COMMISSION STAFF WORKING DOCUMENT The former Yugoslav Republic of Macedonia 2016 Report 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 2016 Communication on EU Enlargement Policy
Date: 2016-11-09
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: North Macedonia, accession criteria, accession negotiations, pre-accession strategy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 362 final   COMMISSION STAFF WORKING DOCUMENT The former Yugoslav Republic of Macedonia  2016 Report 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}  
 
 
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 ................................................... 19 
2.5. Regional issues and international obligations ..................................................... 21 

3.  

ECONOMIC CRITERIA ........................................................................................... 23 

3.1. The existence of a functioning market economy ................................................ 23 
3.2. The capacity to cope with competitive pressure and market forces within the 
Union .......................................................................................................................... 29 

4.  

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ...................... 32 

4.1.Chapter 1: Free movement of goods .................................................................... 32 
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 ............................................................................. 36 
4.6.Chapter 6: Company law ...................................................................................... 37 
4.7.Chapter 7: Intellectual property law ..................................................................... 38 
4.8.Chapter 8: Competition policy ............................................................................. 39 
4.9.Chapter 9: Financial services ............................................................................... 40 
4.10.Chapter 10: Information society and media ....................................................... 41 
4.11.Chapter 11: Agriculture and rural development ................................................. 42 
4.12.Chapter 12: Food safety, veterinary and phytosanitary policy .......................... 43 
4.13.Chapter 13: Fisheries.......................................................................................... 43 
4.14.Chapter 14: Transport policy ............................................................................. 44 
4.15.Chapter 15: Energy ............................................................................................ 45 
4.16.Chapter 16: Taxation .......................................................................................... 47 
4.17.Chapter 17: Economic and monetary policy ...................................................... 48 
4.18.Chapter 18: Statistics.......................................................................................... 49 
4.19.Chapter 19: Social policy and employment ....................................................... 50 
4.20.Chapter 20: Enterprise and industrial policy ...................................................... 52 
4.21.Chapter 21: Trans-European networks ............................................................... 52 
4.22.Chapter 22: Regional policy and coordination of structural instruments .......... 53 
4.23.Chapter 23 Judiciary and fundamental rights ..................................................... 54 
4.24.Chapter 24: Justice, freedom and security ......................................................... 63 
4.25.Chapter 25: Science and research ...................................................................... 72 
4.26.Chapter 26: Education and culture ..................................................................... 72 
4.27.Chapter 27: Environment and climate change ................................................... 73 
4.28.Chapter 28: Consumer and health protection ..................................................... 75 
4.29.Chapter 29: Customs union ................................................................................ 76 
4.30.Chapter 30: External relations ............................................................................ 77 
4.31.Chapter 31: Foreign, security and defence policy .............................................. 78 
4.32.Chapter 32: Financial control ............................................................................. 78 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.33.Chapter 33: Financial and budgetary provisions ................................................ 80 

Annex I — Relations between the EU and the former Yugoslav Republic of Macedonia ...... 81 

Annex II – Statistical Annex .................................................................................................... 83 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.  

INTRODUCTION1

1.1.   Context  

The  Stabilisation  and  Association  Agreement  between  the  former  Yugoslav  Republic  of 
Macedonia and the EU entered into force in  April 2004. The European Council granted the 
status  of  candidate  country  to  the  former  Yugoslav  Republic  of  Macedonia  in  December 
2005.  The  Commission  recommended  for  the  first  time  to  the  Council  to  open  accession 
negotiations with the country in 2009. In 2015, the Commission stated that it was prepared to 
extend  its  recommendation,  conditional  on  the  continued  implementation  of  the  Pržino 
Agreement, which was facilitated by Commissioner Hahn and three Members of the European 
Parliament  in  2015,  and  substantial  progress  in  the  implementation  of  the  'Urgent  Reform 
Priorities'.  

The deep political crisis continued in 2016, exacerbated by the attempt to pardon individuals 
charged  or  allegedly  involved  in  the  wiretaps.  This  decision  was  rescinded  in  the  face  of 
national and international protests. The Pržino agreement is partially implemented and limited 
progress  was  made  in  terms  of  concrete  implementation  of  the  ‘Urgent  Reform  Priorities’. 
The agreements and important decisions taken in summer 2016, which pave the way for early 
parliamentary elections, provide an opportunity for the country's leaders to finally overcome 
the long-lasting crisis. 

1.2.   Summary of the report 

Concerning  the  political  criteria,  the  country  was  faced  with  the  continuation  of  the  most 
severe  political  crisis  since  2001.  Democracy  and  rule  of  law  have  been  constantly 
challenged,  in  particular  due  to  state  capture  affecting  the  functioning  of  democratic 
institutions and key areas of society. The country suffers from a divisive political culture and 
a lack of capacity for compromise. On 20 July and 31 August 2016, leaders of the four main 
political parties reached a deal on the implementation of the Pržino Agreement, including by 
setting  11  December  2016  as  the  date  for  early  parliamentary  elections  and  declaring  their 
support  to  the  work  of  the  Special  Prosecutor.  They  reiterated  also  their  commitment  to 
implement the ‘Urgent Reform Priorities'. 

The inter-ethnic situation remained fragile. The review of the Ohrid Framework Agreement, 
which ended the 2001 conflict and provides the framework for the inter-ethnic relations, still 
needs to be completed in a transparent and inclusive manner.  

Civil  society  played  a  constructive  role  in  supporting  democratic  processes  and  ensuring 
greater checks and balances. At the same time, civil society organisations continue to express 
their  concerns  about  the  deterioration  of  the  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  with  the  reform  of  its  public  administration.  There  has 
been some progress, although limited, over the past year. The implementation of the new legal 
framework on human resources management started. However, there is insufficient progress 
in  the  implementation  of  the  Commission's  previous  recommendations.  Rather  than  being 
suspended,  temporary  contracts  continued  to  be  transformed  into  permanent  ones  without 

1  This  report  covers  the  period  from  October  2015  to  September  2016.  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. 

4 

 
 
  
 
 
                                                 
 
open  competition.  Ineffective  accountability  lines,  the  use  of  the  public  sector  as  a  political 
instrument, allegations of pressure exerted on public employees and alleged politicisation of 
administration  in  an  electoral  year  continue  to  be  of  concern.  A  comprehensive  2017-2022 
public administration reform strategy is belatedly under preparation. Furthermore, the lack of 
political commitment to deliver on necessary reforms in public financial management led to a 
significant reduction of EU financial assistance in 2016.  

The country's judicial system has some level of preparation. However, the situation has been 
backsliding since 2014 and achievements of the previous decade’s reform process have been 
undermined  by  recurrent  political  interference  in  the  work  of  the  judiciary.  The  authorities 
failed  to  demonstrate  necessary  political  will  to  address  effectively  the  underlying  issues  as 
identified in the ‘Urgent Reform Priorities’. The obstructions faced by the newly established 
Special Prosecutor have shown the need to address effectively the lack of independence of the 
judiciary and to prevent selective justice. 

Concerning the fight against corruption, the country has some level of preparation. Corruption 
remains prevalent in  many areas and continues to  be a serious problem. The legislative and 
institutional  framework  has  been  developed.  However,  the  structural  shortcomings  of  the 
State  Commission  for  Prevention  of  Corruption  and  political  interference  in  its  work  have 
minimised  the  impact  of  past  efforts.  There  is  still  a  need  to  establish  a  convincing  track 
record,  especially  on  high  level  corruption  cases.  In  the  fight  against  organised  crime,  the 
country  has reached some level of preparation. The legislative framework  is  broadly  in  line 
with European standards and strategies have been elaborated. However, the law enforcement 
capacity to investigate financial crimes and confiscate assets needs to be developed further. 

Concerning  the  protection  of  human  rights,  the  legislative  and  institutional  framework  is 
largely in line with the European standards. More efforts are needed in practice to ensure the 
respect of human rights of vulnerable groups, including refugees and migrants. There is also a 
continuing lack of political will and adequate resources to enable the relevant supervisory and 
regulatory bodies to fulfil their mandate independently and effectively. The most marginalised 
categories of the population are still not being accorded full protection. In the area of freedom 
of expression, the country has some level of preparation. However, freedom of expression and 
the situation of the media remain a serious challenge in the current political climate. 

With  regard  to  regional  cooperation,  the  country  generally  continues  to  maintain  good 
relations  with  other  enlargement  countries  and  participated  actively  in  regional  initiatives. 
Steps  have  been  taken  to  improve  good  neighbourly  relations,  including  through  the  recent 
progress  in  implementing  the  confidence-building  measures  with  Greece.  The  'name  issue' 
needs to be resolved as a matter of urgency. 

As  regards  the  economic  criteria,  the  former  Yugoslav  Republic  of  Macedonia  has  a  good 
level  of  preparation  in  developing  a  functioning  market  economy.  Overall,  no  progress  was 
made  towards  a  functioning  market  economy  during  the  reporting  period.  Macroeconomic 
stability  was  preserved  and  the  macroeconomic  environment  strengthened  further  in  2015. 
This  was  supported  by  major  public  infrastructure  spending  and  foreign  direct  investment, 
although  signs  of  weaknesses  were  observed  in  the  first  quarter  of  2016.  Despite 
unemployment  remaining  high,  particularly  for  youth,  it  has  decreased  during  the  reporting 
period.  Certain  vulnerabilities  remain,  however,  such  as  the  low  competitiveness  of  the 
domestic private sector which is hampered by weak contract enforcement, the large informal 
economy, and difficult access to finance. The management of public finances did not improve 
and public debt increased further.  

The  economy  has  a  moderate  level  of  preparation  to  cope  with  competitive  pressures  and 
market  forces  within  the  Union.  Some  progress  was  made  to  foster  innovation  and  foreign 

5 

 
investments  and  digitalisation  is  progressing  fast.  The  economy  is  poorly  diversified, 
however,  and  manufacturing  industry  produces  mainly  low  value-added  products.  The 
economy  continued  to  suffer  from  weaknesses  in  education  curricula,  low  innovation  rates 
and  significant  investment  needs,  including  in  public  infrastructure,  that  make  it  less 
competitive. 

As regards its ability to assume the obligations of membership, the country is moderately 
prepared  in  most  areas,  including  in  the  areas  of  competition,  transport  and  energy.  Further 
efforts are needed across the board, in particular in those few areas where the country is at an 
early  stage  of  preparation,  such  as  freedom  of  movement  of  workers.  More  focus  is  also 
needed on administrative capacity and effective implementation. 

The country continued to be affected by the migration crisis. This created a substantial burden 
on  its  asylum  and  migration  system.  The  country  continued  to  cooperate  with  neighbouring 
countries and Member States and made efforts to provide shelter and humanitarian supplies, 
with EU support as well as the support of others. The country should maintain its efforts to 
ensure  effective  screening  of  refugees  and  migrants  and  address  relevant  protection  needs. 
The  country  should  also  maintain  its  efforts  to  decrease  the  number  of  unfounded  asylum 
applications lodged by its nationals in EU Member States. 

2.  

POLITICAL CRITERIA  

2.1.   Democracy 

The  reporting  period  was  marked  by  the  continuing  political  crisis  and  the  partial 
implementation  of  the  2015  Pržino  Agreement.  Although  some  deadlines  were  met,  most 
were late and required constant involvement and support from the EU and the US. Some key 
commitments remained unfulfilled. Although work on these has started, limited progress was 
made  on  the  concrete  implementation  of  the  'Urgent  Reform  Priorities',  primarily  due  to  a 
lack of political will.  

The  deep  political  crisis,  which  arose  from  the  2015  revelations  of  wide-spread  illegal 
interceptions of communications (wiretaps) and their serious content, continued in 2016. The 
President’s  decision  to  pardon  56  individuals  charged  or  allegedly  involved  in  the  wiretaps 
was subsequently rescinded in the face of strong domestic and international protests. Overall, 
democracy and the rule of law continue to be challenged, in particular due to the capture of 
institutions  such  as  judicial  bodies,  regulatory  agencies  and  media  outlets.  The  country 
suffers from a divisive political culture and a lack of capacity for compromise. Narrow party 
interests continue to prevail over the interests of the country and its citizens on key issues. 

A welcome accord on the implementation of the Pržino Agreement was reached on 20 July 
20162.  On  31  August,  the  political  leaders  took  a  number  of  further  important  decisions, 
including  setting  the  date  of  early  parliamentary  elections  on  11  December  2016.  These 
recent accords, including notably on the preparation and holding of credible elections, are an 
opportunity  for  the  country's  leaders  to  finally  overcome  the  long-standing  crisis,  address 
systemic rule of law issues and put the country firmly back onto the EU path. 

Elections 

Ahead  of  the  early  parliamentary  elections,  work  must  continue  to  ensure  conditions  for 

2 Referred below as the '20 July agreement'. 

6 

 
 
 
 
 
                                                 
a credible electoral process (such as preventing and investigating the intimidation of  voters, 
ensuring separation of state and party activities, balanced media reporting and continuously 
updating the voters’ list) and to address the OSCE/ODIHR3 recommendations. Efforts should 
continue to enhance the capacities of the State Election Commission. Greater transparency is 
needed to increase citizens' trust in its work. 

Following letters sent by the EU and US to the Prime Minister, indicating that the conditions 
for credible elections were not in place at that point, the political leaders decided to postpone 
the early parliamentary elections from 24 April 2016 (as initially provided for in the Pržino 
agreement)  to  5 June  2016.  Those  elections  were  postponed,  too,  when  three  signatories  of 
the political agreement deemed that the conditions were not met and only one submitted a list 
of  candidates.  On  31  August  2016,  the  political  leaders  agreed  to  hold  early  parliamentary 
elections on 11 December 2016. 

The  November  2015  amendments  to  the  electoral  code  partially  addressed  previous 
OSCE/ODIHR  recommendations.  These  amendments  introduced  a  quota  of  40 %  for 
candidates of the less-represented gender on party lists. The code was also amended in July 
2016 to reflect the provisions of the 20 July agreement. The code could benefit from a future 
review in order to ensure internal coherence and consistency with the relevant legislation. 

The composition of the State Election Commission was changed to include three independent 
members, in addition to the six nominees from the four main political parties. It operated in a 
tense  political  environment.  Its  work  was  impaired  by  political  interference,  lack  of 
cooperation from various stakeholders, a limited timeframe and resources. 

Parliament 

The  ongoing  crisis  underlined  once  again  parliament’s  weak  legislative  and  oversight 
functions and the need to substantially improve its performance as a forum for constructive 
political  dialogue  and  representation.  The  focus  needs  to  be  on  active  participation  of  all 
parliamentary  parties,  proper  consultation  and  impact  assessment  prior  to  the  enactment  of 
legislation,  credible  functional  oversight  of  the  work  of  government  and  the  intelligence 
services,  establishing  political  accountability  for  the  illegal  wiretaps,  and  the  capacity  to 
monitor the protection of human rights and fundamental freedoms in the country.  

Parliament’s work continued to be seriously hampered by the political crisis, including by a 
lack  of  political  dialogue,  its  dissolution4  and  the  non-participation  of  the  main  opposition 
party in parliamentary activities from 23 June to 22 July 2016. The parliament was dissolved 
again on 17 October 2016 ahead of the early parliamentary elections on 11 December 2016. 
During the reporting period, the parliament did not adequately fulfil its function of providing 
checks  and  balances.  The  practice  of  frequent  legislative  changes  to  laws  and  use  of 
shortened  procedures  for  adoption,  without  sufficient  consultation  or  impact  assessment, 
continued. 

The  two  committees  responsible  for  oversight  of  the  security  services  (one  on  security  and 
counterintelligence,  and  one on the interception of communications)  need to  carry  out  their 
mandate. The inquiry committee failed to deliver on political accountability over the illegal 
wiretaps because members of the main ruling party either did  not participate in hearings or 
would  not  answer  questions.  All  three  committees  failed  to  submit  their  initial  reports  as 

3 Organization for Security and Co-operation in Europe/Office for Democratic Institutions and Human Rights  
4  The  parliament  was  dissolved  on  6  April  before  the  early  parliamentary  elections  planned  on  5  June  2016. 
Following  the  decision  of  the  Constitutional  Court,  it  reconvened  on  18  May  2016  and  amended  the  electoral 
code to postpone the 5 June elections. 

7 

 
                                                 
agreed  in  the  Pržino  Agreement.  The  parliamentary  committee  established  following  the 
President’s decisions on pardons decided that there were no grounds for impeachment. There 
was no progress on implementing the earlier recommendations of the Committee of Inquiry 
into the events in parliament of 24 December 2012. 

Governance 

Serious challenges to the democratic governance of the country  continued, raising concerns 
about  state  capture  of  institutions  and  key  sectors  of  society.  Independent  regulatory, 
supervisory  and  advisory  bodies  were  not  able  to  carry  out  their  functions  proactively, 
effectively and free from political pressure, leading to limited oversight of the executive.  

The government needs to restore credibility by implementing robust reforms, preparing and 
holding credible elections, committing to and implementing all obligations under the Pržino 
Agreement.  The  Ohrid  Framework  Agreement  needs  to  be  reviewed  in  an  inclusive  and 
transparent manner and any resulting recommendations implemented. 
Following  the  Pržino  Agreement,  SDSM5  ministers  joined  the  interim  government  in 
November 2015 and deputy ministers from VMRO-DPMNE6 and SDSM, with veto rights on 
election-related  matters,  were  appointed  to  several  ministries.  However,  obstructionism  and 
lack of cooperation on all sides were reported in these cross-party ministries. As foreseen in 
the Pržino Agreement, ex-Prime Minister Gruevski resigned in January.  
In  April,  DUI7  replaced  its  Ministers  following  the  release  of  illegal  wiretaps  of  a  private 
nature.  Following  the  reconvening  of  parliament  on  18 May,  VMRO-DPMNE  and  DUI 
accepted  the  resignation  of  SDSM  ministers  and  decided  therefore  to  continue  in  their 
coalition.  After  the  latest  agreement  of  20  July,  a  new  interim  government  in  charge  of 
organising elections was appointed by the parliament on 2  September  2016, which includes 
again Ministers from SDSM.  

The  Macedonian  government  made  limited  progress  in  implementing  the  'Urgent  Reform 
Priorities', accepted in June 2015. Backsliding continued in some critical areas of the rule of 
law. 

Inter-ethnic  relations  remained  fragile.  The  Ohrid  Framework  Agreement  (OFA),  which 
ended the 2001 conflict, provides the framework for preserving the multi-ethnic character of 
society.  In  general,  this  process  remained  highly  politicised.  With  international  support,  the 
State Secretariat for the Implementation of the OFA, prepared a report with recommendations 
and submitted it to the government in December 2015. There has been no follow-up to date. 
Overall, the situation remained  mostly calm. Inter-ethnic tensions caused by  public displays 
of religious and ethnic symbols were calmed by community and political leaders.  

Decentralisation  of  government  is  a  key  element  of  the  OFA.  Central  budget  underfunding 
and  low  capacity  of  local  tax  collection  compromise  the  capacity  of  some  municipalities  to 
carry  out  their  obligations.  The  legal  framework  for  local  self-government  needs  to  be 
reviewed. 

Another essential part of the OFA is balanced regional development. On this point, a 2016-
2019  action  plan  envisages  a  more  transparent  and  balanced  distribution  of  national  funds. 
The  2016  budget  for  regional  development  has  doubled  and  the  2017  budget  envisages 
another increase, but this will still be insufficient. 

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

8 

 
                                                 
Civil society 

No progress was made in addressing last year's recommendations. The environment in which 
civil  society  organisations  (CSOs)  operate  worsened.  The  national  authorities  must  consult 
and  engage  with  civil  society  to  find  a  way  out  of  the  crisis  by  better  involving  CSOs  in 
policy-making,  legislative  process  and  in  discussions  resulting  in  concrete  actions.  Both 
government  and  non-governmental  actors  should  cooperate  more  constructively.  The  state 
must ensure relevant legal, financial and policy frameworks to ensure the functioning of civil 
society.  

An empowered civil society is a crucial component of any democratic system and should be 
recognised  and  treated  as  such  by  state  institutions.  CSOs  continued  to  express  serious 
concerns  about  the  difficult  environment  and  the  climate  of  fear  in  which  they  operate.  In 
general,  they  continued  to  report  being  subject  to  harsh  and  disproportionate  criticism  by 
politicians and certain media. Following the presidential pardons, CSOs organised numerous 
protests  across  ethnic  lines,  made  efforts  to  strengthen  democratic  processes  and  ensure 
greater checks and balances. A group of CSOs prepared a 'Blueprint for Urgent Democratic 
Reforms' in July 2016. At the same time, political polarisation and divisions can be observed 
between  CSOs  who  support  the  governing  party  and  those  who  oppose  it.  Some  CSOs 
reported  targeted  investigations  and  infringement  of  privacy  by  law  enforcement  agencies 
when  they  disagreed  with  the  government  on  sensitive  political  issues.  Individual  members 
were fined and taken to court following civil disobedience during the protests (also called the 
‘colourful revolution’).  

There has been limited government commitment to dialogue with CSOs. Their involvement in 
policy-making  and  legislative  drafting  remains  insufficient,  although  some  further  efforts 
were  made  by  the  Secretariat  for  European  Affairs.  Some  89  CSOs  expressed  serious 
concerns  about  the  process  for  establishing  the  Council  for  Cooperation  between  the 
government and civil sector, in particular over the lack of a proper consultative process and 
the selection process of civil society representatives. Local government continued to lack the 
capacity to cooperate with CSOs. 

Inadequate  administrative  capacity  and  the  lack  of  funds  in  the  government  unit  for  NGO 
Cooperation prevent the implementation of the 2012-2017 strategy for cooperation with civil 
society. The drafting of the 2015-2017 action plan is still pending. A binding framework for 
standardised  rules  for  state  financing  of  civil  society  has  not  yet  been  adopted  and  the 
allocations of state funds remain insufficient. A fully functional legal framework, based on the 
law on associations and foundations, is still not in place.  

Oversight of the intelligence services 

The  two  oversight  committees  chaired  by  the  opposition  (one  on  security  and  counter-
intelligence and one on interception of communications) began their work in September 2015. 
They visited the Bureau for Security and Counterintelligence  (UBK) and other services, but 
did not perform any effective oversight.  

The  clear recommendations  on  both  oversight and  reform  of  the  intelligence  services  in  the 
‘Urgent  Reform  Priorities’  were  not  implemented.  The  oversight  system  is  still  not  fully 
functional,  in  particular  as  regards  the  intelligence  services.  Work  on  intelligence  sector 
reform was finally launched in October 2016 with external support. 

9 

 
 
2.2.   Public administration reform  

to 

The country is moderately prepared with the reform of its public administration. There was 
some  progress,  although  limited,  over  the  past  year.  The  implementation  of  the  new  legal 
framework  on  human  resources  management  started.  However,  there  has  been  insufficient 
commitment 
Ineffective 
the  Commission’s  2015 
accountability  lines,  the  use  of  the  public  sector  as  a  political  instrument,  allegations  of 
pressure  exerted  on  public  employees  and  alleged  politicisation  of  administration  in  an 
electoral  year  continue  to  be  of  concern.  Furthermore,  the  lack  of  political  commitment  to 
deliver on necessary reforms in public financial management led to a significant reduction of 
EU financial assistance in 2016.  

recommendations. 

implement 

Strong  political  commitment  is  necessary  to  guarantee  the  independence  of  the  public 
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 politicisation of the public service;  

→ ensure full implementation of the principles of accountability, transparency and merit (as 
provided for in the ‘Urgent Reform Priorities’ as well as the law);  

→  suspend  and  review  the  implementation  of  the  law  on  transformation  of  temporary 
positions  into  permanent  contracts  until  the  principle  of  merit  is  fully  observed  (as  per  the 
‘Urgent Reform Priorities’);   

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

Policy development and coordination 

The  legal  framework  and  institutional  structures  continued  to  ensure  a  coherent  policy-
making  system.  A  medium-term  policy  planning  system  is  in  place  and  strategies  now 
include more information on their financing. However, the quality of the European integration 
coordination  system  is  decreasing  due  to  lack  of  political  will  to  implement  EU-related 
reforms. Sectoral planning needs to be improved, also in view of receiving EU assistance. 

The capacity for inclusive and evidence-based policy and legislative development needs to 
be improved. Obligatory inter-ministerial and public consultations on policies and legislation 
remained a formality. The quality of obligatory regulatory impact assessments for legislative 
and policy proposals is weak. Financial impact assessments are very often not prepared, and 
procedures are applied only formally.  

Public  scrutiny  over  government  work  is  formally  in  place,  but  a  decreasing  number  of 
selected  government  reports  are  made  public.  Those  reports  that  are  publicly  available 
continue  to  focus  more  on  quantitative  outputs  than  on  qualitative  assessment  of  achieved 
policy objectives. 

Public financial management 

Preparations  for  the  multiannual  public  financial  management  reform  programme 
continued at technical level. However, a formal government-led dialogue on the programme is 
yet to be launched and a medium-term budgetary framework is yet to be adopted.  

The following areas have been identified among the main priorities for development of public 
finances in the country: the public availability and comprehensiveness of fiscal data; budget 
classification  and  the  budget  revenue  planning  process;  a  strengthened  internal  control 
system;  alignment  of  public  procurement  legislation  with  the  acquis  and  its  efficient 

10 

 
 
implementation;  and  increased  audit  coverage  of  total  public  spending  in  order  to  improve 
accountability and transparency of the public finances. Payment arrears were identified by the 
2015 public expenditure and financial accountability assessment as a further important area to 
be tackled by the government. 

Budget  transparency  is  not  ensured,  because  clear,  comprehensive,  timely  and  reliable 
budgetary and statistical information is not publicly available. The 2016-2017 fiscal strategy 
and the 2016 budget did not undergo sufficient parliamentary debate. The lack of appropriate 
public  and  parliamentary  scrutiny  raises  concern  about  the  transparency  of  the  budgetary 
process. Parliament has limited capacity to exercise control on use of public funds and there is 
no efficient mechanism to monitor the budgetary impact of government proposals. 

Public service and human resources management 

The  implementation  of  the  new  merit-based  recruitment  and  appraisal  procedures 
enshrined  in  the  2015  law  on  administrative  servants  began  in  September  2016.  However, 
rather than being suspended, temporary contracts continued to be transformed into permanent 
ones without open competition. This was contrary to the ‘Urgent Reform Priorities’, as it ran 
counter to the basic principle of merit in public administration and bypassed the new uniform 
rules  for  public-sector  employees.  No  figures  were  made  public  on  the  number  and  type  of 
such  contracts. Concerns remained also over the transparency of staff mobility and possible 
misuse  of  dismissal  procedures.  Criteria  for  senior  management  positions  should  be  made 
more detailed to limit political appointments and dismissals.  

Allegations of pressure on the public sector employees continued, reinforcing the perception 
of  high  levels  of  politicisation.  The  final  report  of  the  OSCE/ODIHR  Election  Observation 
Mission  (July  2016)  notes  that  there  are  credible  allegations  that  public  sector  employees 
suffered  intimidation,  pressure  and  threats  to  their  employment  to  attend  counter-
demonstrations. Allegations of intimidation to attend demonstrations were also reported. 

After  long  delays,  the  methodology  on  equitable  representation  was  signed  and  published. 
However,  figures  on  equitable  representation  remained  almost  unchanged,  while  smaller 
communities remained under-represented. Efforts to meet targets for equitable representation 
often did not take account of institutions’ real staffing needs and the principle of merit. The 
number of public employees not required to show up for work continued to increase. 

The Ministry of Information Society and Administration does not yet have enough leverage to 
coordinate  and  monitor  human  resources  management.  A  first  report  on  the  number  of 
employees in the public sector was published (one of the ‘Urgent Reform Priorities’). There is 
still lack of clarity on the issue of temporary employees. The remuneration system across the 
public  sector  remained  non-uniform,  leading  to  inconsistent  levels  of  pay  and  hindering 
mobility.  

Professional  development  continued  for  public  servants  through  training.  The  new  human 
resource software in place provides cumulative data on training already provided but there is 
no  centralised  database  of  the  training  offered  by  various  institutions.  The  impact  of 
legislation promoting integrity in the public service remained relatively limited. 

Accountability of the administration 

As  effective  lines  of  accountability  are  not  in  place  between  or  within  institutions,  a 
functional  review  is  needed  to  assess  the  rationality  of  the  organisation  of  the  Macedonian 
public  administration.  Some  institutions  continued  to  report  in  parallel  both  to  their  line 
ministry and to the government. Clear separation of reporting and accountability requirements 
between party and state must be ensured. Managerial accountability is still not systematically 

11 

 
implemented  and  there  is  little  delegation  of  responsibility  to  middle  management.  (See 
chapter 32 — Financial control). 

Appropriate internal and external oversight mechanisms are in place to ensure citizens’ right 
to  good  administration.  The  quality  and  impact  of  parliamentary  oversight  needs  to  be 
improved.  The  Ombudsman  continued  to  work  efficiently  but  systemic  follow-up  of  his 
repeated recommendations is required from a number of institutions (see the ‘Urgent Reform 
Priorities’).  

Concerns  continued  to  be  expressed  about  excessive  classification  of  documents  by  the 
government  as  confidential  (also  an  ‘Urgent  Reform  Priority’),  thereby  impeding  citizens’ 
right  to  access  public  information.  The  volume  and  quality  of  information  published  by 
individual  state  bodies  fell.  The  Commission  that  reviews  appeals  continued  to  have 
insufficient capacity to monitor compliance with the requirement for proactive disclosure of 
information.  It  needs  more  integrity  and  powers  to  impose  penalties  to  encourage  better 
enforcement of the relevant legislation. 

On  the  right  to  administrative  justice,  the  current  appeal  procedure  remained  onerous, 
complex  and  lengthy,  comprising  several  appeal  layers.  Administrative  courts’  efficiency 
increased,  but  delays  in  enforcing  court  rulings  remained.  The  right  to  seek  compensation 
and  the  liability  of  public  authorities  in  cases  of  wrongdoing  is  in  place  but  data  on 
compensation for damages is still not available. 

Service delivery to citizens and businesses 

Government activities on building user-oriented administration slowed during the reporting 
period.  The  interoperability  framework  is  not  operational  due  to  a  lack  of  funding  and 
political  will  to  implement it. The number of services provided to  the public through the e-
government  portal  remained  modest  and  primarily  focused  on  businesses.  The  relevant 
government portal does not qualify as one-stop-shop portal as it is merely an information site.  

Equal  access  to  public  services  is  partially  in  place.  The  legislative  framework  on  general 
administrative  procedures  was  amended,  simplifying  more  than  180  special  administrative 
procedures. A new approach and substantial training at central and local level are needed to 
ensure it is applied uniformly.   

Strategic framework for public administration reform 

A  comprehensive  2017-2022  public  administration  reform  strategy  is  belatedly  under 
preparation, it should be finalised through as inclusive a process as possible and be linked to 
medium-term  and  annual  budget  planning.  The  capacity  of  the  Ministry  of  Information 
Society  and  Administration  and  other  involved  institutions  to  efficiently  coordinate  and 
monitor implementation of the strategy needs to be strengthened. The lack of implementation 
of  the  recommendations  in  last  year’s  report  and  the  delays  in  implementing  the  new  legal 
framework  have  compromised  the  declared  political  support  and  the  commitment  to  the 
principles of transparency, accountability and merit in public administration. This also limits 
the financial sustainability of a wider public administration reform agenda. A new approach 
and strong political commitment from the highest political leadership is needed to ensure full 
understanding and enforcement of these principles. 

2.3.   Rule of law 

Functioning of the judiciary 

The  country’s  judicial  system  has  some  level  of  preparation.  However,  backsliding 
continued and this constitutes a serious concern. The reforms of the last decade continued to 

12 

 
 
be undermined by political interference in the work and appointment of the judiciary. There 
was  no  progress  on  last  year’s  recommendations  or  on  the  outstanding  issues  already 
identified  in  previous  reports  and  the  ‘Urgent  Reform  Priorities’.  The  work  of  the  Special 
Prosecutor must not be obstructed. 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; 

→  reform  the  discipline  and  dismissal  system  for  judges,  in  line  with  EU  and  Venice 
Commission recommendations; 

→  develop  a  serious  justice  sector  reform  strategy  and  action  plan  addressing  remaining 
shortcomings in a sustainable manner; 

→ improve strategic planning, needs assessment, resource management and allocation within 
the justice sector, including within the Ministry of Justice. 

Strategic documents 

The  adoption  and  implementation  of  a  new  judicial  reform  strategy  is  key  to  securing  the 
benefits  of  past  reforms  and  preventing  further  setbacks.  Such  a  strategy  should  address 
persistent shortcomings in a candid, systematic and integrated manner and should foresee an 
inclusive consultation process with relevant national and international stakeholders. There are 
concerns  that  preparatory  work  for  such  a  strategy  has  not  taken  full  account  of  those 
shortcomings. 

Management bodies 

The new president and deputy president of the Judicial Council were elected by its members. 
A  new  member  was  also  appointed  by  the  parliament,  who  retired  one  month  later,  calling 
into  question  the  seriousness  of  the  parliament's  appointment  policy.  Public  prosecutors 
elected  four  new  members  of  the  Council  of  Public  Prosecutors  from  among  their  peers. 
Parliament also renewed the mandates of two serving members of the Council and appointed 
a further new member. Concerns persist about the merit and professional experience of some 
members  of  management  bodies  appointed  by  parliament,  as  well  as  the  treatment  of 
professional staff.  

Independence and impartiality 

There was no progress in ensuring the functional independence of the justice system. Reports 
of selective justice in certain high-profile or politically sensitive court cases continued. Public 
demonstrations  illustrated  the  climate  of  political  tension  surrounding  the  work  of  the 
judiciary,  especially  in  relation  to  the  wiretapping  scandal.  Although  the  President  of  the 
Judicial Council and the President of the Supreme Court have pointed publicly to the need to 
respect  the  independence  of  the  judiciary,  there  is  no  framework  in  place  to  protect  judges 
against external pressure. Concerns about judges’ security of tenure, including in the light of 
2015 Venice Commission recommendations, have not been addressed. 

The work of the Special Prosecutor's Office (SPO), established in 2015 to investigate cases 
linked  to  the  wiretapping  scandal,  continued  to  be  hampered  in  practice.  Criminal  courts 
regularly refused to grant pre-trial measures requested by the SPO as part of its investigations 
and  the  Council  of  Public  Prosecutors  and  the  ruling  party  publicly  criticised  its  work.  The 
international  community  continued  to  insist  that  the  SPO  must  be  allowed  to  fulfil  all  its 
functions independently.  

13 

 
The  automated  court  case  management  information  system  requires  further  upgrades  to 
prevent any misuse. The system needs to ensure that cases cannot be allocated to a specific 
judge on political or personal grounds, and this needs to be monitored on a systematic basis. 
There  were  also  allegations  of  direct  interference  in  the  assignment  of  judges  to  handle 
specific procedures initiated by the Special Prosecutor. 

Accountability  

The  codes  of  ethics  for  judges  (2006)  and  prosecutors  (2004)  are  in  place  but  there  is  little 
evidence  of  effective  monitoring  of  compliance.  Ethics  is  part  of  the  curriculum  of  the 
Academy for Judges and Prosecutors. Judges and Prosecutors are under a legal obligation to 
declare their assets on an annual basis and report on possible conflicts of interest. The State 
Commission for the Prevention of Corruption (SCPC) checks these assets, but its powers of 
verification remain limited. 

Professionalism and competence 

While  they  have  become  more  clearly  merit-based,  decisions  on  appointment  and 
promotion of court presidents and higher court judges continue to be vulnerable to political 
bargaining.  First-time  entrants  to  the  professions  are  required  to  have  graduated  from  the 
Academy  for  Judges  and  Prosecutors.  However,  the  law  on  the  academy  was  amended  in 
December  2015  to  reduce  the  merit  requirements  for  candidate  prosecutors  without  good 
reason and concerns about political motivations persist. The professional evaluation system 
continues  to  be  based  on  quantitative  criteria.  The  'Urgent  Reform  Priorities'  in  these  areas 
have not been addressed. 

Quality of justice 

The  Academy  for  Judges  and  Prosecutors  is  the  institution  responsible  for  initial  and  in-
service training of all judges, prosecutors and court staff. This also covers relevant aspects of 
European  Union  law  and  European  Court  of  Human  Rights  (ECtHR)  jurisprudence.  It  is 
financed  by  the  state  budget  and  foreign  donors.  All  courts  produce  quarterly  and  annual 
activity reports. Most of them publish press releases on ongoing high-level investigations and 
trials. 

ICT systems are in use in all courts, although sometimes with obsolete hard- and software as 
well as  insufficient  funding for renewal and maintenance. The situation is improving across 
public prosecutors’ offices.  

Online  access  to  jurisprudence,  and  in  particular  "searchability",  still  needs  to  improve  in 
line  with  'Urgent  Reform  Priorities'.  Permanent  training  is  still  required  to  improve  the 
reasoning in court judgments. Encouraging secondments of national judges to the ECtHR is 
among  the  'Urgent  Reform  Priorities'.  As  regards  alternative  dispute  resolution,  there  has 
been little use of the option of mediation. The country is an observer in the European Judicial 
Training Network.  

Efficiency 

The clearance rate maintained by most courts is 100 % or higher, meaning that they are able 
to process at least as many cases as they receive in one year. Court backlogs have not been an 
issue of concern for several years. The overall length of court proceedings from initiation to 
final  judgment  remains  a  concern  in  a  number  of  old  cases.  The  Bureau  for  Representation 
before  the  ECtHR  made  significant  efforts  to  ensure  the  speedy  execution  of  all  ECtHR 
judgments (an 'Urgent Reform Priority'), achieving good results. 

14 

 
Fight against corruption 

The country has some level of preparation. The legislative and institutional framework has 
been developed over a decade, as well as a track record on both prevention and prosecution. 
No  progress  was  achieved  in  the  past  year  on  the  outstanding  issues  or  on  last  year’s 
recommendations. Corruption remains prevalent in many areas and continues to be a serious 
problem. A significant slowdown was noted in both prevention and repression activities. The 
capacity to effectively tackle corruption continued to be undermined by political interference 
in the work of relevant bodies, 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 by providing law enforcement with necessary autonomy, 
specialised staff and equipment and by defining clearly specific objectives and indicators to 
measures achievements or failures;  

→  reviewing  the  status  and  composition  of  the  State  Commission  for  Prevention  of 
Corruption (SCPC) to make it more transparent, merit-based and independent from political 
parties; 

→  improving  public  awareness  and  trust  in  the  fight  against  corruption  by  increasing  the 
visibility of anti-corruption measures and the results achieved; 

→  developing  a  credible  track  record  on  fighting  high-level  corruption,  including  asset 
recovery (as per the ‘Urgent Reform Priorities’); 

→  implementing  an  effective  legal  framework  for  the  protection  of  whistle-blowers,  in  line 
with  European  standards  (as  per  the  ‘Urgent  Reform  Priorities’)  and  Venice  Commission 
recommendations. 

Track record 

While  the  track  record  of  investigations,  prosecutions  and  convictions  is  strong  on 
corruption  offences  committed  by  lower-level  officials,  it  remains  very  weak  on  high-level 
corruption.  There  has  still  not  been  a  proper  follow-up  on  the  2015  interception  of 
communications  scandal  that  raised  serious  allegations  of  high-level  political  corruption 
and  unlawful  interference  in  various  sectors  of  society.  This  selective  passivity  raised 
concerns over the independence of the police, the Public Prosecutor’s Office and the SCPC. 

Financial investigations and asset confiscation are still used very rarely and the respective 
capacities of law enforcement and judicial institutions remained weak. 

The  track  record  on  control  of  party  and  campaign  financing  indicates  that  the  existing 
penalties  under  the  law  on  the  prevention  of  corruption  and  the  electoral  code  need  to  be 
applied in practice in a more systematic and visible manner.  

The  SCPC  regularly  initiates  misdemeanour  proceedings  for  failure  to  declare  assets  or 
submit  statements  of  interest.  It  also  investigates  potential  conflicts  of  interest  and  refers 
asset  discrepancies  to  the  Public  Revenue  Office  for  further  investigation.  However,  since 
2015, the SCPC has significantly slowed down its corruption prevention activities. 

Institutional framework 

The SCPC is the main institution responsible for prevention of corruption. However, it lacks 
functional  independence:  the  selection  and  appointment  process  of  its  members  is  not 
transparent and seems to favour political loyalty over professionalism and integrity.  

15 

 
The SCPC suffers from certain structural shortcomings which the national authorities are not 
willing to address effectively. This deprives the SCPC of effective means to fulfil its duties.  

The SCPC is also deprived of investigative powers.  Instead it has to rely either on the Public 
Revenue  Office  or  on  the  courts.  Court  decisions  are  often  issued  after  cumbersome  and 
lengthy  procedure.  Often  these  decisions  exonerate  officials  from  their  responsibility  or 
reduce  penalties,  on  unclear  or  disputable  grounds.  For  failures  to  submit  statements  of 
conflict  of  interest,  the  SCPC  is  only  empowered  to  issue  public  reprimands  which  have  a 
very  low  deterrent  effect.  It  shares  its  role  in  monitoring  election  campaign  financing  in  an 
unclear  manner  with  the  State  Audit  Office,  the  State  Election  Commission,  the  Public 
Revenue Office and law enforcement bodies. Journalists complain of difficulties in obtaining 
information  from  the  SCPC,  whose  decisions  are  not  public,  which  further  reduces  public 
trust in it.  

On  law  enforcement,  the  Unit  for  the  Fight  Against  Corruption  within  the  Ministry  of  the 
Interior Department for Serious and Organised Crimes still has substantial specialised staffing 
and  equipment  needs.  It  also  lacks  safeguards  against  politicisation  and  interference.  The 
Agency for  Management of Confiscated Property continues to  have  insufficient  powers  and 
resources. 

The  capacity  of  the  prosecution  service  to  lead  criminal  investigations  and  direct  law 
enforcement agencies still has to be strengthened, as well as its ability to fulfil its functions 
notwithstanding political circumstances. The Special Prosecutor’s Office is the sole body that 
has  been  proactive  in  investigating  high-level  cases,  in  compliance  with  its  mandate,  but 
continues to face a lack of cooperation from state bodies.  

Legal framework 

The  criminal  code  penalises  a  broad  range  of  corruption-related  offences.  However, 
following  a  Constitutional  Court  decision  in  April  parts  of  the  2009  law  on  pardons  were 
repealed,  re-introducing  the  possibility  for  the  President  to  grant  pardons  for  offences 
including election and voting fraud, drug trafficking, paedophilia and crimes against humanity 
at  any  stage  of  criminal  procedure.  This  clearly  opens  up  the  risk  of  interference  with  the 
course  of  justice.  The  President's  subsequent  attempt  to  pardon  56  individuals  charged  or 
allegedly involved in the wiretaps reinforced the public perception of impunity and selective 
justice. It also showed a serious lack political will to engage effectively against corruption. 

Financing  of  political  parties  and  campaigns  is  regulated  mainly  by  the  2004  law  on  the 
financing of political parties and the electoral code of 2006. The 2015 amendments to the 
electoral code were not sufficient to address all legal shortcomings. There is still no indication 
of political will to create an effective mechanism to monitor the financing of political parties 
and election campaigns. 

The respective control and investigative powers and responsibilities of the State Audit Office, 
the  SCPC,  the  State  Election  Commission  and  law  enforcement  agencies  are  still  unclear, 
leading to a mutual abdication of responsibility. Since 2014, a suspension of party financing 
from  the  state  budget  was  imposed  in  a  handful  of  cases  which  did  not  have  the  expected 
deterrent effect.  

There  is  no  effective  prevention  and  punishment  of  conflicts  of  interest.  The  penalties  for 
failing  to  submit  statements  or  for  established  conflicts  of  interest  are  weak.  Likewise, 
procedures to verify assets declarations and impose penalties are fragmented and inefficient. 

The  implementation  of  the  law  on  free  access  to  public  information  remained  ineffective. 
Political parties are still excluded from the list of holders of information.  

16 

 
A new law on protection of whistle-blowers was adopted in November 2015 but substantial 
legal, institutional and practical preparations are still needed for effective implementation of 
the  law.  The  Venice  Commission  recommendations  and  earlier  European  Commission 
recommendations still need to be followed up in order to complete the legislative framework. 

The  country  is  party  to  all  the  relevant  international  Conventions  but  there  is  still  no 
indication that their provisions are used in practice. 

Strategic framework 

The relevant strategies and action plans continued to be implemented. However, they are not 
based on comprehensive assessments and inclusive consultation processes. Also, the current 
action  plan  of  the  State  Programme  for  Repression  of  Corruption  and  Prevention  and 
reduction of Conflict of Interest lacks ambition and credibility.  

Fight against organised crime 

The country has achieved some level of preparation in the fight against organised crime. The 
legislative  framework  is  broadly  in  line  with  European  standards.  No  progress  was  made 
specifically  on  last  year’s  recommendations.  A  separate  Unit  for  Economic  Crime  and 
Corruption  was  established  at  the  Ministry  of  the  Interior.  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  an  improved  track  record  on  combating  money  laundering  and  improving 
capacity and expertise to carry out financial investigations and asset confiscations on a more 
systematic basis; 

→ establishing an independent, external and transparent oversight mechanism for the police; 

→ 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 on intercepting communications and increasing 
the effectiveness of special investigative measures for genuine law enforcement purposes (as 
per the ‘Urgent Reform Priorities’). 

Track record 

A comprehensive track record on  investigations, prosecutions and convictions in the fight 
against organised crime has already been in place for some time. In recent years a number of 
criminal  networks  and  routes  have  been  dismantled,  in  particular  relating  to  people 
smuggling, human trafficking and drug trafficking, reflecting the country’s location on the 
Western Balkans trafficking routes. 

Proper  implementation  of  anti-money  laundering  legislation  is  still  needed  by  all  relevant 
institutions, including banks. There are relatively few cases, and the necessary data collection 
to track them effectively should be stepped up. Coordination among the relevant anti-money 
laundering institutions slightly improved, but more needs to be done. 

The  use  of  special  investigative  measures  is  quite  common  in  organised  crime  cases,  but 
criminal investigations need to be separated from interception for security purposes. The law 
enforcement and prosecution bodies need more expertise and greater capacity and authority to 
conduct  serious  financial  investigations.  The  precautionary  freezing  of  assets  is  rarely 
applied,  which  leads  to  poor  confiscation  rates.  More  systematic  cooperation  is  needed 

17 

 
between  the  Agency  for  Management  of  Confiscated  Assets  and  law  enforcement  agencies, 
prosecutors and the judiciary. 

The  level  of  sentencing  by  courts  appears  on  the  whole  to  be  appropriately  strict,  although 
efforts are still needed to ensure greater consistency. 

Institutional and operational capacity 

A major police reform started 15 years ago and reforms continued in specific areas. To align 
with the law on internal affairs, a new rulebook on the structure of the unit and job description 
was adopted. The Ministry of the Interior has specialised units dealing with different types of 
crime. The level of police equipment is generally good.  

The  Sector  for  Internal  Control  and  Professional  Standards  is  not  sufficiently  effective, 
especially  when  it  comes  to  ill-treatment.  Penalties  imposed  against  police  officers  are  not 
sufficiently dissuasive. An independent and efficient oversight mechanism for the police still 
needs to be established and the existing complaints mechanism needs to be implemented in a 
consistent manner. Although clear criteria for recruiting and evaluating police officers exist, 
there are persistent allegations of politicisation. 

Relations between prosecutors and police still need to be improved so that the prosecution 
service  can  fully  play  its  leading  role  in  investigations.  Only  one  of  the  planned  multi-
disciplinary investigative centres under the direction of the Public Prosecutor has been set up 
so far and is still not properly staffed and equipped. There is still no electronic interconnection 
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 
is  established  by  law,  but  is  still  not  operational.  Following  enhanced  border  controls  along 
the  Western  Balkan  route  and  the  subsequent  increase  of  smuggling  of  migrants,  law 
enforcement  authorities  face  challenges  in  identifying  and  arresting  smugglers.  Sustained 
efforts by the institutions in charge of this area need to continue.  

The Special Prosecutor has requested amendments to the existing law on witness protection 
in order to widen its scope to cover cases under the SPO's jurisdiction, but the parliament has 
rejected the proposed amendments. 

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 
seize  and  confiscate  assets  more  effectively  and  frequently.  The  financial  police  and  the 
Financial Intelligence Unit have weak resources and capacities. 

An operational agreement with Europol has been in place since 2011 and the country has a 
cooperation agreement  with  Eurojust  in  force  since  2010. Close  cooperation  continued  with 
international and regional bodies in the fight against organised crime. 

Legal framework 

The country’s criminal code is largely in line with European standards. The law on criminal 
procedure  was  modernised  in  2010.  The  2006  law  on  interception  of  communications  was 
amended  in  2012  but  the  ‘Urgent  Reform  Priorities’  recommend  separating  the  mandate, 
regulations  and  technical  facilities  for  interception  in  criminal  investigations  from  those  for 
security and intelligence purposes. Working groups were set up to begin to address the issue 
with external support. Broad consensus will be needed to take this forward. 

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 

18 

 
stepped up. 

Strategic framework 

The  national  organised  crime  threat  assessment,  inspired  by  the  EU  SOCTA  methodology, 
was  adopted  in  March  2016  and  the  regional  threat  assessment  was  adopted  in  June  2016. 
National  strategies  are  in  place  to  combat  human  trafficking  and  illegal  migration  (2013-
2016),  drugs  (2014-2020),  terrorism  (2016-2020)  and  police  development  (2016-2020). 
Nevertheless, strategic planning capacities within the Ministry of the Interior and the Public 
Prosecutor’s Office should be strengthened. 

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 laws are sometimes not fully or correctly applied. The bodies involved in protecting and 
promoting  human  rights  lack  sufficient  staff  and  financial  resources,  they  coordinate  poorly 
and, in some cases, are not considered independent.  

Weaknesses in the implementation of human rights standards continue to affect primarily the 
most  vulnerable  and  marginalised  groups  in  society,  including  children  and  young  people, 
people with disabilities, Roma and LGBTI people. 

Shortcomings particularly affect the following areas: 

  Serious  practical  problems  persist  over  freedom  of  expression  due 
implementation of the law and political interference. 

to  uneven 

  The  prison  system  continues  to  be  heavily  understaffed  and  mismanaged,  resulting  in 
systemic breaches of international human rights standards. 

  The  establishment  of  an  independent  oversight  mechanism  is  a  recurrent  demand,  which 
has  still  not  been  addressed,  necessary  ensure  that  complaints  of  police  ill-treatment  are 
investigated seriously and thoroughly. 

For a detailed analysis of developments on 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.  The  legislative  framework  is  broadly  aligned 
with  both  the  acquis  and  international  standards,  although  further  reforms  have  been  called 
for within the country. Freedom of expression and the situation of the media remain a serious 
challenge in the current political climate. There was no progress in this area over most of the 
past year. Relevant figures on government advertising, which can constitute a tool to exercise 
influence over broadcasters, have still not been made public by the authorities. Balanced and 
diversified  reporting  by  the  mainstream  media  is  still  lacking,  although  there  were  some 
encouraging signs over the summer in terms of reporting by the public broadcaster and some 
private channels. In the coming year the country should in particular: 

→  show  tangible  results  of  ongoing  reforms  within  the  Public  Broadcaster,  aiming  at 
addressing  lack  of  political  independence  and  lack  of  balanced  reporting  ('Urgent  Reform 
Priorities'); 

19 

 
 
 
→  ensure  full  transparency  on  government  advertising,  not  only  on  the  spending  of  public 
finances but also on its recipients and contents ('Urgent Reform Priorities'); 

→  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; 

→  all  media  stakeholders  should  assume  their  respective  responsibility  for  professional 
conduct. 

Intimidation of journalists 

The  media  reflects  the  strong  polarisation  of  society  along  political  lines.  There  were  a 
number of reports of intimidation of journalists and judicial proceedings against journalists. 
On  12 April,  several  journalists  were  injured  by  the  police  during  the  protests  against  the 
President’s  pardoning  of  56  individuals  and  the  premises  of  two  pro-government  media 
outlets were damaged. 

Legislative environment 

The  laws  are  broadly  in  line  with  the  acquis  although  there  are  continuing  calls  for  further 
reforms coming from within the country. Amendments to the electoral code set out rules for 
the portrayal of political parties by the public service broadcaster, strengthened the monitoring 
of the media by the Agency for Audio and Audio-visual Media Services (including through an 
ad-hoc  body  established  within  the  Agency)  and  prohibited  financing  of  political  parties’ 
campaigns by the media.  

Implementation of legislation/institutions  

Implementation  of  legislation  remained  deficient  and  freedom  of  the  media  continued  to 
decline throughout the year. Practical measures in the 'Urgent Reform Priorities' to improve 
the media situation have still not been addressed. Journalists' organisations and civil society 
offered their recommendations for media reforms. There has been little political commitment 
to promote media pluralism and independence. With the 31 August political agreement, some 
improvements  in  news  reporting  have  been  noted  in  particular  as  regards  MRT  and  some 
private channels; these need to be confirmed with time. 

Political  interference  in  the  editorial  policies  of  the  media,  in  particular  nationwide 
broadcasters, remained a serious concern. There are indications that most private broadcasters 
appear  to  have  coordinated  their  editorial  policy  in  favour  of  the  main  ruling  party.  Many 
media  do  not  meet  their  obligations  on  balanced  and  professional  reporting.  In  some 
mainstream media, members of the opposition and their activities are negatively portrayed, as 
are civil  society  protests. There was insufficient coverage  in televised debates  of politicians 
from across the political spectrum, even though debates would allow the expression of diverse 
ideas and opinions. Low professional standards and ethics persisted at some media outlets, to 
the detriment of the public’s right to receive objective and balanced reporting.  

Investigative reporting remained limited. There have also been rare instances of self-criticism. 
Throughout the  reporting  period,  some  20  new  defamation  lawsuits  against  journalists  were 
registered.  The  large-scale  illegal  wiretapping  of  journalists  revealed  last  year,  uncertain 
working conditions and an increase in threats and attacks on media further contributed to self-
censorship. 

The  Agency  for  audio  and  audio-visual  services  made  efforts  to  complement  the  self-
regulatory  functions  of  the  profession,  playing  a  more  proactive  role  on  issues  of 
professionalism and journalistic standards and ethics. There are concerns about pressures on 
the agency members. 

20 

 
Public service broadcaster 

Serious concerns remain over the public service broadcaster (MRT)’s balance in reporting. 
According  to  OSCE/ODIHR  Election  Observation  mission,  media  monitoring  noted  that 
newscasts  provided  limited  information  about  political  events  and  failed  to  provide 
comprehensive  analysis on  a  daily  basis.  In  several  cases,  journalists  mixed  facts  with  their 
own  political  opinions  when  covering  the  news.  The  sustainability  and  autonomy  of  MRT 
financing  must  be  ensured  and  implemented.  The  code  of  ethics  of  MRT  still  needs  to  be 
adopted.  The  Ombudsman  Office’s  recommendation  concerning  unlawfully  collection  of 
licence fees from vulnerable groups in society remained unresolved. The new chief editor of 
MRT was appointed in September 2016 following the 20 July agreement. 

Economic factors 

The  law  on  audio  and  audio-visual  media  services  regulates  media  ownership  by  laying 
down restrictions and prohibitions on conflicts of interest. However, most of the TV stations 
with a national concession and newspapers of wide circulation belong to individuals known to 
have  close  links  with  the  government  ruling  coalition.  Government  advertising  was 
suspended, but the data and criteria for granting such contracts (which should be transparent, 
objective  and  non-discriminatory)  have  still  not  been  made  publicly  available.  The  use  of 
unpaid public service announcements of a truly public interest nature should also be further 
explored (as per the ‘Urgent Reform Priorities’). 

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. Investigative reporting is primarily 
carried out by internet media. 

Professional organisations/professional conditions 

In  July  2016,  a  new  Independent  Syndicate  of  Journalists  in  Macedonia  was  established, 
representing several media portals.  Journalists from MRT are organised in a self-governing 
union.  Weak  union  protection  and  poor  labour  conditions  contributed  to  the  continuing 
problem  of  self-censorship.  None  of  the  country’s  media  outlets  have  signed  a  collective 
agreement  with  the  Independent  Union  of  Journalists  and  Media  Workers.  Most  often 
journalists work under temporary contracts. 

2.5.   Regional issues and international obligations 

The country 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  bilateral  immunity  agreement  with  the  United  States,  granting 
US citizens exemptions from the jurisdiction of the International Criminal Court. In doing 
so, it does not comply with the EU common positions on the integrity of the Rome Statute or 
with the related EU guiding principles on bilateral immunity agreements. The country needs 
to align with the EU position. 

In September 2016, there were 664 Roma refugees from Kosovo* registered in the country, of 
whom  18  were  recognised  refugees,  173  whose  asylum  applications  were  rejected  and  473 
were under subsidiary protection. There were 183 internally displaced persons (47 families). 
In  2015,  152  people  were  voluntarily  repatriated  to  Kosovo  and  Serbia.  The  Ministry  of 
Labour and Social Policy continued to provide support to 80 families for rented housing and 
utilities, under the integration strategy.   

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of  the 

21 

 
 
country’s process of moving towards the EU. They contribute to stability, reconciliation and a 
climate conducive to addressing open bilateral issues and the legacies of the past. The country 
has  continued  to  participate  actively  in  regional  initiatives  such  as  the  South  East  Europe 
Cooperation  Process  (SEECP),  the  Regional  Cooperation  Council,  CEFTA,  the  Western 
Balkans  Six,  the  Energy  Community  Treaty,  the  European  Common  Aviation  Area 
Agreement,  the  Central  European  Initiative  (CEI),  the  Regional  Initiative  for  Migration  and 
Asylum (MARRI) and RECOM. 

The  impetus  given  through  the  ‘Berlin  process’  and  the  Western  Balkan  Six  initiative, 
particularly  on  the  connectivity  agenda,  continued  to  foster  increased  regional  cooperation. 
Building  on  the  results  of  previous  summits,  the  4 July 2016  Paris  summit  saw  further 
advances  on  the  connectivity  agenda  but  also  opened  cooperation  in  new  areas,  notably 
through  the  establishment  of  the  Regional  Youth  Cooperation  Office  to  be  established  in 
Tirana. The country has participated actively.  

The country remained constructively committed to bilateral relations with other enlargement 
countries  and  neighbouring  EU  Member  States.  It  signed  a  bilateral  convention  on  regional 
cooperation with Kosovo under Article 12 of the SAA and needs to do the same with Bosnia 
and Herzegovina. 

Bilateral relations with Albania remained generally good.  

An  agreement  was  ratified  on  collocation  of  diplomatic  mission  and  consular  posts  with 
Bosnia and Herzegovina in March and the country continued its contribution to the EUFOR 
Althea operation.  

Relations  with  Kosovo  continued  to  develop,  with  the  signature  and  ratification  of  an 
agreement  to  facilitate  travel  between  the  two  countries  using  personal  identification 
documents.  Some  tensions  resulted  from  politicians’  statements  alleging  participation  of 
people from Kosovo in the Kumanovo incident in 2015. 

Agreements  with  Montenegro  were  ratified  in  March  2016  on  legal  assistance  in  civil  and 
criminal cases, and on mutual enforcement of judgments in criminal cases.  

Relations with Serbia remained good and continued to deepen. Some tensions arose following 
the vote to support Kosovo’s membership of UNESCO.  

Relations with Turkey developed, including a visit by the Deputy Prime Minister in charge of 
European Affairs to Turkey in February 2016. In August 2016, President Ivanov met with his 
Turkish counterpart in Istanbul. 

Relations  with  Bulgaria  continued  to  be  affected  by  differences,  primarily  about  the 
interpretation of history. A number of high-level visits took place.  During their visit for the 
SEECP  Summit  meeting  in  Sofia,  President  Ivanov  and  Foreign  Minister  Poposki  met  with 
their counterparts.  The respective Academies of  Science  and Art  held their  third meeting in 
Skopje.  Negotiations  on  a  bilateral  agreement  on  good  neighbourly  relations  continued. 
However,  ongoing  issues  remained.  The  countries  continued  to  cooperate  on  defence  issues 
and good cooperation continued on cross-border matters and on sectoral and trade relations, 
including infrastructure priorities. People-to-people contacts continued normally. 

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. The foreign ministers 
met in bilateral and multilateral formats. The visit by Foreign Minister Poposki to Athens in 
December  2015,  during  which  he  paid  a  courtesy  call  on  the  President  and  the  Deputy 
Speaker,  was  the  first  in  more  than  15  years.  The  latest  visit  by  Greek  Minister  of  Foreign 
Affairs, Nikos Kotzias, took place during the ambassadorial conference in August 2016. The 

22 

 
speakers of the parliament met for the first time in September 2016. Constructive discussions 
continued  in  assessing  positively  progress  in  the  implementation  of  the confidence  building 
measures,  which  were  launched  after  the  visit  of  the  Greek  Foreign  Minister  in  2015.  The 
confidence  building  measures  have  started  to  produce  tangible  results. Direct  contacts  were 
established  between  the  two  foreign  ministries  and  political  consultations  were  held  at  the 
level of political directors and legal experts. A Memorandum of Understanding on exchanges 
of  students  was  signed  between  the  University  of  Cyril  and  Methodius  of  Skopje  and 
University of Piraeus. The two chiefs of police also met officially for the first time and direct 
contacts  were  established  between  the  respective  ministries.  Although  the  migration  crisis 
challenged  bilateral  relations,  it  also  had  a  positive  spill-over  effect  on  overall  bilateral 
cooperation. Economic and trade relations continued normally. 

The  Presidents  of  Croatia  and  Slovenia  jointly  visited  the  country  in  the  context  of  the 
migration crisis. 

3.   ECONOMIC CRITERIA 

Key economic figures 

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

GDP growth (%) 

2014 

37  

3.5 

2015 

n/a 

3.7 

Unemployment rate (female; male) (%) 

27.7; 28.6 

26.7; 25.1 

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

for  persons  aged  20–64: 
is 

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

Source: Eurostat 

70.8 

-0.8 

2.4 

70.2 

-1.3 

1.7 

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  central 
importance  of  economic  governance  in  the  enlargement  process.  Each  enlargement  country 
prepares  an  Economic  Reform  Programme  (ERP)  annually,  which  sets  out  a  medium-term 
macro-fiscal  policy  framework  and  a  structural  reform  agenda  aimed  at  ensuring 
competitiveness  and  inclusive  growth.  The  ERPs  are  the  basis  for  country-specific  policy 
guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial level 
in May each year. 

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. However, no progress was made during the reporting period. 
Macroeconomic  stability  was  preserved  and  the  macroeconomic  environment  strengthened 
further  in  2015,  supported  by  major  public  infrastructure  spending  and  foreign  direct 
investment, although with signs of weaknesses in the first quarter of 2016. Unemployment is 

23 

 
 
 
 
 
decreasing,  but  remains  high,  particularly  for  youth.  Certain  vulnerabilities  remain,  such  as 
the low competitiveness of the domestic private sector which is hampered by weak contract 
enforcement, the large informal economy, and difficult access to finance. The management of 
public finances did not improve. In addition to the sustained large fiscal deficits over the past 
years,  the  rising  financing  needs  of  state-owned  enterprises  managing  the  government's 
investment agenda are driving up public debt levels. 

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

  underpinning  fiscal  consolidation  by  identifying  concrete  revenue  and  expenditure 
measures; 

  moving  towards  a  better  targeting  of  transfer  spending  and  improving  the  growth-
friendliness of public finance; 

 improving fiscal transparency and budget planning capacity. 

Economic governance 

The government remains committed to promoting growth and employment by market-
based  economic  policies.  Support  to  private  sector  competitiveness,  public  infrastructure 
developments,  and  export  promotion  remained  the  pillars  of  the  government's  economic 
policy.  However, employment is boosted by large-scale government programmes as well as 
active  labour  market  measures,  rather  than  by  job  creation  in  private  local  enterprises. 
Commitment to fiscal consolidation is lacking, as the government failed to point out concrete 
measures,  while  repeatedly  revising  annual  deficit  targets  upwards  in  mid-year.  The  ERP 
policy  guidance  from  12  May  2015  regarding  macro-fiscal  issues  has  not  been  addressed, 
while the guidance on labour market policies and on structural reform has been only partially 
addressed.  

Macroeconomic stability  

Figure 1 GDP growth 

7,0

6,0

5,0

4,0

3,0

2,0

1,0

0,0

-1,0

P
D
G

f
o
%

60
55
50
45
40
35
30
25
20
15
10
5
0

Economic expansion accelerated in 
2015, but has slowed down in 2016 
in  the  context  of  a  political  crisis. 
After  a  real  output  decline  in  2012, 
the  economy  posted  stable  growth 
rates  averaging  3.4  %  between  2013 
and  2015.  Since  2012,  household 
an 
has 
consumption 
increasingly  important  contributor  to 
growth,  while  investment  and  the 
foreign  balance  proved  volatile.  The 
construction  sector  was  the  fastest 
growing  industry  in  this  period.  In 
2015, real GDP increased by 3.7 %, driven by domestic consumption and net exports. Overall 
investment  remained  flat,  in  spite  of  strong  public  infrastructure  spending.  Growth  lost 
momentum  in  the  first  half  of  2016,  averaging  2.1  %  year-on-year.  The  average  per-capita 
income  (purchasing  power  standards)  amounted  to  37  %  of  the  EU-28  average  in  2015,  an 
increase of 3 percentage points (pp) since 2012. 

GDP per capita in purchasing power standards, EU28=100 (RHS)
GDP growth (LHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

become 

Short-term  external  vulnerabilities  remained  contained.  The  current  account  deficit  has 
remained  moderate  in  recent  years.  In  the  four  quarters  to  June  2016,  it  stood  at  2.5  %  of 

24 

 
 
 
 
 
GDP, albeit higher than its average of 1.5 % of GDP over the past five years. The rise in 2016 
came  largely  on  account  of  a  widening  merchandise  trade  deficit,  which  remains  large,  at 
19.9 % of GDP, yet lower than on average between 2011 and 2015 (23.2 %). The trade deficit 
has  been  covered  historically  by  robust  private  transfer  inflows,  significantly  alleviating 
external  imbalances.  While  still  more  than  compensating  for  the  current  account  deficit, 
foreign direct investment inflows dropped to 1.9 % of GDP in 2015, compared to an average 
of  2.7  %  in  the  preceding  five  years,  as  companies  adjusted  to  new  tax  legislation,  and  the 
political  crisis  lingered  on.  The  composition  of  new  FDI,  shifting  from  equity  to  debt 
financing, has become more volatile and less conducive to structural change in the economy 
in recent years. 

Public sector borrowing abroad impacts on external debt. The external debt of the country 
has  been  rising  rapidly  since  2009  (+14pp),  as  the  public  sector  increasingly  resorted  to 
foreign  financing.  Private  sector  indebtedness  abroad  increased,  too.  At  the  end  of  2015, 
external debt amounted to 70 % of GDP. Foreign exchange reserves declined in 2015, even 
though the government issued a Eurobond in November 2015 (EUR 270 million). Some of the 
loss was made up in the first quarter of 2016, and reserves were further boosted by a EUR 450 
million  Eurobond  issued  in  July  2016.  Reserves  coverage  remains  satisfactory  at  about  4 
months of prospective imports.  

ERP  policy  guidance:  "Underpin  fiscal  consolidation  by 
identifying  concrete  revenue  and  expenditure  measures; 
move  towards  a  better  targeting  of  transfer  spending  and 
improve  the  growth-friendliness  of  public  finance,  in 
particular  by  fully  executing  planned  priority  public 
investment spending. Protect against fiscal risks by using 
any excess revenue to create fiscal buffers." 

Figure 2 Fiscal developments 

P
D
G

f
o
%

50

45

40

35

30

25

20

15

10

5

0

4,5

4,0

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0

P
D
G

f
o
%

2010

2011

2012

2013

2014

2015

Public debt (LHS)

Budget deficit (RHS)

The central bank successfully defended 
price  stability  and  the  currency  peg. 
After  several  years  of  easing,  monetary 
policy  has  become  more  restrictive  since 
mid-2015,  motivated  by  broader-based 
economic  growth,  ample  liquidity  in  the  
financial  sector,  and  strong  household 
credit  growth.  In  May  2016,  the  central 
bank  raised  the  key  interest  rate  from 
3.25 % to 4 %, in response to speculation-
driven  pressure  on  banks'  deposits,  and 
amid continuing subdued price pressures. 
In  2015,  consumer  prices  dropped  by 
0.3 %,  as  in  2014,  driven  by  declining 
fuel  and  transport  prices,  supported  by 
lower 
food  prices.  Annual  average 
inflation has been decreasing since 2011, 
when  it  stood  at  3.9  %.  The  bank  also 
effectively  stimulated  the  "denarisation" 
of  loans  and  deposits,  reducing  foreign 
exchange  risks.  The  country's  exchange 
rate is anchored through a de facto peg to 
the euro.  

indicate 
concrete  measures  underpinning  fiscal  consolidation.  The  authorities  are  planning  an 
expenditure-based reduction in the general government deficit from 3.6 % of GDP in 2015 to 
2.6  %  in  2018,  relying  on  optimistic  assumptions  of  economic  growth  rather  than  specific 
savings. Yet, further ad-hoc increases in pensions, social transfers, and public wages are likely 
this year, as in previous years, while the pace of GDP growth is slowing down.  

The  government 

fails 

to 

25 

 
 
 
 
 
 
 
 
Revenue  shortfalls  due  to  over-optimistic  growth  assumptions  and  underperforming 
collection,  as  well  as  spending  pressures,  have  repeatedly  required  the  adoption  of  a 
supplementary budget and a higher deficit target in recent years.  

"Improve 

fiscal 
ERP  policy  guidance: 
transparency  and  budget  planning  capacity  by 
the  swift 
introduction  of  a  medium-term 
expenditure  framework;  by  providing  multi-
annual  projections  of  detailed  revenue  and 
expenditure  components  in  the  medium-term 
strategy  as  well  as  by  comprehensive  reporting 
the 
of 
consolidated 
Inform 
fiscal 
systematically about payments arrears." 

expenditure 
reports. 

extra-budgetary 

in 

Revenues have been overestimated by an 
average  of  6  %  in  the  last  five  years.  In 
June 2016, the government resorted again 
to a supplementary budget, with a further 
revision  in  August.  On  average  between 
2009 and 2015, 62 % of total expenditure 
was  devoted 
transfers,  especially 
pensions.  In  the  same  period,  only  about 
84 % of budgeted capital expenditure was 
implemented.  

to 

Public debt levels have been rising fast. An increasing amount of public capital expenditure 
has been shifted off-budget in recent years to state-owned enterprises (SOE), financed almost 
entirely  by  government-guaranteed  credit.  This,  in  addition  to  the  rising  primary  fiscal 
deficits, has led to accelerating increases in public debt, by 23.5pp, to 46.5 % of GDP between 
2008  and  2015.  There  is  little  transparency  about  the  fiscal  risks  linked  to  the  execution  of 
sizeable public infrastructure works through state enterprises. Meanwhile, the government has 
successfully lengthened its debt maturities, and only a small share remains (domestic) short-
term debt.  

The  policy  mix  does  not  fully  address  the  economic  challenges.  To  promote  sustainable 
growth  and  employment  and  contain  risks  to  external  balances,  economic  policy  needs  to 
focus  on  supporting  the  domestic  private  sector;  targeting  labour  market  weaknesses,  and, 
diversifying  the  economy's  structure.  This  would  be  aided  by  better  targeted  public 
expenditure  and  strengthened  efforts  at  fiscal  consolidation  and  debt  stabilisation.  The 
external borrowing of public sector bodies needs close monitoring so as to avoid challenges to 
monetary policy through its impact on domestic liquidity.  

Functioning of product markets  

Business environment 

Business  development  suffers  from  weak  and  uneven  law  enforcement.  Low  corporate 
taxation  and  simplification  of  regulatory  requirements  are  cornerstones  of  the  government's 
policies to facilitate business operations. Yet, obtaining licences and permits for operation is 
perceived  to  be  easier  for  foreign  investors  than 
domestic  companies,  which  is  one  of  the  key 
issues  for  domestic  businesses.  Moreover,  opaque 
interpretation  of  business  regulations,  notably  by 
local administrations, uneven enforcement of rules 
and  contracts,  as  well  as  corruption  and  the  large 
private 
informal 
sector 
the  number  of  new 
development.  In  2015, 
businesses,  as  well  as  the  amount  of  registered 
founding  capital,  declined,  compared 
the 
preceding year and to the five-year average, possibly reflecting in part the lingering political 
uncertainty. 

ERP  policy  guidance:  "Ensure  a 
reliable  and  predictable 
regulatory 
environment for businesses by reducing 
the  use  of  the  urgency  procedure  for 
legislation, 
proper 
consultation  of  the  stakeholders  and 
reinforcing 
of 
commercial courts." 

independence 

economy 

ensuring 

hamper 

the 

to 

Institutional  capacities  to  enforce  the  law  are  weak.  Resolving  a  commercial  dispute 
through a court remains time-consuming and costly. Moreover, the efficiency of the judiciary 

26 

 
system  appears  to  be  increasingly  impacted  by  political  interests.  There  were  no  new 
measures  adopted  on  facilitating  business  exit,  which  remains  challenging.  Liquidation 
procedures after bankruptcy have been shortened in recent years, but still take about 1.8 years 
on average.  

The sizeable shadow economy is an important obstacle to business. The informal share of 
the economy is large, impacting on the competitiveness of the formal private sector. Estimates 
range from some 20 % of total output (State Statistical Office) to about 40 %, depending on 
the  method  applied.  This  creates  problems  of  competition  for  registered  companies  and 
obstacles  to  investment.  Policy  measures  in  recent  years  were  aimed  at  reinforcing  the 
capacities of public bodies, involved in tackling the informal economy, as well as changes to 
tax and labour legislation intended to reduce labour cost and enhance the incentives for formal 
employment. 

State influence on the product market 

The  public  sector's  share  of  the  economy  remains  contained,  yet  discretionary  policy 
enforcement  by  the  government  creates  concerns.  The  value  of  state  assets  in  GDP 
amounted to 13 % of GDP in 2015, having declined marginally, but steadily over the past five 
years. Yet, while the state's stake in the economy remains moderate, the involvement of the 
government in the private sector is growing in other ways, such as through uneven application 
of  rules  and  regulations,  inspections,  and  public  procurement  procedures.  There  is  limited 
information  on  amounts  and  beneficiaries  of  state  aid.  The  large  share  of  state-owned  land 
remains an obstacle to the development of the agricultural sector and prevents this land from 
being used as collateral by private owners seeking a bank loan. 

Energy  prices  are  still  largely  set  by  the  Energy  Regulatory  Commission  (ERC).  After 
the  government  postponed  the  liberalisation  of  the  electricity  market  in  2014  by  5  years, 
contrary to the agreement of the EU Energy Community, electricity prices for households and 
small companies remain regulated by the ERC, with a schedule to allow gradual adjustment 
between 2016 and 2020. Prices paid by households do not cover cost and are cross-subsidised 
by  prices  charged  to  small  companies.  Natural  gas  prices,  too,  remain  in  the  ERC's  remit, 
even though legislation was adopted in 2015 to open the market. Oil and oil derivatives prices 
are  also  regulated,  but  follow  global  market  prices.  Administered  and  regulated  prices 
accounted for 15 % of the CPI basket in 2015, largely unchanged from previous years. 

Privatisation and Restructuring 

The  privatisation  process  is  at  an  advanced  stage.  In  2015,  there  were  no  further 
privatisations,  and  the  number  of  enterprises  in  full  or  partial  state  ownership  remained 
unchanged from a year earlier. The value of state assets in GDP amounted to 13 % of GDP in 
2015, having declined marginally, but steadily over the past five years. The implementation of 
a  joint-venture  between  a  state-owned  company  and  a  multinational  tobacco  enterprise  is 
ongoing. 

Functioning of the financial market  

Financial stability 

The  banking  sector  shows  resilience  in  the  face  of  lingering  credit  risk.  The  financial 
sector  remains  dominated  by  banks  which  account  for  about  90  %  of  the  system's  assets. 
Concentration remains high and unchanged compared to previous years, with about 60 % of 
assets held by the three biggest banks, out of a total of 15 banks operating in the country. The 
solvency ratio amounted to about double of the domestic supervisor's required minimum level 
of 8 %. Banks' profitability rose markedly in 2015. The quality of banks' assets, however, did 

27 

 
not  improve.  The  ratio  of  NPL  to  total  loans  to  the  private  sector  amounted  to  11.4  %  on 
average  in  2015,  only  slightly  below  the 
average  in  2014,  and  has  declined  only 
marginally  

guidance: 

since  then.  There  was  some  progress  in 
reducing the amount of non-performing loans 
as  the  central  bank  imposed  an  obligation  on 
banks to write-off fully-provisioned loans that 
have  been  on  their  books  for  more  than  2 
years, with effect in June 2016.  

Access to finance 

the 

in  order 

strategies 

"Develop 
ERP 
policy 
involving  all 
comprehensive 
to  both 
relevant  stakeholders 
further 
resolution  of  non-
foster 
performing  loans  by  banks  and  further 
promote the use of the local currency with a 
view  to  reducing  risks  to  financial  stability 
and  the  real  economy.  There  would  be  a 
case  for  a  gradual  removal  of  the  central 
bank’s  accommodative  monetary  policy 
that  authorities’ 
stance 
sanguine  macroeconomic 
is 
scenario 
realised  (including  through  its  impact  on 
inflation  expectations  and  on  the  output 
gap)." 

the  extent 

to 

for 

SMEs, 

difficult 

Credit  growth  to  companies  slows  amidst 
political  uncertainty.  Access  to  finance  still 
given 
remains 
impediments 
to  both  credit  supply  and 
demand,  despite  abundant  liquidity  of  banks. 
Financial intermediation strengthened in 2015 
compared  to  the  preceding  two  years,  with  assets,  credit  and  deposits  rising  as  a  share  of 
GDP. Commercial bank loans remain by far the dominant source of financing, as SMEs are 
reluctant  to  tap  equity  and  bond  markets,  and  venture  capital  markets  remain  in  their  early 
stage of development. Loan growth  to  private households (12.4 %  yoy on average in  2015) 
was  almost  double  the  growth  rate  of  credit  to  non-financial  companies,  which  has  slowed 
down markedly since summer 2015. In order to curb the growth of long-term consumer loans, 
the central bank increased capital requirements on these assets in December 2015. Given the 
uncertain political situation, credit demand from SMEs and corporates has been subdued since 
mid-2015. To facilitate credit extension to SMEs, the government, in 2015, withdrew the last 
tranche  of  a  credit  line  for  SME  development  extended  by  the  European  Investment  Bank. 
However,  no  other  significant  policy  measures  were  adopted  in  2015  to  facilitate  access  to 
finance for SMEs. 

Functioning of the labour market  

Structural weaknesses hinder the functioning of the labour market. The country's overall 
unemployment  rate  remains  persistently  high,  in 
particular  for  long-term  unemployed  and  young 
workers, albeit declining steadily in recent years. 
In  the  second  quarter  of  2016,  it  dropped  to 
24 %, down by 2.8pp on the year. Between 2011 
and  2015,  the  economy  has  created  a  large 
number  of  jobs.  Annual  employment  growth 
amounted  to  2.5  %  on  average,  carried  by  job 
creation in the public sector, in construction and 
manufacturing,  and  through  active  labour  market  measures.  Yet,  the  employment  build-up 
was  not  in  line  with  output  growth,  as  significant  structural  weaknesses  of  the  economy 
impede the functioning of the labour market.  

ERP  policy  guidance:  "Strengthen  the 
activation  measures 
provision 
especially  for  vulnerable  youth,  women 
and  long-term  unemployed  and  further 
improve the capacity of the Employment 
for  profiling  and 
Service  Agency 
personalised counselling of job seekers." 

of 

Labour  force  participation  remained  modest.  The  activity  rate  has  been  stagnant  over 
recent years, at about 70 % of the working age population (20-64 years). The employment rate 
has increased only marginally – only 52 % of the working age population held a job in 2015. 

28 

 
Given  low  female  participation  rates,  the  gender  gap  remains  important,  with  women  less 
likely to be in employment (42 %) than men (62 %).  

Figure  3  Unemployment  in  the  former  Yugoslav  Republic  of 
Macedonia (% of Active population) 

Figure  4  Participation  rates  in  the  former  Yugoslav  Republic  of 
Macedonia (% of Labour Force) 

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate

Youth unemployment rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

The informal economy accounts for a large, but shrinking share of employment.  About 
20 % of employment took place in the informal economy in 2015, down from 28.6 % in 2008. 
Informal work concerns especially young workers and long-term unemployed. To tackle the 
problem,  the  government  introduced  a  programme  waiving  or  reducing  social  contributions 
for  newly  hired  registered  unemployed  workers  for  a  period  of  up  to  five  years.  The 
programme has been extended for another year.  

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

The economy has  a  moderate level of  preparation  to cope with  competitive  pressures and 
market  forces  within  the  Union.  Some  progress  was  made  to  foster  innovation  and  foreign 
investments  and  digitalisation  is  progressing  fast.  There  was  a  limited  shift  towards  higher 
value  added  in  manufacturing,  but  the  structural  transformation  towards  a  more  diversified 
economy  is  progressing  slowly.  The  economy  continued  to  suffer  from  weaknesses  in 
education curricula, low innovation rates and significant investment needs including in public 
infrastructure.  

In  order  to  support  long-term  growth,  in  the  coming  year  the  former  Yugoslav  Republic  of 
Macedonia should pay particular attention to: 

upgrade  higher  education  and  vocational  curricula,  so  as  to  better  align  skills  with 

→ 
labour market needs; 

improve the innovation infrastructure in order to promote the competitiveness of the 

→ 
domestic private sector. 

Education and innovation 

Higher education needs reforms to address the skills gap. The country has suffered from a 
marked  drain  of  skilled  workers  since  the  1990s,  the  rebuilding  of  which  proves  difficult 
given low enrolment rates and deficiencies in the education system. Shortcomings in tertiary 
and  vocational  education  often  impede  applicants  from  gaining  skills  required  to  work  in 
technology-intensive  sectors.  This  restrains  output  potential  and  impedes  the  reallocation  of 
resources towards sectors with higher productivity and the spread of imported technology to 
the domestic economy. Public expenditure on education, at 4 % of GDP, is only slightly lower 

29 

 
 
 
 
 
than the EU average, yet enrolment rates (18 % for pre-school, 91 % for primary school and 
73  %  for  secondary  school  education)  and  attainments  have  improved  only  marginally  over 
the past five years, pointing to certain weaknesses in the education and training programmes. 
The employment rate of higher education graduates is above the average of the economy, yet 
completion rates are low. The share of early school leavers remained constant at 12 % of total 
students.  Modernisation  of 
the 
implementation of the 2013-2020 Strategy is lagging. The country participated in the PISA8 
assessment for the first time in 2015, but results are not yet available. 

is  currently  underway,  yet 

the  VET  programmes 

Innovation  rates  for  the  private  sector  remain  low.  Public  and  private  expenditure  on 
research and innovation, as a share of GDP remained modest, compared to the EU average, at 
0.52  %  in  2014,  and  only  slightly  higher  than  in  2010.  The  government  has  tackled  this 
problem mainly by the creation of the Innovation Fund which started disbursements in 2015 
to  stimulate  R&D  in  SMEs.  However,  the  absorption  capacities  of  SMEs  for  the  Fund's 
instruments are limited, calling for measures to strengthen their skills and technologies.  

Physical capital and quality of infrastructure 

reform 

The economy's capital stock is in need 
ERP  policy  guidance:  "Adopt  a  credible  public 
of modernisation. The country's capital 
programme. 
finance  management 
base is in need of renewal, even though 
Prioritise  public  investments  against  clear  policy 
modern  production  plants  by  foreign 
objectives  and  identify  the  needs  to  which  they 
investors  and  public 
infrastructure 
respond. 
the 
investments have led to some upgrading 
selection criteria for the investments and on their 
in recent years. The investment ratio has 
impact  on  economic  growth  and  on  the  fiscal 
remained constant, at 23-24 % of GDP, 
path. " 
between 2011 and 2014. Some 70 % of 
investment was carried out by private enterprises (domestic and foreign), while the remainder 
is  public  investment  financed  through  the  government  budget,  international  financial 
institutions,  and  public  enterprises.  The  National  Investment  Committee,  charged  with  the 
preparation and implementation of infrastructure investments, was created in June 2015, but 
there are concerns as to its efficiency.  

transparency  on 

Increase 

the 

Regional connectivity in transport and energy is limited. Transport infrastructure linkages 
to  regional  neighbours  and  connection  to  the  Trans-European  Transport  Networks  remain  a 
challenge.  The  country  made,  some  progress,  although  limited,  in  implementing  the 
connectivity  reform  measures  agreed  in  the  context  of  the  Western  Balkans  Investment 
Framework.  The  focus  should  be  on  the  establishment  of  functioning  maintenance  system 
along  with  the  improvement  of  the  capacities  of  the  public  enterprise  in  change.  The 
strategically  important  Corridor  X  motorway  part  is  expected  by  the  government  to  be 
completed by May  2017, turning the focus on road maintenance and the weak capacities of 
the public enterprise in charge. While the electricity transmission connection with Serbia has 
been  completed,  interconnection  with  Albania,  which  would  link  the  country  to  the  wider 
Corridor VIII network, is still in the planning phase.  

The digitalisation of the  economy is  advanced.  Both fixed and mobile broadband use  has 
expanded in recent years, covering some 94 % of companies in 2015, compared to 87 % five 
years  earlier.  During  this  period,  the  share  of  households  with  internet  access  at  home 
increased by 14pp to 69 %. The number of mobile phone subscriptions relative to population 
size stands at 100 %.  

8 OECD's Programme for International Student Assessment 

30 

 
 
                                                 
Sectoral and enterprise structures 

The  structural  transformation  of  the  economy  is  progressing  slowly.  The  sectoral 
structure of the economy has remained largely stagnant in the past five years. At over half of 
gross value added, services account for the largest share, with agriculture providing 10 %, and 
industry and construction another 22 % (of which manufacturing around 12-13 %). Yet, the 
structure  of  the  manufacturing  sector  shifted  somewhat  from  basic  manufactured  goods 
towards products of higher value (chemicals, machinery) in this period. Half of the economy's 
jobs  are  in  services,  followed  by  industry  and  construction  (27  %)  and  agriculture  (24  %), 
again  without  significant  changes  since  2011.  The  structure  of  the  corporate  sector  and  its 
contribution  to  output  has  also  remained  stable,  with  SME  accounting  for  over  99  %  of  all 
companies, and providing over 76 % of value added in the economy. 

Economic integration with the EU and price competitiveness 

The EU is an increasingly important export market and the major investment partner 
for the country. Trade openness of the economy is high. The country's total value of exports 
and imports of goods and services amounted to 108 % of GDP in 2015, about the same as five 
years earlier. Merchandise trade with the EU has increased steadily in the past 10 years and 
amounted  to  68  %  of  the  country's  total  trade  in  2015.  Exports  rose  particularly  towards 
Germany and Belgium, on account of the operations of foreign direct investors, at the expense 
of exports to CEFTA countries. Imports sourced in the EU increased by 3 % compared to the 
previous year. While the share of EU direct investment inflows varies considerably (90 % of 
total in 2013; 7 % in 2014), the share of the stock of EU in total foreign investment has been 
high, but stagnant, at about 81 % over the past 5 years. Total Foreign Direct Investment (FDI) 
stock per capita and as percentage of GDP is, however, low.  

Figure 5 Trade integration with the EU 

180
160
140
120
100
80
60
40
20
0

90,0
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0

external 
Improved 
competitiveness  hinges  on 
further export diversification.  
Change  in  the  composition  of 
exports  remains  slow,  with 
limited progress towards higher 
value  added  products  over  the 
past  five  years,  The  shares  of 
iron and steel products, as well 
as  of  clothing  in  total  exports 
have  fallen  somewhat,  while 
chemicals,  and  machinery  and 
transport  equipment  became 
more  important,  mainly  on  account  of  foreign  investment.  After  having  declined  for  two 
years, labour  productivity has  been  rising  since early  2014, yet by less  than real net wages, 
which  have  been  supported  by  subdued  price  pressures  as  well  as  by  steady  increases  in 
nominal pay. Gross wages are broadly aligned with the average output per employed person. 
The  real  effective  exchange  rate  (CPI-based)  has  remained  largely  stable  in  the  past  five 
years. 

Share of Imports from EU
Share of exports to EU
Trade with the EU (2008=100) (RHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

31 

 
 
 
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 from creating unjustified barriers to 
trade. 

The  country  is  moderately  prepared  on  the  free  movement  of  goods.  Some  progress  was 
made,  in  particular  on  further  eliminating  non-tariff  barriers  to  trade  and  strengthening  the 
administrative  capacity  of  the  Bureau  of  Metrology.  Further  alignment  is  ongoing  and 
necessary. 

In the coming year, the country should: 

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

→ complete alignment on the General Products Safety Directive and ensure adequate 
administrative capacity to enforce the legal framework. 

General principles 

A  well-established  and  functional  institutional  framework  provides  proper  conditions  for 
production, distribution and marketing of industrial products. Full alignment with some 
of the key acquis, in particular for general product safety and the 2014 directives on product 
harmonisation is still pending.  

Legislative  alignment  is  yet  insufficient  to  negotiate  an  Agreement  on  Conformity 
Assessment  and  Acceptance  and  no  progress  was  made  in  this  area.  Plans  for  further 
alignment of the legislation with the acquis are set out in the national plan for adoption of 
the  acquis  and 
individual  strategic  documents  for  standardisation,  metrology  and 
accreditation.  

Non-harmonised area 

The action plan aimed at removing non-tariff barriers to trade to comply with Articles 34-36 
of the Treaty on the Functioning of the European Union (TFEU), adopted in 2009 is being 
implemented.  However,  nine  legal  acts  constituting  obstacles  to  trade  still  need  to  be 
removed. No progress was made on removing them. 

The  Ministry  of  Economy  and  the  Institute  of  Standardisation  continued  to  fulfil  their 
obligation to notify on regulations related to technical and non-harmonised legislation and 
standards and technical specifications. The procedure for notifying the European Commission 
in accordance with the relevant directive is in place. 

Harmonised area: quality infrastructure 

There is a legal basis and administrative structure in place for technical regulations, standards, 
conformity  assessment,  accreditation,  metrology  and  market  surveillance.  However,  further 
alignment  in  these  areas  is  required,  in  particular  for  general  product  safety  and  market 
surveillance.  

The  Institute  of  Standardisation  adopted  23,446  European  standards  and  standardisation 
technical documents as national standards, mostly by the use of the "cover page" method. It is 
a  full  member  of  CEN  and  CENELEC.  The  Institute  also  developed  a  strategy  for  its 
development 2016-2020 and started the procedure to acquire national accreditation following 
ISO/IEC 17021.  

32 

 
 
 
There are 165 conformity assessment bodies in the country for calibration, testing, medicinal 
laboratories,  product  and  process  certification  and  inspection.  The  Institute  of  Accreditation 
received significant state budget funds in 2016 to accredit a number of laboratories operating 
within higher education facilities. The Institute of Accreditation has been a full member of the 
International Accreditation Forum since September 2015 and signed an agreement on mutual 
recognition of the results of certification bodies for products, processes and services but not 
yet for quality management — ISO 9001. It also signed a multilateral agreement on medicinal 
laboratories under the ILAC (Organisation for Laboratory Accreditation Cooperation) mutual 
recognition agreement. 

The Bureau of Metrology is the official metrology body. Its capacity was strengthened with 
the  recruitment  of  new  staff  and  the  upgrading  of  its  laboratories.  The  Bureau  issues 
calibration  certificates  and  conducts  thousands  of  verifications  of  measuring  instruments.  It 
signed  a  memorandum  of  understanding  with  the  National  Metrology  Institute  of  Spain  on 
knowledge  exchange  and  the  upgrading  of  measurement  capabilities  for  reference  gas 
mixtures. 

On market surveillance, the law on general product safety is still not sufficiently in line with 
the acquis.   

In 2015, the State Market Inspectorate (SMI) conducted nearly a thousand inspections (909) 
in  connection  with  the  law  on  general  product  safety,  mostly  on  household  appliances, 
windows,  doors,  toys  and  children’s  clothing.  200  inspections  concerned  construction 
products. The SMI requested 40 withdrawals of goods from the market and banned the import 
of  one  product  (a  non-automatic  weight  measuring  device).  The  SMI  participates  in 
inspections with other inspection bodies and with the customs authorities. Budget limitations 
prevent the SMI from conducting more numerous tests. 

The  State  Sanitary  and  Health  Inspectorate  conducted  testing  on  208  samples  of  toys  and 
detected incompliance in 10 cases. 

Harmonised area: sectoral legislation. 

With regard to  ‘New and Global Approach’ product legislation, the level of alignment is 
uneven. The country adopted legislation designed to be aligned with the EU acquis in many 
sectors,  particularly  toys,  gas  appliances,  machinery  and  medical  devices.  However, 
alignment was not achieved with the latest EU acquis in this area. In the area of construction 
products,  all  10  Eurocodes  (standards)  and  the  corresponding  annexes  were  adopted.  No 
progress has taken place as regards conformity of civil explosive standards. 

In  the  past  years  the  national  legislation  has  been  adopted  and  designed  to  be  aligned  with 
almost all the ‘Old Approach’ product legislation (including chemicals legislation such as 
REACH  and  the  Regulation  on  classification,  labelling  and  packaging  of  substances  and 
mixtures (CLP), fertilisers, drug precursors and good laboratory practices) and with the acquis 
on relevant procedural measures (including firearms, textiles, footwear and crystal glass).  

No  progress  was  made  with  regards  to  aligning  the  acquis  with  REACH.  As  such,  further 
action  is  required  in  order  to  align  national  legislation  with  the  acquis.  Furthermore, 
alignment  with  the  acquis  on  the  return  of  cultural  goods  has  not  taken  place.  Public 
authorities  that  control  and  supervise  implementation  of  the  laws  are  in  place  and  are  fully 
operational.  

Acquis-compatible legislation is in place concerning the licencing and regulation system for 
economic  operators  dealing  with  drug  precursors,  the  obligation  for  them  to  report 
suspicious  orders  or  transactions  and  mechanisms  are  in  place  to  detect  smuggling.  The 

33 

 
situation  is  similar  for  civil  explosives.  The  categories  of  fertilisers  covered  by  national 
legislation are designed to be fully aligned with the acquis. 

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 national workers. 

Preparations in the area of freedom of movement for workers are still at an early stage. Some 
progress can be reported, especially on further simplifying the administrative procedures for 
work and residence permits. 

In the coming year, the country should: 

→  continue  adapting  the  legal  framework  in  line  with  EU  acquis  on  access  to  the  labour 
market,  in  particular  as  regards  non-discrimination  on  grounds  of  nationality  against  EU 
workers; 

→ start taking steps in the area of coordination of social security systems in order to identify 
which administrative measures (strengthening the administrative capacity) would have to be 
introduced in preparation for future accession. 

As  regards  access  to  the  labour  market,  the  law  on  the  employment  of  foreigners  was 
amended,  reducing  the  deadline  by  which  the  Employment  Agency  has  to  respond  to 
applications  for  work  permits  by  foreigners  and  introducing  a  ‘single  permit  for  work  and 
residence’. The law also introduces ‘external service providers’ as intermediaries between the 
national authorities and applicants. This makes it easier for intermediaries to obtain visas on 
behalf of individuals. EURES (the European jobs network) services are not broadly utilised.  

On  coordination  of  social  security  systems,  parliament  ratified  an  agreement  on 
coordinating social insurance with Albania, in addition to those already signed with 21 other 
countries.  

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 during the reporting period, particularly with  regards to 
the continued arrangements for the market liberalisation of the postal services.  

In the coming year, the country should in particular: 

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

→  establish a single point of contact for 'one-stop shops,' further facilitating ease of access to 
the marketplace for new enterprises; 

→ ensure that the liberalisation of the universal postal service is completed. 

There were no developments on the right of establishment or the freedom to provide cross-
border services. One-stop shops are being progressively deployed. These make it easier to set 
up  and  operate  companies  and  contribute  to  improving  the  country’s  investment  climate. 
However,  the  country  still  needs  to  establish  a  point  of  single  contact,  as  required  by  the 

34 

 
 
 
Services Directive and as provided for in the 2016-2020 national strategy for innovation and 
competitiveness. Foreign companies still cannot be accredited to offer ISO 9001 certification 
for public  administration bodies concerning quality assurance.  This  is an  impediment to  the 
free movement of services. 

The  Postal  Agency  continued  arrangements  for  the  postal  services  market  liberalisation 
scheduled for 1 January 2017. The postal regulatory agency is sufficiently staffed and issues 
two  types  of  licence:  individual  licences  for  universal  postal  services  and  general 
authorisations  for  an  unlimited  period.  General  licences  have  been  granted  to  34  service 
providers, while the universal service is provided by AD Macedonian Post. The postal agency 
still needs to establish a separate accounting system and to further strengthen its monitoring 
capacity. Shortcomings remain with regard to the financing of the net costs of the universal 
service obligation. 

As  regards  mutual  recognition  of  professional  qualifications,  the  number  of  regulated 
professions fell, but the updated list still needs to be published. Furthermore, the description 
of the study programmes for professions with minimum training requirements still needs to be 
updated  to  bring  it  into  line  with  the  acquis.  The  competences  and  work  of  the  inter-
ministerial working group also need to be strengthened. 

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 country is moderately prepared. Some progress 
was made, in particular on fight against money laundering and the financing of terrorism. In 
the coming year, the country should in particular: 

→ implement the new legislation on payment systems and capital; 

→  demonstrate  a  sound  track  record  in  fighting  money  laundering  and  the  financing  of 
terrorism, and complete a national risk assessment and further align with the EU acquis.  

On  capital  movements  and  payments,  the  country  continued  to  meet  SAA  first  stage 
requirements. Certain restrictions on capital movements remain, e.g. EU citizens are not yet 
allowed  to  purchase  agricultural  land.  The  Central  Bank  partially  relaxed  restrictions  on 
holding  accounts  abroad.  Capital  controls,  designed  to  face  potential  spill-over  from  the 
Greek economic crisis, expired in December 2015. 

The legislative framework concerning the fight against money laundering and financing of 
terrorism,  was  amended  to  address  some  of  the  shortcomings  identified  by  the  Moneyval 
Committee.  By-laws  were  adopted  to  strengthen  reporting,  monitoring  and  supervision. 
Further improvements will be needed in order to align with the EU acquis in this field.  

The  Financial  Intelligence  Office  continued  to  implement  the  national  risk  assessment.  The 
Office’s  capacity  and  cooperation  with  law  enforcement  counterparts  were  further 
strengthened,  but  it  still  needs  to  develop  a  consistent  track  record.  The  cooperation  of  all 
stakeholders  in  this  area,  free  of  political  interference,  must  be  guaranteed  to  ensure  proper 
investigation and prosecution of offences.  

In  2015,  according  to  the  Financial  Intelligence  Unit,  the  number  of  suspicious  transactions 
referred  to  the  Office  increased  to  175  from  153  in  2014.  The  Financial  Intelligence  Unit 
submitted  30  notifications  to  law  enforcement  bodies  relating  to  money  laundering  and  the 

35 

 
 
financing  of  terrorism  (31  in  2014)  and  25  people  were  prosecuted  and  13  convicted  for 
money laundering.  

4.5.  Chapter 5: Public procurement 

 EU  rules  ensure  that  the  public  procurement  of  goods,  services  and  works  in  any  Member 
State  is  transparent  and  open  to  all  EU  companies  on  the  basis  of  non-discrimination  and 
equal treatment. 

The  country  is  moderately  prepared  in  this  area,  which  is  particularly  vulnerable  to 
corruption.  There  was  no  progress  in  the  reporting  period.  None  of  the  recommendations 
were  implemented.  Significant  efforts  are  needed  to  ensure  a  transparent,  efficient  and 
effective  public  procurement  regime.  More  needs  to  be  done  to  prevent  irregularities  and 
corruption during the procurement cycle. Investigations into allegations of serious conflicts of 
interest  and  abuse  of  public  office  need  to  be  followed  up.  In  the  coming  year  the  country 
should in particular: 

→ reconsider the mandatory use of e-auction and the role of the Public Procurement Council; 

→ ensure the equal treatment of EU procedures and align fully to the acquis especially in the 
area of concessions;  

→ ensure that reports of irregularities are properly investigated. 

Institutional set-up and legal alignment 

The  legal  framework  on  public  procurement  remained  broadly  in  line  with  the  2004  EU 
procurement  directives,  although  the  level  of  alignment  has  been  reduced  through  frequent 
amendments  since  2013.  The  country  is  yet  to  align  with  the  EU  Directive  on  Defence  and 
Sensitive  Security  Procurement  and  the  2014  EU  rules  on  public  procurement.  The 
generalised use of the ‘lowest price’ criterion and the obligation for contracting authorities to 
obtain  approval  from  the  Public  Procurement  Council  if  they  wish  to  use  non-price  criteria 
when awarding contracts had negative effects on offers and contracts. The country continued 
to  keep  records  on  professional  misconduct  by  businesses,  excluding  them  from  future 
tenders.  This  ‘blacklisting’  practice  is  not  in  line  with  European  Court  of  Justice  case-law. 
The  Commission  recommended  in  the  2015  Report  and  the  relevant  subcommittee  that  the 
country addresses these two issues, but this recommendation was not followed. 

The fee required for registering EU-based economic operators in the e-procurement system is 
less  favourable  than  that  charged  to  domestic  companies,  despite  the  fact  that  the  SAA 
provides  for  access  under  the  same  conditions  as  national  companies  Amendments  to  the 
public  procurement  law  regulate  the  separation  of  tasks  and  legal  status  between  the  Public 
Procurement  Council  and  the  Public  Procurement  Bureau.  The  Public  Procurement  Bureau 
remained  the  backbone  of  the  public  procurement  system.  The  obligation  to  obtain  prior 
consent  from  the  Public  Procurement  Council  gives  contracting  authorities  access  to 
specialised expertise when drafting tenders and led to a decrease in the number of negotiated 
procedures.  Nonetheless,  it  makes  the  procurement  process  more  complex,  expensive  and 
time-consuming.  

There is no register of public procurement experts. The 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  fight  against  corruption  and  the  proper  implementation  of  the  public 
procurement principles.  

36 

 
 
The strategy on public procurement is not inclusive and limits itself to the strategic priorities 
of  the  Public  Procurement  Bureau.  Overall  supervision  of  implementation  and  reporting 
mechanisms is lacking. 

Implementation and enforcement capacity 

The country’s public procurement market dropped to 8 % of GDP and 25 % of the state 
budget in 2015. The e-concession portal was launched. The mandatory e-procurement system 
is  in  place.  This  provides  for  some  transparency,  but  the  upgrade  to  include  changes  in 
contracted  amounts  and  linking  annexes  to  contracts  should  be  completed.  However,  the 
mandatory use of e-auctions is not only not in line with the acquis, but also seems to hinder 
the procurement system. 

Many  contracting  authorities  continue  not  to  publish  their  procurement  plans.  Detailed 
requirements prevent competition in tenders and tender requirements remain too complex for 
small and medium-sized enterprises to participate.  

In  one  quarter  of  all  public  biddings  there  was  only  one  bidder.  The  use  of  negotiated 
procurement  procedures  without  prior  publication  decreased  from  5.5 %  to  4 %  of  the  total 
value of procurement in 2015. 

Until the Special Prosecutor Office was established, there was no investigation on the alleged 
irregularities  in  the  ‘Skopje  2014’  project,  on  the  award  of  certain  large  infrastructure  and 
health  contracts,  or  on  serious  conflicts  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 - Financial control). 

The  Ministry  of  Economy’s  administrative  capacity  to  implement  concessions  and  public-
private  partnerships  legislation  remained  weak.  There  is  no  register  on  concessions  and 
public-private partnerships and data is patchy, particularly as regards the Skopje airport and 
Skopje  City  concessions  notably  missing.  The  Public-Private  Partnership  Council  is  not 
operational.  

The contracting authorities’ capacity to manage public procurement processes needs to be 
further  improved.  Despite  the  existence  of  the  regulatory  and  institutional  framework  on 
integrity and conflict of interest, there is no risk indicator system. The number of integrity-
related reports remained low. 

Efficient remedies system 

As regards the right to legal remedy, the structure and the independence of the legal remedy 
system  formally  complies  with  the  acquis.  Full  alignment  with  the  Remedies  Directive,  in 
particular  related  to  standstill  period  and  time  limits,  is  not  yet  achieved.  The  number  of 
appealed  tenders  grew  to  3.22  %  in  2015,  and  the  State  Appeals  Commission  upheld 
complaints in 43.11 %  of the 610 cases. Sanctions on  misdemeanours that  occur during the 
review  process  remain  disproportionate  and  make  decision-making  highly  formalistic.  The 
implementation  capacity  of  the  SAC  and  the  courts  needs  to  be  strengthened  and 
appointments  freed  from  political  interference.  Improving  access  to  the  commission’s 
decisions and web browsing tools 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. 

37 

 
 
 
The  country  has  reached  a  good  level  of  preparation.  Some  progress  was  achieved, 
concerning in particular the operation of the statutory audit oversight authority. In the coming 
year, the country should in particular: 

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

As regards company law, amendments to the law on trade companies were made concerning 
the functioning of joint-stock companies and protection of minority investors. The Directive 
on Cross-border Mergers is not fully aligned. 

There  was  no  progress  on  corporate  accounting.  The  Directive  on  annual  financial 
statements,  consolidated  financial  statements  and  related  reports  of  certain  types  of 
undertakings is not yet transposed into national law. The Institute of Chartered Accountants is 
established but is still not functioning in accordance with its mandate. Alignment with the EU 
Directive 2014/56 on statutory audit of annual accounts and consolidated accounts is yet to 
be  achieved.  The  Council  for  Advancement  and  Oversight  of  Audit  is  fully  operational  and 
developed its international cooperation. 

4.7.  Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPRs), as 
well  as  rules  for  the  legal  protection  of  copyright  and  related  rights.  Rules  for  the  legal 
protection  of  IPRs  cover,  for  instance,  patents  and  trademarks,  designs,  biotechnological 
inventions and pharmaceuticals. Rules for the legal protection of copyright and related rights 
cover, for instance, books, films, computer programmes and broadcasting. 

The  country  is  moderately  prepared  in  this  area.  Some  progress,  although  limited,  was 
made  during  the  reporting  period.  There  is  still  no  strategy  on  intellectual  property.  In  the 
coming year, the country should in particular: 

→ improve consultation of the stakeholders when drafting legislation; 

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

→ reinforce capacity and coordination among the authorities in charge of implementing the 
intellectual  property  laws  and  raise  public  awareness  of  the  importance  of  protecting 
intellectual property rights.  

On  copyright  and  neighbouring  rights,  the  law  on  copyrights  was  amended  in  February 
2016  to  regulate  the  functioning  of  collective  management  of  rights  and  remuneration 
distribution  and  to  abolish  the  cap  to  remunerations  of  right-holders,  but  the  collective 
management system is still underdeveloped. The system for electronic recording of broadcast 
music works needs to be finalised. The Ministry of Culture revoked the licence of one of the 
collecting societies, with the result that certain fees are no longer collected, and subsequently 
(in July) licensed one more society in the areas of music rights. The capacity of the Ministry 
of Culture to deal with copyright and neighbouring rights remains insufficient. 

As  regards  industrial  rights,  the  State  Office  of  Industrial  Property  concluded  a  bilateral 
cooperation  agreement  with  the  European  Patent  Office  for  2016-18  and  made  its  database 
available to the public. Challenges remain, in particular in providing services to the public. 

The  number  of  court  cases  on  infringements  of  intellectual  property  rights  is  still  low  and 
there  is  no  credible  enforcement  record.  The  Agency  for  Audiovisual  Media  Services 
conducted  inspections  and  found  certain  irregularities  by  broadcasters.  The  functions  of  the 
Coordinative Body for  Intellectual  Property  do not  cover the coordination  of policy-making 

38 

 
 
and of legislative work. Its funding is insufficient and there is no budget for awareness-raising 
and  education  of  right-holders  and  the  public  about  the  importance  of  intellectual  property 
rights. Coordination between the enforcement authorities is insufficient.   

4.8.  Chapter 8: Competition policy 

EU rules protect free competition. These include antitrust rules against restrictive agreements 
between companies and abuse of dominant position. EU rules also prevent governments from 
unduly granting state aid which distorts competition. 

The  country  is  moderately  prepared  in  the  area  of  competition  policy.  No  progress  was 
made in this field during the reporting period. The country is relatively advanced as regards 
legislative alignment, but significant efforts are needed on enforcement. In the coming year, 
the country should in particular: 

→ strengthen the enforcement record of the Commission for the Protection of Competition 
(CPC); 

→ increase the transparency for state aid granted by the government. 

Antitrust and mergers 

The legislative framework is broadly aligned with Articles 101 (restrictive agreements) and 
Article 102 (abuse of dominant position) of the TFEU and with the corresponding provisions 
of the SAA. It also provides for ex ante control of mergers, in line with the principles of the 
Merger Regulation. Some gaps in secondary legislation have yet to be filled. 

As regards the institutional framework, the CPC is responsible for the implementation of the 
law on protection of competition. The authority is accountable to parliament, which appoints 
the President and the four members of the Commission. It is formally largely an operationally 
independent authority. The CPC may act upon a complaint, a notification (e.g. for mergers) or 
on  its  own  initiative.  It  can  also  issue  requests  for  information  and  carry  out  unannounced 
inspections at firms’ premises (‘dawn raids’). The CPC may impose fines and accept remedies 
when competition rules are infringed.  

A policy of leniency towards self-reporters of cartels is in place but has yet to be used. The 
CPC  may  approve  mergers  with  or  without  conditions  or  prohibit  them.  The  CPC  also 
provides opinions on draft legislation that may affect competition. The authority’s decisions 
may be appealed before the Administrative Court. 

As regards administrative capacity, staffing of the CPC appears sufficient, but its level of 
expertise needs to improve.  Its funding is variable, decided each year, raising concerns on its 
independence.  In  terms  of  implementation,  the  activity  of  the  CPC  has  been  stable  and 
significant  over  the  period  over  the  period  of  2013  –  2015,  with  a  total  of  18  decisions 
adopted on cartels and abuses of dominant position with fines amounting to EUR 4.5 million. 
The CPC needs to step up its enforcement policy, using all tools available, in particular on-
site inspections and the leniency programme. In 2015 the CPC issued five opinions on draft 
pieces  of  legislation  with  an  impact  on  competition.  It  should  actively  follow  up  on  those 
opinions to ensure that they are adhered to. There are concerns over lack of independence and 
capacity of courts in dealing with anti-trust cases. 

State aid 

As regards the legislative framework, the law on state aid is mostly aligned with Articles 107 
and  108  of  the  TFEU  and  the  SAA,  but  still  needs  to  be  harmonised  with  the  acquis  with 
regard  to  secondary  legislation  for  certain  forms  of  aid  and  specific  sectors.  The  state  aid 
inventory has not yet been established and the regional aid map has not yet been drawn up. 

39 

 
 
As regards the institutional framework, the CPC is responsible for the implementation of the 
law  on  state  aid.  The  law  provides  that  all  new  or  modified  state  aid  measures  must  be 
notified to the CPC for assessment of their compatibility before they can be granted. The CPC 
can adopt a negative decision or authorise an aid measure under certain conditions. If an aid 
measure is not notified, the CPC has the power to investigate it ex post. If the CPC finds that 
the aid given is incompatible with the law on state aid, it can order the recovery of the aid. 

The administrative capacity of the CPC’s state aid division is inadequate as it lacks staff and 
equipment.  It  only  has  three  staff  members  to  deal  with  a  growing  number  of  cases  and 
outdated equipment. 

As  regards  enforcement,  the  CPC  adopted  25  decisions  in  2015.  These  decisions  were  all 
positive mostly related to foreign investors active in special economic zones and none of these 
was  appealed.  The  CPC  did  not  receive  any  complaints  between  2013  and  2015,  indicating 
low awareness of state aid rules among stakeholders. The State Commission for Prevention of 
Corruption issued a warning about possible conflicts of interest as regards a state aid measure 
provided by the regional authorities. 

A  certain  number  of  aid  measures,  mostly  granted  at  central  level,  are  notified  late  and 
therefore  not  investigated  by  the  CPC.  State  aid  continued  to  be  provided  for  air  transport 
without being notified to the CPC. Awareness of the state aid rules among aid grantors needs 
to be further improved.  

Liberalisation 

Antitrust and state aid rules apply to state-owned undertakings and undertakings with special 
or  exclusive  rights,  except  when  applying  them  would  obstruct  the  performance  of  the 
particular tasks assigned to them. However, the country needs to demonstrate that these rules 
are actually being enforced. 

There  is  no  concluding  evidence  concerning  the  existence  of  monopolies  of  a  commercial 
character within the meaning of Article 37 of the TFEU. 

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,  markets and  post-
trade infrastructures. They include rules on authorisation, operation and supervision of these 
institutions. 

In  the  area  of  financial  services,  the  country  is  moderately  prepared.  Some  progress  was 
achieved  in  the  enforcement  capacities  of  financial  market  regulators  and  their  cooperation 
with European supervisory authorities. In the coming year, the country should focus on: 

→ adequately addressing consumer protection.  

On  banks  and  financial  conglomerates,  banking  law  was  amended  in  order  to  strengthen 
corporate  governance,  improve  supervisory  framework  for  controlling  large  exposures,  and 
enhance  the  corrective  measures  against  the  banks.  More  needs  to  be  done  to  protect 
consumers and prevent unfair banking practices.  

The  central  bank  updated  the  banking  regulations,  in  order  to  strengthen  corporate 
governance,  align  with  rules  on  capital  adequacy,  improve  the  supervisory  framework  for 
controlling large exposures and to enhance the corrective measures against banks. More needs 
to be done to protect consumers and prevent unfair banking practices. 

40 

 
 
The  Central  Bank  signed  a  memorandum  of  cooperation  with  the  European  Banking 
Authority  after  the  positive  assessment  on  the  compliance  with  the  Capital  Requirements 
Directive IV on data confidentiality. 

On  insurance  and  occupational  pensions,  the  track  record  of  the  Insurance  Supervision 
Agency  continued  to  improve  as  it  issued  several  licences.  However,  the  legislation 
authorising  the  Ministry  of  Finance  to  set  premiums  for  motor  vehicle  insurance  and  the 
provision setting a 50 % limit on investing in non-domestic securities are in conflict with the 
acquis.  Delayed  transfer  of  funds  from  the  state  pension  insurance  fund  to  private  funds 
resulted in a breach of the legislation on the management of deposits. 

Concerning  financial  market  infrastructure,  alignment  with  the  Financial  Collateral 
Directive  is  incomplete,  while  alignment  with  the  Settlement  Finality  Directive  has  not  yet 
begun.  There  were  no  developments  on  the  government’s  plans  to  establish  international 
financial  zones.  On  securities  markets  and  investment  services,  the  securities  law  was 
amended, making it possible to secure bonds by real estate.  Domestic brokerage houses and 
banks  are  now  allowed  to  trade  on  foreign  securities  markets.  A  common  order  routing 
platform  was  established  by  the  Skopje,  Zagreb  and  Sofia  stock  exchanges  to  link  their 
equities markets. 

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  electronic  communications  and  the 
information society. No progress was made during the reporting period. In the coming year, 
the country should in particular: 

→ ensure correct implementation of the legal framework on electronic communications and 
audio-visual media; 

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

→ ensure that the necessary preparation is done to introduce the 112 emergency number by 
the end of 2018, including allocating the necessary financial resources. 

In  the  area  of  electronic  communications  and  information  and  communications 
technologies,  some  concerns  remain  regarding  the  implementation  of  the  law  on  electronic 
communications.  The  quality  parameters  for  internet  access  were  increased  only  to  the 
internet  access  next  to  the  main  roads.  Fixed  broadband  penetration  is  almost  18 %  of  the 
population,  while  mobile  broadband,  including  2G/3G,  reached  55 %.  Expansion  of  the  4G 
mobile  network  continued.  The  prices  for  regional  roaming  services  further  decreased  on 
1 July  2016  following  the  2014  agreement  with  Bosnia  and  Herzegovina,  Montenegro  and 
Serbia.  The  European  emergency  number  112  has  still  not  been  introduced  due  to  lack  of 
political commitment and financial resources. 

An  audit  commissioned  by  the  regulator,  the  Agency  for  Electronic  Communications  and 
published  in  March  2015,  found  that  the  spectrum  fees  surpass  the  regulator’s  operational 
financial needs. The audit also suggested that the regulator uses 45 % of its surplus funds for 
purposes  other  than  developing  electronic  communications,  which  would  be  contrary  to  its 
mandate. Some concerns remain about its ability to act independently and its legal powers to 
donate  should  be  removed.  Public  consultation  procedures  with  operators  improved.  The 

41 

 
 
administrative capacity of the Ministry of Information Society and Administration needs to be 
strengthened so that it is better able to prepare strategic documents, align with legislation, and 
ensure coordination with other institutions 

 As regards the information society, a track record needs to be built up on the application of 
the  electronic  signature.  Capacities  to  ensure  cyber  security  remain  low  and  the  national 
cybersecurity strategy should be adopted. Electronic government and interoperability are not 
yet  operational,  despite  the  equipment  and  software  provided.  A  long-term  2020 digital 
strategy needs to be developed. Barriers to e-commerce, including customs duties and VAT 
on imports for small value items, still have to be removed. 

In  the  field  of  audio-visual  policy,  the  media  regulator,  the  Agency  for  Audio  and 
Audiovisual  Media  Services  was  more  proactive  in  reminding  media  outlets  of  their  legal 
obligations. It initiated 157 measures in response to violations of the law on media and law on 
audio and audio-visual media. The Agency also made initial steps to address hate speech and 
unprofessional reporting, but it should further develop activities on media literacy. Concerns 
over the public service broadcaster’s lack of editorial and financial independence continued. 
The country participates in the Media sub-programme of ‘Creative Europe’, with the National 
Film Fund as national contact point. 

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  to  implement  the  Instrument  for  Pre-accession  Assistance  for  Rural 
Development (IPARD II). In the coming year, the country should in particular: 

→ continue to focus on more effective use of IPARD funds. 

As regards general agricultural issues, a monitoring and evaluation system for the national 
agriculture and rural development strategy and programmes has still not been established. The 
organisational structure of the Ministry of Agriculture, Forestry and Water Economy does not 
fully reflect the strategy and policy mandate. A comprehensive functional review should lead 
to improved sector planning and operational efficiency. 

There  has  been 
limited  progress  concerning  common  market  organisation.  The 
disbursement  of  national  direct  subsidies  stands  at  around  EUR  100  million  per  year.  The 
contribution of direct payment measures on farm incomes is not reported and has not yet been 
assessed.  The  farm  accountancy  data  network  is  underused  in  the  calculation  of  levels  of 
direct  support.  An  upgrade  of  the  integrated  administration  and  control  system  is  ongoing. 
Data entry controls and on-the-spot checks need to be carried out regularly in order to have a 
reliable  integrated  farm  register.  There  was  no  progress  on  establishing  a  farm  advisory 
system. 

Rural  development  investments  on  improving  access  to  irrigation,  land  consolidation  and 
promotion  of  agricultural  cooperatives  remains  low.  Preparation  for  IPARD  measures, 
investments  in  rural  public  infrastructure,  improvement  of  training  and  advisory  service 
whose  implementation  was  initially  planned  for  2016-2017  need  to  be  intensified.  Further 
assessment is needed to identify the bottlenecks in programming rural development, designing 
measures and in implementation. 

Despite  the  efforts  to  improve  the  implementation  of  the  IPARD  Programme  and  the 
increased number of applications, around EUR 16.2 million in EU funds remained unused in 

42 

 
 
2015.  Lack  of  and  high  turnover  of  staff  and  manual  processing  of  files  in  AFSARD  (the 
IPARD agency) has created a backlog of projects, delaying decisions and payments. 

Certified  organic  production  is  expected  to  increase.  Stronger  inspection  and  control 
measures  are  needed  to  ensure  the  organic  quality  required  for  exports.  Implementation  of 
other quality schemes could be better promoted to farmers. 

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, protection against harmful organisms and animal nutrition. 

The  country  has  some  level  of  preparation  in  the  area  of  food  safety,  veterinary  and 
phytosanitary policy. Some progress was made in this area.  In the coming year, the country 
should in particular: 

→ increase the ability to control vector-borne diseases; 

→ determine the plant pest status in the country. 

On  general  food  safety,  a  National  Council  for  Food  and  Animal  Feed  was  established  to 
provide scientific and  technical support  to  the Food and Veterinary  Agency. On  veterinary 
policy, the Agency continued to provide regular updates on the system of controls for imports 
and import requirements for live animals and animal products. A programme for eradication 
of brucellosis in sheep and goats was adopted. The Veterinary Agency continued to vaccinate 
foxes against rabies and is implementing, with EU support, emergency vaccination of cattle in 
order to control the spread of lumpy skin disease in the country. Identification and registration 
system for pigs is not fully implemented. 

Regarding the placing on the market of food, feed and animal by-products, a rulebook was 
issued on control of salmonella. The country is on the list of third countries from which table 
eggs may be introduced onto the EU market. Collection and treatment systems for animal by-
products have not yet been established.  

As regard specific rules for feed, a national plan for official controls of animal nutrition was 
adopted  but  has  not  yet  been  implemented.  Some  progress  was  made  on  food  safety  rules. 
Implementing legislation on extraction solvents and purity of additives was adopted and the 
Agency started implementing new food labelling requirements. 

There was some progress on phytosanitary policy such as the adoption of an action plan to 
establish a plant passport system. The State Phytosanitary Laboratory accredited 20 additional 
laboratory methods under ISO 17025. However, the Phytosanitary Directorate is understaffed 
and  lacks  training  and  equipment,  while  the  effectiveness  of  the  phytosanitary  inspectors 
should  be  improved.  Phytosanitary  controls  and  monitoring  should  be  based  on  a  risk 
assessment. International standards for determining the plant pest status in the country are not 
implemented. Coordination between the competent authorities remains poor and ineffective.  

4.13.  Chapter 13: Fisheries 

The  common  fisheries  policy  lays  down  rules  for  management  of  fisheries,  protects  living 
resources  of  the  sea  and  limits  the  environmental  impact  of  fisheries.  This  includes  setting 
catch quotas, managing fleet capacity, rules for markets and aquaculture as well as support 
for fisheries and coastal communities. 

The country is  moderately prepared  in  the area of fisheries.  Good progress  was made  on 
monitoring, inspection and control of catches as well as on fish health surveillance. There was 

43 

 
 
 
improvement  in  fish  stocks  management  in  trans-boundary  lakes.  In  the  coming  year,  the 
country should: 

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

Good progress was made in inspection and control and the monitoring of catches.    

The fisheries market policy should provide more and better information to consumers on the 
fishery  products  placed  on  the  market.  Providing  information  on  sustainable  exploitation  of 
fish stocks and species might be considered. 

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  is  moderately  prepared  in  the  area  of  transport  policy.  Some  progress, 
although  limited,  was  achieved  in  the  past  year  in  relation  to  the  connectivity  reform 
measures.  However,  several  shortcomings  in  the  transport  sector  that  prevent  proper  sector 
planning  and  coordination,  as  well  as  lack  of  political  commitment  to  deliver  on  necessary 
sectoral  reforms,  resulted  in  reduced  EU  financial  assistance.  More  work  is  needed  to 
strengthen the financial and technical capacity of the national accident investigation body for 
air  and  rail  transport,  as  well  as  to  strengthen  administrative  capacity  for  all  modes  of 
transport.  

In  addition  to  addressing  the  shortcomings  outlined  above,  in  the  coming  year  the  country 
should, in particular: 

→ improve sector planning and coordination;  

→  improve  road  safety  conditions  and  strengthen  the  operational  and  administrative 
capacities of the inspection body; 

→ focus on implementing the connectivity reform measures on rail reform and the opening of 
the rail transport market for at least domestic and regional undertakings;   

→  adopt  legislation  on  intelligent  transport  systems  (ITS)  and  improve  the  capacity  and 
resources for the implementation of ITS. 

As regards the general transport acquis, the key strategic documents for the transport sector 
and  its  sub-sectors  were  adopted  and  legislation  is  fully  aligned  with  the  acquis  on 
arrangements  for  summertime.  There  is  a  need  to  strengthen  the  operational  and 
administrative capacity for all modes of transport. The legal frameworks for establishing the 
air  and  rail  accident  investigation  bodies  are  in  place,  but  the  independent  rail  accident 
investigation body has not yet been established and the operationalization of the air accident 
investigation body is ongoing.  

On road transport, the legal framework reached a reasonable level of alignment. Legislation 
aimed at aligning with the acquis on dangerous goods was adopted in November. However, 
the  legal  entity  responsible  for  conducting  the  conformity  assessment  of  the  existing 
equipment  for  the  carriage  of  dangerous  goods  was  not  appointed.  The  country  needs  to 
continue aligning with the safety acquis in this area and develop its enforcement capacity to 
reduce fatalities and increase roadside checks of commercial vehicles.  

Both the legal competencies and operational capacity of road inspectors need to be improved 
to better enforce social legislation. In addition, rules need to be adopted on the application of 
penalties  for  infringements  of  the  European  Agreement  concerning  the  Work  of  Crews  of 

44 

 
 
Vehicles engaged in International Road Transport (AETR). Legislation on clean and energy-
efficient  road  transport  vehicles  and  on  intelligent  transport  systems  (ITS)  needs  to  be 
transposed without further delay. 

Regarding  the  rail  transport  acquis,  the  country  separated  infrastructure  management  and 
operations and assigned the respective responsibilities to two state-owned railway companies, 
thus  meeting  a  major  requirement  of  the  acquis.  Separation  of  the  accounts  of  the  national 
operator’s passenger and freight operations and the transposition and application of large part 
of  the  new  provisions  of  Directive  2012/34/EU  on  a  Single  European  Railway  Area  are 
lagging behind. 

The  national  legislation  allows  private  legal  entities  to  transport  goods  for  their  own  needs, 
which does not constitute an effective opening of the market. Full open access to the railway 
market for foreign operators still needs to be achieved.  

Railway  safety  legislation  is  harmonized.  Further  efforts  should  be  made,  however,  to  meet 
the requirements for its implementation.  

The two cross-border railway cooperation agreements with Greece still need to be finalised. 
The  protocols  on  the  cross-border  railway  cooperation  agreement  with  Serbia  were  signed. 
The cross-border railway cooperation agreement needs to be more widely implemented. The 
establishment of the accident investigation committee needs to be finalised.  

The  country,  despite  being  landlocked,  is  party  to  all  basic  transport  conventions  of  the 
International  Maritime  Organisation  and  has  submitted  its  membership  applications  to  the 
Paris Memorandum of Understanding and to the European Maritime Safety Agency.  

Relevant EU legislation has been transposed in the area of inland waterway transport, with 
the exception of the Regulation on recognition of certification and transportation of goods and 
passengers. An authority responsible for inland waterways has been established. To achieve 
full  alignment,  an  acquis-compliant  law  on  merchant  shipping  needs  to  be  adopted.  The 
country actively participates in the EU Strategy for the Development of the Danube Region. It 
also  signed  the  main  international  agreements  on  inland  waterways,  as  well  as  a  number  of 
bilateral agreements with neighbouring countries. 

On  aviation,  the  country  has  achieved  a  relatively  good  level  of  alignment  with  the  acquis 
and  has  made  considerable  progress  on  implementing  the  first  transitional  phase  of  the 
European Common Aviation  Authority Agreement.  Concerns about possible state aid in the 
aviation sector need to be addressed. 

On the single European sky (SES) legislation, the country has already completed transposition 
and  implementation  of  the  SES  I  legislation  and  partially  transposed  the  SES  II  acquis. 
Aviation  safety  legislation  is  partially  aligned  with  EU  legislation  whereas  the  working 
arrangement with European Aviation Safety Agency covers all aspects of the acquis in civil 
aviation safety and environmental protection of products, organisations and personnel. 

As regards combined transport, no national legislation was adopted. More needs to be done 
to  develop  combined  transport.  Following  the  pre-selection  of  a  location  for  establishing  a 
multimodal  transport  node  near  Skopje,  further  development  is  needed  of  the  balanced 
intermodal transport and mobility system.  

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. 

45 

 
 
The country is  moderately prepared  in  this area.  Some  progress  was made  on security of 
supply while no progress was made on the opening of the electricity market. The obligations 
under  the  Energy  Community  Treaty  are  not  fully  implemented.  In  the  coming  year,  the 
country should particularly focus on the following: 

→  fully  implementing  Energy  Community  Treaty  obligations,  including  closing  the  dispute 
settlement cases over postponed electricity market opening; 

→  adopting  legislation  compliant  with  the  third  energy  package  and  unbundling  of  the 
electricity and gas system operators according to the third energy package; 

→ improving the capacities of the Energy Department in the Ministry of Economy and of the 
Energy Agency. 

The National Energy Strategy until 2035 is still not adopted. The availability of coal for the 
Bitola  thermal  power  plant  should  be  addressed  urgently  as  this  is  a  matter  of  security  of 
supply. The enactment of the oil stocks law was again postponed, now until 1 January 2018. 
The country’s oil stocks, which have remained stable, correspond to 69 days of imports. 

The country is making progress on developing electricity transmission interconnectors. A 
new  400kV  electricity  line  with  Serbia  has  been  completed  and  commissioned,  preparatory 
activities  are  under  way  for  constructing  a  new  400kV  electricity  line  between  Bitola  and 
Elbasan  in  Albania.  On  gas  interconnections,  construction  of  the  Klecovce-Štip  gas 
transmission pipeline is continuing and its completion is expected by the end of 2016. On the 
development of a  power  market  with the  neighbouring countries, the  country has  signed 
the  Memorandum  of  Understanding  on  the  regional  electricity  market  development  of  the 
Western Balkan countries. Although the country has signed a shareholder agreement with the 
regional  electricity  Coordinated  Auction  Office  SEE  CAO,  taxation  of  services  related  to 
cross-border electricity trade is not harmonised with the Energy Community guidelines. The 
VAT law must be amended to avoid double taxation of services provided by foreign market 
participants.  

The  country  has  not  adopted  its  framework  legislation  in  line  with  the  EU’s  third  energy 
package in gas and electricity or the corresponding implementing legislation.  

To  create  an  internal  energy  market,  the  country  established  the  appropriate  market  actors. 
However,  no  measures  were  taken  towards  further  unbundling  of  utilities  in  line  with  the 
country’s  obligations  under  the  third  energy  package.  Starting  from  1 July  2016,  the 
electricity  market  opening  was  further  extended  for  customers  with  an  annual  electricity 
consumption of above 1 000 MWh. The estimate is that around 45 % of the total electricity 
consumption  is  covered  by  the  open  electricity  market.  Regardless  of  market  opening  in 
practice, the right of all customers to choose their supplier will be introduced only in 2020, in 
breach  of  the  country's  obligations  under  the  Energy  Community  Treaty.  The  natural  gas 
market is fully liberalised. By-laws on electricity prices and tariffs determine the criteria for 
assessing  how  to  ensure  that  the  tariffs  of  regulated  energy  activities  are  cost  reflective. 
Regulated prices apply to electricity generation in the state-owned utility.  

The  energy  law  lays  down  conditions  for  third-party  access  to  the  natural  gas  market  in 
line with the acquis. The transmission grid code and the gas market rules are aligned with the 
requirements for capacity allocation and transparency, but do not go into sufficient detail on 
cross-border  issues  and  on  assessing  market  demand  for  new  investment.  An  entry-exit 
transmission tariff system, as required by the acquis, is not in place. 

The Energy Regulatory Commission (ERC) regulates the price of electricity for households 
and SMEs which do not qualify for eligibility under the envisaged scheme of gradual opening, 

46 

 
as well as the price at which the incumbent generator ELEM sells electricity to the suppliers 
of  last  resort.  This  is  detrimental  to  the  functioning  of  the  wholesale  market,  and  ERC’s 
competences  need  to  be  extended  to  cover  the  complete  set  of  regulatory  powers  and 
objectives provided for under the third package. 

In the area of hydrocarbons, the mineral resources law transposed the Hydrocarbon Licencing 
Directive, but alignment is yet to be confirmed. 

The  country  adopted  a  national  renewable  energy  action  plan  (NREAP).  The  headline 
target  is  for  21 %  of  primary  energy  consumed  to  come  from  RES  by  2020.  Currently  this 
proportion  is  17.5 %.  This  target  is  not  in  line  with  the  mandatory  target  of  28 %  RES  by 
2020 to which the country has committed itself. 

The Renewable Energy Directive is only partially transposed into national legislation. The 
country established feed-in tariffs to promote RES and support schemes for various renewable 
energy technologies were adopted. However, caps on capacities imposed for several types of 
renewable  sources  like  wind,  solar,  biomass  and  biogas  until  2020  are  obstacles  to  the 
country  to  reach  its  renewable  energy  targets  in  2020.  The  process  of  simplifying  and 
streamlining  procedures  for  authorisation,  permitting,  licencing  and  connection  to  the  grids 
has to continue as it is critical for the further development of energy from renewable sources. 

The  Bern  Convention  Standing  Committee  recommended  suspending  the  hydropower 
investment projects in the Mavrovo National Park until the environmental assessment of their 
cumulative  impact  has  been  carried  out.  There  is  an  interest  in  the  further  development  of 
hydropower. Such development should be in conformity with the relevant EU legislation on 
environment and the assessment of potential new projects should take into account the impact 
on areas of high nature interest. 

The  country  has  not  adopted  the  second  National  Energy  Efficiency  Action  Plan,  and  the 
third one that was due by the end of June 2016. Both the Energy Department of the Ministry 
of  Economy  and  the  Energy  Agency  have  insufficient  staff  and  technical/engineering 
capacities.  There  is  lack  of  national  funding  for  energy  efficiency  and  the  ESCO  market  is 
underdeveloped. 

The  country  adopted  legislation  to  align  with  the  Energy  Efficiency  Directive  and  the 
Energy  Performance  of  Buildings  Directive.  However,  the  decision  to  postpone  the 
implementation of the energy performance certification scheme reflects a lack of political will 
to implement the requirements of the acquis or to promote investments in building renovation. 

On  nuclear  energy,  nuclear  safety  and  radiation  protection,  the  Radiation  Safety 
Directorate revised the 2016-2018 nuclear safety  and protection strategic plan. An amended 
rulebook  was  adopted  on  qualifications  and  health  requirements  for  operators  with  ionising 
radiation  sources.  The  country  has  ratified  relevant  international  conventions  on  nuclear 
safety and radiation protection and is a full member of the ECURIE system, but  there is no 
long-term and safe radioactive waste storage facility. Radon monitoring is carried out by the 
Institute of Public Health and the radon map is prepared and constantly updated. There are no 
plans to build a nuclear power plant in the near future. 

4.16.  Chapter 16: Taxation 

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

47 

 
 
The  country  is  moderately  prepared  in  this  area.  Some  progress,  although  limited,  was 
made  towards  harmonisation  of  the  legal  framework  during  the  reporting  period.  In  the 
coming year, the country should in particular: 

→ improve the capacities of the tax system, at central and local level, to provide modern tax 
services to citizens  (including e-tax, compliance risk  management, quality  assurance  and  IT 
system modernisation); 

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

As regards indirect taxation, minor amendments were made to the law on VAT. On  excise 
duties, legal changes were made to prevent speculative stocks of tobacco products, to regulate 
the status of small independent breweries and on the requirements to obtain excise licences.  

On direct taxation, the law on personal income tax was amended to extend the deadline for 
commencing the taxing capital gains realised from the sale of securities. Amendments  were 
also  made  concerning  the  manner  in  which  tax  profit  is  calculated.  Progress  was  made  on 
administrative cooperation and mutual assistance.  New agreements were signed to avoid 
double  taxation  and  prevent  fiscal  evasion.  Some  47  cooperation  and  mutual  assistance 
agreements are in place, including with EU Member States. 

As  regards  operational  capacity  and  computerisation,  the  reorganisation  of  the  Public 
Revenue  Office  is  ongoing.  The  aims  of  the  reorganisation  are  to  improve  performance 
efficiency,  align  business  processes  with  ISO  9001/2008  and  implement  compliance  risk 
management. Internal audit activities are also developing. The Office monitors cash payments 
of taxpayers through fiscal cash registers and e-tax services have been expanded. The Office 
continued to participate in inspections to combat the informal economy, to detect unpaid tax 
liabilities and unregistered taxpayers and to stimulate voluntary compliance.  

4.17.  Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them from 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  on  increasing  the  capacity  of  the  country’s  institutions  to  draft  and 
implement economic policy. In the coming year, the country should in particular: 

→ set up a medium-term budgetary framework, and report on arrears, so as to improve fiscal 
discipline and transparency; 

→ introduce fiscal rules so as 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. 

As  regards  economic  policy,  further  alignment  with  the  Directive  on  requirements  for 
budgetary  frameworks  is  needed.  The  country  made  some  progress  on  adopting  the  2010 
European  System  of  National  and  Regional  Accounts  (see  chapter  18  —  Statistics).  The 
capacity to make credible macroeconomic and budgetary forecasts remains low.  

48 

 
 
Fiscal notifications and excessive deficit procedures are incomplete. Further improvements in 
transparency and management of public finances are necessary. Economic policy coordination 
is  weak.  The  2016-2018  economic  reform  programme  was  submitted  on  time  but  lacked 
analytical rigour and external stakeholders were insufficiently involved. The policy guidance 
adopted in May 2015 was partially implemented.  

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 efficiency of data collection and the alignment of sectoral statistics 
with EU standards. Continued efforts remain necessary 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 a full set of 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)’s  professional 
independence is enshrined in law but needs to be strengthened in practice, including through 
adequate resourcing. The other main producers of official statistics, the Central Bank and the 
Ministry  of  Finance,  have  signed  Memoranda  of  Understanding  with  the  SSO.  Main 
classifications  are  in  compliance  with  the  EU  acquis  and  updated  regularly.  The  SSO 
significantly  improved  the  efficiency  of  data  collection  but  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), in current and constant prices, aligned with ESA 2010. 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  only  partially  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.  

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 its 
quality  can  be  improved  further.  Foreign  affiliates’  statistics  are  not  available.  Further 
alignment  is  needed  in  tourism  and  transport  statistics.  Research  and  development  data  and 
Information and Communication Technologies statistics are sufficiently aligned with the EU 
acquis. 

In the field of social statistics, the SSO has created a sample frame for social surveys with a 
new method. A population census was not carried out in the previous census round; although 
population  data  are  regularly  produced,  the  missing  information  from  a  recent  population 
census  affects  the  quality  of  a  wide  range  of  statistics.  Migration  statistics  need  to  be 

49 

 
 
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  but  crime,  education  and  public  health  statistics  are  not  yet 
aligned.  

Statistics on agricultural production are partially produced according to the EU acquis and 
the farm structure survey is conducted regularly. Agro-monetary statistics according to the EU 
acquis are in place but supply balance sheets are not yet produced. Annual crop statistics need 
to  be  aligned  with  the  EU  acquis.  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 but 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 non-discrimination. They also promote social dialogue at European level. 

The country remains moderately prepared in this area. Some progress was made during the 
reporting period. Despite a decrease in the official unemployment rates, young people and the 
long-term  unemployed  still  face  difficulties  in  labour  market  inclusion.  Efforts  to  alleviate 
poverty  were  insufficient  and  remain  a  serious  problem,  in  particular  for  Roma  and  people 
with  disabilities.  The  anti-discrimination  law  is  still  not  aligned  with  the  acquis  and  its 
implementation mechanisms were not strengthened. In the coming year, the country should in 
particular: 

→  tackle  unemployment  and  improve  the  labour  market  conditions,  in  particular  for  young 
people, the long-term unemployed and socially disadvantaged groups; 

→ finalise and start the implementation of the Employment and Social Reform Programme; 

→  fully  utilise  the  mechanisms  for  amicable  settlement  of  labour  disputes  and  improve  the 
efficiency of the bipartite and tripartite social dialogue; 

→  ensure  that  appropriate  institutional  and  financial  resources  are  made  available  to 
implement  the  existing  social  inclusion,  the  Roma  action  plan  and  poverty  alleviation 
strategies. 

Amendments  to  the  labour  law  were  enacted,  regulating  parental  leave  and  fines  for 
employers  not  complying  with  the  law  on  minimal  wages.  The  capacities  of  institutions  in 
charge  of  enforcing  labour  law  remained  weak.  Ratified  ILO  conventions  are  regularly 
reported on and followed up. Alignment with the acquis remained at an early stage. 

On health and safety at work, administrative capacities were slightly improved but remained 
insufficient to ensure enforcement of legal provisions. The National Council for Occupational 
Health  and  Safety  did  not  perform  its  duty  to  coordinate  monitoring  and  implementing  the 
Occupational Health and Safety regulations. 

The capacities of the Economic and Social Council as the lead institution for tripartite social 
dialogue  were  strengthened.  The  overall  lack  of  trust  in  social  dialogue,  both  among 
employers and employees, remains unchanged. The International Organisation of Employees 
admitted the two largest employers’ organisations as members. The capacity of social partners 
needs to be strengthened further. Overall, the effectiveness of their role in the policy-making 
process  remains  limited.  The  first  national  free-of-charge  mechanism  for  the  amicable 
settlement of labour disputes was established and became operational in September 2015.  

50 

 
 
On  employment  policy,  the  unemployment  rate  slightly  decreased,  but  remained  high  at 
24.5 %  in  Q1  2016.  In  addition  to  the  creation  of  new  jobs  and  an  increase  in  labour 
registration, the unemployment rate also declined due to a new sample method applied in the 
Labour Force Survey.  

Labour  market  participation  remained  low,  especially  among  women  at  52  %  (15-64  years 
old)  in  2015,  Roma  and  people  with  disabilities.  Youth  and  long-term  unemployment 
remained a major challenge and the highest priority.  

The  profiling  system  to  categorise  the  unemployed  and  the  preparation  of  individual 
employment plans were further developed and underline the efforts to improve the matching 
of skills demand and supply on the labour market.  

The  new  2016-2020  employment  strategy  was  adopted  in  October  2015.  Preparations  for 
participation  in  the  European  Social  Fund  continued.  The  2007-2013  Operational 
Programme  for  Human  Resource  Development  is  in  the  final  stage  of  implementation  (see 
chapter 22 – Regional policy and coordination of structural instruments).  

is  comprehensive  but  requires  amendment 

Some progress was made on social inclusion and protection. The legal framework for social 
protection 
introduce  new  services. 
Implementation  of  the  2011-2021  national  programme  for  the  development  of  social 
protection is limited and the Ministry of Labour and Social Policy lacks capacity. Cooperation 
is  needed  between  the  social  protection,  education  and  health  sectors.  As  the  cash  benefit 
support  does not  give the desired  results in terms of reducing poverty and  exclusion, which 
are particularly high among Roma and people with disabilities, a review or replacement of the 
system should be considered. Roma and children with disabilities often lack of proper social 
protection. (See also chapter 2 — Freedom of movement of workers) 

to 

Implementation  of  the  2010-2020  national  strategy  for  elderly  people  has  improved  overall 
care for the elderly.  

The amended law on child protection introduced a special allowance for children and young 
people  with  disabilities.  The  national  coordinating  body  to  monitor  implementation  of  the 
relevant UN Convention on Persons with Disabilities remained inactive.  

A law on a national database for persons with disabilities was enacted, but its implementation 
has been delayed. There is a lack of commitment and resources to implement policies in this 
area  and  labour  market  access  for  people  with  disabilities  is  inadequate.  The  de-
institutionalisation  process  is  progressing  too  slowly,  with  residential  institutions  in  a 
particularly  poor  state.  Even  though  the  number  of  children  living  in  institutions  decreased 
further  de-institutionalisation  and  development  of  alternative  community-based  services  are 
needed.  Extremely  poor  conditions  amounting  to  ill-treatment  were  observed  at  the  Special 
Institution for disabled people in Demir Kapija. The government needs to take urgent action 
to  ensure  adequate  living  conditions  while  re-activating  the  implementation  of  the  National 
Strategy for Deinstitutionalisation in the System of Social Protection. 

Regarding non-discrimination in employment and social policy, overall, the administrative 
capacity to support social inclusion remained inadequate at both central and municipal level.  

On equality between women and men in employment and social policy, the new strategy 
on non-discrimination, adopted in June 2016, includes references to gender equality and the 
Istanbul  Convention.  Further  measures  are  still  needed  to  address  gender  pay  equality  and 
gender  equality  in  the  labour  market.  (See  also  chapter  23  —  Judiciary  and  Fundamental 
Rights) 

51 

 
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  this  area.  Some  progress  was made  by  adopting a 
new  strategy  for  competitiveness  and  several  legal  amendments.  In  the  coming  year,  the 
country should: 

→ continue adapting the legal framework and develop measures to facilitate SMEs’ access to 
finance; 

→ adopt a strategy promoting women's entrepreneurship, a strategy for SMEs and a strategy 
for tourism. 

On  enterprise  and  industrial  policy  principles,  a  number  of  strategies  were  adopted, 
including a strategy on competitiveness and the second 2016-2018 action plan to support the 
innovation strategy. 

More than 20 laws relevant for doing business were amended to enable ex-officio exchange of 
data  between  public  institutions.  Furthermore,  the  fines  for  misdemeanour  violations  by 
companies were reduced to take into account companies’ size. A new law on craftsmanship 
was enacted. Even though the law on financial discipline was amended to address identified 
shortcomings in implementation, companies still face difficulties on enforcement of contracts, 
in  particular  on  outstanding  receivables.  The  law  on  financial  discipline  and  the  law  on 
obligations should be further aligned with the EU Late Payment Directive. 

With  regard  to  enterprise  and  industrial  policy  instruments,  the  National  Council  for 
Entrepreneurship  and  Competitiveness  provided  fora  for  public-private  dialogue.  Several 
amendments  to  the  law  on  technological  industrial  development  zones  further  enhanced  the 
attractiveness of such zones. However, concerns exist as to whether the tax regime for such 
zones complies with the EU code of conduct of business taxation and the Customs Code.  

The  law  on  a  health  zone  was  adopted,  which  sets  up  a  legal  framework  for  yet  more 
specialised  development  zones.  The  Fund  for  Innovation  and  Technological  Development 
awarded  a  first  set  of  grants  to  companies  for  innovative  actions.  Its  success  depends  on 
further measures designed to strengthen the skills and technologies in SMEs being taken.  No 
significant efforts were made to diversify the financing instruments for SMEs. EU financing 
instruments for business development, under COSME and EDIF, were underutilised.  

4.21.  Chapter 21: Trans-European networks 

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

In the area of transport networks, there is a good level of preparation. The country achieved 
good  progress  during  the  reporting  period.  In  the  coming  year,  the  country  should  in 
particular: 

→ further improve inter-institutional communication; 

→  further  strengthen  the  operational  and  technical  capacity  of  all  management  and 
stakeholder institutions dealing with transport infrastructure; 

→ complete project documentation for the Tabanovce joint border crossing station. 

52 

 
 
 
On transport networks, the country actively participated in the South-East Europe Regional 
Transport  Network  and  complied  with  its  undertakings  under  the  Memorandum  of 
Understanding. Construction work continued on the motorway section along Corridor X co-
financed by IPA I (2007-2013) funds. Reconstruction works along Corridor X also continued.  

Construction  of  the  segment  of  rail  Corridor  VIII  towards  Bulgaria,  financed  by  an  EBRD 
loan  and  by  the  Western  Balkans  Investment  Framework,  will  be  reviewed  due  to  delayed 
implementation. Concerns  remain  about  the  lack  of  preparedness  and  lack  of  maturity  of 
planning in key sectors. All institutions and bodies involved in implementing large investment 
projects need further to strengthen their operational and technical capacities. The country also 
needs  to  focus  on  connectivity  reform  measures  that  will  ensure  the  sustainability  of  such 
infrastructures.  

On  energy  networks,  construction  of  the  new  Štip-Niš  (Serbia)  400kV  electricity 
interconnection  was  completed.  Preparatory  works  to  build  the  Bitola-Elbasan  (Albania) 
400kV  electricity  interconnection  section  are  also  under  way.  The  state-owned  gas 
transmission operator continued to build the Klecovce-Štip gas transmission pipeline. This is 
expected to be completed by the end of 2016. 

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

Regional  policy  is  the  EU’s  main  investment  policy  for  sustainable  and  inclusive  economic 
growth.  Member  States  bear  responsibility 
implementation,  requiring  adequate 
administrative capacity and sound financial management of projects’ design and execution. 

for 

The country is moderately prepared in this area. Some progress was made in sector-based 
programming. In the coming year the country should focus on: 

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

→ addressing shortcomings in financial management, control and audit; 

→ improving the transparency and visibility of EU funds. 

As regards the legislative framework, the law on balanced regional development needs to be 
fully implemented, in particular by allocating further funding. The institutional framework 
needs to be strengthened to ensure correct and timely implementation of the programmes for 
both IPA I and IPA II. This will also help avoiding further de-commitment of EU funding. A 
system of well-substantiated workload analysis should be developed to ensure progress in the 
area  of  administrative  capacity.  There  was  only  limited  progress  on  introducing  a  sector-
based approach in programming EU funds. General strategic planning, however, needs to be 
improved. 

Some  progress  was  made  in  implementing  the  system  for  monitoring  and  evaluation  of 
projects  and  programmes.  Further  capacity  strengthening  is,  however,  needed  so  that 
recommendations can be properly followed up. Transparency in the use of EU funds needs to 
be increased.  

Further efforts are needed to strengthen the financial management, control and audit of EU 
funds (see chapter  32  —  Financial  control).  Systematic monitoring, on-the-spot checks and 
internal and external audits need to be carried out in order to prevent irregularities. 

53 

 
 
 
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 country has achieved  some level of preparation for applying the  acquis and European 
standards in this area. The legal and institutional frameworks are largely in place. However, 
there was no progress in the past year. The authorities did not demonstrate sufficient will to 
tackle effectively the lack of independence of the judiciary. Corruption remains prevalent in 
many  areas  and  continues  to  be  a  serious  problem.  The  Special  Prosecutor  faced 
administrative  and  judicial  obstruction.  Political  interference  and  structural  weaknesses 
undermined  the  functioning  of  the  State  Commission  for  the  Prevention  of  Corruption.  The 
institutional  framework  for  promoting  and  protecting  human  rights  needs  to  be  improved 
through  adequate  resources,  staffing  and  support  for  the  fulfilment  of  relevant  institutions' 
mandate.  Credible  measures  need  to  be  taken  to  ensure  the  full  exercise  of  freedom  of 
expression.  

In the coming year, the country should, in particular: 

→ demonstrate greater political will to ensure the independence of the judicial system and to 
allow the Special Prosecutor to work unhampered; 

→ ensure the functional independence and merit-based recruitment of regulatory, supervisory 
and oversight bodies so that they can fulfil their duties in a professional and proactive manner 
(an Urgent Reform Priority); 

→  take  strong  measures  to  strengthen  the  institutions  in  charge  of  preventing  and  fighting 
corruption and desist finally from any political interference in their work; 

→  ensure  freedom  of  expression  and  adopt  and  implement  credible  measures  to  support 
pluralism in the media; 

→ urgently address police impunity and sub-standard conditions in the prison system. 

 (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 

Multiple amendments to the legal framework were made, in a hasty manner, with shortened 
adoption procedures and without proper consultation with the professions affected, including 
in  the  areas  of  misdemeanours,  sentencing,  notaries  and  bailiffs  or,  where  relevant,  the 
European  Commission  and/or  the  Venice  Commission.  Political  will  is  needed  to  move  the 
reforms forward in the right direction. 

Management bodies 

The Judicial Council made some efforts to improve transparency, particularly through regular 
updates  of  its  website  and  by  allowing  the  presence  of  journalists  and  Civil  Society 
Organisations at its sessions. The Council of Public Prosecutors still lacks its own budgetary 
allocations, appropriate IT support and staffing. 

Independence and impartiality 

The  new  President  of  the  Association  of  Judges  started  to  actively  engage  in  promoting 
judicial independence. However, there are no indications that judges feel confident enough to 

54 

 
 
complain to the competent bodies. The Judicial Council’s stated intention of protecting judges 
from interference has not produced results in practice. The authorities did not initiate reforms 
on  the  existing  discipline  and  dismissal  system  for  judges,  as  recommended  by  the  Venice 
Commission.  

Accountability  

The  Judicial  Council,  the  Ministry  of  Justice  and  the  Ombudsman’s  Office  continued  to 
handle  the  increasing  number  of  complaints  about  the  work  of  the  courts.  In  2015  the 
Supreme Court received 610 compensation claims for unreasonably lengthy court proceedings 
(compared  to  637  in  2014)  and  awarded  EUR  103,165  in  compensation  and  costs.  The 
Judicial  Council  dismissed  one  judge  in  2015  and  the  Council  for  Public  Prosecutors 
dismissed one prosecutor. There was only one request for determining the responsibility of a 
judge  under  the  new  procedure  in  2016,  which  was  rejected.  The  State  Commission  for  the 
Prevention of Corruption (SCPC) launched misdemeanour proceedings against 3 prosecutors 
in 2015, for failing to submit asset declarations. 

Professionalism and competence 

In 2015 the Judicial Council appointed 20 Court Presidents, after some considerable delay. In 
September 2016 the Council appointed 7 basic Court judges (all graduates of the Academy) as 
well as 11 appellate court judges, 2 higher administrative court judges and 4 Supreme Court 
judges  (all  with  judicial  experience).  The  Council  of  Public  Prosecutors  appointed  17 
prosecutors.  

There is still a lack of transparency in the system of appointment and promotion and no steps 
have been taken to ensure de-politicisation in line with the 'Urgent Reform Priorities'. A new 
professional  evaluation  system  focusing  on  appraisal  of  judges’  core  competencies  has  still 
not  been  introduced  so  the  system  remains  heavily  focused  on  quantitative  criteria.  The 
recommendations of the European Commission and the Venice Commission in this area have 
not been addressed. 

Quality of justice 

During 2015, the Academy provided 267 in-service training sessions to 5 888 participants. Of 
the 13 candidate judges and prosecutors from the fifth generation who successfully completed 
their  pre-service  training  in  February  2016,  12  have  already  been  appointed  in  basic  courts 
and  basic  public  prosecutor’s  offices.  37  new  candidates  enrolled  for  pre-service  training  at 
the Academy. The Academy still lacks sufficient support staff.  

December 2015 amendments to the law on the academy lowered the criteria for enrolment of 
candidate  public  prosecutors  and  shortened  their  training  cycle  from  24  months  to  only  9 
months. This potentially affects not only the quality of training, but also creates an imbalance 
between future judges and prosecutors' level of and access to training. In August 2016 a call 
was published for 60 candidate prosecutors who will undergo this shorter training cycle.  

Ensuring consistency of judgments is still a challenge, although the Supreme Court continued 
its efforts.  

 Efficiency 

A  comprehensive  human  resources  management  strategy  is  needed.  In  November  2015  the 
Judicial  Council  adopted  a  decision  reducing  the  number  of  judges  from  740  to  636, 
apparently without any needs- or impact-assessment having been carried out. 130 new support 
staff were recruited to the Public Prosecutor’s Office in 2015, again without a clear strategy in 
place.  The  2016  budgets  for  the  courts  and  prosecution  service  are  both  significantly  lower 

55 

 
than the per capita European average, while the number of judges and court staff per 100 000 
inhabitants  are  significantly  above  the  European  average,  raising  questions  about  efficiency 
and the correct allocation of resources.  

Amendments to the laws on judges', prosecutors' and prosecution staff's salaries allowing for 
bonuses in specific circumstances were not reflected in the law on court administration, which 
resulted in strikes by administrative staff for several months.  

When implemented, the new law on misdemeanours should reduce the number of proceedings 
before  the  court,  and  the  new  law  on  sentencing  should  produce  increased  judicial 
consistency.  New  laws on notaries and on bailiffs (both to  apply from January  2017)  were 
adopted despite strong criticism.  

Anti-corruption policy 

Track record 

The number of investigations, prosecutions and convictions in corruption cases fell overall 
in 2015. Of the 6 investigations officially presented by the Special Prosecutor’s Office since 
the end of 2015 in relation to the wiretapping scandal, more than half are corruption-related 
cases.  

More than half of the high-level corruption cases launched since 2003 have been completed. 
The credibility of the track record (an 'Urgent Reform Priority') remained marred by the lack 
of  effective  investigations  of  serious  allegations  made  against  senior  officials  and  by 
protracted  prosecutions  in  high-profile  cases.  Investigations  of  corruption  in  public 
procurement  and  concessions  remained  limited  in  2015,  despite  persistent  allegations  of 
widespread corruption. 

No  substantial  sanctions  were  imposed  for  breaches  of  political  party  and  election 
campaign financing regulations. A more credible supervision system and a consistent track 
record of effective and dissuasive penalties, in particular against major political parties, still 
needs to be developed. 

Most  cases  are  still  referred  to  the  prosecution  service  by  the  police.  A  more  proactive 
approach is required from other law enforcement and supervisory bodies. The tendency of the 
Public  Prosecutor’s  Office  not  to  pursue  criminal  investigations  initiated  by  the  State 
Commission  for  the  Prevention  of  Corruption  (SCPC),  the  State  Audit  Office  and  other 
institutions continued. 

In 2015, the SCPC slowed down its corruption prevention activities significantly. It filed only 
2 requests to prosecutors to initiate criminal proceedings (compared with 7 in 2014). It carried 
out checks on asset declarations of only 43 elected and appointed officials. It also initiated 7 
misdemeanour  proceedings  for  failure  to  declare  assets  (51  in  2014).  The  SCPC  asked  the 
Public Revenue Office to conduct asset examination procedures in only 10 suspicious cases 
(58  in  2014).  Unlike in previous years, the Public Revenue Office did not  initiate any asset 
verification procedures on its own initiative. 

As  regards  conflict  of  interest,  the  SCPC  received  437  statements  of  interests  in  2015  and 
misdemeanour  procedures  were  initiated  against  3  officials  for  failure  to  submit  their 
statements  of  interests  (22  in  2014).  The  SCPC  also  initiated  107  procedures  to  resolve 
conflicts  of  interest.  The  only  available  sanction,  a  ‘public  reprimand’,  was  pronounced 
against 16 officials for refusing to resolve their conflicts of interest.  

The  system  for  investigating  and  penalising  undeclared  assets  remained  lengthy  and 
cumbersome.  The  SCPC’s  ability  to  fully  implement  the  system  of  penalties  for  reporting 

56 

 
failures  is  being  undermined  by  courts  applying  weak  sanctions,  often  below  the  level 
required by law. 

Although the National Commission for the Protection of the Right to Free Access to Public 
Information  stated  in  its  annual  report  that  93  %  of  around  5000  requests  for  access  to 
information had received a positive reply, the number of complaints increased (960 in 2015). 
There are indications that the authorities do not disclose information in areas such as budget 
expenditure, procurement, the operation of law enforcement authorities and the judiciary. 

Institutional framework 

Prevention measures 

The SCPC is still not in a position to fulfil its mandate, despite the adoption of a methodology 
for  anti-corruption  verification,  the  establishment  of  a  new  unit  with  four  temporary 
employees and an electronic register of elected and appointed officials to facilitate the control 
of assets and interests (an 'Urgent Reform Priority'). The SCPC’s status, funding and technical 
tools still remain inadequate and it still needs to demonstrate its independence. The number of 
complaints continued to drop in 2015, down to only 124 compared with 141 in 2014 and 201 
in 2013. This indicates a drop in the level of public trust and confidence in the SCPC. 

The State Audit Office’s IT infrastructure improved but interconnection with other relevant 
institutions is still not in place. The enforcement regime needs to be further improved and the 
roles of relevant institutions need to be clarified to enable control of political party donors and 
assets received and owned by political parties. 

An institution needs to be empowered to ensure effective and timely control and supervision 
of  public  procurement,  concessions,  public-private  partnerships  and  execution  of  public 
contracts. There is no administrative penalty regime. 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 
remained passive and is criticised for its lack of functional independence. 

The Academy for Judges and Prosecutors, the SCPC and the Training Centre of the Ministry 
of the Interior continued to provide a variety of anti-corruption training. 226 border police 
officers attended eight specialised training courses on the fight against corruption. The private 
sector should be systematically included in corruption prevention activities. 

Law enforcement 

The  existing  specialised  units  in  police  and  prosecution  face  some  difficulties  especially  in 
fighting  high-level  corruption.  The  Ministry  of  the  Interior’s  Unit  for  the  Fight  against 
Corruption is still inadequately equipped and understaffed. The Public Prosecutor’s Office 
budget  increased  to  EUR  8  million  in  2016  and  it  launched  an  electronic  case  management 
system  aimed  at  improving  its  efficiency  and  integrity.  The  Special  Prosecutor’s  Office 
received  EUR  4.13  million  for  2016  and  could  finally  recruit  its  staff,  but  its  work  was 
hampered  by  obstruction  and  a  lack  of  cooperation  from  other  institutions,  as  well  as 
insufficient technical equipment. 

The  powers  and  resources  of  the  police,  the  Public  Prosecutor’s  Office,  the  courts  and  the 
Agency for Management of Confiscated Property should be strengthened so that criminal 
assets can be seized and confiscated more frequently, including in the early stages of criminal 
investigations.  

In  2015,  the  Ministry  of  the  Interior’s  Unit  for  Internal  Control,  Criminal  Investigations 
and  Professional  Standards  started  disciplinary  procedures  against  20  police  officers  on 

57 

 
charges of corruption (11 in 2014). The procedures resulted in fines against nine officers and 
one dismissal. The Unit also started criminal proceedings in 14 corruption-related cases (11 in 
2014).  To  ensure  proper  oversight  of  police  work,  the  Unit’s  independence  should  be 
strengthened and an external oversight mechanism of the Ministry of the Interior created. 

The customs administration further improved procedures for corruption risk assessment. It 
adopted  a  new  code  of  conduct,  carried  out  internal  investigations  and  organised  anti-
corruption  training.  Following  51  disciplinary  procedures  in  2015,  5  customs  officers  were 
dismissed  for  corruption-related  violations  (compared  with  4  in  2014).  No  criminal  charges 
for  corruption  were  brought  against  customs  officers  in  2015  (there  were  5  such  cases  in 
2014).  The  customs  administration  needs  additional  technical  equipment  so  that  it  can 
independently carry out special investigative anti-corruption measures. 

Legal framework 

There  are  still  significant  gaps  and  weaknesses  in  the  legislation.  A  new  law  on  the 
protection  of  whistle-blowers  was  adopted  in  November  2015  but  Venice  Commission 
recommendations  still  need  to  be  addressed.  Amendments  were  made  to  the  electoral  code, 
which  partially  addressed  previous  OSCE/ODIHR  recommendations,  including  on  election 
campaign  financing.  However,  some  OSCE/ODIHR  and  GRECO  recommendations  on 
political parties still need to be addressed.  

The State Audit Office was given the task of reviewing complaints about campaign financing. 
The law on state audit was amended to increase the fines for non-cooperation by auditees and 
their responsible staff. However, there are concerns over legal certainty and potential abuse of 
the new penalty regime.  

The SCPC currently has inadequate powers to put an end to and penalise conflicts of interest 
in cases where the official concerned refuses to cooperate.  

Strategic framework 

Some  important  measures  set  out  in  the  2011-2015  state  programmes  to  prevent  corruption 
and conflicts of interest and their action plans were not implemented. The overall impact of 
these state programmes has been limited.  

The new state programmes for 2016-2019 are focused on fewer priorities. However, they fail 
to address the criminal framework for combating corruption, where many legal, institutional 
and practical weaknesses persist. They are equally short on detail and ambition in other key 
parts.  Implementation  costs  and  the  bearers  of  these  costs  were  not  set  out  in  the  state 
programmes and no specific funds from the state budget were secured to implement them. 

Fundamental rights 

The country is already a party to most international human rights instruments. In 2016, it 
ratified  Protocol  15  amending  the  Council  of  Europe  Convention  for  Protection  of  Human 
Rights  and  Fundamental  Freedoms  and  also  became  an  observer  to  the  European  Union 
Agency for Fundamental Rights.  

Since September 2015 the European Court of Human Rights (ECtHR) has found violations 
of  the  European  Convention  on  Human  Rights  (ECHR)  in  11  cases  relating  mainly  to 
prohibition of torture and degrading treatment, the right to a fair trial, respect for family life 
and  protection  of  property.  A  total  of  359  new  applications  were  allocated  to  a  decision-
making body, bringing the total number of pending applications to 318. In January 2016 the 
ECtHR  held  that  there  had  been  a  violation  of  the  right  to  fair  hearing,  due  to  the  overall 

58 

 
unfairness of the lustration proceedings relating to the former President of the Constitutional 
Court. 

The  Bureau  for  Representation  before  the  ECtHR  made  significant  efforts  to  ensure  the 
speedy  execution  of  ECtHR  judgments  (an  'Urgent  Reform  Priority')  and  achieved  good 
results. The country has reduced the number of ECtHR judgments still to be executed by more 
than  half  to  56,  of  which  3  are  under  enhanced  supervision.  The  Bureau  still  remains 
understaffed  however,  and  would  benefit  from  seconding  staff  members  to  the  Council  of 
Europe  to  gain  further  expertise.  As  regards  the  El  Masri  case,  the  Committee  of  Ministers 
noted  with  profound  regret  that  the  authorities  have  so  far  provided  no  information  on  the 
outstanding  issues  and  firmly  urged  them  to  accelerate  the  setting-up  of  an  ad  hoc 
commission to establish responsibility of the individuals involved. 

On  the  promotion  and  enforcement  of  human  rights,  the  Office  of  the  Ombudsman 
remains  the  key  oversight  institution.  In  2015,  it  received  4 403  complaints,  an  increase  of 
3.6 %  from  2014.  The  overall  level  of  follow-up  to  the  Ombudsman's  recommendations 
remains high at around 82 % (87 % the previous year), but the number of bodies which fail to 
respect his recommendations has increased.  

The law on the Ombudsman’s Office was amended in September with a view to fulfilling the 
Paris Principles (an 'Urgent Reform Priority') but support from the national authorities to the 
Ombudsman Office is still insufficient. It remains under-staffed and lacks adequate budgetary 
means.  

There was no tangible progress on the prevention of torture and ill-treatment. Most of the 
recommendations  of  the  2015  Committee  for  the  Prevention  of  Torture  report  remain 
unimplemented.  The  national  preventive  mechanism  is  understaffed  and  has  not  been  fully 
operational.  Cooperation  between  the  Ombudsman’s  Office,  the  Public  Prosecutor’s  Office 
and  Ministry  of  the  Interior  was  poor.  Inhumane  conditions  persisted  in  penitentiary  and 
detention  facilities  (in  particular  in  Idirizivo  and  Skopje),  police  stations,  social  care  and 
psychiatric facilities. 

The Ombudsman’s Office received 21 complaints of ill-treatment by police and the Unit for 
Internal  Control  and  Professional  Standards  at  the  Ministry  of  the  Interior  received  62 
complaints in 2015. In three cases, it determined that unjustified physical force had been used. 
Criminal ill-treatment charges were brought against one police officer.  

Some  13  complaints  submitted  to  the  Ombudsman’s  Office  and  38  complaints  to  the 
Directorate for Execution of Sanctions related to excessive use of force by prison staff. Two 
prison officers were disciplined for excessive use of force. Concerns persist that disciplinary 
measures in ill-treatment cases are not dissuasive and the number of criminal charges remains 
very  low.  There  is  continued  concern  over  the  absence  of  an  effective  external  oversight 
mechanism for the Ministry of the Interior, which reinforces  the perception of impunity and 
lack of accountability. 

The situation in the prison system remains critical. There was a significant (20 %) increase in 
the  prison  budget,  but  it  remains  insufficient  to  cope  with  the  needs  of  the  prison  system, 
which  remains  heavily  understaffed  and  mismanaged.  Overcrowding  raises  concerns  and 
urgently  calls  for  increased  use  of  alternative  penalties.  The  law  on  probation  service  was 
adopted, but its application was postponed to November 2016. 

Inhumane physical conditions in a number of penitentiary facilities and in almost all detention 
facilities  triggered  protests  and  hunger  strikes.  There  was no  progress on  provision  of  basic 
education  to  juveniles  and  other  re-socialisation  services  for  prisoners.  Poor  healthcare 
services,  including  limited  access  to  psychiatric  care,  persisted.  No  progress  was  made  on 

59 

 
implementing  numerous  prison management rules.  Inter-prisoner violence  remains  a serious 
concern. 

The  Directorate  for  Personal  Data  Protection  aimed  at  strengthening  its  capacity  through 
training, recruitment of new permanent staff and an increased budget. Some 394 inspections 
were carried out in 2015 in both the public and private sectors (404 in 2014). The Directorate 
received  393  complaints  in  2015  (371  in  2014),  most  concerning  alleged  abuse  of  personal 
data on social networks. Further efforts are needed to ensure full harmonisation of legislation 
with  the  law  on  personal  data  protection.  Greater  use  should  be  made  of  available 
administrative penalties.  

The Directorate has still not taken any action following the scandal over illegal interception of 
citizens’  communications  and  also  did  not  react  to  complaints  submitted  by  NGO  members 
after  their  personal  data  was  published  in  several  pro-government  media.  Efforts  are  still 
needed as regards the Directorate's political independence and proactive approach (as per the 
‘Urgent  Reform  Priorities’).  The  new  law  on  privacy  needs  to  be  aligned  with  the  2015 
recommendations of the Venice Commission. 

Freedom of thought, conscience and religion continued to be guaranteed and the number of 
religious entities rose to 32 following the registration of the religious community of Orthodox 
Albanians. 

Freedom  of  expression  continued  to  be  seriously  challenged  under  the  current  political 
climate. Drastic changes in  policy are required beyond legislative texts. There were 10 new 
reported cases of intimidation of journalists and 8 court proceedings involving journalists. No 
legal  action  was  taken  over  past  physical  altercations  involving  journalists,  including  a 
physical attack by a senior politician. 

The  legal  framework  on  hate  speech  is  generally  in  line  with  international  standards  but  its 
implementation  needs  to  be  stepped  up:  the  prosecution  service  did  not  initiate  any  new 
proceedings  and  there  is  only  one  ongoing.  Access  to  information  legislation  follows 
international  standards  but  in  practice  it  is  difficult  for  journalists  to  obtain  requested 
information. The tendency by public authorities to over-use the ‘classification’ of documents 
persists.  The  law  on civil  liability for  insult  and  defamation  needs to  be  further  harmonised 
with the case-law on Article 10 of the European Convention for Human Rights and correctly 
implemented by the judiciary.  

The  Agency  for  Audio  and  Audio-Visual  Media  Services  was  more  proactive  in  reminding 
media outlets of their legal obligations. It initiated 157 measures in response to violations of 
the  law  on  media  and  law  on  audio  and  audio-visual  Media  (see  also  chapter  10  — 
Information society and media). 

The Council of Media  Ethics  prepared a ‘Charter on Ethical Reporting during Elections’. It 
was signed by most media outlets but largely ignored in practice. Since September 2015, the 
Council has received 86 complaints, resulting in 77 decisions. In general, media outlets were 
reluctant  to  publish  its  decisions,  indicating  a  low  commitment  to  self-regulation  of  ethical 
standards.  Serious  efforts  are  needed  to  develop  a  culture  of  professional  ethics,  both  in 
offline and online media. 

Financing of the public service broadcaster (MRT) is not independent of the government and 
despite attempts to improve licence fee collection, this revenue source is not sufficient. MRT 
adopted  ‘Ethical  and  Professional  Principles  of  MRT  for  Media  Coverage  of  the  Election 
Process’ but the MRT code of ethics still needs to be adopted. There was some improvement 
on professional reporting. However, MRT still does not have full editorial independence (see 
also chapter 10 — Information society and media). 

60 

 
The lack of transparency in the area of government advertising has still not been addressed (as 
per the ‘Urgent Reform Priorities’). Lack of transparent financing of media and ties between 
officials and media owners continued to be a serious concern. 

The representation of journalists continued to be polarised. The government needs to restore 
a fully inclusive dialogue with journalist associations without favouring any specific one. 

Freedom of association is satisfactory, but less so freedom of assembly. Numerous protests 
continued  throughout  the  country  against  the  background  of  the  continuing  political  crisis. 
There were a series of anti-government protests, dubbed the ‘colourful revolution’, led by the 
civic  movement  ‘I  protest’,  with  demonstrators  throwing  paint  on  controversial  Skopje 
2014 monuments and public buildings.  While there were a few violent incidents, the protests 
were largely peaceful. Restraint from violence should be shown by both protesters and police 
in the context of the exercising of freedoms of association and assembly. The Criminal Code 
offence  of  ‘participating  in  a  crowd  which  commits  a  crime’  is  still  applicable  without 
safeguards.  This  broad  provision  remains  open  to  interpretations  which  can  infringe  on  the 
freedom  of  assembly  in  practice.  The  Ombudsman’s  call  for  adequate  human  rights 
safeguards in connection with the use of rubber bullets or Tasers was not followed up by the 
authorities. 

The  Ombudsman’s  Office  confirmed  160  breaches  of  property  rights  in  2015;  most  still 
concerned the slow process of denationalisation. The process of privatising construction land 
is still very slow and cumbersome and the number of resolved cases is very low. The Cadastre 
Office  needs  to  follow  up  on  the  requests  and  recommendations  of  the  Ombudsman  and  to 
respect relevant court decisions in order to provide legal certainty concerning property rights.  

On  non-discrimination,  alignment  with  the  acquis  is  incomplete,  notably  lacking  the 
prohibition  of  discrimination  on  the  grounds  of  sexual  orientation.  A  national  Strategy  for 
equality  and  non-discrimination  2016-2020  was  adopted  in  June.  The  new  members  of  the 
Commission for Protection from Discrimination were appointed in a non-transparent selection 
process.  Some  members  have  made  public  statements  which  call  into  question  the 
appropriateness of their appointment and their ability to act in an objective and professional 
manner. Serious concerns persist about impartiality and independence of the Commission. It 
still  has  limited  financial  and  human  resources.  The  number  of  complaints  filed  with  the 
Commission  decreased  significantly  and 
the  number  of  resolved  cases  confirming 
discrimination in 2015 is insignificant (3 out of 66).  

There is no systematic data collection in place on the reporting, investigation and prosecution 
of  hate  speech  and  hate  crime.  Data  collected  by  civil  society  shows  such  crimes  are  not 
adequately pursued by the authorities (see also chapter 19 — Social Policy and Employment). 

On  equality  between  women  and  men,  a  2016-2020  Strategy  for  Equality  and  Non-
Discrimination  was  adopted  in  June  2016  but  little  has  been  done  to  effectively  promote 
gender equality. The law on termination of pregnancy still has restrictive procedural rules that 
could  lead  women  to  resort  to  illegal  abortions.  Domestic  violence  remains  a  concern.  The 
law  on  the  prevention,  protection  and  combating  of  domestic  violence  suffers  from  serious 
gaps.  There  is  no  definition  of  other  forms  of  gender-based  violence  or  accurate  data  on 
reported  cases.  There  is  a  need  for more  shelters  for  victims.  There  are  no  shelters in  some 
regions.  The  limited  capacity  of  the  existing  shelters  for  domestic  violence  needs  to  be 
addressed.  Efforts  by  the  Ministry  of  Labour  and  Social  Policy  towards  a  more  inclusive 
approach are positive but not sufficient. The Gender Equality Unit of the Ministry of Labour 
and Social Policy remained under-resourced. Public awareness on gender equality is lacking 
and gender stereotyping persists (see also chapter 19 — Social policy and employment). 

61 

 
Efforts are needed to further strengthen the rights of the child.  

Stigma  and  discrimination  towards  Roma  children  and  children  with  disabilities  are  still 
widespread. A mechanism for systematically collecting data on the situation of children with 
disabilities,  street  children  and  Roma  children  needs  to  be  put  in  place.  In  2015,  the 
Ombudsman’s  Office  received  158  complaints  concerning  children’s  rights,  of  which  he 
found 74 to be breaches. Measures and resources for prevention of violence against children 
are still insufficient.  

Mediation and other alternatives to criminal procedure in respect of juveniles should be more 
effectively  promoted.  The  juvenile  educational-correctional  facility  was  relocated  but 
premises  remain  inadequate.  No  police  stations  have  child-friendly  detention  facilities. 
Regular training for juvenile justice professionals has yet to be introduced. 

There  was  no  improvement  on  strengthening  the  rights  of  persons  with  disabilities.  The 
legal  and  policy  frameworks  are  insufficiently  implemented  and  persons  with  disabilities 
continue to experience direct and indirect discrimination. Conditions in special institutions in 
some cases amount to ill-treatment. Despite previous assurances, the authorities have not yet 
reformed the system.  

Full and equal access for children and young people with disabilities to education and training 
has not yet been achieved. The inter-party parliamentary group for the Rights of people with 
disabilities actively advocated for their rights and interests. The National Coordinating Body 
for Implementation of the UN Convention on the Rights of Persons with Disabilities remained 
inactive. 

As  regards  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  prejudice 
and stereotyping is present in society, media and online. Considerable efforts are still needed 
to counter intolerance towards LGBTI people. The 2012 attacks on the LGBTI support centre 
still  have  not  been  investigated.  In  December  2015,  the  conviction  and  7-month  prison 
sentence  of  the  perpetrator  of  a  violent  attack  against  two  LGBTI  activists  in  2012  was 
quashed on appeal. 

No  proper  gender  reassignment  treatment  is  available.  Transgender  people  can  access  only 
limited health services. The national authorities should considerably intensify efforts to raise 
awareness  of  and  respect  for  diversity  in  society.  The  positive  cooperation  between  civil 
society and police in one municipality, to celebrate human rights day and LGBTI persons, set 
a  positive  example.  The  training  of  law  enforcement  bodies,  prosecutors,  judges,  health 
workers and teaching staff remains important. 

Issues of labour and trade union rights are covered in chapter 19.  

On  procedural  rights,  no  changes  were  made  to  the  applicable  laws.  The  legal  aid  system 
suffers from inadequate funding and restrictive requirements. 

While the overall framework for the protection of minorities is in place, the implementation, 
monitoring  and  coordination  of  minority-related  policies  remained  weak.  Minorities 
representing  less  than  20 %  of  the  population  are  left  outside  the  mainstream  policy  and 
decision-making  process.  Measures  against  the  separation  along  ethnic  lines  in  schools  are 
insufficient and segregated education has adversely affected social cohesion and integration of 
communities. 

The  national  TV  broadcaster  offers  programmes  in  minority  languages,  as  do  national  and 
regional  radio.  The  selection  of  state-funded  projects  on  culture  and  inter-ethnic  relations 
lacks  transparency.  Equitable  representation  in  public  administration  does  not  ensure 
representation of all minorities at senior level. 

62 

 
At the end of the Roma Decade 2005-2015, the country made some positive steps, but much 
still needs to be done to improve the social inclusion of Roma. In Skopje at least ten Roma 
families  have  been  evicted  from  dwellings  where  they  were  living,  without  prior  notice  or 
sustainable  solutions,  in  breach  of  basic  international  principles  and  national  commitments. 
Implementation  of  official  policies  suffers  from  the  lack  of  political  support,  financing  and 
administrative  capacities.  The  implementation  of  the  Roma  Seminar  conclusions  and  the 
2014-2020 strategy for Roma inclusion is lagging behind. National action plans were adopted 
in  May  and  relevant  ministries  are  tasked  with  implementing  the  activities  under  their 
budgets.  

Overall, segregation, stereotyping and other forms of discrimination remained prevalent. Most 
Roma are unemployed, have no proper health coverage, live in inappropriate living conditions 
in  segregated  housing  and  are  socially  excluded.  Roma  health  mediators  work  in  13 
municipalities  but  access  to  health  is  still  a  widespread  problem.  Birth  registration  rates  of 
Roma  are  very  low  (200  out  of  800  were  completed).  The  most  disadvantaged  Roma  have 
problems  in  accessing  social  benefits  due  to  lack  of  documents.  Restrictive  administrative 
procedures  threaten  to  cut  assistance  when  additional  family  income  from  other  sources  is 
registered.  

Action  to  address  the  disproportionate  number  of  Roma  children  placed  in  special  needs 
schools is slowly being implemented and there was some improvement on general access to 
education,  with  more  35  children  enrolled  at  all  levels.  However,  the  dropout  rates  remain 
significant and the phenomena of child begging and child marriages persist. 

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  to  implement  the  acquis.  It  made  some  progress  by 
amending  existing  laws  (the  law  on  foreigners,  the  criminal  code  and  the  law  on  border 
control) and adopting strategic documents in several areas (police, terrorism). Measures were 
taken to deal with the humanitarian consequences of the regional migration crisis in the short 
term. Following the decrease of mixed migration flows along the Western Balkan route, the 
humanitarian situation stabilised and pressure increased on the southern and northern borders 
especially  due  to  larger  smuggling  activities.  In  the  coming  year,  the  country  should  in 
particular: 

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

→ continue capacity building for the management of mixed migration flows and improve its 
asylum system; 

→  provide  adequate  accommodation  and  special  consideration  to  vulnerable  categories 
(unaccompanied minors, women with children). 

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

Legal and irregular migration 

Institutional set-up and legal alignment 

The  law  on  foreigners  was  amended  in  December  2015  to  address  the  complexity  and 
duration of procedures for obtaining a work permits and residence permits for employment or 
self-employment. A single procedure was introduced to apply for a residence permit for work. 

63 

 
 
The law also aims to align with the acquis on the right to family reunification, the status of 
third-country nationals who are long-term residents, conditions of admission of third-country 
nationals  for  the  purposes  of  studies,  pupil  exchange,  unremunerated  training  or  voluntary 
service, and return of illegally staying third-country nationals.   

In  November  2015  a  standard  operating  procedure  establishing  a  comprehensive  approach 
towards  unaccompanied  foreign  minors  was  adopted  and  in  July  2016  additional  standard 
operating procedures on vulnerable categories of migrants were also adopted.  

A Crisis Management Centre responsible for managing the flow of migrants and refugees was 
established  in  2015,  with  a  Steering  Committee  and  Assessment  Group  Centre  for  Crisis 
Management, and its mandate has been extended until the end of 2017. The Ministry of the 
Interior’s Unit for Border Affairs and Migration is generally responsible for security aspects 
and  management  of  the  borders.  A  specialised  unit  within  the  Department  for  Serious  and 
Organised Crime deals with the fight against human trafficking and people smuggling, while 
the  Ministry  of  Labour  and  Social  Policy  is  in  charge  of  migrants’  and  refugees'  access  to 
services and their socioeconomic integration.  

In the second half of 2015, several inter-agency bodies were established but a lack of clarity 
persists over the division of powers, coordination and responsibilities. 

Implementation and enforcement capacity 

The lack of reliable data on the scope and structure of migration flows needs to be addressed.  

The  overall  staffing  situation  in  the  Unit  for  Border  Affairs  and  Migration  is  satisfactory. 
Border  police  capacities  were  reinforced  through  a  series  of  bilateral  agreements,  enabling 
deployment  of  guest  officers  from  EU  Member  States  and  Serbia.  However,  the  country 
lacked  material  and  human  resources  to  respond  to  the  continuous  large-scale  mixed 
migration flows. The migration flows created pressure on the overall migration management 
system  and  significant  deficiencies  exist,  particularly  in  the  Regional  Centre  for  Border 
Affairs South, which resulted in partial screening, identification and registration of migrants, 
not meeting EU standards. Additional measures are needed to ensure that individuals' specific 
needs  are  identified  and  addressed,  including  through  appropriate  referral  channels. 
Insufficient institutional capacity and human resources were noted in the Crisis Management 
Centre. 

In 2015, the influx of people transiting along the Western Balkan route increased rapidly. In 
the period from September to November 2015, a total of  428 597 people were registered as 
transiting the country. Between January 2016 and March 2016, 89 628 foreign nationals were 
registered. The majority were from Syria, Afghanistan and Iraq. As the registration capacity 
of the authorities was not sufficient, the actual number of people in transit is assessed as being 
much higher.  

The state of crisis on the border, declared in August 2015, was extended until 30 June 2017, 
enabling the army to support the border police.  In response to enhanced border controls along 
the  Western  Balkan  route,  national  authorities  implemented  an  admissibility  criterion  based 
on nationality allowing entry only to nationals of Syria, Iraq and Afghanistan since November 
2015. Illegal border crossings and smuggling increased.  Following enhanced border controls 
along  the  Western  Balkan  route,  the  flow  of  migrants  and  refugees  coming  via  Greece  has 
significantly reduced. Around 900 migrants and refugees remained stranded in the country, a 
number  that  has  fallen  over  time  due  to  reported  smuggling.  As  of  October  2016,  the 
estimated number of stranded persons is around 200.  

64 

 
In  2015,  398 552  irregular  migrants  were  apprehended  at  borders,  mostly  from  Syria,  Iraq, 
Afghanistan and Pakistan. From January to August 2016, 84 cases of attempts to smuggle a 
total  number  of  1  480  migrants  were  detected.  Criminal  charges  were  submitted  against  72 
people,  including  12  foreign  nationals  for  smuggling  of  migrants.  Law  enforcement  bodies 
need to be more proactive in preventing and arresting people smugglers.  

One  reception  centre  for  irregular  migrants  awaiting  return  is  operational,  with  a  total 
capacity of 120 to 130 people. Following recent renovation, basic conditions are in place but 
the centre is still not suitable for accommodation of vulnerable categories or persons. Access 
to  appropriate  shelter  facilities  remains  poor,  as  does  access  to  healthcare,  water  and 
sanitation.  

Temporary transit centres for migrants were opened near Gevgelija and Tabanovce, close to 
the borders with Greece and Serbia, with an official capacity of 1 500 and 500 respectively. 
At the beginning of the migration crisis, the situation in the transit centres was poor, but has 
improved  over  time.  Neither  centre  is  equipped  for  the  longer  term  due  to  the  authorities’ 
refusal to prepare for more than a temporary transit situation. Additional protection measures 
for the most vulnerable categories, sufficient and adequate capacity and regular oversight of 
conditions are needed in all reception centres.  

The number of persons  returned to their country of origin remains low. Assisted voluntary 
returns procedures have been carried out for 23 migrants. From January 2015 to end-January 
2016,  15 496  migrants  were  returned  to  the  territory  of  Greece  due  to  falsified  certificates, 
documents or because of the nationality-based restrictions imposed along the Western Balkan 
route. 

The readmission agreement with the EU is implemented in a satisfactory manner. In 2015, 
1 832 people were returned to the country, mainly from EU Member States. The country still 
needs to conclude readmission agreements with a number of countries of origin of irregular 
migration while upholding the non-refoulement policy towards asylum seekers. Negotiations 
to conclude a readmission agreement with Turkey have been under way since 2010.  

Asylum 

Institutional set-up and legal alignment 

The country is party to the 1951 Geneva Convention relating to the Status of Refugees and its 
1967  Protocol.  Its  legal  framework  is  largely  in  line  with  the  acquis.  However,  the  law  on 
asylum and temporary protection was amended in April 2016 to the effect that an application 
made  by  a  person  from  a  safe  third  country  would  be  considered  as  manifestly  unfounded, 
which  is  incompatible  with the  Asylum  Procedures  Directive.  The  legislation  should  ensure 
that an individual case-by-case assessment is still guaranteed for the assessment of the merits 
of an application, as required by the acquis and in line with the principle of non-refoulement. 
The  amendments  also  provided  that  the  principle  of  family  reunification  may  only  be 
exercised  three  years  after  obtaining  refugee  status,  which  is  incompatible  with  the  Family 
Reunification Directive. 

The country has the necessary institutions and procedures in place to handle asylum claims. 
The Section for Asylum is the first instance body in the Ministry of the Interior. Appeals can 
be lodged before the Administrative Court within 30 days from the date of the delivery of the 
decision.  The  court  then  has  2  months  to  rule  on  the  case.  An  accelerated  procedure  is 
available  in  cases  of  manifestly  unfounded  applications.  In  all  cases,  the  Higher 
Administrative Court hears appeals against second instance decisions. 

65 

 
 
Implementation and enforcement capacity 

The  Section  for  Asylum  is  not  fully  staffed.  14 positions  out  of  23 are currently  filled.  The 
Section still struggles to cope with asylum applications in a timely manner. In-service training 
of case handlers is needed. 

As  regards  the  asylum  procedure,  the  quality  of  decision-making  remains  inadequate.  The 
capacity to evaluate the applications on merit is still weak and more training is needed. Court 
decisions in asylum cases are often not taken on the basis of a thorough examination of the 
merits.  Sufficient  interpretation  capacities  are  lacking.  A  sufficient  budget  is  needed  to 
facilitate the effective integration of refugees. There was no progress on setting up a database 
for  verifying  the  personal  data,  photographs  and  fingerprints  of  asylum  seekers.  There  have 
been  reported  cases  of  refoulement  at  the  borders  targeting  an  unidentified  number  of 
migrants.  There  are  limited  protection-sensitive  screening  mechanisms  to  identify  and  refer 
appropriately those who may be in need of protection.  

On  the  whole  the  asylum  recognition  rate  remained  low,  mainly  due  to  limited  local 
integration prospects. The Administrative Court continued to process asylum appeals largely 
on  procedural  rather  than  substantive  grounds.  In  2015,  1 578  requests  for  asylum  were 
submitted for 1 888 people but only 34 final decisions were taken, of which 13 negative and 4 
positive. From January 2016 until July 2016, 525 persons submitted applications, of which 5 
were  granted  subsidiary  protection,  23  were  rejected,  and  for  401  applicants  the  procedure 
was stopped after they left the reception centre.  

The  country  is  still  a  transit  country.  The  vast  majority  of  asylum  applicants  leave  before 
completing the procedure. There is one reception centre in Vizbegovo with a capacity of 300. 
Lack of security remained a problem as the centre is targeted by organised criminal groups, 
who  reportedly  enter  the  facility  after  regular  working  hours  when  security  is  low.  An 
additional facility for vulnerable categories was established in Skopje with a capacity of 16.  

In February 2016, the country initiated a procedure to conclude a formal agreement with the 
European Asylum Support Office, negotiations are ongoing. 

Visa policy 

Legislation  is  largely  aligned  with  the  acquis.  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.  

Overall, the implementation  of the visa-free travel regime  with  the EU continued smoothly. 
The national authorities continued cooperation to tackle unfounded asylum applications made 
in Schengen Members and associated countries. The number of applications fell significantly 
in January to June 2016 (3 551) compared to the same 6-month period in 2015 (7 532). The 
authorities ran public information campaigns about the abuse of visa liberalisation. They also 
continued  to  carry  out  additional  border  controls,  surveillance  patrols  and  risk  analysis. 
Criminal charges were brought against 9 persons for facilitating abuse of the visa-free regime 
in the first half of 2016. Some efforts were made to improve the socioeconomic conditions of 
vulnerable  groups,  particularly  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. 

66 

 
Schengen and external borders 

Institutional set-up and legal alignment 

The legislative framework for the management of external borders is largely aligned with EU 
standards. The law on border control, together with implementing legislation, continued to be 
harmonised with the Schengen border code. The border police is a specialised Unit within the 
Ministry  of  the  Interior.  It  includes  four  regional  offices  and  local  stations  for  border 
surveillance and a mobile unit deployed according to risk analysis findings.  

Since  2003,  the  country  implements  an  integrated  border  management  (IBM)  strategy.  The 
current  IBM  strategy  (2015–2019)  was  adopted  in  September  2015  and  is  aligned  with  the 
2006 EU concept on IBM. The Schengen action plan was adopted in 2008. The country still 
needs to create a single coordination centre for the exchange of police information as part of 
the preparations for establishing a Sirene bureau at a later stage. 

Implementation and enforcement capacity 

The border police has a total of 1608 staff. As part of the overall restructuring of the Ministry 
of the Interior the border police was strengthened in the south of the country. Staff  training 
continued  (92  trainings  between  January  and  June  2016),  with  an  emphasis  on  combating 
human  trafficking  and  migrant  smuggling,  detection  of  forged  documents,  the  fight  against 
vehicle smuggling, police use of intelligence, dealing with mixed migration flows and refugee 
protection, treatment of asylum applications, detecting drugs and combating corruption. 

The 2015-19 integrated border management strategy and action plan are at an early stage of 
implementation  by  the  National  Coordination  Centre  for  Border  Management.  The  main 
strands of the new strategy relate to identified security threats (namely due to poorly managed 
irregular  migration  and  cross-border  crime);  challenges  in  the  area  of  border  control  and 
border  surveillance.  Although  the  Centre  prepares  regular  monthly  and  quarterly  reports  on 
risk analysis, its institutional and functional capacities remain weak. 

Some investments have been made in border surveillance and infrastructure along the green 
border, especially in reaction to the increased migration influx. Part of these investments was 
covered  using  EU  and  bilateral  assistance.  However,  further  investments  in  border 
management are still required. There should be a special focus on prioritising those borders 
which are most exposed to irregular migration flows. 

Overall, inter-agency cooperation between border guards, customs and other bodies worked 
well through the National Coordination Centre for Integrated Border Management. However, 
these agencies do not have mutual access to databases and there is no formalised and secured 
information  exchange  with  the  appropriate  security  services.  With  the  increased  influx  of 
migrants, some efforts were undertaken with a view to achieving more detailed registration, 
but  new  solutions  could  not  be  tested.  The  detection  of  false  or  fraudulent  documents 
remained  low.  A  track  record  of  detection,  investigation  and  prosecution  of  cross-border 
crime in coordination with all competent law enforcement authorities needs to be established.  

The main burden of investigation for more complex crimes is on the Department for the Fight 
against  Serious  and  Organised  Crime  and,  in  certain  cases,  the  Bureau  for  Security  and 
Counterintelligence (UBK). 

Cooperation  with  neighbouring  countries  continued  to  be  good,  particularly  on  the 
technical  level.  The  country  has  concluded  border  agreements  with  all  its  neighbours  apart 
from Greece. Joint patrols are conducted with Serbia, Kosovo, Bulgaria and Albania and the 
country has established joint contact centres with these countries. Bilateral cooperation with 

67 

 
Greece,  especially  at  technical  level,  improved  with  the  increasing  mixed  migration  flows. 
The agreement with Frontex is being implemented smoothly.  

Judicial cooperation in civil and criminal matters 

Concerning  judicial  cooperation  in  civil  matters,  the  country  has  not  yet  acceded  to  the 
Hague  Convention  of  19  October  1996  on  Jurisdiction,  Applicable  Law,  Recognition, 
Enforcement  and  Co-operation  in  Respect  of  Parental  Responsibility  and  Measures  for  the 
Protection  of  Children  or  to  the  Convention  of  23  November  2007  on  the  International 
Recovery of Child Support and Other Forms of Family Maintenance. 

Concerning  judicial  cooperation  in  criminal  matters,  in  2015,  the  country  received  1 418 
requests for mutual legal assistance in criminal matters and 597 in civil matters. It sent 1 137 
requests to other countries for criminal matters and 941 for civil matters. The country issued 
116 extradition requests and received 25 from abroad. There were 22 requests for transfer of 
sentenced  nationals  back  to  the  country  and  37  new  requests  for  the  transfer  of  sentenced 
foreign nationals to their respective countries.  

Agreements with Montenegro on legal assistance in civil and criminal cases, and on mutual 
enforcement of judgments in criminal cases were ratified in March. A cooperation agreement 
with Eurojust is in force. However in practice, there is very limited cooperation. 

Fight against organised crime 

Institutional set-up and legal alignment 

New amendments to the Criminal code were adopted in December 2015, introducing prison 
sentences  for  criminal  acts  connected  with  exploitation  of  minors.  An  important  part  of  the 
law on criminal procedure is the investigative centres intended to institutionalize cooperation 
between prosecutors and police, to date only one investigative centre was formerly established 
but it is still not operational due to lack of staff and equipment...  

The  law  on  the  freezing,  confiscation  and  management  of  criminal  assets  needs  to  be 
improved.  The  legal  status  and  functions  of  the  Agency  for  Management  of  Confiscated 
Property need to be strengthened. 

In spite of EU expert assistance the law on the interception of communications has still not 
been  amended  to  bring  it  into  line  with  European  standards.  The  process  of  internal  reform 
and oversight on intelligence is far too slow.  

The 2016-2020 police development strategy was adopted in January 2016 and provides for a 
proactive model of policing. However, an action plan including allocation of resources is still 
lacking.  Despite  repeated  recommendations,  an  independent  external  oversight  mechanism 
has still not been established for the police. 

Anti-money  laundering  legislation  improved  but  additional  amendments  are  required  to 
ensure full compliance with the acquis. Inter-institutional cooperation still needs to improve. 
The  Financial  Intelligence  Units  increased  their  expertise  and  their  new  reporting  and 
analytical  system  procedures  should  improve  cooperation  with  other  law  enforcement 
agencies. 

Both  the  Ministry  of  the  Interior  and  the  Public  Prosecutor’s  Office  have  established 
specialised units fighting serious and organised crime. The new rulebook for restructuring the 
Ministry of the Interior was adopted in August 2015 and establishes three main Units: General 
and Violent Crime Unit, Economic Crime and Corruption Unit, Illegal trafficking in Drugs, 
Weapons,  Hazardous  Substance  Unit.  Thus,  the  number  of  units  within  the  Department  for 
Suppression of Organised and Serious Crime was reduced from 8 to 3.  

68 

 
The  custom  administration,  financial  police  and  border  police  are  key  players  in  fighting 
organised  crime  but  clarity  is  needed  over  the  division  of  their  respective  powers.  The 
Customs Administration took part in nine international operations to detect and prevent illicit 
trade.  Cooperation  continued  with  various  regional  intelligence  liaison  offices.  Cooperation 
and exchange of intelligence with the customs authorities of the neighbouring countries and 
the wider region intensified. 

The  Ministry  of  the  Interior  has  several  forensic  units,  including  for  biological  and  DNA 
identification. 

The  National  Commission  for  Combating  Human  Trafficking  and  Illegal  Migration  has 
operated  since  2001  as  an  inter-ministerial  coordinating  body  to  monitor  and  analyse 
trafficking in the country. The Commission has been active in the past but suffers from a lack 
of  political  support  in  the  field.  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  cyber  security  strategy  is  still  not  finalised  and  needs  to  be  aligned  with  the  European 
Cyber  Security  Strategy.  A  new  section  on  cyber-crime  was  created  in  the  Ministry  of  
Interior’s Unit for Internal Affairs. 

Implementation and enforcement capacity 

This  year,  400  police  cadets  were  recruited.  Although  the  law  requires  a  merit-based 
recruitment policy and career system, allegations of politicised recruitment and dismissals by 
the Ministry still persist and need to be addressed. There is a well-established Training Centre 
within  the  Ministry  of  the  Interior  providing  both  initial  and  vocational  training;  a  working 
agreement with CEPOL was signed in July. 

Staffing  in  the  Department  for  the  Fight  against  Serious  and  Organised  Crime  continued  to 
increase, with 10 new employees hired. The Basic Public Prosecutor’s Office for Organised 
Crime and Corruption employed nine support staff in 2014 and a further 13 in 2015. At the 
moment,  there  are  280  public  prosecutors.  However,  concerns  remained  about  political 
interference in some cases.  

In  the  Agency  for  Management  of  Confiscated  Property,  50  out  of  55  positions  are  filled. 
Established in 2014, the National Coordination Centre for the Fight against Organised Crime 
is still not operational due to financial restraints, namely a lack of staff and IT equipment. An 
action plan was adopted to make the Coordination centre operational.  

National  strategies  are  in  place  to  combat  human  trafficking  and  irregular  migration  (2013-
2016),  drugs  (2014-2020),  terrorism  (2016-2020)  and  police  development  (2016-2020).  The 
national organised crime threat assessment, inspired by the EU methodology, was adopted in 
March 2016. The establishment of the National Intelligence Database was delayed until 2018. 
Direct  cross-border  cooperation  with  other  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. 

During 2015, the Ministry of the Interior detected 150 cases involving 319 perpetrators. The 
cases  included  migrant  smuggling,  money  laundering,  bribery,  human  trafficking  and 
counterfeiting. In the same period there were 88 final convictions (109 in 2014). 

An  increasing  number  of  suspicious  transaction  reports  were  noted  in  2015.  The  Financial 
Intelligence  Unit  received  174  reports  of  suspicious  transactions  in  2015,  154  of  which 
referred  to  money  laundering  and  20  to  financing  of  terrorism.  It  submitted  30  reports  on 
money laundering and financing of terrorism for further investigation by law enforcement. In 

69 

 
the same period, one final verdict was reached concerning 13 individuals convicted of money 
laundering. During 2015, the Financial Intelligence Unit concluded a further five Memoranda 
of  Understanding  with  financial  intelligence  units  in  Lichtenstein,  the  United  Kingdom, 
Kosovo, Azerbaijan and Russia. 

There  was  increased  irregular  migration,  smuggling  and  human  trafficking.  As  regards 
trafficking  in  human  beings,  156  criminal  proceedings  involving  186  defendants  ended  in 
convictions in 2015, including an employee of the Ministry of the Interior, who was sentenced 
to 4 years imprisonment. In total, three victims of trafficking (one woman and two children) 
and 11 potential victims were identified in 2015. However, the level of identification remains 
low, as does the international cooperation to combat the phenomenon.   

Special investigative measures, which are still used mainly by the police, were applied in 127 
cases in the first half of 2016 and 291 cases in 2015. All three law enforcement agencies with 
powers in this field, including the Financial Police and Customs Administration, need to have 
the technical capacity to intercept communications independently of the intelligence services. 
Trust  in  the  system  was  undermined  by  the  existence  and  content  of  the  illegal  wiretaps. 
However, this should not detract from the continued and effective use of special measures for 
genuine  criminal  investigation  purposes.  There  is  a  need  to  separate  criminal  investigation 
from interception for security purposes, both in terms of functions and institutional mandates. 

Several  successful  police  operations  against  organised  criminal  groups  were  carried  out, 
leading  to  the  dismantling  of  international  networks  for  drug  trafficking  and  smuggling  of 
migrants. However, financial investigations, along with the seizure and confiscation of assets, 
remain  rare.  Fighting  organised  crime  and  corruption  remains  fundamental  to  countering 
criminal infiltration of the political, legal and economic systems. 

Fight against terrorism 

The country has to some extent been affected by the phenomenon of foreign terrorist fighters 
and  radicalisation.  The  number  of  citizens  reported  to  have  left  for  conflict  zones  in  the 
Middle East is estimated at 140-150, of whom 25 have died, 20-23 are believed to be involved 
in armed conflict and 72 have returned. 

Institutional set-up and legal alignment 

The  participation  in  foreign  armed  conflict  and  facilitating  such  conflict  is  already 
criminalised. Contacts with foreign fighters are supposed to be reported to the state authorities 
within 24 hours, on penalty of punishment for withholding information.  

The  2013-2019  strategy  to  fight  terrorism  was  adopted  in  March  2016,  which  includes  the 
concepts of violent extremism, radicalisation, prevention and reintegration. The fight against 
terrorism  has  a  dominantly  security-based  approach.  Dialogue  and  cooperation  should  be 
established between security agencies and the local community and CSOs. 

The  anti-terrorism  strategy  provides  for  the  conclusion  of  bilateral  agreements  with 
neighbouring countries and the setting up of joint operational teams, as well as investigation 
into financial flows. However, the latter requires further legislative changes. 

institutions  dealing  with 

for  Security  and 
The  main 
Counterintelligence  (UBK);  the  Intelligence  Agency;  the  Ministry  of  Defence  and  the 
Ministry of the Interior. In addition, the Ministry of Foreign Affairs plays a facilitating role in 
international legal cooperation.  

terrorism  are 

the  Bureau 

70 

 
The  strategy  establishes  a  national  counter-terrorism  coordinator  but  only  for  the  security 
agencies. It does not include a public role for the coordinator. The strategy is not accompanied 
by an action plan containing concrete follow-up projects and resources. 

Implementation and enforcement capacity 

Reportedly,  returning  foreign  fighters  are  monitored  by  the  security  services.  A  counter-
terrorism  operation  led  to  the  arrest  of  11  people,  on  criminal  charges  of  participation  in  a 
foreign  army,  police,  para-military,  or  para-police  formations.  All  were  found  guilty  and 
received sentences of between two and seven years. Sentenced persons are held in different 
prison locations. Security authorities consider that these arrests and sentences had a deterrent 
effect on radicalisation and recruitments and on the number of people allegedly joining ISIS. 
However, activities in this area need to involve local religious leaders and civil society. The 
country also needs to focus on detecting and stopping financial flows feeding terrorism. 

Cooperation in the field of drugs  

The 2014-2020 national drug strategy is coordinated with the EU’s drug strategy and action 
plan and the UN political declaration to combat drugs. Amendments to the law on the control 
of narcotic drugs and psychotropic substances were adopted and allow some use of cannabis 
for medical purposes.  

Good  cooperation  continued  between  the  Ministry  of  the  Interior  and  the  customs 
administration notably in four cases of illicit drug trafficking, resulting in the shutting down 
of  international  channels.  Good  cooperation  continued  between  the  national  focal  point  and 
the European Monitoring Centre for Drugs and Drug Addiction.  

There was a decrease in seizures of narcotics. Overall, nine international channels were shut 
down  and  five  organised  criminal  groups,  involving  41  people,  were  identified  and 
dismantled. Criminal prosecution started against 718 perpetrators.  

The destruction of seized drugs continued in 2015 under the responsibility of the Ministry of 
Health. 

Customs cooperation 

The Customs Administration took part in nine international operations to detect and prevent 
illicit trade in counterfeit and pirated goods, drugs, weapons, dangerous waste, and high-risk 
chemicals. Cooperation continued with the regional intelligence offices of the World Customs 
Organisation,  United  Nations  Office  on  Drugs  and  Crime,  and  Europol.  Information  about 
seized goods was regularly entered into the respective databases. Cooperation and exchange 
of  intelligence  with  the  customs  authorities  of  the  neighbouring  countries  intensified.  The 
Customs  Administration  systematically  cooperated  with  the  Southeast  European  Law 
Enforcement  Centre  (SELEC)  by  taking  part  in  its  operations,  notably  in  fighting  against 
illegal  migration.  The  use  of  the  New  Computerised  Transit  System  (NCTS)  increased  and 
preparations were intensified for joining the Anti-Fraud Transit Information System (ATIS). 
By their use, Customs participates in the systems for investigation and analysis of transit data 
to  detect  abnormal  patterns  in  transit  movements  and  applies  unified  procedures  for  risk 
analysis.  The  Customs  Administration  actively  uses  the  SEED  system  that  provides  for 
systematic electronic exchange of data between the Western Balkan countries, with the aim of 
prevention  of  customs  violations  and  more  efficient  border  control.   (See  also  chapter  29-
Customs union). 

71 

 
 
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.  Some  progress, 
although limited, was made on research activities, while support for innovation in companies 
was further developed. In the following year, the country should: 

→ continue increasing the level of investment in research, in particular in the private sector  

→ promote participation in the EU’s Horizon 2020 research programme;  

→  adopt  a  2016-2020  programme  for  higher  education  and  scientific  research  and  take 
actions to strengthen research capacity in line with the European Research Area priorities.   

In  the  area  of  research  and  innovation  policy,  no  action  was  taken  to  strengthen  research 
capacity. The strategy on research, which expired in 2010, has not been updated. Due to lack 
of funding there were no calls for support of science and research and the national programme 
on higher education and scientific activity has not been updated. The level of investment in 
research improved slightly to 0.52 % of GDP, which is significantly below the EU average.  

With respect to  innovation union, an Action plan for implementing the innovation strategy 
2016-2018 was adopted. However, the grants  available under the Innovation  Fund were  not 
fully disseminated due to the companies’ lack of capacity. 

The  first  results  on  the  country’s  participation  in  the  Horizon  2020  were  mixed:  there  was 
successful  participation  on  societal  challenges  but  the  participation  of  SMEs  and  grants  for 
individual  researchers  (Marie  Sklodowska  Curie)  was  weak.  The  overall  country  rate  of 
success in Horizon 2020 is about 10.31 % (as of March 2016) with a value of EUR 2 million, 
which is less than the national contribution. The Ministry of Education, Science and Research 
drew up an action plan to stimulate participation in H2020.  

In  support  to  the  European  Research  Area,  the  country  provided  public  funding  for  115 
researchers  to  participate  in  international  scientific  meetings  and  ratified  the  International 
Agreement  establishing  a  Centre  for  Research  and  Innovation  of  the  Western  Balkans  to 
implement  the  Regional  Strategy  on  Research  for  Innovation.  The  Ministry  of  Education, 
Science and Research has limited capacity to prepare a new European Research Area roadmap 

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 from vulnerable groups and of EU migrant workers. 

The country is moderately prepared in this area. Some progress was made, in particular on 
a  strategic  framework.  Children  from  non-majority  communities  and  children  with  special 
needs continue to face barriers to accessing quality education. In the coming year, the country 
should in particular: 

→  increase  support  for  teacher  training,  the  professional  development  of  teachers  and  an 
effective assessment process; 

→  improve  access  to  quality  education  for  all,  in  particular  children  with  disabilities  and 
children from Roma communities; 

→  on  the  basis  of  the  evaluation  of  previous  reforms  conducted  in  the  education  sector, 

72 

 
 
 
develop  and  implement  the  new  strategic  framework  for  education,  ensuring  that  all  reform 
processes have fully consulted a wide range of stakeholders. 

Legislation on education was aligned with the law on general administrative procedure. The 
consultation  process  for  reforming  the  higher  education  law,  involving  students  and 
professors,  stalled.  Pre-school  education  continues  to  be  under-resourced.  Systems  in  place 
for  the  professional  development  of  teachers  and  career  advancement  in  education  require 
greater investment and better implementation. 

In  2015,  the  national  qualifications  framework  (NQF)  entered  into  force  and  the  country 
successfully  presented  its  referencing  report  to  the  European  Qualifications  Framework 
Advisory  Group  in  February  2016.  The  Ministry  of  Education  and  Science  progressed  with 
preparation  of  a  detailed  roadmap  for  NQF  implementation,  but  more  practical  and  work-
based training is required with the involvement of employers.  In adult education, the Ministry 
of  Education  and  Science  adopted  the  concept  for  adult  non-formal  education  and  informal 
learning  (NFIL),  including  provisions  on  its  validation.  Although  some  support  measures 
were  introduced,  children  with  disabilities  and  from  Roma  communities  continue  to  face 
barriers to regular and quality education. Education remains a high risk sector for corruption 
and  political  influence,  especially  in  higher  education.  The  country  continued  to  participate 
fully in the Erasmus+ programme.  

As  regards  culture,  the  national  authorities  need  to  ensure  a  systematic  approach  and 
appropriate budget allocations to protect cultural heritage in the country. Active participation 
in the Creative Europe programme continued. 

4.27.  Chapter 27: Environment and climate change 

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

The  country  has  some  level  of  preparation  in  this  area.  Although  there  has  been  some 
progress  in  alignment  of  policies  and  legislation  to  the  acquis,  more  efforts  are  needed  on 
water  quality,  industrial  pollution  and  risk  management,  chemicals  and  climate  change. 
Moreover, implementation is very limited particularly on air quality and nature protection.  

In the coming year, the country should pay particular attention to: 

→ improving the implementation of the national plan for air quality protection; 

→ improving the environmental impact assessment process to ensure effective protection of 
national protected areas, areas of high natural value and potential Natura 2000 sites; 

→  ratify  and  start  implementing  the  Paris  Agreement;  also  by  developing  a  comprehensive 
strategy  on  climate-related  action  consistent  with  the  EU  2030  framework  for  climate  and 
energy policies. 

Environment  

In the area of horizontal legislation, the national strategy on environment and climate change 
still  needs  to  be  adopted.  Structural  administrative  capacity  at  a  central  and  local  level 
remained  weak  and  insufficient.  Priority  measures  were  identified  to  strengthen  the 
implementation  of  environmental  legislation  at  local  level.  The  environmental  impact 
assessment and the strategic impact assessment process need to be further improved to ensure 
effective public participation. This applies in particular for projects in the hydropower sector 

73 

 
 
and  other  infrastructure  projects  in  national  protected  areas,  areas  of  high  natural  value  and 
potential Natura 2000 sites.  

The  law  on  environmental  inspection  needs  to  be  adopted  without  any  further  delay. 
Successful implementation of the law may be considerably hampered by the existing law on 
inspection  supervision,  which  is  not  in  line  with  EU  acquis  and  relevant  best  practice.  An 
information and reporting system for inspection services was also developed and the software 
works well in its initial stage.  

Further  work  is  needed  on  transposing  and  implementing  the  remaining  horizontal 
environmental  directives,  such  as  the  Environmental  Liability  Directive,  INSPIRE  and  the 
Environmental Crime Directive. 

Legislative  alignment  with  the  acquis  on  air  quality  is  well  advanced.  However,  the 
implementation of measures laid down in the national plan for air quality protection remained 
limited. Air pollution still reaches high levels during winter, but air quality plans have only 
been developed for Bitola, Skopje and Tetovo and not for all the zones where levels exceed 
limits. The national air quality monitoring network continued to suffer from a lack of regular 
financial resources. The web portal for real-time air quality monitoring is publicly accessible, 
although technical IT problems often occur.   

Regarding waste management, the legal framework is partially aligned. Further alignment on 
special waste streams is necessary. The implementation of the Waste Directives is still at an 
early  stage.  Regional  waste  management  structures  are  still  not  fully  operational,  suffering 
from  a  lack  of  administrative  and  financial  resources.  The  actions  set  out  in  the  adopted 
regional waste management plans are only  partially  implemented. Preparations continued to 
close  non-compliant  landfill  sites  and  establish  regional  waste  management  centres.  The 
selective  collection  of  different  types  of  waste  should  be  increased.  Economic  incentives  to 
promote recycling and prevention of waste generation remained limited. 

On  water  quality,  the  country  achieved  some  level  of  preparation.  River  basin  plans  are 
being prepared, agglomerations identified and sensitive areas defined. A new  law on setting 
prices on water services was adopted in January 2016. A system for monitoring water quality 
and quantity is needed. Untreated urban wastewater remains the main source of pollution. The 
preparation  of  specific  implementation  plans  for  the  Urban  Waste  Water  Treatment  and 
Drinking Water Directives is under way. New infrastructure is being constructed and existing 
infrastructure  is  being  upgraded,  although  national  funding  is  insufficient.  Administrative 
capacities are insufficient to implement all measures required under water-related directives. 
Flood hazard and risk maps for all river basins still need to be developed.  

Alignment with the acquis started in the field of nature protection, in particular the Habitats 
and  Birds  Directive.  The  national  strategy  on  biodiversity  and  its  action  plan  have  not  yet 
been  adopted.  Work  continued  to  develop  a  national  strategy  for  nature  protection.  Initial 
steps  were  taken  to  designate  and  manage  the  Natura  2000  network  of  protected  areas. 
Concerns  remain  high  about  the  insufficient  protection  of  protected  areas,  areas  of  high 
natural value and potential Natura 2000 sites, and also about the cumulative impact of planned 
hydropower 
recommendations 
regarding  hydropower  projects  have  not  been  taken  into  account.  A  strategic  approach  in 
hydropower development is needed, in which projects should be carried out in line with the 
EU acquis requirements (SEA/EIA/Bird and Habitat Directives). 

investment  projects. Previous  European  Commission's 

As regards  industrial pollution and risk management,  alignment with most EU directives 
and  regulations  (the  Industrial  Emissions  Directive  and  the  Ecolabel  and  Eco-Management 
and Audit Scheme Regulations) is at an early stage. Further work is needed to implement the 

74 

 
SEVESO III Directive and EU Eco label Regulation. The national emission reduction plan for 
large combustion installations was prepared and sent to the Energy Community Secretariat for 
adoption.  Integrated  environmental  permits  and  inspections  are  performed,  but  process  still 
needs to be accelerated. The country adopted a Plan for Monitoring the Quality of Heavy Fuel 
Oil and Gas Oil.  

On  chemicals,  the  updates  of  the  national  implementation  plan  to  reduce  and  eliminate 
persistent organic pollutants are yet to be adopted. More work is needed on implementing the 
REACH  and  the  CLP  Regulation.  Alignment  is  pending  for  the  legislation  on  animal's 
experiments  and  Asbestos.  The  implementing  legislation  on  chemicals  still  needs  to  be 
adopted and adequate capacities still need to be put in place. 

Some  progress  was  made  on  strengthening  administrative  capacity  for  preparing  strategic 
noise maps and action plans. 

The country is a member of the EU Civil Protection Mechanism and actively participates in 
the  EU  Civil  Protection  Mechanism  activities  and  in  several  regional  IPA  projects.  Most 
recently, the country requested to activate the EU Civil Protection Mechanism after the floods 
in August 2016. The National Coordinator for disaster risk reduction was appointed and work 
started on the strategy for disaster risk reduction and management. Administrative capacity at 
national and local level regarding disaster risk management needs to be further strengthened. 
The  country  is  still  not  connected  to  the  EU  Civil  Protection  Mechanism's  Common 
Emergency Communication and Information System (CECIS).     

Climate change 

The level of alignment is at an early stage. The country still needs to develop a comprehensive 
policy and strategy on climate action consistent with the EU 2030 framework. In addition to 
mitigation,  efforts  need  to  be  put  into  adaptation  to  climate  change.  The  National  Climate 
Committee, as the main inter-institutional mechanism, played an important role in developing 
the  country's  Intended  Nationally  Determined  Contribution  (INDC).  The  country  signed  the 
Paris Climate Agreement in April 2016, but it still needs to be ratified and implemented. The 
country has technical capacity to prepare good quality greenhouse gases inventory reports, but 
a sustainable approach for reporting obligations is  lacking. This  area  should  be regulated in 
line  with  the  EU  monitoring,  reporting  and  verification.  In  view  of  emissions  trading,  a 
roadmap  for  introduction  of  monitoring,  reporting  and  verification  (MRV)  was  developed. 
Software for tracking emissions of polluting substances in the atmosphere from industry was 
developed. The Action Plan for reduction of CO2 emissions from aviation was submitted to 
the International Civil Aviation  Organisation. Further  efforts should be made  in  the field  of 
emission standards and control of pollution from transport, with a focus on full transposition 
of the EU legislation on fuel quality. Administrative capacity remained largely insufficient. 

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,  but  no  progress  has  been  observed    in  the  area  of 
consumer and health protection In the coming year, the country should — as the majority of 
last year’s recommendations were not implemented — in particular: 

→ strengthen the operational structures serving consumer protection; 

→ increase the sustainability, efficiency, cost-effectiveness and quality of services in the field 

75 

 
 
of communicable diseases. 

On  consumer  protection,  the  legal  framework  does  not  fully  align  with  the  acquis  on 
consumer  rights  and  consumer  alternative  dispute  resolution.  Consumer  organisations  are 
weak  and  state  grants  only  cover  advisory  services  and  fees  to  international  consumer 
organisations.  The  existing  mediation  scheme  is  too  expensive  for  consumers.  The  lack  of 
administrative  resources  in  the  Ministry  of  Economy  continues  to  hamper  effective  policy 
implementation and coordination.  

Awareness-raising  activities  on  non-safety-related  issues  continued.  On  product  safety-
related  issues  further  efforts  are  needed  by  regulatory  bodies  to  ensure  effective  consumer 
protection. Further efforts are needed to complete alignment with the General Product Safety 
Directive.  

Though  there  was  some  investment  and  training  in  public  health  it  was  not  systemic:  for 
example, new equipment was installed in sub-standard facilities, whereas other facilities lack 
adequately  trained  staff.  Establishment  of  e-medical  registers  was  launched  but  the  e-health 
card remained only partially functional.  

The enforcement of tobacco control requires strengthening 

With regard to communicable diseases, proper funding for early detection should be ensured.  
A  manual  for  immunization  was  published  and  distributed.  Testing  and  monitoring  of 
HIV/AIDS was reinforced following an increase in HIV infection among men. Prescription of 
antibiotics  needs  to  be  stricter  controlled  to  strengthen  the  fight  against  anti-microbial 
resistance.  

On  blood,  tissues,  cells  and  organs,  preparations  started  to  establish a  university  clinic  for 
the transplantation of organs and tissues. Transplantation surgeries ceased for a few  months 
due  to  a  lack  of  organs  and  finances.  New  software  for  blood  donor  management  was 
introduced. Further efforts are needed to achieve alignment with the acquis. 

As regards pharmaceuticals, the use of cannabis for medical purposes was legalised. Use of 
human  and  veterinary  pharmaceuticals  continued  to  improve.  Sanitary  and  human  resource 
conditions in the mental health facilities remained poor.  

Regarding  health  inequalities,  more  investment  and  staffing  are  needed  for  treatment  of 
people  with  severe  physical  and  intellectual  disabilities,  as  well  as  for  treatment  of  Roma. 
Dietary guidance was issued on nutrition quality in kindergartens and primary schools. 

Cancer  screening  activities  continued.  Funding,  access  to  pharmaceuticals  and  specialised 
knowledge  for  treatment  of  rare  diseases  remained  limited.  A  register  for  individual  rare 
disease is missing. This seriously hinders adequate treatment. Initiatives are left with the civil 
society organisations set up by family members of people affected with rare diseases. 

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  achieved  a  good  level of  preparation  on  customs  union.  Some  progress  was 
made  on  legislative  alignment  and  on  administrative  and  operational  capacity.  Certain 
customs provisions of the law on zones for technological and industrial development are still 
not in line with the acquis. In the coming year, the country should: 

76 

 
 
→ abolish fees for customs declarations; 

→ complete and consolidate the developed IT systems, ensure their upgrade and maintenance 
and guarantee business continuity.  

In the area of customs legislation, the 2016 customs tariff was adopted in line with the latest 
changes in the EU Combined Nomenclature. The amended Protocol 4 to the SAA was ratified 
to include provisions for application of the Pan-Euro-Med Convention on preferential rules of 
origin.  The  amended  Customs  Code  further  reduced  the  penalty  fees  set  for  customs 
violations. The number of registered requests for customs protection of trademarks doubled in 
2015 compared with the previous year as a result of new simplified procedures. The customs 
administration continued to charge a fee for processing customs declarations, which is not in 
line with the acquis. 

On  administrative  and  operational  capacity,  professional  integrity  standards  and  internal 
controls  were  systematically  applied.  Risk  management  is  developed  and  risk  analysis  is 
applied to transit operations. The use of simplified procedures is well developed. Capacities 
for carrying out customs controls and combating cross-border crime were strengthened. Inter-
agency  cooperation  and  exchange  of  information  continued  to  result  in  seizures  of  illicit 
goods.  Cooperation  with customs authorities from the region continued. The new  electronic 
system  for  processing  customs  declarations  and  excise  documents  was  not  completed.  The 
electronic integrated tariff system is not fully utilised.  

Following the country’s accession to the EU conventions on common transit in 2015, the new 
computerised  transit  system  was  used  without  interruptions  and  the  number  of  declarations 
processed increased. Raising awareness of benefits stemming from the common transit system 
among  economic  operators  and  optimising  its  use  remain  priorities  of  the  customs 
administration. 

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. It continued its good cooperation with the EU, including within the WTO, 
but  its  institutional  capacity  to  fully  participate  in  EU  commercial,  development  and 
humanitarian policies remained insufficient. 

In the next period, the country needs in particular to: 

→ strengthen its administrative capacity as regards dual-use goods export control.  

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  where  it  jointly 
submitted  a  report  on  the  SAA  end  of  implementation  period  to  the  WTO  Committee  on 
Regional Trade Agreements (CRTA). The Protocol to the SAA taking into account Croatia’s 
accession  to  the  EU  was  ratified.  The  country’s  ongoing  efforts  to  join  the  Wassenaar 
Arrangement can facilitate the implementation of the acquis on dual-use goods export control. 

There was no progress on development policy and humanitarian aid.  

77 

 
 
4.31.  Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  in  the  framework  of  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,  with 
participation in  civil  and  military  crisis management  missions.  In  the coming  period, the 
country should:  
  continue  improving  its  alignment  with  EU  declarations  and  Council  decisions  on 
foreign and security policy.  

Regular  political  dialogue  between  the  EU  and  the  country  on  foreign  and  security  policy 
issues continued. (For information on bilateral relations with other enlargement countries and 
neighbouring  Member  States,  see  Political  Criteria  —  Regional  issues  and  international 
obligations).  

On common foreign and security policy the country aligned, when invited, with 30 out of 
41  EU  declarations  and  Council  decisions  (73   %  alignment).  The  country  did  not  align  its 
foreign  policy  with  certain  Council  decisions  including  EU  restrictive  measures  related  to 
Russia and Ukraine.  

On  the  non-proliferation  of  arms,  following  its  application  for  membership  of  the 
Wassenaar Agreement, the country is working on the entry requirements. 

The country continued to engage actively in cooperation with international organisations. 

Under  the  common  security  and  defence  policy,  the  country  sustained  its  participation  in 
civil  and  military  crisis  management  operations  including  EUFOR  ALTHEA  Bosnia  and 
Herzegovina and the NATO-led ‘Resolute Support’ mission in Afghanistan. Contributions to 
the  ‘2014-2020  European  Union  Battle  Group’  and  KFOR  through  the  Host  Nation 
Coordination  Centre  continued.  Formal  cooperation  with  the  European  Defence  Agency 
started in September 2015. 

4.32.  Chapter 32: Financial control 

Based  on  international  standards,  the  EU  promotes  the  reform  of  national  governance 
systems  to  enhance  managerial  accountability  and  sound  financial  management  of  income 
and  expenditure.  The  financial  control  rules  further  protect  the  EU’s  financial  interests 
against fraud in the management of EU funds and the euro against counterfeiting. 

implementation  of 

the  Commission’s  recommendations 

The country is moderately prepared in this area. No progress was made in the past year 
with 
the  2015  report. 
Considerable further efforts are needed to ensure effective implementation of public internal 
financial  control  (PIFC)  legislation.  Improved  internal  control  over  public  funds,  in  line 
with a sound anti-corruption policy and follow-up of audit recommendations, has yet to be 
pursued. The independence of the State Audit Office in the constitution is not yet enshrined 
in the constitution. In the coming year the country should in particular: 

in 

→  ensure  that  there  is  a  more  systematic  follow-up  to  government  recommendations 
following the annual PIFC implementation report; 

→  ensure  effective  implementation  of  risk  assessment  and  other  tools  and  techniques  in 
public-sector organisations’ management processes; 

→ adopt and implement the national anti-fraud strategy, strengthen the coordination role of 

78 

 
 
 
 
the  Anti-fraud  Coordination  (AFCOS)  Unit  and  improve  management  of  irregularities 
through the Irregularity Management System. 

Public internal financial control 

As regards the strategic framework, the country continued to implement its 2015-2017 PIFC 
policy  paper  and  action  plan.  The  law  on  PIFC  was  amended  to  lay  down  the  examination 
procedure  for  certifying  internal  auditors  in  the  public  sector.  However,  the  Committee  for 
Financial Management and Control and the Audit Committee, which has taken the role of a 
PIFC Council, did not meet regularly. 

The Central Harmonisation Unit (CHU)  continued developing methodological tools, such 
as  manuals  for  financial  management  and  control  and  risk  management.  However,  the 
effective implementation of these tools by budget users remains limited. The CHU prepared 
an annual report on the implementation of PIFC in 2015, but the report was adopted only in 
September  2016.  The  CHU  improved  its  coordination  with  the  State  Audit  Office  during 
compliance audits of the PIFC system. The CHU should significantly step up its monitoring 
and  supervision  over  implementation  of  internal  control  in  public-sector  organisations  and 
state-owned companies. 

The legal framework on financial management and control is harmonised to a large extent 
with  the  internal  control  framework  of  the  Committee  of  Sponsoring  Organisations  and  the 
guidelines  of  the  International  Organisation  of  Supreme  Audit  Institutions  (INTOSAI). 
However,  it  is  not  yet  implemented  coherently  at  central  or  local  level.  Rulebooks  and 
manuals will need to be further updated and adapted to the needs of smaller budget users. A 
few  central  and  local  government  users  have  established  financial  affairs  units,  but  more 
budget users need to follow suit. Risk management strategies have been adopted by most of 
the  budget  users  at  central  and  local  level,  but  they  need  to  be  fully  embedded  in  the 
organisation’s risk management processes.  

The  law  on  financial  inspection  in  the  public  sector  provides  for  centralised  financial 
inspection and was amended to be in line with the law on misdemeanours. The administrative 
capacity of the Financial Inspection Department in the Ministry of Finance was weakened by 
staff changes, and this delayed completion of inspections. 

The internal audit legislation is in line with the international standards. Minor progress was 
made  on  implementing  internal  audit  standards,  rulebooks  and  manuals.  158  internal  audit 
units  exist  at  central  and  local  level  with  216  internal  auditors,  including  77  internationally 
certified. However, most units do not have sufficient number of auditors. Strategic and annual 
plans  guide  the  audit  work  of  most  units,  but  quality  assurance  needs  to  be  better 
implemented. 

External audit 

The amendments to the constitution, to fully ensure the financial, functional and operational 
independence  of  the  State  Audit  Office  (SAO)  have  not  yet  been  approved  by  parliament. 
Apart from this, the SAO law is largely in line with INTOSAI standards. 

The SAO has sufficient institutional capacity to perform its tasks, with 70 of its 85 auditors 
being  certified  public  auditors.  It  carries  out  a  compliance  audit  on  the  final  government 
accounts  of  the  core  budget  by  June  each  year.  The  audit  coverage  of  the  total  audit 
expenditure  was  45 %  in  2016.  The  SAO  has  carried  out  training  of  staff  in  international 
accounting standards, regularity and performance audit, public procurement and ethics. It also 
continued to implement its 2013-2017 strategy plan. 

79 

 
The  quality  of  audit  work  improved  in  line  with  the  INTOSAI  standards,  as  the  SAO  is 
implementing  the  revised  regularity  and  performance  audit  manuals.  Performance  auditing 
need  to  be  further  developed.  As  concerns  the  impact  of  audit  work,  the  SAO’s 
recommendations  are  not  often  efficiently  implemented  by  the  auditees.  The  follow-up  of 
SAO’s  recommendations  needs  close  parliamentary  supervision  as  parliament  still  does  not 
debate  audit  reports.  Improved  parliamentary  follow-up  of  the  SAO’s  recommendations 
would  enhance  scrutiny  of  the  executive  and  ensure  that  public  funds  are  used  more 
transparently and with greater accountability. 

Protection of EU financial interests 

As  regards  acquis  alignment,  national  legislation  addresses  the  main  elements  of  the 
Convention on the Protection of the EU’s financial interests. The  Anti-fraud Coordination 
(AFCOS) unit within the Financial Police has limited capacity to coordinate the overall anti-
fraud  system  and  fight  against  irregularities.  The  legal  framework  setting  out  its  role  and 
responsibilities needs to be improved. The AFCOS unit should increasingly focus its efforts 
on developing methodological tools in line with EU best practice and disseminating them and 
providing training to the network of irregularity officers. A national anti-fraud strategy needs 
to be adopted as well. 

AFCOS  unit  has  cooperated  with  the  European  Commission  in  carrying  out  on-the-spot 
checks.  The  country  has  also  established  procedures  for  reporting  of  irregularities  and 
suspected fraud cases. Access to the Irregularity Management System has been obtained and 
17  cases  of  irregularities  have  been  reported  to  the  Commission  since  2011,  including  two 
cases  during  the  past  year.  A  solid  track  record  on  investigations  and  reporting  needs  to  be 
further developed. 

Protection of the euro against counterfeiting 

Counterfeiting of both national and foreign currencies remained relatively low in the country. 
Concerning  acquis  alignment,  national  legislation  lays  down  counterfeiting  procedures  as 
well as the roles and responsibilities of institutions involved. The National Bank carries out 
technical  analysis  of  counterfeit  money.  The  existing  database  system  of  counterfeit 
banknotes in the National Bank was upgraded with a software system, which, however, is not 
accessible  to  the  Investigative  Centre  within  the  Ministry  of  the  Interior.  Coordination 
between  the  National  Bank,  the  Public  Prosecutor’s  Office  and  the  Ministry  of  the  Interior 
will need to be  further improved. No formal  cooperation  agreements  are in  place with  the 
European  Central  Bank  on  banknotes  and  with  the  European  Commission  on  coins. 
Cooperation  with  foreign  banks  and  bodies  is  not  yet  regulated.  The  country  participates  in 
the Pericles 2020 programme and the regional Balkan Network for Euro Protection initiative. 

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.  Some  progress  was  achieved  in  aligning  the  legal 
framework  on  taxation,  customs,  statistics  and  financial  control.  A  solid  institutional  set-up 
for  the  own  resources  system,  coordination  structures,  administrative  capacity  and 
implementing rules will need to be established in due course.   

No progress was made on traditional own resources, value added tax-based resource and 
gross national income-based resource. The country has to align further its legal framework 
and  strengthen  capacities,  especially  on  customs,  taxation,  statistics  and  financial  control. 
Instruments to fight and reduce tax evasion, fraud and informal economy need to be further 

80 

 
 
strengthened  in  order  to  ensure  appropriate  contributions  to  the  EU  own  resources  system 
upon  accession.  The  country  will  need  to  make  considerable  efforts  to  ensure  the 
exhaustiveness  of  the  national  accounts  and  GNI  calculations.  (For  further  information  see 
developments under chapter 16 — Taxation, chapter 18 — Statistics, chapter 29 — Customs 
union and chapter 32 — Financial control) 

On  administrative  infrastructure,  some  progress  was  made  in  building  up  capacities  of 
relevant  key  institutions  in  this  area.  The  country  will  need  to  establish  a  fully  operational 
coordination structure, administrative capacity and implementing rules to ensure that it will be 
able,  from  accession,  to  correctly  calculate,  forecast,  account  for,  collect,  pay,  control  and 
report to the EU on own resources in line with the acquis. 

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  seven 
subcommittees  but  the  special  group  on  public  administration  reform  was  cancelled  due  to 
lack  of  progress  in  this  area.  The  Stabilisation  and  Association  Committee  and  the 
Stabilisation  and  Association  Council  met  in  June  2016.  The  discussion  at  this  year’s 
Committee was again dominated by the political crisis in the country, the rule of law and the 
lack of progress and negative developments over the implementation of the ‘Urgent Reform 
Priorities’ agreed in June 2015. The meeting of the Stabilisation and Association Council did 
not take place during the reporting period.  

The country continued to implement commitments under the SAA, 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 to 
the  Stabilisation  and  Association  Agreement  to  take  into  account  Croatia’s  accession  to  the 
EU has been ratified by the parliament.  

The  amended  Protocol  4  to  the  Stabilisation  and  Association  Agreement  was  ratified  to 
include  provisions  for  application  of  the  Pan-Euro-Med  Convention  on  preferential  rules  of 
origin. 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. 

No meeting was held under the High-Level Accession Dialogue and there was little progress 

81 

 
 
 
 
 
 
 
 
 
on meeting its targets. 

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, the Commission has been 
regularly  assessing  the  progress  made  by  the  country  in  implementing  reforms  introduced 
under the visa roadmap. A readmission agreement between the EU and the country has been 
in force since 2008. The Joint Readmission Committee took place in Skopje on 21 June. 

Over  the  2007-2013  period,  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.  Out  of  this  overall 
amount, the national authorities are directly responsible for managing about EUR 470 million 
under the decentralised implementation system (DIS).  

Delays  in  procurement  under  the  DIS  led  to  a  situation  in  which  the  country  was  unable  to 
absorb EUR 117 million of IPA funds. The overall de-commitment figures are still expected 
to  rise  as  the  measures  taken  by  the  national  authorities  to  improve  management  of  IPA 
assistance have not yet shown any tangible results. The administrative capacity to plan, design 
and implement projects remains an issue of concern, along with the rules on sound financial 
management. The country is thus at risk of continuing to be unable to make use of substantial 
IPA funds. 

Under  IPA  II  the  EU  allocated  to  the  country  EUR  664  million  to  carry  out  reforms.  In 
November 2015, the Commission adopted the second IPA II annual programme, which was 
significantly reduced by approximately EUR 22 million due to lack of preparedness and lack 
of political will to draw up a credible and relevant sector budget support programme in public 
financial management. 

The financing agreement for the multiannual programmes on transport and environment, also 
to be managed indirectly, is expected to be signed in September 2016. Implementation under 
IPA II is in its very early stages, with a couple of contracts signed by the EUD only. The main 
challenges remain the government's inability or unwillingness to prepare substantial reforms 
in key areas. In response, the Commission yet again reduced the EU financial assistance by 
approximately EUR 27 million from what was provisionally intended for 2016. 

The  European  Commission  adopted  three  special  measures  to  help  the  Western  Balkan 
countries most affected by increased mixed migration flows to cope better. EUR 15.5 million 
were  directly allocated to the former  Yugoslav Republic of Macedonia, as  well as EUR 4.4 
million in humanitarian aid. 

82 

 
 
 
 
 
 
 
 
 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 5.10.2016) 
The former Yugoslav Republic of Macedonia 

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

Note 

2003 
2 024 
25 713 

2011 
2 057 
25 713 

2012 
2 060 
25 713 

2013 
2 062 
25 713 

2014 
2 066 
25 713 

2015 
2 069 
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 (%) 
Employment growth (national accounts data), relative 
to the previous year (%) 
Labour productivity growth: growth in GDP (constant 
prices) per person employed, relative to the previous 
year (%) 
Unit labour cost growth, relative to the previous year 
(%) 
**3 year change (T/T-3) in the nominal unit labour 
cost growth index (2005 = 100) 
Labour productivity per person employed: GDP (in 
PPS) per person employed relative to EU average 
(EU-28 = 100) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final consumption expenditure, as a share of GDP 
(%) 

Note 

2003 
268 694 

2011 
464 186 

2012 
466 703 

2013 
501 891 

2014 
527 631 

2015 
558 240p 

4 386 
2 200e 
5 700 

7 544 
3 700e 
8 800 

7 585 
3 700e 
9 000 

8 150 
3 900e 
9 500 

8 562 
4 100 
10 100 

9 061p 
4 400p 
10 600 

26 

2.2 

0.1 

2.1 

1.2 

: 

34 

2.3 

1.4 

0.9 

34 

-0.5 

1.2 

-1.6 

36 

2.9 

5.6 

-2.5 

-2.4 

-0.2 

-8.5 

: 

: 

: 

39.3 

44.6 

44.2 

43.5 

37 

37 

3.5p 

3.7e 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

1) 

13.4 
18.4 
7.6 
60.6 
97.8 

10.9 
19.0 
6.1 
64.0 
92.0 

10.5 
17.8 
6.6 
65.1 
92.5 

11.5 
17.3 
8.2 
63.0 
89.3 

11.7 
18.3 
8.0 
62.0 
86.9 

11.4p 
18.7p 
7.9p 
62.0p 
85.1p 

83 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23.1p 
7.9p 
48.8p 
65.0p 
: 

2015 
118.0 
: 
: 

: 

: 

: 

: 

2015 
-0.3 

: 

2015 
-127 

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 (%) 
Gross fixed capital formation by the general 
government sector, as a percentage of 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) 

Note 

2) 

20.1 
-2.3 
27.7 
43.4 
: 

2003 
95.1 
: 
: 

: 

: 

: 

: 

23.5 
3.3 
47.1 
66.1 
: 

23.4 
5.5 
45.4 
66.8 
: 

23.7 
5.0 
43.4 
61.5 
: 

23.4 
6.8 
47.7 
64.9 
: 

2011 
106.9 
71 022 
12.9 

2012 
104.0 
70 010 
11.9 

2013 
107.3 
68 158 
10.0 

2014 
112.5 
67 545 
10.6 

9.3 

14.3 

: 

: 

77.3 

76.7 

78.0 

75.0 

2 241 

2 107 

2 250 

2 257 

3 401 

3 213 

3 392 

3 460 

Inflation rate and house prices 
Consumer price index (CPI), change relative to the 
previous year (%) 
**Annual change in the deflated house price index 
(2010 = 100) 

Note 

2003 
1.2 

2011 
3.9 

: 

: 

2012 
3.3 

: 

2012 
-240 

2013 
2.8 

: 

2013 
-134 

2014 
-0.3 

: 

2014 
-69 

Note 
3) 

2003 
-170b 

2011 
-189 

3) 

3) 

3) 

3) 

3) 
3) 

-891b 

-1 905 

-2 008 

-1 863 

-1 855 

-1 825 

135b 

359 

-53b 

-131 

309 

-164 

375 

-193 

358 

-161 

342 

-222 

641b 

1 487 

1 622 

1 547 

1 589 

1 577 

89b 
-6.6 

77 
-3.8 

60 
-2.6 

74 
-2.4 

111 
-1.9 

49 
-1.3e 

3) 

100.1 

344.6 

131.1 

229.4 

197.4 

170.7 

3) 
3) 4) 

0.3 
: 

-0.2 
: 

-19.9 
-5.6 

22.8 
0.4 

7.7 
3.0 

-13.7 
5.9 

3) 

100.4b 

344.4 

111.2 

252.2 

205.1 

157.0 

3) 4) 

72.5 

224.4 

117.1 

226.7 

13.8 

-163.3 

3) 

-36.5 

-52.6 

-55.1 

-55.9 

-53.3 

-54.4e 

3) 5) 

31.4 

-0.7 

1.6 

-3.4 

6.4 

2.5 

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 (%) 
**Five year change in share of world exports of 
goods and services (%) 
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 (%) 

Public finance 
***General government deficit / surplus, relative to 
GDP (%) 
***General government gross debt relative to GDP 

Note 

2003 
: 

2011 
-2.5 

36.5 

27.7 

2012 
-3.8 

33.7 

2013 
-3.9 

34.0 

2014 
-4.2 

38.2 

2015 
-3.5 

38.0 

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(%) 
Total  government revenues, as a percentage of 
GDP (%) 
Total government expenditure, as a percentage of 
GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to 
GDP (%) 
Gross foreign debt of the whole economy, relative to 
total exports (%) 
Money supply: M1 (banknotes, coins, overnight 
deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up 
to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, 
million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
**Annual change in financial sector liabilities (%) 
**Private credit flow, consolidated, relative to GDP 
(%) 
**Private debt, consolidated, relative to GDP (%) 
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) 
**3 year change (T/T-3) in the trade-weighted 
effective exchange rate index, 42 countries (2005 = 
100) 
Value of reserve assets (including gold) (million euro) 

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 
(%) 

: 

: 

29.5 

32.0 

Note 
3) 6) 

2003 
34.9 

2011 
64.2b 

29.6 

33.4 

2012 
68.2 

28.0 

31.9 

2013 
64.0 

27.8 

32.0 

28.8 

32.2 

2014 
70.3p 

2015 
69.9p 

3) 6) 

128.5 

140.8b 

153.3 

147.9 

147.7 

144.0 

461b 

997 

1072 

1 138 

1 391 

1 644 

1 260b 

3 523 

3 540 

3 545 

3 801 

4 081 

1 324b 

4 147 

4 330 

4 558 

5 040 

5 374 

761b 

3 367 

3 551 

3 779 

4 157 

4 544 

: 
: 

: 
9.74 
14.00 
: 
61.264 

: 
: 

: 
2.17b 
5.50 
: 
61.529 

: 
: 

: 
2.1 
4.23 
1.00 
61.530 

1.2 
: 

: 
1.86 
3.75 
0.75 
61.583 

11.8 
: 

: 
1.79 
3.75 
0.50 
61.623 

4.1 
: 

: 
0.99 
3.75 
0.25 
61.61 

7) 
8) 
8) 9) 

10) 

97.3 

107.8 

107.9 

109.4 

112.5 

115.1 

: 

: 

: 

: 

: 

: 

8) 

715 

2 069 

2 193 

1 993 

2 436 

2 262 

2011 
5 053 
3 215 
-1 838 
94 

63.5 

56.3 

2011 
1.6 

7.6 

73.1 
77.2 

2011 
70.1 

2012 
5 071 
3 124 
-1 947 
101 

65.3 

60.3 

2012 
1.7 

9.8 

73.0 
76.9 

2012 
69.6 

2013 
4 983 
3 235 
-1 748 
99 

72.6 

62.7 

2013 
1.9 

10.2 

73.4 
77.5 

2013 
70.4 

2014 
5 505 
3 747 
-1 758 
: 

76.5 

63.4 

2014 
1.9 

9.9 

73.5 
77.5 

2014 
70.8 

2015 
5 777 
4 051 
-1 726 
: 

77.2 

62.1 

2015 
1.3e 

: 

: 
: 

2015 
70.2 

48.4 

48.2 

50.3 

51.3 

51.9 

57.8 
38.8 

35.4 

57.5 
38.7 

35.4 

59.7 
40.7 

37.9 

61.6 
40.8 

38.6 

61.5 
42.1 

40.1 

Note 

11) 

Note 

Note 

2003 
2 031 
1 203 
-828 
94 

63.7 

63.0 

2003 
4.4 

11.3 

70.9 
75.7 

2003 
: 

: 

: 
: 

28.5 

85 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) (%) 

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 
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) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

: 
: 
: 
: 
: 

: 

36.7 

37.0 
36.3 
65.7 

31.2 

: 

: 

18.7u 
23.8u 
6.2u 
51.1u 
: 

: 

31.4 

31.8 
30.8 
55.3 

25.9 

17.3 
23.6 
6.3 
52.7 
: 

: 

31.0 

31.5 
30.3 
53.9 

25.5 

18.7 
23.5 
6.9 
50.8 
: 

: 

29.0 

29.0 
29.0 
51.9 

23.9 

18.5 
23.4 
7.0 
51.1 
: 

: 

28.0 

27.7 
28.6 
53.1 

23.4 

17.9 
23.4 
7.1 
51.6 
: 

: 

26.1 

26.7 
25.1 
47.3 

21.3 

36.0 

36.4 

33.2 

31.0b 

30.0 

19.5 

18.8 

20.1 

19.6b 

18.9 

Note 

2003 
11 824 

2011 
20 847 

2012 
20 902 

2013 
21 145 

106.7 

157.0b 

152.3 

: 

: 
: 
: 

38.5 
44.9 
13.5 

38.8 
43.1 
11.7 

37.0 
39.0 
11.4 

2014 
: 

: 

35.2 
36.1 
12.5 

Note 

2003 
148.1 

2011 
152.2 

2012 
163.5 

2013 
168.2 

2014 
179.8 

300.4 

1 104.9e 

1 084.6 

1 083.9 

: 
: 

: 
: 

: 

51 
17 

2014 
27.2 

259 

2014 
: 
0.52p 

: 
: 

2013 
27.2 

259 

2013 
: 
0.44p 

: 
: 

2012 
27.2 

259 

2012 
4.0p 
0.33 

: 

2015 
: 

: 

: 
: 
11.3p 

2015 
185.5 

1 005.9 

55 
18 

2015 
27.2 

259 

2015 
: 
: 

: 

: 

: 

55.0 

58.3 

65.1 

68.3 

69.4 

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

Note 

2003 
27.2 

2011 
27.2 

208 

259 

Innovation and research 
Public expenditure on education relative to GDP (%) 
*Gross domestic expenditure on R&D relative to 
GDP (%) 
Government budget appropriations or outlays on 
R&D (GBAORD), as a percentage of GDP (%) 
Percentage of households who have internet access 
at home (%) 

Note 

2003 
3.3 
0.21 

: 

: 

2011 
3.5 
0.22 

: 

Environment 
*Index of greenhouse gas emissions,  CO2 
equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2010 constant prices) 

Note 
13) 

2003 
80.8 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

517.4 

423.1 

408.1 

363.6 

341.4p 

: 

86 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electricity generated from renewable sources relative 
to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

17.9 

15.2 

14) 

93.6 

91.8b 

Note 

Note 

Energy 
Primary production of all energy products (thousand 
TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand 
TOE) 
Primary production of natural gas (thousand TOE) 
Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Electricity generation (thousand GWh) 

Agriculture 
Agricultural production volume index of goods and 
services (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) 

2003 
1 666 

0 
1 353 

0 
1 029 
2 740 
6.7 

2003 
104.5 

1 303 
260 

179 

1 239 

192 

466 

40 

681 

2011 
1 736 

0 
1 410 

0 
1 435 
3 131 
6.8 

2011 
96.8 

1 120 
265 

197 

839 

376 

555 

0 

710 

11.7 

93.2 

2012 
1 525 

0 
1 246 

0 
1 453 
2 976 
6.3 

2012 
94.7 

1 267 
251 

177 

796 

350 

457 

0 

691 

18.7 

92.4 

2013 
1 357 

: 
1 053 

0 
1 295 
2 711 
6.1 

2013 
103.0p 

1 260 
238 

167 

807 

381 

562 

0 

687 

15.5 

94.7 

2014 
1 263p 

: 
985p 

0 
1 383p 
2 628p 
5.4 

2014 
: 

1 263 
242 

165 

822 

387 

629 

0 

776 

: 

96.1 

2015 
: 

: 
: 

: 
: 
: 
: 

2015 
: 

1 264 
253 

195 

822 

361 

489 

0 

845 

: = not available 
b = break in series 
e = estimate 
p = provisional 
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)  Total employment (employees and self-employed) and compensation of total employment are used to calculate this 

Indicator. 

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

capital. 

5)  Calculation based on data in euro. 
6)  2003: partial data coverage. 
7)  2003 and 2011–13: the interest rates are calculated as weighted averages; data cover bilateral over-night transactions. 

2014–15: end of year (31 December). 

8)  End of year (31 December). 
9) 

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 %. 

10)  NEER (nominal effective exchange rate). 
11) 
Index (previous year = 100) of the ratio of Paasche unit value indices. 
12)  Break in series caused by the introduction of a new concept of gross income. 
13)  Part of the greenhouse gas inventory prepared in the context of the Third National Communication (UNFCCC). 
14)  Break in series caused by inclusion of pipeline transport and transport for own account. 

87 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88