COMMISSION STAFF WORKING DOCUMENT THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA Report 2015 Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy
Date: 2015-11-10
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: North Macedonia, accession criteria, accession negotiations, pre-accession strategy

EUROPEAN 
COMMISSION 

Brussels, 10.11.2015  
SWD(2015) 212 final 

COMMISSION STAFF WORKING DOCUMENT 

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 
Report 2015 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

EU Enlargement Strategy 

{COM(2015) 611 final} 
{SWD(2015) 210 final} 
{SWD(2015) 211 final} 
{SWD(2015) 213 final} 
{SWD(2015) 214 final} 
{SWD(2015) 215 final} 
{SWD(2015) 216 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
Table of Contents 

1. 

INTRODUCTION....................................................................................................... 4 

1.1.  Context .............................................................................................................. 4 
1.2.  Summary of the report....................................................................................... 4 

2.  POLITICAL CRITERIA............................................................................................. 6 

2.1.  Democracy ........................................................................................................ 6 
2.2.  Public administration reform........................................................................... 10 
2.3.  Rule of law ...................................................................................................... 12 
2.4.  Human rights and the protection of minorities................................................ 20 
2.5.  Regional issues and international obligations ................................................. 22 

3.  ECONOMIC CRITERIA .......................................................................................... 25 

3.1.  The existence of a functioning market economy............................................. 25 
3.2.  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within 

the Union ......................................................................................................... 30 

4.  ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................... 33 

4.1.  Chapter 1: Free movement of goods ............................................................... 33 
4.2.  Chapter 2: Freedom of movement for workers ............................................... 34 
4.3.  Chapter 3: Right of establishment and freedom to provide services............... 34 
4.4.  Chapter 4: Free movement of capital .............................................................. 35 
4.5.  Chapter 5: Public procurement........................................................................ 35 
4.6.  Chapter 6: Company law................................................................................. 37 
4.7.  Chapter 7: Intellectual property law................................................................ 38 
4.8.  Chapter 8: Competition policy ........................................................................ 38 
4.9.  Chapter 9: Financial services .......................................................................... 39 
4.10.  Chapter 10: Information society and media .................................................... 40 
4.11.  Chapter 11: Agriculture and rural development.............................................. 41 
4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy........................ 41 
4.13.  Chapter 13: Fisheries....................................................................................... 42 
4.14.  Chapter 14: Transport policy........................................................................... 43 
4.15.  Chapter 15: Energy.......................................................................................... 43 
4.16.  Chapter 16: Taxation....................................................................................... 44 
4.17.  Chapter 17 Economic and monetary policy .................................................... 45 
4.18.  Chapter 18: Statistics....................................................................................... 46 
4.19.  Chapter 19: Social policy and employment .................................................... 47 
4.20.  Chapter 20: Enterprise and industrial policy................................................... 49 
4.21.  Chapter 21: Trans-European networks............................................................ 49 
4.22.  Chapter 22: Regional policy and coordination of structural instruments........ 50 
4.23.  Chapter 23: Judiciary and fundamental rights................................................. 51 
4.24.  Chapter 24: Justice, freedom and security ...................................................... 61 
4.25.  Chapter 25: Science and research.................................................................... 66 

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4.26.  Chapter 26: Education and culture .................................................................. 66 
4.27.  Chapter 27: Environment and climate change ................................................ 67 
4.28.  Chapter 28: Consumer and health protection .................................................. 69 
4.29.  Chapter 29: Customs union ............................................................................. 70 
4.30.  Chapter 30: External relations......................................................................... 71 
4.31.  Chapter 31: Foreign, security and defence policy........................................... 71 
4.32.  Chapter 32: Financial control .......................................................................... 72 
4.33.  Chapter 33: Financial and budgetary provisions............................................. 74 

Annex I – Relations between the EU and the Former Yugoslav Republic of Macedonia 75 

Annex II – Statistical Annex ............................................................................................. 77 

3 

 
 
1. 

INTRODUCTION1  

1.1. 

   Context 

The  European  Council  granted  the  status  of  candidate  country  to  the  former  Yugoslav 
Republic  of  Macedonia  in  December  2005.  The  Stabilisation  and  Association  Agreement 
between the former Yugoslav Republic of Macedonia and the EU entered into force in April 
2004.  The  Commission  first  recommended  to  the  Council  the  opening  of  accession 
negotiations with the country in 2009. 

The reporting period was dominated by a serious political crisis in the country. On 2 June and 
15  July,  the  European  Commission  and  Members  of  the  European  Parliament  facilitated  an 
agreement  between  political  parties  on  ending  the  crisis  and  the  European  Commission 
presented “Urgent Reform Priorities” on the systemic institutional failings arising out of the 
crisis that the government and all other political actors committed to implement. 

1.2. 

   Summary of the report  

Concerning  the  political  criteria,  serious  challenges  reported  in  previous  years  have  been 
underscored  by  the  country's  most  severe  political  crisis  since  2001  with  intercepted 
communications,  apparently  involving  senior  government  officials,  suggesting  breaches  of 
fundamental rights, interference with judicial independence, media freedom and elections, as 
well as politicisation and corruption. Concerns about all of these issues had been signalled in 
previous Progress Reports. The breakdown of political dialogue and difficulties in arriving at 
consensus on issues highlighted once again the divisive political culture in the country.  

Based on an agreement  facilitated  by the Commissioner, with the help of three members of 
the European Parliament, in June/ July, Members of Parliament of the main opposition party 
returned  to  parliament  on  1  September  after  having  boycotted  it  for  more  than  a  year.  The 
boycott seriously affected the oversight function of the institution over the executive branch. 
Other  key  bodies  failed  to  exercise  effective  oversight.  Work  has  begun  on  the 
implementation of the political agreement. Implementation needs to continue and much more 
needs to be done on the "Urgent Reform Priorities"2 to deliver results on these and other pre-
existing agreed reform targets. 

The  inter-ethnic  situation  remains  fragile.  The  review  of  the  Ohrid  Framework  Agreement, 
which  ended  the  2001  conflict  and  provides  the  framework  for  the  inter-ethnic  relations, 
needs to be completed.  

Following a major police operation in an ethnic Albanian neighbourhood of Kumanovo that 
claimed  18  lives,  all  political  leaders  in  the  country  called  for  restoration  of  calm  and 
underlined that this incident should not be seen as inter-ethnic. Events at Kumanovo still need 
to be fully investigated.  

1  This  report  covers  the  period  from  October  2014  to  September  2015.  It  is  based  on  input  from  a  variety  of 
sources, including contributions from the government of the former Yugoslav Republic of Macedonia, the EU 
Member States, European Parliament reports and information from various international and non-governmental 
organisations. As a rule, legislation or measures which are under preparation or awaiting parliamentary approval 
have not been taken into account. 
2 
files/20150619_urgent_reform_priorities.pdf.  The 
http://ec.europa.eu/enlargement/news_corner/news/news-
files/20150619_recommendations_of_the_senior_experts_group.pdf 

http://ec.europa.eu/enlargement/news_corner/news/news-
the  Senior  Experts'  Group: 
recommendations  of 

Priorities': 

Reform 

'Urgent 

The 

4 

 
 
                                                 
Civil society organisations have played a constructive role in the context of the crisis through 
demanding  accountability  from  the  political  actors  across  ethnic  lines.  At  the  same  time 
organisations  continue  to  express  their  concerns  about  the  difficult  climate  in  which  they 
operate and the limited government commitment to dialogue, as well as about public attacks 
by politicians and pro-government media. 

The  country  is  moderately  prepared  in  the  area  of  public  administration  reform.  There  has 
been  progress  on  some  issues.  However,  concerns  about  politicisation  have  been  reinforced 
by  the  content  of  the  wiretaps,  and  merit  based  recruitment  continues  to  be  undermined. 
Public  trust  in  the  functioning  of  the  institutions  has  further  eroded.  Some  steps  have  been 
taken to reform public financial management, but a medium-term budgetary framework and 
fiscal transparency still needs to be put in place and improved. 

The  country’s  judicial  system  has  some  level  of  preparation.  The  situation  has  been 
backsliding  since  2014  because  the  achievements  of  the  last  decade's  reform  process  have 
been  seriously  undermined  by  actual  and  potential  political  interference  in  the  work  of  the 
intercepted 
judiciary. 
communications still need to be fully investigated. The authorities now need to demonstrate 
real  political  will  to  ensure  the  full  independence  of  the  judicial  system,  including  allowing 
the newly-appointed Special Prosecutor to work unhindered in investigating the wiretaps and 
their content. 

Indications  of  wrongdoings  and  offences  arising 

from 

the 

Concerning  the  fight  against  corruption,  some  level  of  preparation  has  been  achieved. 
Legislative and institutional achievements were, however, overshadowed by a lack of political 
will  and  political  interference  in  the  work  of  the  relevant  bodies,  especially  in  high-level 
cases. A track record of effective prosecution, especially on high level corruption, still needs 
to be established.  

In  the  fight  against  organised  crime,  the  country  has  reached  some  level  of  preparation. 
Sufficient capacity and expertise to carry out financial investigations and asset confiscations 
in a systematic manner still needs to be established.  

The  legal  framework  for  the  protection  of  human  rights  is  broadly  in  line  with  European 
standards.  However,  implementation  is  lacking,  in  particular  in  the  areas  of  prison  reform, 
Roma integration, rights of the child and persons with disabilities. The lesbian, gay, bisexual, 
transgender  and  intersex  (LGBTI)  community  continues  to  suffer  from  discrimination  and 
homophobic media content. The country shows some level of preparation regarding freedom 
of  expression.  Exercising  this  freedom,  however,  is  a  serious  problem  in  the  current  media 
culture and political climate, and the country continued to backslide in this area. Attempts to 
limit media reporting on matters of public interest are worrying. 

The country generally maintains good relations with other enlargement countries and plays an 
active  role  in  regional  cooperation.  Steps  have  been  taken  to  improve  good  neighbourly 
relations. The 'name issue' with Greece needs to be resolved as a matter of urgency.  

As regards the economic criteria, the former Yugoslav Republic of Macedonia is at a good 
level of preparation in developing a functioning market economy. The country benefits from a 
stable  macroeconomic  environment,  supported  by  sound  monetary  policy,  favourable 
conditions for market entry, and a sound legal system. There was some backsliding in public 
finance  management.  Medium-term  fiscal  targets  were  relaxed,  the  composition  of  public 
spending remains tilted towards transfers and subsidies and the development of overall public 
debt,  as  well  as  its  transparency,  remain  a  concern.  The  budget  should  be  more  geared 
towards growth  and  employment, while its overall design, transparency and implementation 

5 

 
should be improved. A high level of non-performing loans has constrained credit supply and 
needs to be addressed by further policy action. Unemployment remains high at 28%.   

The  economy  is  moderately  prepared  to  cope  with  competitive  pressures  and  market  forces 
within the Union. There was some progress in diversifying the export structure as a result of 
direct investment; trade and investment links with the EU strengthened further. However, the 
country  needs  to  improve  the  employability  of  people,  in  particular  the  youth,  by  better 
aligning  education  with  labour  market  needs,  upgrade  linkages  between  foreign  direct 
investors and the domestic economy, and better prioritise investment. 

As regards its ability to take on the obligations of membership, the country has a relatively 
good level of alignment with the acquis. More focus is needed on administrative capacity and 
effective implementation. In most areas, the country is moderately prepared, including in the 
areas of public procurement, statistics and, financial control. Further efforts are needed across 
the board, in particular in those few areas where the country is at an early stage of preparation.  

Mixed-migration flows increased dramatically, creating a substantial burden on the country's 
asylum  and  migration  framework.  The  authorities  have  taken  measures  to  provide  for  safer 
passage  of  third  country  nationals  over  its  territory  and  provided  shelter  and  humanitarian 
supplies, with EU support as well as the support of others. 

2. 

POLITICAL CRITERIA 

2.1. 

  Democracy 

This year the former Yugoslav Republic of Macedonia has faced its worst political crisis since 
2001. The divisive political culture, lack of compromise and breakdown in dialogue took the 
form of a continuing and protracted political crisis, including a boycott of parliament by the 
main opposition party3 and further erosion of trust in public institutions. The crisis deepened 
further  with  the  publication  of  intercepted  conversations  including  senior  government  and 
governing party officials suggesting breaches of fundamental rights, interference with judicial 
independence,  media  freedom  and  elections,  and  politicisation  and  corruption  in  various 
fields. Concerns about all of these issues had been signalled in previous Progress Reports. The 
Macedonian  government,  the  parliament  and  relevant  oversight  bodies  failed  to  react 
adequately to the revelations. 
In  response,  the  Commission  issued  ‘Urgent  Reform  Priorities’  based  partly  on  its  previous 
recommendations and partly on recommendations provided by a group of independent senior 
rule  of  law  experts  brought  in  to  analyse  the  situation.  The  independent  experts  identified 
significant  shortcomings  in  the  areas  of  interception  of  communications,  the  judiciary  and 
prosecution  services,  external  oversight  by  independent  bodies,  elections  and  the  media4.  In 
parallel,  the  Commissioner,  with  the  help  of  three  members  of  the  European  Parliament, 
facilitated a political agreement in June/ July. The leaders of the four main parties committed, 
inter  alia,  to  a  transitional  government  which  will  prepare  early  parliamentary  elections  in 
April 2016. So far, not all elements of the agreement have been implemented and a number of 
deadlines  have  been  missed.  The  leaders  also  committed  to  implement  all  of  the 
Commission’s  recommendations  on  systemic  rule  of  law  issues  (Urgent  Reform  Priorities); 
implementation of these has slowly been started, but without sufficient results to date.   

Elections 

3 Social Democratic Union of Macedonia (SDSM) 
4 These issues and the recommendations to address the situation are referenced throughout this report.  

6 

 
 
                                                 
Shortcomings  regarding  elections,  previously  signalled  by  OSCE/ODIHR,  and  other 
suspicions,  were  reflected  by  the  content  of  the  intercepted  communications.  The  relevant 
Urgent Reform Priorities need to be implemented. 

These  communications  included  discussion  of  manipulation  of  the  voter  list,  vote  buying, 
voter  intimidation,  including  threats  against  civil  servants  and  companies,  and  preventing 
voters from casting their votes. As set out in the ‘Urgent Reform Priorities’, the outstanding 
OSCE/ODIHR recommendations need to be fully implemented before early elections are held 
in April 2016. Despite the commitments in the political agreement, negotiations on electoral-
related reforms were lengthy and difficult.  Political and legal action rather than legislation is 
needed to address the other issues which have been brought to light. 

Parliament 

The  ongoing  crisis  has  underlined  the  need  for  parliament  to  substantially  improve  its 
performance as  a  forum  for  constructive political dialogue and representation, as well as its 
legislative and oversight functions. This needs to include credible functional oversight of the 
work of the intelligence services and the capacity to monitor the protection of human rights 
and fundamental freedoms in the country. The absence of the main opposition party for most 
of the reporting period diminished the quality of reforms and hindered the operation of checks 
and balances. 

Parliament’s  work  continued  to  be  seriously  hampered  by  the  political  crisis,  including  the 
absence of the largest opposition party, SDSM, for 16 months before returning to parliament 
on 1 September. As a result, parliament failed to provide the necessary checks and balances 
on the executive’s power, most obviously on oversight of the intelligence services at the heart 
of  the  interception  of  communications.  During  the  summer,  the  two  relevant  oversight 
committees were reactivated, now under opposition leadership, but an Inquiry Committee into 
the interception of communications still needs to be established (Urgent Reform Priorities). 

The  recommendations  made  in  August  2013  by  the  committee  of  inquiry  into  the  events  in 
parliament of 24 December 2012 were not finalised because of the withdrawal of SDSM from 
the relevant working group in October 2014, and work still needs to restart (Urgent Reform 
Priority). Implementing these recommendations would significantly improve the functioning 
of  parliament  and  the  scheduling  of  its  work.  Consultations  on  proposed  legislative  and 
constitutional changes were carried out through several public debates with the participation 
of civil society organisations and academia. The Committee on European Affairs reviewed 11 
laws  under  the  National  Programme  for  EU  Integration.  However,  frequent  changes  to 
recently  adopted  legislation,  including  its  suspension,  point  to  shortcomings  in  policy 
preparation,  consultation  and  legislative  processes.  A  constructive  meeting  of  the  National 
Council for European Integration took place on 18 September, on the occasion of a meeting of 
the High Level Accession Dialogue. 

Governance 

The  governance  of  the  country  was  strained  by  the  ongoing  political  crisis  and  called  into 
question  by  revelations  of  unethical  behaviour,  illegal  activities  and  even  potential  criminal 
offences.  Only  limited  political  responsibility  was  taken  through  the  resignation  of  two 
ministers and the head of the intelligence service. Failures of oversight by key bodies need to 
be addressed and all independent regulatory, supervisory and advisory bodies need to be able 
to  carry  out  their  functions  proactively,  effectively  and  free  from  political  pressure.  Inter-
ethnic tensions underlined the need to fully implement the Ohrid Framework Agreement.  

7 

 
The government coalition of the VMRO-DPMNE5 and DUI6 remained stable, though severely 
strained by the crisis. In May it lost its two-thirds majority, required for key decisions, with 
the  defection  of  an  MP  from  the  DOM7  party  from  the  VMRO-DPMNE  coalition  due  to 
political fall-out from the revelations. The Minister of Interior and the Minister of Transport 
and  Communications,  as  well  as  the  head  of  the  intelligence  service,  resigned  after  the 
intercepted communications were revealed. 

Since  May,  the  opposition  organised  several  demonstrations  to  protest  against  the  lack  of 
transparency and level of state capture by the government. There have also been an increased 
number of demonstrations protesting at the lack of consultation in government policy-making 
on laws which have been repealed or suspended. 

The  inter-ethnic  nature  of  the  government  coalition  was  a  factor  that  contributed  to  inter-
ethnic  stability.  The  leaders  of  the  four  main  political  parties  committed,  in  the  2 June 
political  agreement,  to  fully  implement  the  Ohrid  Framework  Agreement,  which  ended  the 
conflict of 2001 and provides the framework for preserving the multi-ethnic character of the 
society.  However,  there  remains  a  lack  of  trust  between  communities,  and  inter-ethnic 
tensions persist. Further initiatives are needed to promote good inter-community relations and 
an  inclusive  multi-ethnic  society.  The  long-promised  review  of  the  implementation  of  the 
Ohrid  Framework  Agreement,  including  policy  recommendations,  needs  to  be  urgently 
completed  and  followed  up.  As  in  previous  years,  the  political  and  community  leaders 
successfully handled potential inter-ethnic incidents.   

The serious events in Gošince and Kumanovo raised concerns and questions which still need 
to be investigated thoroughly and transparently. 

Constitutional changes were proposed by the government in a broad range of areas, despite 
the absence of the main opposition party from parliament. Neither the proposed changes, nor 
related implementing legislation, have been adopted by parliament as the two-thirds majority 
could  not  be  reached.  Although  there  was  wide  public  consultation  and  debate  on  the 
proposals,  the  concerns  expressed  by  the  European  Commission  about  their  compatibility 
with the acquis have not all been addressed yet. 

The decentralisation of government is of particular importance as it is a key element of the 
Ohrid Framework Agreement (see also 2.4. Ohrid Framework Agreement). One municipality 
(Plasnica) has still not completed the second phase of fiscal decentralisation. Some progress 
has been made with the adoption of the strategic decentralisation programme for 2015-2020 
and its action plan. However, the decentralisation process needs to be better coordinated and 
efforts  are  required  to  ensure  that  especially  rural  municipalities  have  the  financial 
sustainability to carry out responsibilities transferred to them. Distribution of capital funds to 
municipalities needs to be carried out in a more transparent and coordinated manner. Multi-
annual  budget  planning  and  improved  collection  of  statistical  data  at  local  level  is  also 
needed.  It  is  an  issue  of  concern  that  some  opposition-run  municipalities  were  subject  to  a 
disproportionate number of inspections. 

The report by senior rule of law experts pointed to the failure of independent oversight and 
control  bodies  to  follow  up  effectively  on  the  interception  revelations  (Urgent  Reform 
Priority). More generally, all of the independent regulatory, supervisory and advisory bodies 
should be able to exercise their powers in a proactive and effective manner, without external 
pressure and without exercising inappropriate political self-restraint or interpreting their own 

5 Internal Macedonian Revolutionary Organisation — Democratic Party for Macedonian National Unity 
6 Democratic Union for Integration 
7 Democratic Renewal of Macedonia 

8 

 
                                                 
mandate in an excessively formal way. These bodies include the State Election Commission, 
the  State  Commission  for  the  Prevention  of  Corruption,  the  Agency  for  Audio  and 
Audiovisual  Media  Services,  the  Office  of  the  Ombudsman,  the  Judicial  and  Prosecution 
Councils and the State Audit Office.  

Civil society 

Although  some  progress  was  made,  civil  society  organisations  (CSOs)  have  continued  to 
express serious concerns about the difficult climate in which they operate. They report being 
subject to harsh criticism by politicians and pro-government media, and a limited government 
commitment to dialogue. During the political crisis of 2015, CSOs often played a constructive 
role  by  organising  numerous  peaceful  protests  across  ethnic  lines,  and  demanding  greater 
accountability  of  politicians.  Civil  society  also  demonstrated  cross-ethnic  unity  in  the 
aftermath  of  the  tragic  Kumanovo  events  of  spring  2015.  At  the  same  time,  political 
polarisation  and  divide  can  still  be  observed  between  CSOs  supporting  the  government  and 
those opposing it. The national authorities should involve civil society in policy-making and 
legislation in a more regular and effective manner. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by state institutions.  The binding framework of rules for state 
financing of civil society has not been, however, adopted, and the system for allocating state 
funds to civil society remains ineffective and inefficient. 

Insufficient administrative capacity and the lack of a specific budget in the Government Unit 
for  NGO  Cooperation  are  hampering  implementation  of  the  2012-2017  strategy  on 
cooperation with civil society. The relevant 2015-2017 action plan has not yet been adopted. 
The  working  group  for  monitoring  the  law  on  associations  and  foundations  has  not  been 
established by the Ministry of Justice. The Council for Cooperation between government and 
civil society is not yet established, and neither is the working group for monitoring the law on 
associations and foundations has not been established by the Ministry of Justice.  

The Secretariat for European Affairs continues to consult civil society, including on financial 
assistance-related matters, the preparation of the High Level Accession Dialogue being a good 
example. In general, however, CSOs’ involvement in policy-making and legislative drafting 
remains  insufficient.  The  single  electronic  register  of  legislation  is  not  used  for  online 
consultations  for  most  draft  legislation.  The  minimum  period  for  consultations  and  the 
obligation to provide feedback on comments are not fully complied with. The code of good 
practice  for  CSOs’  participation  in  policy-making  processes  is  implemented  inconsistently. 
Local government lacks the capacity to ensure cooperation with CSOs is undertaken. 

Oversight of the intelligence services 

In theory, the country has a system of oversight in place, which has not functioned in practice 
in the case of the security and intelligence services. The parliamentary committees which are 
responsible for the oversight of the security and intelligence services on the one hand, and the 
interception of communications for intelligence and law enforcement purposes on the other, 
have met infrequently or not at all in recent years. They had not complied with their statutory 
reporting duties, had not conducted inspections (until this autumn) and had not compelled the 
Minister of Interior or the head of the intelligence service to appear before them. Sufficient 
responsibility  has  not  been  taken  for  the  serious  failings  within  the  intelligence  service  to 
prevent  the  illegal  interception  of  individuals'  private  communications  over  a  significant 
period of time. The clear recommendations on both oversight and reform of the intelligence 
services in the ‘Urgent Reform Priorities’ must be implemented.  

9 

 
 
2.2. 

  Public administration reform 

The  country  is  moderately  prepared  with  the  reform  of  its  public  administration.  It  made 
some progress on legislation and improvement of service delivery to citizens and businesses. 
Concern  about  politicisation  has  been  heightened  by  the  content  of  the  leaked  wiretaps  and 
delay  in  fully  implementing  the  new  legal  framework.  Strong  political  will  is  necessary  to 
guarantee the independence of administration and respect for the principles of transparency, 
merit and equitable representation. In the coming year, the country should in particular: 

→  address  serious  concerns  about  the  politicisation  of  public  service;  ensure  full 
implementation  of  the  principles  of  accountability,  transparency  and  merit  (Urgent  Reform 
Priority,  including  introduction  of  an  improved  human  resources  management  information 
system); 

→  suspend  and  review  the  implementation  of  the  Law  on  Transformation  of  Temporary 
Positions  into  Permanent  Contracts  until  the  principle  of  merit  is  fully  observed  (Urgent 
Reform Priority); 

→  adopt  a  public  administration  reform  strategy  and  a  public  financial  management  reform 
programme, which will address the weaknesses identified, including budget transparency. 

Public service and human resources management 

Tailor-made,  political  and  arbitrary  recruitments  took  place  on  a  large  scale.  The  new  legal 
framework,  comprising  the  Law  on  Administrative  Servants  and  the  Law  on  Public  Sector 
Employees,  which  entered  into  force  in  February,  should  combat  this  trend  as  it  created 
uniform  rules  for  public  sector  employees  at  both  central  and  local  level.  All  implementing 
legislation has been adopted, including the methodology on equitable representation. The laws 
represent an improvement by regulating merit-based recruitment, promotion and dismissal 
of public servants at lower positions, but they fall short in relation to senior public servants. 
Concerns  continue  over  the  transparency  of  staff  mobility  and  possible  misuse  of  dismissal 
procedures.  

The public sector has been further inflated with the practice of creating new posts on political 
or  social  grounds,  in  particular  before  the  new  laws  entered  into  force.  The  Law  on 
Transformation of Temporary Positions into Permanent Contracts was adopted in February by 
a fast-track procedure and without prior public consultation nationally or with the EU partners 
only a few days before the entry into force of the framework laws. This law circumvents the 
principles of merit-based recruitment by converting thousands of temporary contract staff into 
permanent civil servants or public employees without open competition.  

While  recruitment  from  the  biggest  non-majority  community  is  increasing,  smaller 
communities  remain  under-represented.  Efforts  to  meet  targets  for  equitable  representation 
did not always take account of institutions’ real staffing needs and the principle of merit. The 
number of public employees not required to turn up to work has increased.  

The  Ministry  of  Information  Society  and  Administration’s  (MISA)  responsibility  for 
coordination and monitoring of human resources management has been extended to cover 
all  public  sector  institutions.  It  is  in  charge  of  providing  real-time  data  on  the  entire  public 
service.  The  total  numbers  of  permanent  and  temporary  employees,  of  all  types,  should  be 
made  public  regularly  (Urgent  Reform  Priority).    There  is  no  uniform  civil  service 
remuneration  system  across  the  public  sector,  leading  to  inconsistent  levels  of  pay  and 
hindering mobility. Close monitoring of the application of the legislation is of key importance 
to address its shortcomings.  

10 

 
 
The right to continuous professional development of civil servants is partially covered, and 
the use of e-learning systems increased. There is, however, no centralised database of training 
offered  by  various  institutions  and  no  cumulative  data  on  training  already  provided. 
Legislation promoting integrity in public service has had relatively limited impact. 

Policy development and coordination 

The  legal  framework  and  institutional  structures  are  in  place  to  ensure  a  coherent  policy-
making  system,  including  for  European  integration.  However,  staffing  in  the  core 
coordination functions is inadequate. A system  for medium-term policy planning is in place 
but sectoral planning is not well developed and strategies are usually not costed. 

Only  some  elements  of  inclusive  and  evidence-based  policy  and  legislative  development 
have been laid down. Ministries do not generally have internal rules laying down processes to 
draft policies and legislation. A large proportion of civil servants focus on implementation of 
policies,  affecting  negatively  policy  development  and  the  administration’s  capacity  to  draft 
policy and legal documents, including those needed to comply with the acquis. The obligatory 
inter-ministerial  and  public  consultations  process  on  policies  and  legislation  is  often 
insufficient and public participation is inconsistent. This has, for example, led to widespread 
protests  and  the  eventual  suspension  of  legislation  (See  Chapter  26).  The  obligatory 
regulatory impact assessments for legislative and policy proposals are not always carried out 
in practice or with sufficient quality. Financial impact assessments are usually not prepared, 
which is a significant shortcoming. 

Public scrutiny over government work is ensured in theory, as the government is under a 
legal  obligation  to  monitor  and  report  on  implementation  of  its  programme.  Most  of  the 
reports  are  not  made  public,  however.  Also,  the  reports  focus  more  on  quantitative  outputs 
than on qualitative assessment whether policy objectives are achieved. 

Accountability of the administration 

The  organisation  of  the  Macedonian  administration  does  not  yet  ensure  effective  lines  of 
accountability,  neither  between  institutions  nor  within  institutions.  Supervision  would  need 
to be clarified, as some institutions have to report parallel both to the relevant ministry and the 
government. Managerial accountability is not implemented systematically, and there is little 
delegation of responsibility to middle management. (See Chapter 32 – Financial control) 

The relevant internal and external oversight mechanisms are in place to ensure the citizens' 
right to good administration. However, the opposition’s long-term absence from parliament 
undermined parliamentary oversight. The Ombudsman continues to function efficiently, and 
around  87 %  of  his  2014  recommendations  were  implemented  by  the  administration. 
However, better follow-up by a number of central institutions is still needed. (Urgent Reform 
Priority / see also Governance) .The right to access public information is regulated in the 
Law  on  Free  Access  to  Information  of  Public  Charter  but  the  scope  of  exemptions  is  too 
broad. The independent commission that reviews appeals does not have sufficient capacity to 
monitor  compliance  with  proactive  disclosure  of  information,  and  is  not  empowered  to 
impose penalties to encourage better enforcement of legislation. 

Regarding the right to administrative justice, the law on general administrative procedures 
ensures  the  right  of  appeal.  A  new  body  reviewing  internal  administrative  appeals  against 
inspection  and  misdemeanour  proceedings  was  established,  but  has  not  become  functional. 
Efficiency  in  the  administrative  courts  increased  but  there  are  delays  in  enforcing  court 
rulings and the appeal procedure remains too onerous. The right to seek compensation and 
the  liability  of  public  authorities  in  cases  of  wrongdoing  is  regulated,  but  data  on 
compensation for damages is not available. 

11 

 
Public financial management 

The medium-term budgetary framework is not yet in place. The parliament does not have the 
resources to monitor the use of public funds. There is also no efficient mechanism to monitor 
the  budgetary  impact  of  government  proposals.  Implementation  of  the  public  internal 
financial control strategy is in its initial phase. 

A  comprehensive  public  financial  management  reform  programme,  addressing  the 
identified  shortcomings  and  linking  and  sequencing  different  areas  and  reform  measures,  is 
currently  being  developed.  Budget  transparency  is  not  ensured  as  comprehensive,  timely 
and reliable budgetary information is not publicly available. Moreover, the 2015-2017 fiscal 
strategy and the 2015 budget were adopted without adequate parliamentary discussion.  

Service delivery to citizens and businesses 

A  user-oriented  administration,  among  other  things  by  developing  e-services,  is  a 
government  priority.  The  inter-operability  framework  is  being  developed.  Equal  access  to 
public services is partially established. An increasing range of services is offered to business 
through  one-stop-shops  or  online,  albeit  at  a  slow  pace.  However,  the  number  of  services 
provided  to  the  public  through  the  e-government  portal  is  limited,  especially  those  with 
transaction possibilities. The use of quality assurance tools is encouraged and currently 16 % 
of  the  central  government  institutions  measure  public  satisfaction.  A  newly  adopted  law  on 
general  administrative  procedures,  to  enter  into  force  in  2017,  is  a  good  step  towards 
simplifying  administrative  procedures.  Substantial  training  at  central  and  local  level  is 
needed  to  ensure  it  is  applied  uniformly.  Considerable  efforts are  also  needed  to  reduce  the 
estimated 130 special administrative procedures hampering modernisation of service delivery 
before the new law enters in force. 

Strategic framework for public administration reform 

A  comprehensive  public  administration  reform  strategy  is  in  place  but  will  expire  at  the 
end of 2015. It focuses mainly on outputs, not targets and indicators. The 2016-2020 strategy 
is  yet  to  be  developed  including  an  action  plan,  linked  to  medium-term  and  annual  budget 
planning. MISA's  capacity to ensure  efficient co-ordination of the strategy's implementation 
should be strengthened. Political support is ensured through the public administration reform 
committee  chaired  by  the  Prime  Minister.  However,  the  declared  commitment  to 
transparency, accountability and merit in public administration has been compromised by ad-
hoc  measures  allowing  public  employment  as  a  social  measure  or  the  mass  conversion  of 
temporary  staff  to  permanent  status.  This  also  limits  financial  sustainability  of  a  wider 
public administration reform agenda. 

2.3. 

  Rule of law  

Functioning of the judiciary 

The country’s judicial system has some level of preparation. However, the situation has been 
backsliding.  Achievements  of  the  last  decade's  reforms  are  being  undermined  by  real  and 
potential  political  interference  in  the  work  of  the  judiciary.  Outstanding  issues  already 
identified in previous reports remain to be addressed. The ‘Urgent Reform Priorities’ set out 
what  the  country  needs  to  do  to  avoid  further  backsliding.  The  legislative  and  institutional 
structures  which  are  already  in  place  need  to  be  put  to  use,  in  good  faith  and  in  the  spirit 
intended. In the coming year, the country should in particular: 

→ depoliticise the appointment and promotion systems in practice, not only in law; 

→ provide full support and resources to the Special Prosecutor; 

12 

 
→ reform the existing discipline and dismissal system for judges; 

→ adopt a new Judicial Reform Strategy and action plan addressing remaining shortcomings 
in a sustainable manner; 

→ improve strategic planning, needs assessment, resource management and allocation within 
the judiciary. 

Strategic documents 

A  number  of  judicial  reforms  were  already  carried  out  under  the  judicial  reform  strategy 
and  its  accompanying  action  plans  from  2004  to  2010.  A  new  strategy  and  action  plan 
focusing on a number of specific areas, including alternative dispute resolution and access to 
justice, are still at an early stage of development. 

Management bodies 

The Judicial Council, established in 2006, is composed of 15 full-time members, of whom 
eight are judges designated by their own ranks and five are lay members (three designated by 
parliament and two by the President) from the ranks of university law professors, lawyers and 
other eminent legal experts. The President of the Supreme Court and the Minister of Justice 
are ex officio members, the latter without voting rights. The President of the Judicial Council 
is  designated  by  its  members  every  three  years.  Four  of  the  five  lay  members  are  elected 
under  the  ‘Badinter  rule’,  ensuring  equitable  representation  of  the  communities.  As  well  as 
carrying  out  core  responsibilities  —  deciding  on  the  appointment,  evaluation,  dismissal, 
termination, detention and immunity of judges — the Judicial Council cooperates closely with 
the Academy of Judges and Prosecutors and also oversees statistical data collection through 
the  automated  court  case  management  system.  It  maintains  an  accessible  website  and 
publishes annual reports online. The Judicial Council’s sessions are public, but their records 
are  not.  The  Council  of  Public  Prosecutors,  established  in  2008,  is  still  lacking  its  own 
budgetary allocations, appropriate IT support and enough staff. 

Independence and impartiality 

The  independence  of  judges  is  enshrined  in  law.  In  the  large  majority  of  ‘ordinary’  cases, 
courts  are  able  to  act  independently.  Relatively  few  complaints  are  made  to  the  Judicial 
Council  over  bias  or  partiality  and  none  have  been  upheld.  However,  there  are  repeated 
reports  of  selective  justice  and  political  interference  in  certain  high-profile  or  politically 
sensitive court cases. This casts a shadow over an otherwise functioning judicial system. The 
random allocation of cases has been required by law since 2006 and is implemented through 
the electronic  case  management system since 2009. However, the Judicial Council  does not 
monitor the system systematically and there are concerns that it is sometimes be circumvented 
in key cases. The criminal and civil procedure legislation provides clear recusal-mechanisms 
for  judges  in  cases  of  conflicts  of  interest.  Concerns  about  judges’  security  of  tenure  still 
need to be addressed due to the high number of dismissals in recent years: since 2007, there 
have  been  59  dismissal  proceedings,  resulting  in  44  dismissals.  While  the  numbers  of 
dismissals have fallen drastically in the past two years, the legislative framework still needs to 
be revised, particularly regarding the often vague grounds for dismissal and the narrow scope 
for imposing less severe disciplinary measures. 

Accountability  

The  codes  of  ethics  for  judges  (2006)  and  prosecutors  (2004)  were  both  updated  in  2014. 
Since 2010, the entrance criteria for the Academy of Judges and Prosecutors include integrity-
testing.  The  two-year  initial  training  programme  for  judges  and  prosecutors  and  the  final 
exam  also  include  a  component  on  judicial  and  prosecutorial  ethics.  There  are  multiple 

13 

 
complaints  mechanisms  for  the  public  to  use.  Complaints  can  be  lodged  via,  among  others, 
the Ministry of Justice, the Office of the Ombudsman and the Supreme Court. Aside from the 
disciplinary  framework  which  is  in  place,  there  have  in  the  recent  past  also  been  criminal 
prosecutions against judges and prosecutors and the principle of immunity does not pose any 
practical  obstacle,  as  it  is  revoked  by  the  Judicial  Council  in  such  cases.  The  State 
Commission  for  Prevention  of  Corruption  has  also  regularly  sought  misdemeanour  fines 
against judges who fail to submit asset declarations or statements of interest and the system 
works smoothly in practice. 

Professionalism and competence 

Although the entrance criteria for the judicial profession were toughened in 2010, as were the 
professional experience pre-requisites for promotion to higher courts, concerns persists about 
how  the  rules  are  applied  in  practice.  There are  no  transparent  means  to  assess  whether  the 
objective, merit-based criteria are in fact applied in decisions on judicial appointments and 
promotions,  especially  when  comparing  multiple  candidates.  The  system  of  professional 
evaluation is based almost exclusively on numerical benchmarks relating to the numbers of 
cases processed per month and the procedural deadlines met. It does not include any features 
of  qualitative  assessment,  such  as  the  clarity  of  reasoning  in  judgments  or  level  of 
specialisation.  It  takes  negligible  account  of  contributions  to  jurisprudence,  academia  or 
teaching and it includes unjustified criteria such as the number of cases overturned on appeal. 
This can also have knock-on consequences for both promotions and dismissals given that they 
are  closely  linked  to  the  results  of  the  evaluation  procedure.  Despite  repeated  criticisms,  no 
improvements  have  yet  been  introduced.  The  lack  of  clear  reasoning  in  court  judgments 
remains a significant problem still to be addressed.  

Quality of justice 

The Academy for Judges and Prosecutors was established in 2006 and has so far produced 
four  graduating  classes  of  80  candidates  in  total,  of  whom  78  have  been  appointed  as  first-
time judges and prosecutors. In addition to the two-year pre-service training programme, the 
Academy provides ongoing in-service training for all judges, prosecutors and court staff. This 
also  covers  relevant  aspects  of  EU  law  and  European  Court  of  Human  Rights  (ECtHR) 
jurisprudence. It operates e-training through its web portal and decentralised training outside 
the  capital.  The  Academy  is  financed  from  the  state  budget  and  by  donors.  It  still  lacks 
sufficient  support  staff.  Its  ability  to  provide  high-quality  training,  both  from  experienced 
national professionals and international guest trainers, needs to be secured and monitored on 
an  ongoing  basis.  All  courts  produce  quarterly  and  annual  activity  reports.  The  Judicial 
Council monitors these, as well as the annual report of the Supreme Court. The Automated 
Court  Case  Management  Information  System  (ACCMIS)  allows  court  activities  to  be 
followed up daily, and has also been used to compile data in specific areas, such as pre-trial 
detentions and the identification of ‘old cases’. 

ICT systems are in use in all courts but some public prosecutors’ offices still lack equipment. 
Online  access  to  law  and  jurisprudence  is  available  in  principle  but  is  inconsistent  in 
practice.  Despite  several  initiatives  to  promote  alternative  dispute  resolution,  including 
under the 2009 Law on Mediation, there is a low level of uptake by the public of the options 
available. The country has observer status in the European Judicial Training Network. 

Efficiency 

Most courts at all levels maintain a clearance rate of 100 % or higher, meaning that they are 
able to process at least as many cases as they receive in one year. Backlogs have not been an 
issue for several years. Individual stages of court proceedings are generally concluded within 

14 

 
the legal deadlines; however, the overall length of court proceedings from initiation to final 
judgment remains a concern in some categories of cases. Amendments were made to both the 
criminal and civil procedure legislation several years ago, addressing the problem of repeated 
referrals and re-examinations following appeals (so-called ‘ping pong’ appeals). However, the 
improvements  benefit  only  cases  started  after  the  amendments  entered  into  force  which  has 
created  a  confusing  procedural  landscape  and  a  category  of  increasingly  lengthy  ongoing 
proceedings which still labour under the old rules. This needs to be addressed. The European 
Court of Human Rights has confirmed that the Supreme Court provides an effective domestic 
remedy for length of proceedings complaints. 

The 2015 budget for the courts is EUR 30.2 million and EUR 7 million for the prosecution 
service.  In  terms  of  budgetary  spending  per  inhabitant,  this  is  significantly  lower  than  the 
European  average.  The  number  of  both  judges  and  court  staff  per  100 000  inhabitants  is 
significantly  above  the  European  average.  There  is  still  no  dedicated  human  resource 
management system or any strategy aimed at improving resource allocation.  

Fight against corruption 

The country has some level of preparation in the fight against corruption, having set up the 
necessary legislative and institutional framework over the last decade as well as developing a 
track record on both prevention and prosecution. No progress has been achieved in the past 
year  on  the  outstanding  issues  identified.  Corruption  remains  widespread.  The  capacity  to 
effectively  address  it  is  currently  being  undermined  by  a  lack  of  political  will  and  political 
interference  in  the  work  of  the  relevant  bodies,  which  is  hampering  their  ability  to  act 
proactively and non-selectively, especially in high-level cases (Urgent Reform Priorities). In 
addressing the shortcomings outlined below, the country should pay particular attention in the 
coming year to: 

→ demonstrating real political will in the fight against corruption in the form of autonomous 
and  effective  measures  by  law  enforcement  and  supervisory  bodies,  notably  the  State 
Commission for Prevention of Corruption; 

→  increasing  the  visibility  of  anti-corruption  measures  and  the  results  achieved  to  improve 
public awareness and trust; 

→ developing a credible track record on fighting high level corruption; 

→  creating  an  effective  framework  for  the  protection  of  whistle-blowers,  in  line  with 
European standards and best practices (Urgent Reform Priorities). 

Track record 

Significant  efforts  have  been  made  in  recent  years  by  the  state  bodies  involved  in  the  fight 
against corruption to collect the data needed to properly monitor investigations, prosecutions 
and convictions in this field. Over 220 criminal proceedings have been launched in the past 
six years and over 30 high-level cases in the past 12 years. While the track record is strongest 
on  combating  corruption  connected  with  serious  and  organised  crime  activity,  as  well  as 
abuse  of  office  by  low  to  medium  level  officials,  it  is  weak  on  high-level  political 
corruption.  Serious  allegations  against  senior  government  officials  have  yet  to  trigger 
thorough investigations. This selective passivity raises concerns over the independence of the 
police,  the  Public  Prosecutor’s  Office  and  the  State  Commission  for  the  Prevention  of 
Corruption (SCPC). 

Widespread allegations of politicisation and of political interference by the executive and the 
ruling political parties in the work of the law enforcement agencies and the judiciary need to 
be  addressed.  The  content  of  the  intercepted  communications  has  implicated  members  of 

15 

 
the government and senior officials in abuses of power and corruption in public procurement, 
urban planning, political party financing and public employment, as well as in interfering in 
the independence of the judiciary, the media and elections. The reluctance of the relevant law 
enforcement  bodies,  including  the  Public  Prosecutor’s  Office,  to  follow  up  on  these 
revelations in a swift and decisive manner is of concern. The effective fight against corruption 
requires  not  only  the  pro-active  efforts  of  enforcement,  regulatory  and  oversight  bodies  but 
also  the  political  will  of  all  other  actors  to  allow  them  to  carry  out  their  functions  fully,  as 
intended by law (see also the ‘Urgent Reform Priorities’).  

Financial investigations and asset confiscation are still used quite rarely in corruption cases. 

The  track  record  on  control  of  party  and  campaign  financing  indicates  that  the  existing 
penalties  under  the  Law  on  Prevention  of  Corruption  and  the  Electoral  Code  need  to  be 
applied much more systematically and visibly in practice.  

The  SCPC  regularly  initiates  misdemeanour  proceedings  for  failure  to  declare  assets  or 
submit  statements  of  interest,  with  over  700  cases  launched  in  the  past  five  years.  It  also 
investigates  potential  conflicts  of  interest  (over  680  cases  in  the  past  five  years)  and  refers 
asset discrepancies to the Public Revenue Office for further investigation (over 230 cases in 
the past five years). Data collection and monitoring in this area is at an advanced stage. 

The implementation of the Law on Free Access to Public Information remains ineffective 
and  in  practice  penalties  are  not  imposed  for  failure  to  comply.  Political  parties  are  still 
excluded  from  the  list  of  holders  of  information,  and  thus  remain  outside  the  scope  of  the 
enforcement  regime.  Whistleblowing  does  not  occur  in  practice  due  to  the  lack  of  any 
comprehensive  protection.  Proposed  legislation  on  the  topic  needs  to  be  aligned  with 
European standards. 

Institutional framework 

The SCPC is the main institution on the prevention side. It was established in 2002 and has 
responsibilities  in  the  areas  of  political  party  and  campaign  financing,  asset  declaration  and 
conflicts of interest. It carries out systematic and ad hoc verifications and acts on complaints 
from the public. All of its annual reports are published on its website, some also in English. 
The  SCPC  has  limited  enforcement  powers  of  its  own,  mainly  issuing  public  warnings. 
However,  it  regularly  institutes  misdemeanour  proceedings  before  the  courts  (resulting  in 
fines)  for  failure  to  comply  with  various  reporting  obligations,  and  also  refers  cases  of 
potential  corruption  directly  to  the  Public  Prosecutor.  Where  asset  discrepancies  are  found, 
the SCPC refers cases for further investigation to the Public Revenue Office, which has the 
power to impose a punitive 75 % tax rate on undeclared income. While it has competent staff, 
the  SCPC  still  lacks  the  adequate  human  and  technical  resources  to  function  effectively. 
Although  formally  independent,  the  SCPC  is  regularly  criticised  for  its  members’  lack  of 
political will to fight corruption in a proactive, independent and non-selective manner. Public 
awareness  of  the  SCPC’s  activities  is  quite  low  and  awareness-raising  on  its  role  should  be 
strengthened. 

On  the  law  enforcement  side,  most  corruption  cases  are  handled  by  the  specialised  Basic 
Public Prosecution Office for Organised Crime and Corruption in Skopje. Since 2007 this has 
special  competence  for  public  sector  corruption  as  well  as  organised  crime,  while  cases  of 
private sector corruption are handled by the local prosecution offices around the country. The 
new  Law  on  Criminal  Procedure  which  applies  since  December  2013  aims  at  strengthening 
the role of the prosecutor in the pre-trial phase and improving the capacity to tackle complex 
organised crime and corruption cases.  Despite many activities undertaken  to  prepare for the 
entry  into  force  of  the  new  system,  the  capacity  of  the  prosecution  service  to  lead  criminal 

16 

 
investigations and effectively direct law enforcement agencies still needs to be strengthened. 
The  Ministry  of  Interior’s  Sector  for  fighting  corruption  still  needs  to  be  reinforced  with 
adequate staff and equipment. The Agency for Management of Confiscated Property does not 
have sufficient powers and continues to be under-resourced. 

Legal framework 

The Criminal Code penalises active and passive bribery in both the public and private sectors, 
active  and  passive  trading  in  influence,  illicit  enrichment  and  abuse  of  funds  for  campaign 
financing. It provides for prison sentences ranging from six months to ten years. In practice, 
sentences imposed are most commonly of three to four years, but heavier sentences of seven 
or eight years have also been given regularly, depending on the circumstances of the case. 

The 2004 Law on the Financing of Political Parties and the recently amended 2006 Electoral 
Code  contain  both  criminal  and  misdemeanour  provisions  on  funding  and  election-related 
corruption.  Fines  range  from  EUR  500  to  EUR  5  000  for  breaches  relating  to  party  and 
campaign  financing,  donations,  reporting  and  pre-election  payments  from  the  state  budget. 
However, the enforcement regime is not being put to full use, as the penalties foreseen are not 
imposed on political parties in practice, despite complaints and media reports of breaches. The 
respective  control  powers  and  responsibilities  of  the  State  Audit  Office,  the  SCPC  and  the 
State Election Commission are unclear under the legislation, leading to a mutual abdication of 
responsibility which needs to be addressed. 

The legal framework for prevention is provided by the 2002 Law on Prevention of Corruption 
(covering asset declarations), the 2007 Law on Preventing Conflicts of Interest, the 2006 Law 
on Free Access to Public Information and the 2008 Law on Lobbying. The first two have been 
amended several times, notably in response to successive rounds of GRECO (Group of States 
against  Corruption)  evaluations.  There  is  still  no  comprehensive  system  for  protecting 
whistle-blowers. 

The country is party to the UN Convention against Corruption since 2007 and the Council 
of  Europe  Criminal  and  Civil  Law  Conventions  since  2002  and  2003  respectively.  While 
legislation penalises illicit enrichment in line with Article 20 of the UN  Convention  against 
Corruption, there is no indication that the provisions are used in practice. 

Strategic framework 

The  country  is  implementing  its  2011-15  state  programmes  for  preventing  corruption  and 
conflicts of interest and their respective action plans. However, the programmes lack visibility 
and  the  relevant  state  institutions  do  not  treat  implementation  as  a  priority.  Implementation 
costs, and how these costs are shared among the institutions, are not clearly set out. Several 
important anti-corruption measures have still to be implemented. 

Fight against organised crime 

The country has achieved some level of preparation in the fight against organised crime. No 
progress  has  been  made.  The  legislative  framework  is  broadly  in  line  with  European 
standards.  The  general  capacity  to  deal  with  organised  crime  was  increased  by  establishing 
specialised  units  both  in  the  police  and  the  public  prosecution  office.  However,  more  still 
needs to be done to improve the effectiveness of law enforcement in this area. In addressing 
the  shortcomings  outlined  below,  the  country  should  pay  particular  attention  in  the  coming 
year to: 

→ establishing a sound track record on combating money laundering, and improving capacity 
and  expertise  to  carry  out  financial  investigations  and  asset  confiscations  on  a  more 
systematic basis; 

17 

 
→ stepping up efforts to improve cooperation between the various law enforcement agencies 
by bringing the National Coordination Centre for the Fight against Organised Crime into full 
operation; 

→  revising  the  legal  and  technical  framework  for  intercepting  communications,  and 
increasing  the  effectiveness  of  special  investigative  measures  for  genuine  law  enforcement 
purposes (Urgent Reform Priorities). 

Track record 

Significant  efforts  have  been  made  by  the  authorities  to  collect  data  needed  to  monitor 
investigations, prosecutions and convictions in the fight against organised crime. In the past 
seven  years,  almost  500  criminal  proceedings  have  been  launched  against  over  2 000 
defendants. The largest groups of cases concern people smuggling, human trafficking and 
trafficking in drugs. This also reflects the country’s position on the Balkan route for these 
crimes. A number of criminal networks and routes have been destroyed in recent years thanks 
to cooperation with neighbouring countries and EU Member States through Eurojust. 

Effective  implementation  of  anti-money  laundering  legislation  by  all  relevant  institutions, 
including banks, is still needed. There are relatively few cases, and the data collection needed 
to  track  them  effectively  needs  to  be  stepped  up  to  the  same  level  as  for  other  areas  of 
organised  crime.  This  requires  improved  coordination  among  the  relevant  anti-money 
laundering institutions, and in particular the cooperation of the Financial Intelligence Unit.  

The  use  of  special  investigative  measures  is  quite  common  in  organised  crime  cases,  but 
more efforts are needed to ensure both that this technique is applied more effectively by law 
enforcement agencies and that the appropriate oversight is carried out. The expertise of law 
enforcement  and  prosecution  services  and  their  capacity  to  conduct  serious  financial 
investigations should be strengthened. The precautionary freezing of assets during the initial 
phase of the investigation is rarely applied, which leads to poor confiscation rates at the end of 
criminal  procedures.  More  systematic  cooperation  between  the  Agency  for  Management  of 
Confiscated Assets and law enforcement agencies is needed. 

The  level  of  sentencing  by  courts  appears  on  the  whole  to  be  appropriately  strict,  although 
efforts  are  still  needed  to  ensure  greater  consistency.  The  principle  of  presumption  of 
innocence of the accused is not always ensured in practice. Some high-profile organised crime 
cases have been criticised as highly politicised, and have even led to the dismissal of judges 
who were not considered to have reached a ‘correct’ decision. 

Institutional and operational capacity 

A  major  police  reform  started  15  years  ago  and  reforms  continue  in  specific  areas.  The 
Ministry  of  Interior  has  specialised  units  dealing  with  economic  organised  crime,  money 
laundering  and  financial  investigation,  corruption,  drug  trafficking,  criminal  intelligence 
analysis,  interception  of  communications,  witness  protection,  trafficking  in  weapons  and 
dangerous  substances,  human  trafficking,  cybercrime  investigation,  digital  forensics  and 
terrorism respectively. The general level of police equipment in terms of vehicles, premises, 
IT  and  radio  communication  systems 
is  relatively  good  (for  example,  TETRA 
communications  technology  is  well  established  and  in  operation).  The  Sector  for  Internal 
Control  and  Professional  Standards  is  well  established  and  handles  hundreds  of  police 
complaints effectively. However, independent, external and transparent oversight of the police 
needs  to  be  established  and  the  existing  complaints  mechanism  must  be  implemented  in  a 
consistent manner. While clear criteria for recruiting and evaluating police officers exist, there 
are persistent allegations of politicisation. According to the most recent Eurostat figures, the 
country has over 500 police officers per 100 000 inhabitants. 

18 

 
The  Basic  Public  Prosecution  Office  for  Organised  Crime  and  Corruption  has  special 
competence for crimes committed by organised groups, cross-border crimes, drug trafficking, 
money  laundering,  terrorism,  human  trafficking  and  smuggling  of  migrants,  among  other 
things.  Relations  between  prosecutors  and  police  still  need  to  be  improved  for  the 
prosecution  service  to  fully  play  its  lead  role  in  investigations,  as  provided  for  by  the  new 
Law  on  Criminal  Procedure.  Investigative  centres  are  being  set  up  within  the  public 
prosecution  offices,  where  members  of  the  Judicial  Police,  the  Financial  Police  and  the 
Customs Administration will work under the direction of the Public Prosecutor. There is no 
electronic  inter-connection  between  the  police  and  the  Public  Prosecutor’s  Office,  which 
would allow information to be shared efficiently. The National Coordination Centre for the 
Fight against Organised Crime, which will bring together a multi-disciplinary staff to optimise 
inter-agency cooperation, is established by law but not yet operational. 

The National Committee to Combat Human Trafficking and Illegal Migration has operated 
since  2001  as  an  inter-ministerial  body  coordinating  various  activities.  Since  2003  it  has 
included a sub-group on the trafficking of children. A National Reporter on human trafficking 
was  appointed  by  the  government  in  2009.  The  Office  of  the  National  Referral  Mechanism 
operates within the Ministry of Labour and Social Policy and provides coordinated assistance 
and protection to victims of human trafficking, especially women and children. The Council 
for  Witness  Protection,  which  includes  representatives  of  the  Supreme  Court  and  the 
prosecution  service,  was  established  in  2005  and  is  authorised  to  put  witnesses  in  the 
protection  programme  and  provide  changes  of  identity.  The  Ministry  of  Interior  has  several 
forensic units, including for biological and DNA identification. The national DNA database, 
established in 2007, contains around 13 000 identified and 3 500 unidentified DNA profiles. 
The  powers  and  resources  of  the  police,  the  Public  Prosecutor’s  Office,  the  courts  and  the 
Agency for Management of Confiscated Property still need to be strengthened so they can 
take measures to seize and confiscate assets more frequently. 

An operational agreement with Europol has been in place since 2011 and the country is the 
only  one  in  the  region  to  have  a  cooperation  agreement  with  Eurojust,  in  force  since  2010. 
Close  cooperation  in  the  fight  against  organised  crime  continues  with  international  and 
regional bodies such as Eurojust, Europol, the Southeast European Law Enforcement Centre 
and the US Drug Enforcement Agency, as well as police services in several other countries. 

Legal framework 

The  country’s  Criminal  Code  is  largely  in  line  with  European  standards.  The  Law  on 
Criminal  Procedure  was  overhauled  completely  in  2010  to  modernise  and  optimise  the 
criminal  procedure,  especially  for  complex  investigations,  under  the  central  guidance  of  the 
Public Prosecutor. It has applied since December 2013. A special Law on Witness Protection 
has  been  in  place  since  2005.  The  2006  Law  on  Interception  of  Communications  was 
amended  in  2012  to  address  the  potential  for  special  investigative  techniques  to  be  abused. 
Nevertheless  the  content  of  the  intercepted  communications  has  brought  to  light  serious 
shortcomings in the practical application of the law, which need to be addressed. The ‘Urgent 
Reform  Priorities’  include  separating  the  mandate,  regulations  and  technical  facilities  for 
interception  in  criminal  investigations,  on  the  one  hand,  from  those  for  security  and 
intelligence purposes on the other. The police, Customs Administration and Financial Police 
need to be given the technical means to carry out interceptions without having to rely on the 
intelligence services. Legislation on the seizure and confiscation of criminal assets needs to be 
improved and its implementation stepped up. Extended confiscation is provided for by the law 
since 2010 but rarely used in practice. 

19 

 
 
Strategic framework 

Activities are under way to draw up both national and regional threat assessments for serious 
and organised crime, inspired by the EU SOCTA methodology.  

National strategies are in place to combat human trafficking and illegal migration (2013-16), 
drugs (2014-20), and terrorism (2011-15). Work continues on the new cyber-security strategy. 

Fight against terrorism 

The  country  has  been  affected  by  the  phenomenon  of  foreign  terrorist  fighters  and 
radicalisation.  A  comprehensive  and  effective  strategy  is  needed  to  prevent  and  counter 
radicalisation, in close cooperation with religious leaders and communities, social and front-
line  workers,  the  education  system  and  youth  organisations.  The  phenomenon  of  foreign 
terrorist  fighters  needs  a  dedicated  approach  by  the  intelligence  and  law  enforcement 
community and a coherent judicial policy towards offenders. 

2.4. 

  Human rights and the protection of minorities 

Overall situation 

The legal framework for protecting human rights is broadly in line with European standards, 
but  more  focus  needs  to  be  placed  on  implementing  it.  The  various  bodies  involved  in 
protecting  and  promoting  human  rights  lack  sufficient  staff  and  financial  resources  and 
sometimes  coordinate  poorly.  General  weaknesses  in  the  implementation  of  human  rights 
standards  affect  the  most  vulnerable  and  marginalised  groups  in  society,  including  children 
and juveniles, disabled persons, the Roma and the LGBTI community. 

Shortcomings particularly affect the following areas: 

•  The  prison  system  continues  to  be  heavily  underfunded,  understaffed  and  mismanaged, 
which leads to systemic breaches of international human rights standards. 

• Police impunity needs to be addressed by establishing an independent oversight mechanism 
and investigating complaints of ill-treatment seriously and thoroughly. 

• Despite improvements to the legislative framework, problems in the area of the freedom of 
expression persist in practice. 

A  detailed  analysis  of  freedom  of  expression  follows  below.  For  a  detailed  analysis  of 
developments  on  other  human  rights  and  the  protection  of  minorities,  see  Chapter  23  — 
Judiciary and fundamental rights. For developments in trade union rights, anti-discrimination 
and equal opportunities, see also Chapter 19 — Social policy and employment. 

Freedom of expression 

The country has some level of preparation regarding freedom of expression. The legislative 
framework  has  been  overhauled  in  recent  years  and  is  aligned  with  both  the  acquis  and 
international  standards.  Nevertheless,  the  freedom  of  expression  and  the  media  remains  a 
serious challenge in the current media culture and political climate. The country continued to 
backslide  over  the  past  year.    In  addressing  the  shortcomings  outlined  here,  in  the  coming 
year the country should in particular: 

→ ensure full transparency on government advertising and develop a mechanism for unpaid 
public service announcements of a true public interest character (Urgent Reform Priority); 

→  enforce,  at  political  level,  the  exercising  of  appropriate  self-restraint  by  politicians  and 
public  officials  not  to  resort  to  defamation  actions,  in  line  with  ECtHR  case  law  (‘Urgent 
Reform Priority’); 

20 

 
→  ensure  that  the  public  has  access  to  objective  and  accurate  reporting  and  a  variety  of 
viewpoints through the mainstream media, particularly the public service broadcaster. 

Intimidation of journalists 

There  were  several  reports  of  intimidation  and  harassment  of  journalists,  two  reports  of 
property  damage  and  two  death  threats  against  journalists  in  2015.  Journalists  continued  to 
report  a  general  climate  of  self-censorship  and  the  publication  of  intercepted  telephone 
conversations confirmed that journalists had been under extensive and unlawful surveillance 
for several years. 

Legislative environment 

The Criminal Code was amended in 2012 to decriminalise defamation and insult. A Law on 
Civil  Liability  for  Insult  and  Defamation  was  adopted,  among  other  things  setting  out 
maximum levels of damages which could be awarded in cases involving the media. The 2013 
Law  on  Media  regulates  basic  obligations,  protections  and  freedoms  relating  to  the  media. 
Blasphemy is not a criminal offence. The legislation on hate speech is largely in line with the 
acquis but data collection on the reporting, investigation and prosecution of hate speech and 
hate crime is not yet systematic. Training of law enforcement, prosecutors, judges and media 
employees needs to be increased in this field. Regulations on registration of journalists and 
access to information follow international standards. However, according to journalists there 
is a tendency by public authorities to over-use the ‘classification’ of documents, most notably 
those relating to the costs of the Skopje 2014 project, to prevent public access to information. 

Implementation of legislation/institutions 

The regulatory regime was reformed in 2013 with the adoption of the new Law on Audio and 
Audiovisual Media Services, and the Broadcasting Council has been replaced by the Agency 
for  Audio  and  Audiovisual  Media  Services.  Legislation  provides  for  the  Agency’s  formal 
and financial independence but there are concerns about its political independence in practice 
(see also Chapter 10 - Information Society and Media). 

The content of the intercepted communications brought to light revelations which confirmed 
existing concerns about  the  media  environment. The  corollary rights  of the media to impart 
information  and  ideas  which  are  of  public  interest  and  of  the  public  to  receive  them,  as 
foreseen  by  the  ECtHR,  are  undermined  by  regular  political  interference  in  the  editorial 
policies of the media, in particular mainstream nationwide broadcasters. This has extended as 
far as direct control over the content and timing of news reporting. 

The tendency of politicians and public officials to sue each other for defamation instead of 
engaging in open debate needs to be addressed urgently as it has a chilling effect on freedom 
of expression. 

As  regards  online  freedom  of  expression,  legislation  prohibits  operators  from  controlling 
internet  traffic,  except  to  protect  network  connections  against  becoming  overloaded.  In 
practice operators do not block, slow down, alter, degrade or discriminate against any internet 
content.  The  interception  scandal  has,  to  some  degree,  had  the  effect  of  increasing  the  self-
confidence  of  various  segments  of  society,  allowing  them  to  express  their  reactions  and 
opinions without self-censorship, particularly on social media. 

The  Media  Ethics  Council,  established  in  2014,  is  a  self–regulatory  body  that  receives 
complaints about media content. It publishes all its decisions on its website. A large number 
of the complaints received so far were made by media against other media, emphasising the 
persistent polarisation and lack of solidarity within the media itself. Both the Council and the 

21 

 
relevant  journalists’  associations  have  a  responsibility  to  contribute  towards  improving 
professional and ethical standards through training and awareness-raising. 

Public service broadcaster 

Regulation of the public service broadcaster MRT is in line with EU standards. Financing is 
not  independent  of  the  government  and  despite  measures  to  improve  license  fee  collection, 
this revenue source is not sufficient. Other means to ensure financial independence have been 
discussed, but no decision has yet been reached. MRT’s full editorial independence is still 
not  ensured.  Its  failure  to  inform  the  public  on  issues  of  public  interest,  including  the 
interception affair, in a balanced and non-selective manner continues to undermine its role as 
a public broadcaster (see also Chapter 10 - Information Society and Media).   

Concerns  about  a  lack  of  balance  in  reporting  could  be  addressed,  for  instance,  by 
broadcasting more regular debates involving more than the governing parties. 

Economic factors 

The Law on Audio and Audiovisual Media Services regulates media ownership, setting out 
limitations and prohibitions relating to conflicts of interest. 

The  largest  television  outlets  with  concessions  to  broadcast  nationally  (SITEL,  KANAL5, 
ALFA  and  MRT,  the  public  broadcaster)  favour  the  government  and  report  selectively  on 
opposition or civil society activities. 

Government  advertising  provides  the  largest  single  source  of  funding  and  has  a  major 
influence  on  the  media  market  at  both  national  and  local  level.  There  is  no  systematic  or 
detailed  reporting  on  government  advertising.  Moreover,  the  content  of  the  intercepted 
communications revealed close links between government and media owners with the highest 
viewership  and  circulation,  who  also  receive  most  of  the  funding  allocated  to  government 
advertising  campaigns.  The  ‘Urgent  Reform  Priorities’  include  a  commitment  to  ensure  full 
transparency  on  government  advertising  and  to  develop  a  mechanism  for  unpaid  public 
service announcements of a truly public interest character. 

Professional organisations/ professional conditions 

Representation  of  journalists  is  divided  between  two  associations,  the  Association  of 
Journalists  of  Macedonia  (AJM)  and  the  Macedonian  Association  of  Journalists  (MAN). 
Here too, polarisation occurs along political lines, with the recently reactivated MAN tending 
towards pro-government stances on most issues. The older of the organisations, the AJM, has 
continued to draw attention to a number of important issues such as the impact of government 
advertising on the diversity of the media and the role of the media during the political crisis. 
Job  security  is  fragile  and  labour  rights  are  still  inadequately  enforced,  contributing  to  the 
continuing problem of self-censorship. 

2.5. 

  Regional issues and international obligations 

The  former  Yugoslav  Republic  of  Macedonia  continued  to  cooperate  fully  with  the 
International Criminal Tribunal for the former Yugoslavia. There are no remaining cases 
or appeals pending in The Hague. 

The  country  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 is not in compliance with the EU Common Positions on the integrity of the Rome 
Statute,  nor  with  the  related  EU  guiding  principles  on  bilateral  immunity  agreements.  The 
country needs to align with the EU position. 

22 

 
As of 1 January 2015, there were 869 Roma refugees from Kosovo∗ registered in the country 
and  119  internally  displaced  persons.  There  are  currently  536  people  under  subsidiary 
protection.  In  2014,  83  people  were  voluntarily  repatriated  to  Kosovo  and  Serbia.  The 
Ministry  of  Labour  and  Social  Policy  continues  to  provide  financial  support  to  families  for 
rented  housing  and  utilities,  under  the  integration  strategy.  Court  procedures  concerning 
internally displaced persons, relating to claims for damages resulting from the 2001 conflict, 
are still under way and most of those affected remain housed with host families. 

The  number  of  third  country  nationals  crossing  the  border  from  Greece  into  the  country 
reached  unprecedented  numbers,  with  peaks  in  August  and  September.  A  total  of  296  550 
persons  transited  the  country  from  January  until  mid-September.  Over  178  900  people  - 
mainly Syrians, Afghans and Iraqis – registered their intention to apply for asylum after new 
legislation was adopted in June. Only a fraction of them effectively applied for asylum.  On 4 
September,  the  former  Yugoslav  Republic  of  Macedonia  signed  a  Memorandum  of 
Understanding  with  Austria,  Hungary  and  Serbia  to  extend  joint  border  controls  between 
signatory  states  to  the  country's  border  with  Greece  and  to  include  the  country  in  a  joint 
investigation team on people smuggling. 

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of  the 
country’s  process  of  moving  towards  the  EU.  The  country  has  continued  to  participate 
actively in regional initiatives, including in the South-East European Cooperation Process, the 
Regional  Cooperation  Council,  the  Energy  Community  Treaty,  the  European  Common 
Aviation  Area  Agreement  and  the  Central  European  Free  Trade  Agreement.  It  assumed  the 
rotating presidency of the Central European Initiative in January 2015. Its priorities include 
advancing the sustainable development of the region by developing the necessary energy and 
transport infrastructure and promoting tourism and the agricultural sector. Fresh impetus has 
been  given  to  regional  cooperation  by  the  Berlin  Process,  with  the  Western  Balkan  Six 
(WB6) intensifying cooperation among themselves and with the EU. In April, WB6 countries 
reached  an  agreement  on  the  South  East  Europe  core  regional  transport  network,  which 
extends the EU corridors to the region to improve connectivity within the Western Balkans as 
well as with the EU. At the WB6 meeting in Vienna in August, the WB6 countries committed 
to  abstain  from  misusing  outstanding  bilateral  issues  in  the  EU  accession  process  and 
discussed other urgent problems, including the migratory pressures on Europe. 

The former Yugoslav Republic of Macedonia has continued to play a generally constructive 
role  in  bilateral  relations  with  other  countries  seeking  to  join  the  EU  and  with 
neighbouring EU Member States. However, a bilateral convention on regional cooperation, 
under Article 12 of the Stabilisation and Association Agreement, has not yet been concluded 
with Serbia. 

Bilateral relations with Albania remained generally good. A memorandum of understanding 
on  defence  was  signed  in  January.  An  agreement  to  jointly  recognise  respective  social 
insurance  schemes  and  a  protocol  on  cultural  cooperation  for  2015-2020  were  signed  in 
March. The Albanian government reacted to the Kumanovo incident by calling for calm and a 
transparent  (international)  investigation  into  the  events,  while  defending  the  territorial 
integrity  of  the  country.  The  Albanian  government  has  reiterated  its  concerns  about  the  full 
implementation of the Ohrid Framework Agreement.  

∗ This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ 
Opinion on the Kosovo declaration of independence. 

23 

 
                                                 
 
Relations with Bosnia and Herzegovina continued to develop. Agreements on the exchange 
and  mutual  protection  of  classified  information  with  Sarajevo  were  signed  and  entered  into 
force  on  1  September  2015.The  country  continued  to  contribute  to  the  EUFOR  ALTHEA 
operation  in  Bosnia  and  Herzegovina  and,  as  of  June  2015,  has  two  staff  in  the  operation’s 
Operational Command. 

Cooperation  with  Montenegro  was  further  strengthened.  In  September  2014,  the  two 
countries  signed  an  agreement  on  mutual  recognition  of  driving  licences.  In  February,  they 
signed a protocol on the collocation of their diplomatic and consular offices in Paris, France. 
A meeting of the joint committee on EU affairs was held in March in Skopje, during which 
the two countries exchanged their experiences of the accession process. 

Relations with Serbia are good and continue to deepen. Regular political dialogue continued 
at  the  highest  level.  At  the  two  governments’  second  joint  session,  Several  cooperation 
agreements were signed in the field of economy, culture, the environment, tourism, education, 
science and technology, together with an agreement on a border-crossing point. The Serbian 
authorities condemned the attacks in Kumanovo in May. The Serbian government condemned 
the violent incident in Kumanovo. 

Relations  with  Kosovo  continued  to  develop.  A  memorandum  of  cooperation  between  the 
public  prosecutors  of  both  countries  in  combating  cross-border  crime  and  terrorism  was 
signed in late December. In January, the two countries signed an agreement on the promotion 
and mutual protection of investment.. In response to allegations that the attack on the border 
police station in Gošince was instigated from Kosovo and that Kosovo citizens were involved 
in the incidents in Kumanovo, the government of Kosovo called for the country’s territorial 
integrity to be respected and condemned the violence.  The government in Kosovo has also 
called for the full implementation of the Ohrid Framework Agreement. 

Close  relations  with  Turkey  were  maintained,  as  demonstrated  by  the  Turkish  Prime 
Minister’s visit to Skopje in December 2014.  

Relations  with  Bulgaria  continued  to  be  affected  by  differences,  primarily  about  the 
interpretation of history. A number of high-level visits took place. Negotiations on a bilateral 
agreement  on  good  neighbourly  relations  continued.  Open  issues  remain,  however.  The 
countries  continued  to  cooperate  on  defence  issues.  Good  cooperation  continued  on  cross-
border  matters,  as  well  as  on  sectoral  and  trade  relations,  including  infrastructure  priorities. 
People-to-people contacts continued normally. 

Good relations with Croatia continued,  promoted  by high-level visits. An agreement on the 
Euro-Atlantic  Partnership  entered  into  force.  Amendments  to  the  agreement  on  economic 
cooperation and trade were signed, as was the joint declaration on the adoption of the 2014-20 
regional strategy for research and innovation development. 

Relations with Greece continued to be affected by the name issue. There were no formal talks 
on this issue under the auspices of the UN during the reporting period. Regular meetings at 
official and expert level took place in June 2015 in Skopje. The Greek Foreign Minister took 
the  initiative  to  visit  Skopje  for  the  first  time  in  11  years.  On  this  occasion,  the  two  sides 
agreed on a number of important confidence-building measures. Economic and trade relations 
continued normally.   

24 

 
3. 

ECONOMIC CRITERIA 

Key economic figures 

Gross  domestic  product  per  capita  (%  of  EU28  in 
PPS) 

GDP growth (%) 

2013 

35.6 

2.7 

2014 

36 

3.8 

Unemployment rate (female; male) (%) 

29  (29; 29)  

28 (28.6; 27.7) 

 Economic  activity  rate  for  persons  aged  20–64: 
proportion  of  the  population  aged  20–64  that  is 
economically active (female; male) (%) 

70.4 (57.1; 83.4)  70.8 (56.8; 84.5)

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

-1.8 

3.3 

-1.3 

3.3 

Source: Eurostat 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The  Monitoring  of  these  economic  criteria  should  be  seen  in  the  context  of  the  increased 
importance  of  economic  governance  in  the  enlargement  process.  In  order  to  improve  their 
economic  governance,  in  2015  the  enlargement  countries  were  asked  to  prepare  Economic 
Reform  Programmes  (ERPs),  which  set  out  a  medium-term  macro-fiscal  policy  framework 
together  with  key  structural  reforms  aimed  at  supporting  the  framework  and  boosting 
competitiveness.  The  ERPs  were  the  basis  for  country-specific  recommendations  jointly 
adopted  by  the  EU  and  the  Western  Balkans  and  Turkey  in  the  Economic  and  Financial 
Dialogue meeting on 12 May 2015. 

3.1. 

    The existence of a functioning market economy 

The former Yugoslav Republic of Macedonia has a good level of preparation in developing 
a  functioning  market  economy.  Overall,  no  progress  was  made.  On  the  one  side  positive 
developments  were  recorded  particularly  as  regards  the  business  environment.  The 
macroeconomic environment strengthened further, despite key vulnerabilities. However, this 
was counterbalanced by backsliding in the management of public finances. The government 
continued to promote growth and employment through major public infrastructure investment 
and  foreign  direct  investment  (FDI).  This  contributed  to  improving  the  structure  of  exports 
and  job  creation.  However,  the  development  of  a  competitive  private  sector  remained 
hampered by weak contract enforcement and the large informal economy. 

In  line  with  the  2015  ERP  recommendations  and  in  order  to  support  long-term  growth,  the 
former Yugoslav Republic of Macedonia should pay particular attention to: 

→ improving medium-term budget planning and execution, and adhering more rigorously to 
the medium-term fiscal strategy; 

→ continuing  with  structural  reforms to improve  the business environment and establishing 
an efficient bankruptcy procedure; 

25 

 
 
→ taking further measures to repair the bank lending channel.  

Economic policy essentials 

The  government  remained  committed  to  pursuing  market-based  economic  reforms, 
attracting  FDI  and  developing  the  private  sector.  In  January  2015,  the  authorities 
submitted  their  Economic  Reform  Programme  (ERP),  outlining  key  economic,  fiscal  and 
structural  reforms  and  policies  for  2015-2017.  The  government  has  made  little  progress  on 
structural  reforms  of  the  labour  market  and  there  was  even  backsliding  on  fiscal  discipline. 
Efforts  to  strengthen  medium-term  budget  planning  and  execution  and  the  employability  of 
workers  should  therefore  be  strengthened.  The  government  should  take  further  measures  to 
implement the ERP recommendations, which are set out below. 

The government continued to engage actively with the international financial institutions. In 
November 2014, the IMF concluded its fourth  and last post-programme  monitoring mission 
related to the country’s 2011-2013 precautionary liquidity credit line. In February 2015, the 
government repaid in advance all outstanding loans to the IMF. 

Macroeconomic stability 

The  macroeconomic  environment  strengthened  further,  but  key  vulnerabilities 
remained  a  source  of  concern.  The  economic  recovery  continued,  with  domestic  demand 
becoming  the  sole  driver  of  growth.  Output  expanded  by  3.8  %  in  2014  and  solid  growth 
continued in the first quarter of 2015. Investment picked up markedly in 2014 due to public 
road,  rail  and  energy  infrastructure  projects  and 
new  FDI.  Import  demand,  mainly  investment-
related, increased accordingly. 

by 

driven 

trough 

continued, 

The  recovery  of  industrial  production  from  its 
2012 
the 
manufacturing  sector,  which  accounts  for  about 
three quarters of industry, although performance 
in the first quarter of 2015 disappointed. Overall, 
sustainable  development  of  the  economy  can 
only  be  achieved  if  the  domestic  private  sector 
continues  to  develop  and  contribute  more  to 
growth. 

The stability of the external sector relied increasingly on public borrowing abroad. The 
current account deficit has declined steadily since 2009 and stood at a moderate 1.3 % of GDP 
in  2014.  This  development  has  been  driven  by  an  improvement  in  the  merchandise  trade 
balance,  spurred  largely  by  exports  made  by 
foreign  investors  in  the  automotive  components 
sector.  Current  transfers  from  abroad  fell,  but 
remained  significant.  FDI  inflows  (3.3  %  of 
GDP)  remained  markedly  below  their  10-year 
average  (4.3  %  of  GDP).  External  debt  stood  at 
70  %  of  GDP  at  the  end  of  2014,  up  by  more 
than  5pp  from  a  year  earlier,    mainly  due  to  an 
increase  in  public  debt  and,  somewhat  less,  in 
FDI-related 
lending.  Hence, 
movements  in  foreign  exchange  reserves  were 
increasingly  driven  by  public  borrowing  abroad, 

intercompany 

rather than by private investment. 

26 

 
 
 
Risks to the domestic economy from the economic situation in Greece, via trade, investment 
and financial linkages appear limited at this point. The share of Greece as a destination of the 
country's exports has fallen from 10 % in 2008 to 5 % in 2014, yet fuel imports have  risen 
markedly.  In  the  medium  term,  a  sustained  crisis  in  Greece  may,  however,  impact  on  the 
economy  through  a  protracted  loss  in  consumer  and  investor  confidence,  lower  exports  and 
more costly external government financing. 

Labour  market  conditions  remained  burdened  by  structural  impediments.  The 
unemployment rate has steadily fallen since 2008 (34 %), to 28 % in 2014. Significant gender 
differences  persist  with  economic  activity  rates  of  women  being  considerably  lower  than 
those of men (56.8 % compared to 84,5 % for 2014). Job creation returned to average speed in 
2014  after  a  surge  in  2013.  New  jobs  were  created  mainly  in  low-productivity  sectors  and 
agriculture, supported by public subsidies and active labour market measures. It is estimated 
that  the  public  sector  accounts  for  20  %  of  total  employment.  Prices  remained  stable; 
monetary  policy  successfully  defended  the  currency  peg.  Lower  prices  for  food  and  for 
energy  contributed  to  a  fall  of  0.3  %  in  the  consumer  price  index  (CPI)  in  2014.  Annual 
average inflation has steadily decreased since 2011, when it stood at 3.9 %. Since April 2015, 
headline  inflation  has  registered  positive  gains  again.  The  central  bank  kept  the  key  policy 
rate unchanged in 2014. 

expenditure 

Fiscal  discipline  slipped  again  in  2014 
and 2015, pointing to a need to improve 
medium-term expenditure planning. The 
supplementary 
government  adopted  a 
budget  in  autumn  2014,  due  both  to 
revenue shortfalls and to earlier and higher-
than-expected 
on 
infrastructure.  The  supplementary  budget 
revised the deficit target upwards, from 3.4 
%  to  3.6  %  of  GDP.  However,  the  actual 
budget deficit was even higher, at 4.2 % of 
GDP,  on  account  of  ad  hoc  increases  in 
spending  on  pensions,  social  benefits  and 
subsidies,  as  well  as  additional  resources 
the 
for 
required 
Corridor X motorway.  

the  construction  of 

in 

1: 

‘Improve 

the  ERP,  and 

recommendation 

ERP 
the 
management  of  public  finances  by  adhering 
rigorously  to  the  2015-2017  medium-term  fiscal 
targets  outlined 
frontload 
consolidation  so  as  to  be  on  track  for  the  2017 
budget  deficit  target  of  2.9%  of  GDP.  Use  any 
additional  fiscal  space  for  further  consolidation 
measures, so as to protect growth-enhancing capital 
spending  in  case  of  unexpected  budget  pressures. 
Keep  tight  control  on  the  development  of  transfer 
payments, pensions, and public wages. Introduce a 
medium-term  expenditure  framework.  Inform  in  a 
timely  and  regular  manner  on  the  size  of  the 
government workforce and payroll.’ 

In  July  2015,  the  government  adopted  again  a 
supplementary  budget,  raising  expenditure  in 
particular  for  social  welfare  assistance,  police 
wages,  and  budgeted  capital  expenditure.  The 
2015 deficit target was raised from 3.4 % to 3.6 
revenue 
%  of  GDP  despite 
projections. GDP growth expectations reduced 
for 2015, by 0.5pp to 3.5. 

increased 

The  composition  of  public  spending  did  not 
improve.  In  2014,  investment  accounted  for 
only 10 % of the budget and even less of actual 
spending.  Some  45  %  of  total  spending  went 
on  social  transfers  including  pensions,  which 

27 

 
the government had increased, as in the previous year, beyond what was required by law and 
despite falling prices. Public sector wages and agricultural subsidies were also raised beyond 
statutory requirements in 2014. 

2: 

to 

‘Improve 

recommendation 

the 
The  government's  commitment 
medium-term  fiscal  strategy  weakened  - 
the 2015-17 strategy provides for a gradual 
decline in the general government deficit to 
2.9  %  of  GDP  by  2017,  relaxing  the 
previous  target  of  2.6  %.  Given  the  2015 
supplementary  budget,  and  in  anticipation 
in  entitlement 
increase 
of  a 
spending  in  the  upcoming  pre-election  period,  reaching  the  2017  target  seems  overly 
ambitious.  Overall,  the  link  between  the  medium-term  framework  and  the  annual  budget 
process  remains  weak,  leading  to  further  retrenchment  of  fiscal  space  needed  to  absorb 
unexpected spending pressures or revenue contraction.  

the 
ERP 
composition of spending, by prioritising investment 
projects according to their productive potential, and 
be  more  transparent  on  the  cost-benefit  analysis 
underlying  transfer  and  investment  spending  items 
on  the  budget.  Provide  more  timely  and  detailed 
data on planned and executed capital expenditure.’ 

further 

Public  debt  levels  have  risen  markedly  in  recent  years  and  amendments  to  the  public 
debt  law  raise  concerns  about  transparency.  The  general  government  debt  ratio  is  still 
comparatively  moderate,  but  has  been  rising  continuously  since  2008.  The  increasing 
financing needs of state-owned enterprises, which carry out major infrastructure works, have 
contributed to a marked rise in overall public debt, which stood at 46 % of GDP at the end of 
2014, compared with 38.6 % at the end of 2013. This is likely to rise further in the short to 
medium  term,  given  the  scale  of  planned  investment  projects.  In  the  summer  of  2014,  the 
government  amended  the  public  debt  law 
to restrict the scope for borrowing by state-
owned  enterprises  with  state  guarantees, 
non-guaranteed 
while 
borrowing.  As  a  result,  the  public  debt 
transparent.  The 
less 
figure  will  be 
the 
should 
government 
management and the transparency of public 
finances,  practise  more  rigorous  fiscal 
discipline  and  improve  fiscal  transparency 
as recommended in ERP recommendations 
1, 2 and 3. 

ERP  recommendation  3:  ‘Improve  the  fiscal 
transparency  by  including  more  comprehensive 
the  debt  of  public  companies  and 
data  on 
contingent  liabilities  in  the  government’s  debt 
management  strategy  and  inform  about  arrears. 
Speed  up  transition  to  ESA  2010  reporting  and 
resume  fiscal  notifications.  Continue  to  keep  tight 
and  non-guaranteed 
control  on  guaranteed 
borrowing  by 
and 
enterprises 
municipalities.’  

encouraging 

state-owned 

improve 

Interplay of market forces 

The  public  sector’s  share  of  the  economy  remained  largely  unchanged.  In  2013,  the 
government  sold  its  minority  stake  in  two  companies.  However,  the  number  of  fully  state-
owned enterprises remained unchanged at 15. In January 2013, the Public Enterprise for State 
Roads  (PESR),  which  is  state-owned,  started  operations.    In  October  2014,  the  government 
decided  to  postpone  full  liberalisation  of  the  electricity  market,  planned  on  1  January  2015, 
for five years. Administered and regulated prices accounted for some 15 % of the CPI basket. 
Most  are  regulated  prices  that  usually  cover  production  costs.  Electrivity  prices  for 
households  and  small  companies  as  well  as  prices  for  natural  gas  and  oil  remain  subject  to 
regulation by the Energy Regulatory Commission (ERC). 

Market entry and exit 

Setting up a business became slightly easier, but market exit remained cumbersome. The 
implementation of measures under the ‘regulatory guillotine’ project progressed further, with 
a  view  to  facilitating  business  registration.  However,  the  ‘one-stop-shop’  procedure  is 

28 

 
advancing only slowly. Conditions for obtaining public support and administrative fast-track 
procedures  implicitly  favour  (bigger)  foreign  firms,  as  local  firms  can  rarely  meet  the 
investment  size  criteria.  Connections  between  the  more  technologically  advanced  foreign 
companies and the domestic private economy are poor, which is a particular concern. Progress 
in  simplifying  market  exit  is  more  limited;  the  bankruptcy  law  was  amended  to  shorten 
procedural deadlines and allow out-of-court settlement in the event of insolvency. 

Legal system 

Frequent  legal  changes,  uneven  implementation  of  laws  and  difficult  contract 
enforcement  burdened  business  operations.  Since  2011,  the  government  has  adopted  a 
number of judicial reforms to speed up procedures and improve capacity, e.g. by upgrading 
information and electronic delivery systems, which accelerated certain court procedures and 
improved the handling of backlog cases. No major new reforms were undertaken in 2014 and 
beyond.  Protection  and  enforcement  of 
rights 
intellectual  property 
remain  a 
informal  economy 
large 
concern.  The 
continued 
to  hamper  competition  and 
private  sector  development.  The  Labour 
Ministry  regularly  updates  its  action  plan 
on  reducing  the  shadow  economy,  but  the 
indicators  and  measures  presented  are  not 
fully coherent, and there is no results-based 
previous  measures. 
assessment 
Government  arrears  still  affected  domestic 
companies’  liquidity,  despite  the  recent 
adoption  of 
the  Law  on  Payment 
Discipline.  The  business  environment 
should be improved in accordance with ERP recommendation 8. 

ERP  recommendation  8:  ‘Improve  the  business 
environment  by  implementing  the  Master  Plan  for 
related  Government 
Competitiveness  and 
the 
include  measures 
Action  Plan.  These  should 
affecting  competitiveness, 
such  as  a  more 
legal  and  regulatory  environment, 
predictable 
enforcement of contracts, respect of IPRs, payment 
discipline,  labour  legislation,  quality  and  integrity 
of  inspection  services,  etc.  Ensure  regular  and 
structured  dialogue  with  social  partners  regarding 
the implementation and review of the Master Plan. 
Step  up  efforts  to  fight  against  corruption  and 
informalities in the economy.’ 

of 

Cooperation  between  the  government  and  the  business  sector  has  declined  in  recent 
years.  The  proportion  of  draft  laws  published  on  the  electronic  register  (ENER)  fell 
significantly over recent years, and the number of laws that undergo frequent changes or are 
adopted with too short consultation deadlines has increased. In many cases, there is little ex 
post consultation with stakeholders on the laws’ impact and effectiveness once they have been 
implemented (see also political criteria – Policy development and co-ordination). 

Financial sector development 

The banking sector remained stable despite high levels of non-performing loans (NPL). 
The  financial  sector  remains  dominated  by  banks  which  account  for  roughly  90  %  of  the 
financial  system’s  total  assets.  Foreign 
ownership  of  banking  assets  remains  high, 
at  about  70  %,  and  concentration  levels 
have not declined much over recent years – 
the  three  biggest  banks  hold  60  %  of  the 
sectors  assets,  compared  to  about  66  %  in 
2010.  The  main  funding  source  of  banks 
are  deposits,  which  have  kept  growing  since  2013.  Financial  stability  indicators,  such  as 
regulatory capital ratios, point to the system’s continued resilience. Profitability improved in 
the second half of 2014, after a lacklustre performance in the preceding two years partly due 
to the high share of bad loans. Since 2013, the central bank has managed to gradually reduce 

ERP recommendation 6: ‘Increase efforts towards 
facilitating the disposal of non-performing loans by 
banks, involving all key stakeholders including the 
central bank as necessary, with a view to removing 
potential obstacles to credit extension in the context 
of a sustained pick-up in credit demand.’  

29 

 
the  share  of  outstanding  loans  denominated  in  foreign  currency,  hence  decreasing  exchange 
rate risks. Further measures should be taken to implement ERP recommendation 6.  

Roughly  one  fifth  of  the  domestic  banking  sector's  assets  and  liabilities  are  held  by  two 
subsidiaries of Greek banks. Both are financially  sound and their funding  is  assured  mainly 
through  domestic  deposit-taking.  In  addition,  the  central  bank  put  in  place  prudential 
measures aimed at containing possible repercussions from the banking crisis in Greece. As a 
temporary  emergency  measure,  it  also  prohibited  residents  from  exporting  capital  related  to 
capital transactions such as debt and equity purchases and long-term lending to Greece. 

Liquidity in the banking sector remained ample in 2014 and beyond, and bank lending to the 
private  sector  continued  to  rally.  While  lending  to  non-financial  companies  picked  up 
noticeably,  these  funds  were  used  mainly  for  working  capital  purposes,  rather  than  for  new 
investment.  The  ratio  of  non-performing  to  total  loans  to  the  non-financial  sector  remained 
elevated, at 11.5 %, at the end of the second quarter of 2015, and only somewhat lower than a 
year  earlier.  The  ongoing  establishment  of  a  modern  and  comprehensive  land  registry 
(cadastre) is expected to help inform lenders about the value of real estate as collateral. The 
setting up of a private and public credit registry should also boost the quality of lending.  

Bank  lending  remains  by  far  the  dominant 
form  of  company  financing,  with 
the 
development  of  a  wider  financial  market 
stalled  -  equity  financing  by  public  listing 
has  even  declined  in  recent  years.  To 
support  the  restoration  of  credit  flows,  the 
government should take further measures to facilitate the write-off of bad claims. To improve 
access  to  finance  for  companies  under  ERP  recommendation  9,  the  government  should 
support the development of venture capital and equity financing, leasing and factoring, among 
other measures.  

ERP  recommendation  9:  ‘Improve  access  to 
finance  for  SMEs  and  speed  up  bankruptcy 
procedures.  Continue  with  the  implementation  of 
the  innovation  strategy,  and  step  up  the  use  of 
instruments foreseen by the Innovation Fund.’ 

3.2. 

    The capacity to cope with competitive pressure and market forces within 

the Union 

The  economy  is  moderately  prepared  to  cope  with  competitive  pressures  and  market 
forces  within  the  Union.  Some  progress  was  made  particularly  as  regards  addressing 
prevalent  shortcomings  in  human  capital  and  physical  infrastructure.  However,  businesses 
remained concentrated in low-productivity activities and it is necessary to increase the value 
added in productive sectors. Further investment is needed to boost labour productivity growth 
and  speed  up  the  transformation  of  the  economy.  Overall,  the  state’s  influence  on 
competitiveness increased. 

In  line  with  the  2015  ERP  recommendations  and  in  order  to  support  long-term  growth,  the 
former Yugoslav Republic of Macedonia should pay particular attention to: 

→ improving the employability of workers by better aligning education with labour demand 
needs, and improving the basic and transversal skills of students at all levels of education; 

→  upgrading  linkages  between  foreign  direct  investors  and  the  economy  and  encouraging 
investment in capital goods and innovation; 

→ better prioritising investment and aligning the transport strategy with the regional agenda 
on connectivity. 

30 

 
 
 
Human and physical capital  

The  share  of  highly  qualified  workers  in  the  economy  is  rising,  but  structural  factors 
limit an increase in labour productivity. Recent reforms have led to greater participation in 
education.  The  number  of  early  school  leavers  has  dropped  and  pre-school  enrolment  has 
increased in the past three years. The overall proportion of tertiary education graduates in the 
workforce  rose  by  4  %  to  18  %  of  the  workforce  between  2009  and  2013.  However,  one 
quarter of university graduates were unemployed, as most new jobs were concentrated in low-
productivity sectors. 

to 

subsidies 

recommendation 

The  main  challenges  remained  the  low  labour  market  participation  (particularly  among 
women),  skills  mismatches,  and  limited  job  opportunities  in  advanced  industrial  sectors. 
Hence, labour productivity has remained at around 18 % of the EU average for a number of 
years.  The  structure  of  employment  remained  focused  on  low-productivity  sectors,  and 
agriculture (19 % of total employment). The government continued to address labour market  
challenges primarily through a wide variety 
of  active  measures,  including  an  array  of 
employment 
incentivise 
recruitment.  These  measures  did  not 
underlying 
adequately 
structural  causes  of  unemployment,  and 
were 
to 
performance  evaluations.  This  weakened 
their  impact.  Implementation  of  the  2013-
2020  vocational  education  and  training  strategy  is  lagging  behind  in  many  areas.  Several 
measures  have  been  adopted,  but  their  effectiveness  is  insufficiently  monitored.  Overall, 
worker  employability  could  be  improved  by  following  ERP  recommendation  4.  To  achieve 
marked improvements in labour productivity, the education system would benefit from closer 
ties between  education programmes  and  employers,  including  foreign investors operating in 
higher value added sectors. 

the 
ERP 
employability  of  workers,  by  better  aligning  skills 
with  labour  demand  needs  notably  by  developing 
the  education  system.  Strengthen  performance 
evaluations of active labour market policies with a 
view  to  better  targeting  skills  development,  and 
inform on their methodology and results in a timely 
manner.’  

sufficiently 

subjected 

‘Improve 

address 

not 

the 

4: 

Public  infrastructure  is  in  need  of  modernisation.  The  state  of  transport  and  energy 
infrastructure continued to hamper economic development. The government is addressing this 
challenge  through  large-scale  public  investment  projects.  As  a  result,  total  investment 
volumes  rose  sharply  in  2013  and  again  in  2014,  with  public  projects  accounting  for  about 
one fifth of total investment in the manufacturing and construction industries.. It makes it all 
the more important to base the development of infrastructure on a reviewed transport strategy 
aligned with the regional agenda on connectivity, in accordance with ERP recommendation 7. 

Private sector investments remained subdued. Domestic firms did not sufficiently invest in the 
renewal of their capital assets and in innovation. As a result, there is an emerging dichotomy 
in the country’s capital stock, with foreign 
investment increasingly focused on higher-
productivity,  technology-intensive  sectors 
(mostly  concentrated  in  special  economic 
zones),  while  capital  stock  in  the  local 
relatively 
economy 
outdated. 

ERP  recommendation  7:  ‘Review  the  transport 
strategy in order to align it with the regional agenda 
on connectivity, with a particular focus on the core 
investment priorities (core network) and establish a 
credible planning and funding mechanism. A single 
sector pipeline would help prioritise investments.’  

low  and 

remains 

31 

 
 
 
 
Sectoral and enterprise structure 

The  sectoral  structure  of  the  economy  remained  largely  stagnant.  Manufacturing 
contributed some 12 % to gross value added in 2014, the same as in 2009. Agriculture’s share 
of the economy  declined only slightly during that period, to 10 %, while trade and services 
increased by 4.5 % and contributed almost 
half  of  the  country’s  value  added.  The 
structure of business also remained largely 
unchanged,  with  micro-enterprises  and 
small  businesses  accounting  for  more  than 
98 % of all companies. However, in the last 
three  years,  the  number  of  large  companies  has  more  than  doubled,  mainly  due  to  foreign 
investment, although their share remained below 1 %. SMEs provided the bulk of jobs (80 % 
of  total  employment).  The  sectoral  structure  of  the  economy  would  benefit  from  following 
ERP recommendation 5. 

ERP recommendation 5: ‘Step up efforts to create 
supply  linkages  between  foreign  and  domestic 
companies  with  a  view  to  enhancing  productivity 
and employment in the domestic economy.’ 

State influence on competitiveness 

While  the  government’s  share  of  economic  assets  remained  moderate,  its  influence  on 
private  sector  competitiveness  through  regulations  and  subsidies  is  rising.  The  state’s 
ownership of economic assets remained relatively moderate at about 15 % of GDP. However, 
the  large  share  of  state-owned  land  remained  an  obstacle  to  the  development  of  the 
agricultural  sector  and  to  bank  lending  to  companies  and  households,  which  is  based  on 
property  as  collateral.  There  is  a  wide  range  of  policy  instruments  through  which  the 
government  increasingly  has  an  impact  on  the  economy’s  competitiveness,  such  as  direct 
subsidies and tax exemptions, in particular for foreign investors; unpredictable inspections of 
firms  and  sanctions;  public  guarantees  for  loans  to  state-owned  enterprises;  public 
infrastructure projects; and active labour market programmes. While the legal framework for 
state  aid  was  strengthened  in  recent  years,  the  information  provided  about  the  amounts  and 
beneficiaries of state aid and about ex post evaluation has been limited. 

Economic integration and convergence with the EU 

Further progress was made in developing closer trade and investment links with the EU. 
Trade  openness  is  relatively  high  given  the  state  of  economic  development  of  the  country. 
Trade in goods remained buoyant in 2014, at about 129 % of GDP. Exports rose by 5pp to 52 
%  of  GDP,  compared  to  a  year  earlier.  The  EU  remained  by  far  the  most  important  trade 
partner in both exports and imports. In the first seven months of 2015, 77 % of total exports 
went  to  the  EU,  broadly  stable  from  the  same  period  in  2014,  and  4pp  higher  than  in  this 
period in 2013. At 63 %, the share of the country's imports which originated in the EU also 
remained elevated. 

With  foreign  investors  increasing  production,  the  structure  of  exports  shifted  somewhat 
towards  products  with  higher  value  added  —  machinery  and  transport  equipment  exports 
accounted for 21 % of the total in 2014 (7 % higher than in 2013). Exports have diversified in 
recent years, but remain highly concentrated — iron and steel, metal ores, clothing and food 
accounted for about 40 % of all exports in 2014, compared with 56 % in 2010. EU companies 
are the main foreign direct investors in the economy. Their share of total FDI stock increased 
further in 2014, for the second year in a row, by 1.5 %, to 83 %. 

32 

 
 
 
4. 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

4.1. 

  Chapter 1: Free movement of goods 

The free movement of goods ensures that many products can be traded freely across the EU 
based on common rules and procedures. Where products are governed by national rules the 
principle of the free movement of goods prevents these creating unjustified barriers to trade. 

The country is moderately prepared in the area of free movement of goods. Some progress 
was  made,  in  particular  on  strengthening  administrative  capacity.  However,  there  was  no 
further  progress  last  year  in  eliminating  non-tariff  barriers  to  trade.  In  the  coming  year,  the 
country should in particular: 

→ complete the adoption of measures to remove non-tariff barriers to trade; 

→ further align itself with provisions on conformity acceptance so that an agreement on 
conformity assessment acceptance can be negotiated. 

With alignment with the EU acquis already well advanced in this area, no additional progress 
can  be  reported  on  general  principles.  Of  42  legislative  amendments  required  to  eliminate 
non-tariff barriers to trade, in line with Articles 18 and 19 of the Stabilisation and Association 
Agreement  (SAA),  nine  still  need  to  be  adopted.  Concerning  horizontal  measures,  the 
Institute  of  Standardisation  adopted  26 649  standards  and  standardisation  documents,  of 
which  22 893  are  European  standards.  The  sale  of  standards  increased  by  24  %  compared 
with  2013.  The  institute's  capacity  improved  with  the  appointment  of  new  staff  reaching  a 
total  of  25.  It  began  issuing  certifications  under  ISO  9001  standards  and  improved 
cooperation with EU standardisation bodies. 

The  alignment  of  conformity  assessment  with  the  acquis  remains  advanced  but  not  yet 
sufficient to allow an agreement on conformity assessment acceptance to be negotiated. 

On  accreditation,  there  were  no  legislative  developments.  The  European  Co-operation  for 
Accreditation  completed  its  first  supervisory  assessment  of  the  Institute  of  Accreditation, 
whose capacity is adequate and was further strengthened. It now has a staff of 25, 93 external 
assessors  and  60  external  experts.  The  Institute  is  an  active  member  of  the  European  Co-
operation for Accreditation, the Multilateral Agreements Committee, as well as a full member 
of 
issued  17 
accreditations  during  the  reporting  period,  and  has  withdrawn  19  since  it  started  operating. 
There  are  now  130  accredited  bodies  in  the  country,  including  nine  institutes  with  new 
accreditation for ISO/IEC17025 and EN/ISO 15 189. 

the  International  Laboratory  Accreditation  Cooperation.  The 

institute 

The Bureau of Metrology issued 13 calibration and measurement options for weight, volume 
and flow in the database of the International Bureau of Weights and Measures. It continued to 
cooperate  with  the  European  Association  of  National  Metrology  Institutes  on  flow, 
temperature, electricity and liquid pressure and joined the European Programme for research 
in the field of metrology (EMPIR). 

In 2014,  the State Market  Inspectorate significantly increased its  inspections under the Law 
on  Product  Safety  (to  777,  from  147).  Inspections  under  the  Law  on  Construction  Products 
declined to 112 from 360.  It carried out 1 287 joint inspections with the Bureau of Metrology, 
identifying 123 abuses. Overall, product quality infrastructure is advanced. 

Regarding  the  'Old  Approach'  and  the  'New  and  Global  Approach',  a  new  Law  on 
Construction  Products  was  enacted  in  June  to  align  with  the  acquis,  and  the  rulebook  on 
single  approval  of  vehicles  was  amended  to  meet  European  technical  specifications  on  the 

33 

 
import and marketing of vehicles. No additional progress on aligning with 'New and Global 
Approach' product legislation or on procedural matters can be reported. 

4.2. 

  Chapter 2: Freedom of movement for workers 

Citizens of one Member State have the right to work in another  Member State and must  be 
given the same working and social conditions as other workers. 

Preparations in the area of freedom of movement for workers are still at an early stage, but 
some progress was made in the past year.  

The capacity for cooperating with EURES, the European jobs network, was developed further 
by training the administration. 

On  coordination  of  social  security  systems,  the  parliament  ratified  agreements  on 
coordinating social insurance with Slovakia, Italy and Hungary. Negotiations continued with 
Albania,  Serbia  and  Turkey.  The  country  signed  agreements  with  eight  Member  States  on 
using the European Health Insurance Card and negotiations with Croatia are ongoing. 

4.3. 

  Chapter 3: Right of establishment and freedom to provide services 

EU natural and legal persons have the right to establish themselves in any Member State and 
to provide cross-border services. For certain regulated professions, there are rules on mutual 
recognition of qualifications. Postal services are gradually being opened up to competition. 

The  country  is  moderately  prepared  on  the  right  of  establishment  and  freedom  to  provide 
services. Some progress was made. In the coming year, the country should in particular: 

→  continue  aligning  national  legislation  with  the  EU  acquis,  notably  on  the  mutual 
recognition of professional qualifications and the Services Directive; 

→ complete liberalisation of the universal postal service. 

On the right of establishment, the simplification of documentation procedures continued, the 
IT system was strengthened and its use expanded. 

On  freedom  to  provide  cross-border  services,  some  progress  was  made  towards 
establishing a Point of Single Contact by developing one-stop shops for setting up companies. 
Restrictions remain in force on certain services, including veterinary medicine, and regulated 
professions. The Law on Services is yet to be enacted. 

Amendments  to  the  Law  on  Postal  Services  limited  the  validity  period  of  the  universal 
service  provider's  licence  and  regulated  the  application  of  fines  for  misdemeanours. 
Shortcomings  remain  on  financing  of  the  net  costs  of  the  universal  service  obligation.  The 
regulator  issued  licences  for  other  postal  services  and  established  a  register  of  licences.  It 
needs to strengthen its monitoring capacity. 

On  mutual  recognition  of  professional  qualifications,  registers  of  regulated  professions 
were  updated  and  the  number  of  regulated  professions  fell.  A  moderate  level  of  acquis 
alignment  has  been  achieved.  A  new  national  coordinator  was  appointed  to  make  progress 
towards  full  alignment.  Legislation  from  2010  needs  to  be  updated  and  legislation  on 
commercial agents and professional use of toxic products still needs to be aligned further. 

Certification  under  the  ISO  9001  standard  is  a  minimum  requirement  for  public 
administrations, but can currently be provided only by companies accredited by the relevant 
national institute, and not yet by EU certification bodies. 

34 

 
4.4. 

  Chapter 4: Free movement of capital 

In  the  EU,  capital  and  investments  must  be  able  to  move  without  restriction  and  there  are 
common rules for cross-border payments. Banks and other economic operators apply certain 
rules to support the fight against money laundering and terrorist financing. 

In  the  area  of  free  movement  of  capital,  the  former  Yugoslav  Republic  of  Macedonia  is 
moderately  prepared.  Some  progress  was  made,  in  particular  in  the  fight  against  money 
laundering  and  financing  of  terrorism.  The  capacity  of  the  Financial  Intelligence  Unit  was 
further strengthened but it still needs to develop a consistent track record. 

 Limited  progress  took  place  on  capital  movements  and  payments.  The  country  already 
meets  the  requirements  of  the  first  stage  of  the  SAA,  and  further  liberalisation  depends  on 
moving  to  the  second  stage.  Restrictions  on  capital  movements  remain,  in  breach  of  the 
acquis, and EU citizens are not yet allowed to purchase agricultural land. In June, the central 
bank  introduced  temporary  capital  controls  to  prevent  spillover  from  the  Greek  economic 
crisis. 

Under  the  National  Payment  System  Council's  action  plan  for  implementing  the  2013-17 
strategy  for  developing  payment  systems,  further  steps  were  taken  to  harmonise  payment 
systems with EU requirements and increase their capacity. 

Concerning  the  fight  against  money  laundering  and  financing  of  terrorism,  the  Financial 
Intelligence  Office  was  strengthened  by  seven  new  staff  and  an  integrated  financial 
intelligence  and  reporting  system.  The  number  of  suspicious  transactions  referred  to  the 
Financial  Intelligence  Unit  continued  to  fall.  In  2014,  the  unit  submitted  31  notifications  to 
law enforcement bodies related to money laundering and financing of terrorism (25 in 2013) 
and 14 people were prosecuted and seven convicted for money laundering. 

4.5. 

  Chapter 5: Public procurement 

EU  rules  ensure  public  sector  procurement  of  goods  and  services  in  any  Member  State  is 
open to all EU companies on the basis of non-discrimination. 

The country is moderately prepared in this area, which is an area particularly vulnerable to 
corruption.  Some  progress  was  achieved,  especially  through  the  mandatory  use  of 
e-procurement, but recent amendments to the procurement law reduced the level of alignment 
with the acquis. More efforts are needed to prevent corruption during the procurement cycle. 
Significant efforts are needed to ensure an efficient and effective public procurement regime. 
Allegations  of  serious  conflicts  of  interest  and  abuse  of  public  office  have  not  yet  been 
investigated. In the coming year the country should in particular: 

→  increase  the  transparency  of  public  spending  by  publishing  real-time  information  on  all 
public procurement contracts; 

→ remove inconsistencies with the acquis including on blacklisting companies, conditions for 
using  awarding  criteria;  ensuring  harmonisation  with  EU  procurement  rules  on  defence  and 
security as well as the 2014 EU procurement Directives, especially on concessions; 

→ ensure that reports of irregularities are properly investigated.  

Institutional set-up and legal alignment 

On  the  legal  framework,  the  2007  Law  on  Public  Procurement  is  broadly  aligned  with  the 
acquis, but the level of alignment has been reduced through frequent amendments since 2013. 
The country has not yet achieved alignment with the EU Directive on Defence and Sensitive 
Security Procurement or the 2014 EU rules on public procurement. The generalised use of the 

35 

 
'lowest price' criterion and the obligation for contracting authorities to obtain approval from 
the  Public  Procurement  Council  in  case  they  wish  to  use  non-price  criteria  when  awarding 
contracts is not in line with the acquis and has detrimental effects on the quality of the offers. 
Keeping  records  on  professional  misconduct  by  businesses  and  excluding  them  from  future 
tenders is equivalent to 'black-listing' and not in line with European Court of Justice case-law. 

The Procurement Council started operation in May. The obligation for contracting authorities 
to  obtain  consent  from  the  Public  Procurement  Council  before  publishing  a  contract  notice 
gives  them  access  to  specialised  expertise  when  drafting  terms  of  reference  but  makes  the 
procurement process more complex, expensive and time-consuming. Insufficient cooperation 
between  the  Public  Procurement  Council,  the  Public  Procurement  Bureau,  the  State 
Commission  for  Protection  of  Competition  and  the  State  Commission  for  Prevention  of 
Corruption  undermines  the  way  that  procurement  principles  are  implemented  and  the  fight 
against corruption. 

A  strategy  for  developing  the  public  procurement  system  is  in  place  but  includes  only  the 
strategic  priorities  of  the  Public  Procurement  Bureau.  Moreover,  there  is  no  overall 
supervision  of  implementation  and  reporting  mechanisms.  After  the  Public  Procurement 
Council was set up in 2014, the Public Procurement Bureau saw part of its staff transferred to 
the Council, and the Bureau’s director was not appointed, weakening the Bureau’s capacity to 
perform its supervisory and institutional role. 

Implementation and enforcement capacity 

The country’s public procurement market is at 12 % of GDP and 34 % of the state budget in 
2013  including  the  'Skopje  2014'  public  infrastructure  project.  The  use  of  e-procurement 
increased  transparency.  Procurement  plans  are  adopted  annually  but  contracting  authorities 
are not obliged to publish them. Often annexes are not drafted until after contracts have been 
awarded  and  not  included  in  the  e-procurement  system.  The  information  made  available 
should  include  changes  in  contracted  amounts,  from  the  initial  tender  amount  to  the  final 
amount paid. The country has not yet established a centralised procurement body for certain 
types  of  procurement.  Joint  procurement  is  done  on  an  ad  hoc  basis.  Tender  requirements 
remain  too  complex  for  small  and  medium-sized  enterprises  to  participate  widely  in  public 
tenders. Negotiated procurement procedures without prior publication accounted for 5.5 % of 
the total value of procurement in 2014. 

No  monitoring  of  the  contract  award  process  is  in  place,  nor  is  contract  implementation 
monitored  by  a  centralised  inspection  system.  The  State  Audit  Office  carries  out  only  an 
annual external audit of the contracting authorities and there are no ad hoc audits. There has 
been no investigation of the alleged irregularities reported by the municipality of Centar about 
the ‘Skopje 2014’ project, of allegations of serious irregularities in the award of some large 
infrastructure  and  health  contracts,  or  of  other  allegations  of  serious  conflict  of  interest  and 
abuse  of  public  office.  The  strengthening  of  the  internal  audit  function  is  vital  to  improve 
contract implementation and monitoring (see Chapter 32 on financial control). 

The  Ministry  of  Economy's  weak  administrative  capacity  hampers  implementation  of  the 
legal  framework  on  concessions  and  public-private  partnerships.  Data  on  concessions 
awarded  and  public-private  partnerships  is  patchy;  notable  omissions  are  the  airport  and 
Skopje City concessions. Integration of data on concessions and public-private parnerships in 
the  system  for  e-procurement,  managed  by  the  Ministry  of  Economy,  will  increase 
transparency. The Public-Private Partnership Council has not yet started work. 

Contracting  authorities’  capacities  to  manage  public  procurement  processes  improved. 
Training  and  certification  programmes,  administered  by  the  Public  Procurement  Bureau, 

36 

 
increased  the  professionalism  of  both  contracting  authorities  and  businesses.  Contracting 
authorities  are  obliged  to  employ  certified  procurement  officers  in  the  tender  evaluation 
processes. A help desk operates at central level, and frequently asked questions are regularly 
updated on the website of the Public Procurement Bureau. 

There  is  a  regulatory  and  institutional  framework  on  integrity  and  conflict  of  interest 
mechanisms  in  public  procurement.  However,  a  risk  indicator  system  to  better  identify 
potential  integrity  problems  is  not  yet  in  place  and  the  number  of  integrity-related  reports 
remains low. 

Efficient remedies system 

As  concerns  the  right  to  legal  remedy,  the  structure  of  the  legal  remedy  system  formally 
complies  with  the  acquis  and  includes  the  State  Appeals  Commission,  whose  members  are 
appointed  by  parliament  for  five  years  and  whose  decisions  can  be  challenged  in  the 
Administrative  Court.  However,  full  alignment  with  the  Remedies  Directive  is  not  yet 
achieved. Misdemeanours occurring during the review process are subject to disproportionate 
sanctions  and  make  decision-making  highly  formalistic.  In  2014,  the  State  Appeals 
Commission upheld complaints in 190 of the 638 cases it reviewed and the court delivered 66 
judgments  on  cases  brought  against  decisions  of  the  commission,  ruling  against  it  in  13 
instances. This high rejection rate remains an issue of concern. On implementation capacity, 
the  capacity  of  the  commission  and  the  court  to  deal  with  an  increasing  number  of  appeals 
needs  to  be  strengthened.  Appointments  to  both  institutions  need  to  be  freed  from  political 
interference. Improving access to the commission’s decisions would increase transparency.  

4.6. 

  Chapter 6: Company law 

The  EU  has  common  rules  on  the  formation,  registration,  and  disclosure  requirements  of  a 
company,  with  complementary  rules  for  accounting  and  financial  reporting,  and  statutory 
audit. 

The country has a good level of preparation in the area of company law. Some progress was 
achieved, particularly on auditing. The Central Registry has also been updated and now refers 
only to active companies. In the coming year, the country should in particular: 

→ continue efforts towards alignment to the latest acquis on accounting and auditing. 

The legislative framework for company law was amended to regulate the relations, rights and 
the obligations between stakeholders. 30 010 inactive entities were removed from the Central 
Registry.  Alignment  with  the  Directive  on  cross-border  mergers  is  not  yet  completed, 
particularly on employees’ participation in the management bodies of companies established 
as a result of cross-border mergers. 

In the area of corporate accounting, the relevant Ministry of Finance unit was strengthened. 
The  Institute  of  Chartered  Accountants  is  still  not  operational,  preventing  professional 
accountants  from  receiving  in-service  training.  Alignment  with  the  Directive  on  annual 
financial statements, consolidated financial statements and related reports of certain types of 
undertakings is not yet done. 

Following new rules adopted in September 2014, the legislative framework for auditing was 
further aligned with the provisions of the Directive on statutory audit of annual accounts and 
consolidated  accounts  regarding  the  performance  of  quality  assurance  reviews,  their 
transparency  and  disciplinary  measures.  The  Council  for  Audit  Promotion  and  Supervision 
adopted a new statute and guidelines on preparation of audit reports on transparency. 

37 

 
4.7. 

  Chapter 7: Intellectual property law 

The  EU  has  harmonised  rules  for  the  legal  protection  of  copyright  and  related  rights.  This 
covers, 
trademarks,  designs, 
biotechnological inventions and pharmaceuticals.  

instance,  computer  programs,  broadcasting  and 

for 

The  country  is  moderately  prepared  in  this  area.  Some  progress  was  made  on  customs 
enforcement. The commitment and capacities of the institutions responsible for enforcing and 
protecting  intellectual  property  rights  and  the  acquis  vary,  but  remain  insufficient.  A 
satisfactory  track  record  on  investigation,  prosecution  and  judicial  handling  of  piracy  and 
counterfeiting  is  lacking.  Public  awareness  campaigns  are  not  yet  well  developed.  In  the 
coming year, the country should in particular: 

→ step up efforts to investigate and prosecute infringements of intellectual property. 

On  copyright  and  neighbouring  rights,  the  Ministry  of  Culture  adopted  a  rulebook  on 
record-keeping  of  authors’  rights  and  holders  of  related  rights.  The  Ministry  of  Culture  and 
the  Ministry  of  Information  Society  and  Administration  jointly  established  a  system  for 
electronic  recording  of  broadcast  music  works.  The  government  has  not  yet  approved  the 
tariff schemes  of collective rights  management societies and the capacity of the Ministry of 
Culture to deal with copyright and neighbouring rights is still insufficient. 

On  industrial  property  rights,  the State  Office  for  Industrial  Property  cooperated  with  the 
Office  for  Harmonisation  in  the  Internal  Market  and  with  the  European  Patent  Office  on 
several projects, but the trademark databases of the first two should be better integrated. The 
State  Office  does  not  have  enough  staff  to  provide  good  quality  services  or  training  to  the 
public and the business community, nor to cooperate internationally. 

Some  progress  was  made  on  enforcement  of  intellectual  property  rights.  The  Coordination 
Body for Intellectual Property has had a positive impact but the level of commitment differs 
between  law  enforcement  institutions  and  sharing  responsibility  between  11  different  law 
enforcement bodies hinders more efficient investigation and legal actions. The State Market 
Inspectorate  lacks  basic  equipment,  IT  and  training  to  ensure  effective  enforcement.  The 
Agency  for  Audio  and  Audiovisual  Media  Services  issued  10  orders  to  broadcasters  to 
prevent further violations of copyright and neighbouring rights. Some 30 misdemeanour cases 
were  lodged  with  the  courts,  but  the  absence  of  a  credible  enforcement  record  hinders 
information on  the follow-up action taken.  The  three public laboratories  are  still  not  legally 
authorised  to  detect  and  analyse  counterfeit  medicines,  so  their  evidence  is  not  accepted  in 
court. Public awareness of the threats posed by counterfeit goods to health and safety remains 
limited. 

4.8. 

  Chapter 8: Competition policy 

EU rules protect free competition. They include anti-trust rules against restrictive agreements 
between companies and abuse of dominant position. EU rules also prevent governments from 
granting state aid which distorts competition.  

The country is moderately prepared in the area of competition policy. Some progress was 
made  in  this  field.  However,  the  budget  and  the  administrative  capacity  of  the  Commission 
for the Protection of Competition (CPC) remain insufficient. In the coming year, the country 
should in particular: 

→ strengthen the enforcement record of the CPC. 

In  the  area  of  antitrust  and  mergers  policy,  new  guidelines  on  vertical  restraints  and  on 
horizontal  agreements  were  adopted  in  June  2015.  The  CPC  and  the  Public  Procurement 

38 

 
Bureau  adopted  joint  guidelines  on  detecting  bid  rigging.  The  overall  budget  of  the  CPC  in 
2014 was EUR 275 000, which is not enough for it to fully carry out its mandate. 

The  CPC  adopted  11  decisions  on  state  aid  in  2014.  State  aid  represented  0.08 %  of  the 
country’s  GDP  in  2014,  which  appears  very  low.  Aid  under  the  de  minimis  regime  ranged 
from  EUR  13 000  up  to  EUR  93 000,  i.e.  below  the  EUR  200 000  ceiling,  which  indicates 
restrained use of the de minimis aid tool. The State Commission for Prevention of Corruption 
issued a public warning about conflict of interest on one of the regional state aids provided by 
the government. The systems for reporting on the use of state aid are not used by all state aid 
providers,  which  hampers  effective  monitoring.  State  aid  continued  to  be  provided  for  air 
transport without being notified to the CPC. The state aid register has not yet been established 
and  the  regional  aid  map  has  not  yet  been  drawn  up  in  accordance  with  EU  guidelines  on 
regional state aid. 

4.9. 

  Chapter 9: Financial services 

EU rules aim at ensuring fair competition between and the stability of financial institutions, 
namely  banking,  insurance,  supplementary  pensions,  investment  services  and  securities 
markets. They include rules on authorisation, operation and supervision of these institutions. 

The  country  is  moderately  prepared  in  the  area  of  financial  services.  Some  progress  was 
made, particularly on improving the implementation and enforcement capacities of financial 
market  regulators.  The  concerns  expressed  by  the  European  Commission  and  the  Venice 
Commission, about the acquis compatibility of the proposed international financial zones, still need to 
be adequately addressed.  

On banks and financial conglomerates, the law was amended to comply with the new Basel 
principles of  effective banking  supervision  and on specifying capital buffers, as required by 
the  acquis.  The  central  bank  updated  the  banking  regulation  on  own  funds  to  further  align 
with the Capital Requirements Directive IV. The liquidity risk management regulations were 
amended  to  introduce  a  new  liquidity  ratio  and to  amend  the  definitions  of  own  funds.  The 
credit bureau law was amended to allow exchange of information with other administrations. 
The law on the deposit insurance fund was also amended to cover certificates of deposits. 

On  administrative  and  supervisory  capacity,  cooperation  continued  between  the  central 
bank  and  the  supervisory  authorities  of  the  parent  banks  of  domestic  subsidiaries.  Local 
subsidiaries  passed  the  stress  test,  better  than  their  parent  banks,  proving  the  solidity  of  the 
banking  system.  The  central  bank  actively  participates  in  the  regional  group  of  supervisors. 
Together with the other financial supervisors, it launched a financial literacy campaign. 

Amendments  to  the  insurance  supervision  law  introduced  new  classes  of  insurance.  The 
legislation authorising the Ministry of Finance to set premiums for motor vehicle insurance is 
still  is  not  aligned  with  the  acquis  and  prevents  competition  in  the  motor  insurance  market. 
The track record of the Insurance Supervision Agency improved. It issued new standards on 
risk management and on the internal audit and control system of insurance companies. It also 
made  11  on-site  visits  resulting  in  73  corrective  measures  and  48  procedures,  including 
payment  of  fines  and  misdemeanour  procedures.  The  use  of  visible  ‘vignettes’  for  motor 
vehicles  that  have  been  registered  and  insured  seems  to  have  reduced  the  number  of 
unregistered vehicles, but reliable data on uninsured vehicles is still lacking. Quality control 
procedures  for  supervising  voluntary  pension  insurance  schemes  were  upgraded.  The  50 % 
limit on investing in non-domestic securities is not in line with the acquis. 

On  financial  market  infrastructure,  alignment  with  the  Financial  Collateral  Directive 
remains incomplete, while alignment with the Settlement Finality Directive has not yet begun. 

39 

 
On  securities  markets  and  investment  services,  amendments  to  the  securities  law 
introduced a new definition of certificates for deposits. The commitments of brokerage houses 
when dealing with clients’ orders were more precisely regulated. The Securities and Exchange 
Commission  continues  to  cooperate  actively  with  the  other  members  of  the  International 
Organisation of Securities Commissions. 

4.10.   Chapter 10: Information society and media 

The EU supports the good functioning of the internal market for electronic communications, 
electronic  commerce  and  audio-visual  services.  The  rules  protect  consumers  and  support 
universal availability of modern services. 

There is a good level of preparation in the field of information society and media. In the past 
year, some progress was made. In the coming year, the country should in particular: 

→  ensure  proper 
communications and audiovisual media services; 

implementation  of 

the  newly  adopted 

legislation  on  electronic 

→ strengthen the independence and capacity of the audiovisual media regulator and the public 
service broadcaster. 

In the area of electronic communications and information and communications technologies, 
amendments to the Law on Electronic Communications were adopted, further aligning it with 
the 2009 EU regulatory framework, although some concerns remain. The scope of universal 
service  was  extended  to  basic  broadband  access.  Fixed  broadband  penetration  remained  at 
23%  of  the  population,  while  mobile  broadband,  including  3G,  reached  66%.  The  4G 
telecommunication network continued to be expanded across the country.  

The  credibility  of  the  telecom  regulator  continues  to  be  undermined  by  the  allocation  of 
surplus funds for purposes other than developing electronic  communications. Spectrum fees 
were  lowered  but  remain  high.  Public  consultation  procedures  with  operators  need  to 
improve.  The  administrative  capacity  of  the  Ministry  of  Information  Society  and 
Administration  needs  to  be  strengthened.  The  introduction  of  the  112  emergency  phone 
number is overdue, due to a lack of financial resources.  

The agreement of 29 September 2014 signed by the former Yugoslav Republic of Macedonia, 
Bosnia  and  Herzegovina,  Montenegro  and  Serbia  on  reducing  the  prices  of  mobile  roaming 
services came into force on 1 July 2015.  

As regards information society services, a new law on e-Signature was adopted. A National 
Centre for Computer Incident Response (as a CERT) was established. An ICT strategy as well 
as  strategies  on  cyber  security  and  broadband  were  developed.  There  are  still  barriers  to  e-
commerce, such as higher customs duties.  

In  the  field  of  audiovisual  policy,  the  Law  on  Audio  and  Audiovisual  Media  Services  was 
amended,  but  with  limited  stakeholder  consultation.  Through  the  alignment  with  the  EU's 
Audiovisual  Media  Services  Directive,  the  country  can  now  access  the  MEDIA  sub-
programme  under  the  EU  programme  "Creative  Europe".  The  regulatory  authority,  the 
Agency  for  Audio  and  Audiovisual  Media  Services,  adopted  implementing  legislation  on 
ownership,  conditions  for  awarding  a  broadcasting  licence  and  protection  of  minors.  The 
regulator  still  needs  to  demonstrate  that  it  works  in  an  independent,  non-discriminatory  and 
transparent  manner.  Serious  concerns  continued  over  selective  reporting  and  the  public 
service broadcaster’s lack of editorial and financial independence. 

40 

 
4.11.   Chapter 11: Agriculture and rural development 

The  Common  Agricultural  Policy  supports  farmers  and  rural  development.  This  requires 
strong management and control systems. There are also common EU rules for quality policy 
and organic farming.  

The country is moderately prepared in the area of agriculture and rural development. Some 
progress  was  made.  The  new  strategy  for  agriculture  and  rural  development  for  2014-2020 
provides the framework needed to tackle key constraints on the sector’s development. In the 
coming year, the country should in particular: 

→ focus on more effective use of IPARD funds. 

Some  progress  has  been  made  on  general  cross-cutting  issues  with  the  strengthening  of 
institutional  capacity.  Further  efforts  are  needed  to  ensure  the  integrated  administration 
control  system  functions  properly,  to  develop  organic  farming  and  the  use  for  policy 
formulation of the Farm Accountancy Data Network. 

In the area of common market organisation, closer economic cooperation between farmers 
is  needed  for  value  chains  to  work  more  effectively.  Improving  quality  and  marketing  in 
strategic sub-sectors such as fresh vegetables, fruit and milk is a recognised priority. 

The  2014-2020  national  strategy  for  agriculture  and  rural  development  was  adopted.  To 
implement land consolidation and land privatisation successfully, the Ministry needs greater 
administrative resources. Greater transparency is needed on budget allocations for the national 
programme  for  agriculture  and  rural  development.  The  capacity  to  implement,  monitor  and 
evaluate  the  national  programme  needs  to  be  strengthened.  Concerns  remain  about  the 
effective use and maintenance of irrigation facilities. Direct payments to farmers need to be 
developed, as do policy objectives, and their impact monitored. 

Significant  steps  have  been  taken  to  address  major  implementation  issues  related  to  the 
Instrument for Pre-accession Assistance for Rural Development (IPARD) where, despite an 
increase  in  applications,  EUR  15.6  million  was  returned  unused  to  the  EU  budget  in  2014. 
The  administrative  capacity  of  the  Agency  for  Financial  Support  in  Agriculture  and  Rural 
Development  was  strengthened  and  progress  was  made  towards  accrediting  new  IPARD 
measures. The new 2014-2020 IPARD Programme was adopted in January 2015. 

Organic  farming  and  quality  protection  policy  saw  some  progress.  Marketing  of  organic 
products  and  protection  of  their  quality  improved.  Preparations  were  made  to  register  two 
products  under  the  Protected  Geographical  Indication  label.  Administrative  capacity, 
however, remains insufficient.  

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

EU  hygiene  rules  for  foodstuff  production  ensure  a  high  level  of  food  safety.  Animal  health 
and welfare and the safety of food of animal origin are safeguarded together with quality of 
seed, plant protection material, harmful organisms and animal nutrition. 

There is some level of preparation in the area of food safety, veterinary and phytosanitary 
policy. Some progress was made, particularly on food safety. In the coming year, the country 
should in particular: 

→ increase administrative capacities, in particular in inspection services and laboratories; 

→ step up efforts on phytosanitary policy. 

On  general  food  safety,  the  Law  on  Food  Safety  was  further  aligned  with  the  EU  acquis. 
Memoranda  of  understanding  and  communication  procedures  were  signed  between  the 

41 

 
relevant food and feed safety bodies. Procedures to verify the effectiveness of official controls 
were put in place. The Food and Veterinary Agency was certified as ISO 9001-compliant for 
having met quality management standards. The agency took on 47 more employees.  

On veterinary policy, the agency continued to update systems for controlling imports of live 
animals  and  animal  products  and  improved  controls  on  the  identification,  registration  and 
movement  of  animals.  The  agency  continues  to  vaccinate  foxes  against  rabies.  Additional 
legislation  on  non-commercial  movement  of  pets  and  zoo-technical  issues  was  enacted,  as 
well  as  new  legislation  on  animal  welfare.  Accumulated  payment  arrears  to  authorised 
veterinary associations and the Faculty of Veterinary Medicine jeopardise the agency’s ability 
to implement animal health programmes.  

Regarding  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  rulebooks 
were  issued  on  hygiene,  controls  and  animal  by-products.  Collection  and  treatment  systems 
for animal by-products have not yet been established. 

Some  progress  has  been  made  on  food  safety  rules.  Following  changes  to  the  acquis,  the 
veterinary  and  food  agency  revised  implementing  legislation  on  food  contact  materials, 
labelling, food supplements and food for particular nutritional use. The agency upgraded its 
information  system  to  include  the  register  of  business  operators  with  food  of  non-animal 
origin  and  processing  of  consumer  complaints.  The  agency,  however,  remains  understaffed 
and  lacks  equipment.  The  annual  monitoring  programme  for  food  safety  is  only  partially 
implemented.  

There was some progress on phytosanitary policy. Implementing legislation was adopted on 
plant health and plant protection products. Inspection plans and guidelines were developed for 
the  phytosanitary  inspectorate.  The  State  Phytosanitary  Laboratory  hired  new  staff  and  15 
additional  laboratory  methods  were  accredited  under  ISO  17025.  However,  harmful 
organisms  and  plant  protection  products  are  only  partially  monitored  and  a  phytosanitary 
information  system  has  not  yet  been  established.  Implementation  of  international  standards 
for phytosanitary measures, particularly for export certification and determining pest status, is 
needed. The Phytosanitary Directorate is still understaffed and lacks training and equipment. 
Coordination between the competent authorities remains poor and ineffective.  

4.13.   Chapter 13: Fisheries 

The  Common  Fisheries  Policy  protects  living  resources  of  the  sea  and  limits  the 
environmental  impact  of  fisheries.  This  includes  setting  catch  quotas,  managing  fleet 
capacity, rules for aquaculture as well as support for fisheries and coastal communities. 

There is a moderate level of preparation in the area of fisheries. Some progress was made 
on monitoring catches. In the coming year, the country should: 

→ make further efforts to align market policy with the acquis. 

Fish  production  in  the  country  is  based  on  aquaculture  and  commercial  lake  fishing.  The 
acquis  on  resources  and  fleet  management,  inspection  and  control  is  only  marginally 
applicable  to  the  former  Yugoslav  Republic  of  Macedonia.  The  Law  on  Fisheries  and 
Aquaculture  was  amended  to  monitor  fish  catches  more  effectively.  The  2015  state  aid 
budget for fisheries and aquaculture remained stable at EUR 1.5 million, but only 20 % of the 
amount allocated to financially support fisheries and aquaculture in 2014 was used. 

Alignment  is  less  advanced  on  market  policy.  Only  health-related  product  labelling  rules 
exist.  The  national  authorities  need  to  prepare  to  implement  Regulation  1379/2013  on  the 
common organisation of the markets in fishery and aquaculture products. 

42 

 
4.14.   Chapter 14: Transport policy 

The EU has common rules for technical and safety standards, security, social standards, state 
aid  and  market  liberalisation  in  road  transport,  railways,  inland  waterways,  combined 
transport, aviation and maritime transport.   

The  country  remains  moderately  prepared  in  this  area.  Some  progress  was  made  but 
additional efforts are needed to align road safety and railway  legislation  with the acquis. In 
the coming year, the country should in particular: 

→ take further steps to strengthen administrative capacity on road and rail transport safety; 

→ accelerate the process of fully re-opening the rail market; 

→ ensure rail and air accident and incident investigation bodies work better. 

In road transport, priority needs to be given to further aligning road safety legislation with 
the  acquis.  The  Roads  Safety  Council  continued  its  campaigns  to  reduce  fatalities.  To 
adequately  implement  the  acquis,  particularly  on  roadside  inspections,  operational  and 
administrative  capacity  needs  to  be  strengthened.  Further  alignment  is  needed  in  rail 
transport.  Changes  to  bring  infrastructure  charges  for  international  freight  to  competitive 
levels were introduced. Licensed operators are still unable to fully access the railway market. 
Staffing of the Accident Investigation Committee remains unclear. A cross-border agreement 
with Serbia was concluded. 

In the area of inland waterway transport, further work is needed to regulate recognition of 
certification and transportation of goods. No measures were taken on intermodal transport 
after one potential location was selected for a multimodal node. Priority needs to be given to 
developing a balanced intermodal transport and mobility system that is environment-friendly 
and competitive. 

The Law on Contractual and Real Rights Relations in Air Transport was amended, bringing 
national legislation further into line with the acquis. The 2013-2018 national aviation strategy 
was amended to allow the establishment of a national airline carrier. Concerns remain over 
financial incentives granted to air operators to apply requirements under phase I of the 
European Common Aviation Agreement. The technical and administrative capacity of the air 
navigation services provider was strengthened. The aviation investigation, accidents and 
incidents body needs to be more transparent. The country actively participates in the Joint 
Service Provisional Area (JSPA) initiative.  

4.15.   Chapter 15: Energy 

EU energy policy covers competition and state aids, equal access to resources, the internal 
energy market, energy efficiency, nuclear energy and nuclear safety and radiation protection. 

The country is moderately prepared in this area. Some  progress was made on security of 
supply  but  not  on  the  opening  of  the  electricity  market.  Obligations  undertaken  under  the 
Energy Community Treaty are not fully implemented. In the coming year, the country should 
in particular implement the following obligations undertaken under the Energy Community: 

→ open the electricity market;  

→ participate in the regional electricity Coordinated Auction Office; 

→  prepare  and  adopt  the  national  energy  efficiency  and  national  renewable  energy  action 
plans. 

43 

 
As regards security of supply, a new Law on Mandatory Oil Reserves was enacted to apply 
as  of  January  2016.  The  current  levels  of  oil  reserves  were  increased  to  71  days.  The 
government postponed full implementation of the Law on Energy, delaying the opening of the 
electricity  market  until  2020,  causing  the  Energy  Community  Secretariat  to  open  a  dispute 
settlement  case  for  this  breach  of  obligations.  The  state-owned  gas  transmission  operator 
started construction of the Klecovce-Štip gas transmission pipeline, expected to be completed 
by the end of 2016. Construction of the new 400kV electricity line with Serbia and activities 
to prepare construction of the Bitola-Elbasan (Albania) section of the electricity transmission 
network are under way. The Energy Department in the Ministry of Economy, as well as the 
Energy Agency are understaffed.  

On the internal energy market, the government launched a procedure in November 2014 for 
awarding  public-private  partnership  contracts  to  finance  and  develop  the  gas  distribution 
system in the eastern and western regions of the country. In November and December 2014 
the  Energy  Regulatory  Commission  adopted  grid  codes  for  transmission  and  distribution  of 
electricity  and  amended  the  Electricity  Market  Rules.  The  Energy  Community  Secretariat 
opened  an  infringement  procedure  for  failure  to  participate  in  the  activities  of  the  regional 
Coordinated Auction Office.  

The  natural  gas  market  was  opened  for  competition  on  1 January 2015.  The  Energy 
Regulatory  Commission  adopted  implementing  legislation  on  natural  gas  prices  for  the 
supplier  of  last  resort  and  grid  codes  for  natural  gas  distribution.  The  dispute  over  the 
ownership of the gas transmission pipeline has not been resolved.  

The national action plan on renewable energy has not yet been adopted and the deadline for 
submitting  it  to  the  Energy  Community  Secretariat  was  missed.  The  Law  on  Biofuels  and 
related implementing legislation and the national action plan for biofuels was prepared. The 
second action plan on energy efficiency has not yet been adopted. Systems for monitoring the 
implementation  of  energy  efficiency  measures  are  not  yet  developed.  Implementing 
legislation  on  energy  audits  was  adopted.  Any  further  development  of  hydropower  should 
take place in conformity with EU environmental legislation. 

On  nuclear  energy,  nuclear  safety  and  radiation  protection,  the  Radiation  Safety 
Directorate revised the nuclear safety and protection strategic plan for 2015-2017 on the basis 
of international standards for physically protecting nuclear materials and facilities. 

4.16.   Chapter 16: Taxation 

EU  rules  on  taxation  cover  value-added  tax  and  excise  duties  as  well  as  aspects  of  taxing 
income from savings of individuals and of corporate taxes. They also deal with cooperation 
between tax administrations, including information exchange to prevent tax evasion.  

The country is moderately prepared in the area of taxation. Some progress was made. The 
Law  on  Special  Zones  for  Technological  and  Industrial  Development  is  still  not  compliant 
with the EU Code of Conduct for Business Taxation. In the coming year, the country should 
in particular: 

→ continue to fight tax fraud, tax evasion and the informal economy;  

→  further  develop  the  Public  Revenue  Office’s  compliance  risk  management  system  and 
strengthen its audit capacity and function; 

→ bring fiscal provisions on technological development zones into line with the EU Code of 
Conduct for Business Taxation. 

44 

 
On indirect taxation, amendments to the Law on Value Added Tax (VAT) came into force 
in January 2015. The legal basis for ‘e-invoices’ was established. Processing of VAT refund 
requests within the legal deadline improved. Regarding excise duties, a duty was introduced 
on  petroleum  coke  and  cigarette  taxes  were  increased.  A  new  law  on  prohibiting  and 
preventing  unregistered  activities  was  enacted  in  December  2014  to  reduce  the  informal 
economy and strengthen cooperation between different authorities.  

There  was  progress  on  direct  taxation.  The  profit  tax  law  was  amended  so  that  since 
1 January 2015 taxation is based on annual profit and no longer on distributed profit. Taxation 
of  gains  from  games  of  chance  and  betting  was  further  improved  with  the  introduction  of 
obligatory automated IT tracking of payments. Amendments to the Law on Personal Income 
Tax enacted in July include the regulation of the fiscal treatment of capital gains on sale of 
real estate. 

Progress was made in administrative cooperation and mutual assistance. The country was 
assessed  as  largely  compliant  with  phase  2  of  the  peer  review  conducted  under  the  OECD 
Global  Forum  on  Transparency  and  Exchange  of  Information  for  Tax  Purposes.  The 
recommendations  of  the  peer  review  report  should  be  adequately  followed  up.  Further 
progress  was  made  through  double  taxation  agreements.  The  agreement  on  the  country’s 
participation in the EU’s Fiscalis 2020 programme was ratified. 

Progress  was  made  on  administrative  and  operational  capacity.  Revenue  collection 
increased.  The  Public  Revenue  Office  (PRO)  continued  to  develop  the  compliance  risk 
management  system  and  a  Council  for  Compliance  was  established.  The  efficiency  of  the 
internal audit and control system improved. The PRO further improved work processes based 
on  the  ISO  9001/  2008  quality  management  system.  The  tax  inspectorate’s  capacity  was 
strengthened  by  new  methods  to  prevent  tax  evasion.  As  of  2015  cash  registers  are 
compulsory  and  the  PRO  now  monitors  online  cash  turnover  in  real-time.  ‘E-tax’  services 
have  been  further  expanded.  The  law  on  prohibiting  and  preventing  unregistered  activities 
aims  to  reduce  the  informal  economy  through  stronger  control  mechanisms,  such  as  joint 
inspections  with  other  control  bodies, 
information  sharing  and  controls. 
Modernising the IT system should be a priority and part of an overall modernisation strategy. 

increased 

4.17.   Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them directly financing the 
public  sector.  Member  States  coordinate  their  economic  policies  and  are  subject  to  fiscal, 
economic and financial surveillance.  

The  country  is  moderately  prepared  in  the  area  of  economic  and  monetary  policy.  Some 
progress  was  made  but  the  capacity  of  the  country’s  institutions  to  draft  economic  policy 
remains insufficient. In the coming year, the country should in particular: 

→ improve economic policy coordination within government and with relevant stakeholders; 

→ introduce expenditure benchmarks and fiscal rules to improve public finance management. 

On  monetary  policy,  acquis  alignment  of  the  legal  framework  is  well  advanced.  The 
functional  and  institutional  independence  of  the  central  bank  is  ensured.  The  law  on  the 
central bank forbids both monetary financing of the public sector and privileged access by the 
public sector to financial institutions. It also establishes price stability as the primary objective 
of  the  central  bank,  in  line  with  the  primary  objective  of  the  European  System  of  Central 
Banks (ESCB). The central bank has inflation forecasts, but no official target.  

45 

 
On economic policy, further alignment with Directive 2011/85 on requirements for budgetary 
frameworks is needed. The lack of expenditure benchmarks or fiscal rules has allowed loose 
management of public finances (see economic criteria). 

Economic policy is drawn up essentially by the central government with limited involvement 
of  decentralised  administrations  or  external  stakeholders.  The  2015-2017  Economic  Reform 
Programme  was  submitted  on  time  but  appears  to  have  involved  limited  input  from  line 
ministries  and  external  stakeholders.  Better  internal  coordination  and  external  consultations 
should  be  ensured.  Further  steps  were  taken  to  improve  central  institutional  capacity  on 
macroeconomic  forecasting  and  analysis,  in  line  with  the  Directive  on  requirements  for 
budgetary frameworks. The country has made some progress in adopting the 2010 European 
System of National and Regional Accounts (see Chapter 18 — Statistics). 

4.18.   Chapter 18: Statistics 

EU  rules  require  that  Member  States  are  able  to  produce  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency,  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information.  

The country is moderately prepared in the area of statistics. Some progress was achieved in 
the past year, notably in the alignment of sectoral statistics with EU standards.  

Continued efforts are needed to improve the quality of data in the areas of macro-economic 
and  social  statistics  as  well  as  for  full  harmonisation  with  the  EU  acquis.  In  addressing  the 
shortcomings outlined below, in the coming year, the country should in particular:  

→ further strengthen human and financial resources of the State Statistical Office; 

→ further align statistics with the European System of Accounts 2010; 

→ transmit tables for the Excessive Deficit Procedure (EDP) to Eurostat. 

As  regards  statistical  infrastructure,  the  legal  framework  is  broadly  in  line  with  the 
European statistics Code of Practice. The State Statistical Office (SSO) is the main producer 
and coordinator of statistics. Its professional independence is enshrined in law but needs to be 
strengthened in practice, including through adequate resourcing. Other producers of statistics 
are  the  Central  Bank  and  the  Ministry  of  Finance,  which  have  signed  Memoranda  of 
Understanding with the SSO. The main classifications are in compliance with the EU acquis 
and upgraded regularly. The availability and quality of administrative data sources remains a 
problem. Data transmission to Eurostat increased in terms of coverage.  

In  the  field  of  macro-economic  statistics  the  SSO  currently  compiles  annual  and  quarterly 
gross domestic product (GDP) data in current and constant prices. Annual sector accounts and 
supply/use tables are compiled. Further efforts are required to harmonise government finance 
statistics and produce quarterly sector accounts. Excessive deficit procedure notifications are 
not  yet  transmitted  and  financial  accounts  are  not  yet  produced.  Statistics  on  the  balance  of 
payments and on foreign direct investment are compiled by the Central Bank according to the 
latest standards (6th Balance of Payments Manual). The harmonised index of consumer prices  
and purchasing power parities are aligned.  

Structural  business  statistics  and  short-term  statistics  for  the  sectors  of  industry  and 
construction are well developed but additional quality improvements are needed as well as the 
introduction  of  short-term  statistics  for  services  and  overall,  an  increased  coverage  of 
variables.  The  business  register  represents  a  good  basis  for  sampling  and  data  delivery  but 
needs more frequent updating. Foreign affiliates statistics are not available. Further alignment 

46 

 
is needed in tourism and transport statistics. Research and development data and ICT statistics 
are sufficiently aligned with the EU acquis. 

In the field of social statistics, in May 2015 the SSO started preparing an up to date sample 
frame for social surveys by collecting data on the number, type and territorial distribution of 
dwellings and households, as well as the number of persons living in the recorded households  
in  selected  enumeration  areas.  The  main  deficiency  continues  to  be  the  lack  of  reliable  and 
recent  population  data,  affecting  the  quality  of  household  surveys  and  per  capita  data. 
Migration  statistics  need  to  be  developed.  The  survey  of  income  and  living  conditions  is 
implemented  and  there  was  progress  in  implementing  social  protection  statistics.  Labour 
market statistics are broadly aligned with the EU acquis. Crime, education and public health 
statistics are not yet aligned.  

Statistics on agricultural production are partially produced according to the EU acquis. The 
farm  structure  survey  is  conducted  regularly.  Agro-monetary  statistics  according  to  EU 
standards are in place but supply balance sheets are not yet produced.  

Energy  statistics  are  largely  in  line  with  the  EU  acquis.  Short-term  energy  statistics  and 
energy  balances  are  produced.  Statistics  on  waste,  water  and  on  environmental  protection 
expenditure are published. Material flow balances are not yet produced. 

4.19.   Chapter 19: Social policy and employment 

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and anti-discrimination. They also promote social dialogue at European level.  

The  country  is  moderately  prepared  in  the  area  of  social  policy  and  employment.  Some 
progress was made in the last year. However, labour market conditions remain very difficult, 
with  continuing  high  unemployment  rates,  alarming  levels  of  youth  and  long-term 
unemployment  and  very  low  participation  rates  of  women.  Although  policy  measures  are 
being taken to promote social inclusion, poverty remains a serious problem, in particular for 
Roma.  The  Law  on  Anti-Discrimination  needs  to  be  amended  to  comply  with  the  acquis. 
Anti-discrimination  mechanisms  need  to  be  strengthened.  In  the  coming  year,  the  country 
should in particular: 

→ tackle unemployment, in particular among youth and the long-term unemployed; 

→  improve  bipartite  and  tripartite  social  dialogue,  particularly  in  the  private  sector  and 
especially for collective bargaining; 

→  ensure  appropriate  institutional  and  financial  resources  are  made  available  to  implement 
the social inclusion and poverty alleviation strategies already adopted. 

Amendments  to  labour  law  were  enacted,  regulating  publication  of  job  vacancies  and 
compulsory  social  insurance.  Efforts  to  enhance  the  capacity  of  the  various  institutions  in 
charge  of  enforcing  labour  law,  and  improve  cooperation  among  them,  remain  fragmented. 
Alignment with the acquis remains at an early stage. 

On health and safety at work, the Law on Occupational Safety and Health was amended and 
two relevant rulebooks were adopted. However, this was done without consulting the National 
Council for Occupational Health and Safety or assessing their impact on alignment with the 
acquis. The division of responsibilities and coordination between the relevant institutions still 
needs  to  be  improved.  Administrative  capacity  remains  insufficient  to  ensure  proper 
implementation  and  enforcement  of  the  legal  provisions.  Overall,  the  country  remains 
moderately prepared on aligning with the acquis in this area. 

47 

 
The  role  of  the  Economic  and  Social  Council  as  the  lead  institution  for  tripartite  social 
dialogue was strengthened. A tripartite social dialogue was established in 12 municipalities. 
Amendments  to  the  Law  on  Peaceful  Settlement  of  Labour  Disputes  introduced  external 
mediators  and  arbiters  but  implementation  is  slow  and  partial.  The  trust  in  social  dialogue 
both among employers and employees should be strengthened as well as the capacity of social 
partners  in  shaping  policy.  Overall,  consultation  of  social  partners  in  the  policy-making 
process remains limited. The influence of trade unions and employers’ organisations is limited 
and their capacity remains weak. 

Regarding employment policy, the unemployment rate remains high at 27.4% % in Q1/2015. 
The  public  sector  remains  the  main  employer.  Labour  market  participation  remained  very 
low,  especially  among  women  (38.8%  in  Q1/2015)  and  Roma.  Amendments  to  the  Law  on 
Employment and Insurance in Case of Unemployment and implementation of new tax reliefs 
provide  additional  assistance.  Development  of  a  profiling  system  of  the  unemployed 
continued.  In  December  2014,  the  country  launched  the  employment  and  social  reforms 
programme  to  address  the  high  unemployment  rate,  poverty  and  inequalities.  The 
Employment Service Agency continued to modernise its electronic services. 

Preparations  for  participation  in  the  European  Social  Fund  continued  with  EU  assistance. 
The lack of strategic guidance and planning and poor inter-institutional coordination reduced 
the  effectiveness  of  the  human  resource  development  programme.  Due  to  delays  in 
procurement  planning,  substantial  EU  funding  was  returned  unused  to  the  EU  budget.  (See 
Chapter 22). 

Some progress has been made on social inclusion. The capacities of the relevant institutions 
are weak, as is cooperation between them. The reform of social services at local level is being 
piloted  in  four  municipalities.  Implementation  of  the  2011-2021  national  programme  for 
developing  social  protection  is  nonetheless  limited.  Measures  under  the  national  strategy 
against poverty have had limited impact and poverty levels remain high, particularly among 
Roma.  Data  on  poverty  has  not  been  regularly  updated.  Implementation  of  the  2010-2020 
national  strategy  for  elderly  people  has  improved  care  of  the  elderly.  The  amended  Law  on 
Child  Protection  introduced  a  special  allowance  for  children  and  young  disabled  persons. 
Lack  of  commitment  and  resources  hampered  implementation  of  the  2010-2018  national 
strategy on equal rights for persons with disabilities. Labour market access for persons with 
disabilities  is  inadequate.  The  national  coordinating  body  to  monitor  implementation  of  the 
relevant  UN  convention  remained  inactive.  The  administration’s  capacity  to  promote  social 
inclusion did not improve and remains inadequate at municipal level. 

Amendments  to  legislation  on  social  protection  introduced  subsidies  for  private  sector 
employers  hiring  workers  from  vulnerable  groups.  The  amended  Law  on  the  Pension  and 
Disability  Insurance  improved  the  recording  of  data  on  insurance  and  salaries.  The 
administrative capacity of the relevant institutions remains weak. 

Moderate  progress  was  made  on  implementation  of  the  2011-2015  anti-discrimination 
strategic  plan.  The  Commission  for  Protection  against  Discrimination  improved  its 
cooperation with civil society organisations  and  municipalities. Data collection and analysis 
improved but remains limited, with more systematic collection needed of data disaggregated 
according to gender. (See also Chapter 23 – Judiciary and Fundamental Rights)  

The Law on Equal Opportunities for Women and Men was amended to establish a unified 
reporting system and a deputy coordinator for equal opportunities in ministries and the gender 
units. There is progress on developing institutional capacity  at local level and an increasing 
number  of  municipalities  are  developing  local  action  plans.  The  use  of  gender-responsive 
budgeting tools continued under the 2012-2017 Strategy. However, further measures are still 

48 

 
needed to address pay inequality between men and women. (See also Chapter 23 – Judiciary 
and Fundamental Rights) 

4.20.   Chapter 20: Enterprise and industrial policy 

EU industrial policy enhances competitiveness, facilitates structural change and encourages 
an enterprise friendly environment that stimulates small and medium sized enterprises.  

The  country  is  moderately  prepared  in  the  area  of  enterprise  and  industrial  policy.  Some 
progress was made, particularly on the Fund for Innovation and Technological Development, 
which began operating. In the coming year, the country should in particular: 

→ continue adapting the legal framework and take measures to facilitate SMEs’ access to 
finance. 

to 

On  enterprise  and  industrial  policy,  the  National  Council  for  Entrepreneurship  and 
Competitiveness  contributed 
for  competitiveness  and 
entrepreneurship. This aims to improve the business environment and simplify licensing and 
permitting  requirements  in  line  with  the  principles  of  the  Small  Business.  The  Agency  for 
Promotion of Entrepreneurship still has no resources to carry out its main mandate. Enforcing 
contracts, especially those between public bodies and the private sector, remains difficult and 
requires further capacity-building at the administrative court level. 

the  2015  programme 

Concerning enterprise and industrial policy instruments, the 2014-2020  national strategy 
on entrepreneurial learning was adopted to promote entrepreneurship and set up a system of 
lifelong entrepreneurial learning. Financing for implementation of the numerous measures is 
not  yet  secured.  The  Late  Payment  Directive  still  needs  to  be  fully  reflected  in  the  Law  on 
Financial Discipline. The Enterprise Europe Network (EEN) 2015-2020, part of the COSME 
Programme, was established in 2015. It will follow up the EEN activities carried out in the 
country under the  predecessor programme of COSME, the Entrepreneurship  and  Innovation 
Programme (EIP). 

Activities to attract foreign investors continued: 10 new technological industrial development 
zones  were  prepared  and,  to  attract  investment,  the  relevant  law  was  amended  to  allow  the 
sale of land and buildings in the zones. However, the conditions of sale/lease for individual 
investors remains at the government’s discretion and there is an overall lack of transparency. 

An EIB-co-funded loan instrument is operating to facilitate much-needed access to finance for 
small  companies.  A  set  of  new  measures  to  promote  employment  was  introduced  in  May. 
Under  these  measures,  companies  may  receive  state  subsidies  for  social  benefits  for  new 
employees.  No  developments  were  noted  on  sectoral  policies.  The  number  of  tourist  in  the 
country grew by 5.1% in 2014. 

4.21.   Chapter 21: Trans-European networks 

The EU promotes trans-European networks in the areas of transport, telecommunications and 
energy to strengthen the internal market and contribute to growth and employment. 

There is a good level of preparation in the area of trans-European networks. Good progress 
was made in the reporting period. In the coming year the country should: 

→ further improve inter-institutional communication and strengthen the technical capacity of 
all management and stakeholder institutions dealing with transport infrastructure. 

Regarding transport networks, the country continued to participate in the South-East Europe 
Transport Observatory (SEETO). The country played an active role in the Western Balkans 6 
connectivity  agenda  by  endorsing  the  agreement  on  the  regional  core  transport  network  in 

49 

 
Brussels in April, and the further agreement (in Riga in June) on the core network corridors 
and on the list of projects to be implemented by 2020 (in Vienna in August). 

The  government  adopted  the  2014-2020  sector  operational  programme  for  transport. 
Motorway  construction,  co-financed  by  EU  funds,  along  the  extension  of  Orient  East-Med 
core corridor in the Western Balkans (former Corridor X) is under way and reconstruction of 
two  sections  of  motorway  and  11  railway  stations  along  the  same  corridor  began. 
Construction of the first phase of the Corridor VIII railway towards Bulgaria, financed by the 
Western  Balkans  Investment  Framework  and  a  loan  from  the  European  Bank  for 
Reconstruction and Development, is progressing. The administrative and technical capacity of 
all of the institutions and bodies involved needs to be strengthened further. 

On  energy  networks,  construction  of  the  new  400kV  interconnection  overhead  line  with 
Serbia (Štip-Niš) is under way, as are preparations for the construction of the Bitola-Elbasan 
(Albania) section of the electricity transmission network. 

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

The  EU  funds  regional  development  in  the  Member  States.  Implementation  is  the 
responsibility of the Member States that must have adequate administrative capacity to ensure 
the good handling and sound financial management of the projects.  

The  country  is  moderately  prepared  in  the  area  of  regional  policy  and  coordination  of 
structural instruments. No progress can be reported. In the coming year, the country should 
focus on: 

→ building the administrative and financing capacity needed for procuring and implementing 
EU funds properly and in timely fashion; 

→ addressing shortcomings in the financial management, control and audit system. 

Regarding  the  legislative  framework,  the  law  on  regional  development  is  not  fully 
implemented. The budget preparation process must be improved to ensure overall financing 
capacity  is  adequate  and  contracted  work  is  paid  for  on  time.  Regional  and  municipal 
development is lagging behind. 

Programmes  relating  to  the  institutional  framework  need  to  be  better  prepared  and 
implemented.  Inter-ministerial  coordination  and  stakeholder  consultation  need  to  be 
improved, including civil society and donors. 

Administrative capacity must be strengthened. Progress in this area is still insufficient. Even 
if staff turnover has decreased, a proper policy to encourage staff to stay, including training, 
must be put in place. 

Implementation  of  sector-based  programming  is  slow.  All  procurement-related  processes, 
from identifying projects to evaluating tenders and contracting, still need major improvement. 
Efforts are needed to prepare programmes in timely fashion. 

Systematic  follow-up  is  needed  of  monitoring  and  evaluation  findings,  recommendations, 
project and programme indicators, and the sustainability of results. Full use needs to be made 
of the management information system. EU funding needs to be made more visible. 

Further  efforts  are  needed  to  strengthen  financial  management,  control  and  audit  (See 
Chapter 32 — Financial control). Systematic monitoring, on-the-spot checks and internal and 
external audits are needed to prevent irregularities. 

50 

 
4.23.   Chapter 23: Judiciary and fundamental rights 

The  EU's  founding  values  include  the  rule  of  law  and  respect  for  human  rights.  A  proper 
functioning  judicial  system  and  effective  fight  against  corruption  are  of  paramount 
importance, as is the respect for fundamental rights in law and in practice.  

The former Yugoslav Republic of Macedonia has some level of preparation for applying the 
acquis and European standards in this area. The legal and institutional framework is largely in 
place. However there has been no progress in the past year. The current lack of political will 
to  tackle  the  remaining  challenges  at  the  highest  level  is  holding  back  the  capable 
administration  from  reaching  its  full  effectiveness.  The  de  facto  de-politicisation  of  judicial 
appointments and promotions, overhaul of the professional evaluation system and reform of 
the  disciplinary  provisions  are  still  outstanding.  A  credible  approach  to  fighting  high  level 
corruption  is  needed  and  public  trust  in  the  relevant  institutions  needs  to  be  strengthened. 
Adequate staffing, funding and coordination are required in the field of fundamental rights. In 
the coming year, the country should in particular: 

→  demonstrate  real  political  will  to  ensure  the  full  independence  of  the  judicial  system; 
provide full support and resources to the Special Prosecutor appointed to look into the making 
and content of the intercepted conversations; 

→ strengthen the institutions in charge of preventing and fighting corruption and desist from 
any political interference in their work; 

→  ensure  full  freedom  of  expression  and  the  media  and  take  strong  measures  to  address 
police impunity and sub-standard conditions in the prison system; 

→ restore public confidence in delivery of justice especially for the politically sensitive cases 
through increased transparency of court procedures and consistency of jurisprudence. 

(See  also  the  specific  recommendations  on  the  judicial  system,  the  fight  against  corruption 
and freedom of expression in sections 2.3 and 2.4.) 

Functioning of the judiciary 

Strategic documents 

Preparation of the 2015-2020 strategy and action plan for judicial reform is at an early stage. 
Six working groups have been established, including on access to justice, administrative law 
and  IT  and  e-justice.  The  process  requires  stronger  political  support  and  far  better 
coordination  between  different  stakeholders,  which  could  be  achieved  by  using  the  Council 
for  Judicial  Reform  more  effectively.  Recent  changes  to  the  legal  framework  suffered  from 
inadequate consultation with the legal professions and international bodies in the field. 

Management bodies 

The Judicial Council’s election of its new President and Deputy President in March triggered 
widespread  criticism,  given  that  both  are  lay  members  appointed  by  parliament  who  do  not 
have judicial experience. The legal requirement that lay members should come from the ranks 
of  university  law  professors,  lawyers  or  eminent  legal  experts  is  not  honoured  in  practice: 
three  of  the  five  current  lay  members  were  previously  career  officials  in  the  public 
administration  and  two  were  previously  acting  judges.  This  undermines  the  professional 
balance and high level of competence foreseen by the legislation. Additional criteria added by 
April  amendments  to  the  Law  on  the  Judicial  Council  did  not  significantly  clarify  the 
situation.  In  October  2014,  the  Council  of  Public  Prosecutors  elected  an  appropriately 
experienced President. 

51 

 
Independence and impartiality 

The  extent  of  previously  suspected  political  interference  in  both  the  appointment  of  judges 
and  the  outcome  of  court  proceedings  was  confirmed  by  the  content  of  the  intercepted 
communications.  In  order  to  restore  public  confidence,  professional  bodies  such  as  the 
Judicial  Council  and  the  Association  of  Judges  need  to  be  proactive  in  visibly  promoting 
judicial  independence  and  defending  the  judicial  profession  from  any  form  of  explicit  or 
implicit  pressure,  both  external  and  internal.  Long-standing  concerns  about  the  security  of 
tenure of judges were not addressed by the recent creation of a new ‘Council for Determining 
the Facts and Initiating a Procedure for Determining the Responsibility of a Judge’. Given that 
the  number  of  disciplinary  proceedings  has  actually  fallen  dramatically  in  recent  years,  the 
timing and creation of a new body devoted entirely to preparing the procedure for dismissing 
judges appears misplaced and is a further blow to a profession which is already under siege. 
The defective legislative grounds for dismissal, which jeopardise judicial independence, have 
still not been addressed. 

Accountability  

Revised  codes  of  ethics  for  judges  and  prosecutors  were  adopted  in  2014.  The  Judicial 
Council, the Ministry of Justice and the Ombudsman’s Office continued to handle complaints 
about  the  work  of  the  courts  in  2014  (the  latter  received  901,  up  from  732).  However  the 
Judicial  Council’s  competence  to  hear  complaints  from  members  of  the  public,  which  had 
been  carried  out  transparently  for  several  years  including  through  public  meetings,  was 
removed in 2015. This constitutes a step backwards. The Supreme Court continued to receive 
compensation  claims  for  unreasonably  lengthy  court  proceedings  (637  in  2014,  compared 
with  434  the  previous  year)  and  it  awarded  EUR  115  963  in  compensation  and  costs.  One 
dismissal  procedure  was  initiated  by  the  Judicial  Council  in  2014.  The  Council  for  Public 
Prosecutors  dismissed  two  prosecutors,  one  of  whom  was  accused  of  several  crimes.  The 
State  Commission  for  the  Prevention  of  Corruption  launched  misdemeanour  proceedings  in 
2014  against  5  judges,  1  former  judge  and  2  prosecutors  for  failing  to  submit  asset 
declarations  and  against  15  judges  and  1  prosecutor  for  failing  to  submit  statements  of 
interest.  In  October  2014,  the  sensational  arrest  of  25  employees  (including  14  sitting  or 
former judges) of Basic Court Skopje I amid accusations of corruption raised concerns about 
the  line  between  accountability  and  political  pressure.  The  case  concerned  high  numbers  of 
misdemeanour  fines  whose  enforcement  had  been  delayed  beyond  the  limitation  period. 
Given  the  need  to  protect  the  procedural  rights  of  the  judges  involved,  the  case  could  have 
been handled in a different way. The apparent failure at court management level to detect any 
systemic  problem  at  an  earlier  stage  raises  questions  about  the  timing  and  nature  of  the 
criminal allegations.  

Professionalism and competence 

In  2014  the  Judicial  Council  appointed  three  new  judges,  all  graduates  of  the  Academy  for 
Judges  and  Prosecutors,  as  required  by  law.  It  also  appointed  14  basic  court  presidents,  of 
whom eight had already served as presidents and two were acting presidents. The Council of 
Public  Prosecutors  appointed  14  prosecutors  including  four  graduates  of  the  Academy. 
Despite  the  objective,  merit-based  criteria  set  out  in  the  law,  the  appointment  of  court 
presidents  and  higher  court  judges  is  still  vulnerable  to  political  bargaining  which  not  only 
affects the outcome but often also delays the appointment procedure, to the detriment of the 
courts concerned. Professional evaluation criteria still need to be introduced which focus on 
appraising  judges’  core  competencies,  such  as  legal  drafting  and  reasoning,  organisational 
skills,  participation  in  training  activities  and  level  of  specialisation.  The  current  system  is 
heavily focused on quantitative criteria, targets and deadlines, without reference to quality of 

52 

 
performance or professional development. The lack of clear of reasoning in court judgments 
is a problem. This skill needs to be taught in a more harmonised way and applied consistently 
by the courts.  

Quality of justice 

A  revised  Law  on  the  Academy  for  Judges  and  Prosecutors  introduced  stricter  criteria  for 
appointment  of  the  Academy’s  Programme  Council,  as  well  as  for  the  students.  The  fifth 
generation  of  students  to  undertake  the  two-year  initial  training  programme  (13  candidate 
judges and prosecutors) have completed the nine-month theoretical training and are currently 
on placement in courts and public prosecution offices for the 15-month practical training. In 
2014,  the  Academy  provided  in-service  training  via  280  training  programmes  for  7 560 
participants.  The  Supreme  Court  continued  to  take  structural  measures  to  ensure  the 
consistency of judgments of the lower courts.  

Efficiency 

In  2014  the  vast  majority  of  first  instance  and  appeal  courts,  as  well  as  the  Administrative 
Court, High Administrative Court and Supreme Court, continued to maintain a clearance rate 
of 100 % or more. The overall length of proceedings, particularly for ‘old cases’, remains a 
concern. There is still no dedicated human resource management system or strategy aimed at 
improving  resource  allocation  across  the  court  system,  and  disparities  persist.  The  2015 
budgets for the courts and prosecution service are both significantly lower than the per capita 
European  average.  The  number  of  both  judges  and  court  staff  per  100  000  inhabitants  are 
significantly above the European average, raising questions about efficiency. Recent changes 
to  the  legislative  framework  for  court  staff  removed  many  of  the  professional  criteria 
previously  required  and  give  rise  to  concern  that  the  court  administration  will  increasingly 
employ more numerous but less qualified staff. In 2014, the Public Prosecutor’s Office (PPO) 
recruited 55 new support staff across the country and in 2015 a further 129. At the same time, 
several  prosecutors'  offices,  notably  in  rural  areas,  suffer  from  severe  shortages  of 
prosecutors. 

Anti-corruption policy 

Track record 

The  track  record  of  investigations,  prosecutions  and  convictions  in  corruption  cases 
continued  to  develop.  In  2014,  a  further  60  criminal  investigations  and  prosecutions  were 
added.  While  investigation,  prosecution  and  first  instance  verdicts  are  usually  swift, 
significant  delays  can  occur  at  the  appeal  stages  due  to  repeated  referrals  and  re-
examinations at first instance, notably in older cases started before improvements were made 
to  the  criminal  procedure  legislation.  For  cases  which  have  reached  the  court  stage  the 
conviction  versus  acquittal  rate  is  good  and  substantial  prison  sentences  are  regularly 
imposed. However, attention needs to be paid to the number of cases which are dropped by 
the prosecution service before reaching the court stage. In particular, it should be clarified 
whether this is due to problems in coordinating with the referring law enforcement agencies 
or  in  gathering  sufficient  evidence  at  the  investigative  stage.  Most  cases  are  referred  to  the 
prosecution service by the police and the State Commission for the Prevention of Corruption 
(SCPC). This shows the need for a more proactive approach also from other law enforcement 
and  supervisory  bodies,  such  as  the  Customs  Administration,  Financial  Police,  Financial 
Intelligence Unit, Public Revenue Office, State Audit Office and relevant public procurement 
bodies. 

Of the 30 or so high-level corruption cases launched since 2003, half have been closed while 
the rest are still ongoing. Repeated appeals and lengthy proceedings are a problem. Moreover, 

53 

 
the credibility of the track record in fighting high-level corruption is weakened by the failure 
to  investigate  serious  allegations  made  against  senior  public  officials.  This  includes 
allegations made in the recent interceptions scandal, which implicated several politicians. 

Investigations of abuse of public procurement procedures remained limited in 2014. 

In 2014, the Minister of Justice started suspending annual political party financing from the 
state  budget  for  parties  which  had  breached  financial  reporting  rules  in  the  last  3  years. 
Around 75 suspensions were imposed, but subsequently reversed for 18 political parties after 
they  belatedly  submitted  the  outstanding  financial  reports.  No  substantial  fines  have  been 
imposed yet. A more credible supervision system and consistent track record of effective and 
dissuasive  penalties,  including  fines  against  major  political  parties,  still  needs  to  be 
developed. 

In  2014,  the  SCPC  completed  systematic  checks  on  the  asset  declarations  of  49  public 
officials and 73 incoming and outgoing mayors, as well as on the statements of interest of 
152 judges and 91 prosecutors. It initiated 51 misdemeanour proceedings for failing to declare 
assets against mayors, judges, members of parliament and directors of state bodies and 22 for 
failing  to  submit  statements  of  interest  against  judges  and  members  of  parliament.  It  also 
asked  the  Public  Revenue  Office  to  conduct  asset  examination  procedures  in  58  suspicious 
cases (an increase from 35 in 2013) and started 171 procedures to try to resolve conflicts of 
interest.  The  system  for  investigating and  penalising  undeclared assets is rather lengthy and 
the 75 % tax penalty has been imposed in only handful of cases so far. The SCPC’s ability to 
fully implement the system of penalties for reporting failures is being undermined by courts 
failing  to  impose  the  levels  of  fines  set  out  by  law,  releasing  officials  from  liability  on 
technical  grounds  or  allowing  protracted  appeals  in  what  should  be  simple  administrative 
matters. 

Institutional framework 

Prevention measures  

The  SCPC  received  a  44 %  budget  increase  to  EUR  509 000  in  2015  but  its  capacity  still 
needs  to  be  strengthened.  Above  all,  the  SCPC  needs  to  demonstrate  its  independence  by 
fulfilling  its  mandate  to  fight  corruption  in  a  pro-active  and  non-selective  manner.  The 
number of complaints to the SCPC continued to drop in 2014, to only 141 (201 in 2013). This 
raises concern over the level of public trust and confidence in the SCPC. 

The  IT  infrastructure  of  the  State  Audit  Office  was  improved,  however  it  still  lacks  the 
special  IT  tools  needed  to  properly  supervise  the  financing  of  political  parties  and  election 
campaigns  in  line  with  its  strengthened  role  in  this  area.  Moreover,  the  unit  responsible  for 
carrying out this supervision remains under-staffed. 

There is still no institution empowered to ensure effective and timely control and supervision 
of  public  procurement,  concessions,  public-private  partnerships  and  execution  of  public 
contracts. No administrative penalty regime is yet envisaged for milder violations of the law 
and reports of corruption in public procurement are not tackled adequately. The transparency 
and accountability of public institutions and state enterprises, and of public expenditure, are 
still insufficient. The National Commission for the Protection of the Right to Free Access to 
Public  Information  remains  passive,  weak  in  status  and  focused  on  training  rather  than  on 
systemic shortcomings in the area. 

The Academy for Judges and Prosecutors, the SCPC and the Training Centre of the Ministry 
of Interior continued to provide various anti-corruption training programmes. More efforts 

54 

 
should be made to raise public awareness of anti-corruption measures and the private sector 
should be systematically included in corruption-prevention activities.  

Law enforcement  

The budget of the PPO increased slightly to EUR 7 million in 2015. However, the resources 
earmarked  for  implementing  the  new  Law  on  Criminal  Procedure  were  reduced  by  20 %  to 
EUR 1.4 million. The roll-out of the PPO’s electronic case management system, which would 
improve both its efficiency and integrity, has been delayed. The Ministry of Interior’s Sector 
for  the  fight  against  corruption  remains  inadequately  equipped  and  under-staffed,  with  7  of 
the 19 posts yet to be filled. 

The powers and resources of the police, the PPO, the courts and in particular the Agency for 
Management of Confiscated Property should be strengthened so that  assets can be seized 
and  confiscated  more  frequently  and  in  a  more  coordinated  manner  in  corruption  cases,  to 
ensure a deterrent effect. In particular, asset seizures and other provisional measures should be 
undertaken more systematically in the early stages of criminal investigations to ensure assets 
are successfully confiscated at the end of the procedure. 

In 2014, the Ministry of Interior’s Sector for Internal Control and Professional Standards 
(SICPS) started disciplinary procedures against 188 police officers (down from 277 in 2013), 
of  which  11  cases  related  to  corruption  (12  in  2013).  The  procedures  resulted  in  9  officers 
being fined. The SICPS also started criminal proceedings in 11 corruption-related cases (6 in 
2013). To ensure proper oversight of police work the SICPS should become independent from 
the Ministry of Interior. 

The  Customs  Administration  continued  its  anti-corruption  work  by  adopting  a  corruption 
risk  assessment  manual,  conducting  internal  and  external  surveys  and  organising  anti-
corruption training. It imposed disciplinary measures on 199 customs officials in 2014 (77 in 
2013),  of  whom  4  were  dismissed  for  corruption-related  violations  (none  in  2013). 
Corruption-related criminal charges were brought against 5 customs officers in 2014 (none in 
2013).  The  customs  administration  should  continue  its  anti-corruption  efforts  and  should 
acquire  technical  equipment  allowing  it  to  independently  carry  out  special  investigative 
measures. 

Legal framework 

Amendments  were  made  to  the  Law  on  Prevention  of  Corruption  which  introduced  the 
necessary  legal  basis  for  the  establishment  of  a  register  for  elected  and  appointed  persons. 
Bylaws  on  the  register  were  adopted  by  the  SCPC.  An  amendment  to  the  Criminal  Code 
refined the criminal offence of abuse in concluding an agreement between interested parties. 
However, a number of OSCE/ODIHR and GRECO recommendations on  political party and 
campaign  financing  still  need  to  be  addressed.  Loopholes  on  donations,  campaign  bank 
accounts and campaign debts still need to be closed. The powers of the SCPC to put an end to 
or penalise conflicts of interest in cases where the official concerned refuses to cooperate are 
currently inadequate. 

Strategic framework 

Important measures envisaged in the 2011–2015 state programmes for preventing corruption 
and conflicts of interest and their action plans are behind schedule, in particular those related 
to the political sector, the judiciary and public procurement. While many measures have been 
implemented,  the  overall  impact  of  the  state  programmes  has  been  limited  in  terms  of 
controlling and reducing corruption. The state programmes for the next period need to have a 
higher status and legal force. They should also focus more on key priorities and weaknesses, 

55 

 
rather  than  on  excessive  numbers  of  broad,  technical  measures  with  limited  anti-corruption 
impact.  The  financial  costs  of  individual  measures  and  the  bearers  of  those  costs  must  be 
spelled out to ensure sufficient resources are allocated to the fight against corruption. 

Fundamental rights 

Regarding  international  human  rights  instruments,  action  plans  are  being  developed  to 
implement the most recent recommendations under the UN Convention on the Elimination of 
all  Forms  of  Discrimination  against  Women  and  those  of  the  second  Universal  Periodic 
Review  of  the  UN  Human  Rights  Council.  The  Council  of  Europe’s  Committee  for  the 
Prevention of Torture carried out its 11th country visit in 2014. 

Since September 2014, the European Court of Human Rights (ECtHR) has found that the 
country violated the European Convention on Human Rights (ECHR) in 11 cases relating to 
the  right  to  life,  prohibition  of  torture  and  degrading  treatment,  right  to  a  fair  trial  within  a 
reasonable  time,  respect  for  family  life  and  protection  of  property.  A  total  of  379  new 
applications  were  allocated  to  a  decision-making  body,  bringing  the  number  of  pending 
applications  to  324.  At  present,  117  ECtHR  judgments  still  have  to  be  executed  by  the 
country, of which two are under enhanced supervision. The government submitted its action 
plan  in  relation  to  the  El  Masri  judgment  after  considerable  delays.  The  Committee  of 
Ministers urged the authorities to carry out a fresh investigation of the case in order to bring 
those  responsible  to  justice.  The  country’s  Bureau  for  Representation  before  the  ECtHR 
remains seriously under-staffed and the country rarely seconds national judges to the ECtHR 
(see the ‘Urgent Reform Priorities’). 

On  the  promotion  and  enforcement  of  human  rights,  the  Office  of  the  Ombudsman 
remains  the  key  oversight  institution  underpinning  democratic  values  in  the  country  and 
continued to deliver on its constitutional and legal mandate to protect citizens’ rights. In 2014 
the  Ombudsman  received  4 249  complaints,  an  increase  of  11 %  from  2013.  The  level  of 
follow-up  on  the  Ombudsman’s  recommendations  rose  to  87 %.  However,  some  public 
authorities including the Ministry of Interior and some prison institutions continue to be less 
responsive. Amendments to the Law on the Ombudsman aiming at full compliance with the 
Paris Principles were prepared some time ago but have still not been adopted by Parliament 
(this is also one of the ‘Urgent Reform Priorities’). Sufficient resources for the Ombudsman's 
office have still not been provided. 

Regarding  the  prevention  of  torture  and  ill-treatment,  the  Office  of  the  Ombudsman 
continued to play an active role as national preventive mechanism (NPM) under the Optional 
Protocol  to  the  Convention  against  Torture.  However,  it  remains  under-resourced  and  its 
current staffing level is critically low, requiring urgent action to ensure that it can continue to 
function. In 2014 the NPM carried out 28 preventive visits to places of detention and warned 
against  worsening  conditions.  There  was  limited  follow-up  to  its  recommendations  by  the 
relevant authorities. Inhuman physical conditions persist in a number of prisons and almost all 
detention  facilities.  Seriously  substandard  conditions  in  juvenile  facilities  and  in  Idrizovo 
prison continue to cause concern.  

In 2014, the Ombudsman’s Office received 20 complaints of ill-treatment or excessive use of 
force by the police. The Sector for Internal Control and Professional Standards received 71. In 
four cases it was determined that unjustified physical force had been used. Criminal charges 
were brought against two police officers. In January the ECtHR found that potentially lethal 
use of force by a member of the special Alfa unit in 2009 violated the right to life. Prisoners’ 
complaints  to  the  Ombudsman’s  Office  increased  to  274  in  2014  (247  in  2013).  Most 
concerned inhuman conditions and 14 ill-treatment or excessive use of force. The Directorate 
for Execution of Sanctions received 75 complaints against prison staff, including 3 for torture 

56 

 
or  ill-treatment.  One  prison  officer  was  convicted  for  failure  to  report  ill-treatment  and 
received a conditional sentence. Procedures have yet to be established for conducting detailed 
examinations  of  all  alleged  cases  of  torture,  inhuman  treatment  and  other  unprofessional 
conduct towards inmates and detainees. Concerns persist that severe disciplinary measures are 
not  being  imposed  on  police  and  prison  officers  in  ill-treatment  cases  and  the  number  of 
criminal charges remains low.  

A new strategy and action plan for the prison system for 2015-19 were adopted in May but 
adequate  financial  resources  need  to  be  allocated  to  ensure  proper  implementation. 
Administrative capacity improved with the recruitment of 46 new staff in prisons and 5 in the 
Directorate  for  Execution  of  Sanctions.  There  is  still  no  systematic  initial  and  in-service 
training  programme  for  prison  staff  although  ad  hoc,  largely  donor-led  training  took  place. 
The  prison  reconstruction  programme  continued,  despite  major  delays.  The  prison  system 
continues  to  be  heavily  underfunded,  under-staffed  and  mismanaged,  leading  to  systemic 
breaches of international human rights standards. Increasing overcrowding, in some facilities 
exceeding  200 %,  raises  serious  concerns  over  its  sustainability.  Provisions  for  conditional 
release, alternative sanctions and non-custodial pre-trial measures continue to be under-used. 
A  probation  service  has  yet  to  be  introduced.  Basic  education  and  other  re-socialisation 
services  have  yet  to  be  provided  to  juveniles  in  detention.  Numerous  prison  management 
rules, re-socialisation measures and treatment programmes for vulnerable groups have yet to 
be  fully  implemented  in  practice.  The  transparent  and  merit-based  appointment  of  prison 
directors and prison staff should be ensured as an urgent priority and is key to tackling many 
of these problems. 

The Law on Personal Data Protection is largely aligned with the EU acquis. The Directorate 
for  Personal  Data  Protection  continued  to  strengthen  its  capacity  through  ongoing  training, 
employment of 4  new staff and a slight budget increase. It further increased its activities in 
2014, carrying out 404 inspections in the public and private sectors (387 in 2013) and finding 
300 violations in total. It received 371 complaints in 2014 (404 in 2013), mostly concerning 
abuse  of  personal  data  on  social  networks.  The  number  of  personal  data  controllers  and 
processors trained increased to 66 in 2014  (54 in 2013) and active public awareness-raising 
measures  continued.  The  Directorate  was  consulted  on  draft  legislation,  public  policies  and 
operations  of  data  controllers  more  frequently  than  in  previous  years.  Further  efforts  are 
needed  to  ensure  full  harmonisation  of  sectoral  legislation  with  the  Law  on  Personal  Data 
Protection. The Directorate, which is an independent regulatory body, has yet to take action 
following  the  recent  disclosure  of  massive  unlawful  interception  of  individuals’  electronic 
communications. This has raised questions about its ability to act with full independence.  

Freedom  of  thought,  conscience  and  religion  continues  to  be  guaranteed  and  enforced. 
Following the rejection of three new applications which did not meet legal requirements, the 
number of registered religious entities remains at 31. 

In  the  area  of  freedom  of  expression,  increased  reports  of  harassment  and  intimidation  of 
journalists were noted, as were some cases of property damage by unknown perpetrators. A 
funeral  wreath  was  delivered  to  the  family  of  a  journalist  critical  of  government  policies. 
There were several physical altercations involving journalists, including a physical attack by a 
senior  politician,  which  was  not  condemned  by  the  government.  Numerous  journalists  were 
revealed  by  the  content  of  the  intercepted  communications  to  have  been  under  illegal 
surveillance.  Some  intercepts  indicated  that  media  had  been  under  direct  and  indirect 
government pressure to alter their reporting. Attempts to limit reporting on matters of public 
interest are worrying.  There is still a lack of transparency on government spending on media 
advertising  and  the  government  has  failed  to  provide  details  on  the  amounts,  criteria  and 

57 

 
recipients despite the requirement under the Law on Audio and Audiovisual Media Services 
to do so (see also the ‘Urgent Reform Priorities’). 

The Agency for Audio and Audiovisual Media Services continued to play an active regulatory 
role. It carried out industry-wide programme monitoring in areas including protecting young 
audiences and fostering and protecting cultural identity. It also prepared numerous studies and 
reports, including on the treatment of gender issues by broadcasters and a guide to monitoring 
hate speech. The Agency approved changes in the ownership structures of three regional TV 
and  radio  stations  and  carried  out  administrative  supervision  of  the  transparency  of  138 
broadcasters’ operations. 

Since  becoming  operational  in  November  2014  the  new  self-regulatory  body  for  the  media, 
the  Media  Ethics  Council,  received  40  complaints  against  various  media  outlets  and  issued 
decisions on 39. However, in many cases the media concerned did not publish the Council’s 
decision,  limiting  the  impact  of  self-regulation.  Principles  of  fair  reporting  in  online  media 
were  also  adopted  by  Web  portals.  There  is  still  a  large  amount  of  litigation  in  the  area  of 
defamation and insult, pointing to the need to further revise the legislation and court practice. 
Greater emphasis should be put on non-judicial resolutions such as mediation (in non-media 
cases) and right to reply mechanisms (in media cases). Investigative reporting remains weak. 
The professional standards and ethics of some journalists, notably in the mainstream media, 
remain  a  serious  problem.  The  tendency  of  influential  programme  hosts  to  use  deliberately 
offensive or provocative language under the mantel of freedom of expression continues to be 
unhelpful  in  a  media  culture  which  is  dominated  by  polarisation,  intimidation,  a  lack  of 
solidarity  and  a  lack  of  balanced,  objective  debate.  The  widespread  misappropriation  of  the 
term hate speech for what is in fact unprofessional or provocative language in the media also 
continues. This risks overshadowing true incidents of hate speech, which must be investigated 
and penalised when they do occur. The country continued to backslide in this area, although 
the publication of the content of the intercepted communications have increased open public 
discussion of political issues. 

Measures  were  taken  to  increase  the  financing  of  the  public  service  broadcaster  MRT, 
including  improvements  to  the  licence  fee  collection  system.  However,  there  are  serious 
concerns  about  MRT’s  editorial  independence.  It  provided  limited  reporting  of  the 
interception  revelations,  and  some  of  the  published  recordings  implied  that  government 
officials had threatened public service journalists' job-security if they did not report along the 
‘desired’ lines. 

Freedom of association is satisfactory but the situation regarding freedom of assembly has 
deteriorated. Protests by students, university and high school professors, journalists and other 
citizens’ groups increased as a result of the political situation and the most recent education 
reforms. In May public protests against police brutality led to a violent clash between police 
and  protesters.  Civil  society  observers  reported  that  police  used  excessive  force  to  restore 
public order and, after dispersing the protesters, continued to make arrests in the surrounding 
areas. There were concerns that some of those detained had nothing to do with the protests. 
There appears to be an increasing reliance on the criminal offence of ‘participating in a crowd 
which  commits  a  crime’.  This  broad  provision  is  open  to  interpretations  which  infringe  the 
freedom  of  assembly,  since  the  state  has  an  obligation  to  protect  the  majority  of  peaceful 
demonstrators rather than incriminate them. Amendments to the Law on Police increased its 
powers relating to public order, including allowing the use of tasers and rubber bullets. Such 
broad  powers  need  to  be  balanced  by  accompanying  provisions  to  safeguard  human  rights. 
Clear operational standards are needed, as well as rigorous human rights training for all police 
officers involved in such activity. 

58 

 
The Ombudsman’s Office received 239 complaints about property rights in 2014 and found 
breaches in 102 cases. Most complaints concerned the slow process of denationalisation and 
the  work  of  the  Cadastre  Office.  The  Cadastre  Office  needs  to  be  far  more  proactive  in 
rectifying errors and omissions made at administrative level, so as to provide legal certainty 
on property rights. 

As regards non-discrimination, from its creation in January 2011 until the end of 2014, the 
Commission  for  Prevention  of  and  Protection  from  Discrimination  has  only  received  288 
complaints  and  confirmed  the  existence  of  discrimination  in  12  cases.  Much  greater  efforts 
are  needed  to  raise  public  awareness  of  the  Commission's  role  and  work.  It  remains  under-
staffed  and  under-resourced  and  concerns  persist  about  its  independence.  The  legislative 
framework still needs to be aligned with the acquis as regards discrimination on grounds of 
sexual orientation. Collection of data on the reporting, investigation and prosecution of hate 
speech and hate crime is still not systematic and several cases of hate speech in social media 
and blogs require adequate follow-up by the authorities. (See also Chapter 19 — Social Policy 
and Employment.) 

As regards equality between women and men, a gender equality strategy (2013-2020) and 
action  plan  (2013-2016)  are  in  place  and  some  ministries  have  earmarked  a  budget  for 
implementation.  Of  the  123  members  of  Parliament  42  are  women  including  one  minister. 
Four of the 84 mayors are women, as are 405 councillors (30 % of the total). Mechanisms to 
promote  gender  equality  lack  visibility  and  there  are  limited  opportunities  for  civil  society 
organisations  and  external  stakeholders  to  feed  into  decision-making  processes.  Gender 
stereotyping  persists and  further  measures  are  needed  to  combat  double  or  multiple 
discrimination,  particularly  against  Roma  women.  A  new  Law  on Combating  Domestic 
Violence was adopted to protect survivors, but it fails to recognise all forms of violence and 
only  provides  for  civil  proceedings  against  perpetrators.  Further  public  awareness  raising 
measures are necessary, particularly in rural areas. (See also Chapter 19 — Social policy and 
employment). 

Regarding rights of the child, the Law on Child Protection was amended to introduce early 
childhood development services and broaden the scope of child protection. New kindergartens 
and  early  childhood  development  centres  were  opened,  with  the  latter  providing  a  range  of 
quality  services,  especially  for  the  most  vulnerable  children.  However,  services  to  protect 
children most at risk remain limited. The most marginalised children who fall outside both the 
education  and  healthcare  systems,  as  well  as  children  with  disabilities,  continue  to  face 
problems  accessing  their  rights.  The  National  Commission  on  the  Rights  of  Children  still 
lacks qualified staff and funding. The Ombudsman’s Office received 124 complaints in 2014 
about  breaches  of  children’s  rights.  The  lack  of  systematic  collection  of  data  in  this  area 
remains a major shortcoming. 

Implementation  of  the  new  Law  on  Justice  for  Children  started  and  mediation  was 
successfully used as an alternative to criminal proceedings involving juveniles. Child-friendly 
interrogation  rooms  were  installed  in  eight  police  stations,  but  none  has  child-friendly 
detention facilities required by law. Training was  held for juvenile justice professionals and 
should  be  introduced  on  a  permanent  basis.  Police  services  and  Centres  for  Social  Work 
dealing with juveniles remain underfunded and under-staffed. The status and resources of the 
State  Council  for  Prevention  of  Juvenile  Delinquency  should  be  strengthened  to  ensure  it 
functions  properly.  Most  municipalities  have  yet  to  establish  local  councils  for  preventing 
juvenile delinquency, and most  of  those  that do exist are inactive. Despite improvements in 
the law, there is still no systematic access to legal aid for juveniles in practice. 

59 

 
Little improvement can be reported on integration of persons with disabilities. An interparty 
parliamentary  lobby  group  was  established  to  promote  the  rights  of  disabled  people. 
Implementation of the 2010-18 national strategy on equal rights for people with disabilities is 
inadequate. The national coordinating body monitoring implementation of the UN convention 
on the Rights of Persons with Disabilities is inactive. 

Lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons  continue  to  suffer 
discrimination and homophobic media content, both online and offline. A sixth violent attack 
occurred  during  the  celebration  of  the  second  anniversary  of  the  LGBTI  support  centre, 
leaving two people injured. Despite calls by civil society organisations and the international 
community  for  the  perpetrators  to  be  prosecuted,  none  of  the  attacks  has  yet  been  fully 
investigated.  In  August  parliament  rejected  a  draft  amendment  to  the  anti-discrimination 
legislation, which would have prohibited any form of direct or indirect discrimination on the 
grounds of sexual orientation and gender identity. Considerable efforts are still needed to raise 
awareness of and respect for diversity within society and to counter intolerance. This needs to 
be  done  through  public  campaigns  and  training  of  law  enforcement  bodies,  prosecutors, 
judges and health workers. 

Despite  many  difficulties,  labour  and  trade  union  rights  are  generally  respected. 
Implementation  of  the  Law  on  Peaceful  Settlement  of  Labour  Disputes,  and  the  start  of 
mediators’ and arbiters’ work, has been slow. Trust in social dialogue both among employers 
and  employees  should  be  strengthened  as  well  as  the  capacity  of  social  partners  in  policy 
shaping.  (See also Chapter 19 — Social Policy and Employment.) 

The  new  Law  on  Criminal  Procedure,  applied  since  the  end  of  2013,  guarantees  the 
procedural rights of suspected and accused persons and victims of crime. It sets out clearly 
the  right  to  interpretation  and  translation  of  the  defendant,  victim,  private  plaintiff  and 
witness,  and  establishes  the  defendant’s  right  to  a  lawyer.  It  also  specifies  the  information 
which must be given to anyone who is invited for questioning or detained. This includes the 
reasons for their detention, any charges against them, the right to remain silent and the right to 
inform a third person and/or diplomatic or consular authorities. Adequate medical assistance 
must be provided as needed or upon request and any person deprived of their liberty must be 
brought  before  a  court  within  24  hours.  Legal  aid  is  available  under  the  2009  Law  on  Free 
Legal  Aid  but  its  implementation  is  not  yet  widespread.  Special  safeguards  are  in  place  for 
juveniles and for vulnerable witnesses or victims. The presumption of innocence is set out in 
the Constitution and the Law on Criminal Procedure but there have been some concerns about 
its  full  observance,  including  in  relation  to  the  content  of  the  intercepted  communications. 
Further efforts are needed, particularly as regards statements made  to the  public and  media, 
including  by  the  courts  and  by  members  of  the  executive.  The  ECtHR  has  found  several 
violations  of  the  right  to  liberty  in  cases  where  pre-trial  detention  was  imposed  without 
concrete and sufficient justification,  and  judges  have  made  efforts to improve the reasoning 
given in pre-trial detention orders and extensions, but there is scope for further improvement. 
Trial in absentia is possible in certain circumstances. 

Regarding the protection of minorities and cultural rights, the Ohrid Framework Agreement 
continues to provide a basis for inter-community relations. The Agency for the Protection of 
Minorities  representing  less  than  20 %  of  the  population  still  struggles  with  an  inadequate 
mandate, insufficient budget and a lack of support from relevant institutions. The Directorate 
for education in communities’ languages and the Directorate for the promotion of culture of 
the  communities  also  continue  to  be  inadequately  funded  and  staffed.  Inter-institutional 
cooperation  remains  weak.  Systemic  measures  to  ensure  that  all  communities  can  exercise 
their  ethnic,  cultural  and  linguistic  rights  remain  largely  donor-funded.  Curricula  for  the 
Roma,  Vlach  and  Bosnian  languages  in  elementary  schools  were  developed,  coming  into 

60 

 
effect  from  2016/17.  Limited  use  was  made  of  the  new  policy  measures  to  promote  inter-
ethnic  relations  under  the  integrated  education  strategy.  Measures  against  separation  along 
ethnic  lines  in  schools  are  insufficient.  Multiple  forms  of  discrimination  against  the  non-
majority  communities  persist  and  action  to  combat  stereotyping,  including  in  the  media, 
remains ineffective. 

The new Roma strategy for 2015-20 was adopted. The Ministry of Labour and Social Policy's 
unit  for  implementing  Roma  policy  was  strengthened.  The  Roma  Seminars  have  been  held 
regularly but their conclusions have not been followed up comprehensively and coordination 
among  institutions  is  still  weak.  A  number  of  government  projects  on  social  housing, 
education, employment and social assistance have produced some good results. Roma health 
mediators  are  functioning  in  six  municipalities.  Under  a  project  to  include  people  in  the 
register of births, 120 of the 550 people identified so far have been registered. However, the 
most  disadvantaged  Roma  still  have  problems  accessing  social  benefits  due  to  their  lack  of 
administrative  documentation.  Hardly  any  progress  can  be  reported  in  terms  of  political 
representation, media coverage in the Roma language and the status of the Roma language in 
municipalities  with  a  Roma  majority.  Roma  have  limited  economic  opportunities.  Poverty 
remains  the  biggest  factor  behind  the  low  share  of  Roma  children  in  education.  There 
continues to be a disproportionate number of Roma children placed in special needs schools. 
Segregation,  stereotyping  and  other  forms  of  discrimination  remain  prevalent.  Complaints 
have  been  registered  by  Roma  prevented  from  leaving  the  country  and  of  mistreatment  of 
Roma  who  have  returned  after  unsuccessfully  seeking  asylum  abroad.  Roma  refugees  and 
internally  displaced  persons  continue  to  live  in  substandard  conditions  and  their  access  to 
education, housing, health and employment remains a concern. The number of active Roma 
non-governmental organisations is declining because less funding is available. 

4.24.   Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation entails the lifting of border controls inside the EU. There is also cooperation in 
the  fight  against  organised  crime  and  terrorism,  and  judicial,  police  and  customs 
cooperation.   

The  country  is moderately  prepared  for  implementing  the  acquis  in  this  area.  It  has  made 
some  progress  by  adopting  new  laws  and  strategic  documents  in  several  areas  (migration,  
money laundering and terrorism). The country is on the transit route for mixed migration via 
Turkey  and  Greece  towards  northern  Europe.  Urgent  measures  were  taken  to  deal  with  the 
humanitarian consequences of the regional migration crisis in the short term, but authorities 
have  been  overwhelmed  by  the  escalating  numbers.  International  cooperation  and  law 
enforcement, in particular in the area of organised crime, remained strong. In the coming year, 
the country should in particular: 

→ strengthen capacity regarding mixed migration flows of refugees and economic migrants, 
especially early identification of those needing protection, vulnerable groups and minors; 

→  ensure  effective  border  management  and  step  up  action  against  people  smuggling  and 
human trafficking as a high priority; 

→ adopt and implement the new anti-terrorism strategy and action plan, with a special focus 
on measures preventing radicalisation. 

(See also the specific recommendations on the fight against organised crime in section 2.3.) 

61 

 
 
 
Legal and irregular migration 

The  government  adopted  the  2015-2020  migration  strategy  and  action  plan  in  January.  As 
regards the legal residence and work of foreigners, 4 219 temporary residence permits were 
issued in 2014, of which around a quarter were for employment or self-employment purposes.  
The number of irregular migrants detected increased significantly from 1 750 in 2014 to 24 
637 in the first 7 months of 2015. In 2014, 1 213 people were returned to the country under 
the readmission agreement with the EU, which continues to be implemented smoothly on the 
whole.  

During  summer  2015,  the  former  Yugoslav  Republic  of  Macedonia  faced  an  unprecedented 
number of third country nationals entering the country, primarily through Greece, on route to 
other  EU  Member  States.  The  numbers  of  new  arrivals  regularly  reached  around  5  000  per 
day. Urgent legislative measures were taken on 18 June in order that third country nationals 
declaring 'an intention to apply for asylum' could be issued with documentation and allowed 
72 hours' legal stay to register their claim. The new legal framework significantly reduced the 
scope  for  organised  crime  groups  involved  in  people  smuggling  and  also  provided  easier 
access to public transport, reducing the risk of accidents. Over the past year, 24 people had 
been  killed  by  trains  while  transiting  the  country  clandestinely  on  foot  alongside  railway 
tracks. The changes effectively put an end to transfers of migrants to the Centre for Foreigners 
in Gazi Baba, which had been widely criticised by domestic and international monitors due to 
serious under-capacity and overcrowding and is no longer in general use.  

The government also developed an emergency response plan in the event of continued influx. 
In view of the substantial rise in third country nationals transiting the country, further efforts 
are needed in the area of cooperation and information sharing, especially on the borders with 
Greece and Serbia. Attention should be paid to proper contingency and emergency planning 
to  enable  the  country  to  manage  the  migratory  flows  more  efficiently.  The  crisis  has 
highlighted  the  need  for  a  cross-cutting  strategic  approach  encompassing  migration,  asylum 
and law enforcement, in particular the fight against people smuggling and human trafficking. 

Asylum  

The number of new applications for asylum continued to increase, from 1 364 in 2014 to 1730 
so  far  in  2015.  Refugee  status  was  granted  to  11  people  in  2014  and  three  in  2015,  the 
majority coming from Syria. The Ministry of Interior appointed a full-time representative of 
the  asylum  unit  to  the  reception  centre  in  Vizbegovo,  improving  access  to  the  asylum 
procedures.  On  the  whole,  the  asylum  recognition  rate  remains  low,  and  the  Administrative 
Court  continues  to  process  asylum  appeals  largely  on  procedural  rather  than  substantive 
grounds, leading to long delays and repeat appeals. In 2014, one asylum seeker was granted 
legal  aid  under  the  Law  on  Free  Legal  Aid,  but  for  the  remaining  40  applications  the 
procedure  had  to  be  stopped  as  the  asylum  seekers  had  left  the  country.  It  is  important  that  
the  existing  asylum  legislation  be  fully  implemented  by  ensuring  that  access  to  and 
information about asylum procedures are readily available. 

Visa policy  

Legislation  is  largely  aligned  with  the  acquis  and  the  link  between  diplomatic  and  consular 
missions,  the  national  visa  system  N-Vis  and  the  Visa  Centre  at  the  Ministry  of  Foreign 
Affairs has been operational since 2009. An agreement on joint use of consular premises with 
Serbia was signed in September 2014. 

Implementation  of  the  visa-free  travel  regime  with  the  EU  has  continued  smoothly  overall. 
The national authorities continued cooperation to tackle unfounded asylum applications made 
in Schengen members and associated countries, and the overall numbers fell by around 10% 

62 

 
in  2014.  In  addition  to  running  public  information  campaigns,  the  authorities  continued  to 
carry out additional border controls, surveillance patrols and risk analysis. Criminal charges 
for  facilitating  abuse  of  the  visa-free  regime  were  brought  against  32  people  in  2014  and 
against  7  people  during  May-July  2015.  Some  efforts  were  made  to  improve  the  socio-
economic  conditions  of  vulnerable  groups,  notably  Roma,  through  specific  support 
programmes in the areas of employment, education and health. However, the root causes of 
this phenomenon still require greater structural efforts and the investment of proper resources. 

Schengen and external borders  

The  national  integrated  border  management  development  strategy  for  2015-2019  is  being 
prepared. Good cooperation with Albania, Bulgaria, Kosovo and Serbia continued, including 
through the operation of the respective joint contact centres and regular mixed border patrols. 
A  joint  cooperation  centre  was  opened  with  Kosovo  in  January  2015  at  Hani  i  Elizit/Blace. 
Good cooperation and exchange of best practices continued with Frontex, as did participation 
in other bilateral and multilateral cooperation initiatives in the field of border operations. The 
capacities  of  the  National  Coordination  Centre  for  Border  Management  were  strengthened 
slightly but internal coordination and cooperation with related ministries remains weak. 

Judicial cooperation in civil and criminal matters 

The country received 2 252 new requests for mutual legal assistance in 2014 and made 2 856 
such  requests  to  other  countries.  Around  a  third  of  such  exchanges  related  to  criminal 
matters and two thirds to civil matters. As regards judicial cooperation in criminal matters, 
the  country  issued  100  extradition  requests  and  received  20  from  abroad.  A  total  of  45 
requests for transfers of sentenced persons were also processed.  

The  former  Yugoslav  Republic  of  Macedonia  is  the  only  enlargement  country  to  have  a 
cooperation agreement with Eurojust, in force since 2010. 

Fight against organised crime 

Track record 

During  2014,  the  Ministry  of  Interior  filed  93  criminal  charges  (85  in  2013)  against  584 
people  accused  of  involvement  in  different  types  of  organised  crime,  including  drug 
trafficking,  people  smuggling  and  financial  and  economic  crimes.  In  the  same  period  there 
were 109 convictions at first instance, 101 at second instance and 27 decisions given by the 
Supreme Court within the extraordinary review procedure. 

The  Financial  Intelligence  Unit  submitted  154  reports  of  suspicious  transactions  in  2014.  It 
submitted  31  notifications  related  to  money  laundering  and  financing  of  terrorism  to  law 
enforcement  for  further  investigation  (up  from  25  in  2013).  In  the  same  period,  14  people 
were prosecuted and 7 convicted of money laundering. 

As  regards  trafficking  in  human  beings,  37  criminal  proceedings  involving  52  accused 
persons  ended  in  convictions  in  2014.  The  Ministry  of  Interior  also  submitted  criminal 
charges against 8 police officers involved in trafficking. In total 8 victims were identified, of 
whom  6  were  minors.  Four  cases  of  forced  marriage  including  both  sexual  and  labour 
exploitation, 3 cases of sexual exploitation and 1 case of forced begging were detected. 

There  was  a  general  increase  in  drug  seizures,  with  those  involving  heroin  rising  the  most 
(by  73.5 %).  In  2014  the  Ministry  of  Interior  seized  632 kg  of  marijuana,  20  kg  of  heroin, 
318 g  of  cocaine,  1 187  stems  and  3 816  seeds  of  cannabis,  5 kg  of  hashish,  1 189  ecstasy 
tablets  and  1.2 kg  of  amphetamine.  In  addition,  the  Customs  Administration  seized  around 
4 kg of heroin, 91 kg of marijuana, 20 g of hashish and 96 ecstasy tablets. As a result of two 

63 

 
joint  operations  (with  Switzerland  and  Bulgaria,  and  with  Serbia)  three  heroin  trafficking 
channels to the EU from Turkey were cut off. Cigarette seizures in 2014 and first quarter of 
2015 totalled 757 270 as well as a further 103.5 kg of tobacco. The destruction of seized drugs 
continued  in  2014  under  the  responsibility  of  the  Ministry  of  Health  (involving  187 kg  of 
marijuana, 46 kg of heroin, 447 cannabis stems and over 1 000 tablets and capsules). 

Special  investigative  measures,  which  are  still  used  mainly  by  the  police,  were  applied  in 
307 cases in 2014 (271 in 2013). All three law enforcement agencies with powers in this field, 
including  the  Financial  Police  and  Customs  Administration,  need  to  have  the  technical 
capacity  to  carry  out  interception  of  communications  independently  of  the  intelligence 
services, whose facilities they currently rely on. Trust in the system has been undermined by 
the  content  of  the  intercepted  communications  which  implied  serious  abuse  of  special 
investigative measures within the intelligence services. However, this should not detract from 
the  continued  and  effective  use  of  special  measures  for  genuine  criminal  investigation 
purposes. 

Institutional and operational capacity 

In 2014, 400 police cadets completed basic training and 399 of them were recruited. Training 
of a further 400 is currently underway. In addition,  50  vacancies for candidates with higher 
education were filled in the Ministry of Interior. Although the Law on Internal Affairs and the 
human  resources  strategy  introduced  a  merit-based  recruitment  policy  and  career  system, 
allegations of politicised recruitment by the Ministry still persist and need to be addressed. 

Implementation  of  the  ‘national  intelligence  model’  continued,  with  the  preparation  of  11 
standard operating procedures, seven guidelines and a manual. Steps were undertaken to set 
up national and regional threat assessments of serious and organised crime activities, inspired 
by the EU SOCTA methodology. The establishment of the National Intelligence Database has 
been delayed until 2018. 

Staffing in the Department for the Fight against Serious and Organised Crime at the Ministry 
of Interior continued to increase, with 10 new employees hired. The Basic Public Prosecutor's 
Office for Organised Crime and Corruption employed 9 support staff in 2014 and a further 13 
in 2015. Within the same Office, the first Investigative Centre was established, equipped with 
IT and audio-visual recording facilities, and started to function.  

The  specialised  units  in  both  the  Ministry  of  Interior  and  the  Public  Prosecutor’s  Office 
fighting serious and organised crime are well established. However, general understaffing still 
hampers their ability to handle cases with maximum effectiveness and concerns remain about 
political interference in  some cases. The  National  Coordination  Centre  for  the Fight against 
Organised Crime is established by law but is still not operational pending the development of 
procedures  for  data  exchange  between  the  relevant  institutions,  training  and  supply  of  IT 
equipment. 

Direct cross-border cooperation with national police services continued, through exchanges of 
operational  information  and  intelligence,  joint  operations,  joint  investigative  teams  and  the 
involvement of public prosecutors from the countries concerned. 

Legal framework 

In  March  2015  the  Law  on  Police  and  the  Law  on  Internal  Affairs  were  both  amended  to 
standardise the use of video recordings of police actions. Amendments to the Law on Police 
additionally allow for rubber bullets and tasers to be used in situations which threaten public 
order.  The  introduction  of  such  broad  powers  need  to  be  accompanied  by  adequate  human 
rights protection, which should be set out clearly in the legislation and operating procedures 

64 

 
and be accompanied by training. The Ombudsman has called for clear rules on the use of such 
measures to be laid down in the relevant secondary legislation. 

Strategic framework 

Work is currently underway to prepare the new cyber-security strategy, along the lines of the 
EU  strategy  in  this  area,  including  cybercrime  as  one  of  its  four  pillars.  Fighting  organised 
crime and corruption remains fundamental to countering criminal infiltration of the political, 
legal and economic systems. 

Fight against terrorism  

The Criminal Code was amended in September 2014 to introduce a new criminal offence of 
participation in foreign army, police, para-military or para-police formations. In August 2015 
charges  were  brought  against  36  people  under  the  new  provisions.  The  new  Law  on 
Prevention of Money Laundering and Financing of Terrorism was adopted in September 2014 
and  a  new  Law  on  Property  Rights  Restrictions  for  Prevention  of  Terrorist  Financing  is  in 
preparation.  A  new  anti-terrorism  strategy  and  action  plan,  addressing  among  other  things 
radicalisation  and  foreign  terrorist  fighters,  are  under  preparation.  Radicalisation  remains  a 
serious challenge for the country. Efforts need to be enhanced to identify, prevent and disrupt 
the flow of foreign terrorist fighters traveling to countries such as Iraq and Syria. 

Cooperation in the field of drugs  

The National Drug Strategy 2014-2020 is coordinated with the drug strategy and action plan 
of the EU and the UN political declaration to combat drugs, as well as reflecting national and 
regional priorities. Amendments to the Law on Control of Narcotic Drugs and Psychotropic 
Substances are being prepared, including on the early warning approach and timely, partial or 
full banning of new psychoactive substances emerging on the market. Plans are underway to 
set up supervisory bodies for the  implementation of prevention  activities under the Strategy 
and  for  activities  relating  to  drug  addiction  treatment.  Good  cooperation  continued  between 
the national focal point and the European Monitoring Centre for Drugs and Drug Addiction. 

Customs cooperation 

The  Customs  Administration  took  part  in  four  international  operations  and  four  projects  to 
detect  illicit  trade  in  counterfeit  goods,  drugs,  cultural  goods  and  high-risk  chemicals. 
Cooperation  continued  with  the  regional  intelligence  liaison  offices  of  the  World  Customs 
Organisation,  the  South-East  European  Law  Enforcement  Centre  and  the  United  Nations 
Office  on  Drugs  and  Crime.  Information  about  seized  goods  was  regularly  entered  in  the 
respective  databases. Cooperation and exchange of intelligence with the customs authorities 
of the neighbouring countries and the wider region continued. Regular information on illicit 
trade in drugs was exchanged with the German Customs Investigation Bureau. A cooperation 
agreement was signed with the customs administrations of Hungary, Serbia and China. (See 
also Chapter 29 — Customs union). 

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

65 

 
 
 
 
4.25.   Chapter 25: Science and research 

The  EU  provides  significant  support  to  research  and  innovation.  All  Member  States  can 
benefit from the EU’s research programmes, the more so where there is scientific excellence 
and solid investment in research. 

There is a good level of preparation in the area of science and research. Good progress was 
made with respect to actions on innovation, and with initial and active participation in the EU 
Research  and  Innovation  Programme  "Horizon  2020".  In  the  coming  years,  the  country 
should focus on: 

→ actions to strengthen the research capacity in line with the European Research Area; 

→ increasing the level investment in research in particular by the private sector. 

A network of national contact points was established and representatives in the Horizon 2020 
Programme Committees, have been nominated. Several workshops and information days on 
Horizon 2020 have been organised which resulted in a large number of applicants submitting 
proposals  for  funding.  Based  on  first  Horizon  2020  statistics,  about  20  projects  were 
successfully evaluated. An Action Plan on promotion and support for participation in Horizon 
2020  was  adopted  focussing  on  SMEs  and  mobility  of  scientists.  The  country  cooperates 
actively  at  regional  level  on  the  implementation  of  the  Regional  Strategy  on  Research  for 
Innovation and with the Central European Initiative (CEI) and UNESCO. 

As  regards  policy  actions  on  research  and  innovation,  the  country  concentrated  on 
innovation.  Implementation  of  the  National  Innovation  Strategy  is  high  on  the  political 
agenda, as demonstrated by the allocation of EUR 20 million (in part with a World Bank loan) 
through  the  Fund  for  Innovation  and  Technological  development  to  facilitate  access  to  risk 
capital  to  co-finance  innovations,  new  technologies  start-ups  and  spinoff  companies.  As 
regards strengthening research capacity, a new 2015-2019 programme for higher education 
and scientific and research activities is being prepared, aiming at funding national research in 
line  with  the  EU  priority  areas.  The  level  of  investment  in  research  stagnated  at  less  than 
0.30%. The country nominated representatives to the European Research Area Committee and 
related advisory bodies but due to lack of administrative capacity participation was limited. 

4.26.   Chapter 26: Education and culture 

The  EU  supports  cooperation  in  education  and  culture  through  funding  programmes  and 
through  the  open  method  of  coordination.  Member  States  must  also  prevent  discrimination 
and facilitate education of children of EU migrant workers. 

The former Yugoslav Republic of Macedonia is moderately prepared in this area, and some 
progress was made in the past year. Improvements were seen in pre-school education and on 
early  school-leavers.  Children  from  non-majority  communities  and  children  with  special 
needs  continue  to  face  barriers  in  access  to  quality  education.  Participation  in  the  EU’s 
Creative  Europe  programme  has  made  an  important  contribution  to  the  country’s  cultural 
activities  locally  and  regionally.  Far-reaching  reforms  of  the  education  system  were  put  on 
hold following large public protests. In the coming year, the country should in particular: 

→ reform teacher training aimed at improving the basic and transversal skills at basic levels 
of education; 

→ evaluate the implementation of reforms in the education sector from 2005 to 2015;  

→  develop  a  new  strategic  framework  for  education,  linking  all  reform  processes  and 
involving a wide range of stakeholders. 

66 

 
Regarding education, training and youth, the government introduced a wide-ranging reform 
by  amending  the  laws  on  primary,  secondary  and  higher  education  as  well  as  a  law 
establishing a teacher academy. Following mass protests by students and academics over lack 
of consultation and objections to content, the reform was put on hold for a year. 

The  number  of  places  in  pre-school  education  facilities  increased.  The  number  of  places  in 
pre-school  education  facilities  increased.  The  proportion  of  three  to  six-year  olds  in  early 
childhood  education  has  steadily  increased  (34%  in  2014),  but  remains  well  under  the  EU 
average  and  targets  (95%  by  2020).  Children  from  rural  areas,  from  non-majority 
communities and with disabilities remain disadvantaged. Measures were introduced to support 
education of children with special needs. 

Some progress was made in modernising vocational education and training programmes and 
occupational  standards.  However,  most  of  these  do  not  match  the  demands  of  the  labour 
market.  The  country  participates  fully  in  the  Erasmus+  programme.  The  administrative  and 
financial  capacity  of  the  National  Agency  for  European  Educational  Programmes  and 
Mobility was strengthened. 

Concerning  culture,  the  Law  on  Protection  of  Cultural  Heritage  was  amended  and  bilateral 
agreements  on  cultural  cooperation  signed.  Participation  in  the  Creative  Europe  programme 
continued successfully. The relevant institutions need to be strengthened to ensure policies are 
implemented and monitored effectively. Strategic expenditure planning needs to be improved. 

4.27.   Chapter 27: Environment and climate change 

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection.  

In the field of environment and climate change, the country is moderately prepared. Some 
progress was made in transposing the acquis, in particular general horizontal legislation and 
air quality and chemicals laws. In the coming years, the country should focus on: 

→  finalise  the  setting  up  of  systematic  strategic  planning,  and  start  implementing  the 
country's contribution to the expected 2015 Paris Climate Agreement; 

→  implementing  national  legislation  and  increasing  investment,  especially  in  the  waste  and 
water sectors. 

On  the  environment,  some  progress  was  made  in  the  area  of  horizontal  legislation.  The 
environment and climate change strategy was developed. Public communication and access to 
environmental information improved, although public consultations still need to do so. 

Some progress  was made in aligning with the acquis on air quality but air pollution levels 
remain  high.  They  pose  serious  risks  to  health  and  they  need  to  be  addressed  urgently. 
Implementation of measures laid down in the national plan for air quality protection remains 
limited and insufficient, although some general measures were implemented. Data reporting 
and dissemination of information on air quality improved. Work continued on transposing the 
acquis  on  control  of  volatile  organic  compound  emissions  from  petrol  use,  on  planning  air 
quality protection and improvement at local level. Adequate financial resources are needed to 
support the automatic air quality monitoring network. 

Regional waste management plans and strategic environmental assessments were developed 
for two regions, and are at a preparatory stage in the other four. The implementation of the 
legislation on special waste streams continued, but is still lagging behind. 

67 

 
On  water  quality,  planning  and  preparation  of  river  basin  management  plans  and  future 
infrastructure investment to improve the systems for waste water collection and treatment are 
ongoing.  The  government  began  preparations  for  establishing  integrated  water  management 
systems,  but  the  river  basin  management  boards  are  not  yet  operational.  A  system  for 
monitoring water quantity and quality is needed. 

Regarding  nature  protection,  the  transposition  of  the  acquis  on  natural  habitats  and  wild 
fauna and flora is delayed. Implementation of the nature protection acquis and designation of 
a Natura 2000 network has still  not  begun. The Fifth National Report to the Convention on 
Biological  Diversity  was  adopted.  Cross-border  cooperation  was  improved  with  the 
designation  of  the  Ohrid-Prespa  region  as  a  transboundary  biosphere  reserve.  The  national 
nature protection strategy still needs to be completed. Concerns remain about the potentially 
detrimental  environmental  impact  of  the  planned  construction  of  two  large  hydropower 
facilities,  Lukovo  Pole  and  Boškov  Most.  Investments  in  hydropower  need  to  be  in 
conformity  with  relevant  EU  environment  legislation,  respecting  EIA,  water  legislation  and 
nature protection obligations, especially for national protected areas and areas of high natural 
value, potential protected Natura 2000 sites. Public consultations with stakeholders continue 
to not always be properly applied, and results not always fully reflected in decisions.  

On industrial pollution control and risk management, the integrated pollution prevention 
and  control  permitting  procedures  are  under  way  but  far  behind  schedule.  The  issuing  of 
permits needs to speed up. 

In the area of chemicals, initial steps were taken to establish an inter-sectoral body for major 
accident prevention and control. The national plan to reduce and eliminate persistent organic 
pollutants was adopted. 

No progress was made on noise. The preparation of maps and action plans still lags behind. 

The country continues to actively participate in the EU Civil Protection Mechanism and in 
several  regional  projects  aimed  at  strengthening  cooperation.  However,  it  has  still  not 
connected  with  the  Civil  Protection  Mechanism’s  common  emergency  communication 
system.  Disaster  risk  reduction  and  management  need  to  be  treated  as  a  matter  of  priority, 
particularly in the light of the 2015 floods. 

The  country  still  needs  to  develop  a  comprehensive  policy  and  strategy  on  climate  action, 
consistent with the EU 2030 framework. More efforts are needed to integrate climate action 
into  all  relevant  sectoral  policies  and  strategies.  The  country  submitted  its  First  Biennial 
Update Report to the United Nations Framework Convention on Climate Change. The country 
submitted its intended nationally determined contribution (INDC) and adopted it as an input 
to  the  expected  2015  Paris  Climate  Agreement.  The  country  is  at  the  early  stages  of 
transposing  and  implementing  EU  climate  acquis.  A  Roadmap  for  achieving  long  term 
climate  action  objectives  was  developed.  Some  progress  was  made  on  ozone  depleting 
substances. The country needs to continue to pay attention to adaptation to climate change. 

Overall,  there  has  been  some  progress  towards  strengthening  the  country’s  administrative 
capacity to implement and enforce legislation on the environment and climate change, but it 
remains  largely  insufficient  at  all  levels.  The  environmental  monitoring  and  information 
system is inadequate. Environmental protection and climate action requirements are still not 
well integrated into other areas of policy-making and implementation. 

68 

 
4.28.   Chapter 28: Consumer and health protection 

EU rules protect consumers in relation to product safety, dangerous imitations and liability 
for  defective  products.  The  EU  also  ensures  high  common  standards  for  tobacco  control, 
blood, tissues, cells and organs, patients’ rights and communicable diseases.  

The  country  is  moderately  prepared  in  the  area  of  consumer  and  health  protection.  Some 
progress was made in the last year. In the coming year the country should in particular: 

→ strengthen the operational structures serving consumer protection; 

→ ensure efficient and high-quality healthcare. 

The  Council  for  consumer  protection  was  established,  but  its  impact  on  individual  cases 
remains modest. The Law on Consumer Protection was amended to align with the acquis. The 
lack  of  administrative  and  financial  resources,  however,  hampers  effective  policy 
implementation. On product safety-related issues, a new Law on Market Surveillance was 
enacted and market supervision was intensified, although further efforts are needed by market 
supervisors and other regulatory bodies to ensure effective consumer protection. Awareness-
raising activities were carried out on non-safety-related issues. 

Investment  in  public  health  continued.  Mobile  and  rural  pharmacies  were  introduced  and 
measures  adopted  to  reduce  the  price  of  pharmaceuticals,  resulting  in  savings  of  EUR  33 
million. A free telephone line for medical counselling was established. However, the e-health 
card system is only partially functional. The lack of human and financial resources, including 
accrued  arrears,  continues  to  undermine  the  sustainability  of  public  health  programmes  and 
equal access to healthcare. The health sector has not yet been decentralised effectively. 

The  enforcement  of  tobacco  control  legislation  is  uneven  and  primarily  focused  on  major 
urban areas. Public health centres provide counselling on giving up smoking.  

New  polyvalent  vaccines  were  introduced  as  part  of  the  mandatory  immunisation  against 
communicable  diseases  and  the  rapid  alert  system  on  communicable  diseases  was 
successfully  deployed.  The  inter-agency  commission  continued  to  work  towards  full 
implementation  of  international  health  regulations,  but  more  administrative  capacity  is 
needed.  Supervision  of  antibiotics  was  strengthened,  requiring  medical  prescriptions.  Free 
HIV/AIDS tests showed an increase in HIV infection amongst males.  

On  blood,  tissues,  cells  and  organs,  a  central  information  system  was  set  up  for  tissue 
matching,  storage,  replacement  and  transplantation.  A  protocol  for  cadaver  transplantation 
was  prepared  in  line  with  Eurotransplant  standards  and  a  list  of  potential  recipients  was 
established.  Standard  operative  procedures  for  transfusion  medicine  and  quality  control  of 
blood and blood safety were adopted. The haemophilia centre was certified at European level. 
Further efforts are needed to achieve full alignment with the acquis. 

A rulebook on veterinary pharmaceuticals was adopted to transpose relevant EU regulations, 
increasing  the  level  of  overall  health  protection.  Administration  of  human  pharmaceuticals 
improved.  The  Ministry  of  Health  ensures  the  monitoring,  tracing  and  quality  assurance  of 
pharmaceuticals subject to parallel trade.  

Mental  health  facilities  continue  to  be  under-staffed  and  under-resourced.  Centres  for 
treatment of depression were opened in 36 healthcare centres. The 2014-2020 mental health 
strategy and action plan is not yet adopted. 

The 2014-2020 strategy and action plan on preventing drug abuse were adopted, aiming to 
reduce  demand  for  and  supply  of  drugs.  Regarding  health  inequalities,  programmes  to 
include Roma and Roma health mediators continued. A project to  increase physical activity 

69 

 
by children with Down syndrome was launched. Civil society organisations raised concerns 
over  the  strict  application  of  the  abortion  law.  Awareness  campaigns  were  launched  on 
nutrition and physical activity. 

A new programme for prostate cancer screening began. The cancer registry is not yet fully 
operational and cooperation with the State Statistical Office on mortality data not yet ensured. 
Sustainable funding is needed to screen all age groups for cervical, breast and colon cancer.  

The  amended  excise  law  provides  that  1  MKD  per  cigarette  box  is  allocated  for 
pharmaceuticals for rare diseases, but funding and specialised knowledge for their treatment 
remains limited. 

4.29.   Chapter 29: Customs union 

All Member States are part of the EU customs union and follow the same customs rules and 
procedures.  This  requires  legislative  alignment  as  well  as  adequate  implementing  and 
enforcement capacity and access to the common computerised customs systems. 

The country has a good level of preparation in the area of customs union. Good progress 
was  made  on  legislation  and  administrative  and  operational  capacity,  although  introducing 
fees for customs declarations is a step backwards. Certain customs provisions of the Law on 
Special  Zones  for  Technological  and  Industrial  Development  are  still  not  in  line  with  the 
acquis. In the coming year, the country should in particular: 

→ remove fees for customs declarations; 

→  finalise  and  consolidate  ongoing  IT  projects,  ensuring  the  maintenance  and  business 
continuity of the IT systems. 

On  1 January 2015,  fees  were  introduced  for  lodging  and  processing  customs  declarations, 
which is not in line with the acquis or the Stabilisation and Association Agreement. 

The country’s July 2015 accession to the conventions on a common transit procedure and on 
the simplification of formalities in trade in goods will significantly facilitate trade. The 2015 
customs tariff was adopted in line with the latest changes in the EU Combined Nomenclature. 
A  new  Law  on  Representation  in  Customs  Procedure  defines  the  status  of  authorised  and 
licensed  representatives  and  lays  down  criteria  for  issuing  authorisations  and  licences  for 
customs representations. In May, a new Law on Customs Measures for Intellectual Property 
Rights (IPR) Protection was adopted which regulates actions to be taken by customs related to 
goods that are suspected of infringing IPR. 

Good progress was made on administrative and operational capacity. Professional integrity 
standards and internal control measures were implemented systematically. Risk management 
was  further  developed  and  a  new  risk  analysis  module  in  transit  operations  was  introduced. 
The  use  of  simplified  procedures  is  well  developed.  Capacities  for  carrying  out  customs 
controls  and  combating  cross-border  crime  were  strengthened.  Improved  inter-agency 
cooperation  and  exchange  of  information  continued  to  result  in  seizures  of  drugs  and 
counterfeit  goods.  Cooperation  with  neighbouring  customs  administrations  continued, 
including through joint operations, and cooperation agreements with the Serbian, Hungarian 
and  Chinese  customs  administrations  were  signed.  The  agreement  on  the  country’s 
participation in the EU’s Customs 2020 programme was ratified. In relation to IT, the ‘new 
computerised transit system’ is fully operational since March 2014 and its maintenance was 
secured.  The  common  communication  network/common  system  interface  was  installed  and 
successfully  tested.  The  integrated  tariff  environment  system  was  completed.  Some  of  its 
functions  are  in  use  and  consideration  should  be  given  to  adding  others  that  would  benefit 
traders. A new system for processing customs declarations is expected to be completed soon. 

70 

 
4.30.   Chapter 30: External relations 

The  EU  has  a  common  trade  and  commercial  policy  towards  third  countries,  based  on 
multilateral and bilateral agreements and autonomous measures. There are also EU rules in 
the field of humanitarian aid and development policy.  

The  country  is  moderately  prepared  in  the  area  of  external  relations,  with  some  progress 
over the past year. The country continued its good cooperation with the EU within the World 
Trade  Organisation  (WTO),  but  its  institutional  capacity  to  fully  participate  in  EU 
commercial, development and humanitarian policies is still insufficient. 

On  the  common  commercial  policy,  the  country  continued  to  coordinate  its  positions  and 
align its policies closely with those of the EU, including within the WTO. It notified Category 
Commitments under the WTO Trade Facilitation Agreement, detailing the provisions it will 
implement  when  the  agreement  enters  into  force.  The  country  also  ratified  the  Additional 
Protocol 4 to the Agreement on Amendment of and Accession to the Central European Free 
Trade Agreement, abolishing all import duties on agricultural products from the Republic of 
Moldova.  The  competencies  of  the  Commission  on  Export  of  Dual  Use  Goods  and 
Technologies were strengthened. 

36 bilateral agreements with other countries are in force, of which 18 EU Member States. In 
the areas of development policy and humanitarian aid, the country is lagging behind.   

4.31.   Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  in  the  framework  of  the  foreign, 
security and defence  policy,  to  align with EU  statements, to take part in EU actions and to 
apply agreed sanctions and restrictive measures. 

The country is moderately prepared in this area. Some progress was made as the country 
continues to participate in civil and military crisis management missions. In the coming year, 
the  country  should  in  particular  improve  its  alignment  with  EU  declarations  and  Council 
Decisions on foreign and security policy. 

The  regular  political  dialogue  between  the  EU  and  the  former  Yugoslav  Republic  of 
Macedonia  on  foreign  and  security  policy  issues  continued.  (For  information  on  bilateral 
relations,  see  Political  criteria  —  Regional  issues  and  international  obligations).  On  the 
common foreign and security policy, the country aligned itself, when invited, with 27 out of 
40  EU  declarations  and  Council  Decisions  (68 %  alignment).  On  the  illegal  annexation  of 
Crimea  by  Russia  and  events  in  eastern  Ukraine,  the  country  aligned  its  foreign  policy  in 
broad terms with the EU’s stance but not with the Council Decisions introducing restrictive 
measures  over  those  issues.  (On  the  International  Criminal  Court,  see  Political  criteria  — 
Regional issues and international obligations.) 

As  part  of  measures  on  non-proliferation  of  arms,  the  country  continued  its  efforts  to 
become a participating state to the Wassenaar Arrangement. 

The country continued to engage actively in cooperation with international organisations. It 
is  a  member  of  the  UN  Human  Rights  Council  until  2016  and  was  elected  to  the  Board  of 
Directors of the International Atomic Energy Agency. 

The country continued to participate in civil and military crisis management missions under 
the  common  security  and  defence  policy  (CSDP),  in  particular  EUFOR  ALTHEA  Bosnia 
Herzegovina.  The  country  extended  its  participation  in  the  NATO-led  Resolute  Support 
mission  in  Afghanistan  with  38  personnel  as  of  2015.  The  country  has  also  officially 
contributed to the ‘2014-20 European Union Battle Group’ since March 2014. 

71 

 
4.32.   Chapter 32: Financial control 

Based  on  international  standards,  EU  financial  control  rules  promote  sound  financial 
management  of  national  income  and  expenditure.  They  also  protect  the  EU's  financial 
interests against fraud in the management of EU funds and the euro against counterfeiting. 

The country is moderately prepared in this area. Some progress was made in the past year, 
especially in strengthening public internal financial control (PIFC) and external audit.  

However,  significant  efforts  are  needed  with ensuring  coherent  implementation  of  the  PIFC 
legislation across public administration and delegation of responsibilities. The independence 
of the State Audit Office in the Constitution has yet to be achieved. In the coming year, the 
country should in particular: 

→  ensure  that  there  is  a  more  systematic  follow  up  to  government's  recommendations 
following the annual PIFC review; 

→ ensure efficient implementation of risk assessment and other tools and techniques in public 
sector organisations' management processes; 

→  strengthen  the  coordination  role  of  the  Anti-fraud  Coordination  Service  and  improve 
management of irregularities through the Irregularity Management System. 

Public Internal Financial Control 

As concerns a PIFC strategy framework, implementation of the 2015-17 PIFC policy paper 
and its action plan adopted in December 2014 are under way. The  Committee for  Financial 
Management  and  Control  and  the  Audit  Committee  have  resumed  their  regular  quarterly 
meetings.  

The Central Harmonisation Unit (CHU) prepares an annual report on the implementation of 
PIFC,  but  it  is  adopted  only  in  June  the  following  year.  The  government  issues 
recommendations  on  the  basis  of  the  report,  but  they  need  to  be  monitored  more 
systematically. The CHU has ensured training for its staff and improved coordination with the 
State  Audit  Office  (SAO).  The  CHU  should  further  step  up  its  monitoring  and  supervision 
over implementation of FMC in the public sector organisations and state-owned companies.  

The  legal  framework  for  financial  management  and  control  (FMC)  is  established  in  line 
with  the  Committee  of  Sponsoring  Organisations  (COSO)  model  and  the  guidelines  of  the 
International Organisation of Supreme Audit Institutions (INTOSAI), but the legislation is not 
coherently  implemented  by  all  institutions.  Rulebooks  and  manuals  will  need  to  be  further 
updated  and  adapted  to  the  needs  of  smaller  budget  users.  Management  of  risks  should  be 
fully embedded in the organisations' management processes. The Law on Financial Inspection 
regulates  a  centralised  budget  inspection  function  that  is  compatible  with  PIFC.  The 
Financial  Inspection  Department  in  the  Ministry  of  Finance,  with  four  staff,  launches 
investigations on the basis of suspicion of irregularities and fraud. The department still needs 
to reach its full operational capacity. 

The  legal  framework  on  internal  audit  is  in  line  with  the  international  standards.  Progress 
was  made  on  better  implementing  internal  audit  standards,  rulebooks  and  manuals.  151 
internal  audit  units  exist  at  central  and  local  level,  with  77  internal  auditors  internationally 
certified. However, most units do not have sufficient number of auditors. Most internal audit 
units  conduct  their  audits  based  on  strategic  and  annual  plans,  although  not  yet  based  on 
operational and systematic risk. Quality assurance needs to be better implemented. 

72 

 
 
 
External audit 

The constitutional and legal framework is not complete, as the State Audit Office's (SAO) 
independence  is  not  anchored  in  the  Constitution.  Amendments  are  yet  to  be  adopted  by 
parliament. The SAO law is largely in line with the INTOSAI standards.  

The SAO has sufficient institutional capacity to perform its tasks, with 70 of its 82 auditors 
being certified public auditors. The SAO is not required to perform a full financial audit on 
the  final  government  accounts,  which  allows  it  to  decide  on  the  audits  it  wants  to  perform. 
The audit coverage, however, has been limited, leaving a majority of public funds unaudited. 
The  SAO  is  committed  to  improving  institutional  capacity  and  continued  to  implement  its 
2013-2017 strategic development plan efficiently.  

Concerning  the  quality  of  audit  work,  a  revised  regularity  audit  manual,  covering  both 
financial  and  compliance  audit,  and  a  performance  audit  manual  were  adopted.  Special 
attention should be paid to improving capacity to carry out performance audits.  

Regarding the impact of audit work, in 2014 the SAO audited 80 budget users on efficiency 
and  effectiveness  of  their  internal  control  systems,  therefore  proactively  contributing  to 
improvement  of 
Implementation  of 
recommendations needs to be closely monitored. The SAO’s annual audit report is discussed 
in parliament but its recommendations are still not followed up systematically to ensure that 
public funds are used more transparently and with greater accountability. 

internal  control  standards. 

the  public  sector 

Protection of the EU’s financial interests 

The  main  elements  of  the  Convention  on  the  Protection  of  the  EU’s  financial  interests  are 
regulated, ensuring a partial acquis alignment. A memorandum of cooperation between the 
Financial  Police,  the  Public  Prosecutor’s  Office,  the  Ministry  of  Interior  and  the  customs 
administration  was  signed  to  facilitate  joint  inspections.  The  Financial  Police  department  in 
the  Ministry  of  Finance  with  four  staff  is  the  dedicated  Anti-fraud  Coordination  Service 
(AFCOS). It should focus its efforts on developing and disseminating methodological tools, 
establishing  an  AFCOS  network  and  organising  training  for  irregularity  officers.  A  national 
anti-fraud  strategy  still  needs  to  be  adopted  and  implemented  efficiently.  On  cooperation 
with  the  European  Commission,  one  joint  investigation  was  carried  out  in  2014, 
irregularities  in  seven  cases  (of  which  three  concern  potential  fraud)  were  reported  to  the 
European Anti-Fraud Office (OLAF), albeit on paper and not electronically in the Irregularity 
Management  System.  Development  of  a  solid  track  record  on  investigations  and  reporting 
needs to continue. 

Protection of the euro against counterfeiting 

There  remains  relatively  little  counterfeiting  of  currencies  in  the  country.  On  acquis 
alignment, national legislation already lays down the national anti-counterfeiting procedures 
and  the  roles  and  responsibilities  of  relevant  institutions.  The  Banknote  Department  of  the 
National Bank carries out technical analysis of counterfeit money, including euro banknotes 
and  coins.  Its  cooperation  with  the  Ministry  of  Interior  should  be  improved  further  through 
timely  exchange  of  information  through  the  database  system  of  counterfeit  banknotes.  No 
formal cooperation agreements are in place with the European Commission on coins or with 
the  European  Central  Bank  on  banknotes  on  counterfeiting.  Further  efforts  are  needed  to 
improve  cooperation  between  national  institutions  involved  in  fighting  counterfeiting.  This 
should  be  done  through  systematic  training,  expanding  practical  experience  and  skills  and 
improving cooperation with the European Commission and the European Central Bank.  

73 

 
4.33.   Chapter 33: Financial and budgetary provisions 

Rules for funding the EU budget provide for contributions based mainly on the gross national 
income of each Member State as well as from value-added tax and customs duties. 

Preparations  are  at  an  early  stage  but  some  progress  was  achieved  in  this  chapter.  The 
administrative framework for applying the own resources rules needs to be set up. 

No progress was made on traditional own resources, the value added tax-based resource 
or  the  gross  national  income-based  resource.  Some  progress  was  made  in  the  underlying 
policy  areas  affecting  the  correct  application  of  the  financing  system.  (For  developments  in 
the  underlying  policy  areas  see  Chapters  16  —  Taxation;  18  —  Statistics;  29  —  Customs 
union; and 32 — Financial control). 

On administrative infrastructure, some progress was made towards fighting tax evasion and 
fraud  and  reducing  the  size  of  the  informal  economy,  which  remains  a  key  challenge.  The 
administrative  capacities  of  the  institutions  involved  in  the  own  resources  system  (customs, 
taxation,  statistics,  financial  control)  need  to  be  further  strengthened  and  legislation  further 
aligned with the acquis. 

74 

 
 
Annex I – Relations between the EU and the former Yugoslav Republic of Macedonia 

The  former  Yugoslav  Republic  of  Macedonia  is  participating  in  the  Stabilisation  and 
Association process. 

The  Stabilisation  and  Association  Agreement  (SAA)  with  the  EU  is  the  framework  for 
relations  with  the  EU  including  political  and  economic  dialogue.  Experts  met  in  six  sub-
committees  and  in  a  special  group  on  public  administration  reform.  Meetings  of  the 
Stabilisation and Association Committee and the Stabilisation and Association Council took 
place  in  June  and  July  2015,  respectively.  The  discussion  at  this  year’s  Committee  and 
Council was dominated by the serious political crisis in the country, on which the European 
Commission  and  Members  of  the  European  Parliament  facilitated  dialogue  from  March  to 
July,,  as  well  as  the  systemic  rule  of  law  issues  revealed  in  intercepted  conversations 
involving senior government officials on which the European Commission presented “Urgent 
Reform Priorities” which the country needs to address.  

As  regards  the  SAA,  the  country  has  continued  to  implement  commitments,  including  all 
those  relating  to  the  first  stage  of  implementation  of  Title  V  (‘Movement  of  workers, 
establishment,  supply  of  services,  capital’).  The  Council  has  still  not  decided  on  the 
Commission’s 2009 proposal on passage to the second stage of the Association, under Article 
5  of  the  SAA.  The  protocol  on  the  adaptation  of  the  SAA,  to  take  account  of  Croatia’s 
accession to the EU, was signed in July 2014; pending its ratification, the protocol is applied 
on a provisional basis with effect from 1 July 2013. 

The  country  is  also  engaging  in  the  reinforced  multilateral  economic  dialogue  with  the 
Commission  and  with  EU  Member  States,  to  prepare  for  participation  in  multilateral 
surveillance  and  economic  policy  coordination  under  the  EU’s  Economic  and  Monetary 
Union. Under the High Level Accession Dialogue, work continued on a new table of targets, 
complemented by the “Urgent Reform Priorities”. A plenary meeting was held in September 
involving, for the first time, several political parties and civil society.  

Visa  liberalisation  for  citizens  of  the  country  travelling  to  the  Schengen  area  has  been  in 
force  since  December  2009.  As  part  of  the  monitoring  mechanism  is  in  place  since  visa 
liberalisation, the Commission has been regularly assessing the progress made by the country 
in implementing reforms introduced under the visa roadmap. The monitoring mechanism also 
includes an alert mechanism to prevent abuses, coordinated by Frontex. The Commission has 
regularly submitted its post-visa liberalisation monitoring reports to the European Parliament 
and the Council. On the basis of a visa-waiver suspension mechanism, EU Member States can 
request the Commission, in an emergency situation and as a measure of last resort, to examine 
the  possibility  of  temporarily  suspending  the  visa  waiver  for  third  country  nationals.  A 
readmission agreement between the European Union and the country has been in force since 
2008. 

Over  the  period  2007-13,  the  EU  provided  financial  assistance  to  the  country  under  the 
Instrument for Pre-accession Assistance (IPA). It has allocated a total of EUR 610 million 
to the country, complemented by IPA multi-beneficiary programmes. Of this overall amount, 
the  national  authorities  are  directly  responsible  for  managing  about  EUR  470  million  under 
the decentralised implementation system (DIS). The delays in procurement under the DIS led 
to a situation in which the country was unable to implement EUR 70 million of IPA funds by 
the end of 2014, which were returned to the EU budget. Due to the limited national capacity 
to programme and to absorb IPA funds, there is a risk that further funds will be unused by the 

75 

 
 
country in the future. Administrative capacity to plan, design and implement projects needs to 
be strengthened, in line with the rules of sound financial management. 

In December 2014, the Commission adopted its first IPA II National Programme for 2014. It 
addresses  the  sectors  of  democracy  and  governance,  rule  of  law  and  fundamental  rights, 
competitiveness  and  innovation,  agriculture,  transport  and  environment.  The  government 
adopted  sector  operational  programmes  on  transport  2014-2020,  as  well  as  on  environment 
and  climate  action,  2014-2020.  The  Framework  Agreement  between  the  country  and  the 
Commission  on  IPA  II  was  ratified  by  the  government  on  10  June  2015,  enabling  the 
implementation of IPA II funds. 

In October 2015, the Commission adopted a special measure of EUR 10 million, to strengthen 
the  response  capacity  of  the  most  affected  countries  in  the  Western  Balkans  to  cope 
effectively with increased mixed migration flows, focusing primarily on Serbia and the former 
Yugoslav Republic of Macedonia. 

76 

 
 
Annex II – Statistical Annex 

STATISTICAL DATA (as of 11.09.2015) 
The former Yugoslav Republic of Macedonia 

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

Note 

2002 
2 039 
25 713 

2010 
2 053 
25 713 

2011 
2 057 
25 713 

2012 
2 060 
25 713 

2013 
2 062 
25 713 

2014 
2066 
25 713 

National accounts 
Gross domestic product (GDP) (million national 
currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita), relative to the EU average (EU-28 = 
100) 
Real GDP growth rate: change on previous year 
of GDP volume (%) 
Gross value added by main sectors 
Agriculture, forestry 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 
(%) 

Business 
Industrial production volume index (2010 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all 
persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial 
business economy) (EUR million) 
Total value added (in the non-financial business 
economy) (EUR million) 

Inflation rate  
Consumer price index (CPI), change relative to 
the previous year (%) 

Note 
1) 

1) 
1) 
1) 2) 

2002 
258 58
1 
4 241 
2 099 
5 500 

2010 
437 296 

2011 
464 187 

2012 
466 703 

2013 
499 559p 

2014 
525 843e 

7 109 
3 459 
8 900b 

7 544 
3 665 
8 800 

7 586 
3 680 
9 100 

8 112p 
3 930p 
9 500 

8 533e 
4 127s 
10 000p 

1) 2) 

26 

35b 

34 

34 

36 

36p 

1) 

1.5 

3.4 

2.3 

-0.5 

2.7p 

3.8e 

1) 
1) 
1) 
1) 
1) 

1) 

1) 
1) 

1) 

Note 

3) 

12.3 
17.1 
6.4 
64.2 
98.1 

21.3 

-0.5 
26.3 

45.2 

2002 
90.8 
: 
: 

: 

: 

: 

: 

11.7 
17.9 
6.5 
63.9 
93.8 

23.1 

1.4 
39.8 

58.1 

10.9 
19.0 
6.1 
64.0 
92.0 

23.5 

3.4 
47.1 

66.1 

10.5 
17.8 
6.6 
65.1 
92.5 

23.4 

5.6 
45.4 

66.8 

11.0p 
17.9p 
6.6p 
64.4p 
89.6p 

23.5p 

5.0p 
43.8p 

10.2e 
18.0e 
6.8e 
65.0e 
86.7e 

: 

: 
47.9e 

61.9p 

65.1e 

2010 
100.0 
71 638 
16.8 

2011 
107.0 
71 022 
12.9 

2012 
104.1 
70 010 
11.9 

2013 
107.4 
68 158 
10.0 

2014 
112.5 
: 
: 

13.6 

9.3 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Note 

2002 
1.8 

2010 
1.6 

2011 
3.9 

2012 
3.3 

2013 
2.8 

2014 
-0.3 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 
**3 year backward moving average of the current 
account balance relative to GDP (%) 
Net inward foreign direct investment (FDI) 
(million euro) 
Foreign direct investment (FDI) abroad (million 
euro) 
of which FDI of the reporting economy in the EU-
28 countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of which FDI of the EU-28 countries in the 
reporting economy (million euro) 
**Net international investment position, relative 
to GDP (%) 
Year on year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

Note 
4) 

2002 
-402 

2010 
-144b 

2011 
-189 

2012 
-224 

2013 
-147 

2014 
-114 

4) 

4) 

4) 

4) 

4) 
4) 

4) 

4) 

-1 000 

-1 532b 

-1 905 

-2 008 

-1 858 

-1 856 

121 

-48 

132b 

359 

-100b 

-131 

309 

-148 

361 

358 

-212 

-225 

525 

1 356b 

1 487 

1 622 

1 563 

1 609 

103 
-6.2 

31b 
-7.2 

77 
-3.8 

60 
-2.5 

74 
-2.4 

83 
-2.0 

112.0 

156.9 

344.6 

117.3 

263.8 

278.0 

0.1 

: 

3.6 

: 

-0.2 

-6.1 

-11.6 

-15.7 

: 

: 

: 

: 

4) 

112.1 

160.5b 

344.4 

111.2 

252.2 

262.3 

4) 5) 

4) 

: 

: 

135.6 

224.4 

117.1 

226.7 

88.9 

-51.1 

-52.6 

-55.1 

-56.2 

-56.0 

4) 6) 

29.1 

5.4 

-0.7 

1.6 

-3.4 

6.4 

Public finance 
***General government deficit / surplus, relative 
to GDP (%) 
***General government gross debt relative to 
GDP (%) 
Total government revenues, as a percentage of 
GDP (%) 
Total government expenditure, as a percentage 
of GDP (%) 

Note 

2002 
: 

40.5 

: 

: 

2010 
-2.4 

24.1 

30.2 

32.6 

Financial indicators 
Gross foreign debt of the whole economy, 
relative to GDP (%) 
Gross foreign debt of the whole economy, 
relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight 
deposits, million euro) 
Money supply: M2 (M1 plus deposits with 
maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable 
instruments, million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per 
annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 

Euro exchange rates: average of period (1 euro 
= … national currency) 
Trade-weighted effective exchange rate index 
(2005 = 100) 
Value of reserve assets (including gold) (million 
euro) 

10) 
10) 
11) 

12) 

10) 

2011 
-2.5 

27.7 

29.5 

32.0 

2011 
64.2 

2012 
-3.8 

33.7 

29.6 

33.4 

2012 
68.2 

2013 
-3.9 

34.2 

28 

31.9 

2013 
64.3 

2014 
-4.2 

38.2 

27.8 

32.0 

2014 
69.8p 

Note 
4) 7) 

2002 
39.3 

2010 
57.8b 

4) 7) 

150.5 

150.5b 

140.8 

153.3 

148.7 

146.8 

8) 

8) 

8) 

432 

933b 

997 

1 072 

1 138 

1 391 

1 052 

3 277b 

3 523 

3 540 

3 545 

3 801 

1 141 

3 781b 

4 147 

4 330 

4 558 

5 040 

657 

3 102b 

3 367 

3 551 

3 779 

4 157 

9) 

11.94 

3.78b 

23.00 
: 

5.50 
: 

2.17 

5.50 
: 

2.10 

4.23 
1.00 

1.86 

3.75 
0.75 

1.79 

3.75 
0.50 

60.978 

61.515 

61.529 

61.524 

61.566 

61.623 

93.3 

106.8 

107.8 

107.9 

109.4 

112.5 

770 

1 715 

2 069 

2 193 

1 993 

2 436 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External trade in goods 
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 * 100) (number) 
Share of exports to EU-28 countries in value of 
total exports (%) 
Share of imports from EU-28 countries in value 
of total imports (%) 

Demography 
Crude rate of natural change of population 
(natural growth rate): number of births minus 
deaths (per thousand inhabitants) 
Infant mortality rate deaths of children under one 
year of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that are 
in employment (%) 
Male employment rate for persons aged 20–64 
(%) 
Female employment rate for persons aged 20–
64 (%) 
Employment rate for persons aged 55–64: 
proportion of the population aged 55–64 that are 
in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share 
of total employment, persons aged 20–64 (%) 
People employed in the private sector as a 
share of total employment, persons aged 20–64 
(%) 
Unemployment rate: proportion of the labour 
force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the 
labour force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the 
labour force that has been unemployed for 12 
months or more (%) 
Unemployment rate for persons (aged 25–64) 
having completed at most lower secondary 
education (ISCED 0–2) (%) 
Unemployment rate for persons (aged 25–64) 
having completed tertiary education (ISCED 5 & 
6) (%) 

Note 

2002 
2 105 

2010 
4 137 

2011 
5 053 

2012 
5 071 

2013 
4 983 

2014 
5 485 

1 178 

2 535 

3 215 

3 124 

3 235 

3 723 

-927 

-1 602 

-1 838 

-1 947 

-1 748 

-1 762 

48.1 

48.4 

48.2 

50.3 

51.3 

94 

63.5 

56.3 

2011 
1.6 

7.6 

73.1 
77.2 

2011 
70.1 

101 

65.3 

60.3 

2012 
1.7 

9.8 

73.0 
76.9 

2012 
69.6 

: 

72.6 

62.7 

2013 
1.9 

10.2 

73.2 
77.2 

2013 
70.4 

: 

76.6 

63.5 

2014 
: 

: 

: 
: 

2014 
70.8 

57.8 

38.8 

35.4 

18.1u 
24.1u 
6.2u 
51.6u 
: 

: 

31.4 

31.8 
30.8 
55.3 

25.9 

: 

: 

57.5 

38.7 

35.4 

17.3 
23.6 
6.3 
52.7 
: 

: 

31.0 

31.5 
30.3 
53.9 

25.5 

: 

: 

59.7 

40.7 

37.9 

18.7 
23.5 
6.9 
50.6 
: 

: 

29.0 

29.0 
29.0 
51.9 

23.9 

: 

: 

61.6 

40.8 

38.6 

18.0 
23.5 
7.0 
51.4 
: 

: 

28.0 

27.7 
28.6 
53.1 

: 

: 

: 

13) 

106 

90 

61.2 

65.5 

64.4 

55.2 

Note 

Note 

2002 
4.8 

10.2 

70.6 
75.6 

2002 
: 

: 

: 

: 

25.8 

: 
: 
: 
: 
: 

: 

2010 
2.5 

7.6 

72.9 
77.2 

2010 
70.4 

58.4 

37.5 

34.2 

: 
: 
: 
: 
: 

: 

31.9 

31.7 
32.3 
58.4 

32.0 

31.9 
32.2 
53.7 

27.0 

26.7 

: 

: 

: 

: 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 
inflation index) (2000 = 100) 
GINI coefficient — see definitions 
Poverty gap 
*Early leavers from education and training: 
proportion of the population aged 18–24 with at 
most lower secondary education who are not in 
further education or training (%) 

Standard of living 
Number of passenger cars relative to population 
size (number per thousand population) 
Number of mobile phone subscriptions relative 
to population size (number per thousand 
population) 

Infrastructure 
Density of railway network (lines in operation per 
thousand km²) 
Length of motorways (kilometres) 

Innovation and research 
Public expenditure on education relative to GDP 
(%) 
*Gross domestic expenditure on R&D relative to 
GDP (%) 
Percentage of households who have internet 
access at home (%) 

Environment 
Energy intensity of the economy (kg of oil 
equivalent per 1 000 euro GDP at 2005 constant 
prices) 
Electricity generated from renewable sources 
relative to gross electricity consumption (%) 
Road share of inland freight transport (based on 
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) 

Note 

2002 
11 279 

2010 
20 553 

2011 
20 847 

2012 
20 902 

2013 
21 145 

2014 
: 

14) 

103.0 

160.8b 

157.0 

152.3 

: 

: 

: 
: 
: 

40.9 
: 
15.5 

38.5 
: 
13.5 

38.8 
43.1 
11.7 

37.0 
39.0 
11.4 

: 
: 
12.5 

Note 

2002 
150.9 

2010 
151.1 

2011 
152.2 

2012 
163.5 

2013 
168.2 

2014 
179.8 

179.7 

1 098.2 

1 104.9e 

1 084.6 

1 083.9 

: 

Note 

2002 
27 

2010 
27 

2011 
27 

2012 
27 

2013 
27 

2014 
27 

208 

251 

259 

259 

259 

259 

Note 

2002 
3.4 

0.24 

: 

2010 
3.7 

0.22 

46.0 

2011 
3.5 

0.22 

55.0 

2012 
4.0p 

0.33 

58.3 

2013 
: 

2014 
: 

0.44p 

: 

65.1 

68.3 

Note 
3) 

2002 
589.5 

2010 
493.5 

2011 
521.6s 

2012 
502.7p 

2013 
453.9s 

2014 
: 

18.7p 

: 

92.4 

92.4 

11.0 

28.0 

15) 

91.7 

89.0b 

Note 

2002 
1 577 

0 
1 356 

2010 
1 616 

0 
1 194 

15.2 

91.8 

2011 
1 736 

0 
1 410 

11.7 

93.2 

2012 
1 525 

0 
1 246 

2013 
1 373p 

: 
1 069p 

2014 
: 

: 
: 

: 

: 

: 

: 

0 

0 

0 

0 

0 

1 486 

1 271 

1 435 

1 453 

1 172p 

2 892 

2 879 

3 131 

2 976 

2 722p 

6.1 

7.3 

6.8 

6.3 

6.1 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agriculture 
Agricultural production volume index of goods 
and services (at producer prices) (previous year 
= 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals 
(thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, 
end of period) 
Livestock numbers: live sheep and live goats 
(thousand heads, end of period) 
Production and utilisation of milk on the farm 
(total whole milk) (thousand tonnes) 
Harvested crop production: cereals (including 
rice) (thousand tonnes) 
Harvested crop production: sugar beet 
(thousand tonnes) 
Harvested crop production: vegetables 
(thousand tonnes) 

Note 

2002 
97.5 

2010 
107.7 

2011 
96.8 

2012 
94.7 

2013 
103.0p 

2014 
: 

1 316 
259 

196 

1 234 

198 

645 

44 

678 

1 121 
260 

1 120 
265 

1 267 
251 

1 260 
238 

1 263 
242 

191 

854 

347 

541 

0 

887 

197 

839 

376 

555 

0 

845 

177 

796 

350 

460 

0 

704 

167 

807 

381 

562 

0 

165 

822 

387 

: 

0 

702 

778 

: = not available 
b = break in series 
e = estimated value 
p = provisional 
s = Eurostat estimate 
u = low reliability 

* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

  Footnotes: 

1)  Based on ESA 2010. 
2)  Source: Eurostat. 
3)  Excluding NACE Rev. 2 Sections A, O, T, U and Class 64.20. 
4)  Based on the balance of payments manual 6th edition. 
5)  Data on FDI flows by countries are produced only for the categories Equity capital and the Loans component of Other 

capital. 

6)  Calculation based on data in euro. 
7)  2002: partial data coverage. 
8)  2002: excluding data for savings houses. 
9)  The interest rates are calculated as weighted averages. Data cover bilateral over-night transactions.  

10)  End of year (31 December). 
11) 

In 2012, the National Bank of the Republic of Macedonia introduced two deposit instruments for the banks — overnight and 7 
day deposit. At the end of year the rate for overnight deposits was 1% and for 7 day deposits was 2%. 

12)  NEER (nominal effective exchange rate). 
13) 
Index (previous year = 100) of the ratio of Paasche unit value indices. 
14)  Break in series caused by the introduction of a new concept of gross income. 
15)  Break in series caused by inclusion of pipeline transport and transport for own account. 

81