exposed  to  turnover  of  experienced  staff.  MAPAS  has  limited  leverage  over  the 
institutions  it  supervises.  In  the  area  of  insurance  and  occupational  pensions  the  country 
partially meets its objectives. 

Progress  was  made  in  the  area  of  financial  market  infrastructure.  The  financial  stability 
committee  and  the  financial  services  supervisory  committee  meet  regularly.  A  new  law  on 
leasing,  introducing  soft  supervisory  standards  was  adopted.  In  the  area  of  financial  market 
infrastructure the country is moderately advanced.  

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Progress can be reported in the area of securities markets and investment services. Most of 
the  present  directives  on  market  abuse,  markets  in  financial  instruments,  investors' 
compensations  schemes,  transparency  and  prospectuses,  are  already  transposed;  alignment 
remains to be confirmed. Further steps need to be taken to achieve alignment with Directive 
2007/16  and  other  developments  in  the  EU  acquis  relating  to  undertakings  for  collective 
investment in tradable securities (UCTIS IV package). Furthermore, the frequency with which 
the  supervisory  regulations  of  are  amended  makes  implementation  by  the  capital  market 
undertakings  cumbersome.  As  regards  administrative  developments,  the  Parliament  has 
elected  four  new  members  and  re-elected  the  President  of  the  regulator,  the  Securities  and 
Exchange Commission (SEC); all of them will be full-time employees of the SEC. Moreover, 
steps were taken to distinguish the competences of the Central Bank and the SEC in the area 
of licensing and supervision of trading in securities, while the SEC's cooperation with other 
domestic authorities was strengthened. The IT system of the SEC was upgraded and is now 
adequate. However, the number of SEC staff is still not sufficient. On an international level, 
the  SEC  has  signed  the  International  Organization  of  Securities  Commissions  Multilateral 
Memorandum of Understanding.  

Conclusion 

There was overall good progress in the areas of banking, insurance and securities markets and 
investment  services.  The  laws  on  the  deposit  guarantee  fund  and  on  distance  marketing  of 
financial  services  were  adopted,  the  Basel  II  accord  for  risk-based  supervision  is  being 
gradually  applied  and  the  preparation  of  remaining  legislation  in  the  area  of  banks  and 
financial  conglomerates  is  advancing.  The  Insurance  Supervisory  Agency  has  started  with 
enforcement  through  on-site  and  off-site  supervisions.  New  legislation  regulating  other 
financial services has been introduced, such as leasing and non-banking financial companies 
and steps were taken to distinguish the competences of the Central Bank and the SEC in the 
area of licensing and supervision of trading in securities. However, alignment remains to be 
confirmed  for  some  newly  transposed  legislation.  The  independence  and  the  enforcement 
capacity  of  the  MAPAS  remain  to  be  addressed.  Recent  developments  in  the  EU  law  will 
need  to  be  taken  into  account.  Overall,  in  the  area  of  financial  services,  alignment  with  the 
acquis is on track. 

4.10.  Chapter 10: Information society and media 

implementing 

legislation  aimed  at 

There  was  good  progress  in  the  area  of  electronic  communications  and  information 
technologies.  The  regulator  adopted 
improving 
competitive  conditions  and  introduced  most  of  the  key  competitive  safeguards.  The 
implementation  of  cost  accounting  obligations  would  ensure  that  operators  follow  fair, 
objective, and transparent criteria when allocating costs to services. The regulator has obliged 
operators to make provision for greater protection of consumer rights by adopting consumer 
rights regulation by obliging service providers to publish all conditions for access, pricing and 
tariffs.  The  MVNO  regulation  (mobile  virtual  network  operator)  was  introduced  and 
procedures were launched for the regulation of next generation access networks. The regulator 
analysed all relevant markets for electronic communications and made headway in imposing 
regulatory remedies. Relevant markets that are sufficiently competitive are no longer subject 
to ex-ante regulation. High fees charged by the regulator to the operators exceeding the level 
necessary  to  cover  the  administrative  costs  called  into  question  the  non-profit  nature  of  the 
regulator  and  may  constitute  a  barrier  to  market  entry,  in  contradiction  to  the  acquis.  The 
regulator appointed a new Director; however, the appointment process raised concerns about 
possible politicisation. The level of cooperation with the competition authority has improved 

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41 

   EN 

 
as  a  start  was  made  on  coordination  of  ex-ante measures imposed by the regulator with ex-
post  measures  by  the  competition  authority.  A  universal  service  provider  was  designated. 
Preparations  for  the  introduction  of  the  emergency  number  112  have  advanced.  The 
administrative capacity within the competent ministry has yet to be strengthened. In the area 
of electronic communications and information technologies, the country is advanced.  

There  was  progress  in  the  area  of  information  society  services  under  the  responsibility  of 
Ministry  of  Information  Society  and  Administration,  notably  in  the  area  of  online  public 
services.  Amendments  to  the  Electronic  Commerce  Act  were  adopted  which  were  aimed  at 
completing alignment in this field, in particular by establishing a national contact point, which 
has yet to be put into operation. An e-inclusion strategy was adopted. Internet shopping in the 
country remains at a low level. A new 'threshold' on internet trading with a high customs tariff 
is  not  in  line  with  the  current  strategy  to  promote  the  digital  economy.  A  national  internet 
exchange point is yet to be established. In the area of information society services, the country 
is advanced. 

There  was  some  progress  in  the  area  of  audiovisual  policy.  The  Broadcasting  Law  was 
amended, putting the Public Revenue Office in charge of collecting the broadcasting fee on 
behalf  of  the  Public  Service  Broadcaster.  The  number  of  members  of  the  Broadcasting 
Council  increased  from  the  current  9  to  15.  The  Broadcasting  Council's  market  monitoring 
activities  increased,  but  remain  insufficient.  Cooperation  with  the  competition  authority 
intensified, but legislation on copyrights and on media ownership and concentration is still not 
fully enforced. Piracy is widespread, notably in the cable TV networks. Sustainable funding 
of  the  public  service  broadcaster  and  the  Broadcasting  Council  is  yet  to  be  secured.  The 
public  service  broadcaster  does  not  currently  fulfil  its  statutory  role  to  provide  informative, 
educational  and  entertaining  programmes.  The  process  was  launched  for  the  adoption  of  a 
new  Law  on  electronic  media  aimed  at  aligning  with  the  Audiovisual  Media  Services 
Directive.  Preparations  have  started  for  the  introduction  of  mobile  TV  services  and  second 
generation digital television. The government adopted an Action Plan for digital switch-over 
and  use  of  the  digital  dividend;  however,  the  switch-over  was  postponed  to  2013,  thereby 
hindering investments in the market. Use of the operators' money for the digitalisation of the 
public broadcaster is not in line with best European practices. Intrusions into media freedom 
hindered the uninterrupted functioning of the media without political interference. Large fines 
are imposed for defamation of public figures, which is contrary to European case law. In the 
area of audiovisual policy the country needs to step up its efforts to align with the acquis. 

Conclusion 

Progress  was  made  in  the  field  of  electronic  communications  and  information  society 
services.  Alignment  with  the  EU  acquis  is  advancing  and  most  of  the  key  competitive 
safeguards were introduced. The country's approximation with Digital Agenda Europe actions 
is progressing. Some progress can be reported in the area of audiovisual policy, including an 
Action Plan for full digital switch-over and use of the digital dividend. However, the country 
only  partially  meets  the  EU  requirements  in  this  area.  Further  efforts  are  necessary  with 
regard  to  the  capacity  of  the  Broadcasting  Council  whose  ability  to  monitor  the  market 
effectively remains inadequate. The public broadcaster is failing to fulfil its statutory role. 

4.11.  Chapter 11: Agriculture and rural development  

Horizontal  progress  was  made.  Implementing  legislation  was  enacted  in  the  fields  of 
agricultural  and  rural  development  support  policy,  including  direct  payments,  and  market 

EN 

42 

   EN 

 
support measures. For 2011, a total of € 101 million is allocated for direct support schemes; 
this  includes  area  and  headage  payments,  premium  payments  for  strategically  important 
products, and non-commodity based payments. Institutional capacity remains a concern, with 
restrictions  in  budgetary  allocations  in  2011  for  salaries  of  public  servants  in  the  sector 
compounded by uneven progress in filling vacant posts. 

Good progress can be reported towards setting up an Integrated Administration and Control 
System  (IACS).  The  Land  Parcel  Identification  System  (LPIS)  is  in  an  advanced  stage  of 
development;  and  farmer  registration  is  on-going.  The  real  estate  register  currently  covers 
99%  of  the  country.  The  farm  register,  with  a  supporting  automated  IT  system,  is  fully 
functional and is being used in the supervision of national support schemes in 2011. However, 
internet  and  server  capacity  is  a  constraint,  particularly  at  times  of  peak  activities. 
Compatibility  of  data  registers  is  progressing,  although  it  has  not  yet  been  fully  achieved. 
Institutional capacity to manage and maintain a functioning IACS is insufficient. 

There  was  some  progress  in  improving  the  capacity  of  the  paying  agency  (the  Agency  for 
Financial  Support  for  Agriculture  and  Rural Development  —  AFSARD).  Staff  employed  in 
AFSARD  has  a  wide  range  of  responsibilities,  covering  both  national  support  schemes  and 
existing  and  planned  additional  Instrument  for  Pre-Accession  Assistance  for  Rural 
Development  (IPARD)  measures  under  Component  V.  However,  despite  high  levels  of 
motivation and training, their number is insufficient. Preparations for implementation of the 
European Agricultural Guarantee Fund (EAGF) (direct payments) are being initiated through 
the  introduction  of  relevant  implementing  legislation.  Limited  progress  is  evident  in  the 
development of a sustainable and efficient agricultural information system. The activities of 
the  Pilot  Farm  Accountancy  Data  Network  (FADN)  continue.  Provision  of  support  in 
agriculture  was  strengthened.  Preparations  in  the  area  of  horizontal  issues  are  moderately 
advanced. 

Regarding  animal  products,  implementing  legislation  for  poultry  and  eggs  and  honey  has 
been  adopted.  Harmonisation  of  legislation  with  the  acquis  has  continued  for  specialised 
crops,  principally  through  the  adoption  of  implementing  legislation  on  wine.  Institutional 
capacity  to  implement  and  enforce  the  legislation  in  force  has  been  strengthened.  The  legal 
basis  is  in  place  for  implementation  of  market  support  measures  such  as  intervention  for  a 
restricted  number  of  commodities,  consumption  promotion,  and  producers'  organisations. 
Alignment with the EU common market organisation is limited. Preparations in this area are 
being initiated. 

Alignment with the acquis in the area of specialised crops is on track, particularly for wine. 
Implementing legislation on wine was introduced, relatingd principally to the registration of 
producers  and  control  of  processing  facilities.  However,  the  implementing  law  concerning 
geographical indications remains to be fully aligned with the acquis. Implementing rules for 
fruits  and  vegetables  have  been  enacted  and  an  ambitious  timetable  has  been  set  for  other 
products.  

Further  progress  can  be  reported  in  the  field  of  rural  development.  Implementation  of  the 
IPARD  programme  under  component  V  continues  for  three  measures  'Investments  in 
agriculture  holdings',  'Processing  and  marketing'  and  'Diversification  in  rural  economy'.  To 
date,  three  calls  for  proposals  have  been  completed  and  fourth  launched.  The  associated 
commitment for the four proposals under IPA Component V totals €M 4.67. Nevertheless, the 
absorption  of  allocations  for  2007  and  2008  under  IPA  Component  V,  totalling  €M  8.8, 
remains  a  concern.  The  institutional  capacity  of  the  Ministry  of  Agriculture,  Forestry  and 

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43 

   EN 

 
Water  Economy  (MAFWE)  Managing  Authority  was  strengthened.  Preparations  for 
accreditation of the Technical Assistance measure were renewed with a view to finalisation by 
the end of 2011. 

Continuing progress can be reported in the field of quality policy. Implementing legislation 
for  the  legal  framework  covering  regulation  of  marketing  standards,  requirements  on 
presentation  and  consumer  labelling,  and  the  establishment  of  quality  schemes  were 
introduced. This was supported by institutional restructuring and strengthening.  

There  was  further  progress  with  organic  farming.  The  law  on  organic  production  was 
strengthened,  principally  in  the  fields  of  registration  of  producers,  and  control  of  permitted 
and  non-permitted  inputs.  Alignment  with  the  acquis  remains  to  be  confirmed.  Numbers  of 
registered  organic  producers,  as  well  as  total  organic  production,  continue  to  increase.  A 
budget of € 1.79 million was allocated in 2011 to support organic production. Administrative 
capacity is insufficient to meet acquis obligations. Preparations in this area are back on track.  

Conclusion 

Further progress was achieved in the field of agriculture and rural development. Key support 
policies  for  agriculture  and  rural  development  are  gradually  being  aligned  with  EU 
requirements. Alignment with the acquis requires continuing sustained efforts. Administrative 
capacity  remains  a  concern  throughout  the  sector.  Overall,  preparations  in  the  area  of 
agriculture and rural development are moderately advanced. 

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

Good  progress  was  made  as  regards  the  general  principles.  A  new  food  safety  law  was 
enacted. The Law lays down the general principles and requirements of an integrated system 
for safety of food and animal feed, general and specific hygienic requirements for food safety, 
and organisation of the food safety system, including official controls. Starting from 1 January 
2011, an independent Food and Veterinary Agency (FVA) was established by a merger of the 
Food Directorate of the Ministry of Health and the Veterinary Directorate of the Ministry of 
Agriculture, Forestry  and Water economy, to provide more coherent approach in the sector. 
Staffing of the FVA still needs some strengthening. 

Progress was made in the area of veterinary policy. Additional implementing legislation on 
control systems was adopted. A system for the collection, processing and disposal of animal 
by-products remains to be put in place. The capacity of systems for the control of imports was 
improved  by  opening  two  new  border  inspection  posts  at  the  border  crossing  point  of 
Tabanovce and Skopje Airport. Since January 2011 all formalities for import of animals and 
animal by-products are the responsibility of the veterinary inspection at the border.  

The part of the system for identification and registration of bovines, sheep and goats which 
deals  with  movement  control  has  been  improved,  but  it  does  not  cover  all  the  movements. 
Corrective  measures  have  been  adopted  to  address  shortcomings  in  identification  and 
registration  of  animals,  but  the  FVA  administrative  capacity  remains  weak.  Good  progress 
was made in the area of control measures for animal diseases. The FVA is implementing the 
programme for oral vaccination of foxes, based on a developed action plan and corresponding 
implementing legislation. Surveillance programmes for rabies and classical swine fever are in 
an  initial  phase  of  implementation.  A  programme  for  the  control  and  eradication  of 
transmissible spongiform encephalopathies was adopted. Measures for control and eradication 

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44 

   EN 

 
of Newcastle disease and African horse sickness have been adopted, alignment remains to be 
confirmed. The FVA is implementing a programme for eradication of brucellosis. Although 
clear progress has been made in the areas where small ruminants are mass vaccinated against 
brucellosis, the prevalence of disease is maintained or increased in other regions. The national 
control plan on salmonella in hens is not implemented due to lack of funds. The capacities of 
the FVA, although strengthened, remain insufficient to perform systematic controls in relation 
to transmissible animal diseases. The 2011 budget for veterinary expenditure on measures for 
animal  health  was  reduced  by  18%  as  compared  to  2010;  the  total  budget  is  required  for 
payment  of  arrears  carried  over  from  2010.  The  costs  of  implementation  of  the  2011 
programme are foreseen to be paid from the 2012 national budget. 

Some progress was made in the area of animal welfare. Implementing legislation transposing 
the acquis was adopted; alignment remains to be confirmed.  

Some  implementing  legislation  on  intra-Community  trade  in  live  animals,  semen,  ova  and 
embryos,  remains  to  be  adopted.  The  aim  of  the  existing  legislation  on  non-commercial 
movement  of  pet  animals  and  on  import  requirements  for  live  animals  and  animal  products 
aims  is  to  transpose  the  acquis;  alignment  has  yet  to  be  confirmed.  No  new  international 
veterinary agreements were signed during the reporting period. The capacity to transpose and 
implement  the  acquis  on  zootechnical  issues  was  strengthened.  A  programme  for  livestock 
breeding was adopted.  

The  laboratories  of  the  veterinary  faculty  were  nationally  accredited  to  ISO  17025  standard 
for an additional 89 laboratory methods. A system for the supervision of veterinary inspectors 
and  veterinary  stations  was  established.  The  administrative  capacity  of  the  veterinary 
inspection  remains  insufficient,  at  both  central  and  local  level,  to  implement  an  EU-
compatible control system. In the area of veterinary policy, the country is advanced. 

Some progress was made in the placing on the market of food and feed. The aid schemes 
for HACCP were prolonged to 2011 and training events provided for food business operators 
(FBO).  The  FBOs  do  not  always  apply  the  HACCP  based  procedures  correctly  and  official 
controls are not always conducted in accordance with the legal requirements. The new food 
safety law provides a comprehensive legal basis for the formal categorisation and upgrading 
of the food business operators. Evaluation of food processing establishments for compliance 
with EU standards is not always performed correctly. The existing legislation transposes the 
acquis on hygiene rules, specific rules for animal products, control rules and specific control 
rules  for  animal  products  still  remains  to  be  adopted.  Planned  activities  for  improving  the 
quality of the raw milk are not implemented.  

Implementing rules, covering the control and management of animal by-products, were adopted. 
The necessary collection and treatment systems have not yet been set up. Development of a 
strategy  for  management  of  animal  by-products  is  in  progress.  Preparations  in  this  area  are 
being initiated. 

Some progress can be reported in the area of food safety rules. Implementing legislation was 
adopted  on  the  safety  of  food  for  particular  nutritional  uses  and  food  supplements.  The 
legislation aims at transposing the acquis on food contact material, labelling, food additives, 
flavourings, quick-frozen foodstuffs, contaminants, novel food, ionising radiation and mineral 
waters.  Implementing  legislation  on  extraction  solvents  and  fortified  food  has  yet  to  be 
adopted.  The  capacity  of  the  laboratory  in  the  Institute  for  Health  Protection  is  still 
insufficient to provide reliable results with respect to both human resources and procedures. 

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45 

   EN 

 
The  capacity  of  the  food  inspectorate  was  strengthened,  but  the  number,  training  and 
competence  of  staff  remain  insufficient.  The  annual  monitoring  programme  for  food  safety 
was adopted and is in the implementation phase. Preparations in this area are being initiated. 

Progress  was  made  on  specific  rules  for  feed.  A  law  on  animal  feeding  was  enacted.  The 
implementing legislation remains to be adopted.  

Progress can be reported in the area of phytosanitary policy. Implementing legislation was 
adopted in all areas, including on plant health, plant protection products, quality of seeds and 
propagation  materials  and  plant  variety  rights.  A  new  list  of  authorised  active  substances 
intended  for  plant  protection  products  was  adopted.  No  action  was  taken  to  implement  the 
international  standards  for  phytosanitary  measures,  in  particular  for  surveillance,  export 
certification  and  determining  pest  status  in  an  area.  Despite  some  recruitment,  the 
administrative capacity of the phytosanitary directorate needs further strengthening.  

Coordination among the various competent authorities in the area of phytosanitary policy has 
not  improved.  Two  new  phytosanitary  border  inspection  posts  were  opened  at  the  border 
crossing  point  of  Tabanovce  and  Skopje  Airport.  Preparations  for  accreditation  of  the  state 
phytosanitary laboratory are ongoing. Its capacity has improved, but remains under-used due 
to  its  undefined  role  in  the  national  food  safety  monitoring  system  and  the  lack  of  samples 
received on a regular basis. Preparations in the area have been initiated.  

No  progress  has  been  observed  in  alignment  with  the  acquis  as  regards  the  release  into  the 
environment  of  genetically  modified  organisms  (GMOs)  and  genetically  modified  food  and 
feed. 

Conclusion 

There  was  good  progress  in  the  area  of  food  safety,  veterinary  and  phytosanitary  policy,  in 
particular with respect to the adoption of the new food safety framework law, establishment of 
the  new  Food  and  Veterinary  Agency  and  implementation  of  various  animal  disease 
eradication programmes. The administrative capacity of the Food and Veterinary Agency, in 
terms of both the number and the competence of its staff, is still insufficient to ensure proper 
implementation  of  the  acquis.  Preparations  in  the  area  of  food  safety,  veterinary  and 
phytosanitary policy are well on track. 

4.13.  Chapter 13: Fisheries 

There was limited progress in the field of resource and fleet management. Preparations in 
this area are on track. The acquis requirement on fleet registration is not applicable.  

Limited progress was made in the area of inspection and control. Implementing legislation 
was  enacted  that  reinforces  the  Law  on  Fisheries  and  Aquaculture.  However,  the 
administrative  capacity  of  the  unit  for  fisheries  and  aquaculture  within  the  Ministry  of 
Agriculture,  Forestry  and  Water  Economy  (MAFWE),  and  of  the  relevant  unit  within  the 
Agricultural Inspectorate, is insufficient. Preparations in this area are being initiated. 

Some  progress  was  made  in  the  field  of  structural  actions.  Implementing  legislation  was 
enacted to cover the control of, and procedures related to, recreational fishing. For 2011, €1 
million is allocated for support schemes. 

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46 

   EN 

 
Progress was achieved in the field of market policy. MAFWE has established a register of all 
State  aid  approved  in  the  fisheries  sector.  National  schemes  remain  to  be  aligned  with  the 
EU's structural and State aid policies, in particular regarding support for the stocking of fish 
waters.  

There  are  no  formal  international  agreements.  Informal  working  arrangements  continue 
with Albania and with Greece, covering the management of resources in Lakes Ohrid, Prespa 
and Dojran, whose waters are shared.  

Conclusion 

There was some progress in the area of fisheries. Administrative capacity is still insufficient. 
Since  the  country  is  landlocked,  a  large  proportion  of  the  fisheries  acquis  is  not  relevant. 
Preparations  for  implementation  of  the  common  fisheries  policy  are  being  initiated. 
Preparations in the area of fisheries are moderately advanced. 

4.14.  Chapter 14: Transport policy 

implemented  according 

Good progress can be reported in road transport. The work of the Road Safety Council was 
improved;  safety  campaigns  were 
their  annual  plan. 
Implementation  of  the  legislation  on  digital  tachographs  has  started  and  all  the  necessary 
structures were put in place. The Law on road transport was amended with a view to aligning 
it with the acquis on market access. The State transport inspection capacity was strengthened, 
and specialised equipment and further training events were provided. However, the number of 
inspections is still insufficient. The administrative capacity for implementing the road safety 
policy,  and  the  social  acquis,  needs  further  improvement.  Preparations  in  the  area  of  road 
transport are well advanced. 

to 

There  was  considerable  progress  in  the  rail  transport.  A  new  law  on  interoperability  was 
enacted by the Parliament. The Safety Authority was established as entity within the transport 
ministry, but its administrative capacity needs to be strengthened. Legislation on the licensing 
of  train  drivers  was  adopted  to  transpose  EU  rules,  but  it  will  only  be  applicable  after 
accession  of  the  country  to  the  EU.  The  safety  authority  issued  a  series  of  vehicle 
authorisations,  some  of  them  according  to  EU  Technical  Specifications  of  Interoperability. 
The accident investigating body, established in early 2010, was not effective. Preparations for 
a  new,  full-time  body  within  the  government  Secretariat  General  are  ongoing.  Additional 
efforts are still needed in order to implement and enforce the acquis. The level of track-access 
charges  still  adversely  affects  the  competition  of  rail  with  road  transport.  The  Railway 
Regulatory  Agency  is  a  regular  participant  in  the  EU  working  group  of  rail  regulators. 
Burdensome,  non-transparent  and  costly  licensing  and  safety  certification  procedures  and 
ensuing  court  proceedings  have  had  a  discouraging  effect  on  companies  from  entering  this 
monopolistic market. As a result, there is still only one operator. The Joint Border Crossing 
Agreement with Kosovo has been signed.  

Little  progress  was  made  in  the  area  of  inland  waterways  transport.  Implementing 
legislation on the requirements of ships' crew members was adopted. A safety inspection and 
licensing  function  was  established  and  started  to  operate.  Preparations  in  this  area  are 
advanced. 

No progress can be reported in the area of combined transport. Preparations are on track. 

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Limited  progress  can  be  reported  in  the  area  of  air  transport.  The  Civil  Aviation  Agency, 
which  is  the  independent  regulatory  body,  has  become  operational.  However,  the  human 
resources have not yet been strengthened. The reduction of the financial resources of the Civil 
Aviation Authority in the amendment to the Aviation Law has not been resolved. For some of 
the requirements under the first phase of the European Common Aviation Area agreement as 
regards  air  traffic  management,  aviation  safety  and  security,  national  implementation 
measures  have  been  put  into  place.  Several  important  pieces  of  the  Single  European  Sky 
legislation  have  been  correctly  transposed,  but  significant  efforts  are  needed  in  order  to 
complete regulatory alignment. In order to meet the obligations of the first transitional period 
in accordance with Protocol V of Annex V to the ECAA Agreement, the transposition of the 
interoperability regulation and the airspace and the flexible use of airspace regulations need to 
be  finalised,  and  the  airspace  needs  to  be  reconfigured  into  a  functional  airspace  block. 
Although the associated National Supervisory Authority has been established, efforts are still 
needed  to  ensure  its  proper  functioning  and  sustainable  structure.  The  Air  Accident 
Investigation  Committee  still  needs  to  be  established.  The  air-navigation  services  company 
staff still lacks relevant expertise. The administrative capacity of the air traffic department of 
the Ministry of Transport and Communications was strengthened. Overall, there is still a lack 
of  adequate  administrative  capacity  in  the  air  transport  sector.  In  the  area  of  air  transport, 
preparations are moderately advanced. 

No  development  can  be  reported  in  the  area  of  satellite  navigation.  Preparations  for 
establishing technical assistance for the implementation of the satellite navigation programme, 
once it is operational, are ongoing.  

Conclusion 

Progress can be reported in the area  of transport policy, particularly in the area of road and 
rail transport. The implementation of digital tachographs has started. A new law on railways 
interoperability  was  adopted  and  a  Safety  Authority  was  established.  The  Safety  Authority 
needs  to  introduce  safety  certification  procedures.  The  administrative  capacity  in  each 
regulatory  transport  authority  needs  further  strengthening.  The  Accident  Investigation 
Committees,  in  both  rail  and  air  transport,  need  to  be  strengthened  in  order  to  act  as  an 
independent  body  for  investigating  accidents  and  serious  incidents.  Overall,  preparations  in 
the area of Transport policy are advanced. 

4.15.  Chapter 15: Energy 

Progress can be reported in the area of security of supply. Legislation was aligned with the 
directives  on  security  of  electricity  and  natural  gas  supply.  The  Directorate  of  Compulsory 
Reserves  of  Oil  and  Oil  Derivatives  proceeded  to  implement  the  medium-term  programme 
2010-2015 for the establishment of mandatory reserves. At the beginning of September 2011, 
oil stocks were equivalent to only 33 days' average consumption. Alignment with the new oil 
stocks directive remains to be achieved. In the area of security of supply the country partially 
meets its objectives. 

There was good progress in the area of the internal energy market. A new comprehensive 
energy  law,  aligned  with  the  obligations  deriving  from  the  Energy  Community  Treaty,  was 
enacted. The new energy law envisages the full opening of the electricity market to all non-
household customers by mid-2012, and it strengthens the competences and independence of 
the Energy Regulatory Commission (ERC). The ERC adopted rulebooks on licences and on 
awarding  cross-border  transmission  capacities.  The  ERC  amended  the  rulebook  on  the 

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method  and  conditions  for  regulating  electricity  prices,  and  started  preparations  on  a  new 
tariff system for electricity transmission and distribution for the 2012 regulatory period. The 
subsidy  scheme  for  vulnerable  customers  was  extended  to  2011.  The  dispute  with  the 
distribution  system  operator,  a  major  EU  investor,  was  resolved.  The  dispute  settlement 
procedure  opened  by  the  Energy  Community  Secretariat  on  this  case  has  been  closed. 
Electricity prices for households increased in 2011 by more than 5%, but still do not reflect 
costs.  Market  rules  are  still  under  preparation.  Collection  rates  for  power  bills  remain 
insufficient to ensure the viability of the system.  

The new energy law stipulates the unbundling of natural gas supply from transmission. The 
ownership  of  the  gas  transmission  pipeline  system  remains  unresolved  between  the 
government and the distribution company.  

The  administrative  capacity  of  the  ERC  was  further  strengthened:  two  new  staff  members 
were  employed,  and  the  ERC  continued  to  benefit  from  extensive  training  activities  of  two 
IPA 2007 projects. The staff numbers of the energy department of the Ministry of Economy 
stayed  unchanged  at  14.  The  administrative  capacity  remained  insufficient  to  address  all 
energy policy challenges. In the area of the internal energy market the country is moderately 
advanced. 

Progress  was  made  in  the  area  of  energy  efficiency.  The  national  energy  efficiency  action 
plan,  in  line  with  the  commitments  of  the  Energy  Efficiency  Task  Force  of  the  Energy 
Community, was adopted in April. An energy saving campaign was carried out. The Ministry 
of Economy adopted rulebooks on labelling and high –efficiency co-generation plants, and a 
decree  on  eco-design.  The  Energy  Agency  still  lacks  the  necessary  resources  and 
administrative  capacity  to  effectively  promote  energy  efficiency  and  renewable  energy 
sources. In the area of energy efficiency, the country has started to address its objectives. 

In the field of renewable energy, a new rulebook on renewables and the decree for feed-in 
tariffs were adopted. The government took a decision confirming the renewable energy target 
for 2020 of 21%, and submitted a simplified renewable energy action plan for implementation 
of  the  strategy  to  develop  renewable  energy  sources  to  the  Energy  Community  Secretariat. 
The country was for the first time eligible for participation in the 2011 call for proposals for 
the Intelligent Energy program. However, the memorandum for participation in the program 
is not  yet  signed.  The  first  8  small  hydropower  plants  are  currently  under  construction.  The 
government issued an authorisation for the construction of the pilot wind farm Bogdanci with 
an  installed  capacity  of  around  50MW.  Preparations  in  the  area  of  renewable  energy  are 
ongoing,  but  the  country  is  not  making  full  use  of  its  renewable  energy  potential.  Further 
efforts are needed to improve the share of renewable energy in final energy consumption.  

The country has no nuclear energy. A study was commissioned for assessing the feasibility 
of constructing a nuclear power plant as an option to meet energy demand from 2020. 

Some regulatory progress was made regarding nuclear safety and radiation protection. The 
national  emergency  plan  was  adopted  in  June.  The  compliance  with  the  acquis  of  existing 
regulations  in  force  remains  to  be  verified.  Memorandum  of  understanding  for  cooperation 
between  the  Radiation  Safety  Directorate  (RSD)  and  its  counterpart  in  Montenegro  was 
signed.  The  administrative  capacity  of 
remains  satisfactory;  however, 
implementation  of  the  law  cannot  be  effectively  monitored  as  the  RSD  has  only  two 
inspectors. The 2011 budget for the RSD was substantially reduced, and the RSD is still not 
financially independent from the Ministry of Health, although it is still in charge of licensing 

the  RSD 

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   EN 

 
medical  practices.  The  envisaged  storage  facility  for  radioactive  waste  has  not  yet  been 
licensed:  the  current  design  does  not  meet  international  standards  and  the  necessary 
environmental impact assessment has not been carried out.  

Conclusion 

Good  progress  was  made  in  the  energy  sector,  in  particular  in  enacting  the  new 
comprehensive  energy  law  and  resolving  the  long-standing  dispute  with  the  distribution 
system  operator.  However,  an  effectively  functioning  electricity  market  has  yet  to  be 
established,  and  conditions  for  competition  ensured.  The  country's  energy  efficiency  and 
renewable  energy  potential  has  not  yet  been  adequately  exploited,  and  the  financial 
independence of the radiation protection regulator is still not secured. Preparations in the area 
of Energy are moderately advanced. 

4.16.  Chapter 16: Taxation  

There was limited progress on harmonisation of legislation in the area of indirect taxation. 
The rate of value added tax (VAT) for medical equipment and other devices for personal use 
to  alleviate  or  treat  disability  was  reduced  from  18%  to  5%,  which  is  compatible  with  the 
acquis. The VAT registration threshold was increased from 2011 to approximately € 32,000 
which is generally in line with the thresholds applied by some EU Member States. The Law 
on excise duties was amended with a view to discouraging the misuse of marked mineral oils 
as fuel for vehicles instead of for heating and to increase the amounts of fines for certain types 
of  offences.  Legislation  on  VAT  and  excise  is  only  partially  aligned  with  the  acquis,  some 
rates for excise remain lower than the minimum required. Preparations in this field remain on 
track. 

No progress was achieved in the area of direct taxation. The Law on profit tax was amended, 
however  issues  such  as  potential  discrimination  against  non-resident  legal  persons  for 
payment  of  tax  on  dividends  and  the  future  application  of  the  Parent-Subsidiary  Directive 
have yet to be addressed. Relief from personal income tax for employees in the technological 
industrial development zones was increased from 5 to 10 years. The introduction of taxation 
of interest on deposits was postponed until 2013. Preparations in this field remain moderately 
advanced. 

There  was  limited  progress  in  the  field  of  administrative  cooperation  and  mutual 
assistance.  A  double  taxation  agreement  with  Belgium  was  ratified.  The  number  of 
agreements  concluded  with  EU  Member  States  remains  at  23.  Double  taxation  agreements 
were  concluded  with  Kosovo  and  Norway.  However  the  agreements  do  not  cover  debt 
recovery and automatic exchange of information.  

Progress was made in the area of operational capacity and computerisation. The amended 
Law on registration of cash payments reinforced the penalty policy. The twice-amended Law 
on  tax  procedure  introduced  policies  for  taxpayers  to  correct  irregularities,  clarified  the 
penalty policy and improved the tax appeal procedure by involving the State Administrative 
Inspectorate  in  cases  where  appeals  are  not  dealt  with  within  the  legal  time  limits.  An 
amendment to the Law on the Public Revenue Office (PRO) created new competences for the 
office,  including  the  collection  of  administrative  and  misdemeanour  fines,  as  well  as 
television  and  radio  licence  fees.  The  PRO  updated  its  strategic  plan  for  2011-2013  and 
prepared  action  plans  for  2011.  Taxpayers'  services  were  further  decentralised  and  new 
Service  Points  offering  taxpayer  services  were  opened.  The  PRO  office  for  large  taxpayers 

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increased the number of companies it covers from 235 to 255. Enhanced audit activities were 
combined  with  new  risk  assessment  tools,  arrears  collection  was  stepped  up,  e-filing  of  tax 
returns  was  extended  and  internal  audit  capacity  was  somewhat  strengthened.  Horizontal 
monitoring agreements with taxpayers were introduced in order to improve compliance with 
limited inspection and desk audit was launched. Intensive communication strategies through 
the  web,  telecommunication  tools  and  new  publications  led  to  increased  voluntary 
compliance.  Training  on  professional  standards  and  management  took  place  and  a  staff 
appraisal system was implemented. A Centre for debt collection, a Centre for seized goods, a 
Tax  Academy  for  training  and  a  special  audit  unit  to  collect  information  on  high-risk  fraud 
and  tax  evasion  were  established  within  the  PRO.  The  new  Rulebook  for  implementation  of 
the  Law  on  excise  duties  became  effective  and  guidelines  for  control  procedures  for  excise 
levied on liquid petroleum gas were adopted. However, staff shortages  persist, especially in 
the area of auditing. The IT capacity of the tax administration remains weak. Internal audit, 
enforced  collection,  tax  investigation,  tax  audit,  as  well  as  efforts  to  reduce  the  informal 
economy,  need  to  be  further  improved.  The  PRO  lacks  tax  investigation  and  intelligence 
capacity, and co-ordination with the financial police remains to be substantially strengthened. 
A code of conduct for business taxation is not yet in place. Preparations in this area remain 
advanced. 

Conclusion 

Limited progress can be reported in the field of harmonisation of taxation legislation with the 
acquis.  Operational  capacity  for  the  administration  of  taxes  continued  to  improve,  however 
enforced  collection,  investigation,  audit  performance,  IT  and  staffing  capacity  remain  to  be 
addressed. Effective means of combating tax fraud and reducing the informal economy have 
yet to be introduced. Preparations in the area of taxation are on track. 

4.17.  Chapter 17: Economic and Monetary policy 

Significant progress can be reported in the field of monetary policy. A new Law on central 
bank was enacted, outlining the organisation and the operations of the central bank, its legal 
status, independence and its relations with the parliament and the government, as well as its 
tasks and responsibilities after accession to the EU and after accession to the eurozone. The 
law addresses the prohibition of monetary financing of the public sector and the prohibition of 
preferential access for the public sector to financial markets. The central bank is responsible 
for the monetary and other operations, such as last instance creditor and other monetary policy 
instruments;  foreign  exchange  rate  and  foreign  currency  reserves  policy;  issuance  of 
banknotes  and  coins;  organisation  of  the  payment  system;  supervision  of  the  financial 
institutions;  financial  stability;  statistical  analysis;  and  keeping  of  credit  register.  The 
institutional  and  administrative  capacity  of  the  central  bank  is  adequate.  The  quality  of 
monetary  statistics  and  their  compliance  with  international  standards  has  improved.  In  the 
area of monetary policy the country is in compliance with the requirements. 

There was some progress in the area of economic policy. The fifth pre-accession economic 
programme (PEP), covering the period 2011-2013, was submitted on time. The presentation 
of information in the PEP, especially the fiscal and macroeconomic framework, has improved. 
There is still room for improvement of the calculation of outputs and quality of data for the 
capital  stock  and  the  labour  market.  The  structural  part  lacks  a  more  comprehensive 
description of the reform strategies. The PEP is still not used as a core document for economic 
policy-making.  The  administrative  capacity  of  several  central  state  institutions  for  the 
the 
formulation  and 

implementation  of  economic  policy  has 

increased.  However, 

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51 

   EN 

 
administrative  capacities  of  some  municipalities,  in  particular  the  smaller  ones,  remained 
weak. Preparations in the area of economic policy are moderately advanced.  

Conclusion 

There  was  significant  progress  in  the  area  of  economic  and  monetary  policy.  A  new  law 
defining the operations, organisation and independence of the Central Bank was enacted. The 
quality  of  the  pre-accession  economic  programme  improved.  Administrative  capacity  for 
policy implementation varies widely between the central and local level. Overall, preparations 
in the area of economic and monetary policy are advanced. 

4.18.  Chapter 18: Statistics 

Progress  was  made  in  the  area  of  statistical  infrastructure.  The  amended  Law  on  State 
Statistics was adopted by Parliament and has strengthened the State Statistical Office's (SSO) 
role  as  coordinator  of  the  national  statistical  system,  and  advanced  the  introduction  of  the 
principles  of  the  European  Statistical  Code  of  Practice.  The  new  strategy  on  data 
dissemination  for  2010-2012  and  the  action  plan  for  its  realisation  were  adopted.  About  40 
new employees from the non-majority  communities were recruited, improving the  equitable 
representation and staff situation. The resource situation in SSO needs to be further improved, 
but overall preparations in this area are advanced. 

Some  progress  was  made  in  the  field  of  classifications  and  registers.  The  national 
classification  of  occupations  was  prepared  in  line  with  the  International  Standard 
Classification  of  Occupation  ISCO-08.  The  database  for  the  statistical  farm  register  was 
completed  and  the  procedures  for  updating  it  were  improved.  Preparations  in  this  area  are 
moderately advanced. 

Good progress was made in the area of sector statistics. Following intensive preparations for 
the  census  of  population  and  housing,  originally  scheduled  for  April  2011,  the  census  was 
postponed  to  October  2011.  However,  the  State  Census  Commission  only  reached  an 
agreement  on  the  composition  of  the  enumerator  teams  in  mid-September,  which  caused 
delays in the recruitment and training of enumerators. 

Improvements were made in agricultural statistics, and the results of the first farm structure 
survey were published in 2011. Overall, progress was made  on national accounts, including 
methodological improvements to supply and use tables and quarterly accounts; and on further 
development of sector  accounts.  Cooperation between  the  SSO  and  the  Ministry  of  Finance 
was reinforced. It has not been decided which institution is to be responsible for the financial 
accounts  statistics.  Progress  was  made  in  business  statistics.  The  development  of  structural 
business statistics continued and preliminary data were submitted to Eurostat. SSO introduced 
methodological  improvements  in  the  area  of  short-term  statistics  and  released  the  first  data 
under  the  new  classification  for  economic  activity,  NACE  Rev.  2.  The  number  of  data 
transmitted  to  the  European  Commission  increased,  and  SSO  and  the  other  producers  of 
official  statistics  are  encouraged  to  continue  this  trend.  However,  substantial  effort  and 
financial resources will be needed in order to achieve full alignment with ESA 95, including 
improved exhaustiveness of data. Preparations in the area of sector statistics are advanced.  

Conclusion 

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There was good progress in several areas, but full alignment with the acquis on statistics has 
yet  to  be  achieved.  Substantial  effort  is  needed  to  improve  sector  statistics,  in  particular  in 
economic  statistics.  The  scope  of  data  transmission  has  increased,  but  efforts  need  to  be 
stepped up. Preparations in the area of statistics are advanced. 

4.19.  Chapter 19: Social policy and employment  

There was little progress in the area of labour law. Several amendments were made to Law 
on  Labour  Relations  and  Law  on  Temporary  Employment  Agencies.  Implementation  of  the 
applicable  laws  is  slow.  The  administrative  capacities  of  the  institutions  responsible  for 
implementation  and  enforcement  of  the  labour  law  have  not  been  further  strengthened. 
Cooperation between the relevant institutions has not improved. Preparations in this area have 
slowed down.  

There  is  some  progress  to  report  in  the  area  of  health  and  safety  at  work.  The  National 
Council  for  Occupational  Safety  and  Health  is  functioning.  The  number  of  inspectors 
increased  slightly  and  training  was  provided.  Nevertheless,  the  inspection  capacity  remains 
insufficient. The number of workplace inspections of the State Labour Inspectorate continues 
to  be  high.  In  the  legislative  area,  a  Rulebook  concerning  risks  related  to  exposure  to 
biological agents at work was adopted. Amendments were prepared to the Law on Health and 
Safety  at  Work  to  bring  it  further  into  line  with  the  Framework  Directive  89/391/EEC.  The 
lack  of  coordination  between  relevant  authorities  is  still  hindering  the  finalisation  of  the 
strategy  for  the  further  development  of  health  and  safety  at  work.  There  is  still  no 
consolidated  recording  of  data  on  accidents  at  work.  Overall,  the  administrative  capacity 
needs  to  be  strengthened  to  ensure  proper  implementation  and  enforcement  of  the  legal 
provisions.  

There was some progress in the field of social dialogue. The Economic and Social Council 
has  met  regularly.  The  three  largest  trade  unions  signed  a  memorandum  for  co-operation, 
providing  for  their  coordinated  participation  in  the  social  dialogue.  Bipartite  and  tripartite 
social  dialogue  needs  to  be  further  improved,  and  participation  by  the  social  partners  in  the 
policy  development  process  further  developed.  Preparations  in  this  area  continue  to  make 
slow progress.  

Limited  progress  was  made  in  the  area  of  employment  policy.  Employment  in  the  grey 
economy  has  not  diminished.  The  State  Labour  Inspectorate  continued  to  implement  some 
initiatives at central level in order to raise awareness of the need to combat undeclared work. 
However, the impact has been rather limited. Efficient cooperation and coordination between 
enforcement bodies is still lacking. The unemployment rate remains high and labour market 
participation  is  still  very  low.  The  budget  allocated  to  the  active  labour  market  programme 
decreased  for  the  second  year  and  is  still  inadequate.  The  Employment  Service  Agency  has 
undertaken  to  analyse  the  existing  active  labour  market  measures,  but  is  still  without  a 
comprehensive approach to monitoring and evaluation. Preparations in this area are not very 
advanced. 

There was some progress in the preparation for participation in the European Social Fund. 
The  procurement  of  projects  co-financed  under  the  Human  Resources  Development 
Operational Programme (IPA component IV) has started, but encountered significant delays, 
which put at risk part of the funds. Administrative capacity within the line ministries involved 
in the implementation of this component is still insufficient, in terms of both numbers of staff 
and expertise. Preparations in this area are advancing.  

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53 

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Some progress was made on social inclusion. The national strategy for alleviation of poverty 
and  social  exclusion  was  adopted,  and  the  related  action  plans  was  prepared.  The 
corresponding  budget  for  implementation  of  the  operational  programmes  has  not  been 
ensured.  Implementation  of  the  national  programme  for  development  of  social  protection 
2010-2021  started  with  the  analysis  of  decentralised  social  inclusion  services.  Local  action 
plans  for  social  inclusion  were  prepared  in  eight  municipalities.  The  transition  from 
institutional  to  community-based  care  has  continued,  particularly  for  people  with  mental 
disabilities. Progress in the field of administrative and fiscal decentralisation of social services 
remains limited. The full impact of the economic situation on poverty remains to be assessed; 
the poverty rate is still high. The high drop-out rate in the early years of education improved 
slightly, but still remained significant, in particular for Roma children. Implementation of the 
national  strategy  on  equality  of  rights  of  people  with  disabilities  2010-2018  has  not 
progressed. Overall, the potential of social policies still needs to be fostered. The progress in 
implementing the measures set by the adopted strategic plans concerning poverty reduction, 
Roma, people with disabilities and other socially excluded people, lacks the adequate human 
and financial resources. Preparations in this area are at an early stage. 

Little progress can be reported in the field of social protection. The Law on social protection 
was amended and new provisions for totally visually impaired and physically disabled people 
were  introduced.  Implementation  of  the  Law  on  social  protection  continued  to  be  slow. 
Administrative  capacity  is  still  insufficient  to  develop  a  sustainable  and  equitable  social 
protection system. Preparations in this area are moderately advanced.  

Some  progress  can  be  reported  in  the  area  of  anti-discrimination.  The  framework  law  on 
anti-discrimination  has  begun  to  be  implemented.  However,  it  is  not  fully  in  line  with  the 
acquis, particularly because it does not explicitly prohibit discrimination on grounds of sexual 
orientation  in  employment  and  occupation.  The  restrictive  three-month  time  limit  for 
complaints and the wide scope of exceptions were maintained in the law. The Commission for 
Protection  against  discrimination  was  established  and  started  work,  but  there  are  concerns 
about  the  functionality  and  independence  of  that  body.  The  financial  and  administrative 
capacity and expertise of the Commission still need to be strengthened and a significant track 
record  established.  The  administrative  capacity  of  the  secretariat  of  the  Commission  is 
particularly  critical.  The  Secretariat  lacks  sufficient  resources  and  equipment  to  support  the 
work of the Commission. Civil society organisations are monitoring the implementation of the 
law  and  the  activities  of  the  Commission.  The  majority  of  the  complaints  submitted  were 
based on ethnic grounds. The Roma are the community who suffer most from discrimination. 
The collection, elaboration and analysis of data are still very limited. Preparations in this area 
are moderately advanced.  

Little progress can be reported on equal opportunities. The mechanisms are in place to allow 
the  Ministry  of  Labour  and  Social  Policy  to  deal  with  complaints  of  unequal  treatment. 
However, the section for equal opportunities within the Ministry of Labour and Social Policy 
still  lacks  the  appropriate  human  and  financial  resources.  Also  the  capacities  of  the  equal 
opportunity  commissions  at  local  level  remain  inadequate.  Support  for  activities  and 
initiatives  aiming  at  combating  discriminatory  customs,  traditions  and  stereotypes  remains 
limited. The female employment rate has increased at 36%, but remains very low compared to 
the EU average. Little was done to improve women's rights in rural areas.  

Conclusion 

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Limited  progress  was  made  in  aligning  with  the  acquis  in  the  area  of  social  policy  and 
employment.  The  unemployment  and  poverty  rates  remain  high.  Effective  employment  and 
social  inclusion  policies  should  be  further  implemented.  Inclusion  of  Roma,  people  with 
disabilities  and  other  socially  excluded  people  is  slow.  The  framework  law  on  anti-
discrimination has started to be implemented; however, its full alignment with the acquis is 
yet to be achieved. Tripartite and bipartite social dialogue should be further strengthened. The 
overall  administrative  capacity  is  still  insufficient.  Preparations  in  the  area  of  social  policy 
and employment are not very advanced.  

4.20.  Chapter 20: Enterprise and industrial policy 

Progress can be reported in the area of enterprise and industrial policy principles. Business 
regulatory reform continued. So far 48 measures have been implemented under the regulatory 
guillotine project, as well as 19 measures under the fourth anti-crisis reform package. These 
measures  aim  at  lessening  the  penalties  for  misdemeanour  violations,  auctioning  of 
construction  land  in  state  ownership  to  businesses  on  favourable  terms,  simplifying  and 
reducing the costs of construction permits, creating legal conditions for the regularisation of 
businesses operating in the grey area and abolition of the profit tax for re-investment in the 
country. The one–stop shop for company registration was upgraded. The central register was 
further expanded with the addition of a register of bankruptcy proceedings and a register of 
persons disqualified to act as company managers. However, the data entry, functionality and 
interoperability of the new registers have yet to be ensured. A survey of 150 companies was 
conducted  with  a  view  to  identifying  obstacles  faced  by  businesses.  The  government 
continued  its  regular  dialogue  with  the  business  community  representatives  and  companies, 
including consultation on business related legal acts and strategic objectives. The 'think small 
first'  principle  has  been  taken  into  consideration  by  the  authorities,  but  further  work  is  still 
needed.  The  central  database  of  all  legal  acts  is  not  being  regularly  updated  and  is  not  yet 
fully functional. The Strategy for craftsmanship development was adopted, but no budget was 
allocated for its implementation. The human resources of the SME Department and the SME 
Agency continue to be insufficient. In the area of enterprise and industrial policy principles, 
the country is moderately advanced; however, the business environment remains weak, with 
low investment rates.  

There  was  progress  in  the  field  of  enterprise  and  industrial  policy  instruments.  The 
country  continue  to  participate  in  the  EU  Entrepreneurship  and  Innovation  Programme.  An 
innovation scoreboard report was prepared and the country was included for the first time in 
the  EU  Innovation  Scoreboard  2010.  The  FDI  Agency  was  allocated  a  sum  of  €4.9  million 
and a department for legal matters and investor after-care was established. The 2011 budget 
for  the  annual  programmes  to  support  competitiveness,  entrepreneurship  and  clusters 
networking  is  slightly  higher  than  in  2010.  The  Ministry  of  Economy  allocated  about 
€173,000 for the Programme for the implementation of industrial policy in 2011. Despite the 
new  measures  taken  to  enhance  the  business  environment,  the  service  provided  by  some 
central  and  local  administrative  offices  still  impedes  the  smooth  operation  of  business.  The 
attraction of foreign direct investments (FDI) and export promotion remain the prime focus of 
the  economic  policy,  however,  the  instruments  have  yet  to  deliver  the  desired  results. 
Preparations  in  the  area  of  policy  instruments  are  moderately  advanced,  but  remain 
ineffective. 

There was some progress in the area of sector policies. Amendments were made to the Law 
on tourism and related implementing acts in order to simplify the enforcement of the law and 

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to make the subsidy scheme more attractive for foreigners. The 2011 Programme for tourism 
development was set at €932,000, an increase of 72% over 2010.  

Conclusion 

Progress was good but uneven in the field of enterprise and industrial policy and principles, 
but  yielded  little  practical  benefit  in  terms  of  boosting  the  economy.  Legislation  was 
simplified and administrative procedures for business operation were streamlined. However, 
enterprise  support  measures  remain  dispersed  across  several  programmes  run  by  different 
authorities with insufficient public funding.  

4.21.  Chapter 21: Trans European Networks 

Some  progress  was  made  in  the  area  of  transport  networks.  The  country  has  maintained 
active  cooperation  under  the  Memorandum  of  Understanding  on  development  of  the  South 
East  Europe  Core  Regional  Transport  Network  and  has  continued  implementing  the  South 
East Europe Transport Observatory multi-annual plan for 2011-2015. The motorway section 
along  corridor  X  near  the  border  with  Serbia  (Tabanovce-Kumanovo)  was  completed.  The 
procurement process of the motorway section Demir Kapija – Smokvica, co-financed by IPA 
funds, is not yet finished. Strengthening of the administrative capacity with adequate technical 
expertise  still  remains  to  be  done.  Preparations  in  the  area  of  transport  networks  are 
moderately advanced. 

There was progress in the area of energy networks. The transmission system operator signed 
the declaration for establishment of the Coordinated Auction Office in South Eastern Europe. 
The  preparations  for  the  construction  of  a  new  400  kV  electricity  interconnection  line  with 
Serbia made further progress. A memorandum of understanding was signed between the two 
transmission  system  operators  for  the  construction  of  a  new  400kV  interconnection  with 
Albania  (Bitola  –  Elbasan).  The  country  is  moderately  advanced  in  the  area  of  electricity 
networks. 

Progress  was  made  in  the  area  of  telecommunications  networks.  The  country  took  steps  to 
benefit from the Information and Communication Technologies Policy Support Programme of 
the Competitiveness and Innovation Framework Programme. 

Conclusion 

Further  progress  was  made  in  the  area  of  Trans-European  networks.  Overall,  the  country  is 
continuing  to  develop  its  transport  and  energy  networks  and  to  participate  actively  in  the 
South East Europe Transport Observatory and the Energy Community. The implementation of 
corridor  X  is  still  delayed,  as  additional  time  was  needed  in  order  to  establish  the  financial 
framework. Preparations in the area of Trans-European networks are moderately advanced. 

4.22.  Chapter 22: Regional policy and coordination of structural instruments 

Regarding  the  legislative  framework,  no  progress  has  been  noted  in  this  area.  Additional 
efforts are needed in order to ensure implementation of the Cohesion Policy in line with the 
EU rules and policies, in particular in the environment sector. Multi-annual programming and 
budget flexibility remains insufficient. Preparations in this area are moderately advanced. 

Limited  progress  was  noted  in  relation  to  the  institutional  framework.  In  line  with  audit 
recommendations, some changes were made to the management and control system within the 

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Operational  Structures  for  IPA  Components  III  and  IV,  including  self-assessment  and  risk 
the 
management  as  well  as  procedures  for  reporting 
establishment  of  a  decentralised  implementation  system  without  'ex-ante'  controls  were 
prepared  and  submitted  to  the  Commission.  Further  significant  improvements  are  needed  in 
order  to  enhance  the  efficiency  of  the  operating  structures  of  the  IPA  regional  development 
and  the  human  resources  development  programmes.  This  includes  overcoming  the  lack  of 
inter-ministerial  coordination  within  these  programmes.  Preparations  in  this  area  are 
moderately advanced. 

irregularities.  Roadmaps  for 

Some limited progress was made in the area of administrative capacity. Workload Analyses 
and  recruitment  plans  for  2011  were  prepared  by  the  relevant  IPA  institutions,  such  as  the 
National Fund, the  CFCD, and all  line ministries/beneficiary institutions  that are  part  of the 
operating structures. Training was conducted on the basis of the Training Plan for 2010 and 
2011.  Limited  availability  of  appropriate  experts  hampered  procurement  process  in  several 
programmes;  the  relevant  ministries  still  need  to  demonstrate  that  they  have  the  full 
ownership  of  the  implementation  of  the  programmes.  Further  substantial  strengthening  of 
administrative capacity in all institutions is needed by deriving full benefit from the training 
events and experience learning by doing experience under the relevant IPA Components. The 
country's administrative capacity in the area remains insufficient.  

Limited  progress  was  made  as  regards  programming.  Partial  changes  were  made  to 
operational  programmes  and  the  preparations  for  identifying  operations  and  major  projects 
continued,  in  part  with  IPA  assistance.  Nevertheless,  the  development  of  a  project  pipeline 
remains  a  major  issue,  in  particular  in  the  education  and  environment  sectors.  Significant 
strengthening  of  administrative  capacity  is  needed  in  the  area  of  programming  and  project 
preparation. Preparations in this area are advancing. 

In the area of monitoring and evaluation, limited progress can be reported. The Management 
Information System (MIS) and the evaluation steering committee under IPA Component IV 
were established. Interim evaluation of the IPA Component III has not taken place yet. The 
interim evaluation on the IPA Component IV has been finalised. Preparations in this area are 
advancing. 

Some  progress  was  noted  in  the  area  of  financial  management  and  control.  The  National 
Authorising  Officer  submitted  the  first  interim  payment  applications  for  Component  III  and 
Component IV, as well as the first advance payment for Component I. The Audit Authority 
was established in June 2011, however, with a significant delay after the entry into force of 
the national Law on Audit on the Instrument for Pre-Accession Assistance. The nomination of 
the  Audit  Authority's  head  raised  questions  about  the  selection  criteria.  The  administrative 
capacity  under  Decentralised  Implementation  System  (DIS)  has  improved  in  terms  of  the 
necessary staff and training, but remains insufficient. Preparations in this area are in progress. 

Conclusion 

Some progress was noted in the area of regional development and coordination of structural 
funds. The implementation of the IPA operational programmes for regional development and 
human resources development has progressed, but at a slower pace than necessary in order to 
benefit  fully  from  available  resources  and  avoid  the  de-commitment  of  funds.  The  lack  of 
adequate  expertise  and  sufficient  institutional  coordination  has  hampered  the  preparation  of 
operations/projects  and  the  procurement  process.  The  relevant  ministries  still  need  to 

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demonstrate  full  ownership  of  programme  implementation.  Overall,  moderate  advancement 
can be reported in the area of regional policy and coordination of structural instruments. 

4.23.  Chapter 23: Judiciary and fundamental rights (see also Political criteria) 

There  has  been  some  progress  in  the  area  of  the  judiciary.  A  number  of  legislative 
amendments  were  adopted,  covering  a  range  of  issues;  however,  core  problems  relating  to 
independence, competence and efficiency still remain to be tackled in practice.  

As  regards  the  independence  of  the  judiciary,  the  ex  officio  membership  of  the  Minister  of 
Justice in the Judicial Council was amended. The Minister of Justice now participates in the 
work of the Judicial Council without voting rights, in line with the recommendations of the 
Venice  Commission.  The  Minister's  ex  officio  membership  of  the  Council  of  Public 
Prosecutors was removed. 

Dismissal  proceedings  were  initiated  against  13  judges  in  2010,  resulting  in  7  dismissal 
decisions  (compared  with  10  in  2009).  5  judges  resigned,  including  one  in  the  course  of 
dismissal  proceedings.  No  disciplinary  proceedings  were  initiated  against  any  judges 
(compared with 2 in 2009). Further efforts are necessary in order to safeguard the security of 
tenure of judges, including the need for clearly defined and predictable legislation outlining 
less  extensive  and  more  precise  grounds  for  dismissal  and  a  better  balance  between 
disciplinary  and  dismissal  proceedings.  Recent  amendments  to  the  Law  on  courts  failed  to 
address the shortcomings, instead adding further grounds for dismissal which may encroach 
on independent decision-making. 

As regards impartiality of the judiciary, the random allocation of cases has been operational in 
all courts since 2010 as part of the Automated Court Case Management Information System 
(ACCMIS). No judges were subject to dismissal proceedings on the grounds of bias or failure 
to  treat  the  parties  equally  during  2010  (compared  with  3  in  2009).  A  total  of  11  training 
sessions on topics relating to judicial ethics, corruption and conflicts of interest were carried 
out during the reporting period.  

As regards professionalism and competence of the judiciary, the Law on courts was amended 
to set out in detail the educational requirements for judges, including mandatory knowledge of 
English,  as  well  as  introducing  psychological  and  integrity  testing.  New  minimum 
requirements  of  4  and  6  years'  continuous  judicial  experience  were  introduced  for  Appeal 
Court  and  Supreme  Court  judges  respectively.  However,  the  entry  into  effect  of  these 
provisions was postponed until mid-2013, thus considerably delaying the positive impact on 
the profession.  

The  third  generation  of  candidates  of  the  Academy  for  Training  of  Judges  and  Prosecutors 
(ATJP), comprising 10 judges and 7 prosecutors, successfully completed their initial training 
at the end of 2010. The ATJP also continued to provide ongoing in-service training for judges, 
prosecutors  and  other  target  groups  in  the  justice  field  with  a  total  of  240  seminars, 
conferences  and  workshops  carried  out  in  the  reporting  period,  benefiting  a  total  of  7156 
participants. Training of trainers has begun in preparation for the implementation of the new 
Law  on  Criminal  Procedure,  which  will  enter  into  force  in  November  2012.  Of  the  71 
graduates of the ATJP from the last three years, only 49 have so far been recruited as judges 
and prosecutors. By contrast, judicial recruitments from outside the ATJP continued this year, 
under transitional provisions which have been extended to 2013. In the reporting period, out 
of a total of 26 available posts for first instance judges, only 6 were filled by graduates of the 

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ATJP,  despite  a  healthy  rate  of  applications  by  its  candidates.  The  remainder  of  judges 
(considerably more than the 50% set out in the transitional provisions) were appointed by the 
Judicial Council from the ranks of other legal professions. 

New  provisions  on  the  monitoring  and  evaluation  of  judges'  work  were  introduced  by 
amendments to the Law on the Judicial Council. They seek to improve the functioning of the 
court  system  by  instilling  procedural  discipline  at  the  level  of  individual  judges;  however, 
they  do  not  address  the  quality  of  judgments  and  there  is  no  link  to  training  needs.  On  the 
contrary, the emphasis on targets and deadlines, as well as the link to dismissal proceedings, 
may  have  an  adverse  effect  on  independence.  The  Judicial  Council  carried  out  its  annual 
evaluation  of  the  work  of  605  judges  and  presidents  of  court  in  2010.  Only  one  judge  was 
rated as 'unsatisfactory'.  

As  regards  the  efficiency  of  the  judiciary,  the  Judicial  Council  adopted  a  decision  on  the 
number of cases which should be processed per month by judges at different court instances, 
as  well  as  a  methodology  for  ranking  the  complexity  of  cases  by  subject  matter.  While  the 
overall aim of these measures is to enhance efficiency, care should be taken to avoid an over-
formalistic application of targets at the expense of high-quality, independent decision-making.  

The  overall  duration  of  court  proceedings  is  still  a  challenge  and  the  country's  ability  to 
address it is hampered by the inadequacy of statistical data. A methodology was adopted in 
July 2011 for the gathering, analysis and processing of court data on the basis of the European 
Commission  for  the  Efficiency  of  Justice  (CEPEJ)  guidelines.  However,  this  will  only  be 
implemented  through  the  ACCMIS  from  the  end  of  2012,  following  the  development  and 
testing  of  the  necessary  software.  Complete  and  comparable  information  needs  to  be 
developed  on  the  average  duration  of  different  types  of  proceedings,  taking  all  instances  as 
well as enforcement into account. It is important to identify and address unreasonably lengthy 
proceedings and court backlogs, which have a negative impact on citizens' fundamental right 
of access to justice as well as the country's attractiveness to foreign direct investment. In 2010 
the Supreme Court received 398 complaints concerning unreasonably lengthy proceedings. In 
the same period it upheld 137 complaints and awarded compensation in 124 cases. The total 
amount paid out was around €160,000. 

Following legislative changes in 2010 around 400,000 enforcement cases will be transferred 
from the court system to professional bailiffs or closed in the second half of 2011 and around 
37,000  payment  orders  will  be  transferred  to  public  notaries.  Around  90,000  criminal  and 
misdemeanour  fines  have  already  been  transferred  to  the  Public  Revenue  Office  for 
enforcement and a further 43,000 remain to be transferred. There are still insufficient numbers 
of bailiffs (90 out of a target 132), especially in the north-west part of the country. There are 
currently  over  111,000  active  enforcement  cases  being  handled  by  the  bailiffs.  The 
jurisdiction for hearing appeals against decisions of the Administrative Court was transferred 
from the Supreme Court to the newly established High Administrative Court, which became 
operational  in  July  2011.  This  will  ease  the  future  workload  of  the  former.  It  remains  to  be 
seen what the impact of these changes will be on the overall average length of proceedings at 
all levels. Reorganisation of jurisdiction alone can not ensure efficiency and quality of justice, 
unless  it  is  accompanied  by  adequate  resources,  training  and  improved  procedural  rules  to 
support the smooth functioning of the court system.  

As regards alternative dispute resolution, several laws were amended to promote mediation in 
civil, criminal, misdemeanour, juvenile and consumer protection cases and a handbook for the 
training  of  mediators  was  prepared.  The  number  of  certified  mediators  is  currently  177. 

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Between  April  and  June  2011  an  initiative  for  free  mediation  in  commercial  disputes  was 
carried  out  in  the  Basic  Court  Skopje  2  and  22  cases  were  directed  towards  free  mediation. 
However, in general the level of uptake of mediation is still low.  

The  latest  amendments  to  the  Law  on  court  budget  introduced  an  increase  of  state  budget 
allocations from 0.4% to 0.8% of GDP, to be achieved gradually by 2015. In practice further 
progress is being hampered by inadequate funding. New buildings for Basic Court Skopje 1 
and  the  Public  Prosecutors'  Office  (PPO)  are  under  construction,  but  the  strategy  for 
improving the working conditions and IT infrastructure of the PPO has not been implemented 
due to budgetary constraints and the ATJP is both understaffed and lacks adequate premises 
in view of the high number of training activities it organises.  

As  regards  access  to  justice,  there  were  174  applications  for  legal  aid,  of  which  141  were 
considered by the Ministry of Justice and 58  granted. There are 211 lawyers and 2 citizens' 
associations registered as providers of legal aid. The annual budget for legal aid is currently 
€100,000. The system of legal aid is still at an early stage of development.  

As regards transparency and public relations, the Judicial Council considered 1 581 citizens' 
complaints regarding the work of judges and courts in 2010 and 808 in the first half of 2011. 
These mainly concerned the length of proceedings, failure to schedule trial or hearing dates, 
non-enforcement of judgments and failure to comply with procedural deadlines. Amendments 
were made to the Law on the Judicial Council, obliging it to hold public sessions at least once 
a  month  to  discuss  such  complaints.  Amendments  to  the  Law  on  courts  introduced  public 
relations  offices  in  all  courts  and  also  require  courts  to  publish  their  judgments  on  their 
websites within two days of adoption, in order to increase the transparency of their work. So 
far around 72,000 judgments have been published.  

Some  progress  was  made  in  the  area  of  anti-corruption  policy.  The  Criminal  Code  was 
amended  to  refine  the  scope  of  incrimination  for  bribery  and  trading  in  influence  and  to 
introduce  criminal  liability  for  failure  to  report  donations  and  other  funds  used  to  finance 
electoral  campaigns.  The  amended  Electoral  Code  introduced  a  requirement  to  submit 
financial  reports  for  all  election  campaigns  to  the  State  Electoral  Commission,  State  Audit 
Office and State Commission for Prevention of Corruption (SCPC) within 15 days of the end 
of the campaign, to be published immediately on the respective websites of these bodies. The 
third  round 
amendments  were  adopted  with  a  view 
recommendations  concerning  incrimination  and  transparency  of  party  funding.  The  new 
Criminal  Procedure  Code,  which  was  adopted  in  November  2010  and  enters  into  force  in 
November 2012, aims to enhance the role of the public prosecutor in the pre-trial procedure 
and introduces a number of special investigative measures. The 2011-2015 State programme 
for  the  prevention  and  repression  of  corruption  and  the  State  programme  for  reduction  of 
conflict  of  interest,  as  well  as  their  corresponding  action  plans,  remain  to  be  adopted.  The 
Law on Financing of Political Parties still remains to be amended to take account of GRECO 
recommendations. The OECD Convention on Combating Bribery of Foreign Public Officials 
in international business transactions has yet to be ratified.  

implementing  GRECO's 

to 

There  are  several  bodies  tasked  with  combating  corruption.  The  SCPC,  the  Anti-corruption 
Unit within the Organised Crime Department of the Ministry of Interior and the Basic Public 
Prosecutor's  Office  for  the  Fight  against  Organised  Crime  and  Corruption  all  remain 
understaffed  and  underfinanced.  The  establishment  of  investigation  centres  under  the  new 
Criminal Procedure Code will require a 30% increase in the numbers of both prosecutors and 
support  staff.  The  specialisation  of  law  enforcement  agents  and  judiciary  at  local  level,  in 

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particular  on  petty  corruption,  remains  insufficient.  Although  the  Law  on  prevention  of 
corruption  was  amended  to  professionalise  the  SCPC,  public  trust  in  its  independence  and 
impartiality  nevertheless  remains  fragile.  Its  approach  is  still  reactive  rather  than  proactive, 
and its impact on the promotion of anti-corruption policies is weak. The SCPC received 457 
new  complaints  or  reports  of  corruption  in  2010  and  filed  14  requests  with  the  Public 
prosecutor's Office (PRO) to initiate criminal prosecutions.  

The  majority  of  corruption  cases  prosecuted  and  brought  before  courts  continue  to  be  for 
abuse  of  an  official  position  and  fraud.  There  were  83  convictions  for  corruption-related 
offences in 2010 and 58 convictions so far in 2011. The capacity of the judiciary to deal with 
sensitive  high-level  corruption  cases  remains  weak.  The  courts  continue  to  apply  lenient 
penalties.  The  number  of  cases  in  which  seizure  or  confiscation  of  assets  were  ordered 
remains low. Decisions by public prosecutors not to indict are still not being reviewed by the 
courts.  The  absence  of  consolidated  statistics  which  clearly  track  the  investigation, 
prosecution,  conviction  and  sentencing  of  corruption-related  offences  is  a  weakness  which 
needs to be addressed both in order to facilitate the preparation of strategies for combating the 
phenomenon and to better inform the public of progress made in suppressing it. 

In  2010,  the  Sector  for  Internal  Control  and  Professional  standards  within  the  Ministry  of 
Interior brought criminal charges against 29 police officers for criminal offences, including 16 
cases  of  alleged  abuse  of  an  official  position.  Five  police  officers  from  one  border  crossing 
point  were  charged  as  part  of  a  large-scale  police  operation.  The  Customs  Administration 
should  be  prioritised  as  a  high  corruption  risk  in  the  development  and  implementation  of 
future anti-corruption programmes.  

During  the  reporting  period,  496  asset  declarations  were  submitted  by  public  officials  upon 
election,  appointment  or  expiry  of  office.  The  SCPC  established,  for  the  first  time,  a 
procedure for systematic verification of asset declarations, in cooperation with the Ministry of 
Interior, the Cadastral Agency, the Central Register, the Central Securities Depository and the 
PRO.  Between  April  and  June  2011,  9  out  of  the  122  asset  declarations  made  by  officials 
from the legislative branch, 28 out of the 124 declarations from the executive branch and 89 
out  of  the  913  declarations  from  the  judicial  branch  were  verified.  The  SCPC  referred  30 
cases in which discrepancies had been found to the PRO for further action.  

The  SCPC  received  620  declarations  of  conflict  of  interest  and  submitted  202  requests  to 
initiate  criminal  proceedings  for  failure  to  submit  such  declarations,  including  against  one 
MP,  4  mayors  and  8  judges.  It  also  received  95  complaints  requesting  a  determination  of  a 
conflict of interest. Amendments to the Law on conflict of interest and secondary legislation 
setting  out  a  procedure  for  checking  the  content  of  such  declarations  still  remain  to  be 
adopted. 

As  regards  enforcement  of  the  Law  on  financing  of  political  parties,  16  political  parties 
submitted  annual  accounts  of  financial  operation  to  the  State  Audit  Office  (SAO),  8  parties 
submitted annual financial reports, 6 parties submitted quarterly reports on donations for the 
second half of 2010 and 7 parties submitted quarterly reports on donations for the first half of 
this  year.  All  political  parties  which  took  part  in  the  parliamentary  elections  of  June  2011 
submitted  financial  reports  on  the  election  campaign,  including  donations,  in  terms  of  the 
Electoral Code. The SAO began auditing these reports in September.  

The number of complaints to the National Commission for Protection of the Right to Public 
Interest Information rose from 340 in 2009 to 540 in 2010. The majority were submitted by 

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civil  society  organisations  and  the  most  common  ground  was  the  inactivity  of  information-
holders.  Information  related  to  public  expenditure  continued  to  be  subject  to  a  number  of 
exceptions set out in the law. 

The Academy for Training of Judges and Prosecutors (ATJP) carried out 13 training events 
for  373  participants  on  the  new  provisions  of  the  Criminal  Code  related  to  extended 
confiscation  and  illicit  enrichment  and  6  training  events  on  bribery  were  attended  by  162 
participants including judges, prosecutors and legal clerks.  

Limited and uneven progress was made in the area of fundamental rights.  

The Office of the Ombudsman  received 4043 complaints in 2010 (an increase of 11% from 
2009).  Violations  were  found  in  20%  of  the  cases  dealt  with  (987  out  of  4  828)  and  the 
Ombudsman's recommendations were accepted in 791 cases, representing an increase of 71% 
over 2009. The largest number of violations was found in the area of property rights (19%), 
consumers'  rights  (12.4%)  and  the  judiciary  (10%).  The  second  instance  Government 
commissions continued to be the least responsive to the Ombudsman's instructions, followed 
by  the  local  self-government  units.  Three  persons  were  recruited  to  each  of  the  three  new 
units of the Ombudsman's Office which deal with anti-discrimination, combating torture and 
ill-treatment and children's rights respectively.  

There was some limited progress as regards the prohibition of torture and ill-treatment. The 
Ombudsman's  specialised  unit  on  combating  ill-treatment,  which  is  designated  as  a  national 
prevention  mechanism  for  implementing  the  Optional  Protocol  to  the  Convention  against 
Torture, became operational in April. However, it lacks the authority and resources to fulfil its 
mission effectively. The unit of the Ministry of Interior for internal control and professional 
standards  intensified  its  monitoring  of  police  work.  It  increased  its  coordination  with  the 
Ombudsman  and  the  Prosecutor's  Office  in  exercising  oversight  over  police  behaviour. 
However, it is yet to be transformed into an authority that is fully independent from the police 
with the ability to implement effective investigations. The numbers of cases of ill treatment 
which were prosecuted was down to 27 criminal charges against 29 police officers in 2010, as 
compared to 36 criminal charges against 50 police officers in 2009. No cases of illegal arrest 
were reported. 

Some limited progress was made as regards the prison system. A manual for the supervision 
of penitentiary institutions was adopted. A programme of compulsory training of prison staff, 
including on international human rights standards, was adopted in December 2010 and several 
trainings  have  been  conducted.  Construction  and  rehabilitation  of  detention  facilities  and 
prisons continued. The semi-open wing of Idrizovo prison was renovated; however, parts of 
the  prison  remain  below  the  required  standards.  The  country  has  yet  to  develop  a  strategic 
plan to comprehensively tackle the challenge of managing a prison system in accordance with 
international  and  European  standards.  The  capacity  of  the  Directorate  for  Execution  of 
Sanctions to pursue prison reform needs to be strengthened.  

With  regard  to  freedom  of  expression  and  the  media,  the  legal  framework  is  generally  in 
place,  but  attention  needs  to  be  paid  to  ensuring  that  its  implementation  is  consistent, 
transparent  and  in  line  with  the  case  law  of  the  European  Court  of  Human  Rights.  Some 
training targeted at journalists and judges  has taken place, but  more systematic training and 
awareness-raising is necessary in this field. The Association of Journalists held a number of 
consultations  in  2011  on  the  development  of  self-regulation  for  both  print  and  broadcasting 
media. In 2010, the first ever independent trade union of journalists and media employees was 

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established.  However,  defamation  has  not  been  decriminalised.  In  2010  there  were  587 
defamation cases brought before the courts, of which 139 were against journalists. The level 
of  fines  imposed  is  often  high  in  relation  to  the  average  monthly  wage  and  this  can  lead  to 
self-censorship. The media continue to be subject to interference from political and business 
interests.  Intimidation  of  journalists  and  selective  enforcement  of  legislation  against  media 
companies  are  increasing  causes  for  concern.  The  enforcement  track-record  against  illegal 
media concentrations is poor, hampered in part by the lack of transparency of ownership. 

There  was  no  progress  on  freedom  of  assembly  and  association.  The  Government 
Commission for Public Benefit Status has yet to be established. Tax legislation has not been 
harmonized  with  the  Law  on  associations  and  foundations,  thereby  preventing  access  to  tax 
benefits and the exercise of certain types of economic activities. 

Freedom of thought, conscience and religion is generally ensured.  

Little  progress  was  made  on  women's  rights  and  gender  equality.  The  sector  for  equal 
opportunities policy in the Ministry of Labour and Social Affairs still lacks adequate expertise 
and human resources. Its financial capacities are negligible. Despite efforts to strengthen the 
capacities of the local commissions on equal opportunities, they are still faced with a lack of 
expertise  and  of  political  will.  Only  very  limited  actions  targeting  Roma  women  have  been 
implemented.  The  participation  of  women  in  political  life  remains  low  at  local  level.  The 
work in this field is still at an early stage. 

Some  progress  has  been  made  on  children's  rights.  The  National  Strategy  on  Prevention  of 
Juvenile Delinquency was adopted and the Law on Juvenile Justice was amended, introducing 
improvements  regarding  free  legal  aid,  mediation  and  procedural  rights  of  juveniles.  Proper 
implementation of both the Law and the 2010-2012 Action Plan requires additional financial 
and  administrative  resources,  closer  coordination  between  the  relevant  institutions,  the 
adoption  of  standards  and  protocols  for  implementation  and  the  development  of  a 
comprehensive  monitoring  system.  Further  efforts  are  also  needed  in  order  to  enhance  the 
capacity of specialised staff to deal with juveniles, improve detention conditions and ensure 
provision  of  education  and  medical  services  for  juveniles  in  custody.  Children  with 
psychological  and  intellectual  disabilities  continue  to  be  a  highly  vulnerable  group  with  no 
specialised  medical  institutions  devoted  to  them.  The  lack  of  resources  and  capacity  of  the 
Centre for Social Work is critical. Preparations in this area are at an early stage. 

Limited  progress  can  be  reported  in  the  treatment  of  socially  vulnerable  persons  and/or 
persons  with  disabilities.  The  law  on  social  protection  was  amended  to  introduce  new 
provisions for people with disabilities.  Additional  small communal housing units for people 
with disabilities were opened as part of the social care services, bringing the total number to 
14. However, the administrative capacity of municipalities remains insufficient to assume the 
necessary social policy responsibilities. Social integration of people with disabilities remains 
limited. The UN Convention on the rights of persons with disabilities is yet to be ratified.  

Some progress can be reported in the area of anti-discrimination policy. The Commission for 
protection against discrimination has become operational and has started to act on complaints 
submitted.  The  majority  of  the  complaints  were  made  on  political  and  ethnic  grounds. 
However,  the  law  on  anti-discrimination  has  yet  to  be  fully  aligned  with  the  acquis. 
Discrimination  on  grounds  of  sexual  orientation  has  been  omitted.  Also,  the  financial, 
administrative and technical capacity of the Commission needs to be strengthened.  

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As regards property rights, the land register covers 99,5% of the country's territory, leaving 
minor  areas  of  Skopje,  Gostivar  and  Kriva  Palanka  uncovered.  The  land  registry  office 
organised  some  public  awareness  campaigns  and  continued  with  the  regular  organisation  of 
open  days  for  the  public.  E-cadastre  was  piloted  in  Skopje,  Negotino  and  Kavadarci.  The 
country joined the European Position Determination System (EUPOS). However, the process 
of  returning  property  confiscated  during  the  period  of  the  Socialist  Federal  Republic  of 
Yugoslavia continues to extend substantially beyond the legal deadlines. Breaches of property 
rights linked to the process of denationalisation alone accounted for 32% of petitions lodged 
with  the  Ombudsman.  The  enforcement  of  restitution  claims  for  which  a  final  decision  has 
been taken remains unsatisfactory. The backlog of property dispute proceedings continued to 
create  delays.  There  has  again  been  no  progress  on  returning  the  property  of  religious 
communities. 

Little  progress  was  made  as  regards  respect  for  and  protection  of  minorities  and  cultural 
rights. The Ohrid Framework Agreement (OFA) remains crucial for ensuring continued inter-
ethnic dialogue and cooperation. Steps have been taken to promote inter-ethnic integration in 
education.  The  implementing  structure  of  the  Decade  of  Roma  Inclusion  has  improved. 
Progress was made to ensure equitable representation, in particular with regard to the Roma 
and Turkish communities. However, the public administration needs to recruit more qualified 
and  experienced  civil  servants  from  non-majority  communities  across  all  sectors  and 
positions.  The  implementation  of  the  Roma  Strategy  and  its  action  plans  needs  to  be 
strengthened and adequately funded.  

Progress  was  made  on  data  protection.  Amendments  to  the  law  on  personal  data  protection 
were adopted in order to strengthen the position of the Directorate for personal data protection 
(DPDP)  and  to  improve  implementation.  The  DPDP's  performance  continued  to  be 
satisfactory and its capacity was enhanced by a small increase in staff. It continued to provide 
frequent  training  sessions  and  interaction  with  other  institutions  was  on  a  satisfactory  level. 
However, there is no reference in the law to any form of judicial intervention. The Council of 
Europe Convention for the protection of Individuals with regard to Automatic Processing of 
Data had not yet been signed. The DPDP's budgetary allocation has been reduced. 

There were no developments in relation to EU citizens' rights. 

Conclusion 

Some  limited  progress  can  be  reported  on  independence  and  efficiency  of  the  judiciary,  in 
particular  the  amendment  of  the  Minister  of  Justice's  role  on  the  Judicial  Council  and  the 
establishment  of  the  High  Administrative  Court.  Weaknesses  remain  in  the  evaluation  and 
security  of  tenure  of  judges.  Increased  efforts  are  needed  to  ensure  competence  within  the 
profession, in particular through the work of the ATJP and the application of more stringent 
minimum requirements for recruitment. The inadequacy of statistical court data and analysis 
needs  to  be  addressed  as  a  priority.  Some  limited  progress  was  made  on  anti-corruption 
policy. Legislative alignment has continued and systematic verification of asset declarations 
by the SCPC has begun. However, implementation of the recently amended legal framework 
has  not  fully  taken  place,  consolidated  statistical  collection  and  analysis  is  missing,  a  track 
record  of  high-level  corruption  cases  has  yet  to  be  established,  a  system  of  verification  of 
conflict of interest statements still remains to be established. The SCPC needs to be more pro-
active  in  both  referring  and  monitoring  the  progress  of  corruption  cases.  The  country  is 
moderately  advanced  in  the  area  of  fundamental  rights.  Much  needs  to  be  done  in  order  to 
further  promote  and  safeguard  fundamental  rights.  In  the  field  of  freedom  of  expression, 

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intimidation of journalists, self-censorship and the frequency of defamation actions remain a 
concern.  Some  progress  was  made  as  regards  cultural  rights  and  minorities.  The  Ohrid 
Framework  Agreement  remains  an  essential  element  for  democracy  and  rule  of  law  in  the 
country. 

4.24.  Chapter 24: Justice, freedom and security 

Some  progress  has  been  made  on  migration.  The  implementation  of  the  2009-2014  action 
plan  on  migration  policy  has  continued,  although  with  several  notable  delays.  The  Law  on 
foreigners  was  amended  to  provide  a  legal  framework  for  the  establishment  of  a  national 
database  for  foreigners,  covering  data  on  asylum,  migration  and  visas.  The  database  is 
operable and connected to all concerned institutions and training of users and administrators 
of the database has been completed; however the secondary legislation necessary for its use 
and  maintenance  has  yet  to  be  adopted.  Exchange  of  information  and  coordination  on 
irregular migration with countries from the region was enhanced. In 2010, over 1100 irregular 
migrants were detected. The readmission agreement with the EU continues to be implemented 
well.  A  readmission  agreement  was  also  signed  with  Serbia.  In  2010,  839  persons  were 
received  under  the  EU  readmission  agreement  and  bilateral  agreements.  The  budget  and 
human  resources  of  the  Ministry  of  Labour  and  Social  Affairs  have  increased  slightly.  The 
national  migration  profile  for  2010  has  been  adopted.  In  this  area,  the  country  is  well 
advanced. 

There has been limited progress on asylum. Rules were adopted establishing the role of each 
institution in the integration of refugees and foreigners and providing for the appointment of 
legal  guardians  for  unaccompanied  minors  and  mentally  disabled  persons.  The  centre  for 
integration,  which  prepares  family  integration  plans  for  recognized  refugees  and  persons 
under subsidiary protection, became partially government-funded from the beginning of 2011. 
The  government  adopted  a  program  for  integration  of  persons  granted  asylum  including 
assistance for housing. However, a number of concerned families were in practice left without 
housing support for several months due to delays in implementation. In the first half of 2011 
there were 349 requests for asylum (compared with 147 for the whole of 2010). During the 
same  period,  418  asylum  seekers  were  accommodated  in  the  reception  centre  Vizbegovo. 
Asylum-seekers  still  face  difficulties  accessing  information  about  procedures  and  social 
rights. There has been no progress in speeding up the process  for providing asylum seekers 
with  ID  documents.  Free  legal  aid  provided  by  the  state  is  still  not  available  to  asylum-
seekers.  The  legal  framework  for  ensuring  access  to  public  health  insurance  for  persons 
granted asylum is missing. Although the administrative capacity of the section for asylum in 
the  Ministry  of  the  Interior  increased  slightly,  its  efficiency  in  issuing  first  instance  asylum 
decisions  cannot  be  considered  as  satisfactory  and  needs  to  be  improved.  Efforts  should  be 
made to consider how to prevent potential abuses of the asylum system. Problems providing 
interpretation  persist.  Appeal  decisions  by  the  Administrative  Court  continue  to  be  issued 
largely  on  procedural  rather  than  substantive  grounds.  A  further  appeal  instance  was 
introduced  with  the  establishment  of  the  High  Administrative  Court.  The  institutional  and 
legal  framework  is  largely  in  place,  but  implementation  of  the  existing  legislation  and 
strategies  remains  insufficient  and  further  efforts  are  needed.  In  this  area,  the  country  is 
advanced. 

Some progress has been achieved on visa policy. All diplomatic and consular missions in the 
country are connected to the national visa system N-VIS. The system is interconnected with 
the  national  database  for  foreigners.  The  government  adopted  a  decision  allowing  third-
country  nationals  with  a  valid  Schengen  C-type  visa  to  enter  the  country  without  a  visa. 

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Alignment with the EU negative and positive lists is not yet fully completed. In this area, the 
country is well advanced.  

Visa liberalisation for citizens travelling to the Schengen area was granted with effect from 19 
December  2009.  The  rules  for  visa-free  travel  have  been  respected  by  the  vast  majority  of 
travellers. However, under the visa-free regime, increases in the number of unfounded asylum 
applications  in  several  EU  Member  States  occurred.  To  counteract  this  phenomenon  the 
national  authorities  introduced  a  set  of  measures,  including  public  information  campaigns, 
focusing  in  particular  on  the  vulnerable  groups  most  likely  to  be  involved,  as  well  as 
preventive measures like enhanced border checks and profiling. Efforts to address this issue 
are ongoing. In order to ensure ongoing implementation of the commitments taken, a post visa 
liberalisation monitoring mechanism has been established. The Commission presented its first 
monitoring report to the European Parliament and the Council in June 2011. 

There has been good progress in the area of external borders and Schengen. A new Law on 
border  control  was  adopted  with  a  view  to  aligning  with  the  EU  acquis,  in  particular  the 
Schengen  Border  Code.  A  Joint  Contact  Centre  for  Police  and  Customs  Cooperation  was 
opened with Bulgaria and protocols for joint border patrols were signed with Bulgaria, Serbia 
and  Kosovo.  Good  cooperation  continued  with  Frontex.  A  Rulebook  on  developing  risk 
analysis  in  the  area  of  organised  cross-border  crime  and  illegal  migration  was  adopted  and 
several  training  events  were  carried  out  in  the area  of  risk  analysis.  Two  mobile  units  were 
created at central level to enhance efficiency in the fight against irregular migration and trans-
border  crime  and  operational  use  of  risk  analysis.  Training  of  field  officers  has  developed 
noticeably and a specific training programme for senior and mid-level police officers has been 
adopted  and  is  starting  to  be  implemented.  The  central  database  for  false  and  genuine 
documents and specimen travel documents has been established and is regularly updated. The 
second phase of implementation of the TETRA radio communication system is ongoing and it 
covers 40% of the country's territory. The border police still do not have adequate technical 
equipment  and  budgetary  resources.  Police  stations  responsible  for  border  surveillance  still 
have no access to the central database of the Ministry of Interior. Overall, preparations in the 
area of external borders and Schengen are advanced.  

Good progress can be reported on judicial cooperation in civil and criminal matters. The 
agreement on judicial cooperation with Eurojust entered into force. Three bilateral agreements 
were signed with Kosovo on mutual legal assistance in criminal matters, on extradition and on 
transfer of sentenced persons. A new law on international cooperation in criminal matters was 
enacted, providing a comprehensive legal framework, but its application will only begin with 
the application of the new Criminal Procedure Code in November 2012. Training was carried 
out for 54 judges and 14 prosecutors on the implementation of the new law. The Constitution 
was amended in order to enable extradition agreements to be concluded in further alignment 
with  international  agreements.  The  Ministry  of  Justice  processed  752  requests  in  criminal 
matters and 2 316 requests in civil matters. Cooperation with Eurojust was good. Posting of a 
liaison officer to Eurojust would further enhance the cooperation. In this area the country is 
moderately advanced. 

Some  progress  can  be  reported  on  police  cooperation  and  the  fight  against  organised 
crime.  An  international  law  enforcement  coordination  unit  in  charge  of  the  exchange  of 
police and intelligence information (ILECU) was established within the Ministry of Interior. 
103  international  arrest  warrants  were  issued  in  the  country  in  2010.  There  has  been  active 
regional and international law enforcement cooperation, including through Interpol channels. 
Cooperation  with  Europol,  via  a  contact  point,  was  also  good.  The  conclusion  of  an 

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operational agreement with Europol will significantly facilitate exchange of analytical data in 
order to improve the fight against organised crime and terrorism.  

The Act of Systematisation of the Bureau for Public Security introduced job descriptions and 
a new organisational structure. The newly established strategic level of the Bureau for Public 
Security aims to improve efficiency and provide an integrated approach for police operations. 
The  Ministry  of  Interior  completed  an  annual  performance  evaluation  process  for  the  first 
time, as a first step in implementing a merit-based career and appraisal system. The sector for 
Internal Control and Professional Standards of the Ministry of Interior carried out 33 checks 
under legal provisions restricting the political activity of Ministry officials. A working group 
was established to develop a training strategy; however this has not yet been done. The Police 
Training Centre conducted advanced, continuous and specialised training. 

Full  implementation  of  the  new  organisational  charts  of  the  regional  Sectors  for  Internal 
Affairs (SVRs) is however hampered by insufficient staffing. There are also concerns about 
politicisation  of  the  police  and  its  work,  including  investigations  it  carries  out.  Around  160 
cases of  non-transparent recruitments for posts of authorised officials within the Sectors for 
Internal Affairs, without prior advertising of vacancies, were reported. An amendment to the 
Law on Internal Affairs created the possibility of salary reductions where Ministry employees 
are deployed to a lower position as a result of organisational changes, which may weaken the 
stability of employment within the police organisation. The fact that the Training Centre does 
not have a separate budget line within the Ministry of Interior limits its training outreach and 
strategic planning capacity.  

The  Act  of  Systematisation  also  introduced  changes  to  the  Organised  Crime  Department  of 
the  Ministry  of  Interior,  improving  its  functionality  and  integration  into  the  national  and 
international  criminal  investigation  intelligence  system.  All  services  dealing  with  organised 
crime are now within the Centre for Suppression of Organised and Serious Crime, which will 
comprise  the  National  Intelligence  Database  and  National  Coordination  Centre  in  charge  of 
strategic planning and intelligence gathering. However, there was limited progress as regards 
the staffing of the Centre for Suppression of Organised and Serious Crime; only around 64% 
of the total number of posts in the organisational chart has been filled, thereby hampering its 
effectiveness. The National Intelligence Database will not become operational before the end 
of  2012  and  is  currently  in  the  tendering  phase.  The  National  Coordination  Centre,  which 
could enhance exchange of information between the law enforcement agencies, has not been 
established so far. The government has adopted a Strategy and accompanying Action Plan for 
its establishment, however, the relevant budgetary allocations to accompany these instruments 
is missing.  

The  new  Criminal  Procedure  Code  was  enacted  and  will  enter  into  force  from  November 
2012. Its aim is to improve the efficiency of criminal procedures by strengthening the role of 
the public prosecutor, establishing the judicial police and improving investigative procedures 
for complex organised crime and corruption cases.  

The  direct  involvement  of  the  Minister  of  Interior  in  authorising  the  use  of  interceptions 
remains  in  place  and  the  Law  on  interception  of  communications  has  yet  to  be  amended. 
Moreover the existing parliamentary oversight over the use of interception orders needs to be 
strengthened.  The  overly  restrictive  and  centralised  application  of  the  interceptions 
inadequately addresses the increasing threat of organised crime. The customs administration 
and  the  financial  police  have  no  technical  capacity  to  apply  special  investigative  measures. 
The  number  of  interceptions  used  in  organised  crime  cases  is  relatively  low.  Generally,  the 

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use  of  special  investigative  techniques  is  still  rare  and  needs  to  be  increased,  as  does  the 
systematic use of financial investigations.  

The  witness  protection  programme  was  activated  in  seven  cases  in  2010.  The  witness 
protection unit still lacks adequate equipment. The measures taken to ensure compensation for 
victims of organised crime were not sufficient.  

Structural problems are still evident in law enforcement agencies combating organised crime. 
Human resources are not efficiently balanced between the different law enforcement agencies. 
There is a surplus of police and customs officers as a percentage of the population, while the 
number of investigative judges and trial judges is not sufficient. 

The  analytical  and  administrative  capacities  of  the  Office  for  the  Prevention  of  Money 
Laundering and Financing of Terrorism (OPMLFT) were increased as regards investigation of 
financial crime. The majority of cases analysed in the reporting period concerned tax evasion. 
In the reporting period, the OPMLFT submitted 23 reports of suspicious transactions related 
to  money  laundering  to  the  investigating  authorities  and  prosecution  service  and  95  reports 
relating to other types of economic and financial crime. International cooperation with FIUs 
in  other  countries  continued,  with  the  OPMLFT  receiving  33  requests  and  submitting  79 
requests in 2010. So far, 39 persons have been prosecuted for money laundering in 2011, as 
compared with 10 persons in 2010. The quality of investigations into money laundering and 
financial crime still needs to be enhanced.  

Some progress has been achieved in the fight against, and prevention of, trafficking in human 
beings.  A  national  shelter  for  victims  of  trafficking  was  opened,  with  a  capacity  for  12 
persons. The number of identified victims of human trafficking was 12 in 2010, an increase 
from  8  in  the  previous  year.  In  2010,  25  persons  were  arrested  on  suspicion  of  trafficking, 
compared  with  17  in  2009  and  11  persons  were  convicted,  an  increase  from  zero  in  2009. 
Sentences ranged from four to 8.5 years' imprisonment. A comprehensive, multi-disciplinary 
and victim-centered approach to trafficking needs to be further ensured. In addition, proactive 
identification of victims of trafficking both from abroad and from within the country needs to 
be improved.  

The  country  is  advanced  in  the  field  of  police  cooperation  and  fighting  organised  crime. 
However,  efforts  of  relevant  law  enforcement  bodies  (the  Ministry  of  Interior,  the  Public 
Prosecutor's  Office,  the  Customs  Administration  and  the  Financial  Police)  in  fighting 
organised  crime  should  be  strengthened.  At  the  same  time,  substantial  efforts  are  needed  to 
ensure  the  full  implementation  of  the  police  reform  in  practice,  as  well  as  to  ensure  the 
establishment of the National Intelligence Database. Concerns remain in connection with the 
politicisation of the police.  

Some  progress  can  be  reported  in  the  fight  against  terrorism.  The  police  are  adopting  an 
adequate approach to the issue of counter-terrorism. Bilateral and multilateral cooperation has 
continued.  Cooperation  with  the  investigative  and  prosecuting  bodies  and  foreign  financial 
intelligence  units  has  improved.  The  strategy  on  the  fight  against  terrorism  (2012-2014),  in 
line with the EU Strategy on counter-terrorism and the Council of Europe Convention on the 
Prevention of Terrorism, together with the corresponding Action Plan, have yet to be adopted. 
In  the  reporting  period,  five  suspicious  transactions  related  to  financing  of  terrorism  were 
reported  by  the  Office  for  prevention  of  money  laundering  and  financing  of  terrorism. 
Overall, preparations in this area are advanced. 

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Little progress can be reported as regards cooperation in the field of drugs. Implementation 
of  the  new  action  plan  of  the  National  Drug  Strategy  covering  the  period  2009-2012  is 
ongoing,  in  line  with  the  EU  strategy  on  drugs  (2005-2012).  In  2010,  the  amount  of  drugs 
seized  remained  relatively  low  considering  the  country's  location  on  the  main  Balkan  drug 
trafficking  routes.  The  customs  administration  does  not  significantly  detect  and  seize 
narcotics at the borders. The human resources capacity of the Illicit Drugs Department of the 
Ministry of Interior remains insufficient. The country largely meets acquis requirements.  

Good  progress  can  be  reported  in  the  area  of  customs  cooperation.  The  Customs 
Administration  took  part  in  a  number  of  international  operations  for  the  detection  of  illicit 
trade.  Cooperation  and  exchange  of  intelligence  with  the  customs  administration  of 
neighbouring  countries  and  the  wider  region  was  intensified  with  a  view  to  preventing  and 
detecting  illicit  trafficking,  and  combating  cross-border  crime.  Intelligence  information  was 
exchanged  on  a  regular  basis  with  the  South-East  European  Cooperative  Initiative  and  the 
Regional  Intelligence  Liaison  Offices.  A  customs  cooperation  agreement  was  signed  with 
Kosovo, a memorandum of co-operation was signed with Polish customs and a joint contact 
centre for police and customs cooperation was established with Bulgaria. Preparations in this 
area are on track. 

For the fight against counterfeiting of the euro, see chapter 32 –Financial control. 

Conclusion 

Good  progress  can  be  reported  on  external  borders  and  Schengen  and  customs  cooperation. 
The  border  police  still  lack  adequate  technical  equipment  and  budgetary  resources.  Some 
progress has been achieved on migration, visa policy, police cooperation and the fight against 
organised crime. The implementation of the police reform has continued. At the same time, 
structural problems, understaffing and lack of budgetary provision still  persist. The national 
intelligence database has not yet been set up. Implementation in the field of asylum needs to 
be considerably enhanced, including on the provision of legal aid, interpretation and access to 
social rights. Preparations in the area of justice, freedom and security are on track. 

4.25.  Chapter 25: Science and research 

Little  progress  can  be  reported  in  the  area  of  research  and  innovation  policy.  The  2011 
programme for scientific research activities, technological development and technical culture 
was  adopted.  The  national  strategy  for  science  -  research  and  development  activity  2011  – 
2020 is not yet in place. The 2011 budget for the programme for research and technological 
development  decreased  compared  to  the  2010  level.  Financial  resources  are  limited  and  the 
capacities  of  the  research  facilities  remain  weak.  Preparations  in  this  area  are  moderately 
advanced.  

Good  progress  is  being  made  as  regards  the  country's  participation  in  the  framework 
programmes.  There  was  an  increase  both  in  the  number  of  applications  submitted  and 
selected, and in the amount of funds received, under the Seventh EU Framework Programme 
for  Research  and  Development  (FP7).  Participation  is  good  in  the  energy,  ICT  and 
environment  themes;  however,  partaking  in  Marie  Curie  actions  and  involvement  of  SMEs 
remains very low. The Joint Research Committee was established. The Committee monitored 
progress  under  FP7  since  the  association  and  established  at  its  February  meeting  that 
additional efforts are required to increase participation in FP7.  

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Little progress can be reported in the area of integration into the European Research Area. 
Following  the  adoption  of  amendments  to  the  Law  on  higher  education,  40%  of  the  tuition 
fees are invested in fundamental and applied research and in modernisation of infrastructures. 
Some equipment was procured for universities and laboratories. However, the investment in 
research, from both the public and the private sector, remains very low (estimated at around 
0.2% of GDP in 2010). In addition, the lack of reliable statistics makes implementation and 
monitoring  difficult.  Preparations  in  this  area  are  moderately  advanced.  Nominations  have 
been made in most governance bodies, including in the European Research Area Committee 
(ERAC) and the Strategy Forum for International Cooperation (SFIC). However, attendance 
at their meetings is irregular, due to the lack of administrative capacity. 

Conclusion 

Concerning European standards on research and innovation, progress can be reported. There 
was increased participation in the EU framework programmes. National strategies for science 
- research and development activity and for innovation policy are not yet in place. Private and 
public  investment  in  the  field  of  research  is  low.  The  administrative  capacity  to  support 
participation in FP7 and ERAC governance bodies needs to be strengthened. Preparations in 
the area of science and research are insufficient.  

4.26.  Chapter 26: Education and culture 

Some progress can be reported in the field of education, training and youth. Amendments 
were enacted to the laws on higher education, primary and secondary education. The system 
of ranking of universities has been established. The implementation of the Bologna process in 
higher  education  is  progressing.  A  system  of  counselling  of  pupils'  parents  was  established. 
The possibility was introduced for international public schools to be established with curricula 
in  foreign  languages.  The  government  adopted  the  Integrated  Education  Strategy  that 
envisages  introducing  the  ethnic  communities'  languages  as  the  teaching  language.  The 
second  donor-funded  integrated  bilingual  primary  school  started  classes  in  Strumica.  The 
council  for  adult  education  developed  the  operational  plan  for  implementation  of  the  adult 
education  strategy.  Efforts  have  continued  with  a  view  to  developing  the  national 
qualifications  framework.  The  centre  for  vocational  education  became  operational.  The 
country  improved  its  performance  in  early  school  leaving  and  higher  education  attainment, 
areas where EU-level benchmarks were set for 2020. 

However, additional efforts are needed in relation to all the Education and Training 2020 EU 
benchmarks,  including  for  early  childhood  education  and  participation  of  adults  in  lifelong 
learning.  Resources  allocated  to  education  remain  low.  There  are  still  large  regional 
disparities in accessing education, particularly at the pre-school education level.  

Increasing interaction between members of ethnic communities at school remains a challenge, 
as does decreasing of the early school leaving rate among Roma students. The need to provide 
structured training for teachers is yet to be tackled. 

Efforts were made to reinstate the preparatory measures for the Lifelong Learning and Youth 
in  Action  programmes.  Parliament  enacted  amendments  to  the  Law  on  establishing  the 
National  Agency  for  European  educational  programmes  and  mobility,  thus  increasing  the 
accountability  of  the  National  Agency.  However,  the  progress  made  did  not  reach  the  level 
required by EU rules and remained inadequate. The preparatory measures therefore continued 

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to be suspended. In the area of education, training and youth, the country is partially meeting 
its priorities. 

There was some progress in the field of culture. The country has become further involved in 
both the Culture programme and the Europe for Citizens programme. Amendments to the law 
on  protection  of  cultural  heritage  were  enacted.  The  Council  of  Europe  Framework 
Convention on the Value of Cultural Heritage for Society was ratified. In the area of culture 
the country is well advanced.  

Conclusion 

Concerning  European  standards  in  the  areas  of  education,  training,  youth  and  culture,  there 
was  some  progress.  Reform  efforts  were  made  at  all  levels  of  education.  The  country 
improved  its  performance  in  relation  to  the  Education  and  Training  2020  common 
benchmarks,  notably  in  areas  such  as  early  school  leaving  and  higher  education  attainment. 
However,  the  National  Agency  for  the  Lifelong  Learning  and  the  Youth  in  Action 
programmes did not reach the level required by the EU and the preparatory measures remain, 
therefore,  suspended.  Increasing  interaction  between  the  ethnic  communities  in  education 
remains a challenge. Substantial funds were invested in cultural projects and in the renovation 
and  construction  of  school  buildings;  however,  the  investments  have  not  been  equitably 
applied to all municipalities in the country and do not reflect the multi-ethnic composition of 
the country. Preparations in the area of education, training, youth and culture are moderately 
advanced. 

4.27.  Chapter 27: Environment 

In the field of environment, some progress was made in the area of horizontal legislation. A 
multilateral Agreement among the countries of the South-Eastern Europe for implementation 
of the Convention on Environmental Impact Assessment in a Transboundary Context and the 
Protocol  on  Pollutant  Releases  and  the  Transfer  Register  were  ratified.  Transposition  of  the 
acquis  continued  with  adoption  of  some  implementing  legislation.  The  administrative 
capacity for implementing the requirements for Environmental Impact Assessment (EIA) and 
Strategic  Environmental  Assessment  (SEA)  has  improved,  but  the  provisions  for  public 
consultation are still not adequately applied. Preparations in this area are advancing.  

Some  progress  can  be  reported  in  the  area  of  air  quality.  Transposition  of  the  acquis 
continued  with  adoption  of  some  implementing  legislation.  Three  more  Protocols  to  the 
CLRTAP  were  ratified.  Some  progress  was  made  in  developing  the  system  of  air  quality 
monitoring.  The  administrative  capacity  remains  insufficient  at  central  and  local  levels. 
Preparations in this field are moderately advanced. 

Some  progress  was  made  in  the  area  of  waste  management.  The  Law  on  Management  of 
Batteries and Accumulators and Waste Batteries and Accumulators was adopted, following a 
comprehensive consultation. Some implementing legislation was adopted in the area of waste 
management planning and packaging waste management. The process for issuing concessions 
for regional landfills to store municipal solid waste in four regions continued. Administrative 
capacity is still insufficient at both central and local level. Investment in this area is far from 
sufficient and needs to be increased. A system of data collection, registration and reporting is 
still not operational. Preparations in this area are making slow progress. 

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Little progress can be reported in the area of water quality. Administrative reorganization of 
this  sector  is  underway.  The  process  of  transposition  of  the  acquis  in  this  field  is  not  very 
advanced. Some implementing legislation was adopted to further align with the Urban Waste 
Water  directive  and  the  Water  Framework  Directive.  Administrative  capacity  is  still 
insufficient at all levels. The lack of sufficient coordination between the competent authorities 
in  the  water  sector  is  hampering  the  implementation  of  the  legislation.  There  is  very  little 
progress in addressing the gaps in the water monitoring system. Planning and preparation of 
infrastructure investments are lagging behind and the funding is far too low in relation to the 
needs. No progress was made in applying the polluter-pays principle. This creates problems 
for the sustainability of investments in this sector. Preparations are lagging behind in this area. 

Some  progress  was  made  on  nature  protection.  The  process  of  transposition  of  the  acquis 
related  to  natural  habitats  and  of  wild  fauna  and  flora  continued  with  the  adoption  of  an 
amendment to the law on nature protection. Implementing legislation was adopted in this area. 
Good  progress  was  achieved  with  the  introduction  of  the  national  information  system  on 
biodiversity.  Some  progress  can  be  reported  on  the  development  and  implementation  of 
management plans for protected areas, but sustainable financing still needs to be secured. A 
national  strategy  and  action  plan  for  nature  protection  has  still  not  been  completed.  The 
administrative capacity is still insufficient, at both central and local levels. The stakeholders 
are  not  yet  sufficiently  involved.  Preparations  in  this  area  are  moderately  advanced.  In  the 
field of forestry, the programme for expanded reproduction of forests 2011 was approved and 
implementation of the programme commenced. 

Little progress was made in the area of industrial pollution control and risk management. The 
process  of  transposition  of  the  acquis  continued  with  adoption  of  some  implementing 
legislation.  However,  full  alignment  remains  a  considerable  challenge  for  the  country.  The 
permissions  process  is  well  behind  schedule.  The  requirements  for  public  consultation  in 
relation  to  the  IPPC  permitting  system  are  not  always  properly  applied.  Administrative 
capacity  needs  to  be  significantly  strengthened,  in  particular  for  inspection  activities. 
Preparations in this area are slow. 

Some progress was made in the area of chemicals. The Convention on the import-export of 
dangerous  chemicals  (Rotterdam  Convention)  was  ratified.  A  new  Law  on  chemicals  was 
adopted, aimed at transposing the Regulation on the registration, evaluation, authorisation and 
restriction of chemicals (REACH). The Bureau for medicines and chemicals published the list 
of  restrictions  and  prohibitions  for  the  use  of  chemicals.  Administrative  capacity  is  still 
insufficient. Preparations in this area are at an early stage. 

Some  progress  was  made  in  the  area  of  noise.  Transposition  of  the  noise  directive  was 
completed.  Administrative  capacity  is  insufficient  in  terms  of  staff  and  equipment.  The 
preparations in this area are still at an early stage. 

As regards civil protection, progress has been achieved with the signing of the memorandum 
of  understanding  on  the  country's  accession  to  the  EU  Civil  Protection Financial Instrument 
and the EU Civil Protection Mechanism. The ratification by the government still needs to take 
place for the document to enter into force. 

Regarding  climate  change,  some  progress  was  made  on  general  policy  developments.  The 
revision of the national climate action plan was initiated. The country has also initiated a five 
year program for greening the economy, but the measures, responsibilities, timeframe and the 

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other details to be covered are still not defined. Significant awareness-raising at all levels is 
still needed. 

At the international level, the country supported the EU's position at the UN Climate Change 
Conference COP16 in Cancun and has associated with the Copenhagen Accord, but did not 
formulate pledges for greenhouse gas (GHG) emissions reductions. The country is preparing 
its  Third  National  Communication  to  UNFCCC.  The  country  participated  actively  in  the 
climate work under the Regional Environmental Network for Accession (RENA). 

The  process  of  introducing  mitigation  measures  into  some  national  strategies  started. 
Programming  of  pilot  projects  to  implement  the  clean  development  mechanism  under  the 
Kyoto Protocol continued. Preparations for the introduction of the emissions trading scheme 
were initiated, but this remains a considerable challenge. Concrete steps are needed in order to 
move  gradually  towards  adopting  a  GHG  reduction/limitation  target  in  order  to  be  able  to 
implement EU climate acquis, especially the EU Emissions Trading Scheme, and to join the EU 
Effort-Sharing.  

Some progress was made in the area of ozone-depleting substances and fluorinated gases. The 
process of transposition  of the acquis  continues  with  adoption  of  implementing  legislation.  A 
national plan for eliminating HCFCs was developed and consulted with various administrative 
bodies, but further substantial efforts are necessary to align with the EU legislation. The country 
associated itself with the Declaration adopted at the 22nd Meeting of the Parties to the Montreal 
Protocol on the global transition away from HCFCs and CFCs. 

Very little effort was made to strengthen the administrative capacity for implementing and 
enforcing environmental legislation, which remains largely insufficient, both at national and 
at  local  level.  The  coordination  between  the  administrative  bodies  responsible  for 
environment-related issues is still not effective. The stakeholders are not sufficiently involved 
in  the  decision-making  process.  Enforcement  of  legislation  has  improved,  but  the  system  is 
not yet efficient and a credible record has not been established. The environmental monitoring 
and  information  system  is  still  not  adequate.  The  investment  in  the  sector  is  still  extremely 
low  in  relation  to  the  needs.  Environmental  protection  requirements  are  still  not  well 
integrated  into  policy  making  and  policy  implementation  in  other  areas.  The  precautionary 
principle, the principle of preventive action and the polluter-pays principle are only partially 
applied.  Administrative  capacity  as  well  as  technical  and  financial  resources  need  to  be 
considerably strengthened in order for the country to be able to align with, and implement, all 
the requirements of the EU climate change policy and legislation. 

Conclusion 

Some progress can be reported in transposing the EU acquis into national legislation and in 
ratifying multilateral environmental agreements. Limited progress was achieved in alignment 
with climate change acquis. However, significant efforts are needed in order to implement the 
national legislation, especially in the areas of water management, industrial pollution control 
and climate change. Administrative capacity is still weak at both central and local level across 
all sectors. Investments need to be significantly increased, especially in the waste and water 
sectors. Overall, preparations in the field of environment and climate change are moderately 
advanced.  

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4.28.  Chapter 28: Consumer and health protection 

There  has  been  some  progress  in  the  area  of  consumer  protection.  As  regards  horizontal 
aspects,  the  regulatory  and  administrative  frameworks  have  improved.  The  consumer 
protection programme for 2011-2012 was adopted. The Organisation of Consumers continues 
its work on organising awareness raising events, mounting education campaigns and advising 
consumers,  thanks  to  an  increased  financial  allocation  which  is,  however,  still  insufficient. 
Also the activities are concentrated mostly in urban rather than rural areas. The administrative 
capacity of the consumer protection department within the Ministry of Economy remains low. 
Preparations in this area are on track.  

There has been some progress as regards product-safety related issues. An amendment to the 
Law  on  product  safety  was  enacted  and  a  rulebook  on  the  safety  of  children's  toys  was 
adopted,  with  the  aim  of  aligning  with  the  acquis.  The  enforcement  of  consumer  protection 
legislation improved slightly as a result of increased market surveillance activity, although not 
all  of  this  activity  related  to  consumer  products.  The  collaboration  between  the  customs 
administration  and  the  market  inspectorates  was  strengthened  by  the  signature  of  a 
Memorandum of understanding between competent authorities. Market surveillance does not 
yet provide for effective and transparent protection of consumers. The administrative capacity 
of the coordinating body remains poor.  

There has been good progress with regard to non-safety related issues. A law on the sale of 
distance  financial  services  has  been  adopted.  Furthermore,  the  law  on  consumer  protection 
has been amended with a view to alignment with the acquis on unfair commercial practices 
and injunctions. Preparations in the area of consumer protection are advanced. 

There has been some progress in the area of public health. Regarding horizontal aspects, the 
government  adopted  various  health  programmes.  The  overall  funding  has  increased 
considerably compared to previous years. Preparations in this area are on track.  

There has been some progress in the area of tobacco. The law on protection against smoking 
is generally in line with the acquis. The enforcement of the law remains at a satisfactory level. 
The labour and market inspectorate and the state sanitary and health inspectorate intensified 
joint controls in the field. Public acceptance is good and there are relatively few violations of 
the law. Preparations in this area are well advanced. 

Some  progress  was  made  in  the  area  of  communicable  diseases.  The  rulebook  on  case 
definitions was introduced and aligned with the EU criteria on case definitions. However, full 
alignment with the acquis on communicable diseases remains to be confirmed. Specific health 
programmes  for  prevention  and  control  of  some  communicable  diseases,  such  as  the 
programme  on  obligatory  vaccination  of  the  population,  were  launched.  Several  training 
events  were  organised  for  health  professionals  dealing  with  communicable  diseases.  Efforts 
are being made to ensure functionality of the healthcare database, including the national early 
warning  system;  further  improvement  is  however  needed.  The  national  programme  on 
antimicrobial resistance 2012 – 2016 was adopted. Although the prevalence of HIV/AIDS is 
currently low, the financing of future activities on prevention, testing, treatment and care of 
the disease needs to be ensured. Preparations in this area are on track. 

There  has  been  good  progress  in  the  area  of  blood.  A  national  integrated  blood  transfusion 
system  was  developed  and  it  now  comprises  an  institute  for  transfusion  medicine,  three 
regional centres and 19 units. The national programme for organisation and improvement of 

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blood donation was adopted. A new law on organ, tissue and cell transplantation was adopted 
aimed at aligning with the acquis. Preparations in this area are on track.  

There is little progress to report in the field of mental health. The programme on healthcare 
for people with mental disabilities was adopted and its budget was nearly doubled compared 
to 2010. However, there was no progress in the implementation of the Action Plan on mental 
health which is supposed to provide community based mental health care as an alternative to 
institutions.  Adequate  staff  and  financial  resources  are  needed  in  order  to  provide  good 
quality health care. Preparations in this area are at an early stage.  

Progress  in  addressing  the  socio-economic  determinants  of  health  and  health  inequalities  is 
slow. National strategy for sexual and reproductive health is now in place. Some progress was 
made in the field of cancer. The budget of the programme for the early detection of malignant 
diseases  was  more  than  tripled.  Funds  were  allocated  to  organise  three  types  of  cancer 
screening for breast, colorectal and cervical cancer screening as recommended by the Council 
Recommendation. The cancer registry is in place, but not yet fully operational. Preparations in 
this area are ongoing.  

Conclusion 

There has been some progress in the area of consumer and health protection. In the field of 
consumer  protection,  good  progress  was  made  as  regards  legal  alignment  with  the  acquis. 
There  was  some  progress  in  the  field  of  public  health,  particularly  with  regard  to  the 
completion  of  the  integrated  blood  safety  system  and  the  enactment  of  the  Law  on  organ, 
tissue and cell transplantation. Progress in the area of consumer and health protection is still 
hampered  by  the  limited  financial  resources  and  weak  operational  structures.  Overall, 
preparations in the area of consumer and health protection are moderately advanced.  

4.29.  Chapter 29: Customs Union 

Good progress was made on customs legislation. The 2011 customs tariff was adopted taking 
into account the obligations arising from the Stabilisation and Association Agreement (SAA) 
and  the  changes  in  the  EU  Combined  Nomenclature.  Customs  duties  for  imports  from  EU 
countries for all industrial products were completely abolished, in accordance with the SAA 
provisions. The Customs Code was amended to introduce provisions for the use of customs 
representation  in  customs  clearance,  including  licensing  for  customs  representation. 
Furthermore, amendments to the Customs Code were enacted in order to further align it with 
the  customs  acquis  in  the  areas  of  electronic  customs  declarations,  transit  procedure,  and 
customs  debt  and  guarantees.  Further  customs-related  fees  were  abolished  in  line  with  the 
acquis, namely fees relating to entrance and stay at customs terminals, processing fees for IPR 
protection requests and fees relating to printing and distribution of EUR1 forms. Preparations 
in this area are advanced. 

Good  progress  was  made  on  administrative  and  operational  capacity.  Several  strategies 
were adopted for the period 2011-2014, including on training and professional development 
of customs officers, integrity and anti-corruption, risk management, prevention of smuggling 
of tobacco and tobacco products and protection of intellectual property rights. A new customs 
clearance  guide  was  published,  outlining  applicable  customs  duties  and  the  procedures  for 
customs clearance.  

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The  Customs  Administration  introduced  new  IT  modules,  including  an  electronic  document 
management  system,  a  human  resource  management  system  and  an  electronic  resource 
planning system. The single-window system for issuing authorisations was further upgraded 
and a new functionality for transport authorisations was introduced. The strategy for joining 
the Common Transit Convention and the national plan for implementing a new computerised 
transit  system  were  adopted  and  are  being  implemented.  However,  the  new  customs 
declaration  processing  system  which  was  installed  has  not  become  operational,  thus 
undermining the overall operational capacity of the Customs Administration. A pilot system 
for  exchanging  electronic  pre-arrival  information  with  several  other  neighbouring  customs 
administrations started to function. 

Operational  capacities  for  customs  controls  were  further  enhanced,  and  co-operation  with 
other  government  bodies,  including  the  Ministry  of  Interior  and  the  Public  Revenue  Office, 
was  strengthened.  This  led  to  the  seizure  of  significant  quantities  of  counterfeit  and  illicit 
goods.  Good  progress  was  made  in  developing  the  risk  management  system  at  border 
crossings, with more systematic application of risk analysis and risk-based control measures. 

Co-operation with the business community has intensified. The business advisory body meets 
monthly as a forum for consultation on, and discussion of, initiatives and legislative proposals 
that might affect businesses. Cooperation with other customs administrations continued to be 
strengthened,  in  particular  with  those  of  the  neighbouring  countries.  An  agreement  on 
customs  cooperation  was  signed  with  Kosovo  and  a  joint  police  and  customs  cooperation 
centre was established with Bulgaria. Preparations in this area are well on track. 

Conclusion 

Good  progress  was  made  in  the  area  of  customs  union,  both  on  customs  legislation  and  on 
administrative  and  operational  capacity.  The  customs  legislation  is  well  aligned  with  the 
acquis.  There  was  continued  improvement  in  the  administrative  capacity  of  the  customs 
administration to implement legislation and to tackle cross-border crime. Preparations in the 
area of customs union are well 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. The average 
customs duty on industrial products was reduced to 6.20% (compared to 6.31% in 2010) and 
the  duty  on  agricultural  and  fisheries  products  was  16.61%  (compared  to  15.98%  in  2010). 
The  country  continued  to  coordinate  closely  with  the  Commission  and  to  align  with  the 
policies and positions of the EU in international trade negotiations.  

The Law on control of exports of dual-use goods and technologies was amended and several 
Rulebooks were adopted, with a view to further alignment with the acquis on the control of 
export,  transfer,  brokering  and  transit  of  dual  use  goods.  The  responsibilities  of  state 
institutions and legal and natural persons engaged in these activities were defined, including 
the procedure for issuing transit and brokering licences.  

In  the  area  of  bilateral  agreements  with  third  countries,  the  country  ratified  investment 
protection  agreements  with  Morocco  and  Montenegro.  The  number  of  bilateral  investment 
protection  agreements  that  were  ratified  rose  to  35,  of  which  28  are  in  force  and  16  are 

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agreements with EU Member States. An agreement with Lithuania was signed, but is yet to be 
ratified. 

There is little progress to report in the areas of development policy and humanitarian aid. 
Preparations  in  both  areas  are  at  an  early  stage.  Co-ordination  between  institutions  with 
responsibilities  for  humanitarian  aid  was  streamlined  and  they  began  to  meet  on  a  more 
regular basis. The Ministry of Foreign Affairs co-ordinated the country's humanitarian aid to 
Serbia (after the earthquake in Kraljevo) and Japan. 

Conclusion 

Alignment  with  the  common  commercial  policy  has  continued  in  the  WTO  forum.  The 
country's institutional capacity is not yet developed enough to enable it to participate fully in 
EU policies in the fields of development and humanitarian aid.  

4.31.  Chapter 31: Foreign, Security and Defence Policy 

The  regular  political  dialogue  between  the  EU  and  the  former  Yugoslav  Republic  of 
Macedonia  continued  to  cover  foreign  policy  issues.  (Concerning  relations  with  other 
enlargement  countries  and  Member  States,  see  Political  criteria  2.3  –  Regional  issues  and 
international obligations).  

As regards the common foreign and security policy (CFSP), during the reporting period, the 
former Yugoslav Republic of Macedonia has aligned itself, when invited, with 66 out of the 
67  relevant  EU  declarations  and  Council  decisions  during  the  reporting  period  (99% 
alignment).  As  regards  the  International  Criminal  Court,  see  Political  criteria  2.3  — 
Regional issues and international obligations. 

With regard to sanctions and restrictive measures the country aligned itself with the restrictive 
measures  introduced  by  the  Council's  Decisions.  Implementation  of  restrictive  measures  is 
ongoing. The Law on international restrictive measures was enacted. It includes more detailed 
the 
provisions  on  financial  measures  and 
implementation  of  restrictive  measures  by  a  national  coordination  body,  operational  from 
September 2011. 

introduces  a  system  for  monitoring  of 

No particular developments can be reported concerning conflict prevention. 

With  regard  to  non-proliferation,  the  country  submitted  a  letter  of  intent  to  become  a 
participating state of the Wassenaar Agreement on export controls for conventional arms and 
dual-use goods and technologies. It also asked, as a pre-accession measure, to be included in 
the Wassenaar Arrangement Outreach programme.  

The  country  continued  to  engage  actively  in  cooperation  with  international  organisations 
(UN, OSCE, Council of Europe, etc.) 

With  regard  to  security  measures  (classified  information),  the  Directorate  for  Security  of 
Classified Information of the Ministry of Foreign Affairs completed the selection of members 
of the Misdemeanour Commission pursuant to the Law on Classified Information 

As  regards  the  common  security  and  defence  policy  (CSDP),  the  country  continued  to 
demonstrate  a  sustained  commitment  to  participate  in  civil  and  military  crisis  management 
operations. Currently, the country has a total of 166 soldiers deployed in the ISAF mission in 

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Afghanistan.  The  country  continued  to  take  part  in  the  EUFOR  Althea  mission,  with  a 
medical  team  at  Camp  Butmir  and  an  assistant  legal  advisor  for  gender  issues.  It  also 
participates  in  the  UN-led  peacekeeping/UNIFIL  mission  in  Lebanon  by  providing  a  staff 
officer in the Joint Operation Centre in Nagura. The country signed the MoU on the principles 
of establishment and operation of the EU Battlegroup available for the second half of 2012. 

The  government  approved  the  initiative  for  the  conclusion  of  an  Agreement  with  the 
European Union to establish a framework for participation in crisis management operations. 

Conclusion 

The country made efforts to ensure better coordination between the competent authorities in 
the  implementation  of  international  restrictive  measures.  It  demonstrated  a  high  level  of 
alignment  with  EU  declarations  and  Council  decisions  and  a  continued  commitment  to 
participate in civil and military and crisis management operations. Overall, preparations in the 
area of foreign, security and defence policy are well advanced. 

4.32.  Chapter 32: Financial control 

Some  progress  can  be  reported  in  the  area  of  public  internal  financial  control  (PIFC). 
Secondary  legislation  on  financial  management  and  control  and  on  Internal  Audit  has  been 
adopted,  although  implementation  of  the  legislation  remains  slow.  The  strategy  for  the 
development  PIFC  still  needs  to  be  updated  to  include  a  medium  to  long-term  plan  for 
development  of  PIFC  an  action  plan  to  insure  its  full  implementation  The  government  is 
facing delays in establishing units for financial control and internal audit. Some units which 
have already been established remain understaffed. The Committees for financial control and 
internal audit were established by Government decisions, but are not operational yet. A PIFC 
policy  paper  remains  to  be  developed,  including  the  legislative  separation  of  internal  audit 
from financial inspection.  

As regards external audit, the State Audit Office (SAO) continued with the implementation 
of its development strategy 2010-2014 and has improved the quality of its audits. The annual 
SAO  programme  for  year  2011  envisages  intensive  cooperation  with  the  Parliament  and 
creation of conditions for timely discussions of the SAO reports in the Parliament. However, 
as  yet,  no  formal  mechanism  for  parliamentary  follow-up  of  SAO  reports  has  been 
established. A procedure for the amendment of the Constitution has been launched which will 
ensure the functional and financial independence of the SAO.  

Some progress was made towards aligning legislation in the area of protection of the EU's 
financial  interests.  The  Decree  for  procedure  for  preventing  irregularities,  mutual 
cooperation  and  reporting  was  adopted.  In  accordance  with  the  Decree  the  Ministry  of 
Finance's financial police department serves as the central contact point for cooperation with 
OLAF, and is responsible for coordinating the system for the prevention of irregularities and 
fraud, as well as for the admission, control, assessment and reporting of irregularities in the 
management and use of EU funds.  

Progress  was  made  in  the  fight  against  counterfeiting  of  the  Euro.  A  Central  office  for 
preventing the counterfeiting of money was established, which will coordinate cooperation on 
the  investigation  of  counterfeiting  among  the  Ministry  of  Interior,  the  financial  police,  the 
central  bank  and  the  customs  administration.  Preparations  for  setting  up  an  electronic  data 
base  on  counterfeited  money  are  underway.  The  new  Central  Bank  law  transferred 

EN 

78 

   EN 

 
responsibility  for detection and seizure of forged banknotes from the Ministry of Interior to 
the Central Bank. The Central Bank set up a national analytical centre and issued a manual on 
procedures  for  detection  and  withdrawal  of  counterfeited  banknotes.  About  70%  of  all 
investigative procedures initiated on counterfeited bank notes resulted in criminal charges. In 
2010 the police hosted a training session under the EU Pericles Programme on recognition of 
counterfeit euro banknotes and coins. The authorities regularly participate in Pericles events. 
In the fight against counterfeiting of the Euro, the country is advanced. 

Conclusion 

There  has  been  little  progress  in  the  area  of  financial  control.  Developments  in  the  area  of 
PIFC  were  related  mainly  to  legislative  alignment.  Efforts  are  needed  in  order  to  ensure  its 
implementation,  especially  in  relation  to  the  establishment  of  Financial  Management  and 
Control  systems.  The  State  Audit  Office  (SAO)  administrative  capacity  has  been  further 
strengthened;  however,  the  independence  of  the  SAO  has  yet  to  be  anchored  in  the 
Constitution. Cooperation with the Parliament remains a concern.  

4.33.  Chapter 33: Financial and budgetary provisions 

There have been no particular developments as regards traditional own resources, the VAT 
resource and the GNI resource. For progress in the underlying policy areas, see chapters 16 
– Taxation, 18 – Statistics, 29 – Customs union and 32 – Financial control.  

A  regards  administrative  infrastructure,  institutions  are  in  place  in  the  underlying  policy 
areas  that  indirectly  affect  the  own  resources  system.  However,  in  addition  to  further 
strengthening these institutions, a fully operational coordination structure will be required in 
order  to  ensure  the  correct  calculation,  forecasting,  collection,  payment  and  monitoring  of 
own resources and reporting to the EU for implementation of the own resources rules.  

Conclusion 

There  is  no  particular  progress  to  report  under  this  chapter.  Overall  there  are  no  significant 
divergences between the systems in the country and the EU in terms of basic principles and 
institutions for the underlying policy areas that might affect the correct application of the rules 
on  own  resources.  The  administrative  framework  for  the  application  of  the  own  resources 
framework is still not in place.  

EN 

79 

   EN 

 
Statistical Annex 

STATISTICAL DATA (as of 30.09.2011) 
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) 
GDP per capita in PPS (EU-27 = 100) 
Real GDP growth rate (growth rate of GDP volume, national currency, % change on previous 
year) 
Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% change on previous year) 
Real unit labour cost growth (national accounts, % change on previous year) 
Labour productivity per person employed (GDP in PPS per person employed, EU-27 = 100)  
Gross value added by main sectors (%) 

Agriculture and fisheries 
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) 

Note

Note

1) 

2) 
2) 
2) 
2) 

2000 
2 022 
25 713 

2001 
2 031 
25 713 

2002 
2 039 
25 713 

2003 
2 024 
25 713 

2004 
2 030 
25 713 

2005 
2 035 
25 713 

2006 
2 039 
25 713 

2007 
2 042 
25 713 

2008 
2 045 
25 713 

2009 
2 049 
25 713 

2010 
2 053 
25 713 

2002 

2001 

2003 

2000 

2005 
236 389 233 841  243 970 258 369 272 462 295 052 320 059 364 989 411 728  410 734  427 172 
4 814 
2 363 
6 600 
29 

5 231 
2 564 
7 200b 
30b 

6 720 
3 283 
8 500 
34 

5 965 
2 919 
7 700 
31 

6 677 
3 253 
8 400 
35 

4 442 
2 185 
5 900 
27 

4 217 
2 081 
5 400 
26 

4 001 
1 981 
5 200 
25 

3 839 
1 887 
5 000 
25 

3 893 
1 921 
5 100 
27 

: 
: 
: 
35 

2004 

2006 

2007 

2008 

2009 

2010 

4.5 
0.3 
4.2 
-7.0 
: 

12.0 
26.9 
6.8 
54.2 
92.6 
16.2 
6.0 
48.6 
63.5 

-4.5 
-1.7 
-2.9 
-0.8 
: 

11.8 
26.1 
6.0 
56.1 
94.8 
14.8 
4.2 
42.7 
56.6 

0.9 
-0.6 
1.4 
-0.4 
: 

12.4 
24.2 
6.0 
57.5 
99.5 
16.6 
4.0 
38.0 
58.2 

2.8 
-1.9 
4.8 
2.7 
: 

12.9 
23.2 
6.0 
57.8 
97.3 
16.3 
2.8 
38.1 
54.5 

4.6 
-2.2 
6.4 
-9.9 
: 

12.8 
21.6 
6.2 
59.4 
98.1 
17.4 
4.6 
39.9 
60.1 

4.4 
2.1 
3.0 
-8.6 
: 

12.3 
21.9 
6.3 
59.5 
95.7 
16.6 
4.8 
44.1 
61.1 

5.0 
3.2 
5.6 
3.2 
: 

12.1 
22.2 
6.4 
59.3 
96.3 
17.6 
3.9 
46.6 
64.5 

6.1 
4.4 
5.0 
-8.8 
: 

10.6 
24.3 
6.6 
58.5 
93.8 
19.6 
5.0 
52.4 
70.8 

5.0 
6.1 
6.2 
-2.0 
: 

11.6 
24.1 
5.7 
58.7 
98.5 
21.0 
5.8 
50.9 
76.2 

-0.9 
2.5 
3.9 
9.9 
: 

11.2 
21.5 
5.9 
61.4 
95.7 
19.9 
6.0 
39.0 
60.6 

Note
3) 

2000 
99.4 

2001 
96.3 

2002 
91.3 

2003 
95.5 

2004 
93.4 

2005 
100.0 

2006 
105.9 

2007 
110.0 

2008 
115.6 

2009 
105.6 

1.8e 
: 
: 
: 
: 

: 
: 
: 
: 
93.2e 
: 
: 
47.3e 
66.0e 

2010 
100.5 

Inflation rate 
Annual average inflation rate (CPI, % change on previous year) 

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

Note

Note
4) 
4) 
4) 
4) 
4) 

2000 
5.8 

2000 
-112 
-750 
53 
-76 
661 

2001 
5.5 

2001 
-263 
-589 
-21 
-30 
377 

2002 
1.8 

2002 
-402 
-856 
-24 
-48 
525 

2003 
1.2 

2003 
-170b 
-753b 
-6b 
-57b 
646b 

2004 
-0.4 

2004 
-362 
-914 
-43 
-32 
628 

2005 
0.5 

2005 
-122 
-858 
-25 
-93 
853 

2006 
3.2 

2007 
2.3 

2008 
8.3 

2009 
-0.8 

2010 
1.6 

2006 
-23 
-1 001 
22 
-26 
982 

2007 
-421 
-1 181 
25 
-278 
1 012 

2008 
-862 
-1 763 
6 
-91 
985 

2009 
-449 
-1 551 
28 
-58 
1 132 

2010 
-191 
-1 468 
60 
-149 
1 366 

EN 

80 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (%) 
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 (2005=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) 
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 
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 
(%) 
* Employment rate (15-64): share of population aged 15-64 in employment (%) 

Employment rate male (15-64) (%) 
Employment rate female (15-64) (%) 

4) 

4) 

4) 
5) 

Note

Note
6) 
6) 
7) 
7) 
7) 
8) 
9) 
10) 

11) 
10) 

Note

Note

144 
234 
1 
: 
233 
: 

55 
499 
-1 
: 
500 
: 

103 
112 
0 
: 
112 
: 

2000 
2.3 
47.9 

2001 
-2.5 
48.8 

2002 
-0.5 
42.9 

89b 
100b 
0b 
: 
100b 
43 

2003 
0.1 
37.9 

2003 
35.9 
95.7 
461b 
1 260b 
1 324b 
761b 
5.8 
14.0 
: 
61.260 
95.5 
715 

55 
260 
-1 
: 
261 
125 

53 
75 
-2 
: 
77 
41 

59 
345 
0 
: 
345 
255 

24 
507 
1 
: 
506 
355 

49 
409 
9 
: 
400 
264 

2004 
0.4 
35.6 

2005 
0.2 
38.4 

2006 
-0.6 
32.0 

2007 
0.6 
24.0 

2008 
-1.0 
20.6 

2004 
46.8b 
121.7b 
470 
1 475 
1 542 
951 
8.0 
13.0 
: 
61.330 
98.1 
717 

2005 
52.5 
122.8 
501 
1 708 
1 777 
1 153 
9.2 
13.0 
: 
61.290 
100.0 
1 123 

2006 
47.9 
104.7 
591 
2 130 
2 221 
1 504 
5.6b 
9.5 
: 
61.180 
100.2 
1 417 

2007 
47.6 
92.6 
772 
2 728 
2 872 
2 093 
3.5 
7.5 
: 
61.180 
99.8 
1 524 

2008 
49.2 
97.7 
881 
2 913 
3 184 
2 803 
4.8 
8.5 
: 
61.260 
100.8 
1 495 

36 
137 
-8 
: 
145 
131 

2009 
-2.7 
23.9 

2009 
56.6 
148.9 
854 
3 040 
3 388 
2 913 
6.0 
10.0 
: 
: 
106.8 
1 598 

32 
220 
-1 
: 
221 
144 

2010 
-2.5 
24.8 

2010 
62.4 
135.0 
933 
3 277 
3 781 
3 102 
3.7 
5.5 
: 
: 
106.3 
1 715 

2002 
39.3 
108.5 
432 
1 052 
1 141 
657 
14.4 
23.0 
: 
60.970 
91.9 
771 

2004 

2002 

2005 

2003 

2006 
2 105.3  2 031.3  2 354.0  2 601.0  2 979.7  3 795.0  4 587.3  3 615.8  4 119.1 
1 177.9  1 203.0  1 345.9  1 643.5  1 917.5  2 446.4  2 697.6  1 925.2  2 497.5 
-1 621.6 
-927.4 
101.5 
106.4 
63.0 
55.9 
53.1 
61.7 

-1 062.2 -1 348.6 -1 889.7 
109.3 
65.2 
49.6 

-1 690.6 
98.3 
56.2 
52.2 

-1 008.1
82.9 
60.3 
60.8 

-828.2 
94.5 
58.9 
60.3 

-957.5 
95.6 
56.9 
54.7 

100.4 
61.3 
52.9 

93.1 
59.5 
49.0 

2007 

2008 

2009 

2010 

2002 
4.8 
10.2 
70.6 
75.6 

2003 
4.4 
11.3 
70.9 
75.7 

2004 
2.7 
13.2 
71.5 
75.8 

2005 
2.0 
12.8 
71.6 
75.9 

2006 
1.9 
11.5 
71.7 
76.2 

2007 
1.5 
10.3 
71.8 
75.9 

2008 
1.9 
9.7 
72.4 
76.5 

2009 
2.3 
11.7 
72.3 
76.7 

2010 
2.5p 
7.7p 
: 
: 

2000 
42.7 
93.6 
368 
690 
786 
624 
7.2 
17.5 
: 
60.720 
83.6 
759 

2000 
: 
: 
: 
95.4 
: 
: 

2000 
5.9 
11.8 
70.8 
75.2 

2001 
44.2 
108.4 
415 
1 145 
1 267 
620 
11.9 
23.0 
: 
60.910 
88.6 
844 

2001 
: 
: 
: 
97.1 
: 
: 

2001 
5.0 
11.9 
70.9 
76.1 

Note

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

59.7 
40.3 
49.7 
30.9 

61.8 
42.6 
50.6 
34.5 

59.8 
40.4 
48.6 
32.0 

61.3 
38.5 
45.6 
31.3 

58.8 
36.8 
44.4 
28.9 

60.7 
37.9 
45.4 
30.1 

62.2 
39.6 
48.3 
30.7 

62.8 
40.7 
48.8 
32.3 

63.5 
41.9 
50.7 
32.9 

64.0 
43.3 
52.8 
33.5 

64.2 
43.5 
52.8 
34.0 

EN 

81 

EN 

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

Agriculture 
Industry 
Construction 
Services 

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 (%) 
Long-term unemployment rate: share of labour force that is unemployed for 12 months and 
more (%) 

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/HICP) (2000=100) 
* Early school leavers - Share of population aged 18-24 with at most lower secondary 
education and not in further 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 
Spending on human resources (public expenditure on education in % of GDP) 
* Gross domestic expenditure on R&D in % of GDP 
Percentage of households who have Internet access at home (%) 

Environment 
* Greenhouse gas emissions, CO2 equivalent (tons, 1990=100) 
Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP) 
Electricity generated from renewable sources in % of gross electricity consumption 
Road share of inland freight transport (% of tonne-km)  

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) 

26.2 

27.7 

25.8 

28.5 

24.5 

26.2 

27.9 

28.8 

31.7 

34.6 

34.2 

12) 
12) 
12) 
12) 

: 
: 
: 
: 
32.2 
30.5 
34.9 

24.9 
29.2 
5.9 
39.7 
30.5 
29.5 
32.0 

23.9 
27.5 
5.8 
42.6 
31.9 
31.7 
32.3 

22.0 
27.3 
6.6 
43.8 
36.7 
37.0 
36.3 

16.8 
25.8 
7.0 
50.1 
37.2 
36.7 
37.8 

19.5 
25.8 
6.5 
48.0 
37.3 
36.5 
38.4 

20.1 
25.0 
7.6 
47.1 
36.0 
35.3 
37.2 

18.2 
24.9 
6.4 
50.1 
35.0 
34.6 
35.6 

19.7 
24.8 
6.5 
48.9 
33.8 
33.5 
34.2 

18.5 
23.2 
6.5 
51.7 
32.2 
31.8 
32.8 

19.1 
22.6 
6.4 
51.9 
32.0 
31.9 
32.2 

59.9 

56.1 

58.4 

65.7 

64.8 

62.6 

59.8 

57.7 

56.4 

55.1 

53.7 

26.9 

26.5 

27.0 

31.2 

31.7 

32.3 

31.1 

30.1 

28.7 

26.3 

26.7 

Note

Note

Note

Note

13) 

Note

14) 

Note

2000 

2005 
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  19 957.0  20 553.0 

2003 

2001 

2002 

2004 

2006 

2007 

2008 

2009 

2010 

100.0 

98.1 

103.0 

106.7 

111.4 

113.6 

118.1 

124.5 

126.9 

158.7b 

160.8 

: 

: 

32.2 

: 

: 

: 

: 

: 

: 

: 

: 

2000 
147.9 
49.4 

2001 
152.1 
109.0 

2002 
151.1 
179.7 

2003 
148.2 
300.4 

2004 
122.7b 
491.6 

2000 
: 
: 

2000 
: 
0.4 
: 

2000 
104.0 
710.2 
16.9 
60.0 

2000 
1 595 
0 
1 273 

2001 
: 
: 

2001 
: 
0.3 
: 

2001 
92.0 
720.4 
9.2 
87.0 

2001 
1 642 
0 
1 419 

2002 
: 
: 

2002 
3.4 
0.3 
: 

2002 
90.0 
771.4 
11.0 
92.0 

2002 
1 577 
0 
1 356 

2003 
: 
: 

2003 
3.4 
0.2 
: 

2003 
: 
710.9 
17.9 
94.0 

2003 
1 666 
0 
1 353 

2004 
: 
: 

2004 
: 
0.3 
11.2e 

2004 
: 
681.6 
18.9 
91.0 

2004 
1 598 
0 
1 293 

2005 
124.3 
597.6 

2005 
: 
: 

2005 
: 
0.3 
11.2e 

2005 
: 
680.3 
17.5 
93.0 

2005 
1 578 
0 
1 288 

2006 
118.7 
695.1 

2006 
: 
: 

2006 
: 
0.2 
14.0e 

2006 
: 
661.9 
18.7 
92.0 

2006 
1 617 
0 
1 296 

2007 
121.9 
884.2 

2010 
2009 
2008 
128.6 
151.0 
137.7 
1 157.9  1 036.8  1 098.2 

2007 
: 
: 

2007 
: 
0.2 
16.5e 

2007 
: 
646.5 
11.2 
88.0 

2007 
1 504 
0 
1 254 

2008 
: 
: 

2008 
: 
: 
29.0e 

2008 
: 
613.9 
9.3p 
84.0 

2008 
1 624 
0 
1 378 

2009 
: 
: 

2009 
: 
: 
42.0e 

2009 
: 
576.0 
15.4 
89.0 

2009 
1 607p 
0 
1 293p 

2010 
: 
: 

2010 
: 
: 
46.1e 

2010 
: 
: 
: 
89.0 

2010 
: 
: 
: 

EN 

82 

EN 

 
  
 
 
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 
: = not available 
p = provisional 
e = estimated value 
b = break in series 
* = Europe 2020 indicator 

0 
1 104 
2 765 
6.8 

0 
1 011 
2 677 
6.4 

0 
1 486 
2 892 
6.1 

0 
1 029 
2 740 
6.7 

0 
1 152 
2 749 
6.7 

0 
1 248 
2 863 
6.9 

0 
1 323 
2 925 
7.0 

0 
1 469 
3 039 
6.5 

0 
1 403 
3 022 
6.3 

0 
1 274p 
2 811p 
6.8 

: 
: 
: 
: 

Note

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

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 
: 
588 

98.0 
1 077 
254 
255 
944 
374 
469 
: 
565 

104.5 
1 064 
254 
247 
950 
368 
615 
: 
590 

102.9 
1 014 
253 
194 
849 
343 
609 
: 
650 

107.7 
1 120 
260 
191 
854 
347 
541 
: 
743 

The  balance  of  payments  sign  conventions  are  used  for  FDI.  For  FDI  abroad  a  minus  sign  means  investment  abroad  by  the  reporting  economy  exceeded  its  disinvestment  in  the  period,  while  an  entry 
without sign means disinvestment exceeded investment. For FDI in the reporting economy an entry without sign means that investment into the reporting economy exceeded disinvestment, while a minus 
sign indicates that disinvestment exceeded investment. 

GDP in constant prices of the previous year. 
2003–2009, data are provided according to NACE Rev 1.1. 
Data are recalculated according to NACE Rev.2 for the period from 2005 to 2010. 
2000-2002, values in Euro are calculated using the annual average exchange rate; from 2003 onwards, the values in Euro are calculated on the basis of the current exchange rate. 
Data on FDI flows by countries are produced only for the categories Equity capital and the Loans component of other capital. Data for reinvested earnings and the remaining components of FDI 
flows, based upon the Annual FDI Survey, will be available within t+270 days. 
2000-2003,  external  debt  data  are  calculated  on  the  old  methodology,  with  partial  data  coverage;  since  2004,  Gross  Foreign  Debt  Data  are  prepared  according  to  the  External  Debt  Statistics 
Guide, with full data coverage. 
From 2003, data for money supply are revised to include data for saving houses 
From  2006,  data  cover  bilateral  transactions  over  night;  2003,  end  of  year;  from  2003,  the  category  Total  credits  by  MFIs  (Microfinance  Institutions)  is  expanded  with  loans  granted  by  saving 
houses. 
2000-2006, end of year; until 2005 data cover transactions with all maturities concluded on the Institutionalized Money Market; from 2006, data cover bilateral transactions over night 
End of year. 
NEER (nominal effective exchange rate). 
Data provided according to NACE Rev 1.1. 
Data for 2004 and 2005 are the same figure, obtained from the same ICT survey, conducted in February 2005, as a pilot survey, which covered the end of 2004 and beginning of the 2005. 
Break in series: 2004-2008, revised data (including transport for own account). 

83 

EN 

Footnotes: 
1) 
2) 
3) 
4) 
5) 

6) 

7) 
8) 

9) 
10) 
11) 
12) 
13) 
14) 

EN