COMMISSION STAFF WORKING DOCUMENT THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 2012 PROGRESS REPORT accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Enlargement Strategy and Main Challenges 2012-2013
Date: 2012-10-10
Institutions: European Commission
Subjects: Community acquis, North Macedonia, accession criteria, economic reform, political reform

EUROPEAN 
COMMISSION 

Brussels, 10.10.2012  
SWD(2012) 332 final 

COMMISSION STAFF WORKING DOCUMENT 

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 
2012 PROGRESS REPORT 

accompanying the document 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2012-2013 

{COM(2012) 600 final}

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TABLE OF CONTENTS 

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

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

Context ......................................................................................................................... 4 

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

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

Democracy and the rule of law .................................................................................... 6 

Human rights and the protection of minorities .......................................................... 13 

Regional issues and international obligations ............................................................ 18 

Economic criteria ....................................................................................................... 20 

The existence of a functioning market economy ....................................................... 20 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 24 

Ability to take on the obligations of membership...................................................... 26 

Chapter 1: Free movement of goods .......................................................................... 26 

Chapter 2: Freedom of movement for workers .......................................................... 27 

Chapter 3: Right of establishment and freedom to provide services ......................... 28 

Chapter 4: Free movement of capital ......................................................................... 29 

Chapter 5: Public procurement................................................................................... 30 

Chapter 6: Company law............................................................................................ 31 

Chapter 7: Intellectual property law........................................................................... 32 

Chapter 8: Competition policy ................................................................................... 33 

Chapter 9: Financial services ..................................................................................... 33 

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. 

4.10.  Chapter 10: Information society and media ............................................................... 35 

4.11.  Chapter 11: Agriculture and rural development......................................................... 36 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy .................................. 38 

4.13.  Chapter 13: Fisheries.................................................................................................. 40 

4.14.  Chapter 14: Transport policy ..................................................................................... 40 

4.15.  Chapter 15: Energy .................................................................................................... 41 

4.16.  Chapter 16: Taxation.................................................................................................. 43 

4.17.  Chapter 17: Economic and monetary policy.............................................................. 43 

4.18.  Chapter 18: Statistics.................................................................................................. 44 

4.19.  Chapter 19: Social policy and employment ............................................................... 45 

4.20.  Chapter 20: Enterprise and industrial policy.............................................................. 47 

4.21.  Chapter 21: Trans-European networks....................................................................... 48 

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4.22.  Chapter 22: Regional policy and coordination of structural instruments .................. 48 

4.23.  Chapter 23: Judiciary and fundamental rights ........................................................... 49 

4.24.  Chapter 24: Justice, freedom and security ................................................................. 55 

4.25.  Chapter 25: Science and research .............................................................................. 59 

4.26.  Chapter 26: Education and culture............................................................................. 60 

4.27.  Chapter 27: Environment and climate change ........................................................... 61 

4.28.  Chapter 28: Consumer and health protection............................................................. 62 

4.29.  Chapter 29: Customs union........................................................................................ 64 

4.30.  Chapter 30: External relations.................................................................................... 65 

4.31.  Chapter 31: Foreign, security and defence policy...................................................... 65 

4.32.  Chapter 32: Financial control..................................................................................... 66 

4.33.  Chapter 33: Financial and budgetary provisions........................................................ 67 

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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  take  on  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 2011 to September 2012. 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.  In  October  2009,  the  Commission  made 
recommendations  to  the  Council  to  open  negotiations  with  the  country  and  to  move  to  the 
second  phase  of  SAA  Implementation.  These  recommendations  were  reiterated  in  2010  and 
2011. The Council has not yet decided on the Commission’s proposals.  

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. 

1 
2 

The rapporteur for the former Yugoslav Republic of Macedonia is Mr Richard Howitt. 
Enlargement Strategy and Main Challenges 2012-2013, COM(2012) 600.  

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The  Stabilisation  and  Association  Agreement  (SAA)  remained  at  the  core  of  the 
relationship  between  the  EU  and  the  former  Yugoslav  Republic  of  Macedonia.  The  country 
has  been  implementing  its  commitments  under  the  SAA  with  the  EU,  including  all  those 
relating to the first stage of implementation of Title V (Movement of workers, establishment, 
supply of services, capital). The Commission’s 2009 proposal on passage to the second stage 
of the Association, under Article 5 of the SAA, has been under consideration by the Council.  

Regular  political  and  economic  dialogue  between  the  EU  and  the  country  has  continued 
through the SAA structures. Meetings of the highest joint bodies, namely the Stabilisation and 
Association Committee and the Stabilisation and Association Council, took place in October 
2011 and January and July 2012. Experts from both sides have met in seven sub-committees 
and a special group on public administration reform. Multilateral economic dialogue between 
the  Commission,  the  EU  Member  States  and  candidate  countries  on  pre-accession  fiscal 
surveillance continued, and included a ministerial meeting in Brussels in May. In December 
2011, the government adopted its annual revision of the national programme for the adoption 
of the acquis.  

A  High  Level  Accession  Dialogue  (HLAD)  was  launched  by  the  government  and  the 
Commission on 15 March 2012. The purpose of the HLAD is to inject new dynamism into the 
EU  accession  reform  process,  thereby  strengthening  confidence  and  boosting  the  country’s 
European prospects.  It  does  not  override the  standard pre-accession procedures.  The HLAD 
focuses  on  five  key  areas:  protecting  freedom  of  expression  in  the  media;  strengthening  the 
rule of law; reforming public administration; improving the election process; and developing 
the  market  economy.  It  also  discussed  good  neighbourly  relations.  Political-level  meetings 
were held on 15 March, 7 May and 17 September. These reviewed progress in reforms on the 
basis  of  agreed  targets  and  actions  and  a  government  roadmap.  Technical  consultations  on 
various  topics  continued  throughout  the  year.  There  has  been  good  overall  progress.  The 
targets and actions are assessed in detail within the relevant sections of the Progress Report. 

Visa liberalisation for citizens of the former Yugoslav Republic of Macedonia travelling to 
the  Schengen  area  has  been  in  force  since  December  2009.  The  Commission  set  up  a  post-
visa-liberalisation  monitoring  mechanism  to  assess  whether  the  implementation  of  all  the 
reforms introduced by the country was consistent with the visa roadmap and sustainable. This 
was  complemented  by  an  alert  mechanism  to  avoid  abuses.  The  Commission  presented  its 
second monitoring report to the European Parliament and the Council in December 2011 and 
adopted  the  third  in  August  2012.  A  readmission  agreement  between  the  European  Union 
and the former Yugoslav Republic of Macedonia has been in force since January 2008. 

Financial assistance is provided through the Instrument for Pre-Accession Assistance (IPA). 
The  revised  Multiannual  Indicative  Financial  Framework  for  2012-13  allocates  a  total  EU 
contribution of € 215 million to the  country.  The last national programme under the current 
IPA Component I was submitted to the Commission in July 2012 with a total EU allocation of 
€ 56 million for the years 2012 and 2013. In additi on, the country continued to benefit from 
various regional, cross-border cooperation and horizontal programmes. Implementation of all 
IPA  programmes  on  the  ground  is  slowly  taken  off.  The  government  should,  however, 
streamline  and  strengthen  planning  and  horizontal  coordination  of  policies,  particularly  in 
view of the forthcoming IPA 2014-2020 programming period. 

Since 2007 the Commission has committed over € 490  million for projects to be implemented 
in  the  country,  including  € 101  million  in  2012.  This  assistance  focuses  on  further 
strengthening  administrative  capacity  (with  particular  emphasis  on  the  judiciary  and  public 
administration sectors), regional economic development, customs reforms, alignment with the 
EU acquis and technical support to ensure sound and efficient management of EU funds. In 

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the context of pre-accession, since December 2010, the national authorities have been directly 
managing over € 250 million under the Decentralis ed Implementation System (DIS) for four 
out  of  five  IPA  components.  There  have  been  encouraging  elements  regarding  the 
reinforcement of capacities across the administration in 2012, although further strengthening 
of  the  national  management  and  control  systems  is  still  needed  in  order  to  ensure  higher 
effectiveness, impact and absorption of EU funds. 

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.  The  programmes  currently  being  implemented  provide 
significant  support  for  NGO  management  and  resource  mobilisation,  for  institutional 
cooperation between CSOs and central and local authorities as well as networking at regional 
level. Furthermore, under the DIS, civil society is involved in monitoring the implementation 
of  EU  aid,  particularly  the  assistance  given  under  the  Transition  and  Institution-Building 
Component,  via  participation  in  the  biannual  IPA  Monitoring  Meetings.  The  first  one  was 
held in Skopje on 16 July 2012. 

The  former  Yugoslav  Republic  of  Macedonia  actively  participates  in  the  following  Union 
Programmes:  the  Seventh  Research  Framework  Programme,  the  Entrepreneurship  and 
Innovation  Programme,  ‘Progress’,  ‘Culture’,  ‘Europe  for  Citizens’,  ‘Fiscalis  2013’, 
‘Customs 2013’, and (since December 2011) the Intelligent Energy Programme. 

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  

The functioning of Parliament and political dialogue have been maintained. Dialogue needs to 
be further strengthened, including on inter-ethnic issues. 

All parties supported the High Level Accession Dialogue (HLAD) as an opportunity to inject 
new dynamism into the EU accession process. The Parliament adopted several laws related to 
EU accession, in particular as regards the reform targets of the HLAD.  

The  parliament  is  discussing  government  proposals  for  improvement  of  the  legislative 
framework  for  elections,  following  the  OSCE/ODIHR  recommendations  on  the  2011 
elections.  The  proposals  aim  to  strengthen  the  Electoral  Code,  in  particular  by  increasing 
transparency of campaign and political party financing and addressing gaps and ambiguities 
in the existing Code. The government has also proposed amendments of the Law on financing 
of political parties. The Voters’ List is in the process of being revised. On-going efforts will 
be  necessary  to  fully  address  the  recommendations  of  the  OSCE/ODIHR,  in  particular  as 
regards the separation of state and political parties, prevention of intimidation of voters and 
audit of the Voters’ List. 

The  Parliamentary  Committee  on  EU  Affairs  (CEA)  and  the  National  Council  on  EU 
Integration  (NCEI),  which  is  chaired  by  the  opposition  and  includes  civil  society 
representatives, held joint sessions on key EU topics. They debated the 2011 Progress Report, 
the annual revision of the National Programme for the Adoption of the Acquis (NPAA) and 

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the HLAD roadmap for reforms. The CEA and NCEI consulted with the Commission as part 
of  the  HLAD  meeting  of  7  May  and  17  September  in  Skopje.  The  two  bodies  held  regular 
sessions and public hearings.  

Agenda  items  proposed  by  the  opposition  were  discussed  in  plenary,  in  line  with  the  2009 
Law on Parliament and 2010 amendments to the rules of procedure.  

Fourteen further public hearings, one public discussion and two oversight hearings were held. 
The legislative process involved consultations with civil society organisations and academia.  

The 2011 amendments to the Law on Languages were implemented. The Committee on Inter-
ethnic Relations continued its activities and held five sessions, including one on inter-ethnic 
incidents and tensions which arose in the first half of the year. The Committee on Labour and 
Social Policy continues to discuss the scope of the government proposed Law on Defenders 
concerning support to victims of the 2001 conflict. A mutually satisfactory solution should be 
found  which  facilitates  reconciliation,  on  the  basis  of  the  recent  government  report  on  the 
Ohrid Framework Agreement.  

The Code of Ethics for MPs was not adopted. The Committee of Inquiry set up to investigate 
the incident in the Parliament in 2010 has not come to any conclusions. 

The  Parliamentary  Institute,  established  by  the  2009  Law  on  Parliament  in  order  to  support 
the work of Members of Parliament, has not become operational. Further efforts are needed to 
resolve administrative blockages, such as delays in staff recruitment procedures.  

Parliamentary  oversight  of  the  interception  of  communications  has  been  strengthened  by 
amendments  to  the  legal  framework.  Oversight  of  intelligence  and  counter-intelligence 
services  also  need  to  be  strengthened.  There  is  insufficient  cooperation  between  the  two 
parliamentary committees responsible and the Ministry of the Interior. 

Overall, the functioning of the parliament and political dialogue have been maintained. The 
parliament  has  consistently  supported  the  accession  process,  including  the  High  Level 
Accession  Dialogue.  The  implementation  of  the  Law  on  Languages  and  of  the  rules  of 
procedure has progressed. The government has adopted proposals to for improvement of the 
framework for elections which are being considered by Parliament. On-going efforts will be 
needed  to  fully  address  the  recommendations  of  the  OSCE/ODIHR.  Continued  efforts  are 
needed  to  develop  the  capacity  of  the  parliament  and  political  dialogue  needs  to  be 
strengthened.  

Government  

The  Macedonian  government  has  deepened  its  commitment  to  the  EU  reform  process  by 
engaging  fully  with  the  High  Level  Accession  Dialogue.  On  this  basis,  it  adopted  an 
ambitious  roadmap  for  reforms  in  April  2012  and  regularly  reviewed  its  implementation  at 
ministerial  level.  Civil  society  organisations  were  consulted,  in  an  inclusive  spirit.  Through 
this dialogue, the EU accession process regained a central position in the political agenda of 
the country. 

The  revised  National  Programme  for  the  Adoption  of  the  Acquis  for  2012  was  adopted  in 
December  2011.  This  would  benefit  from  clearer  deadlines,  staffing  requirements  and 
budgetary implications. Implementation of some of the measures was affected by the cuts to 
the state budget. 

In  the  first  half  of  2012  there  were  a  number  of  incidents  and  killings  in  the  country.  Joint 
efforts  by  the  coalition  partners  played  an  important  role  in  alleviating  the  inter-ethnic 
tensions  triggered  by  these  incidents  (See  Respect  for  and  protection  of  minorities,  cultural 
rights). Relations in the government were affected by different points of view concerning the 

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status of victims of the 2001 conflict. The coalition partners should pursue their dialogue in 
order to find solutions and ensure stability. 

In  October  2011,  10  days  after  the  beginning  of  the  census,  the  State  Census  Commission 
resigned due to disagreements concerning the methodology established by the State Statistical 
Office,  notably  the  method  for  counting  citizens  working  abroad.  The  coalition  partners 
agreed to interrupt the census. 

Decentralisation  of  government,  a  key  element  of  the  Ohrid  Framework  Agreement, 
continued.  A  programme  for  implementing  decentralisation  and  local  self-government  for 
2011-2014  and  the  corresponding  action  plan  were  adopted.  All  but  one  of  the  85 
municipalities entered the second phase of fiscal decentralisation, enabling a more substantial 
transfer  of  responsibilities  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 4%, thus enhancing their financial capacity to take on new tasks. The provisions 
of the Law on Regional Development on financial allocations through the responsible bodies 
are  not  fully  implemented.  Capacity-building  programmes  are  being  implemented  to  assist 
municipalities.  

Progress  in  meeting  the  objectives  of  decentralisation  needs  to  be  accelerated,  driven  in 
particular  by  the  Ministry  of  Local  Self-Government  (MoLSG)  and  Ministry  of  Finance. 
Mechanisms  for  addressing  the  significant  disparities  in  delivery  of  public  services  are 
limited,  and  rural  and  small  municipalities  are  especially  disadvantaged.  Financial 
sustainability  of  municipalities  remains  the  main  challenge.  Although  there  has  been  some 
increase  in  the  collection  of  local  taxes  and  fees,  some  municipalities  have  difficulties 
ensuring the collection of property tax. 

The financial and legal framework for the implementation of all responsibilities transferred to 
municipalities needs to be developed with the participation of the local self-government units. 
Also, more transparency and coordination of central funding for municipal projects is needed.  

Overall, cooperation within the government coalition has continued and has been successful 
in  putting  the  accession  process  at  the  centre  of  the  political  agenda.  The  government  has 
effectively  coordinated  the  implementation  of  the  HLAD  on  the  basis  of  its  own  Roadmap. 
The government responded with maturity to inter-ethnic tensions and needs to build on this to 
further strengthen inter-ethnic relations and reconciliation, including on the status of victims 
of  the  2001  conflict.  The  coalition  partners  should  pursue  their  dialogue  in  order  to  find 
solutions and ensure  stability.  In  the  field of local government, progress on decentralization 
needs to be accelerated, in particular as regards the financial framework.  

Public administration  

Some progress was made in the area of public administration. The High Committee on Public 
Administration,  led  by  the  Prime  Minister,  maintained  its  overall  coordination  and  political 
responsibility for public administration reforms. The administrative and operational capacity 
of  the  Ministry  of  Information  Society  and  Administration  (MISA)  for  managing  public 
administration  improved,  and  administrative  inspection  was  reinforced  with  new  staff  and 
training.  Additional  efforts  and  resources  are  needed  to  further  improve  the  MISA’s 
administrative  capacity  and  administrative  inspection  to  effectively  cope  with  tasks 
throughout the country.  

The  Laws  on  Civil  and  Public  Servants  were  amended,  postponing  until  January  2013  the 
application of some staff appraisal methods previously criticised by EU experts. The mobility 
of  civil  and  public  servants  has  been  partially  improved.  The  registry  of  public  servants  is 
now operational, albeit with incomplete data from some institutions. The Constitutional Court 

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excluded  certain  categories  of  staff  from  the  scope  of  the  Law  on  Public  Servants  retaining 
only those clearly  exercising public authority. The recruitment and  dismissal procedures for 
institutions finding themselves outside the public servants law are now governed by general 
labour law provisions and collective bargaining. The area of civil and public service therefore 
remains  fragmented.  To  consolidate  regulation  in  this  area  and  to  address  persisting 
shortcomings  regarding  in  particular  the  recruitment,  promotion  and  termination  of 
employment,  preparations  for  a  new  comprehensive  Law  on  Administration  have 
commenced.  

Eligibility  criteria  for  recruiting  staff  remain  inconsistent.  While  some  progress  has  been 
observed  in  eliminating  tailor-made  vacancies,  concerns  remain  that  the  principle  of  merit-
based recruitment is not always respected. The regulations on hiring temporary staff remain 
unaligned with general recruitment procedures for civil and public servants. The Government 
has not made available official figures on existing or transferred temporary positions. 

Regarding  equitable  representation,  approximately  one  quarter  of  all  newly  employed  civil 
servants  came  from  the  non-majority  communities.  The  co-ordination  of  the  recruitment 
process,  in  particular  by  the  Secretariat  for  Implementation  of  the  Ohrid  Framework 
Agreement (SIOFA), needs substantial improvement. The trend of recruiting employees on a 
quantitative  basis  without  sufficient  regard  to  the  real  needs  of  the  institutions  continued. 
Most  of  the  recruits  have  not  reached  their  designated  institutions  while  already  receiving 
remuneration  by  SIOFA.  The  recruitment  procedure  for  non-majority  members  is  not 
harmonised with the general recruitment procedures and remains vulnerable to undue political 
influence.  

The  salary  framework  remains  fragmented.  The  practice  continued  of  paying  ad  hoc 
allowances  to  public  servants  for  certain  duty-related  tasks  without  giving  a  transparent 
justification. 

The  Parliament  introduced  the  principle  of  tacit  approval  in  administrative  proceedings 
(‘silence is consent’) by amending over 130 laws in line with recent amendments to the Law 
on  General  Administrative  Procedures.  A  complex  appeals  procedure  seriously  undermines 
the  application  of  this  principle.  To  address  this  and  other  issues,  preparations  for  a 
contemporary Law on General Administrative Procedures have commenced. 

The  Parliament  appointed  members  of  the  Second  Instance  State  Commission  for  appeals 
administrative  procedures.  The  State  Commission  is  not  yet  fully  operational  and  lacks 
administrative capacity.  

MISA continued efforts to improve the services offered to citizens. E-government is promoted 
as  a  tool  to  increase  transparency  and  prevent  petty  corruption.  The  ‘scoreboard’  grading 
system  for  use  by  citizens  has  been  expanded  to  additional  institutions.  Responsibility  for 
management  of  regulatory  impact  assessment  (RIA)  and  the  Single  Electronic  Register  of 
Legislation (ENER) shifted from the Secretariat General to MISA. Steps have been taken to 
improve  the  legislative  drafting  process  through  RIA.  It  has  not,  however,  been  applied 
systematically. Public awareness of the citizens’ charter offering satisfaction surveys needs to 
be increased. 

As  regards  financial  management,  managerial  accountability  is  not  yet  fully  taking  into 
account  the  principles  of  public  internal  financial  control.  The  reports  of  the  State  Audit 
Office  repeatedly  draw  attention  to  various  shortcomings  with  regard  to  the  application  of 
procurement  rules  and  human  resources  policy.  The  quality  of  strategic  planning  in  central 
and local institutions needs to be enhanced. 

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The Constitutional Court annulled provisions of nearly 15% of laws that were challenged at 
the Court in the course of 2011, a decrease compared to 2010.  

The  number  of  complaints  received  by  the  National  Commission  for  Protecting  Access  to 
Information (NCPAI) fell by 25% in 2011. The majority of the complaints were made against 
state  administrative  bodies  for  administrative  silence.  More  than  half  of  the  complaints 
resulted with the  submission of the requested information.  No  sanctions were imposed. The 
administrative capacities of the NCPAI have not improved and the state funding was reduced. 
The NCPAI continued to hold frequent training sessions to increase the awareness of the right 
to free access to public information. 

The Ombudsman Office’s recommendations continued to be respected by the public bodies in 
the majority of cases (78%). The least responsive bodies in this regard remained the second-
instance government commissions, followed by the Ministry of Finance, the Ministry of the 
Interior  and  local  self-government  units.  The  majority  of  violations  concerned  consumer 
rights, property rights, labour rights and prisons. 

There  was  moderate  progress  in  police  reform  with  ongoing  implementation  of  the  Act  of 
Systematisation  aimed  at  strengthening  the  efficiency  of  police  services.  Additional  human 
resources are needed to implement the act, especially in regional police commands. There is a 
need  for  continued  training,  professionalization  and  depoliticisation  of  police  personnel.  To 
that  end,  an  independent  oversight  mechanism  for  law-enforcement  agencies  is  needed  to 
combat  impunity  and  ensure  democratic  and  accountable  policing  services.  The  Law  on 
Interception of Communications was amended, strengthening the efficiency and transparency 
of this special investigative measure.  

Overall, there was some progress as regards public administration. Services to citizens were 
improved and e-government has been gradually introduced. Steps on fundamental reforms of 
the  administrative  framework  and  public  and  civil  service  have  been  launched.  Additional 
efforts  are  needed  to  guarantee  the  transparency,  professionalism  and  independence  of  the 
public  administration.  In  particular,  respect  for  the  principle  of  merit-based  recruitment 
together with the principle of equitable representation needs to be ensured. 

Judicial system (See also Chapter 23 – Judiciary and fundamental rights) 

The  main  bodies  tasked  with  ensuring  the  independence,  impartiality,  accountability  and 
professionalism of the judiciary continued to carry out their functions.  

The  Judicial  Council  appointed  63  judges  to  courts  of  all  levels  in  2011,  and  6  new  court 
presidents. When appointing first instance judges, it continued to give preference to applicants 
who  had  not  graduated  from  the  Academy  for  Judges  and  Prosecutors  (AJP),  despite  the 
legislative requirement that 50% of such appointments should be AJP graduates. This raises 
concerns about the credibility of the current recruitment provisions and the Judicial Council’s 
commitment to merit-based recruitment. The Judicial Council initiated 4 dismissal procedures 
during  2011  (down  from  12  the  previous  year)  and  1  disciplinary  procedure.  There  are  at 
present numerous grounds for the dismissal of judges, but the one which is used in most cases 
is  broad  and  general  (unprofessional,  untimely  or  inattentive  exercise  of  judicial  office). 
Efforts are needed to further safeguard the security of tenure of judges by ensuring that  the 
grounds for dismissal are clear, precise and predictable, and that the application of the rules 
respects  the  principle  of  proportionality.  The  Judicial  Council  completed  the  professional 
evaluation  of  612  judges  for  the  year  2011:  77%  were  rated  as  very  good,  20%  as  good, 
2.45% as satisfactory and 0.49% (3 judges) as unsatisfactory. The assessment criteria applied 
by  the  Judicial  Council  under  the  current  legislation  are  predominantly  quantitative  rather 

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than  qualitative,  and  no  link  is  made  between  the  professional  evaluation  of  judges  and 
identification of their future training needs. 

The  Council  of  Public  Prosecutors  appointed  18  prosecutors  in  2011.  No  prosecutors  were 
dismissed. The Council service remains understaffed. It is financially dependent on a budget 
line  from  funds  allocated  to  Public  Prosecutor’s  Office  and  is  accommodated  in  rented 
offices. 

The principle of equitable representation and gender balance continues to be observed in both 
the judiciary and the prosecution service.  

The Academy for Judges and Prosecutors (AJP) continued to provide both initial training for 
future judges and prosecutors and ongoing training for the members and staff of the judiciary, 
law enforcement agencies and other institutions and bodies. However, the fifth annual intake 
of candidate judges and prosecutors scheduled for autumn 2011 was postponed and combined 
with the autumn 2012 intake. This delay resulted from uncertainty over the newly introduced 
integrity  component  of  the  entrance  exam  for  the  AJP,  which  was  partly  annulled  by  the 
Constitutional Court in February 2012. Of the 80 candidates who have successfully graduated 
from  the  AJP  since  January  2009,  56  have  so  far  been  recruited  as  judges  and  prosecutors, 
while 24 remain to be appointed in their first posts. 

As  regards  efficiency,  progress  is  being  made  to  reduce  the  overall  backlogs  in  the  court 
system as a whole. The global number of pending cases in national courts at all levels at the 
end  of  2011  was  295,769  (as  compared  with  678,670  in  2010).  A  significant  number  of 
enforcement cases and non-contentious cases (around 330,000) were removed from the court 
system  in  the  second  half  of  2011  as  a  result  of  a  transfer  of  competences  to  professional 
bailiffs  and  notaries.  However,  the  main  reason  for  the  reduction  in  backlogs  was  the  high 
clearance rate of the basic courts over the last three years (up to 170% in 2011), due to greater 
procedural  discipline  and  monitoring  at  the  level  of  individual  judges.  Only  the  Supreme 
Court  and  the  Administrative  Court  continued  to  accumulate  backlogs  rather  than 
progressively reduce them, and urgent attention needs to be given to adequate distribution of 
human resources in order to address this problem. While the improvement in the efficiency of 
justice is an important achievement, care needs to be taken that the quality of justice is given 
equally high priority.  

Following on from the significant reforms of the justice sector between 2004 and 2010, there 
is  currently  no  comprehensive  judicial  reform  strategy  or  action  plan  in  place.  The  Courts 
Budget Council completed a project to determine the average cost of court proceedings, with 
a view to establishing the human and budgetary resources needed by the national courts. The 
2011 methodology for judicial statistics is not yet being implemented systematically and there 
has  not  been  adequate  training  or  awareness-raising  among  courts  on  how  to  use  new 
statistical  tools.  The  2011-2013  strategy  determining  the  number  of  judges  and  prosecutors 
does not contain any analysis which would inform the management or distribution of existing 
resources to make it more efficient across the court network, nor does it project future needs 
in  terms  of  clear,  verifiable  indicators.  The  IT  strategy  for  the  judiciary  still  remains  to  be 
fully  implemented  and  extended  to  the  prosecution  service.  Efforts  are  needed  to  either 
improve the implementation of individual strategies, or to develop an overall strategy which 
brings these together in a coherent way and focuses on the remaining challenges within the 
judicial sector. The Council for Judicial Reform should intensify its work and take a lead in 
defining the new strategic framework for continuation of the judicial reform. 

Overall  as  regards  the  judiciary,  legislative  and  institutional  safeguards  are  in  place,  but 
further efforts are needed to guarantee independence and impartiality in practice. Progress has 
been made, notably in reducing the backlog of cases. Further efforts are needed to create clear 

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and  transparent  grounds  ensuring  proportionate  dismissal  procedures  and  to  improve 
significantly the implementation of merit-based judicial appointment and career development. 
The AJP should be further supported in its key role in the development of a professional and 
highly-skilled judiciary and prosecution service.  

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

Further amendments were made to the legal framework. Changes were made to the Law on 
Financing  of  Political  Parties  and  the  Law  on  Prevention  of  Conflicts  of  Interests,  which 
improved  the  verification  and  enforcement  powers  of  the  relevant  authorities.  New  State 
Programmes for Prevention and Repression of Corruption and for Prevention and Reduction 
of Conflict of Interest were adopted by the State Commission for the Prevention of Corruption 
(SCPC), along with a corresponding Action Plan for 2011-2015. However, weak preparation 
for the entry into force of the new Law on Criminal Procedure has meant further delays in its 
implementation, with entry into effect now postponed until December 2013.  

Stricter sentences for corruption-related offences were imposed by the courts in comparison 
with 2010. However, orders for the seizure and confiscation of assets remain exceptional. A 
track record of investigations, prosecutions and convictions, including the full use of available 
enforcement  means  and  special  investigative  techniques,  has  yet  to  be  established.  The 
general capacity of the judiciary to deal with corruption cases remains low. Only a handful of 
high-level corruption cases have been prosecuted, and almost all of them remain in the court 
system after many years, having been returned for retrial following appeals, due to inadequate 
examination of evidence by the first instance court.  

The Law on the Financing of Political Parties was amended in October 2011 to strengthen the 
system  for  controlling  party  and  campaign  funding.  However  the  State  Audit  Office  (SAO) 
remains  ill-equipped  to  carry  out  its  new  functions  under  the  legislation.  Implementation  of 
the  rules  on  party  financing  needs  to  improve  significantly,  especially  taking  into  account 
GRECO  recommendations.  The  SAO  has  so  far  audited  11  political  parties’  financial 
statements for 2010 and has not yet audited any for 2011. It has not taken measures against 
any political parties for breaches of the reporting obligation, despite having received financial 
statements from only 16 out of over 40 registered parties for 2011.  

Following  the  2011  elections,  in  May  the  Court  of  Appeal  upheld  the  conviction  of  an 
opposition  party  leader  who  was  sentenced  to  5  years  imprisonment  for  illegal  financing  of 
election campaign and misuse of position. This has raised questions about selectivity. 

The  number  of  police  officers  subjected  to  disciplinary  proceedings  remained  steady,  while 
the Customs Administration strengthened its internal control system, doubling the number of 
disciplinary procedures initiated against customs officers. 

Corruption  in  public  procurement  continues  to  be  a  serious  problem.  The  institutional 
framework  and  measures  taken  remain  ill-suited  to  effectively  addressing  this  phenomenon. 
Existing  legislation  requires  further  improvement  to  address  corruption  risks  and  increase 
transparency  in  public  procurement.  The  internal  control  system  in  central  and  local 
administration remains weak. Effective whistle-blowing mechanisms in the public and private 
sectors  have  yet  to  be  established.  There  are  few  criminal  prosecutions  for  abuse  of  public 
procurement. 

There  is  a  lack  of  analysis  of  corruption  and  ways  to  tackle  it.  Operational  cooperation  and 
information  sharing  between  institutions  needs  to  be  further  strengthened.  Supervision  and 
enforcement of the law by the SAO, the SCPC and other bodies is hampered by the lack of 
any  coordinated  system  of  follow-up  concerning  the  outcome  of  those  misdemeanour  or 
criminal proceedings which are initiated. The statistics system for monitoring anti-corruption 

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policies  is  underdeveloped.  Public  anti-corruption  awareness  remains  low.  Resources  to 
ensure effective action against corruption remain insufficient. 

Overall, the legislative framework is in place and capacity has been strengthened slightly, but 
greater efforts are needed as regards implementation of existing laws. Steps have been taken 
to improve verification capacities and enforcement powers of the authorities. However, there 
has been little visible progress in terms of end-results. A track record of handling high-level 
corruption  cases  has  yet  to  be  established.  A  more  proactive  and  coordinated  approach  by 
supervisory bodies and enforcement agencies is needed. Collection and analysis of statistical 
data  should  be  improved  to  focus  efforts  where  they  are  most  needed.  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 

Progress was made as regards international human rights instruments, with the ratification 
of the revised European Social Charter and the UN Convention on the Rights of Persons with 
Disabilities and the corresponding Optional Protocol. The European Charter for Regional or 
Minority Languages has not yet been ratified.  

During  the  reporting  period,  the  European  Court  of  Human  Rights  (ECtHR)  delivered 
judgements on seven applications finding that the country had violated rights guaranteed by 
the  European  Convention  on  Human  Rights  (ECHR).  A  total  of  341  new  applications  have 
been  submitted  to  the  ECtHR  since  September  2011,  bringing  the  total  of  pending 
applications to 969.  

Limited  progress  can  be  reported  in  the  promotion  and  enforcement  of  human  rights. 
Efforts were made to strengthen the implementation of the legal framework, and increase staff 
in  institutions.  The  Ombudsman  still  needs  a  full  mandate  to  promote  and  protect  human 
rights in compliance with the Paris Principles. 

Civil and political rights 

The Ombudsman’s Office’s national prevention mechanism remains an important tool for the 
prevention  of  torture  and  ill-treatment.  The  Ministry  of  the  Interior’s  Sector  for  Internal 
Control and Professional Standards further improved the professionalism of its staff members 
and  its  regular  monitoring  of  police  work  continues;  however,  the  results  remain  limited. 
Efforts  were  made  to  increase  police  officers’  knowledge  of  European  standards  and  to 
enforce safeguards against ill-treatment in police stations. Gaps remain, in practice, as regards 
the  implementation  of  formal  safeguards  against  ill-treatment,  including  the  zero-tolerance 
strategy for ill-treatment. Weaknesses in the complaints system and the related data-collection 
system remain a concern. Efforts were made to improve the procedures for and treatment of 
detained persons, including an Action Plan for the renovation of detention facilities; however, 
conditions in a number of detention facilities remain below required standards.  

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

There was some progress as regards the prison system. Prison reconstruction and training of 
prison  staff  continued.  Standardised  procedures  for  management  and  risk  assessment  were 
adopted.  However,  the  prison  system  remains  seriously  underfunded  and  understaffed.  Poor 
management,  poor  material  conditions,  limited  health  care  provision,  a  lack  of  educational 
and  rehabilitation  activities,  in  particular  for  juveniles,  and  the  lack  of  an  independent 

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inspection  mechanism  to  address  violations  and  punish  perpetrators  remain  matters  of 
concern. Overcrowding continues at an average of 20%.  

Access  to  justice  recorded  a  positive  trend  in  providing  legal  aid  via  counselling  by  the 
Ministry of Justice to 24 out of 85 citizens. Asylum seekers are also eligible for legal aid.  

Some  progress  has  been  made  in  the  field  of  freedom  of  expression  and  the  media.  The 
overall  constitutional  and  legal  framework  protecting  freedom  of  expression  is  generally  in 
place.  The  roundtable  process  of  dialogue  between  the  government  and  the  Association  of 
Journalists has proved an important forum for addressing key challenges relating to the media. 
A  memorandum  of  understanding  was  signed,  which  identified  five  areas  to  be  discussed, 
including  the  decriminalisation  of  defamation  and  ‘insult’,  the  strengthening  of  the  public 
broadcaster,  transparency  of  government  advertising  and  improving  journalists’  and  editors’ 
respect for professional standards. In September 2012, the government adopted proposals for 
a  new  Law  on  Civil  Liability  for  Insult  and  Defamation  aiming  at  alignment  with  relevant 
ECHR principles. The Criminal Code needs to be revised in line with this approach. Training 
of  the  judiciary  on  Article  10  of  the  European  Convention  on  Human  Rights  has  been 
conducted, and translations made of key European Court of Human Rights judgments. Further 
efforts  are  needed  to  ensure  that  these  standards  are  consistently  applied.  Professional 
standards  in  journalism  also  need to be strengthened. At the same time, there are continued 
concerns  about  lack  of  pluralism  and  self-censorship.  There  is  currently  no  active  self-
regulatory body for the media.  

The Broadcasting Council improved its enforcement record as regards illegal concentration of 
ownership  and  conflicts  of  interest,  and  a  number  of  television  channels  were  required  to 
amend  their  ownership  structure.  The  Broadcasting  Council  also  revoked  the  licence  of  the 
television channel A2 TV on the grounds that the programming content was not in line with 
the licence requirements. The Broadcasting Council needs to demonstrate that it is following a 
non-discriminatory and transparent approach. There continues to be concern that a large share 
of  government-funded  advertising  campaigns  is  being  directed  to  media  supportive  of  the 
government.  The  State  Labour  Inspectorate  should  continue  to  enforce  the  labour  rights  of 
media workers to ensure job security and independence.  

Freedom of assembly and association are generally ensured. There were no cases of misuse 
of the legislation or prohibited registration. 

A new Strategy for Cooperation with Civil Society (2012-2017) and Action Plan (2012-2014) 
were adopted in June 2012. A Council for Cooperation with Civil Society is proposed under 
the strategy, while a legally binding framework will standardise rules for state financing for 
civil society organisations. The new strategy aims to ensure that all measures carried forward 
from  the  previous  strategy  are  implemented.  Preparation  of  the  new  strategy  was  broadly 
participatory. 

The Government Commission for Public Benefit Status set up in September 2011 has yet to 
become fully operational. Tax legislation is still not in line with the Law on Associations and 
Foundations,  preventing  access  to  tax  benefits  and  certain  types  of  economic  activity.  The 
system for allocating state financing to civil society organisations needs to be improved and 
standardised.  Civil  society  organisations  remain  heavily  dependent  on  foreign  funding. 
Existing  government  systems  for  implementing  the  Strategy  for  Cooperation  with  Civil 
Society  needed  further  strengthening,  including  the  NGO  Cooperation  Unit  in  the  General 
Secretariat.  No  measures  have  been  taken  to  develop  civil  society  in  rural  areas  and/or  at 
municipal  level.  Local  self-government  units  lack  sufficient  capacity  in  this  area  to  ensure 
standardised cooperation with and financing of local civil society organisations.  

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The  new  law  on  lustration  enacted  in  June  replaces  the  previous  law  which  was  contested 
twice by the Constitutional Court. The period covered by the law goes beyond 1991, as in the 
previous  laws.  Furthermore  the  new  law  allows  for  publication  of  the  names  of  former 
collaborators  of  the  secret  service  as  well  as  of  the  supporting  evidence.  The  scope  of 
application  includes  journalists,  academics,  past  holders  of  public  office,  members  of  civil 
society  organisations  and  individuals  who  made  a  profit  during  the  privatisation  process. 
Concerns have been raised about the proportionality and constitutionality of the law. 

With  regard  to  freedom  of  thought,  conscience  and  religion,  two  more  religious  entities 
were registered under the Law on the Legal Status of Churches, Religious Communities and 
Religious  Groups,  bringing  the  total  number  to  30.  Two  applications  for  registration  were 
rejected. The Bektashi community from Tetovo remains unregistered. It has filed a case with 
the European Court of Human Rights relating to restitution of property. 

Overall, civil and political rights are broadly respected and some further progress was made. 
The ongoing reform of the prison system needs to be pursued. Significant efforts are needed 
to improve management of the prisons, in particular for juveniles. The dialogue between the 
government  and  journalists  on  issues  relating  to  freedom  of  expression  was  deepened.  The 
government adopted a proposal to decriminalise defamation through a Law on Civil Liability 
for Insult and Defamation. The Criminal Code needs to be revised in line with this approach. 
The  Broadcasting  Council  has  begun  to  enforce  legal  provisions  against  concentration  of 
ownership and  conflicts  of interest with the political sphere. There are widespread concerns 
about  lack  of  pluralism  and  self-censorship  and  the  Broadcasting  Council  needs  to 
demonstrate  that  it  is  following  a  non-discriminatory  and  transparent  approach.  Continued 
efforts  are  necessary  to  address  related  challenges  such  as  transparency  of  government 
advertising and the labour rights of journalists. 

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

As  regards  women’s  rights  and  gender  equality,  discriminatory  customs,  traditions  and 
stereotypes are widespread and undermine women’s basic rights, especially those of women 
in rural areas. Active participation by women in political life remains low, particularly at local 
level.  Women  are  also  under-represented  on  the  labour  market.  Some  very  limited  actions 
targeting  Roma  women  were  implemented.  Institutions  do  not  appropriately  exercise  their 
role in ensuring better integration of the gender perspective into other policy areas. There is 
no strategic approach to implementing national strategies and action plans.  

Some  limited  progress  was  made  in  the  area  of  children’s  rights.  Amendments  to  the 
Juvenile  Justice  Law  provide  for  more  rights  and  better  protection  of  child  victims  and 
introduce special protection measures for child witnesses. Juvenile justice professionals from 
all  relevant  institutions  benefited  from  comprehensive  training.  Collection  of  statistical  data 
on  juvenile  justice  has  improved.  Eleven  municipal  councils  for  the  prevention  of  juvenile 
delinquency were set up. The relevant institutions remained underfunded and understaffed as 
regards administration of juvenile justice. Leadership and coordination of the reform process 
need to be strengthened.  

Juvenile detention conditions in police stations fail to meet legal requirements. Free legal aid 
was not systematically provided to juveniles. The programme to compensate juvenile victims 
is  not  operational.  The  situation  in  the  educational-correctional  facility  in  Veles  remains  a 
matter of serious concern, in particular with regard to the treatment of juveniles in the closed 
wing, provision of external healthcare, education and rehabilitation services. The number of 
specialist staff such as psychologists and social workers remains insufficient.  

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Prevention,  protection,  outreach  and  care  services  still  lack  sufficient  financial  and  human 
resources  notably  with  reference  to  children  with  disabilities,  street  children,  children  using 
drugs and children who are victims of domestic violence, sexual abuse or trafficking.  

Some  limited  progress  can  be  reported  in  the  treatment  of  the  socially  vulnerable  and/or 
persons with disabilities. The UN Convention on the Rights of Persons with Disabilities was 
ratified.  Social  services  are  slowly  being  deinstitutionalised  and  civil  society  is  slowly 
increasing  its  provision  of  social  care  services.  However,  the  fiscal  and  administrative 
decentralisation of  social services  is still limited. The implementation  of adopted policies is 
slow.  Poor  material  conditions  and  inhumane  and  degrading  treatment  in  psychiatric 
institutions need to be addressed. Social integration of people with disabilities is very limited. 
The poverty rate remains very high.  

Some progress can be reported in the area of anti-discrimination policies. The Commission 
for Protection against Discrimination became an observer member of the European Network 
of  Equality  Bodies.  It  was  active  in  processing  complaints,  mainly  in  the  areas  of  labour 
relations,  social  security,  the  judiciary  and  administration.  The  overall  capacity  of  the 
Commission  remains  weak  and  its  public  visibility  and  accessibility  levels  are  low.  Public 
awareness of the need for non-discrimination is very limited. The Anti-Discrimination Law is 
still  not  fully  in  line  with  the  acquis;  discrimination  on  the  grounds  of  sexual  orientation  is 
still  omitted.  The  Lesbian,  Gay,  Bisexual  and  Transgender  (LGBT)  community  continue  to 
suffer from discrimination and stigmatisation.  

There  has  been  progress  as  regards  labour  and  trade  unions  rights.  The  Economic  and 
Social  Council  (ESC)  continued  to  meet  regularly.  The  ESC  agreed  on  the  minimum  wage 
and Parliament adopted the Law on the Minimum Wage. Training on peaceful settlements in 
labour disputes and for negotiators and mediators were provided to the relevant stakeholders. 
Bipartite  social  dialogue  remains  weak,  particularly  in  the  private  sector.  The  capacity  of 
social partners remains weak as trade unions lack stable finances and management capacity.  

As  regards  property  rights,  progress  was  made.  The  process  of  returning  property 
confiscated  under  the  Socialist  Federal  Republic  of  Yugoslavia  has  so  far  resulted  in  the 
resolution  of  30,744  cases  filed  between  May  2000  and  December  2007.  About  10%  of  the 
decisions taken were dealt with at second instance or by the Administrative Court. Property 
which could not be returned was compensated for in the form of bonds and 11 issues worth 
€ 301 million were made during the period 2001-2011.  

Overall,  some  progress  can  be  reported  in  the  strengthening  of  social  and  economic  rights. 
The Macedonian institutions have taken a more proactive role on behalf of children’s rights, 
notably  juvenile  justice  and  street  children.  Social  dialogue  has  developed  through  the 
Economic  and  Social  Council.  The  Commission  for  Protection  against  Discrimination  is 
engaged in processing complaints although its resources are limited. The Anti-Discrimination 
Law needs to be fully aligned with the acquis, notably as regards discrimination on grounds 
of sexual orientation. There is a need for better protection of the rights of women, including 
those  in  vulnerable  groups,  as  well  as  further  efforts  to  increase  their  participation  in  the 
labour market and in political life. Social integration of people with disabilities remains weak. 

Respect for and protection of minorities, cultural rights 

In the first half of 2012, there were a number of incidents and killings in the country, which 
led  to  heightened  tension  between  ethnic  communities  and  public  protests.  The  government 
responded  in  a  calm  and  measured  way.  Political  leaders  also  made  statements  calling  for 
restraint and mutual respect. This approach needs to continue in order to avoid politicising the 
incidents. It is crucial that the judiciary and law enforcement agencies conduct rigorous and 

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objective  investigations  in  order  to  ensure  that  the  perpetrators  of  any  crime  committed  are 
brought to justice.  

A review of the implementation of the Ohrid Framework Agreement has been launched by the 
Secretariat  for  the  Implementation  of  the  Ohrid  Framework  Agreement  (SIOFA)  and  the 
government  adopted  a  report  for  the  first  time  since  the  signature  of  the  Agreement.  The 
report  covers  all  aspects  of  the  Agreement,  showing  where  there  has  been  progress  and 
highlighting  the  main  challenges.  The  report  provides  an  important  tool  for  strengthening 
inter-community  dialogue.  The  review  needs  to  be  continued  and  the  recommendations 
should be followed up in a concrete manner.  

Relations in the government were affected by different points of view concerning the status of 
victims  of  the  2001  conflict.  The  coalition  partners  should  pursue  their  dialogue  in  order  to 
find solutions and ensure stability. The parliamentary Committee on Labour and Social Policy 
continues  to  discuss  the  government  proposed  Law  on  Defenders  which  aims  to  provide 
support to the victims of the 2001 conflict. A mutually satisfactory solution should be found 
which  facilitates  reconciliation,  on  the  basis  of  the  recent  government  report  on  the  Ohrid 
Framework Agreement.  

The SIOFA recruited new senior staff. Nonetheless, further significant efforts are necessary to 
strengthen the capacity of the SIOFA.  

The  agency  for  protecting  the  rights  of  minorities  which  represent  less  than  20%  of  the 
population  increased  its  visibility,  for  example  through  participative  fora  with  other 
institutions and civil society. However, the agency was not able to carry out many of its tasks 
due to limited resources. 

The Ministry of Education and Science promoted access to education for the communities, for 
instance through the development of relevant textbooks. Access to education in the languages 
of the smaller communities remains uneven due to the limited numbers of qualified teachers 
and teaching material. 

Committees  for  relations  between  communities  continued  to  exist  in  many  municipalities. 
However, their potential to lead inter-community dialogue at local level is not fully used.  

The  law  on  languages  continued  to  be  implemented  well  in  the  Parliament.  Its  scope  was 
widened  to  include  officials  elected  or  appointed  by  the  Parliament.  An  evaluation  and 
monitoring mechanism needs to be established.  

Regarding the Ministry of Education and Science’s strategy on integrated education, donors 
funded  some  activities  but  no  state  budget  was  allocated  to  implement  the  strategy. 
Segregation in schools along ethnic and language lines remains widespread. There have been 
repeated cases of inter-ethnic violence in secondary schools.  

As regards equitable representation, the overall proportion of civil servants from non-majority 
communities  is  satisfactory  and  remains  at  approximately  29%.  However,  the  distribution 
between ministries is uneven and equitable representation at senior level remains insufficient. 
Some  of  the  small  communities,  in  particular  the  Roma  and  the  Turks,  remain 
underrepresented.  

Some  progress  was  made  regarding  the  Roma.  The  strategy  on  social  inclusion  of  Roma 
2012-2014  was  adopted,  along  with  an  action  plan.  Despite  budgetary  restrictions,  financial 
support  for  Roma  programmes  was  maintained  at  the  2009  and  2011  level.  The  country 
presided over the Decade of Roma Inclusion and organised several regional conferences and 
seminars. It has undertaken to implement the operational conclusions of the July 2011 social 
inclusion  seminar  on  Roma.  The  Roma  health  mediator  programme  started  in  16 

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municipalities.  Requests  for  the  legalisation  of  illegal  houses  were  submitted  to  the 
municipalities in line with the legislation and the process is ongoing. To address the problem 
of  persons  without  documents,  new  Roma  information  centres  were  opened.  Education 
projects continued to be implemented and the enrolment rates of Roma children in secondary 
education increased slightly.  

Recent  legislative  changes  aiming  to  address  the  overrepresentation  of  Roma  children  in 
special schools have not been implemented. Access to basic health services remains difficult. 
Roma  have  above  average  rates  of  infant  mortality  and  many  children  are  either  not  fully 
vaccinated  or  not  vaccinated  at  all.  High  unemployment  rates  persist  and  access  to 
unemployment benefits remains problematic. Discrimination against Roma persists, including 
continued stereotyping in the media and in social networks on the internet. Roma women and 
Roma with disabilities face precarious living conditions because of double discrimination.  

In  July  2012  there  were  1,162  refugees  and  internally  displaced  persons  (IDPs)  in  the 
country,  the  majority  of  whom  are  Roma  from  Kosovo∗.  257  persons  were  voluntarily 
repatriated  to  Kosovo  and  Serbia  in  2011.  The  government  continued  to  implement 
integration policies for Roma refugees. Access to the public health service and active market 
labour measures was formalised and access to housing was improved.  

The  number  of  internally  displaced  persons  (IDPs)  decreased  from  611  in  2010  to  474  in 
2011.  Most  of  the  complaints  lodged  by  IDPs  against  the  state  for  damages  from  the  2001 
conflict are still before the courts.  

Overall, some progress was achieved in the area of cultural rights and minorities. A review of 
the  Ohrid  Framework  Agreement  was  launched  which  includes  recommendations  for 
addressing the on-going challenges. This momentum needs to be maintained through concrete 
follow  up.  Tension  between  communities  following  violent  incidents  caused  concern.  The 
government responded with maturity and needs to build on this by further strengthening inter-
ethnic  relations  and  reconciliation.  Concerning  the  Roma,  several  measures  were  taken, 
notably  to  address  the  issue  of  persons  without  documents  and  to  integrate  IDPs  and  Roma 
refugees.  However,  implementation  of  existing  strategies  and  interinstitutional  cooperation 
needs to be significantly strengthened. Several institutions mandated to promote the rights of 
the communities lack financial and administrative resources.  

2.3. 

Regional issues and international obligations 

The  former  Yugoslav  Republic  of  Macedonia  continued  to  cooperate  fully  with  the 
International  Criminal  Tribunal  for  the  former  Yugoslavia  (ICTY).  There  are  no 
remaining cases or appeals pending in The Hague. Of the four cases that the ICTY transferred 
to the national authorities in 2008, one was dismissed in 2011 by the domestic court system 
and the other three were dismissed in 2012, at the request of the public prosecution and on the 
basis of the Amnesty Law.  

The  former  Yugoslav  Republic  of  Macedonia  still  maintains  a  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  progress  towards  the  European  Union.  The  country  has  continued  to  actively 

∗  

This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the 
ICJ Opinion on the Kosovo Declaration of Independence. 

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participate  in  regional  initiatives,  including  the  South  East  European  Cooperation  Process 
(SEECP),  the  Regional  Cooperation  Council  (RCC),  the  Central  European  Free  Trade 
Agreement  (CEFTA),  the  Energy  Community  Treaty  and  the  European  Common  Aviation 
Area  Agreement.  The  country  took  over  the  Chairmanship-in-Office  of  the  SEECP  in  June 
2012.  The  seat  of  the  Secretariat  of  the  South-Eastern  European  Health  Network  (SEEHN) 
was established in Skopje. The country continued to contribute to the EUFOR Althea mission 
in Bosnia and Herzegovina.  

The former Yugoslav Republic of Macedonia has maintained an overall constructive role as 
regards  bilateral  relations  with  other  enlargement  countries  and  neighbouring  EU 
Member States.  

Relations with Albania continued to develop, with the entry into force of agreements on travel 
by citizens between the two countries and on cooperation as part of EU accession process. An 
agreement  was  signed  on  setting  up  a  joint  centre  for  the  exchange  of  information  between 
their respective border and migration police corps.  

Relations with Bosnia and Herzegovina continued to be good. Several agreements on judicial 
cooperation and on cooperation in the areas of health and of education were signed.  

Relations with Croatia continued to be good, leading to regular bilateral high-level visits.  

Cooperation  with  Montenegro  was  further  strengthened.  The  extradition  agreement  entered 
into  force,  as  did  agreements  on  economic  cooperation  and  on  the  EU  accession  process. 
Agreements  on  readmission  of  persons  residing  without  authorisation  and  on  police 
cooperation were signed.  

Relations with Serbia remained good. There were reciprocal presidential visits in December 
2011  and  January  2012,  which  took  place  in  a  positive  atmosphere.  Agreements  on  travel 
conditions  and  on  compensation  for  health  protection  were  signed.  There  were  no 
developments regarding the dispute between the Orthodox churches in the two countries.  

Cooperation with Kosovo continued to develop with the entry into force of an agreement on 
railway  transport  border  regulations,  and  with  the  signing  of  an  agreement  on  joint  border 
control and supervision. The joint monitoring patrols along the border with Kosovo need to 
address the challenge of illegal trafficking of goods and illegal migration. 

Close relations with Turkey further advanced in the diplomatic, economic and cultural fields. 
An agreement on regular air traffic between the two countries entered into force.  

There continue to be close ties with Bulgaria, notably in the economic sphere. Developments 
during  the  reporting  period  highlighted  the  need  for  more  dialogue  to  overcome  possible 
misunderstandings  and  different  perceptions  concerning  historical,  cultural  and  ethnicity 
based issues. Recent statements at the highest level have confirmed the willingness to move 
forward. 

Relations  with  Greece  continued  to  be  close,  notably  in  the  economic  sphere  and  tourism. 
However,  relations  between  the  two  countries  remained  affected  by  the  name  issue.  The 
International  Court  of  Justice  adopted  a  judgment  concerning  the  Interim  Agreement  with 
Greece.  The  country  has  kept  engaged  in  talks  under  the  auspices  of  the  UN  and  in  direct 
contacts  with  Greece.  The  talks  under  the  UN  auspices  for  a  negotiated  and  mutually 
acceptable  solution  should  be  pursued  with  increased  vigour,  as  should  direct  bilateral 
meetings  and  contacts.  Actions  and  statements  which  could  negatively  impact  on  good 
neighbourly relations should be avoided. 

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

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continues  to  affect  relations  with  Greece.  A  constructive  approach  to  challenges  with 
neighbours is important. 

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  has  been  maintained  on  the  fundamental  features  of  the  country’s 
economic  policy  set-up.  The  medium-term  policy  framework  was  described  in  various 
programmes, such as the sixth pre-accession economic programme (PEP), covering the period 
2012-2014, the labour market strategy for 2015 and the national employment action plan for 
2011-2013. In addition, the authorities embarked on a high-level accession dialogue (HLAD) 
with  the  EU,  which  provided  another  platform  for  accelerating  accession-related  reforms  in 
the  economy.  Cooperation  with  the  IFIs,  such  as  the  World  Bank  and  the  IMF  continued, 
although  the  IMF’s  second  review  of  the  current  financial  arrangement  could  not  be 
completed yet. Structured dialogue with the business community continued. Overall, a broad 
political consensus has been maintained on the fundamentals of economic policy.  

Macroeconomic stability 

The  economy  grew  by  about  3%  in  2011,  but  shrank  by  about  1%  year-on-year  in  the  first 
half  of  2012,  compared  with  growth  of  nearly  5%  in  the  first  half  the  year  before.  Rather 
resilient  private  consumption  helped  to  prevent  a  sharper  slowdown,  while  the  reduction  in 
public consumption had a negative contribution to growth. Indicators on domestic production 
point  to  a  marked  year-on-year  deceleration  during  the  reporting  period,  with  industrial 
production being on average nearly 9% lower since October 2011 than in the same period the 
year before. Average per capita GDP improved in relation to the EU average, increasing from 
35% of the EU average in 2010 to 36% in 2011. Overall, economic activity has decelerated 
since autumn 2011, although private consumption and investment remained rather resilient in 
view of the markedly weaker international environment.  

External  imbalances  declined,  but  their  financing  deteriorated.  In  the  first  half  of  2012,  the 
current account deficit was at about -2.8% of the estimated full-year GDP, compared to -3.5% 
of GDP the year before. The most important factor for the improvement was a further increase 
of current transfers to about 10% of the estimated full-year GDP. The trade balance of goods 
and  services  deteriorated  slightly,  reaching  -12%  of  estimated  full-year  GDP,  compared  to 
-11% of GDP the year before, mainly as a result of weaker export revenues. The capital and 
financial account surplus shrank to a similar extent, declining to about 2.6% of GDP by June 
2012, compared to a surplus of 4% a year before. FDI inflows and other investment declined 
to about 1% of the estimated full-year GDP and 0.6% of GDP respectively, compared to 2% 
of GDP and 4% of GDP a year before. As a result, the financing of the current account deficit 
was less based on investment inflows but on external credits. 

Gross external debt rose slightly to 61.2% of GDP in the first quarter of 2012, compared to 
59.7% a year before. The main reason for this increase was public external debt, which rose 
by  2.2  percentage  points  of  GDP,  while  private  debt  declined  by  0.7  percentage  points. 
Foreign  reserves  stood  at  € 2.1 billion  (about  30%  of  GDP )  in  July,  compared  with 
€ 1.8 billion (29% of GDP) the year before. The  coverage of prospective imports by reserves 

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improved  slightly,  reflecting  not  only  an  increase  in  the  level  of  foreign  reserves,  but  also 
expected lower imports. Overall, the current account deficit shrank. However, the financing of 
the deficit increasingly relied on foreign loans, leading to an increase in public gross external 
debt.  

Unemployment was very high at 31.2% and remained largely unchanged year-on-year in the 
second quarter of 2012, while during winter it had been about 1 percentage point higher than 
in  the  year  before.  Employment  was  about  1%  higher  than  a  year  before  but  its  impact  on 
unemployment  was  limited,  as  most  newly  employed  persons  appear  not  to  have  been 
registered  in  the  labour  market  before.  The  main  sectors  with  employment  growth  in  the 
second  quarter  of  2012  were  education,  the  textile  industry  and  municipal  services.  Youth 
unemployment increased slightly, from 54.6% in the second quarter of 2011 to 54.9% in the 
second quarter of 2012. The young account for about 10% of the labour force, but their share 
in  unemployment  rose  from  18.5%  in  the  second  quarter  of  2011  to  18.8%  in  the  second 
quarter of 2012. Unemployment among the less-well educated, who make up nearly 30% of 
the labour force, has declined, from 39% in the second quarter of 2011 to 36% in the second 
quarter of 2012. Employment in the public sector increased by about 1% year-on-year, mainly 
in  the  education  sector.  However,  as  a  share  in  total  employment  the  share  of  public  sector 
employment has declined from 22% in mid-2011 to 21% in mid-2012. Overall, the situation 
in  the  labour  market  remains  weak.  Unemployment  continues  to  be  very  high,  particularly 
among the young and less educated.  

Monetary  policy  cautiously  supported  the  gradual  recovery,  while  the  exchange  rate  policy 
remained geared to maintaining price stability and the de facto peg to the euro. The Central 
Bank  has  slightly  lowered  its  key  policy  rate,  from  4%  to  3¾%.  In  order  to  support  the 
lending  activities  of  the  financial  sector,  the  Central  Bank  amended  the  rules  on  minimum 
reserve  requirements  and  collateral.  It  also  introduced  a  number  of  measures  to  stimulate 
financial  market  activity,  such  as  establishing  new  monetary  instruments,  a  new  overnight 
deposit facility and a one-week deposit facility, a standing 7-day repo facility and by lowering 
the  interest  spreads  between  overnight  deposit  rates  and  Central  Bank  bills.  Overall,  the 
exchange rate and monetary policies have remained sound.  

Inflation was markedly lower than a year before, with an average inflation in the first eight 
months of 2012 of 2.4%, compared to 4.4% the same period a year before. However, during 
recent months, inflationary pressures have increased. The main sources for the increase lie in 
higher energy prices, but also rising food prices and rent costs. Prices for food and beverages 
account for about 40% of the consumer basket. Core inflation, which excludes the impact of 
energy and food prices on the overall price level, remained fairly stable and below 2%.  

The published central government deficit for 2011 was in line with the 2.5% of GDP target. 
Revenue,  which  accounts  for  some  30%  of  GDP,  was  some  7.5%  lower  than  initially 
expected. In order to meet the deficit target, spending was reduced by about 7%, mainly on 
purchases of goods and services, which were kept some 19% below their initial budget target. 
Capital  investment  was  also  kept  some  16%  lower  than  originally  planned.  However,  as  a 
share  of  GDP  capital  spending  rose,  from  3.5%  in  2010  to  3.8%  in  2011,  while  overall 
spending  declined  from  32.0%  of  GDP  to  31.2%.  In  2012,  revenues  have  so  far  remained 
below  forecasts  and  dropped  by  3%  in  real  terms.  To  compensate  for  the  shortfall,  the 
authorities adopted a supplementary budget and raised the deficit target for 2012 from -2.5% 
of  GDP  to  -3.5%.  So  far,  the  main  area  of  spending  cuts  was  again  capital  spending, 
accounting in July for about 1.8% of the estimated full-year GDP, compared to 2.4% a year 
before. In the first seven months of 2012, published data point to a deficit of about 2% of the 
estimated  full-year  GDP,  which  is  a  similar  level  as  the  year  before.  The  government  debt 
ratio  rose  to  about  30%  of  GDP  in  July  2012,  compared  to  around  25%  the  year  before, 

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mainly  due  to  increased  domestic  lending.  In  spite  of  existing  legal  obligations,  neither  the 
fiscal and public debt strategy nor the Public Investment Programme have been updated yet 
for  the  period  2012-2014.  Furthermore,  the  authorities  did  not  submit  a  Fiscal  Notification, 
which should present central government data in a format comparable to EU standards. 

Fiscal decentralisation has continued. By mid-2012, 84 of the 85 municipalities had advanced 
to  the  second  stage  of  decentralisation.  Furthermore,  municipalities’  share  of  revenue 
allocation has increased. The efficiency of the local units in charge of financial management 
still  needs  to  be  strengthened  by  improving  management  and  competences,  by  ensuring 
adequate staffing levels and shortening administrative procedures.  

Fiscal  policy  remained  geared  to  meeting  the  deficit  target,  although  due  to  a  weaker-than-
expected  revenue  performance  the  fiscal  target  had  to  be  raised  in  autumn  2012.  Budgetary 
planning and execution have deteriorated and the quality of public spending continues to be 
low. The budgetary process continues to be plagued by overly optimistic revenue estimates, a 
lack of medium-term planning, short-term oriented spending decisions and a deterioration in 
public  spending  management,  resulting  in  increasing  payment  arrears,  a  further  reduced 
transparency  of  spending  decisions  and  weakened  reliability  of  public  sector  accounts.  This 
not only blurs the information on the countries’ fiscal position, but also has negative knock-on 
effects on the liquidity situation of the private sector 

Overall, the policy mix continued to be directed towards stability. Monetary conditions were 
supportive to growth, while taking into account the country’s policy of a de facto peg to the 
euro.  Public  spending  was  kept  largely  in  line  with  revenue.  However,  budgetary  planning 
and  the  management  of  public  expenditure  have  deteriorated  markedly  and  the  quality  of 
public spending has remained weak. Unemployment continues to be very high, in particular 
among  the  young,  posing  a  persistent  major  policy challenge.  Macro-fiscal  risks  are  mainly 
related to external shocks, such as a further decline in external demand, higher import prices 
and/or a drop in current transfers.  

Interplay of market forces 

Privatisation  is  largely  completed  and  the  economy  is  mainly  driven  by  market  forces.  The 
role of the private sector increased slightly from 82% of total value added in 2010 to 82.4% in 
spring 2012, mainly as a result of an increase in value added in construction and trade. The 
government  took  some  decisions  which  increased  the  state’s  role  in  the  economy,  such  as 
agreeing  to  a  debt-equity  swap  with  a  few  troubled  companies.  At  the  same  time,  the 
government  scheme  to  sell  state  land  generated  revenue,  but  also  lowered  the  level  of  state 
assets. Attempts to privatise several state-owned companies failed. Overall, the asset value of 
fully or partly state-controlled property remains largely unchanged at some 13% of GDP. The 
majority of state capital — nearly 80% — is concentrated in five companies, mainly public 
utilities.  The  public  sector  employs  some  20%  of  the  labour  force  and  public  procurement 
accounts for about 11% of GDP. The share of administered and regulated prices in  the CPI 
basket remained unchanged at 13.1%. Regulated prices, which account for about 12% of the 
CPI basket, usually cover costs. However the electricity prices are still distorted as a result of 
persistently  high  technical  losses  and  non-cost  covering  input  prices.  Administered  prices, 
such as for water supply and waste disposal which account for about 1.4% of the CPI basket, 
usually are not cost recovering. Overall, the role of the state has remained largely unchanged 
and limited.  

Market entry and exit 

The government has continued its efforts to facilitate market entry and exit. However, partly 
due  to  the  less  supportive  international  economic  environment,  the  number  of  newly 

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established companies has declined to slightly below 10% of the total number of enterprises. 
Limited  access  to  finance  is  still  impeding  the  growth  of  many  companies,  in  particular  of 
small  and  medium-sized  enterprises  (SMEs).  The  third  phase  of  the  ‘regulatory  guillotine’ 
project,  which  focuses  on  reducing  administrative  burdens,  is  being  implemented  and  the 
fourth  phase,  concentrating  on  measures  for  SMEs,  has  started.  Further  progress  has  been 
made towards closing down non-operating companies. In the period October 2011 and August 
2012,  the  number  of  bankruptcy  procedures  was  some  32%  higher  than  a  year  before.  The 
average  duration  of  company  liquidation  has  been  reduced.  Overall,  some  further  progress 
was made on facilitating market entry and exit.  

Legal system 

The legal system for a functioning market economy is largely in place. Real estate property 
registration is practically completed. The authorities adopted a number of reforms to increase 
the  efficiency  and  transparency  of  courts,  and  to  expedite  legal  procedures.  The  number  of 
pending  commercial  court  cases  declined,  from  5,782  at  the  end  of  2011  to  2,152  cases  in 
mid-2012. The duration of court proceedings remained largely unchanged. About one third of 
the  cases  are  resolved  within  three  months  and  about  60%  within  six  months.  The  share  of 
cases  taking  more  than  five  years  fell  further,  from  1.2%  in  2010  to  0.8%  in  2011.  Despite 
simplified  procedures  and  introduction  of  new  legal  instruments  strengthening  payment 
discipline,  contract  enforcement  is  still  difficult,  hampering  the  business  environment,  in 
particular  for  SMEs.  Sometimes,  the  legislative  process  suffers  from  insufficient  discussion 
with the stakeholders, leading to the need of frequent revisions of recently adopted legislation. 
Implementation of existing legislation needs to be further strengthened. 

The  legal  and  financial  independence  and  the  resource  endowment  of  some  regulatory  and 
supervisory  bodies  has  been  strengthened.  However,  in  some  cases  such  as  the  Agency  for 
supervision of fully-funded pension insurances (MAPAS), the State Appeals Commission for 
Public Procurement and the State Commission for Prevention of Corruption, the endowment 
with  human  and  IT  resources  and/or  the  leverage  are  still  insufficient.  The  quality  of  the 
decisions of the Commission for Protection of Competition needs to be further improved. The 
follow-up  of  the  State  Audit  Office  (SAO),  reports  by  the  Parliament  is  inadequate  and 
government mechanisms to deal with systemic shortcomings identified in SAO’s reports are 
lacking.  

Overall,  the  functioning  of  the  legal  system  has  continued  to  gradually  improve.  However, 
weaknesses  related  to  lengthy  procedures,  corruption  and  difficult  contract  enforcement  are 
continuing to hamper the business environment.  

Financial sector 

The  significance  of  the  financial  sector  and  its  intermediation  function  have  both  improved 
further. Despite the international financial crisis, the sector’s assets rose slightly from 71% of 
GDP the end of September 2011 to 72% at the end of June 2012. Deposits remained largely 
unchanged at about 50%. Gross loans rose from 44% of GDP to 47%, mainly due to increased 
lending  of  medium-sized  banks.  Deposits  remain  the  sector’s  main  source  of  liquidity, 
covering  more  than  112%  of  outstanding  loans.  The  sector  continues  to  be  owned 
predominantly by foreign companies, with 13 out of 17 banks dominated by foreign owners. 
The share of foreign ownership rose to 75% of GDP in mid-2012, compared to 73% a year 
before.  The  share  of  state  ownership  in  the  sector  remains  low,  at  some  7%  of  the  sector’s 
assets.  The  main  state  assets  in  this  sector  are  still  its  majority  share  in  the  country’s  only 
development bank and a limited number of remaining minority shares. Market concentration 
remains  high,  but  decreased  slightly.  The  assets  of  the  five  biggest  banks  in  terms  of  their 
share  of  total  assets  declined  slightly,  from  67%  in  mid-2011  to  66%  in  mid-2012.  The 

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efficiency  of  the  banking  sector  has  improved  slightly.  The  profitability  of  the  sector  as  a 
whole  recovered  slightly  in  the  second  quarter  of  2012.  Credit  growth  has  recovered  since 
autumn  last  year,  reaching  some  8.5%  in  the  first  seven  months  of  2012.  Private-sector 
weighted  lending  rates  declined  to  some  8.4%  in  July,  while  deposit  rates  dropped  slightly 
faster, to some 5%. As a result, spreads widened slightly to 3.4 percentage points. Financial 
stability has been maintained, with sound liquidity, solvency and capital adequacy ratios. The 
share  of  non-performing-loans  increased  slightly  in  the  case  of  large  and  small-sized 
companies, while in the group of medium-sized banks, the loan performance improved. The 
sectors  average  ratio  of  non-performing  loans  remained  close  to  10%  with  provisions  still 
exceeding the amount of identified non-performing loans. 

Banking  regulation  and  supervision  are  largely  in  line  with  international  standards.  The 
relevance of non-banking financial market intermediaries continues to be limited, with assets 
equivalent  to  some  10%  of  the  financial  sector’s  assets  or  around  8%  of  GDP.  Insurance 
institutions  account  for  some  4%  of  the  sector’s  assets  and  leasing  companies  and  pension 
funds for about 3% each. The value of the capital market accounts has continued is decline to 
about 30% of GDP. 

Overall, the trend towards further deepening and widening of the financial sector continued. 
However,  the  levels  of  financial  intermediation  and  competition  in  the  market  are  still  low, 
constraining more dynamic growth in the private sector, particularly for SMEs. Furthermore, 
some regulatory  and supervisory agencies continued to be impeded by insufficient levels of 
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. Market entry and exit procedures have 
improved. Some steps have been taken to strengthen the rule of law. However, so far, those 
measures  have  not  had  significant  impact  yet.  The  quality  of  public  finance  planning  and 
management has deteriorated and the quality of spending has remained low. Unemployment 
remains  very  high,  particularly  among  the  young.  The  business  environment  continues  to 
suffer  from  institutional  and  administrative  weaknesses,  difficult  contract  enforcement  and 
corruption. 

Human and physical capital endowment 

The level of human capital endowment is still low. The authorities continued to improve the 
physical infrastructure for education, to increase the numbers of teachers and to modernise the 
curricula. The number of teachers rose by 1.5% in the school-year 2011-12, after an increase 
by 4.4% the year before. As in the previous year, the increase was mainly due to additional 
recruitments  in  primary  and  lower-secondary  schools.  Measures  have  been  taken  to  raise 
enrolment rates, although in some areas this policy faced difficulties. Budget allocations for 
education  rose  marginally  in  2011,  from  4.6%  of  GDP  in  2010  to  4.7%  of  GDP,  while  for 
2012 the budget envisages a decline to 4.5% of GDP. Despite continued efforts, the overall 
level of education of the labour force is still relatively low and the mismatch of skills is still 
substantial.  There  is  significant  room  for  improving  the  efficiency  of  public  spending  on 
education and for raising the quality of education. Overall, measures to improve qualification 
levels  have  continued.  However,  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  remains  relatively  low  and  its  quality  is  hampered  by 
decades of underinvestment in the past. Public investment increased to some 3.8% of GDP in 

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2011.  However,  there  is  very  limited  information  on  the  actual  spending  priorities.  Gross 
fixed  capital  formation  was  still  high  at  some  36%  of  GDP  in  the  last  quarter  of  2011,  but 
dropped  to  22%  in  the  first  quarter  of  2012.  The  authorities  do  not  provide  recent 
disaggregated gross investment data, which would allow a better understanding of the driving 
factors behind the investment decisions. Some limited steps have been taken to improve the 
country’s  transport  infrastructure.  The  stock  of  foreign  investment  increased  from  51.5%  of 
GDP  in  mid-2011  to  53%  in  mid-2012.  Overall,  spending  on  strengthening  the  knowledge-
based economy has remained low. The efforts to increase the public capital stock continue to be 
impeded  by  weak  implementation  capacity,  but  also  by  use  of  funds  for  less  productive 
purposes,  such  as  the  decoration  of  the  capital.  Overall,  the  country’s  capital  stock  remains 
low.  

Sectoral and enterprise structure 

There were no major changes in the area of restructuring enterprises. Network industries are 
dominated by a very small number of incumbent suppliers, which often undermines effective 
competition. SMEs continue to be by far the biggest group of companies, providing more than 
80%  of  private-sector  employment  or  nearly  60%  of  total  employment.  Access  to  finance 
improved, partly thanks to additional international credit facilities, primarily provided by the 
European  Investment  Bank  (EIB).  Furthermore,  the  government  continues  to  subsidise 
interest costs for SME loans, although on a declining scale in the 2012 budget. 

The  informal  sector,  fuelled  by  weaknesses  in  tax  and  expenditure  policies  and  in  law 
enforcement,  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.  The  data  available  suggest  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 
Competition Commission is in place. However, the quality of its decisions should be further 
improved  and  the  reporting  awareness  of  state-aid  providers  is  not  sufficiently  developed. 
Overall, state influence on competitiveness remained limited. 

Economic integration with the EU 

The country is a small, open economy, with total trade in goods and services accounting for 
about 120% of GDP in 2011. Trade integration with the EU is advanced. About 64% of all 
exports  currently  go  to  the  EU-27  and  about  56%  of  imports  originate  there.  The  country’s 
second  largest  trading  area  is  the  CEFTA,  which  accounts  for  around  24%  of  exports  and 
around 11% of imports. The export structure has improved, with an increase in the share of 
higher unit-value commodities, such as car emission catalysts. However, textiles, clothing and 
manufactured  iron  products  still  account  for  more  than  one  third  of  total  exports.  FDI 
accounts for about 50% of GDP, with 80% of the investment stock coming from the EU. The 
exchange  rate  against  the  euro  has  remained  stable  in  nominal  terms.  Price  competitiveness 
has  remained  largely  unchanged.  This  is  reflected  in  the  largely  unchanged  real  effective 
exchange  rate,  which  in  mid-2012  was  some  1%  lower  than  a  year  before.  Overall,  trade 
integration  with  the  EU  is  well  advanced.  The  commodity  composition  of  exports  has 

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improved, although traditional products, such as textiles, clothing and steel, still predominate. 
International price competitiveness remained largely unchanged.  

4. 

ABILITY TO TAKE ON THE OBLIGATIONS OF MEMBERSHIP 

This  section  examines  the  former  Yugoslav  Republic  of  Macedonia’s  ability  to  take  on  the 
obligations  of  membership  –  that  is,  the  acquis  as  expressed  in  the  Treaties,  the  secondary 
legislation  and  the  policies  of  the  Union.  It  also  analyses  the  former  Yugoslav  Republic  of 
Macedonia’s  administrative  capacity  to  implement  the  acquis.  The  analysis  is  structured  in 
accordance with the list of 33 acquis chapters. In each sector, the Commission’s assessment 
covers  progress  achieved  during  the  reporting  period  and  summarises  the  country’s  overall 
level of preparations. 

4.1. 

Chapter 1: Free movement of goods 

Limited  progress  can  be  reported  in  the  area  of  general  principles.  Implementation  of  the 
action plan to align with Articles 34 to 36 of the Treaty on the Functioning of the European 
Union is progressing as 26 legal acts (out of identified 42) were amended.  

There was progress on horizontal measures. Quality infrastructure was improved following 
the strategic plan for implementation of the acquis in the area of free movement of goods. As 
regards  standardisation,  good  progress  can  be  reported.  The  Law  on  standardisation  was 
amended  to  improve  the  organisational  set  up  of  the  Institute  of  Standardisation  (ISRM).  A 
total  of  16,500  European  standards  (ENs)  have  been  adopted  as  national  standards.  Out  of 
them, 3,210 are so called harmonised ENs in the meaning of the ‘new approach’ directives. 
All Yugoslav standards and conflicting standards were withdrawn. The ISRM became a full 
member  of  the  European  Committee  for  Standardisation  (CEN)  and  of  the  European 
Committee for Electrotechnical Standardisation (CENELEC). The membership of the ISRM 
assembly  expanded  to  97  stakeholders.  The  administrative  capacity  of  the  ISRM  was 
improved with a new document/standards management system which also allowed electronic 
sale of standards. The ISRM was certified in line with the EN ISO 9001:2009 standard.  

In  the  area  of  conformity  assessment,  little  progress  can  be  reported.  The  number  of 
designations  issued  to  the  conformity  assessment  bodies  increased  by  one  to  nine.  Product 
certification is at an early stage of development. Full alignment of the Law on Product Safety 
with  the  horizontal  acquis  of  2008  (New  Legislative  Framework)  has  yet  to  be  ensured.  A 
national regulation on common framework for placing goods on the market and notification to 
the  EC  was  adopted.  This  regulation  aims  to  take  on  board  horizontal  elements  of  the  sui 
generis Decision 768/2008/EC, but alignment remains to be confirmed. 

There was some progress in the area of accreditation. The Institute of Accreditation (IARM) 
has adequate capacity for management of the current scope of accreditations. It has accredited 
a total of 107 conformity assessment bodies, which is a significant increase from 76 one year 
earlier.  However  the  IARM  should  establish  or  upgrade  its  accreditation  capacities  in  new 
fields.  The  IARM  signed  the  Multilateral  Agreement  for  testing  laboratories,  calibration 
laboratories,  inspection  bodies  and  product  certification  bodies  with  European  Cooperation 
for  Accreditation  (EA-MLA)  and  Mutual  Recognition  Agreement  with  International 
Laboratory Accreditation Cooperation (ILAC-MRA). 

Good  progress  can  be  reported  on  metrology.  The  Law  on  Metrology  was  amended  to 
simplify issuing of certificates and to provide a legal basis for inspection and supervision of 
measuring instruments. The number of calibration  and verification certificates issued by the 
Bureau of Metrology (BoM) increased by 43% in 2011 compared with 2010. The equipment 
of the BoM’s various laboratories was re-calibrated and laboratories for weight, temperature, 

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volume, flow and pressure were accredited by the national accreditation body. However, the 
capacity of the BoM for calibration of measuring instruments is under-used.  

Little  further  progress  can  be  reported  with  market  surveillance.  In  2011  the  coordination 
body  for  market  surveillance  performed  a  total  of  390  coordinated  inspections  and  340 
surveillance actions, most of which (80%) were related to the legislation on the safety of toys. 
The  State  Market  Inspectorate  recruited  four  inspectors  for  product  safety  surveillance 
activities.  The  human  and  financial  resources  are  insufficient  to  conduct  comprehensive 
checks on technical compliance of products. Preparations in the area of horizontal measures 
are advanced, but full alignment of the Law on market surveillance with the acquis remains to 
be achieved. 

Progress was achieved on the ‘old approach’ product legislation. To implement the Law on 
Chemicals,  the  list  of  high-risk  substances  and  the  rulebook  on  methods  for  testing  and 
registration  of  chemicals  were  adopted.  In  October  2011,  reports  on  the  status  of  chemicals 
and  the  national  action  plan  for  a  strategic  approach  to  chemical  management  were  also 
adopted.  The  intra-sectoral  body  for  coordination  of  activities  related  to  the  Law  on 
Chemicals  was  established.  Staff  from  the  State  Sanitary  and  Health  Inspectorate  received 
specialised  training.  Preparations  in  the  area  of  the  ‘old  approach’  product  legislation  are 
advanced. 

Some progress can also be reported on the ‘new and global approach’ product legislation. 
Amendments  were  adopted  to  rulebooks  on  machinery,  cables,  lifts,  pressure  equipment, 
simple  pressure  vessels,  and  other  to  allow  application  of  the  Multilateral  Agreement  for 
European Cooperation for Accreditation (EA-MLA). Further harmonisation with relevant EU 
Directives  was  achieved  for  machinery,  toys,  medical  devices  and  low  voltage  equipment 
electromagnetic  compatibility;  alignment  with  the  acquis  remains  to  be  confirmed.  Three 
national  annexes  on  Eurocodes  EC1,  EC7  and  EC8 for  the structural  design of construction 
works were adopted. In the area of ‘new and global approach’ product legislation, the country 
is advanced. 

In  the  case  of  procedural  measures,  some  progress  can  be  reported.  The  Decree  on 
notification  to  the  European  Commission  of  technical  and  non–harmonised  regulations  and 
technical  standards  was  amended.  However,  full  alignment  has  not  yet  been  achieved.  The 
country is advanced in this area. 

Conclusion 

In  the  area  of  free  movement  of  goods,  good  progress  can  be  reported,  particularly  on 
standardisation,  accreditation  and  metrology.  Certain  areas  of  the  framework  horizontal 
acquis remain to be fully harmonised. Alignment with the Articles 34 to 36 of the Treaty on 
the  Functioning  of  the  European  Union  remains  to  be  achieved.  Preparations  in  the  area  of 
free movement of goods are advanced. 

4.2. 

Chapter 2: Freedom of movement for workers 

Some progress can be reported as regards access to the labour market. The Law on Public 
Servants remains to be amended to give EU citizens access to posts in the public sector.  

No  progress  was  made  towards  preparing  for  participation  in  the  EURES  (European 
Employment Services) network.  

Little  progress  can  be  reported  in  the  area  of  coordination  of  social  security  systems.  The 
bilateral agreement with Canada for coordination of social security systems came into force 
and  negotiations  for  signing  agreements  with  Italy  and  Albania  continued.  Work  to  resolve 

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social insurance issues with Kosovo also continued. Preparations in this area are moderately 
advanced. 

There has been some progress in the area of the European health insurance card (EHIC). 
Hungary and Romania accepted the inititive of the health Insurance Fund to start negotiations 
on  EHIC.  Agreements  on  lump  sum  compensation  of  the  costs  for  health  protection  with 
Montenegro and Serbia were signed. Preparations in this area are moderately advanced. 

Conclusion 

Some  progress  has  been  made  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  

There  was  some  progress  on  the  right  of  establishment.  Efforts  to  simplify  the  procedures 
and  decrease  the  costs  of  establishment  and  permits  continued.  The  portal  for  electronic 
submission of applications for establishment came into operation. However, awareness about 
electronic  establishment  remains  low.  Efforts  continue  on  establishment  of  a  one-stop  shop 
(register) system for domestic and foreign investors, which is equivalent to the ‘point of single 
contact’ under the Services Directive.  

Some  progress  can  be  reported  in  alignment  with  the  Services  Directive,  concerning  both 
establishment and cross-border services. Screening of national legislation is continuing as part 
of the action plan for harmonisation with the Services Directive. The Ministry of Economic 
Affairs  ensures  coordination  between  the  authorising  bodies.  However,  requirements 
prohibited  by  the  Services  Directive  remain  in  several  service  sectors,  including  veterinary 
medicine,  private  education,  tourism  and  regulated  professions.  Awareness  of  the  Services 
Directive remains low and the administrative capacities of various authorising bodies should 
be strengthened. The minimum tariffs set by the Law on Construction are not in line with the 
acquis. Preparations in the area of the right of establishment are on track. 

Little  progress  can  be  reported  on  freedom  to  provide  cross-border  services.  The 
requirement  for  permanent  establishment  remains  the  general  rule  for  foreign  operators 
providing services in the country.  This is not in line with the  acquis. For some  services the 
establishment requirement has been removed, but this will apply as of the date of accession of 
the country to the EU. In the area of freedom to provide cross-border services the country has 
partly met its priorities. 

There was good progress on postal services. The existing Law on Postal Services is largely in 
line with the acquis. However, full harmonisation has yet to be completed as far as the period 
for  designation  of  the  universal  service  provider  and  the  financing  of  the  net  costs  of  the 
universal service obligation are concerned. Principles of the method of conducting a separate 
accounting  and  cost  accounting  of  the  universal  service  provider  were  regulated.  In  its 
capacity  as  the  national  regulatory  authority,  the  Postal  Agency  continued  to  adopt 
implementing legislation on regulation of the postal market. Market supervision and oversight 
rules were adopted and general conditions for providing the universal service and for access 
to that service were established. The regulator’s inspection service came into operation. The 
provider  of  the  universal  service  is  under  an  obligation  to  allow  other  providers  of  postal 
services access to the postal network. Quality standards for services covered by the universal 
service were  decided  and  the  method  to be applied by the  universal service provider in this 
respect  was  adopted.  However,  the  universal  service  provider  has  yet  to  establish  separate 
accounting  for  its  universal  service.  New  notification  procedures  encouraged  growth  of  the 
postal  market,  with  many  operators  active  on  the  market.  However,  it  remains  to  be 
consolidated.  The  volume  of  items  posted  increased.  The  regulator  adopted  a  rulebook  on 

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obligations  for  postal  service  providers.  The  performance  of  the  universal  postal  service 
provider holding the monopoly over services for consignments weighing below 50 grams is 
weak.  There  is  no  progress  concerning  the  privatisation  of  the  state-owned  universal  postal 
service  provider.  Regarding  administrative  capacity,  the  Postal  Agency  has  a  sufficient 
number of staff to carry out its tasks. The policy-making capacity of the Ministry of Transport 
and  Communications  in  the  field of  postal  services  remains  insufficient.  Preparations  in  the 
area of postal services are well on track.  

Some  progress  can  be  reported  on  mutual  recognition  of  professional  qualifications.  An 
inter-sectoral  coordination  group,  bringing  together  representatives  of  different  authorising 
bodies, was formed and defined its mandate. The organisational framework is developed, with 
clear  roles  and  responsibilities  for  the  individual  institutions  and  a  stakeholder  analysis  was 
provided. A national coordinator for recognition of professional qualifications was nominated, 
as required by the Professional Qualifications Directive. However, the administrative capacity 
of the various bodies remains weak. The Law on Recognition of Professional Qualifications is 
still  not  fully  aligned  with  the  acquis.  Alignment  with  the  specific  sectoral  directives  on 
lawyers,  commercial  agents  and  professional  use  of  toxic  products  remains  to  be  achieved. 
Preparations on mutual recognition of professional qualifications are moderately advanced. 

Conclusion 

Some  progress  can  be  reported  in  the  areas  of  the  right  of  establishment  and  freedom  to 
provide services, particularly in the case of postal services. Further efforts are needed to align 
the  legislation  with  the  acquis,  notably  with  a  view  to  implementation  of  the  Services 
Directive, establishment of the single point of contact and mutual recognition of professional 
qualifications.  Overall,  in  the  areas  of  the  right  of  establishment  and  freedom  to  provide 
services the country is moderately advanced. 

4.4. 

Chapter 4: Free movement of capital  

The  country  met  the  requirements  of  the  first  stage  of  the  Stabilisation  and  Association 
Agreement (SAA) in the field of capital movements and payments in 2008. Recent progress 
was limited to relaxing some of the restrictions on opening and holding accounts abroad, but 
only for residents temporarily staying there. Further liberalisation of capital movements and 
payments is conditional on the transition to the second stage of the SAA, pending a decision 
by the SA Council. Nationals are still not allowed to buy foreign securities, to open accounts 
in  foreign  banks  or  to  purchase  real  estate  abroad.  EU  citizens  are  not  allowed  to  purchase 
agricultural land. Restrictions remain on the amounts that non-residents can transfer through 
their  local  and  foreign  currency  accounts.  In  the  area  of  capital  movements  and  payments, 
preparations are moderately advanced. 

There was limited progress in the area of payment systems. Within the National Council on 
Payment  Systems,  preparations  for  alignment  with  the  Payment  Services  Directive  and  for 
implementation of single euro  payments  area (SEPA)  standards  and the  direct  debit scheme 
progressed.  Most  of  the  charges  for  cross-border  electronic  payment  transactions  remain 
disproportionate  to  those  for  domestic  electronic  payment  transactions.  The  country  partly 
meets its targets in the area of payment systems. 

Some progress was achieved in the fight against money-laundering. The Law on Prevention 
of Money-Laundering and Financing of Terrorism, incorporating the revised Financial Action 
Task  Force  (FATF)  recommendations,  was  amended.  The  government  adopted  the  national 
strategy  for  combating  money-laundering  and  financing  of  terrorism  for  2012-2014  and 
established  the  Council  on  Combating  Money-Laundering  and  Financing  of  Terrorism.  The 
strategy sets out the activities of all institutions involved in order to meet objectives covering 

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legislation, capacity-building, international and interinstitutional cooperation and awareness-
raising.  The  Council  is  chaired  by  the  Director  of  the  Financial  Intelligence  Unit  (FIU)  — 
formerly called the Office for Prevention of Money-Laundering and Terrorism Financing — 
and  made  up  of  representatives  of  14  reporting  institutions  and  of  investigative  and 
prosecuting bodies. It coordinates and monitors activities specified in the strategy and reports 
to  the  government.  The  Council  provides  a  platform  for  strengthening  interinstitutional 
cooperation.  The  FIU  is  upgrading  IT  systems  to  improve  data  collection,  processing  and 
analysis.  However,  the  level  of  reporting  remains  unsatisfactory  and  points  to  persistent 
deficiencies  in  implementation.  In  2011,  the  number  of  suspicious  transaction  reports 
submitted  to  the  FIU  decreased  by  32%  to  165.  The  number  of  court  cases  and  sentences 
remains very low (two indictments and one conviction). Preparations for combating money-
laundering are moderately advanced. 

Conclusion  

There was some progress in the area of free movement of capital, notably on improving the 
institutional  framework  for  the  fight  against  money-laundering.  Implementation  of  anti-
money-laundering policies is weak. Further liberalisation of capital movements and payments 
is planned 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 

Some  progress  was  made  as  regards  general  principles.  The  Law  on  public  procurement 
(LPP)  was  amended  to  introduce  inter  alia  mandatory  publication  of  contract  notice  for 
contracts below € 5,000, technical dialogue for  contracts above € 130,000 and 6 months’ time 
suspension to relaunch annulled tenders. A negative reference list of economic operators who 
are  to  be  excluded  from  participation  in  future  tenders  for  1  to  5  years  was  introduced; 
alignment  with  the  acquis  has  yet  to  be  confirmed.  Six  pieces  of  implementing  legislation 
were issued, including a Code of conduct for public procurement. The national programme for 
prevention of corruption 2011-2015 outlined safeguards in the area of public procurement. A 
new Law on concession and public-private partnerships (LCPPP) was enacted and is in line 
with  the  acquis.  Implementing  legislation  was  adopted,  but  16  sectoral  laws  have  yet  to  be 
harmonised  with  the  LCPPP.  The  capacity  of  the  unit  in  the  Ministry  of  Economy  dealing 
with  concessions  and  PPP  is  insufficient  to  respond  to  the  increased  competences  for 
implementation  of  the  LCPPP.  The  EU  directives  on  defence  and  sensitive  security 
procurement  as  well  as  the  late  payment  directive  have  yet  to  be  transposed.  As  regards 
general principles, the country is well on track. 

Some  progress  was  made  on  the  award  of  public  contracts.  The  use  of  e-auction  for 
published contract notices was increased from 70% to 100%. The e-procurement system was 
extended to include also concessions and PPP contract notices and the negative reference list. 
Training of contracting authorities and economic operators decelerated. The number of tender 
cancellations  increased  from  20%  in  2010  to  29%  in  2011  and  the  use  of  negotiated 
procedures without publication of a contract notice rose. Tailor-made trainings for contracting 
authorities on quality criteria, tender specifications and contract management have yet to be 
developed. With regards to the award of public contracts, the country is moderately advanced. 

Progress  can  be  reported  as  regards  the  remedies  system.  The  competencies  of  the  State 
Appeals Commission (SAC) were expanded to also cover appeals in the field of concessions 
and PPP. About 14% of all the tenders launched in 2011 were the subject of appeal. The total 
number of cases of the SAC decreased from 868 in 2010 to 690 in 2011. The SAC maintained 
the level of case resolution of above 95%. In four cases the Administrative court overruled the 
decisions  of  the  SAC.  33  posts  in  the  SAC  remain  unoccupied  and  the  budget  of  the  SAC 

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decreased  in  2012.  The  right  of  appeal  for  the  economic  operators  that  were  put  on  the 
negative  reference  list  is  not  safeguarded  in  the  LPP.  Full  alignment  with  the  amended  EU 
Directive on Remedies has yet to be achieved. Court statistics on public procurement related 
cases are partially available, and the methodology for their collection is not comprehensive. In 
7  out  of  45  cases  received,  the  State  Commission  for  Prevention  of  Corruption  suspected 
corruptive behaviour while spending public funds and recommended the Public Prosecutor’s 
Office to press criminal charges. The enforcement of the articles of the criminal code related 
to  public  procurement  resulted  in  one  conviction  in  the  first  half  of  2012.  As  regards  the 
remedies system, the country is moderately advanced. 

Conclusion 

Overall,  some  progress  was  made  in  the  area  of  public  procurement.  Alignment  of  the 
legislation on concessions  and  public-private  partnerships with  the acquis is advanced, with 
exception  of  remedies  and  defence  procurement.  Use  of  e-auctions  is  mandatory. 
Administrative  capacities  in  the  field  of  remedies  and  of  concessions  and  public-private 
partnerships  remain  weak.  Overall,  preparations  in  the  area  of  public  procurement  are 
advanced.  

4.6. 

Chapter 6: Company law 

Good  progress  can  be  reported  in  the  area  of  company  law.  Law  on  European  Economic 
Interest  Grouping  was  adopted.  It  will  be  applicable  only  upon  the  country’s  entry  into  the 
EU.  The  extension  of  the  one-stop  shop  to  include  also  Agency  for  Insurance  Supervision, 
Public  Revenue  Office  and  Agency  for  Supervision  of  Fully  Funded  Pension  Insurance  is 
underway.  Central  Registry  employs  300  people  country-wide  which  is  a  sufficient  level  of 
staffing.  Some  of  the  rules  on  employee  participation  were  transposed  under  the  concept  of 
Societas Europaea; however article 16 of the Tenth Company Law Directive on cross-border 
mergers has yet to be transposed. The legal department of the Ministry of Economy staffed 
with 13 people is now responsible for alignment of the company law with the acquis. In the 
area of company law the country remains well on track.  

Good  progress  was  made  on  corporate  accounting.  The  Law  on  performing  accounting 
activities was enacted to define criteria for the accountancy profession, introduce disciplinary 
measures in case of breach of the Code of ethics of International Federation of Accountants 
(IFAC) and  establish the Institute of accountants and  certified accountants  as a professional 
chamber  responsible  to  issue  licences  and  deliver  continuous  training  to  professional 
accountants. The International Financial Reporting Standards (IFRS) for small and medium-
sized enterprises were translated and are now being applied.  

Little  progress  can  be  reported  as  regards  auditing.  The  Council  of  Audit  Promotion  and 
Supervision  was  established  to  promote  the  audit  profession,  ensure  quality  control  and 
supervise the Institute for Chartered Auditors (ICA); meetings were held regularly. The ICA 
conducts  exams  for  certified  auditors  and  delivers  lectures  for  continuous  professional 
improvement. The number of staff in ICA increased to 3 people, but remains insufficient to 
perform  an  effective  quality  assurance  control.  Chartered  auditors’  qualifications  obtained 
abroad are not yet recognised. Overall, in the area  of  corporate accounting and auditing the 
country is moderately advanced. 

Conclusion 

Good  progress  was  made  in  company  law,  particularly by adopting legislation on European 
economic interest groups. The administrative capacity of the Institute for Chartered Auditors 
is weak. Chartered auditors’ qualifications obtained abroad have yet to be recognised. Overall, 
preparations in the area of company law are moderately advanced. 

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4.7. 

Chapter 7: Intellectual property law 

Some progress was made in the area of copyright and neighbouring rights. The amount of 
single equitable remuneration for reproduction for private use of written works, phonograms 
and videograms was regulated; the compliance with the acquis remains to be confirmed. The 
commission  for  mediation  in  the  field  of  copyright  and  neighbouring  rights  is  now  the 
institution  responsible  to  provide  opinion  on  the  tariff  schemes  of  the  collective  rights 
management  (CRM)  societies  that  are  to  obtain  licences.  Two  CRM  societies  are  currently 
active. The cooperation of the unit responsible for copyright in the Ministry of Culture with 
the relevant institutions was limited. In this area, the country is advanced. 

Further progress was made in the area of industrial property rights. The London Agreement 
on the application of Article 65 of the European Patent Convention that aims at reducing the 
costs for patent translation was ratified. A license regime for chartered valuators in the area of 
industrial  property  was  set  up.  Implementing  legislation  on  registration  of  designation  of 
origin and geographical indications of agricultural products was adopted. The State Office for 
Industrial  Property  (SOIP)  continued  the  cooperation  with  the  World  Intellectual  Property 
Organization, European Patent Office, European Patent Academy and other relevant bodies. 
Trainings and public awareness raising activities related to intellectual property rights (IPR) 
continued. In 2011, Academy for Judges and Prosecutors delivered 16 trainings on protection 
of  IPR,  including  training  of  trainers,  to  328  members  of  the  judiciary  as  part  of  the 
continuous training. The National Strategy for intellectual property has yet to be updated. In 
the area of industrial property rights, the country remains well advanced. 

Some  progress  can  be  reported  as  regards  enforcement.  The  Law  on  customs  measures  for 
protection of IPR was amended to allow for processing of requests for such measures free of 
charge. The 2011-2013 Strategy for customs measures for protection of IPR was adopted. The 
increased competencies of the State Market Inspectorate (SMI) when seizing counterfeit items 
have had a positive impact. 49 police inspectors from the Ministry of Interior (MoI) deal with 
infringements  of  IPR.  The  Bureau  on  Pharmaceuticals  (BP)  seized  counterfeit  life-style 
medicines that were being sold in pharmacies, but there is no awareness as regards the threats 
posed by counterfeit medicines to the health and safety of the consumers. The Coordination 
Body for Intellectual Property (CBIP) undertook 12 coordinated actions in 2011, which is a 
drop  by  half  compared  to  2010.  Cooperation  of  the  CBIP  with  the  Agency  for  Managing 
Confiscated  Property  continued,  but  the  number  of  goods  publicly  destroyed  decreased 
significantly  in  2011.  Competencies  for  IPR  are  spread  across  many  law  enforcement 
institutions  (CBIP,  SMI,  MoI,  BP,  Customs  administration,  Ministry  of  Justice  etc.)  which 
creates a complex, rather than effective system IPR protection. In 2011, a total of 126 court 
procedures were initiated for violations of IPR. About 15 prison sentences and a number of 
fines  on  criminal  offences  were  issued  to  individuals  by  the  specialised  IPR  departments  of 
the  courts.  Development  of  a  methodology  for  collecting  and  exchanging  statistical  data  on 
IPR  is  at  an  early  stage;  however  the  exchange  of  data  between  the  law  enforcement 
institutions  is  not  systematic.  Awareness  that  counterfeit  affects  also  foodstuffs,  cosmetics, 
hygiene products, medicines, toys, technical and electronic equipment is low and such goods 
are being sold in the streets and green markets. The trade in counterfeit medicines and fake 
products via the internet is still not subject of criminal prosecution. The cooperation between 
authorities to trace counterfeit channels and tackle the ‘counterfeit pyramid’ is limited, both at 
national and international level.  

Conclusion 

Some  progress  was  made  in  the  area  of  intellectual  property  regarding  both  the  legislative 
framework  and  administrative  capacity.  Implementation  remains  a  challenge  and  the 

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collective  rights  management  system  is  still  underdeveloped.  A  solid  track  record  on 
investigation, prosecution and trial of IPR-related cases has yet to be established, as violations 
of  IPR  continue.  The  level  of  awareness  of  IPR  among  the  institutions  and  public  remains 
low. Overall, preparations in the field of IPR are moderately advanced. 

4.8. 

Chapter 8: Competition policy  

Good  progress  can  be  reported  in  the  area  of  anti-trust,  including  mergers.  Guidelines  on 
restrictions  related  to  concentrations  and  several  implementing  regulations  were  adopted. 
Compared  with  2011,  the  enforcement  record  of  the  Commission  for  Protection  of 
Competition (CPC) has improved in terms of both quantity and quality. Since 1 October 2011, 
the  CPC  has  adopted  three  decisions  on  prohibited  agreements,  three  on  abuse  of  dominant 
position  and  23  on  concentrations.  The  CPC  is  increasingly  investigating  economically 
important  areas,  particularly  telecommunications  and  broadcasting.  The  staff  dealing  with 
anti-trust  and  mergers  should  be  used  more  efficiently.  CPC  staff  have  acquired  good  basic 
skills,  but  would  benefit  from  more  advanced  training.  The  general  budget  of  the  CPC  for 
2012  remained  around  30% 
inadequate.  Effective 
implementation  of  the  leniency  measures  provided  for  in  the  Law  on  Protection  of 
Competition is limited because of conflicting provisions in the criminal code. In addition, if 
an  appeal  is  lodged,  enforcement  of  the  decisions  taken  by  the  CPC  on  misdemeanour 
procedures is suspended until the final decision of the Administrative Court, which weakens 
the  effectiveness  of  the  decisions  of  the  CPC.  The  number  of  decisions  confirmed  by  the 
Administrative  Court  has  increased  from  3  in  2011  to  6  in  first  9  months  of  2012,  thus 
strengthening enforcement. The judges of the Administrative Court received some training on 
anti-trust  and  mergers.  Preparations  in  the  area  of  anti-trust,  including  mergers,  are  at  an 
advanced stage. 

in  2009  and,  hence, 

than 

less 

There was some progress in the field of State aid. Implementation of the Law on State Aid is 
satisfactory. In the first 9 months of 2012 the CPC took eleven decisions in the field of State 
aid, including ex-officio decisions, which is an increase compared with 2011. The quality of 
some of them could be improved. The number of staff dealing with State aid is adequate. In 
the area of State aid the country is on track. 

There is no progress to report in the field of market liberalisation. 

Conclusion 

Good progress was made on competition. The implementing legislation adopted has improved 
the  legislative  framework.  The  enforcement  record  continued  to  improve  in  terms  of  both 
quality  and  quantity.  The  CPC  does  not  have  adequate  budgetary  resources.  The  number  of 
staff is adequate but needs to be used more efficiently. Overall, preparations in this area are 
advanced. 

4.9. 

Chapter 9: Financial services  

There has been good progress in the areas of banks and financial conglomerates. The Law 
on  Supplementary  Supervision  of  Financial  Conglomerates  was  enacted,  with  the  aim  of 
aligning  with  the  Financial  Conglomerates  Directive.  The  law  lays  down  the  rules  for 
supplementary  supervision  of  banks,  insurance  undertakings  and  brokerage  firms  which  are 
part  of  a  financial  conglomerate.  In  the  field  of  consumer  protection,  the  central  bank 
(NBRM),  started  addressing  issues  raised  in  complaints  by  performing  general  checks  on 
banks.  Implementation  of  the  banking  legislation  on  protection  of  consumers  is  improving. 
However, protection of consumers remains a challenge and needs to be properly addressed. 

The  NBRM  further  upgraded  the  regulations  on  capital  requirements  for  credit  risk.  A  new 
methodology was issued on the capital requirements for covering market, credit, currency and 

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operational risks. It is partly aligned with the Capital Adequacy Directive. Cooperation with 
the supervisory authorities of the countries whose banks own some of the largest banks in the 
country is good. With a total of 53 staff working in the banking supervision department, the 
capacity  of  the  NBRM  is  satisfactory  for  proper  implementation  and  enforcement  of 
regulations.  Application  of  the  standardised  approaches  of  pillar  1  of  the  Basel  II  Accord 
began  in  July  2012.  The  advanced  approaches  will  be  introduced  from  2013,  for  which 
additional  capacity  will  be  needed.  The  country  is  well  on  track  in  the  areas  of  banks  and 
financial conglomerates.  

There was good, but uneven, progress in the fields of insurance and occupational pensions. 
The Insurance Supervisory Agency (ISA) issued implementing legislation on accounting and 
financial  reporting,  risk-based  supervision  and  consumer  protection,  thus  almost  completing 
the legal framework on insurance supervision. The preparations for the implementation of the 
Solvency II Directive (2009/138/EC) are ongoing. New software for off-site supervision was 
installed.  Based  on  the  checks  performed,  the  ISA  imposed  supervision  measures  on 
insurance  undertakings.  The  capacity  of  the  ISA  and  its  cooperation  with  the  supervisory 
authorities  of  the  insurance  companies  that  have  local  subsidiaries  are  adequate.  The  ISA 
participated  in  three  supervisory  colleges  for  partner  countries  and  performed  two  joint 
controls  with  home-country  insurance  regulators.  It  is  represented  in  the  supervision  forum 
with the International Association of Insurance Supervisors. The capital and solvency margins 
are still well above the levels required and the guarantee fund against insolvency of insurers is 
sufficient.  New  registration  plates  were  introduced  to  combat  uninsured  driving,  however 
uninsured  driving  remains  a  challenge  and  the  enforcement  record  on  combating  offences 
committed  by  uninsured  drivers  is  weak.  The  Ministry  of  the  Interior  estimates  that  the 
number of uninsured vehicles has dropped from 17% to 10%. The provisions in the Law on 
Compulsory Insurance of Road Vehicles authorising the Ministry of Financial Affairs to set 
the  premiums  for  motor  vehicle  insurance  are  an  effective  barrier  to  competition  between 
insurance companies and is not in line with the EU acquis.  

The  Law  on  Payment  of  Pensions  from  both  the  mandatory  (second  pillar)  and  voluntary 
(third pillar) fully funded pension insurance funds was enacted. The Agency for Supervision 
of  Fully  Funded  Pension  Insurance  (MAPAS)  adopted  new  risk-based  supervision  manuals 
modelled  on  International  Organisation  of  Pension  Supervisors  (IOPS)  best  practices  for 
defined-contributions  pension  schemes.  The  limit  of  50%  on  investing  in  non-domestic 
securities, which is contrary to the principles of EU law, remained. New legal provisions were 
introduced  prohibiting  pension  funds  to  invest  in  bonds  and  other  securities  issued  and 
guaranteed by the state that are not traded on the domestic market. The Law on Fully Funded 
Pension Insurance was amended to ensure the full independence of the MAPAS. However, its 
overall  enforcement capacity  is  insufficient. The  MAPAS  still has  limited  leverage over  the 
institutions  it  supervises.  In  the  area  of  insurance  and  occupational  pensions,  the  country  is 
not yet sufficiently aligned with the acquis. 

There  was  little  progress  on  financial  market  infrastructure.  All  financial  services 
regulators  amended  legislation  introducing  risk  analysis  based  on  international  credit  rating 
agencies’  assessments,  instead  of  EU  and  OECD  membership  criteria.  Alignment  with  the 
Settlement Finality Directive (98/26/EC) and the Financial Collateral Directive (2003/47/EC), 
as both amended by Directive 2009/44/EC, remains pending. In the area of financial market 
infrastructure, the country is not yet sufficiently aligned with the acquis. 

There has been some progress in securities markets and investment services. The national 
legislation on market abuse, markets in financial instruments, investor compensation schemes, 
transparency  and  prospectuses,  is  largely  in  line  with  the  corresponding  acquis.  The 
preparations for alignment with Directive 2007/16/EC and other developments in the acquis 

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relating to activities for collective investment in tradable securities (UCITS IV package) were 
launched.  The  Securities  and  Exchange  Commission  adopted  by-laws  with  a  view  to  full 
implementation of the legislation. The frequency with which the supervisory regulations are 
amended  has  undermined  legal  stability  for  the  market  participants.  The  SEC  continued 
cooperating with the capital market regulators from the region, with the aim of establishing a 
common platform for listing, trading, transparency and settlement. The number of SEC staff 
is sufficient for the current workload. The SEC and the Central Bank improved cooperation, 
exchange of information and coordination in the area of supervision of trading in securities. In 
the area of securities markets and investment services the country is well advanced.  

Conclusion 

Progress  was  made  in  the  field  of  financial  services,  particularly  on  banking,  insurance  and 
securities  markets.  Alignment  of  the  legal  framework  on  insurance  supervision  with  the 
acquis  is  very  advanced.  The  Law  on  Payment  of  Pensions  from  the  fully  funded  pension 
insurance funds was enacted and the MAPAS attained full legal and financial independence. 
However,  uninsured  driving  remains  a  challenge  and  the  enforcement  record  on  combating 
offences committed by uninsured drivers is weak. Alignment with key acquis in the area of 
financial  market  infrastructure  remains  to  be  achieved.  Overall,  in  the  area  of  financial 
services, alignment with the acquis is moderately advanced.  

4.10.  Chapter 10: Information society and media 

Good progress can be reported in the field of electronic communications and information 
and  communications  technologies.  The  Law  on  Electronic  Communications  was  amended 
and  regulations  were  adopted  within  the  reporting  period  with  the  aim  of  improving 
competition  in  the  market.  The  2009  EU  regulatory  framework  is  yet  to  be  transposed  into 
national  legislation.  Responsibilities  for  legislation  and  policy-making  for  electronic 
communications  and  the  information  society  were  transferred  to  the  new  Ministry  of 
Information Society and Administration (MISA). The capacity of the new ministry needs to 
be strengthened. The role and responsibilities of the Agency for Electronic Communications 
(AEC), as the national regulatory authority, were clarified in legislation. The AEC published a 
five-year  regulatory  strategy  (2012–2016)  and  introduced  regular  public  consultations, 
including on its annual plan. Progress was made with implementing competitive safeguards, 
such as cost-accounting obligations for fixed and mobile networks and next-generation access 
networks.  The  AEC  designated  universal  service  providers  and  built  up  its  capacity  on 
protection  of  consumer  rights.  The  regulator  also  developed  an  electronic  register  of 
electronic communications infrastructure. Amendments were made to the legislation in order 
to  adjust  the  regulatory  fees  on  operators  and  on  use  of  surplus  funds.  However,  these  still 
need to be implemented. Transferring the regulator’s surplus funds to areas that fall outside 
the  regulator’s  authority.  The 
the  remit  of  electronic  communications  undermines 
coordination  of  measures  imposed  by  both  the  AEC  and  the  national  competition  authority 
needs  to  be  improved.  A  public  call  to  award  the  development  of  the  fourth  generation  of 
mobile telephony was made. The emergency number 112 was not introduced due to financial 
constraints.  Preparations  in  the  area  of  electronic  communications  and  information 
technologies are advanced.  

There  was  some  progress  in  information  society  services.  Further  electronic  government 
projects were initiated to expand the opportunities for citizens and businesses to interact with 
the  public  administration.  A  method  for  assessment  of  the  value  of  information  technology 
was adopted. Work on interconnection of registers and databases between state institutions is 
continuing. Two certification service providers are still issuing qualified electronic signature 
certificates. However, there is little demand for  the  certificates,  and  market  access  has  been 

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made  difficult  as  the  implementing  legislation  requires,  in  practice,  prior  registration  before 
certificates can be issued. The internet domain name market is not liberalised, and MARNet, 
remains the only domain name registry in the country. While internet penetration has grown 
and online social networks are becoming increasingly influential, there are still barriers to e-
commerce,  including  the  ‘threshold’  imposed  on  internet  trading  by  the  customs  authority. 
Preparations in the area of information society are advanced  

Little progress can be reported in audiovisual policy. Parliament enacted amendments to the 
Broadcasting  Law  that  provide  for  higher  broadcasting  fees  and extend  advertising  times  in 
the  public  service  broadcaster’s  programmes.  Collection  rates  for  the  broadcasting  fee  has 
started to increase and provide for proper funding of the public service broadcaster and of the 
Broadcasting  Council.  The  Broadcasting  Council  increased  its  monitoring  activities  and  the 
transparency  of  its  work,  but  concerns  about  its  independence  remain.  The  total  number  of 
cases  of  illicit  media  concentration  investigated  increased.  Efforts  were  made  to  enforce 
legislation  on  copyright  and  on  media  ownership  and  concentration,  but  these  still  remain 
insufficient.  The  removal  of  the  licence  for  the  TV  station  A2  did  raise  questions  and 
identified  weaknesses  in  the  legal  framework  and  practice  for  imposing  sanctions.  The 
Broadcasting  Council  needs  to  review  its  practices  and  legal  framework  in  order  to  address 
these concerns. The Broadcasting Council lacks resources to monitor and enforce the law at 
regional and local levels. Content monitoring activities remain weak and insufficient.  

The  independence  of  the  public  service  broadcaster  (MRTV)  is  provided  for  in  the  Law  on 
Broadcasting Activity. MRTV has initiated some reforms under new management to increase 
its efficiency and quality of the offer. Further significant efforts remain to be  undertaken to 
ensure that the MRTV fulfils the public service mission, inter alia by providing balanced and 
pluralistic news coverage. The drafting process of new media legislation, aligning it with the 
audiovisual media services directive advanced, but the inclusiveness and transparency of the 
process still need to be ensured.  

Preparations continued for the digital switchover to be achieved in 2013. Amendments were 
made to the Law on Electronic Communications, regulating the digitalisation process. There 
is  little  coordination  of  the  switchover  plan  between  institutions  and  there  is  no  permanent 
mechanism  for  planning  and  supervising  the  digital switchover,  with  the participation of  all 
stakeholders. The DVB-T network was built with the aim of broadcasting and transmitting the 
programmes of the public service broadcaster. A separate DVB-T multiplex operator has yet 
to  be  selected.  This  will  digitally  broadcast  the  programmes  of  the  commercial  television 
channels. Preparations in the area of audiovisual policy are at an early stage. 

Conclusion 

Progress  can  be  reported  on  the  information  society  and  media,  notably  in  the  area  of 
electronic communications and information society services. In the case of audiovisual policy, 
the activities of the Broadcasting Council increased, but a non-discriminatory approach needs 
to be ensured. Adoption of a media law in line with EU acquis remains a priority. The country 
partly  meets  its  priorities  in  the  area  of  the  information  society  and  media.  Overall, 
preparations in this area are moderately advanced. 

4.11.  Chapter 11: Agriculture and rural development  

With  respect  to  horizontal  issues,  there  was  little  progress.  The  national  programme  for 
adoption  of  the  acquis  established  an  ambitious  timetable  for  legislative  alignment  in  this 
sector. For 2012, a total of € 130 million has been  allocated for direct support schemes. This 
includes  direct  area  and  headage  payments,  premium  payments  and  input  subsidies  for 

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strategically  important  products,  and  non-commodity-based  payments,  including  support  for 
young farmers.  

There  was  an  overall  increase  in  staff.  However,  only  limited  implementing  legislation, 
principally  of  a  technical  nature,  was  enacted  in  the  fields  of  agricultural  and  rural 
development support policy, quality of agricultural products, and wine. Institutional capacity 
remains a significant concern. 

Good  progress  can  be  reported  towards  setting  up  an  integrated  administration  and  control 
system  (IACS).  The  legal  basis  for  the  land  parcel  identification  system  (LPIS)  has  been 
established and the system is in operation. Registration is ongoing and already extends to over 
45% of declared holdings. The real estate register is complete for agricultural land. The farm 
register,  with  a  supporting  automated  IT  system,  is  fully  functional.  Internet  and  server 
capacity  remains  a  concern,  particularly  at  peak  times.  Although  the  farm  register  is  now 
integrated with LPIS information, compatibility between data registers has not yet been fully 
achieved. A national strategy for consolidation of land parcels, including an operational plan, 
has been adopted following public debate and consultation. Institutional capacity to manage 
and maintain a functioning IACS is insufficient.  

The  capacity  of  the  paying  agency,  the  Agency  for  Financial  Support  for  Agriculture  and 
Rural  Development  (AFSARD),  remains  a  cause  for  concern,  given  its  wide  range  of 
responsibilities.  Staff  employed  in  the  AFSARD  are  responsible  for  both  national  support 
schemes  and  measures  under  the  Instrument  for  Pre-accession  Assistance  for  Rural 
Development (IPARD). Their number remains insufficient, despite recruitment of additional 
staff. Establishment of the reference price database is a positive development for management 
of IPARD measures.  

Progress  has  been  made  with  development  of  a  sustainable  agricultural  information  system, 
with online data entry established plus a website that allows access to market data. Pilot farm 
accountancy data network (FADN) activities are continuing and now cover a larger number of 
farmers and farm types. Preparations in the area of horizontal issues are advanced. 

In the field of common market organisation, there has been limited progress, principally for 
commodities that are of greatest relevance to the country. Harmonisation of legislation with 
the  acquis  is  continuing  for  selected  commodities,  including  adoption  of  implementing 
legislation  for  carcass  classification.  The  legal  basis  exists  for  implementation  of  market 
support  measures,  such  as  optional  intervention  for  a  limited  number  of  commodities, 
consumption  promotion  and  producers’  organisations.  The  Law  on  Wine  was  amended  to 
ensure  closer  alignment  with  the  acquis  and  implementing  legislation  was  introduced, 
principally relating to registration of producers and to grapes and grape products. Alignment 
with  the  acquis  in  the  area  of  specialised  crops  is  on  track.  Compatibility  with  the  EU 
common market organisation is limited to poultrymeat and eggs and to milk quality, with an 
ambitious timetable set for other products. Preparations in this area are at an early stage. 

Little  progress  can  be  reported  in  the  area  of  rural  development.  Implementation  of  the 
IPARD  programme  under  component  V  is  continuing  for  three  measures.  Five  calls  for 
proposals  were  completed  and  a  sixth  launched,  with  an  associated  commitment  of 
€ 5.32 million of IPA support under component V.  The absorption capacity for component V 
remains  a  significant  concern.  A  government  action  plan  was  adopted  to  improve  the 
management and control of IPARD and support greater absorption of funds. The institutional 
capacity of the managing authority, the Ministry of Agriculture, Forestry and Water Economy 
(MAFWE),  was  strengthened.  There  has  been  very  limited  progress  in  preparations  for 
implementation  of  additional  IPARD  measures.  Preparations  in  this  area  are  moderately 
advanced. 

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There  has  been  progress  in  quality  policy.  Implementing  legislation  to  establish  national 
marks  and  signs  related  to  quality  protection  and  to  identify  protected  species  of  various 
commodities was introduced. Preparations in this area are on track.  

There was some further progress with organic farming. The Law on Organic Production was 
strengthened, with the aim of alignment with the acquis. The numbers of registered organic 
producers  and  total  organic  production  are  both  continuing  to  increase.  A  budget  of  € 2.11 
million was  allocated in 2012 to  support organic  production,  including  top-up  payments  for 
organic  producers  and  support  for  processing  and  trading  organic  products.  Administrative 
capacity remains insufficient to meet acquis obligations. Preparations in this area are on track.  

Conclusion 

Some  progress  was  achieved  in  the  area  of  agriculture  and  rural  development.  Continuing 
advances have been made towards setting up the integrated administration and control system. 
Further  alignment  with  the  acquis  is  required.  Administrative  capacity  remains  a  concern 
throughout the sector. Overall, preparations remain moderately advanced. 

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

Good progress was made as regards general food safety. The Food and Veterinary Agency 
(FVA)  adopted  a  single  multiannual  national  control  plan  on  state  surveillance  over  food 
movements,  a  strategy  paper  on  veterinary  and  plant  health,  and  a  multiannual  training 
programme.  Preparations  started  on  a  new  food  safety  strategy  (2013–2015)  and  a  general 
crisis  management  plan.  An  internal  system  for  control  and  auditing  within  the  FVA  was 
established. Preparations in this area are on track. 

Good  progress  was  made  in  the  area  of  veterinary  policy.  As  regards  control  systems  for 
imports and requirements for imports of live animals and animal products, the FVA provides 
regular updates following amendments of the relevant acquis including the latest adopted EU 
safeguards measures. The system of reduced checks of consignments at the border inspection 
posts is not implemented yet. Activities for establishment of a system for identification and 
registration  of  pigs  have  been  initiated.  The  database  for  identification  and  registration  of 
animals  was  upgraded  and  is  a  central  part  of  the  newly  integrated  veterinary  information 
system.  

Good progress was made on measures to control animal diseases. The FVA is implementing a 
programme  for  oral  vaccination  of  foxes  against  rabies.  Surveillance  programmes  for  rabies 
and classical swine fever were established. Measures to control and eradicate swine vesicular 
disease and certain diseases in aquatic animals were adopted with the aim of alignment with 
the acquis. The contingency plan for eradication of classical swine fever (CSF) was adopted. 
The  FVA  is  implementing  a  programme  of  mass vaccination of domestic pigs  against  CSF. 
However,  there  are  concerns  about  the  way  vaccinations  are  being  carried  out  and  that  the 
immunity rate is low. The national control plan on salmonella in hens is being implemented. 
Some  progress  was  made  in  the  area  of  intra-Community  trade  in  live  animals,  semen,  ova 
and  embryos,  with  the  adoption  of  implementing  legislation  transposing  the  acquis.  The 
European Commission approved the annual monitoring programme on prohibited substances 
and  residue  control.  Some  progress  was  made  in  animal  welfare.  Implementing  legislation 
that  further  transposes  the  acquis  was  adopted.  Some  progress  was  made  in  the  area  of 
zootechnical  issues  by  registration  of  livestock  breeders  and  adoption  of  implementing 
legislation aiming at alignment with the acquis. The 2012 budget for veterinary expenditure 
on animal health was increased by 45% compared with 2011. However, significant delays in 
payment  to  authorised  private  veterinary  centres  for  carrying  out  various  FVA  programmes 
are  jeopardising  their  implementation.  The  capacity  of  the  laboratories  of  the  veterinary 

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faculty was strengthened, particularly on rabies and CSF diagnosis. In the area of veterinary 
policy, preparations are advanced. 

Progress  was  made  in  the  placing  on  the  market  of  food,  feed  and  animal  by-products. 
Some  implementing  legislation  was  adopted  on  hygiene  rules.  The  existing  legislation 
transposes the acquis on specific rules for animal products, controls and specific controls for 
animal  products.  The  aid  schemes  for  hazard  analysis  and  critical  control  points  (HACCP) 
were extended to 2012 and training was provided for food business operators (FBO). FBOs do 
not  always  apply  HACCP-based  procedures  correctly  and  official  controls  are  not  always 
conducted  in  accordance  with  the  legal  requirements.  Planned  activities  for  improving  the 
quality of raw milk are not yet implemented.  

Implementing  rules  on  management  of  animal  by-products  (ABP)  were  adopted  and 
preparations commenced on the ABP management strategy. The lack of a location available 
for  disposing  of  or  processing  ABPs  remains  the  biggest  obstacle  to  implementing  the 
strategy.  

Progress can be reported in the food safety rules. Implementing legislation was adopted on 
the  safety  of  food  supplements,  fortified  foods,  foods  for  particular  nutritional  uses,  novel 
food and mineral waters; alignment remains to be confirmed. The legislation aims at further 
alignment with the acquis on labelling, food additives, extraction solvents, flavourings, food 
contact material, quick-frozen foodstuffs, contaminants and ionising radiation.  

The  annual  monitoring  programme  for  food  safety  was  adopted  and  is  being  implemented. 
There are no risk-based criteria for categorisation, neither risk based criteria for inspection of 
establishments dealing with food of non-animal origin. The capacity of the food inspectorate 
was  strengthened  but  remains  insufficient  in  terms  of  control  procedures  and  human 
resources. Preparations in this area are on track. 

Progress was made on specific rules for feed. Some implementing legislation was adopted on 
feed additives and medicated feed. Preparations in this area are on track. 

Little progress can be reported in phytosanitary policy. Some implementing legislation was 
adopted on plant health and on the quality of seeds and propagation material. No action was 
taken  to  implement  the  international  standards  for  phytosanitary  measures,  in  particular  on 
surveillance, export certification and determining pest status in an area. Control of marketing 
places of plant production products is done only on a random basis and no controls of their 
application  are  carried  out.  Coordination  between  the  various  competent  authorities  for 
phytosanitary  policy  has  not  improved.  The  administrative  capacity  of  the  Phytosanitary 
Directorate is weak. 

The capacity of the State Phytosanitary Laboratory 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 this area are not very advanced. 

Some  progress  was  observed  in  alignment  with  the  acquis  on  genetically  modified 
organisms by futher adoption of implementing legislation.  

Conclusion 

Good progress was made in the area of food safety and veterinary and phytosanitary policy, in 
particular with respect to  the institutional strengthening of the Food and  Veterinary  Agency 
and  implementation  of  various  animal  disease  eradication  programmes.  Preparations  in  the 
area of food safety and veterinary policy are well on track. Little progress was observed in the 
area  of  phytosanitary,  where  administration  and  co-ordination  capacity  of  the  competent 
authorities has not improved. The implementation of international standards for phytosanitary 

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measures  has  not  been  carried  out.  Preparations  in  the  area  of  phytosanitary  are  at  an  early 
stage.  

4.13.  Chapter 13: Fisheries 

EU requirements on resource and fleet management and inspection and control do not apply 
for  inland  fishing  and  are  therefore  not  applicable,  except  for  control  of  marketing  and 
traceability of fishery products. 

After implementing legislation was adopted, commercial freshwater fishing has restarted after 
a break to allow restocking with indigenous species following earlier over-fishing. 

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 remains insufficient. Preparations in this area are at an early stage. 

Limited  progress  was  made  on  structural  action.  Further  implementing  legislation  was 
enacted covering control of, and procedures related to, recreational fishing.  

Limited progress was achieved in market policy.  

The  register  of  State  aid  approved  in  the  fisheries  sector  is  operational.  However,  national 
schemes still need to be aligned with the EU’s structural and State aid policies, in particular 
with regard to support for stocking fish waters.  

There  are  no  formal  international  agreements.  Informal  working  arrangements  still  exist 
with Albania and Greece, covering management of resources in the three lakes whose waters 
they share.  

Conclusion 

There  was  limited  progress  in  the  area  of  fisheries.  Administrative  capacity  remains 
insufficient. A large proportion of the fisheries acquis is, however, not relevant as the country 
is landlocked.  

4.14.  Chapter 14: Transport policy 

Some progress can be reported in road transport. Implementation of the legislation on digital 
tachographs  continued.  Implementing  legislation  was  adopted  on  working  hours,  on 
admission  to  the  occupation  of  road  transport  operator  and  on  market  access.  Further 
legislative  progress  needs  to  be  made  concerning  access  to  the  international  market  for  bus 
services in order to align with the most recent acquis. The Road Safety Council worked with a 
reduced budget due to amendments to the Law on Insurance. As a result, the number of road 
safety campaigns was reduced. The administrative capacity for implementing the road safety 
policy  needs  further  improvement.  The  state  transport  inspections  were  stepped  up,  but  the 
administrative capacity of the state transport inspectorate still needs to be increased. Further 
alignment with recent road safety and dangerous goods acquis is still necessary. Preparations 
in the road transport sector are advanced.  

Little  progress  can  be  reported  on  rail  transport.  The  level  of  track-access  charges  levied 
from  freight  trains  still  has  a  negative  impact  on  the  competitiveness  of  rail  against  road 
transport  and  due  to  higher  levels  on  the  Coridor  X  line,  discriminates  against  international 
traffic.  Lengthy  procedures  for  licensing  and  safety  certification  along  with  ongoing  court 
procedures deterred railway operators from entering the market. An amendment to the law on 
railways to foreclose all but the state-owned rail operator until accession reversed alignment 
with acquis achieved in previous years. High charges and market closure further deteriorate 
the  poor  income  situation  of  the  infrastructure  manager,  without  giving  the  aspired  positive 
social  effects  on  the  State  operator.  The  Safety  Authority  was  established,  but  its 

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administrative  capacity  still  needs  to  be  strengthened.  The  procedure  to  establish  a  new 
accident  investigation  entity  within  the  Government  Secretariat-General  has  not  been 
completed  yet.  The  Joint  Border  Crossing  Agreement  with  Kosovo  was  ratified.  Further 
alignment with the railway acquis is still necessary. 

In the case of inland waterways transport some progress was made. Safety inspections and 
licensing are underway. Preparations in this area are advanced.  

Little progress can be reported in the area of combined transport. Preparation of a strategic 
study for multi-modal nodes started in April 2012. Preparations in this area are in progress.  

Some  progress  can  be  reported  in  air  transport.  The  Law  on  Aviation  was  amended  to 
introduce national subsidies for operators with the aim of expanding tourism and air transport. 
However, the compatibility of these amendments to the provisions of the European Common 
Aviation  area  are  being  examined  based  on  data  collected  at  the  2011  assessment  visit. 
Progress regarding the first phase of the ECAA agreement is still to be assessed on the basis 
of  these  data.  Good  progress  can  be  reported  as  regards  air  traffic  management.  The  air-
navigation services provider is still understaffed. The Civil Aviation Agency, in its capacity as 
the independent regulatory body, continued its activities but human resources for inspections 
still need to be strengthened. Three members were appointed as independent investigators to 
investigate  accidents  and  serious  incidents.  The  independence  of  the  accident  investigation 
body  still  needs  to  be  confirmed.  In  the  area  of  air  transport  preparations  are  moderately 
advanced.  

No progress can be reported on satellite navigation.  

Conclusion 

There was little new progress in transport policy. In road transport, there was some progress 
on  acquis  alignment,  but  road  safety  needs  further  improvement.  The  railway  legislation 
needs further alignment with the acquis. A legal amendment to close the railway market for 
competition  until  EU  accession  reversed  already  achieved  alignment  with  acquis.  The 
administrative  capacity  of  the  Rail  Safety  Authority  still  needs  to  be  strengthened.  The 
Accident Investigation Committee for rail transport needs to become operational in order to 
act as an independent body. Overall, preparations in this area are moderately advanced. 

4.15.  Chapter 15: Energy 

Little progress was made in security of supply. Several by-laws based on the Law on Energy 
were adopted, with the aim of further aligning the national legislation on security of electricity 
and natural gas supply. At the beginning of 2012, oil stocks increased slightly, but were still 
equivalent to only 34 days’ average consumption. In the area of security of supply the country 
is at an early stage.  

There was some progress on the internal energy market. The energy balance for 2012-2016 
was adopted. To follow up the new Energy Law, the Energy Regulatory Commission (ERC) 
adopted  a  number  of  rulebooks  covering  regulated  maximum  income,  tariff  systems  and 
prices for electricity. New market rules were adopted. The foreseen deadlines for the adoption 
of  secondary  legislation  on  market  opening  have  been  delayed.  As  a  consequence,  all  non-
household  customers  connected  to  the  distribution  system,  who  should  have  been  eligible 
after the adoption of the Energy Law, remain in the regulated system and have no access to 
the competitive market. The electricity prices for tariff customers increased twice in 2012, in 
January  by  about  7,8%  and  in  August  by  about  9,8%.  In  2012,  energy  poverty  mitigation 
measures  totalling  about  € 2.4  million  will  be   taken  to  subsidise  the  most  vulnerable 
households.  Application  of  the  Law  on  Enforcement  improved  the  collection  rates  for 

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electricity  bills.  The  country  needs  to  start  preparations  for  alignment  with  the  EU’s  ‘third 
internal energy market package’. 

The energy balance for 2012-2016 estimates a 4.9% increase in consumption of natural gas in 
2012 as a result of the gasification at Kumanovo and Strumica and of the entry into operation 
of  a  combined  heat  and  power  facility.  Under  the  new  Energy  Law,  the  ERC  adopted 
rulebooks regulating the tariffs and prices for transmission, transport, distribution, supply and 
sale of natural gas. Following this, tariffs for transmission and operation of the transmission 
system were increased by about 7.5%. Further implementing legislation needs to be adopted. 
The  dispute  between  the  government  and  the  private  company  about  ownership  of  the  gas 
transmission  pipeline  remained  unresolved.  The  administrative  capacity  of  the  Ministry  of 
Economic  Affairs  remains  insufficient  to  address  all  the  energy  policy  challenges.  Statistics 
provided  by  the  national  authorities  do  not  always  meet  the  requirements  of  the  Energy 
Community. In the area of the internal energy market the country is advanced. 

There was some progress in the area of renewable energy with the adoption of the rulebook 
on the preferential status of producers of electricity from renewable sources and of the Decree 
on Feed-in Tariffs for Electricity from Renewable Sources. In 2012, 21 new concessions for 
small  hydropower  plants  were  granted,  bringing  the  total  number  to  68.  Hydro  power  plant 
‘Sv Petka’,  with  installed  capacity  of  36,4MWh  was  put  in  operation  and  construction  of  a 
36,8MWh  installed  capacity  wind  park  started.  Funds  for  construction  of  the  117.54  GWh 
‘Boskov  Most’  hydropower  plant  were  secured  via  a  loan  from  the  European  Bank  for 
Reconstruction and Development (EBRD) and supported by a government guarantee. The low 
electricity  prices  for  end-users  and 
the  burdensome  administrative  procedures  for 
authorisation,  permitting  and  licensing  continue  to  be  obstacles  to  the  adequate  uptake  of 
renewables in the country. Preparations in the area of renewable energy are on track although 
the country’s renewable energy potential is not efficiently harnessed.  

Some progress was made on energy efficiency. The Ministry of Economic Affairs adopted a 
rulebook  on  energy  consumption  labelling  for  various  appliances.  The  indicative  energy-
saving  target  for  2012  is  set  at  4.04%  of  the  average  energy  consumption  over  the  period 
2002-2006.  The  Energy  Agency  issued  guidelines  applying  energy-efficiency  criteria  in 
public  procurement.  The  national  programme  for  energy  efficiency  in  public  buildings  has 
been drafted and is discussed with stakeholders. is being prepared. € 100,000 were allocated 
for  subsidies  to  households  for  solar  collectors  for  2012.  Six  municipalities  benefited  from 
energy  audits  and  consequent  retrofits  of  a  number  of  buildings.  The  Energy  Agency  has 
limited  administrative  capacity  to  perform  all  the  assignments  under  its  responsibility. 
Overall, in the area of energy efficiency the country has started to address its objectives, but 
the necessary secondary legislation still needs to be put in place.  

The country has no nuclear energy.  

There  was  some  progress  in  the  area  of  nuclear  safety  and  radiation  protection.  The 
Radiation  Safety  Directorate  (RSD)  issued  a  rulebook  on  the  premises,  equipment, 
qualifications and health conditions of persons working with ionising radiation sources. The 
RSD’s strategic plan for 2012-2014 was adopted, which, inter alia, serve as a guide for the 
mid-term tasks and priorities of the RSD, while its implementation is expected to strengthen 
the  efficiency  and  transparency  of  the  RSD.  A  national  coordination  body  for  prevention, 
reduction  and  protection  from  chemical,  biological,  radioactive  and  nuclear  arms  and 
materials was established.  

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Conclusion 

Some  progress  was  made  in  the  energy  sector,  in  particular  on  enacting  legislation 
implementing the 2011 Energy Law. A number of implementing acts have still to be adopted. 
Full  liberalisation  of  the  electricity  and  natural  gas  markets  is  yet  to  be  achieved.  Some 
progress was made on renewable energy. Preparations in this area are moderately advanced. 

4.16.  Chapter 16: Taxation 

There  was  no  progress  on  harmonisation  of  legislation  in  the  area  of  indirect  taxation. 
Legislation on VAT and excise is only partially aligned with the acquis. Some rates for excise 
remain lower than the minimum required by the acquis. Preparations in this field remain on 
track. 

No progress was achieved in the area of direct taxation. Future alignment with the Parent-
Subsidiary Directive, the Merger Directive and the Interest and Royalties Directive, have yet 
to be addressed. Some national provisions concerning the special zones for technological and 
industrial  development  are  still  not  in  line  with  the  EU  Code  of  Conduct  for  Business 
Taxation. Preparations in this field remain moderately advanced. 

There was some progress in the field of administrative cooperation and mutual assistance. 
The  Public  Revenue  Office  (PRO)  signed  a  memorandum  of  electronic  data  exchange  with 
the  Financial  Police  and  the  Financial  Intelligence  Unit.  Operational  instructions  were 
adopted for PRO employees on the handling of exchange of information with tax authorities 
from other countries. The number of agreements concluded with EU Member States remains 
at 23. These agreements do not cover debt recovery, nor automatic exchange of information. 
Preparations in this area remain on track. 

Some progress was made on operational capacity and computerisation. The mandate of the 
PRO was extended to cover financial aspects of the fight against money laundering terrorism 
as  well  as  the  supervision  of  gambling  activities.  The  PRO  further  developed  its  electronic 
tools  by  extending  the  e-filing  of  tax  returns  for  individuals,  introducing  the  electronic 
archiving of VAT returns presented on paper and making the e-filing of VAT and profit tax 
returns  mandatory  from  2013.  New  procedures  were  introduced  for  the  sale  of  confiscated 
assets. The PRO also adopted new implementing rules on profit tax, personal income tax and 
VAT  registration  of  cash  payments.  In  the  area  of  human  resources,  new  guidelines  were 
issued  for  fighting  corrupt  behaviour  by  employees  of  the  PRO.  Performance  appraisal  was 
extended to all PRO staff. The Tax Academy launched its training programme. However, staff 
shortages  persist,  especially as regards the fight against high-risk tax fraud and tax evasion. 
The  IT  capacity  of  the  tax  administration  remains  weak.  The  efficiency  of  inspections, 
enforced collection and internal audits needs to be further strengthened. Preparations in this 
area remain advanced. 

Conclusion 

Progress has been limited in the field of taxation. Efforts are still required to harmonise the 
national  legislation  with  the  acquis,  to  reinforce  the  fight  against  tax  fraud  and  tax  evasion 
and  to  address  IT  and  staffing  capacity.  Overall,  preparations  in  the  area  of  taxation  are 
moderately advanced. 

4.17.  Chapter 17: Economic and monetary policy 

In the area of monetary policy, the country is well aligned with the acquis. Some progress 
was  made  on  strengthening  the  institutional  capacity  of  the  Central  Bank  by  introducing 
medium-term  strategic  planning  and  upgrading  the  model  for  macroeconomic  forecasting. 
The monetary policy instruments used by the Central Bank were further developed.  

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No  progress  can  be  reported  in  economic  policy.  The  pre-accession  economic  programme 
(PEP)  for  2012-2014  was  submitted  on  time.  The  fiscal  strategy  was  geared  to  shifting  the 
emphasis  from  less  productive  spending  to  capital  investment.  However,  this  intention  was 
reversed  in  the  2012  budget  rebalance  due  to  significant  shortfall  in  revenues.  With  the 
increased  reliance  on  foreign  loans  for  financing  the  deficit,  the  economy  became  more 
vulnerable  to  external  risks.  No  fiscal  notification  was  submitted  in  2012.  The  information 
presented  in  the  PEP  needs  improvements  in  the  substance,  quantity  and  quality  of  data.  In 
particular,  more  precise  information  beyond  2012  would  add  to  its  relevance  as  a  core 
medium-term  policy  document.  The  structural  part  refers  to  a  broad  range  of  reforms,  but 
without translating them into specific measures set in a clear conceptual framework. In spite 
of existing legal obligations, the Fiscal and Public Debt Strategies nor the Public Investment 
Programme  were  not  updated  for  the  period  2012-2014.  The  capacity  for  economic  policy 
formulation and coordination remains insufficient and differs widely between the central and 
local levels. In the area of economic policy, preparations are moderately advanced. 

Conclusion 

There was little new progress in economic and monetary policy. The monetary policy-making 
capacity of the Central Bank was further improved. The quality of the pre-accession economic 
programme  remains  to  be  strengthened.  The  capacity  for  economic  policy  formulation  and 
implementation still differs widely between the central and local levels. Overall, in the area of 
economic and monetary policy, the country is advanced. 

4.18.  Chapter 18: Statistics 

There was  progress as regards statistical infrastructure. The State Statistical Office  (SSO) 
adopted  the  strategic  plan  for  2012-2014.  Further  progress  was  achieved  in  data 
dissemination. With 34 new employees, the share of the SSO’s total staff from non-majority 
ethnic groups increased to 27%. The overall resource situation in the SSO needs to be further 
strengthened. Preparations in this area are advanced. 

Progress  can  be  reported  on  classifications  and  registers.  Improvements  were  made  to  the 
quality of the statistical farm register and further progress was achieved towards the transition 
to  NACE  rev.  2  in  business  statistics.  However,  stronger  interinstitutional  coordination  is 
necessary to improve compliance of administrative data with standardised classifications and 
definitions. Preparations in this area are moderately advanced. 

Some progress was made in sectoral statistics. The population and housing census started in 
October 2011 but was interrupted and cancelled after the State Census Commission resigned 
(See Political criteria, section 2.1. — Democracy and the rule of law). As a result, there are 
no  recent  data  on  population  and  households.  This  has  an  impact  on  the  accuracy  and 
availability of a wide range of statistics. 

Further harmonisation was achieved in the area of national accounts, including compilation of 
excessive  deficit  procedure  tables,  calculation  of  quarterly  GDP  and  integration  of  sectoral 
data.  Agreement  was  reached  to  hand  responsibility  for  financial  account  statistics  to  the 
Central Bank. Coverage of balance of payments statistics was extended and harmonisation of 
statistics on external debts improved. Significant progress can be reported with regard to the 
production of business statistics, notably in the quantity and quality of the data transmitted to 
Eurostat. Methodological improvements were made in short-term statistics, transport statistics 
and agricultural statistics. However, further progress towards adoption of ESA 95 standards is 
needed  in  order  to  achieve  full alignment.  In  the  area  of  social  statistics,  new  surveys  were 
introduced.  Preparations  in  the  area  of  sectoral  statistics  are  moderately  advanced  but 
hampered by the lack of up-to-date census data. 

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Conclusion 

There  was  progress  in  the  field  of  statistics,  in  particular  on  harmonisation  of  sectoral 
statistics and transmission of data. Full alignment with the acquis has yet to be achieved. The 
cancellation of the population census and the persistent lack of resources indicate that stronger 
commitment will be needed in order to make substantial progress in this chapter. The lack of 
up  to  date  census  data  impacts  on  the  quality  and  availability  of  data  in  sectoral  statistics. 
Overall, preparations in the field of statistics are moderately advanced. 

4.19.  Chapter 19: Social policy and employment  

There has been some progress as regards labour law. The Law on European Works Councils 
was enacted. Several amendments were made to the Law on Labour Relations with the aim 
inter  alia  of  enhancing  the  effective  enforcement  of  labour  law.  However,  cooperation 
between the relevant institutions remains insufficient. Alignment with the acquis in this area 
is at early stage.  

Some progress can be reported in the area of health and safety at work. The Law on Health 
and Safety at Work was amended and several rulebooks were adopted to bring the legislation 
further  into  line  with  the  Framework  Directive  (Directive  89/391/EEC).  A  campaign  was 
launched  to  raise  awareness  about  ways  to  ensure  greater  safety  for  workers  in  the 
construction  sector.  Inspection  capacity  in  the  area  of  health  and  safety  at  work  remains 
insufficient.  Implementation  of  the  strategy  for  occupational  health  and  safety  and  of  the 
action  plan  for  2011-2012  is  slow  and  lacks  coordination  between  the  relevant  authorities. 
The  National  Council  for  Occupational  Health  and  Safety  is  not  operational.  Consolidated 
recording of data on accidents at work is still lacking. Alignment with the acquis in this area 
is moderately advanced.  

There  has  been  progress  as  regards  social  dialogue.  The  role  of  the  Economic  and  Social 
Council  as  a  forum  for  policy  dialogue  has  been  strengthened.  Equal  numbers  of 
representatives  from  trade  unions  and  employers’  associations  have  been  designated  in  the 
new composition of the Committee for Establishing Representativeness of Trade Unions and 
Employers’  Associations.  The  first 
in 
municipalities  have  been  established.  Bipartite  and  tripartite  social  dialogue  has  improved 
slightly,  particularly  in  the  private  sector  and  especially  for  collective  bargaining.  Regular 
participation  by  social  partners  in  the  policy-making  process  is  limited  to  labour  legislation 
issues only. The capacity of social partners remains weak.  

local  Economic  and  Social  Councils 

three 

Little progress has been made in employment policy. A minimum wage has been adopted at 
national level. Unemployment was very high in 2011 at 31.4% and increased further to 31.6% 
in the first quarter of 2012. Employment in the grey economy has not diminished. The State 
Labour Inspectorate has taken some measures at central level to raise awareness of the need to 
combat undeclared work. Cooperation and coordination between enforcement bodies have not 
improved  and  labour  market  participation  is  still  very  low.  Long-term  unemployment,  high 
youth unemployment and very low participation by women in the labour market are all causes 
for  great  concern.  The  national  budget  allocated  to  the  active  labour  market  programme  is 
low.  The  Employment  Services  Agency  has  difficulties  with  implementing  active  labour 
market measures. Monitoring and evaluation of the active labour market programme are weak 
as they are based almost exclusively a basic quantitative analytical approach.  

There has been little progress in preparations for participation in the European Social Fund. 
Procurement  of  projects  co-financed  under  the  first  allocation  for  the  Human  Resources 
Development  Operational  Programme  (IPA  component  IV)  is  in  the  final  stage  and 

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implementation of most of the projects has started. However, weak administrative capacity is 
having an adverse impact on the quality of project and programme management.  

Little  progress  has  been  made  on  social  inclusion.  Appropriate  institutional  and  financial 
resources are to be ensured in order to efficiently implement the policies and strategic plans 
already  adopted.  The  national  strategy  for  alleviation  of  poverty  and  social  exclusion  for 
2010–2020  has  been  adjusted  to  EU  2020  priorities.  However,  a  corresponding  budget  for 
implementing it is lacking. Financial support has been provided to selected municipalities to 
implement  their  local  action  plans  for  social  inclusion.  A  national  body  for  monitoring  and 
evaluating implementation of the national strategy for elderly persons for 2010–2020 has been 
set  up.  The  country  presided  over  the  Decade  of  Roma  Inclusion.  The  strategy  for  Roma 
inclusion  for  2012-2014  was  also  adopted.  Steps  were  taken  to  address  the  problems  of 
persons  without  documents,  access  to  housing  or  education.  Implementation  of  the  national 
action plans and operational plans on Roma inclusion is slow.  

As  regards  people  with  disabilities,  the  UN  Convention  on  the  Rights  of  Persons  with 
Disabilities  and  the  Optional  Protocol  to  the  Convention  have  been  ratified.  The  transition 
from  institutional  to  community-based  care  for  people  with  disabilities  has  continued;  there 
are now 15 residential units. However, implementation of the national strategy on equal rights 
for people with disabilities (for 2010-2018) has not progressed. Preparations in this area are 
progressing slowly.  

Some  progress  can  be  reported  on  social  protection.  The  Law  on  Social  Protection  was 
amended,  further  regulating  inspections  and  supervision  of  the  social  protection  system.  A 
system for continuing education for professionals in institutions for social protection has been 
established. Reforms in the pension and healthcare systems are progressing. Implementation 
of the law on social protection as well as of the national programme for development of social 
protection  for  2010-2021  needs  to  be  stepped  up.  Administrative  capacities  need  to  be 
strengthened. Preparations in this area are moderately advanced.  

Some progress can be reported on anti-discrimination. The national strategy on equality and 
non-discrimination  and  the  strategic  action  plan  for  2011–2015  of  the  Commission  for 
Protection  from  Discrimination  (CPD)  has  been  adopted,  proposing  measures  for  improved 
legal  framework,  awareness  raising,  capacity  building  and  inter-institutional  co-operation. 
The Commission has entered into formal cooperation with other relevant bodies such as the 
Ombudsman,  the  parliamentary  Committee  on  Equal  Opportunities,  and  the  Academy  for 
Judges  and  Prosecutors.  The  human  and  financial  resources  of  the  Commission  and  its 
Secretariat remain insufficient. The staff capacity at the Department of Equal Opportunities in 
the Ministry of Labour and Social Policy is low. The framework law on anti-discrimination 
does  not  explicitly  prohibit  discrimination  on  grounds  of  sexual  orientation  in  employment 
and occupation and is therefore not fully in line with the acquis. A structured and systematic 
data  analysis  on  discrimination  has  not  been  established.  Awareness  raising  activities  on 
equity and non-discrimination need to be intensified. 

A  little  progress  can  be  reported  on  equal  opportunities.  Labour  market  indicators 
concerning women are stable. The female employment rate remains very low compared to the 
EU average. The mechanism in place within the Ministry of Labour and Social Policy to deal 
with  complaints  of  unequal  treatment  does  not  function  properly.  There  is  a  tendency  to 
confuse  equal  opportunities  with  anti-discrimination  issues.  The  national  action  plan  for 
gender equality for 2008-2012 is implemented in a piecemeal approach, depending largely on 
external  financing.  The  section  for  equal  opportunities  within  the  Ministry  of  Labour  and 
Social  Policy  lacks  appropriate  human  and  financial  resources.  The  capacity  of  the  equal 
opportunity  commissions  at  local  level  remains  limited.  Little  was  achieved  to  improve 

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women’s  situation  in  rural  areas  or  Roma  women’s  conditions.  Support  for  activities  to 
combat discriminatory customs, traditions and stereotypes remains limited. 

Conclusion 

Little progress has been made in achieving an efficient and inclusive labour market. Very high 
unemployment remains a major challenge, in particular concerning women and young people. 
Social dialogue has improved but the role of social partners needs to be further strengthened. 
Poverty  remains  high  and  inclusion  of  Roma,  people  with  disabilities  and  other  socially 
excluded  people  is  limited.  Further  efforts  on  anti-discrimination  are  needed.  The  overall 
administrative capacity needs to be significantly strengthened in order to push implementation 
forward. Overall, preparations in this area are not very advanced.  

4.20.  Chapter 20: Enterprise and industrial policy 

There  was  some  progress  in  the  area  of  enterprise  and  industrial  policy  principles.  The 
‘regulatory  guillotine’  project  continued  to  focus  on  simplification  of  the  operating 
requirements for craftsmen and small businesses. 80 measures to improve the competitiveness 
of  the  local  economy  were  adopted.  Data  entry  and  the  functionality  and  interoperability  of 
the  Central  Register  were  improved.  The  national  authorities  maintained  close  cooperation 
with  representatives  of  business.  The  National  Council  for  Entrepreneurship  and 
Competitiveness was established, as a joint body of the public and private sectors. The central 
database of all draft legal acts is in operation; however, the level of reaction to, or comments 
on, legislative proposals by stakeholders using this facility remains very low.  

Some  progress  was  achieved  in  the  field  of  enterprise  and  industrial  policy  instruments. 
Entrepreneurship  and  innovation  were  strongly  promoted  through  the  ‘Factory  of  business 
ideas’  project.  About  120  companies  benefited  from  the  subsidised  advisory  service 
programme. Three new clusters were registered, bringing the total to 18. However, the budget 
allocated for support programmes under the SME Department and the SME Agency remains 
insufficient. The Law on Bills of exchange provided for improved enforcement of contracts, 
however it is only applicable in transactions between private entities and not between public 
and private. The country still shows a poor record on the number of applications submitted to, 
and use of the funds available under the EU Competitiveness and Innovation programme. A 
credit line for an additional € 100 million for th e private sector was agreed with the European 
Investment Bank. The government continued to provide subsidies in order to preserve the low 
interest rate for companies. The SME portal has yet to be established, making SME-relevant 
information difficult to obtain. Preparations in the area of policy instruments are moderately 
advanced. 

There  was  some  progress  in  sector  policies.  The  national  strategy  for  tourism  development 
was  adopted  by  the  government.  Intensive  promotional  campaigns  continued  and  subsidies 
were awarded with a view to attracting foreign tourists. A number of municipalities reduced 
their local taxes on construction of hotels, restaurants and other facilities by up to 95%. Local 
craftsmanship was supported through subsidies for procurement of equipment. However, the 
budget  allocated  for  the  craftsmanship  strategy  is  limited.  The  policy  framework  for  green 
growth should be strengthened.  

Conclusion 

Some  progress  can  be  reported  in  the  field  of  enterprise  and  industrial  policy.  Various 
strategies and measures were adopted, showing strong commitment to improving the business 
environment. However, implementation remains scattered across a number of uncoordinated 
and poorly funded bodies. The measures are yet to be made fully effective.  

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4.21.  Chapter 21: Trans-European networks  

Some progress was made in transport networks. The country continued to cooperate actively 
under  the  Memorandum  of  Understanding  on  Development  of  the  Core  Regional  Transport 
Network.  The  authorities  contributed 
the  Memorandum  of 
Understanding  on  the  Development  of  the  South-East  Europe  Regional  Transport  Network 
which  was  included  in  the  revision  of  the  trans-European  transport  network  guidelines 
proposed by the Commission in October 2011.  

implementation  of 

to 

Reconstruction of Ohrid airport and extension of a runway at Skopje airport were completed 
under  a  concession  agreement.  The  contract  for  construction  of  the  motorway  section  along 
SEETO  corridor  X,  from  Demir  Kapija  to  Smokvica,  co-financed  by  IPA  funds  was  signed 
and  construction  work  started  in  September  2012.  The  missing  link  on  rail  corridor  VIII 
towards  Bulgaria,  co-financed  by  WBIF  funds,  will  go  into  detailed  design  phase. 
Administrative  and  technical  capacity  needs  to  be  strengthened.  Preparations  in  the  area  of 
transport networks are moderately advanced. 

There  was  little  progress  in  the  energy  networks.  Preparatory  activities  related  to 
construction  of  a  new  400  kV  electricity  interconnection  line  with  Serbia  continued. 
Feasibility  studies  were  drafted  for  construction  of  a  new  400 kV  electricity  grid 
interconnection between Bitola and Elbasan and for development of the national gasification 
system. The country is moderately advanced in the area of electricity networks. 

Some  progress  can  be  reported  on  telecommunications  networks.  The  Memorandum  of 
Understanding  on  the  Information  and  Communication  Technologies  Policy  Support 
Programme of the Competitiveness and Innovation Framework Programme was signed with 
the EU, opening up access to the programme.  

Conclusion 

In  the  area  of  trans-European  networks  progress  was  made.  Overall,  development  of  the 
transport, energy and telecommunications networks is continuing and the country is actively 
participating  in  the  South-East  Europe  Transport  Observatory  and  the  Energy  Community. 
Preparations in this area are moderately advanced. 

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

As  regards  the  legislative  framework,  no  progress  was  made  in  securing  multi-annual 
programming, budget flexibility and co-financing capacity at national and local levels. Further 
efforts  are  needed  in  order  to  implement  the  cohesion  policy  in  line  with  the  EU  rules  and 
policies,  in  particular  in  the  environment  sector.  In  this  area,  preparations  are  moderately 
advanced. 

There  has  been  limited  progress  concerning  the  institutional  framework.  Considerable 
improvements  are  needed  in  order  to  increase  the  efficiency  of  the  operating  structures  to 
prepare and implement projects under the precursors of the Structural Funds, IPA components 
III and IV. Preparation of environmental projects by the relevant ministry remains of concern. 
More  efficient  management  and  control  systems  are  needed  to  ensure  continuation  of 
operations  and  payments  under  IPA  components  III  and  IV  and  prevent  repetition  of  the 
previously  identified  deficiencies.  Inter-ministerial  coordination  within  the  operating 
structures needs to be further strengthened. Preparations in this area are moderately advanced.  

In  the  area  of  administrative  capacity,  limited  progress  was  made.  Technical  support  and 
training for institutions involved in IPA implementation have continued. Analysis of training 
needs was carried out by the line ministries, the National Fund and the Central Financing and 
Contracting Department (CFCD). The training plan was only partially implemented due to the 

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heavy workload. The staffing situation deteriorated after management powers were conferred 
on  the  relevant  institutions  in  2009  and  2010.  The  workload  analysis  identified  a  need  for 
substantial  strengthening  of  the  staff  capacity  to  implement  pre-accession  assistance, 
including  relevant  expertise.  An  effective  retention  policy  of  trained  staff  is  of  the  utmost 
importance. Greater efforts are needed to ensure efficient management and coordination of all 
ongoing  and  planned  projects.  The  country’s  administrative  capacity  in  this  area  remains 
insufficient. 

As  regards  programming,  some  progress  was  made.  The  Human  Resources  Development 
Operational Programme for IPA component IV has been revised to add financial allocations 
for  2012-2013.  The  revision  of  the  Regional  Development  Operational  Programme  for  IPA 
component  III  has  not  been  completed.  Identification  and  preparation  of  mature  projects 
compatible with the objectives and means of the operational programmes, particularly in the 
environmental  sector  under  IPA  Component  III,  remains  difficult.  Tender  documents  and 
procurement processes need to be improved. Closer coordination and active participation by 
all  stakeholders  in  the  programming  process  are  needed.  Preparations  in  this  area  are 
advanced. 

There  was  some  progress  in  monitoring  and  evaluation.  Sectoral  monitoring  committees 
have  met  regularly.  The  management  information  system  (MIS)  is  in  the  process  of  full 
operational  deployment  and  the  relevant  manuals  of  procedures  and  guidelines  for  the 
operating  structures  include  a  reference  to  the  MIS.  Further  upgrades  and  continuous 
maintenance will be needed. The manual for programme monitoring and evaluation compiled 
by  the  national  IPA  coordinator  has  to  be  finalised  including  an  efficient  line  of  reporting. 
Interim  evaluations  on  IPA  components  III  and  IV  were  completed.  The  relevant 
recommendations  have  to  be  followed  up.  The  administrative  capacity  for  monitoring  and 
evaluation needs to be further strengthened. Preparations in this area are advancing. 

In  the  area  of  financial  management,  control  and  audit,  some  progress  was  made.  The 
senior management of the IPA Audit Authority was replaced in May and its budget for 2012 
was  slightly  increased.  Staff  shortages  in  the  CFCD  are  recurrent  and  need  to  be  urgently 
addressed. The capacity for proper financial management will have to be further strengthened 
in order to ensure an efficient system for management and control of EU funds. The internal 
audit  units  in  the  line  ministries  have  been  formally  set  up  and  staffed,  but  suffer  from 
insufficient understanding of IPA objectives and procedures. 

Conclusions 

Limited progress can be reported in the area of regional policy and coordination of structural 
instruments.  Management  of  IPA  programmes  needs  to  be  improved  in  order  to  ensure  full 
and  timely  absorption  of  EU  funds.  Additional  efforts  are  needed  to  address  deficiencies  in 
management,  control  and  audit  systems.  In  particular,  staffing  and  qualifications  within  the 
operating  structures  and  the  CFCD  need  to  be  substantially  strengthened.  Overall, 
preparations in this area are moderately advanced. 

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

Progress was made in the area of the judiciary but key issues remain to be addressed.  

Little  progress  was  made  as  regards  the  independence  and  impartiality  of  the  judiciary. 
Although  basic  safeguards  are  in  place,  including  the  role  and  composition  of  the  Judicial 
Council,  further  efforts  are  needed  in  practice  to  guarantee  independent,  high-quality 
decision-making by courts. Improvements are needed in the evaluation and promotion system, 
where the current emphasis on quantitative rather than qualitative assessment criteria creates 
the risk of formalistic  decision-making. The current  grounds  for dismissal  of judges are not 

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sufficiently  clear,  precise  and  predictable,  which  could  pose  a  potential  threat  to  judicial 
independence.  

As regards the professionalism and competence of the judiciary, stricter criteria entered into 
force  for  admission  to  initial  training  at  the  Academy  for  Judges  and  Prosecutors  (AJP), 
relating to certified academic performance and knowledge of English. The fourth generation 
of  nine  AJP  graduates  completed  their  initial  training  in  January  2012.  The  AJP  also 
continued  to  provide  continuous  in-service  training  for  judges,  prosecutors,  court  staff  and 
law  enforcement,  with  a  total  of  290  different  training  activities  being  provided  during  the 
reporting period, attended by 9,571 participants. The AJP’s budget for 2012 increased by 10% 
to  around  EUR 425,000;  however,  it  still  lacks  adequate  premises  and  staff,  in  view  of  the 
high volume of its activities.  

The requirement that all newly-appointed first instance judges must have graduated from the 
AJP has still not entered into force. In spite of the transitional provisions stipulating that 50% 
of such appointments should be AJP graduates, the Judicial Council continued to give greater 
preference to applicants who had not graduated from the AJP. Out of 26 available basic court 
posts  advertised  during  2011,  the  Judicial  Council  appointed  only  2  AJP  graduates  and  22 
non-AJP  graduates  (while  2  posts  were  not  filled),  despite  receiving  a  healthy  rate  of 
applications  from  AJP  graduates  for  each  post.  This  raises  concerns  about  the  credibility  of 
the current provisions and the Judicial Council’s commitment to merit-based recruitment. 

In  the  area  of  accountability,  nine  judges  were  dismissed  during  2011  and  none  were 
disciplined. There were no cases of revocation of judicial immunity by the Judicial Council in 
connection  with  criminal  proceedings  against  any  judges.  The  Judicial  Council  considered 
2,081 complaints filed by individuals and companies against judges and courts during 2011. 
The  most  common  ground  was  the  length  of  court  proceedings.  The  Ministry  of  Justice 
received 658 complaints about the length of proceedings (a decrease from 952 in 2010). The 
Supreme  Court  received  1,884  complaints  during  2011  regarding  unreasonably  lengthy 
proceedings, an increase from 398 in 2010. In the same period, it upheld 195 complaints and 
awarded compensation in 180 cases. The total amount paid out was around EUR 136,000. The 
second  instance  council  within  the  Supreme  Court,  which  hears  appeals  in  this  type  of 
proceeding, increased the awarded compensation in 17 cases.  

As  regards  the  efficiency  of  justice,  greater  efforts  are  needed  to  ensure  collection  and 
monitoring of the correct statistical indicators, such as the clearance rate and disposition time 
of  courts.  The  2011  Methodology  for  court  statistics  is  not  yet  being  systematically 
implemented and the related software is not yet operational. Training and awareness-raising 
are needed to ensure that all courts are using the same statistical tools. There is no monitoring 
mechanism  covering  the  overall  duration  of  court  proceedings,  including  all  stages  and 
instances  as  well  as  enforcement,  which  now  falls  under  the  jurisdiction  of  professional 
bailiffs. This is an essential tool in detecting unreasonable delays and their causes. There is no 
system  in  place  to  identify  and  give  priority  to  ‘old  cases’  which  have  been  in  the  court 
system  for  several  years.  Despite  changes  to  several  laws  and  campaigns  promoting 
mediation, the uptake of alternative dispute resolution is still very low. 

Progress  has  been  made  in  reducing  overall  court  backlogs  in  the  country.  In  the  last  two 
years, the 27 first instance courts and 4 appeal courts have together disposed of a considerably 
higher  number  of  cases  than  they  have  received.  This  has  been  partly  due  to  organisational 
measures, such as monthly targets set by the Judicial Council. However, care must be taken to 
ensure  that  productivity  is  not  given  priority  over  the  quality  of  judgments.  Problems  still 
remain  at  the  Supreme  Court  and  the  Administrative  Court,  which  have  both  been 
accumulating  backlogs  for  several  years.  In  April  2012,  the  Judicial  Council  temporarily 

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transferred four judges from the Higher Administrative Court to the Administrative Court in 
order  to  address  the  problem.  The  global  number  of  pending  cases  in  national  courts  at  all 
levels at the end of 2011 was 295,769. There is currently no system in place to establish what 
proportion of these cases actually constituted backlogs of ‘old cases’ as opposed to ordinary 
case-flow. In view of the current disparities in the workload at the different court levels, steps 
are  needed  to  ensure  more  efficient  distribution  of  human  resources,  including  judges, 
prosecutors  and  court  staff,  where  they  are  most  needed.  In  particular,  future  human  and 
financial resource strategies need to take better account of the actual and projected needs of 
the court system and to be based on reliable judicial performance indicators.  

The court budget for 2012 is around EUR 29 million (or 0.4% of GDP), of which 80 to 85% is 
spent on the salaries of judges and administrative staff. The current number of judges (678) is 
more than 50% higher than the European average in relation to the size of the population, and 
the  court  budget  is  one  of  the  highest  as  a  percentage  of  per  capita  GDP.  Future  judicial 
strategies  need  to  assess  the  sustainability  of  this  spending  and  start  planning  a  gradual 
rationalisation  of the  court network. The budget of the Public Prosecutor’s Office is around 
EUR 5.3 million. The majority (83%) is spent on salaries, while the remainder is insufficient 
to cover the necessary IT infrastructure upgrade of the prosecution service, notably its link-up 
to the courts’ automated court case management information system (ACCMIS), which still 
needs to be carried out.  

The courts at all levels have continued to publish judgments on  their websites  (over  90,000 
during  2011),  which  is  an  important  tool  in  promoting  transparency  and  access  to  justice. 
However,  the  system  should  be  made  more  user-friendly  through  the  classification  of 
judgments by subject and the inclusion of a search function.  

The legal aid budget for 2012 has doubled from last year to EUR 200,000; 213 lawyers and 4 
NGOs are registered to provide legal aid, however the number of cases is still very low. 

There is currently no judicial reform strategy or action plan in place to follow up the previous 
one dating from 2004-2009. It would be advisable to develop a new overall strategy in order 
facilitate strategic planning, budgeting and monitoring of future developments in the sector. 

Some progress was made in the area of anti-corruption policy.  

Amendments to the Law on the Financing of Political Parties were adopted, which give the 
State Audit Office (SAO) a leading role in the supervision of political financing. Efforts are 
still needed in practice to ensure that the SAO takes a proactive approach in investigation and 
enforcement, as well as to ensure the mandatory auditing of political parties’ annual reports 
and  the  effective  application  of  sanctions  for  violations  of  the  financing  rules,  in  line  with 
GRECO recommendations. The Law on the Prevention of Conflicts of Interest was amended 
and a bylaw adopted which set out the procedure for checking declarations made by elected 
and  appointed  public  officials.  The  Criminal  Code  still  needs  to  be  amended  in  order  to 
abolish  the  possibility  for  courts  to  return  the  bribe  to  a  bribe-giver  who  has  declared  the 
offence before it is uncovered. 

The  State  Commission  for  the  Prevention  of  Corruption  (SCPC)  adopted  State  Programmes 
for Prevention and Repression of Corruption and for Prevention and Reduction of Conflict of 
Interest,  along  with  a  corresponding  Action  Plan  for  2011-15,  providing  for  anti-corruption 
measures in 11 corruption-prone areas which include the financing of political parties, public 
procurement,  health  and  social  services,  customs,  the  mass  media  and  the  judiciary.  These 
programmes  have  not,  however,  been  adopted  or  endorsed  at  government  level,  which  may 
detract from their visibility and impact. 

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The  administrative  capacity  of  bodies  tasked  with  combating  corruption  improved  slightly, 
with the SCPC gaining one new recruit and the Ministry of the Interior’s Sector for Internal 
Control  and  Professional  Standards  gaining  11.  The  Anti-Corruption  Unit  of  the  Centre  for 
Suppression of Serious and Organised Crime is still operating at only 65% of capacity (11 out 
of 17 posts are filled). In 2012, the SCPC’s budget was increased by around 5% and it also 
procured new IT equipment. 

In 2011, the SCPC received 267 complaints of corruption (40% less than in 2010), and filed 
10  requests  with  the  Public  Prosecutor’s  Office  (PPO)  to  initiate  criminal  proceedings  for 
abuse of an official position. Following the 2011 election, the SCPC initiated misdemeanour 
proceedings against four election campaign organisers for failure to submit financial reports 
and three initiatives for criminal investigation of illegal campaign financing.  

There  were  125  convictions  for  corruption-related  offences  in  2011  and  74  in  the  first  six 
months  of  2012.  Bribery  offences  account  for  less  than  10%  of  convictions,  while  the 
majority still relate to abuse of public office. Stricter sentences for corruption-related offences 
were  imposed  by  the  courts  in  comparison  with  2010.  However,  orders  for  the  seizure  and 
confiscation  of  assets  remain  exceptional.  The  Criminal  Code  provisions  on  extended 
confiscation, illicit enrichment and criminal liability of legal persons have yet to be put into 
practice.  Special  investigative  measures  are  rarely  used  to  detect  and  investigate  corruption 
offences.  Decisions  by  public  prosecutors  not  to  indict  are  still  not  reviewed  by  the  courts. 
SCPC  and  SAO  requests  to  the  PPO  to  start  criminal  investigations  do  not  result  in 
convictions, indicating that the effectiveness of the existing referral mechanisms needs to be 
improved.  Inadequate  statistical  data-gathering  and  sharing  between  different  enforcement 
and prevention bodies hampers the identification of problem areas.  

The general capacity of the courts to deal with corruption cases, in particular high-level ones, 
needs  to  be  improved.  Only  a  handful  of  high-level  corruption  cases  have  been  prosecuted, 
and almost all of them remain in the court system after many years, having been returned for 
retrial  following  appeals,  due  to  inadequate  examination  of  evidence  by  the  first  instance 
court.  

The  Sector  for  Internal  Control  and  Professional  Standards  in  the  Ministry  of  the  Interior 
initiated  15  criminal  proceedings  for  corruption  related  offences  in  2011.  The  majority  of 
charges concerned abuse of official position. The Sector initiated 530 disciplinary procedures 
in  2011  (compared  to  556  in  2010).  The  Customs  Administration  strengthened  its  internal 
control  system.  In  2011,  42  disciplinary  procedures  were  initiated  against  customs  officers 
(compared  to  21  in  2010).  In  26  cases,  disciplinary  measures  were  applied  and  in  5  cases, 
criminal charges were brought (compared to 1 case in 2010).  

As regards corruption prevention activities, the SCPC continued to conduct random checks of 
asset declarations. Following checks carried out in 2011, the SCPC submitted 48 requests to 
the Public Revenue Office to initiate property examination procedures. As a result, 10 elected 
and appointed officials were charged the 70% tax rate on their undeclared income. In 2011, 
the SCPC received 425 statements of interest. It dealt with 128 cases of possible conflict of 
interest, confirmed conflicts in 37 cases and issued a public warning in 8. The effectiveness of 
the new implementing legislation on systematic verification remains to be seen. 

The Law on Free Access to Public Information remains deficient. The exceptions to access to 
public  information  are  vaguely  worded,  leaving  scope  for  arbitrary  interpretation.  The 
sanctions  set  out  in  the  law  are  unclear  and  are  not  applied  in  practice.  Political  parties  are 
excluded from the list of holders of information.  

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In 2011, the Academy for Training of Judges and Prosecutors carried out 15 training activities 
for  353  participants  on  combating  corruption  and  conflicts  of  interest.  Intensive  training  on 
the new Law on Criminal Procedure continued for judges and prosecutors.  

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

Some progress was achieved with regard to the prevention of torture and ill-treatment and the 
fight  against  impunity.  Staff  of  the  national  prevention  mechanism  in  the  Ombudsman’s 
Office  conducted  regular  visits  to  detention  facilities.  However,  the  Office  has  yet  to  be 
provided  with  the  necessary  budget  and  human  resources.  The  Ministry  of  the  Interior’s 
Sector  for  Internal  Control  and  Professional  Standards  increased  its  capacity  to  investigate 
allegations  of  ill-treatment,  but  it  has  yet  to  be  given  the  authority  to  impose  effective 
sanctions. The lack of independence of the internal control function for the police remains a 
concern. In 2011, of 63 complaints concerning disproportionate or  unlawful  use  of  physical 
force by police officers, all of which were investigated, 8 were considered well founded and 
led to the imposition of disciplinary sanctions. Allegations continued regarding ill-treatment 
towards persons detained in police custody by crime inspectors, and by the members of the 
Alpha  unit.  In  2011,  out  of  14  complaints  relating  to  Alpha  unit,  7  were  sent  to  the  public 
prosecutor, and for 8, disciplinary measures followed.  

There  was  some  progress  in  the  area  of  the  prison  system.  A  number  of  measures  were 
adopted  on  re-socialisation  of  convicted  persons.  A  risk  assessment  manual  was  produced, 
identifying  risks  and  the  needs  of  prison  inmates.  Standardised  procedures  were  adopted 
regarding  the  management  of  penitentiary  facilities,  notably  the  procedures  for  hygiene 
control,  admission  and  treatment  of  inmates,  as  well  as  procedures  addressing  violent 
behaviour, work, escapes  and visits to inmates. Numerous training activities for prison staff 
took  place.  The  implementation  of  a  large-scale  project  to  rebuild  prisons  continued. 
However, a comprehensive national strategy for the prison system has yet to be drafted. The 
administrative  capacity  of  the  Directorate  for  Execution  of  Sanctions  and  the  penitentiary 
institutions is weak. Specialised treatment programmes for vulnerable groups have yet to be 
put into practice. Lack of financial resources continued to restrict convicted persons’ access to 
adequate  healthcare  services.  Vocational,  educational  and  other  rehabilitation  activities  for 
inmates remain inadequate.  

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 (ECtHR). The government 
has adopted proposals to decriminalise defamation through a new Law on Civil Liability for 
Insult and Defamation, which aims to align with the relevant ECHR principles. The Criminal 
Code needs to be amended in line with this approach. Training on Article 10 ECHR has taken 
place for the judiciary and journalists. Over 40 key ECtHR judgments relating to Article 10 
have  been  translated  and  published  on  the  websites  of  the  Ministry  of  Justice  and  the 
Academy  for  Judges  and  Public  Prosecutors.  Further  training  of  all  judges  dealing  with 
defamation cases should continue in order to ensure that ECHR principles are applied by the 
courts in practice.  

With  regard  to  freedom  of  assembly  and  association,  the  overall  situation  is  satisfactory. 
There were no cases of misuse of the legislation or prohibition of registration. 

Freedom of thought, conscience and religion is generally ensured. 

Moderate progress was made on women’s rights and gender equality. A new Law on Equal 
Opportunities  was  enacted.  The  Sector  for  Equal  Opportunities  Policy  in  the  Ministry  of 
Labour  and  Social  Affairs  still  lacks  adequate  expertise,  personnel  and  budget.  Local 

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commissions  on  equal  opportunities  also  face  a  lack  of  expertise.  There  is  confusion  in 
practice  between  the  concepts  of  equal  opportunities  and  anti-discrimination,  which  is  a 
matter of concern. Some efforts were made to address women’s health needs; however, due to 
financial  constraints  only  a  limited  number  of  women  can  benefit  from  improvements. 
Insufficient support to the National Action Plan for Roma Women renders its implementation 
almost  impossible.  Women’s  participation  in  decision-making  in  society  remains  low, 
especially at local level.  

Some limited progress was made in the area of children’s rights. Amendments to the Family 
Law and the Law on Pre-School Education provided for a strengthened legislative framework 
for  the  adoption  of  children  and  for  the  inclusion  of  vulnerable  groups  in  education.  A 
National  Coordinative  Body  for  child  protection  was  established.  The  Centres  for  Social 
Work  were  equipped  with  a  new  database  and  case  management  system  to  improve  the 
quality of social services delivered to vulnerable children. However, it is estimated that only 
15% of children with disabilities are in education, mainly in specialised institutions. The lack 
of  psychologists  and  education  specialists  employed 
the  existing 
discrimination  against  children  with  disabilities,  prevent  their  inclusion  in  the  education 
system. The Ministry of Labour and Social Policy started activities to ensure registration of 
children without documents. It is estimated that there are around 1,000 street children, almost 
exclusively Roma.  The  number  of  reported  cases  of  sexual  abuse  and  paedophilia  remained 
constant. The Ministry of Labour and Social policy adopted a protocol on dealing with cases 
of paedophilia, in cooperation with the World Health Organisation. 

in  schools,  and 

Some  limited  progress  can  be  reported  in  the  treatment  of  the  socially  vulnerable  and/or 
persons with disabilities. The UN Convention on the Rights of Persons with Disabilities was 
ratified. The opening of communal housing units as part of the deinstitutionalisation process 
for  people  with  disabilities  has  continued.  However,  implementation  of  the  revised  national 
strategy  on  equality  of  rights  of  people  with  disabilities  2010-2018  is  very  slow.  Material 
conditions  and  inhumane  and  degrading  treatment  in  psychiatric  institutions  have  not 
improved. Integration of people with disabilities in society remains limited. 

Some progress can be reported in the area of anti-discrimination policy. The Commission for 
Protection Against Discrimination became an observer member of the European Network of 
Equality Bodies. The Commission signed Memoranda of Cooperation with the Ombudsman’s 
Office,  the  Women’s  Lobby  and  the  Academy  for  Judges  and  Public  Prosecutors.  The 
Commission  issued  34  opinions  in  2011,  relating  to  complaints  submitted  mainly  on  the 
grounds of ethnic, political and social status in the areas if labour relations, social security and 
the  judiciary.  The  Commission  still  lacks  sufficient  financial  and  human  resources;  the 
capacity  of  its  secretariat  is  particularly  weak.  Awareness  among  the  population  of  the 
Commission’s work and the principles of the Anti-Discrimination Law remains very low. A 
decreasing proportion of its recommendations is accepted by public authorities and there are 
concerns over its independence. The Anti-Discrimination Law is still not fully in line with the 
acquis  as  it  does  not  explicitly  prohibit  discrimination  on  grounds  of  sexual  orientation  in 
employment  and  occupation.  The  Criminal  Code  penalises  offences  related  to  racism  and 
xenophobia. Data on occurrences of hate speech or incitement in the media is collected by the 
Broadcasting Council.  

As regards property rights, the land register now covers 99.96% of the country’s territory. A 
new  Law  on  Expropriation  was  adopted  which  extends  the  scope  of  public  interest  at  both 
national  and  local  level.  Appeals  against  first  instance  decisions  on  expropriation  are  now 
dealt  with  solely  by  the  Administrative  Court.  The  E-cadastre  system  was  expanded  to  a 
further  21  towns  in  the  country.  A  national  positioning  system  (MAKPOS)  was  put  into 
commercial use. Info-lines were made available to the land registry office and open days for 

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the  public  continued  to  be  held.  The  process  of  returning  property  confiscated  under  the 
Socialist  Federal  Republic  of  Yugoslavia  has  continued.  However,  168  complaints  lodged 
with the Ombudsman’s Office in 2011 for breach of property rights were linked to the process 
of denationalisation alone. Delays persist in the enforcement of final decisions on restitution 
and the backlog of property disputes continues to cause delays in the Administrative Court. 

Limited  progress  was  made  as  regards  respect  for  and  protection  of  minorities  and  cultural 
rights.  Institutions  promoting  the  rights  of  smaller  communities  increased  their  activities, 
particularly  in  the  area  of  education.  The  Government  adopted  an  action  plan  on  Roma 
inclusion and some progress was made regarding the education of Roma and identification of 
persons  without  documents.  However,  the  Secretariat  for  the  Implementation  of  the  Ohrid 
Framework  Agreement  continues  to  suffer  from  insufficient  strategic  planning  capacity  and 
internal  control  standards.  Institutions  responsible  for  promoting  the  rights  of  smaller 
communities  and  the  Roma  remain  underfunded,  posing  a  serious  obstacle  to  the 
implementation  of  existing  strategies.  Inter-institutional  cooperation  is  weak.  The  pace  of 
implementation  of  the  Roma  Strategy  has  slowed  down  in  the  areas  of  health  and  culture. 
Concerns over the sustainability of several successful projects, such as the Roma Information 
Centres, persist. A series of violent incidents has put inter-ethnic relations under strain. 

Further  progress  was  made  on  protection  of  personal  data.  The  National  Strategy  for  data 
protection  2012-2016  and  related  action  plan  were  adopted.  The  inspection  capacity  of  the 
Directorate  for  Personal  Data  Protection  (DPDP)  increased,  and  it  gained  three  new  staff. 
Budget  allocations  remained  at  the  same  level  as  in  2011.  International  cooperation  further 
improved.  Various  guidelines  were  published,  targeting  data  controllers  and  processors  and 
the general public. However, the number of confirmed violations has increased from 176 in 
2010 to 319 in 2011, and various media do not respect individuals’ right to privacy, leading to 
frequent violations.  

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

Conclusion 

Some progress has been made in the field of the judiciary, notably in reducing the backlogs of 
court  cases.  Further  improvements  are  needed  as  regards  merit-based  judicial  appointments, 
precise  and  predictable  dismissal  grounds  and  correct  use  of  statistical  tools.  In  the  area  of 
anti-corruption  policy,  the  legislative  framework  is  in  place  and  capacity  has  been 
strengthened slightly but greater efforts are needed to develop a track record of investigations, 
prosecutions  and  convictions  as  no  progress  has  been  observed  in  this  regard.  As  regards 
fundamental  rights,  some  progress  was  made  in  the  area  of  freedom  of  expression,  notably 
towards the decriminalisation of defamation. The relevant institutions need to become more 
effective in promoting and safeguarding fundamental rights in practice. The Ohrid Framework 
Agreement  remains  an  essential  element  for  democracy  and  rule  of  law  in  the  country. 
Preparations in the field of the judiciary and fundamental rights are moderately advanced. 

4.24.  Chapter 24: Justice, freedom and security 

Little  progress  was  made  in  the  field  of  migration.  Establishment  of  the  database  for 
foreigners,  covering  asylum,  migration  and  visas, advanced slowly and is still in the testing 
phase. In 2011, 469 irregular migrants were detected in the country. A high concentration of 
irregular  migrants  was  reported  at  the  border  with  Serbia.  Strategic  capacity  for  managing 
migration  flows  is  insufficient  to  cope  with  the  increasing  numbers  of  migrants  transiting 
through the country. A readmission agreement with Serbia entered into force and another was 
signed  with  Montenegro.  The  readmission  agreement  with  the  EU  continues  to  be 

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implemented  well.  In  2011,  1,022  persons  were  returned  under  the  EU  readmission 
agreement. In this area, the country is well advanced.  

Some progress has been made in the field of asylum. The Law on Free Legal Assistance was 
amended  to  include  asylum  seekers.  An  amendment  to  the  Law  on  Health  Insurance 
guarantees  access  to  the  public  health  system  for  persons  who  are  granted  asylum.  An 
integration  programme  was  adopted  for  2012, ensuring state funding for housing  support to 
persons who are granted asylum. The centre for integration continued to build up its capacity 
to provide services to persons granted asylum. The reception capacity of the asylum centre in 
Vizbegovo  improved.  Access  to  information  about  asylum  procedures  and  social  rights 
increased slightly. In 2011, 740 applications for asylum were made, a sharp increase from 180 
in  2010.  In  this  context,  the  capacity  of  the  asylum  unit  in  the  Ministry  of  Interior  remains 
insufficient.  The  asylum  procedure,  in  particular  for  first  instance  asylum  decisions,  is  slow 
and unsatisfactory. The appeal system in relation to determination of refugee status continued 
to improve, although decisions are still issued on procedural rather than substantive grounds. 
No  progress  was  made  on  speeding  up  the  process  for  providing  asylum  seekers  with  ID 
papers.  Interpretation  remains  an  obstacle.  The  legislative  and  institutional  framework  is 
overall satisfactory but implementation needs to improve. Given the recorded increase in the 
number  of  asylum  seekers,  more  efforts  are  needed  on  strategic  planning.  In  this  area,  the 
country is advanced. 

Progress  was  made  on  visa  policy.  Implementation  of  the  visa  free  regime  with  the  EU 
improved. The number of asylum applications lodged by the citizens of the country in the EU 
decreased  from  7,550  in  2010  to  5,545  in  2011.  However,  long-term  policies  to  improve 
social and economic inclusion of the most vulnerable groups of the population most likely to 
migrate  remain  underdeveloped  and  underfunded.  Continuous  training  on  forged  documents 
was provided for staff of diplomatic and consular missions. There is already a high degree of 
alignment with the EU positive list. Further efforts need to be made with a view to alignment 
with the EU negative list by the date of accession. In this area, the country is well advanced.  

There  was  good  progress  in  the  area  of  external  borders  and  Schengen.  Legislation 
implementing  the  Law  on  Border  Control  was  adopted.  Protocols  were  signed  for  the 
establishment of joint contact centres for police cooperation with Serbia, Kosovo and Albania. 
Protocols on joint border patrols were implemented by mixed patrols with Bulgaria, Kosovo 
and  Albania.  Good  cooperation  with  Frontex  continued.  A  rulebook  on  risk  analysis  in  the 
area  of  organised  cross-border  crime  and  illegal  migration  is  being  implemented.  Training 
programmes  for  field  officers  and  a  specific  training  programme  for  senior  and  mid-level 
police officers has continued to be implemented. The central database for false and genuine 
documents and specimen travel documents was updated regularly. Further efforts are needed 
to  complete  the  human  resources  capacity  of  the  inland  mobile  unit  set  up  at  central  level. 
Competences were transferred to an inter-agency body, the National Coordination Centre for 
border  management,  which  includes  a  newly  established  National  Advisory  Body  for 
Integrated  Border  Management,  responsible  for  monitoring  and  implementation  the  IBM 
strategy  and  action  plan.  Significant  additional  efforts  are  needed  to  strengthen  the 
institutional  and  functional  capacity  of  these  bodies,  particularly  for  strategic  planning  and 
human  resources  management.  Further  efforts  are  also  needed  to  complete  the  human 
resources  capacity  of  the  inland  mobile  unit  set  up  at  central  level.  Work  continued  on 
extending  the  TETRA  radio  communications  system,  which  currently  covers  40%  of  the 
country. Progress was achieved in the technical equipping of the border police, notably with 
surveillance  equipment.  Reconstruction  and  renovation  of  9  out  of  20  police  stations  for 
border surveillance were completed. Also, a total of 9 police stations were connected to the 
central  database  of  the  Ministry  of  Interior  and  the  connection  of  others  is  underway. 

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Budgetary  management  of  border  police  resources  was  partly  decentralised.  Overall, 
preparations in the area of external borders and Schengen are advanced. 

There  was  some  progress  on  judicial  cooperation  in  civil  and  criminal  matters.  The 
appointment  of  two  liaison  officers  further  improved  cooperation  with  Eurojust.  In  the 
reporting  period  the  Ministry  of  Justice  processed  1,017  requests  on  criminal  matters  and 
3,880 on civil matters. A bilateral extradition agreement with Montenegro entered into force, 
and  agreements  with  Serbia  and  Croatia  were  ratified.  Application  of  the  2011  Law  on 
International  Cooperation  on  Criminal  Matters  was  postponed  as  a  result  of  the  postponed 
entry into force of the new Law on Criminal Procedure. In this area the country is moderately 
advanced. 

Some  progress  can  be  reported  on  police  cooperation  and  the  fight  against  organised 
crime. The international law enforcement coordination unit in charge of exchanges of police 
and intelligence information (ILECU) within the Ministry of Interior is now in operation and 
an agreement was signed on cooperation between the law enforcement agencies involved. 107 
international arrest warrants were issued in the country in 2011. There was good regional and 
international  cooperation  on  law  enforcement  through  Europol  and  Interpol.  The  Sector  for 
International Police Cooperation was designated as the National Central Unit for Cooperation 
with  the  signatories  of  the  Convention  on  Police  Cooperation  in  South-Eastern  Europe.  An 
agreement  on  operational  and  strategic  cooperation  with  Europol  entered  into  force,  but  a 
liaison officer at Europol remains to be assigned. 

The  Police  Training  Centre  continued  to  provide  its  advanced,  continuous  and  specialised 
training.  Around  300  police  cadet  candidates  were  selected  to  receive  basic  training  at  the 
Centre.  It  now  has  a  separate,  but  limited,  budget  line.  A  training  strategy,  defining  the 
objectives  and  target  groups,  was  adopted.  However,  human  resources  are  not  efficiently 
balanced  between  the  different  law  enforcement  agencies.  Full  implementation  of  the  new 
structure for the Bureau of Public Security and the regional Sectors for Internal Affairs is still 
hampered  by  insufficient  financing  and  staffing.  A  professional  evaluation  of  Ministry  of 
Interior staff was carried out. Professionalization of police human resources and a rigorously 
merit-based  recruitment  policy  are  needed  in  order  to  enhance  operational  capacity  and  the 
efficiency of investigations. Further police training and establishment of an independent and 
robust external oversight mechanism for the police services remain crucial for police reform. 

Full  implementation  of  the  new  Law  on  Criminal  Procedure  (LCP),  which  was  adopted  in 
2010  with  entry  into  effect  postponed  until  November  2012,  will  now  be  postponed  until 
December 2013 for lack of budgetary and human resources and equipment. The Investigative 
Centres and Judicial Police foreseen by the new LCP have not yet been established. Further 
efforts are needed to implement the action plan for enforcement of the new LCP, in particular 
in the areas of resources, organisation, equipment and training of law enforcement agents and 
prosecutors. 

There  has  still  been  no  progress  on  staffing  the  Centre  for  Suppression  of  Organised  and 
Serious Crime, with only around 62% of the posts filled (a slight decrease from last year). The 
National Criminal Intelligence Database is still not operational and the National Coordination 
Centre  for  the  fight  against  organised  crime  has  still  not  been  established.  Efforts  by  the 
relevant law enforcement bodies (the Ministry of Interior, the Public Prosecutor’s Office, the 
Customs  Administration  and  the  Financial  Police)  on  fighting  organised  crime  need  to  be 
stepped  up.  Structural  problems  persist  in  law  enforcement  agencies  combating  organised 
crime.  

The Law on Interception of Communications was amended, removing the direct involvement 
of the Minister of Interior in the authorisation of interceptions and aiming at improved control 

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and  supervision  of  the  process  by  the  public  prosecutor  and  the  relevant  parliamentary 
oversight committee. The use of special investigative techniques still needs to be increased in 
practice,  as  does  the  systematic  use  of  financial  investigations.  The  customs  administration 
and  financial  police  still  have  limited  capacity  to  apply  special  investigative  measures, 
significantly limiting the efficiency of the fight against organised crime.  

The witness protection programme was activated in two cases in 2011. The witness protection 
unit  was  granted  two  additional  premises  but  still  lacks  adequate  equipment.  The 
implementation of legislative provisions providing for compensation to be paid to victims of 
organised crime needs to be improved in practice. 

In  2011,  the  Financial  Intelligence  Unit  (FIU)  reported  22  cases  of  suspicious  transactions 
related to money-laundering and 107 related to other types of economic and financial crime to 
investigating authorities and the prosecution service. Most of the cases processed concerned 
tax  evasion.  A  total  of  43  persons  were  prosecuted  in  four  cases  during  2011.  Six  persons 
were  convicted  in  two  cases.  The  level  of  reporting  and  investigation  of  money-laundering 
and financial crime remains weak. A more pro-active stance is urgently needed. 

Moderate progress was achieved in addressing trafficking in human beings. Eleven victims of 
human  trafficking  were  identified  in  2011,  down  from  12  in  the  previous  year.  During  the 
year, the Centre for Victims of Human Trafficking accommodated eight victims. Efforts are 
needed  to  ensure  the  Centre’s  sustained  ability  to  provide  comprehensive  care.  In  2011,  35 
persons  were  charged  on  suspicion  of  trafficking  compared  with  25  in  2010  and  7  persons 
were  convicted,  down  from  11  in  2010.  A  comprehensive,  multi-disciplinary  and  victim-
oriented  approach  to  trafficking  still  needs  to  be  developed,  and  proactive  identification  of 
victims  of  trafficking  needs  to  be  improved.  The  country  remains  a  source,  destination  and 
transit country for human sex trafficking and forced labour. 

The country is advanced in the fields of police cooperation and fighting organised crime.  

Some progress can be reported in the fight against terrorism. The country became a member 
of  the  counterterrorism  initiative  of  the  Council  of  Europe.  Bilateral  and  multilateral 
cooperation  continued.  A  national  strategy  for  the  prevention  of  money-laundering  and 
financing of terrorism for 2012-2014 was adopted. The Council for the Fight against Money-
Laundering  and  Financing  of  Terrorism  was  established  as  an  inter-ministerial  body  to 
improve  inter-institutional  cooperation.  A  memorandum  of  cooperation  was  signed  between 
the  FIU  and  the  Intelligence  Agency.  In  2011,  the  FIU  submitted  three  notifications  of 
suspicious transactions regarding financing of terrorism to law enforcement agencies and the 
prosecution service. Preparations in this area are well advanced. 

Little  progress  can  be  reported  as  regards  cooperation  in  the  field  of  drugs.  The  national 
focal  point  cooperated  well  with  the  European  Monitoring  Centre  for  Drugs  and  Drug 
Addiction  (EMCDDA)  on  common  projects.  In  2011,  the  quantity  of  drugs  seized  on  the 
country’s territory remained low, continuing last year’s downward trend. The country remains 
on  the  main  Balkan  drug  trafficking  routes,  despite  several  successful  international  police 
operations to cut international drug trafficking channels. The customs administration needs to 
put  more  effort  into  detecting  and  seizing  narcotics  at  the  borders.  The  human  resources 
capacity  of  the  Illicit  Drugs  Department  in  the  Ministry  of  Interior  should  be  strengthened. 
The country broadly meets acquis requirements. 

There was good progress on customs cooperation. The customs administration took part in 
eight  international  operations  to  detect  illicit  trade,  led  by  the  regional  intelligence  liaison 
offices  of  the  World  Customs  Organisation  (WCO),  the  South-east  European  Law 
Enforcement  Centre  (SELEC)  and  the  German  authorities.  Cooperation  and  exchanges  of 

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intelligence  with  the  customs  authorities  of  neighbouring  countries  also  continued  and 
intensified. Preparations in this area are well on track. (See also Chapter 29 – Customs union). 

For measures against counterfeiting of the euro, see Chapter 32 – Financial control.  

Conclusion 

Progress  has  been  made  in  the  area  of  justice,  freedom  and  security,  notably  on  external 
borders  and  customs  cooperation,  as  well  as  on  interception  of  communications.  Further 
efforts are needed to improve the efficiency of the asylum procedure, ensure rigorously merit-
based recruitment to the police, step up the fight against organised crime and improve seizure 
of drugs. A more pro-active stance of law enforcement agencies is urgently needed. Overall, 
preparations in this area are advanced. 

4.25.  Chapter 25: Science and research  

Little progress can be reported on research and innovation policy. The preparations of the 
national  programme  for  scientific  and  research  activities  for  2012-2016  and  the  strategy  on 
innovation  have  advanced,  but  remain  to  be  adopted.  The  2012  programmes  for  scientific 
research activities, technological development and technical culture were adopted. The budget 
for these programmes has, however, continued to decrease since 2010. Financial resources are 
still  limited  and  the  capacity  of  the  research  facilities  remains  weak.  Greater  efforts  are 
needed,  in  particular  on  the  level  of  investment  and  strengthening  the  capacity  at  national 
level  by  increasing  the  number  of  scientists  and  modernising  infrastructure.  Preparations  in 
this area are moderately advanced. 

Further progress was made on participation in the Seventh Framework Programme (FP7). 
The  level  of  participation  in  FP7  continued  to  increase  but  remains  uneven.  The 
administrative  capacity  to  organise  promotion  activities,  workshops  and  conferences  on 
cooperation opportunities under FP7 improved. Particular efforts have been made to involve 
SMEs and on Marie Curie actions. Further efforts are necessary, in particular in preparation 
for  the  next  framework  programme,  ‘Horizon  2020’,  covering  the  period  2014-2020. 
Collaboration with the Joint Research Centre resulted in the conclusion of a Memorandum of 
Understanding  (MoU)  aiming  at  increasing  the  exchange  of  scientists  and  preparing  for 
compliance  with  EU  standards  and  technical  requirements.  Preparations  in  this  area  are 
advanced. 

With regard to the European Research Area (ERA), steps were taken to facilitate integration 
into  the  ERA  and  to  contribute  to  the  Innovation  Union.  Procurement  of  equipment  for 
scientific  laboratories  for  public  universities  and  research  institutes  allowed  upgrading  of 
several  national  institutes.  On  mobility  of  researchers,  preparations  for  the  national 
EURAXESS portal and for setting up network infrastructure are well advanced. However, the 
level  of  investment  in  research  decreased  in  2012.  A  lack  of  reliable  statistics  makes  it 
difficult  to  monitor  investments  and  results.  Preparations  on  EU  research  and  innovation 
policy are moderately advanced. 

Conclusion 

Little  progress  can  be  reported  in  the  area  of  science  and  research.  Preparations  for  the 
national  programme  for  science,  research  and  development  activities  for  2012-2016  and  for 
the  strategy  on  innovation  have  advanced,  but  the  documents  remain  to  be  adopted. 
Participation  in  FP7  continued  to  be  good.  The  administrative  capacity  to  support 
participation in the framework programmes has improved, but remains weak. Little progress 
can be reported on future integration into the European Research Area. Overall, in the area of 
science and research the country partially meets its targets. 

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4.26.  Chapter 26: Education and culture 

There was some progress in the fields of education, training and youth. Parliament enacted 
amendments  to  the  laws  on  primary  and  secondary  education.  University  rankings  are 
published  for  all  19  universities  covering  aspects  such  as  teaching,  research  and  social 
services.  Third-cycle  (doctoral)  studies  were  launched  as  part  of  the  implementation  of  the 
Bologna  process  in  higher  education.  Strategies  for  introducing  entrepreneurial  and 
environmental  education  and  for  training  gifted  pupils  in  primary  education  have  been 
designed. The licensing system for adult education activities was established. Adult education 
schemes are in progress providing university studies and training.  

The country improved its performance on upper-secondary attainment and in areas where EU-
level benchmarks were set for 2020, in particular as regards early-school leaving and tertiary 
attainment. 

However, in general, the country remains below the EU average in education, particularly in 
early-childhood  education.  No  national  targets  were  set  for  educational  attainment,  aligned 
with  the  education  and  training  2020  framework  to  address  priority  areas  in  each  of  the 
different  levels  of  education  and  training.  There  are  limited  opportunities  for  distance, 
modular  or  part-time  learning.  Austerity  measures  have  affected  overall  spending  on 
education.  Regional  disparities  remain.  Some  children  in  rural  areas  do  not  receive  primary 
education and the early school-leaving rate remains high, particularly among Roma. Teacher-
training needs to be improved. Higher education is necessary as it does not reflect the needs of 
the  labour  market.  The  national  qualifications  framework  is  not  developed.  The  overall 
capacities of the centre for vocational education and of the centre of adult education remain 
insufficient.  

There was good progress as regards the country’s access to the Lifelong Learning and Youth 
in Action programmes. The progress made towards meeting the conditions set by the EU led 
to  the  lifting  of  the  suspension  of  the  preparatory  measures  under  these  programmes.  The 
system of secondary controls of the work and day-to-day management of the national agency 
for a European educational programme and mobility was enhanced. The national authorities 
took measures to remove the irregularities detected and to make sure that the national agency 
works  properly.  The  country  has  also  become  part  of  the  centralised  action  of  the  Lifelong 
Learning programme.  

Overall, preparations in the areas of education, training and youth are at an early stage. 

Some  progress  can  be  reported  in  the  field  of  culture.  The  country  has  intensified  its 
participation  in  the  Culture  and  the  Europe  for  Citizens  programmes.  New  items  and 
institutions  were  declared  as  part  of  cultural  heritage.  The  government-sponsored  cultural 
infrastructure programmes have failed to reflect the multi-ethnic composition of the country 
and allocations to the cultural activities of the non-majority communities remain insufficient. 
Preparations in the area of culture are on track. 

Conclusion 

There was some progress in the areas of education, training, youth and culture. The country 
improved  its  performance  in  relation  to  the  Education  and  Training  2020  common 
benchmarks. The suspension of preparatory measures for the Lifelong Learning and Youth in 
Action  programmes  was  lifted.  Investment  continued,  although  it  has  yet  to  be  equitably 
applied  to  reflect  the  multi-cultural  society  better.  In  the  areas  of  education  and  culture  the 
country is moderately advanced. 

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4.27.  Chapter 27: Environment and climate change 

In  the  field  of  environment,  further  progress  was  made  on  the  horizontal  legislation. 
Legislation  was  adopted  on  strategic  environmental  assessment  (SEA)  and  environmental 
impact  assessment  (EIA).  The  administrative  capacity  for  implementing  the  EIA  and  SEA 
Directives  was  improved,  but  shortcomings  remain,  in  particular  at  local  level.  The 
requirements for access to information and public consultations related to EIA and SEA are 
still not adequately applied. Implementation of environmental liability legislation has not yet 
begun. Preparations for alignment with the INSPIRE and the Environmental Crime Directives 
need to be speeded up. Preparations in this area are advanced.  

Some progress was made in the area of air quality. Alignment with the acquis continued, with 
the  adoption  of  implementing  legislation.  Good  progress  was  made  on  developing  an  air 
quality  monitoring  system,  but  it  was  uneven,  due  to  insufficient  financial  resources  for 
operating  the  system.  This  hampers  proper  implementation  of  the  legislation  in  this  field. 
Preparations in this field are well underway. 

Some  progress  was  made  in  the  area  of  waste  management.  The  Law  on  Electrical  and 
Electronic Equipment waste management was adopted. Implementing legislation was adopted 
and  further  progress  was  made  on  setting  up  the  integrated  waste  management  system.  The 
administrative  capacity  was  improved.  Investments  in  this  area  are  far  from  sufficient  and 
need  to  be  increased.  A  system  to  deal  with  data  collection,  registration  and  reporting  was 
launched on a pilot basis. Preparations in this area are progressing. 

Very little progress can be reported in the area of water quality. Alignment with the acquis is 
still  lagging  behind.  The  national  strategy  for  water  has  not  been  adopted  yet.  River  basin 
management structures were established, but are not yet fully operational. The administrative 
capacity remains insufficient at central and local levels. The insufficient coordination between 
the  competent  authorities  in  the  water  sector  continues  to  hamper  implementation  of  the 
legislation.  No  progress  was  made  on  addressing  the  gaps  in  the  water  monitoring  system. 
Planning and preparation of infrastructure investment are lagging behind and funding is low 
compared  with  the  needs  in  the  sector.  No  progress  was  made  to  apply  the  polluter-pays 
principle  and  establish  an  appropriate  water  pricing  system.  This  continued  to  hamper 
operation of water treatment facilities. Preparations in this area are lagging behind. 

Little  progress  was  made  in  the  area  of  nature  protection.  Alignment  with  the  acquis 
continued with the adoption of legislation implementing the Law on Nature Protection. Some 
progress  can  be  reported  on  the  development  of  management  plans  for  protected  areas,  but 
requirements  for  public  consultation  with  stakeholders  are  still  not  always  properly  applied. 
Implementation of these plans is still inadequate due to the lack of sustainable financing and 
insufficient  monitoring.  Work  on  the  new  national  strategy  and  action  plan  for  nature 
protection has not yet started. Preparations in this area are moderately advanced.  

Little  progress  was  made  on  industrial  pollution  control  and  risk  management.  Work  on 
transposition  and  implementation  of  the  Seveso  II  Directive  is  progressing.  The  integrated 
pollution  prevention  and  control  (IPPC)  permit  process  is  behind  schedule.  Administrative 
capacity needs to be significantly strengthened, in particular for permit, control and inspection 
activities. Preparations in this area require substantial additional efforts. 

Good progress was made in the area of chemicals. The report on the status of chemicals and 
the national plan for the strategic approach to chemical management were adopted. Progress 
can  be  reported  on  implementation  of  REACH  (registration,  evaluation,  authorisation  and 
restriction of chemicals). The administrative capacity was improved. Preparations in this area 
are moderately advanced. 

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Very little progress was made in the area of noise. Administrative capacity is insufficient in 
terms of both staff and equipment. In this area, preparations are at an early stage. 

Good  progress  was  made  on  civil  protection  in  the  form  of  accession  to  the  EU  civil 
protection mechanism and participation in the IPA cooperation project on civil protection.  

Little progress was made in the area of climate change. A comprehensive climate strategy is 
still  to  be  developed.  Climate  considerations  are  being  increasingly  integrated  in  energy 
policy, but substantial efforts are required in order to fully integrate climate change into other 
sectoral  policies  and  strategies.  The  country  regularly  associated  itself  with  EU  positions  in 
the international context. While having previously associated itself also with the Copenhagen 
Accord, the country did not yet put forward a mitigation commitment by 2020. The country 
should  consider  taking  mitigation  commitments  consistent  with  those  of  the  EU  and  its 
Member States for the purpose of the post-2020 climate agreement to be reached by 2015. 

The  country  took  initial  steps  to  identify  stationary  installations  for  the  purpose  of  future 
implementation of an emissions trading system. The national management plan for the phase-
out of hydrochlorofluorocarbons (HCFCs) was adopted in November 2011. Significant efforts 
are required to strengthen the country’s monitoring, reporting, and verification capacities.  

The  country  participated  regularly  in  the  climate  work  under  the  Regional  Environmental 
Network for Accession (RENA) and a high-level event on climate cooperation was organised 
under  the  Regional  Environmental  network  for  Accession  (RENA).  Initiatives  to  raise 
awareness and promote  cooperation  between stakeholders were launched, but efforts should 
be intensified. In this area, preparations are at an early stage. 

The  administrative  capacity  for  implementing  and  enforcing  environmental  and  climate 
change legislation remains largely insufficient at both national and local levels. Coordination 
between administrative bodies responsible for environment-related issues is not yet effective. 
Environmental  protection  and  climate  change  requirements  are  still  not  integrated  well  into 
policy-making  and  policy  implementation.  Involvement  of  stakeholders  in  decision-making 
has  improved,  but  is  still  not  sufficient.  The  environmental  monitoring  and  information 
system needs further development. Investments in the sector continue to be very low.  

Conclusion 

Overall, limited progress was made in  the environment and climate change chapter.  Further 
progress was made on transposing the acquis into national legislation, in particular on waste 
management, air quality and chemicals. Little progress was made towards alignment with the 
climate  change  acquis.  Significant  efforts  are  needed  in  order  to  implement  the  national 
legislation,  especially  on  water  management,  industrial  pollution  control,  nature  protection 
and  climate  change.  Considerable  efforts  are  required  on  awareness-raising,  setting  a  more 
strategic approach for the country, aligning with and implanting EU climate acquis, as well as 
strengthening administrative capacity. Administrative capacity at both central and local levels 
needs to be strengthened. Investments need to be increased, especially in the waste and water 
sectors. Overall, preparations in the field of the environment are moderately advanced while 
in the field of climate change remain at an early stage. 

4.28.  Chapter 28: Consumer and health protection  

Some  progress  can  be  reported  in  consumer  protection.  As  regards  horizontal  aspects,  the 
regulatory  framework  and  the  enforcement  records  have  improved.  The  Organisation  of 
Consumers  has  continued  organising  awareness  raising  events,  education  campaigns  and 
providing advice to consumers, including in rural areas. Capacity-building events have been 
organised  for  professionals  from  market  inspectorates,  consumer  organisations  and  relevant 
ministries.  However,  the  financial  support  granted  to  the  consumers’  association  remains 

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insufficient.  The  administrative  capacity  of  the  consumer  protection  department  within  the 
Ministry of Economic Affairs needs to be increased.  

Some progress has been noted on product safety-related issues. Amendments to the rulebook 
on the safety of childrens’ toys have been adopted. The enforcement record of the consumer 
protection  legislation  has  further  improved.  Market  inspectorates  have  been  increasingly 
dealing  with  consumer  complaints,  decreasing  the  workload  of  consumer  organisations. 
Despite some improvement, market surveillance does not yet provide for fully effective and 
transparent  protection  for  consumers.  The  administrative  capacity  of  the  coordinating  body 
needs to be substantially augmented.  

Some  progress  can  be  reported  with  regard  to  non-safety-related  issues.  The  new  law  on 
consumer protection for agreements for consumer credits entered into force and implementing 
regulation were adopted with a view to alignment with the acquis. The law provides for more 
information and efficient legal protection for consumers when concluding credit agreements. 
Preparations in the area of consumer protection are advanced. 

Some progress has been achieved in the area of public health. Regarding horizontal aspects, 
a  new  law  on  healthcare  was  adopted  regulating  health  professions  and  the  system  of 
accreditation  of  health  care  institutions.  It  also  re-organises  network  of  health  facilities  on 
geographical  basis.  An  integrated  IT  system  for  health  is  being  implemented  including 
delivery  of  equipment.  The  preparations  for  introducing  an  e-health  card  system  continued. 
The  overall  budget  allocated  to  the  health  programme  has  doubled  compared  to  2011. 
Cooperation  with  the  European  Centre  for  Disease  Prevention  and  Control  (ECDC),  the 
World  Health  Organisation  (WHO)  and  the  Global  Fund  (GF)  remains  very  good. 
Preparations in this area are on track.  

In  the  area  of  tobacco  control,  some  progress  can  be  reported.  Enforcement  of  the  law  on 
protection against smoking remains at a satisfactory level and has been further reinforced with 
the introduction of heavier sanctions in case of repeated violations of the law. The labour and 
market  inspectorate  and  the  state  sanitary  and  health  inspectorate  have  performed  joint 
controls in the field. Counselling services to help people quit smoking have been provided.  

Limited  progress  has  been  made  in  the  fight  against  communicable  diseases.  Training  has 
been  provided  to  health  professionals  and  inspectors  on  implementation  and  control  of 
immunisation  as  well  as  other  issues  related  to  control  of  communicable  diseases.  The 
national  strategy  for  containment  of  antimicrobial  resistance  2012-2016  was  adopted  and 
activities promoting awareness raisings on the responsible use of antibiotics were carried out. 
The  strategy  for  fighting  HIV/AIDS  2012-2016  and  the  national  strategy  on  immunisation 
2011-2020 have not been adopted. Preparations in this area are on-going.  

There has been little progress in the area of blood. The institutional capacity of the national 
integrated blood transfusion system needs further strengthening. IPA 2009 assistance has been 
earmarked  for  this  purpose.  In  the  area  of  tissues,  cells  and  organs,  an  integrated 
transplantation  system  is  being  developed.  Training  for  health  professionals  working  in  this 
field  has  been  provided  through  TAIEX.  Implementing  regulations  need  to  be  adopted  to 
complete the regulatory framework in the area. Preparations in this area are on-going.  

Limited  progress  can  be  reported  in  the  field  of  mental  health.  The  annual  programme  on 
healthcare  for  people  with  mental  disabilities  was  adopted.  Some  of  the  mental  health 
institutions underwent refurbishment. The facilities remain however understaffed and without 
adequate financial resources. The budget of the annual programme is insufficient. No progress 
can be reported on implementation of the action plan on mental health that aims at creating 
community-based  mental  healthcare  as  an  alternative  to  institutions.  Sustainability  of  the 

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existing community mental health centres is a serious concern. Preparations in this area are at 
an early stage.  

There was some progress in the field of drug abuse prevention. An evaluation of the national 
strategy regarding illicit drugs until 2012 has commenced. Some progress has been made in 
capacity-building to address dependence on alcohol and illicit drugs, to provide rehabilitation 
and family support, and to develop substitution treatment.  

There has been little progress on addressing health inequalities. Within the Decade of Roma 
Inclusion  2005-2015,  sixteen  Roma  health  mediators started providing health counselling to 
Roma people.  

Some  progress  has  been  made  in  the  area  of  reducing  alcohol-related  harm,  where  the 
introduction of a minimum age of 18 years for purchasing alcohol, and a ban on alcohol sale 
in night hours contributed to reduced occurrence of alcohol poisoning in all age groups.  

There has been little progress in addressing health inequalities. Within the Decade of Roma 
Inclusion  2005-2015,  sixteen  Roma  health  mediators started providing health counselling to 
Roma people.  

Some  progress  has  been  made  in  cancer  screening.  The  government  launched  a  yearly 
programme  for  early  detection  of  malignant  diseases;  including  regular  cancer  screenings. 
The cancer registry remains however only partly operational. Awareness raising activities on 
cancer do not receive sufficient funding.  

The yearly national programme for treatment of rare diseases has been adopted and its budget 
increased. However, the budget is still insufficient to ensure full implementation. Preparations 
in these areas are ongoing.  

Conclusion 

There has been some progress in the area of consumer and health protection. Further progress 
in this area is undermined by the limited financial resources and weak operational structures, 
particularly  in  the  field  of  consumer  protection.  Overall,  preparations  in  this  area  are 
moderately advanced.  

4.29.  Chapter 29: Customs union 

Some progress was made on customs legislation. The 2012 customs tariff was adopted in line 
with  the  latest  changes  in  the  EU  Combined  Nomenclature.  New  implementing  provisions 
were introduced on risk management, including electronic risk management and exchange of 
information,  use  of  summary  customs  declarations,  risk  analysis,  the  procedure  for  issuing 
and  revoking  authorisations  for  the  simplified  customs  procedure,  and  exchange  of 
information between customs authorities using IT and computer networks. Preparations in this 
area are advanced. 

information  with 

intensified  and  exchange  of 

Good progress was made on administrative and operational capacity. Cooperation with the 
the  customs 
business  community 
administrations  of  neighbouring  countries  continued.  Professional  standards  and  internal 
control  measures  were  implemented  systematically  with  the  aim  of  preventing  and  fighting 
corruption  among  customs  officers.  Operational  capacity  for  customs  controls  was  further 
enhanced. Further progress was made with developing the risk management system at border 
crossings,  in  the  form  of  more  comprehensive  application  of  risk  analysis.  However, 
sustainable financial resources  for operation and  maintenance of customs control equipment 
need  to  be  secured.  An  Information  and  Communication  Technology  (ICT)  development 
strategy  and  a  public  relations  strategy  were  adopted  for  2012-2014.  The  national  plan  for 
implementing the New Computerised Transit System (NCTS) was regularly updated. A new 

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transit  application,  fully  compatible  with  the  NCTS,  was  developed  and  the  necessary 
implementing capacity was put in place. The single window system for issuing authorisations 
was  further  upgraded.  The  customs  administration  started  developing  a  new  Customs 
Declaration  Processing  System.  Further  development  of  staff’s  project  management  and 
quality assurance capacity is necessary in order to minimise the risks associated with parallel 
implementation of a number of IT development projects and to improve project performance 
in general. Preparations in this area are on track.  

Conclusion 

There  was  progress  in  the  area  of  customs  union,  in  particular  on  administrative  and 
operational  capacity.  Inter-agency  cooperation,  the  fight  against  corruption  in  the  customs 
administration  and  the  capacity  to  tackle  cross-border  crime  continued  to  improve. 
Preparations in the area of customs union are well on track. 

4.30.  Chapter 30: External relations 

Progress  was  made  in  the  area  of  the  common  commercial  policy.  The  former  Yugoslav 
Republic of Macedonia continued gradually to reduce customs duties in 2012, in line with its 
WTO  obligations.  The  country  also  ratified  the  regional  Convention  on  Pan-Euro-
Mediterranean Preferential Rules of Origin, which will enable it to participate in the system of 
diagonal cumulation of origin. The country participates in the work of the Central European 
Free  Trade  Agreement  (CEFTA)  bodies  and  continued  to  coordinate  closely  with  the 
European Commission and to align with the policies and positions of the EU in international 
trade negotiations.  A new list  of dual-use goods and technologies was adopted and is being 
implemented,  thus  replacing  the  previous  one  from  2008.  It  transposes  the  list  of  dual-use 
goods and technologies contained in the relevant Council Regulation. Preparations in the area 
of the common commercial policy are moderately advanced. 

As  regards  bilateral  agreements  with  third  countries,  the  country  ratified  investment 
protection agreements with Lithuania and Qatar. The number of ratified bilateral investment 
protection agreements rose to 37, of which 32 are in force and 17 are with EU Member States.  

Some  progress  can  be  reported  in  the  areas  of  development  policy  and  humanitarian  aid. 
The Ministry of Foreign Affairs coordinated the country’s humanitarian aid to Turkey in the 
wake of the Van earthquake in 2011. The country became a member of the European Union’s 
civil protection mechanism, which enables it to participate in the European disaster response 
system. Preparations in both areas are at an early stage. 

Conclusion  

Some  progress  was  made  in  the  area  of  external  relations,  notably  as  regards  the  common 
commercial policy. However, the country’s institutional capacity is still not sufficient for it to 
participate  fully  in  EU  commercial,  development  and  humanitarian  policies.  Preparations  in 
the area of external relations are moderately advanced. 

4.31.  Chapter 31: Foreign, security and defence policy  

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

As regards the common foreign and security policy (CFSP), during the reporting period the 
country  aligned  itself,  when  invited,  with  all  EU  declarations  and  Council  decisions.  (As 
regards the International Criminal Court, see Political criteria, section 2.3 — Regional issues 
and international obligations.) 

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With  regard  to  sanctions  and  restrictive  measures,  the  country  aligned  itself  with  the 
restrictive measures introduced by Council decisions. Implementation of restrictive measures 
continued during the reporting period. The coordination body for monitoring implementation 
of  international  restrictive  measures,  which  was recently  established under the relevant law, 
met  regularly.  The  register  of  international  restrictive  measures  was  established  and  is  kept 
within the Ministry of Foreign Affairs, with sub-registers at the competent institutions. 

No particular developments can be reported concerning conflict prevention. 

With  regard  to  non-proliferation,  the  country  has  begun  to  participate  in  the  Wassenaar 
Arrangement on non-Member States’ outreach activities. The Ministry of Interior eradicated 
its stockpile of weapons and confiscated weapons were destroyed.  

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

With regard to security measures (classified information), draft texts of bilateral agreements 
with  Italy  and  Serbia  on  exchanges  and  protection  of  security-classified  information  were 
agreed. The agreement with Germany was signed. 

As  regards  the  common  security  and  defence  policy  (CSDP),  the  country  maintained  its 
ongoing  commitment  to  participate  in  civil  and  military  crisis  management  operations. 
Currently,  the  country  has  a  total  of  171  personnel  deployed  in  the  ISAF  mission  in 
Afghanistan,  including  eight  officers  at  the  Afghan  national  army  school  for  military  police 
training in Kabul. The country continued to take part in the EUFOR Althea mission in Bosnia 
and  Herzegovina,  with  an  11-member  medical  team  at  Camp  Butmir  and  an  assistant  legal 
adviser for gender issues. It also continued to participate in the UN-led peacekeeping/UNIFIL 
mission  in  Lebanon  by  providing  a  staff  officer  in  the  joint  operation  centre  in  Nagura.  As 
part of its contribution to the EU battlegroup for the second half of 2012, the army’s general 
staff  is  participating  in  related  training,  including  preparations  for  the  European  Endeavour 
2012 exercise. 

Conclusion 

The  country  has  maintained  its  high  level  of  alignment  with  EU  declarations  and  Council 
decisions and has continued to participate in civil and military crisis management operations. 
Overall, the preparations in the area of foreign, security and defence policy are well advanced. 

4.32.  Chapter 32: Financial control  

There was little progress in the area of public internal financial control (PIFC). Committees 
for  financial  management  and  control  (FMC)  and  for  internal  audit  were  established. 
However, the medium term fiscal strategy for 2013-2015 which set out the basic parameters 
of  the  budget  was  not  adopted,  as  required  by  the  Organic  Budget  Law.  An  updated  PIFC 
policy paper for 2012-2014 and its action plan and Law on Financial Inspection are lacking. 
The  PIFC  Law  and  its  implementing  legislation  are  being  implemented  with  delays.  The 
heads  of  institutions  have  yet  to  adopt  managerial  accountability  and  to  authorise  the 
delegation  of  responsibilities  accordingly.  Managerial  accountability 
is  an  essential 
prerequisite  for  development  of  FMC  and  internal  audit  as  tools  for  improving  public 
management. Preparations in this field are at an early stage. 

Some  progress  can  be  reported  on  external  audit.  The  State  Audit  Office  (SAO)  is 
implementing  a  strategic  development  plan  for  2010-2014,  which  was  updated  in  2012.  In 
2011, the SAO fully implemented its annual work programme with all types of audits. Since 
the  amendment  of  the  Law  on  Financing  of  Political  Parties  in  October  2011,  the  SAO  has 
been carrying out audits on all finances of all political parties, regardless of the source. The 

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IPA  audit  authority  has  been  formally  separated  from  the  SAO  with  the  creation  of  an 
independent budget line in June 2012. The SAO’s functional independence still needs to be 
safeguarded  constitutionally.  Formal  mechanisms  for  cooperation  between  the  SAO  and 
parliament  remain  to  be  established,  especially  in  relation  to  the  follow-up  of  audit  reports. 
Preparations are progressing. 

There  was  little  progress  in  protection  of  the  EU’s  financial  interests.  The  Anti-fraud 
Coordination  Service  (AFCOS)  prepared  a  national  strategy  for  fraud  prevention  to  protect 
the  financial  interests  of  the  European  Union  covering  the  period  2012-2014.  However,  the 
administrative  capacity  of  the  AFCOS  needs  to be  further  enhanced,  along  with  operational 
cooperation  between  the  AFCOS  and  its  partners,  including  OLAF.  Preparations  are  at  an 
early stage. (See Chapter 22 – Regional policy and coordination of structural instruments – 
for progress on audit of EU funds.) 

Good  progress  can  be  reported  on  protection  of  the  euro  against  counterfeiting.  The 
Memorandum for Cooperation between the Ministry of the Interior, the Financial Police, the 
Central  Bank  and  the  Customs  Administration,  which  regulates  their  coordination  and  their 
joint efforts to protect money against counterfeiting, was adopted and is being implemented. 
The  central  office  for  preventing  money  counterfeiting  cooperates  and  participates  in  joint 
activities  with  international  counterparts.  An  electronic  database  on  counterfeit  money  is  in 
place and the rulebook on use of the database is prepared. Preparations are on track. 

Conclusion 

Some progress was made in this chapter, notably in the areas of external audit and protection 
of  the  euro  against  counterfeiting.  Substantial  efforts  are  still  required,  especially  on 
implementation of PIFC law, on constitutional anchorage of the state audit institution and on 
increasing  administrative  capacity  for  effective  protection  of  the  EU’s  financial  interests. 
Overall, preparations in this chapter are at an early stage. 

4.33.  Chapter 33: Financial and budgetary provisions  

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

As regards administrative  infrastructure, institutions are in place in the underlying policy 
areas that directly affect the own resources system. These will need to be further strengthened 
for  future  correct  calculation,  collection,  accounting,  payment  and  monitoring  of  own 
resources  and  for  reporting  to  the  EU  on  implementation  of  the  EU’s  own  resources  rules. 
Appropriate  coordination  structures  to  steer  and  streamline  own  resources  pre-accession 
preparations  and  to  establish  working  procedures  are  to  be  set-up.  Effective  tools  to  fight 
against  tax  evasion  and  fraud  and  to  decrease  the  informal  economy  are  to  be  further 
developed.  

Conclusion 

There has been little progress under this chapter. The institutions and administrative capacity 
for correct calculation, forecasting, collection, accounting, payment, monitoring and reporting 
of own resources will need to be developed in due course. Overall, preparations are at an early 
stage. 

EN 

67 

   EN 

Statistical Annex 

STATISTICAL DATA  
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 (2005=100) 

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) 
     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) 

Note

Note

1) 

2) 

3) 
3) 
3) 
3) 

Note
4) 

Note

Note
5) 
5) 
5) 
5) 
5) 

5) 

5) 

5) 

6) 

Note

Note
7) 
7) 

8) 

8) 

8) 

2001 
2 031 
25 713 

2007 
2 042 
25 713 

2008 
2 045 
25 713 

2009 
2 049 
25 713 

2010 
2 053 
25 713 

2011 
2 057 
25 713 

2001 
233 840 
3 839 
1 890 
4 972 
25 
-4.5 

2007 
364 989 
5 965 
2 921 
7 723 
31 
6.1 

2008 
411 728 
6 720 
3 286 
8 414 
34 
5.0 

2009 
410 734 
6 703 
3 272 
8 500 
36 
-0.9 

2010 
434 112 
7 057 
3 438 
8 873 
36 
2.9 

2011 
463 393f 
7 531f 
3 661fe 
9 248fe 
: 
3.1f 

-1.7 

-2.9 

-0.8 

4.4 

1.7 

-8.8 

6.2 

-1.1 

-2.0 

2.5 

-3.4 

9.9 

1.5 

1.4 

1.8 

46.5 

56.7 

58.5 

60.2 

58.3 

11.8 
26.1 
6.0 
56.1 
94.8 
14.8 
4.2 
42.7 
56.6 

2001 
96.4 

2001 
5.5 

2001 
-263 
-588 
-21 
-30 
377 

55 
498 
1 
: 

499 

: 

2001 
: 
48.8 

2001 
44.2 
108.4 

10.6 
24.3 
6.6 
58.5 
93.8 
19.6 
5.0 
52.4 
70.8 

2007 
110.0 

2007 
2.3 

2007 
-421 
-1 181 
28 
-281 
1 012 

24 
507 
-1 
: 

506 

355 

2007 
0.6 
24.0 

2007 
47.6 
92.6 

11.6 
24.1 
5.7 
58.7 
98.5 
21.0 
5.8 
50.9 
76.2 

2008 
115.6 

2008 
8.3 

2008 
-862 
-1 763 
9 
-94 
985 

49 
409 
-9 
: 

400 

264 

2008 
-0.9 
20.6 

2008 
49.2 
97.6 

11.1 
21.8 
6.0 
61.1 
95.7 
19.9 
6.3 
39.2 
61.0 

2009 
105.6 

2009 
-0.8 

2009 
-457 
-1 560 
16 
-47 
1 133 

35 
137 
8 
: 

145 

131 

2009 
-2.6 
23.8 

2009 
56.4 
148.2 

11.5 
21.5 
6.3 
60.8 
93.2 
19.1 
6.4 
46.6 
65.3 

2010 
100.5 

2010 
1.6 

2010 
-150 
-1 468 
49 
-99 
1 367 

32 
158 
1 
: 

159 

114 

2010 
-2.4 
24.2 

2010 
58.6 
129.7 

: 

: 

: 

: 

: 
: 
: 
: 
92.4f 
: 
: 
54.4f 
73.8f 

2011 
103.8 

2011 
3.9 

2011 
-201 
-1 682 
97 
-109 
1 493 

76 
302 
2 
: 

304 

168 

2011 
-2.6 
28.6 

2011 
64.7f 
122.5 

415 

772 

881 

854 

933 

997 

1 145 

2 728 

2 913 

3 040 

3 277 

3 523 

1 267 

2 872 

3 184 

3 388 

3 781 

4 147 

EN 

68 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

9) 

10) 
11) 

12) 
11) 

Note

Note

Labour market 
Economic activity rate (20-64): share of population aged 20-64 that 
is economically active (%) 
* Employment rate (20-64): share of population aged 20-64 in 
employment (%) 

Note

Employment rate male (20-64) (%) 
Employment rate female (20-64) (%) 

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

Agriculture 
Industry 
Construction 
Services 

13) 
13) 
13) 
13) 

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 (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 (%) 

620 

2 093 

2 803 

2 913 

3 102 

3 367 

11.7 
23.0 
: 
60.913 

88.6 
844 

2001 
1 893 
1 293 
-600 
97.1 
53.5 
59.5 

2001 
5.0 

11.9 

70.8 
75.6 

2001 
: 

: 

: 
: 
27.7 

25.0e 
29.3e 
6.0e 
39.8e 
30.5 
29.5 
32.0 
56.1 

3.6 
7.5 
: 
61.184 

99.8 
1 524 

2007 
3 834 
2 477 
-1 356 
109.3 
65.3 
49.8 

2007 
1.5 

10.3 

71.9 
76.1 

2007 
68.5 

45.0 

54.0 
35.8 
28.8 

17.4u 
25.2u 
6.5u 
50.8u 
34.9 
34.5 
35.5 
57.7 

4.1 
8.5 
: 
61.265 

100.8 
1 495 

2008 
4 664 
2 698 
-1 967 
93.1 
59.5 
48.2 

2008 
1.9 

9.7 

72.1 
76.3 

2008 
69.4 

46.3 

56.2 
36.2 
31.7 

18.9u 
25.2u 
6.5u 
49.5u 
33.8 
33.5 
34.2 
56.4 

6.0 
10.0 
: 
61.273 

106.8 
1 598 

2009 
3 637 
1 937 
-1 700 
98.3 
56.4 
52.2 

2009 
2.3 

11.7 

72.5 
76.7 

2009 
70.1 

47.9 

58.4 
37.1 
34.6 

18.5be 
23.3be 
6.5be 
51.7be 
32.2 
31.8 
32.8 
55.1 

3.8 
5.5 
: 
61.515 

106.3 
1 715 

2010 
4 137 
2 535 
-1 602 
101.5 
61.8 
53.2 

2010 
2.5 

7.6 

72.7 
77.0 

2010 
70.4 

48.1 

58.4 
37.5 
34.2 

19.1e 
22.6e 
6.4e 
51.9e 
32.0 
31.9 
32.2 
53.7 

2.2 
5.5 
: 
61.529 

107.2 
2 069 

2011 
5 038 
3 198 
-1 841 
92.7 
60.6 
54.4 

2011 
1.6 

7.6 

: 
: 

2011 
70.1 

48.4 

57.8 
38.8 
35.4 

18.1u 
24.1u 
6.2u 
51.6u 
31.4 
31.8 
30.8 
55.3 

26.5 

29.7 

28.7 

26.3 

26.7 

25.9 

Note

14) 

2001 
10 552.0 
98.1 

2007 
14 584.0 
124.5 

2008 
16 096.0 
126.9 

2009 
19 957.0 
158.7 

2010 
20 553.0 
160.8 

2011 
20 847.0 
157.0 

: 

19.9 

19.6 

16.2 

15.5 

13.5 

Note

Note

Note

2001 
152.1 
109.0 

2007 
121.9 
884.2 

2008 
128.6 
1 223.4 

2009 
137.7 
948.4 

2010 
151.0 
1 098.2 

2011 
152.1 
1 104.9e 

2001 
36.0 
145 

2001 
3.6 

0.30 
: 

2007 
36.0 
221 

2007 
3.1 

2008 
36.0 
237 

2008 
3.3 

2009 
36.0 
251 

2009 
3.6 

0.17 
16.5e 

0.23 
29.0e 

0.20 
42.0e 

2010 
36.0 
251 

2010 
3.7 

0.19 
46.0 

2011 
36.0 
259 

2011 
: 

: 
55.0 

EN 

69 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 
Primary production of natural gas (thousand TOE) 

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

Agriculture 
Agricultural production volume index of goods and services 
(producer prices, previous year=100) 
Total utilised agricultural area (thousand hectare) 
Livestock: cattle (thousand heads, end of period) 
Livestock: pigs (thousand heads, end of period) 
Livestock: sheep and goats (thousand heads, end of period) 
Production and utilisation of milk on the farm (total whole milk, 
thousand tonnes) 
Crop production: cereals (including rice) (thousand tonnes, 
harvested production) 
Crop production: sugar beet (thousand tonnes, harvested 
production) 
Crop production: vegetables (thousand tonnes, harvested 
production) 

Note

16) 

Note

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

2001 
90.2 

1 244 
265 
189 
1 286 
201 

474 

38 

667 

Note

2001 
92.0 
720.4 

2007 
: 
646.5 

2008 
: 
613.9 

2009 
: 
575.7 

2010 
: 
580.4p 

2011 
: 
: 

9.2 

11.2 

9.3 

15.4 

28.0p 

15) 

87.0b 

88.4 

84.3 

89.0 

89.0 

: 

: 

2011 
: 
: 
: 
: 
: 
: 
: 

2011 
96.8 

1 120 
265 
197 
839 
376 

2007 
1 504 
0 
1 254 
0 
1 461 
3 033 
6.5 

2007 
98.1 

1 077 
254 
255 
944 
374 

2008 
1 624 
0 
1 378 
0 
1 404 
3 023 
6.3 

2008 
104.5 

1 064 
254 
247 
950 
368 

2009 
1 607 
0 
1 293 
0 
1 273 
2 810 
6.8 

2009 
102.9 

1 014 
253 
194 
849 
343 

2010 
1 616p 
0 
1 194p 
0 
1 274p 
2 882p 
7.3p 

2010 
107.7 

1 121 
260 
191 
854 
347 

469 

613 

606 

539 

552 

8 

0 

0 

0 

0 

698 

728 

804 

887 

845 

: = not available 
- = not applicable 
p = provisional 
e = estimated value 
b = break in series 
u = unreliable or uncertain data 
f = forecast 
* = Europe 2020 indicator 
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. 
Footnotes: 
1) 
2) 
3) 
4) 
5) 

Estimated using the GDP in euro and population as of 1st January. 
GDP in constant prices of the previous year. 
2003 - 2008, data according to Nace Rev. 1.1. 
Data are recalculated according to NACE Rev.2 for the period from 2005 to 2010. 
2001 - 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 for 2011 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,  are 
available within t+270 days. 
2001  -  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 series for money supply are revised to include data for saving houses 
From  2006,  data  cover  bilateral  transactions  over  night  [2003]  -  Starting  from  2003,  the  category  Total  credits  by  MFIs  is 
expanded with loans granted by saving houses. 
2001 - 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 are provided according to NACE Rev 1.1 
A new concept of the gross income was implemented in 2009. 
Break in series: 2004-2008 revised data (included transport for own account); 2005 - 2010 - Break in series: 2005-2010 revised 
data (included pipeline transport) 
2001 - 2009, to compute gross inland energy consumption the primary production, net imports and stock change data were used. 

6) 

7) 

8) 
9) 

10) 

11) 
12) 
13) 
14) 
15) 

16) 

EN 

70 

   EN