COMMISSION STAFF WORKING DOCUMENT North Macedonia 2019 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 2019 Communication on EU Enlargement Policy
Date: 2019-05-29
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, 29.5.2019  SWD(2019) 218 final  COMMISSION STAFF WORKING DOCUMENT North Macedonia 2019 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 2019 Communication on EU Enlargement Policy {COM(2019) 260 final}  
 
 
Table of Contents 

1 

1.1 

INTRODUCTION .................................................................................................... 3 

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

1.2. Summary of the report ............................................................................................... 3 

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW 
CHAPTERS........................................................................................................ 6 

2.1. Functioning of democratic institutions and Public Administration Reform ............. 6 

2.1.1. Democracy .............................................................................................................. 6 

2.1.2 

Public administration reform ............................................................................ 10 

2.2 

Rule of law and fundamental rights ................................................................. 14 

2.2.1 

Chapter 23: Judiciary and fundamental rights .................................................. 14 

2.2.2 

Chapter 24: Justice, freedom and security........................................................ 33 

3. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS ...... 45 

3.1. The existence of a functioning market economy ..................................................... 45 

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

 .......................................................................................................................... 51 

4 

5. 

5.1 

5.2 

5.3 

5.4 

5.5 

5.6 

5.7 

5.8 

5.9 

5.10 

5.11 

5.12 

5.13 

5.14 

5.15 

5.16 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION ...................... 53 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ............. 55 

Chapter 1: Free movement of goods ................................................................ 55 

Chapter 2: Freedom of movement for workers ................................................ 57 

Chapter 3: Right of establishment and freedom to provide services ................ 58 

Chapter 4: Free movement of capital ............................................................... 59 

Chapter 5: Public procurement ......................................................................... 60 

Chapter 6: Company law .................................................................................. 62 

Chapter 7: Intellectual property law ................................................................. 62 

Chapter 8: Competition policy ......................................................................... 63 

Chapter 9: Financial services ........................................................................... 65 

Chapter 10: Information society and media ..................................................... 66 

Chapter 11: Agriculture and rural development ............................................... 68 

Chapter 12: Food safety, veterinary and phytosanitary policy ......................... 69 

Chapter 13: Fisheries ........................................................................................ 71 

Chapter 14: Transport policy ............................................................................ 71 

Chapter 15: Energy ........................................................................................... 73 

Chapter 16: Taxation ........................................................................................ 75 

1 

 
 
5.17 

5.18 

5.19 

5.20 

5.21 

5.22 

5.25 

5.26 

5.27 

5.28 

5.29 

5.30 

5.31 

5.32 

5.33 

Chapter 17: Economic and monetary policy .................................................... 76 

Chapter 18: Statistics ........................................................................................ 77 

Chapter 19: Social policy and employment ..................................................... 78 

Chapter 20: Enterprise and industrial policy .................................................... 81 

Chapter 21: Trans-European networks ............................................................. 82 

Chapter 22: Regional policy and coordination of structural instruments ......... 83 

Chapter 25: Science and research ..................................................................... 84 

Chapter 26: Education and culture ................................................................... 85 

Chapter 27: Environment and climate change ................................................. 87 

Chapter 28: Consumer and health protection ................................................... 89 

Chapter 29: Customs union .............................................................................. 91 

Chapter 30: External relations .......................................................................... 92 

Chapter 31: Foreign, security and defence policy ............................................ 94 

Chapter 32: Financial Control .......................................................................... 95 

Chapter 33: Financial and budgetary provisions .............................................. 97 

ANNEX I – RELATIONS BETWEEN THE EU AND NORTH MACEDONIA......... 99 

ANNEX II – STATISTICAL ANNEX ........................................................................ 100 

2 

 
 
 
 
 
1 

INTRODUCTION  

1.1 

Context  

The  Stabilisation  and  Association  Agreement  (SAA)  between  the  Republic  of  North 
Macedonia and the EU entered into force in April 2004. The passage to the second stage 
of  the  SAA,  which  the  Commission  had  proposed  in  2009,  took  place  during  the 
reporting period. Since 2009, the Commission has recommended to the Council to open 
accession negotiations with North Macedonia, a candidate country since 2005. In light 
of the progress achieved in previous years, in April 2018 the Commission repeated its 
unconditional  recommendation  to  open  accession  negotiations.  In  June  2018,  the 
Council  set  out  the  path  towards  opening  accession  negotiations  in  June  2019.  The 
Commission  has  continued  to  thoroughly  monitor  the  reforms  set  in  the  Council 
Conclusions and EU-related reforms across all sectors. North Macedonia has continued 
to deepen the reform momentum, delivering tangible results in the key areas identified 
in  the  June  2018  Council  Conclusions.  Good  neighbourly  relations  have  also  been 
significantly  strengthened.  The  entry  into  force  in  February  2019  of  the  historic 
agreement with Greece (also called the ‘Prespa agreement’) was a major breakthrough 
and sets an example of reconciliation for the region and beyond. 
1.2. Summary of the report1 

Concerning the political criteria, North Macedonia has continued to maintain a steady 
pace of implementation of EU reforms throughout the reporting period. The government 
has taken steps to restore checks and balances, and to strengthen democracy and the rule 
of law. The country has continued to undergo fundamental changes in an inclusive and 
open political atmosphere. The country has continued to deliver tangible results in key 
areas  identified  in  the  Council  Conclusions  such  as  the  judiciary,  fight  against 
corruption and organised crime, intelligence services reform and public administration. 
The culture of compromise in the political landscape has improved by the government’s 
efforts to reach out to all stakeholders, including the opposition and civil society, in an 
inclusive  and  transparent  manner.  Following  the  signature  of  the  historic  agreement 
reached  with  Greece  in  June  2018  (also  known  as  the  ‘Prespa  agreement’),  a 
consultative referendum  was organised in September 2018, whereby an overwhelming 
majority  of  voters  who  cast  their  ballots  supported  EU  and  NATO  membership  by 
accepting the Prespa agreement. The presidential elections were well organised and the 
fundamental freedoms were respected, allowing the citizens to make informed choices 
between  the  candidates.  The  Parliament  has  improved  its  performance  as  a  forum  for 
constructive  political  dialogue  and  enhanced  its  oversight  and  legislative  functions, 
including by limiting the use of fast-track procedures.  

The inter-ethnic situation remained calm overall, despite some occasional tensions. The 
government  pursued  its  commitment  to  increase  trust  among  communities.  The  Ohrid 
Framework Agreement, which ended the 2001 conflict and provides the framework for 
preserving the multi-ethnic character of the society, is mentioned in the preamble of the 
Constitution and continued to be implemented.  

1 This report covers the period from March 2018 to March 2019. It is based on input from a  variety of 
sources,  including  contributions  from  the  government  of  North  Macedonia,  the  EU  Member  States, 
European  Parliament  reports  and  information  from  various  international  and  non-governmental 
organisations.  

3 

 
 
                                                           
The climate in which civil society organisations operate has continued to improve. Civil 
society  continued  to  play  a  constructive  role  in  supporting  democratic  processes. 
Strategic documents have been adopted, providing guidance on the cooperation between 
government and civil society. Both  governmental and non-governmental actors should 
aim at a meaningful consultation process. 

On intelligence services reform, North Macedonia has made good progress. Following 
the  reform  of  the  system  for  interception  of  communications,  the  new  Operational 
Technical Agency is fully operational. The country has also embarked on the reform of 
its  intelligence  services  in  cooperation  with  NATO  and  other  partners.  A  model  has 
been selected and the legal framework for establishing a new National Security Agency 
has been adopted. 

North Macedonia is moderately prepared with the reform of its public administration. 
Good  progress  has  been  made,  especially  with  the  implementation  of  the  public 
administration reform strategic framework, improved public consultations and increased 
transparency in policy-making and in the area of policy development and coordination. 
Steps  have  been  taken  to  address  alleged  politicised  appointments.  However,  further 
efforts  are  needed  to  enhance  accountability  of  the  administration  and  prevent  its 
politicisation.  Respect  for  the  principles  of  transparency,  merit  and  equitable 
representation remains essential. 

The  country’s  judicial  system  has  reached  some  level  of  preparation  /  is  moderately 
prepared and good progress was made in addressing the ‘Urgent Reform Priorities’ and 
recommendations  from  the  Venice  Commission  and  the  Senior  Experts’  Group  on 
systemic  Rule  of  Law  issues.  The  country  demonstrated  continued  determination  to 
improve  the  judicial  system  and  the  implementation  of  the  new  legal  framework  is  a 
firm  basis  for  continued  progress.  A  new  law  on  the  Public  Prosecutor  Office  to 
integrate  the  Special  Public  Prosecutor  within  the  prosecutorial  system  has  been 
prepared. The courts have been delivering judgements on some high profile cases filed 
by the Special Prosecutor’s Office. Beyond legal changes, all judicial institutions need 
to demonstrate their exemplarity and contribute, through additional efforts, to restoring 
public trust in the judiciary. 

As  regards  the  fight  against  corruption,  North  Macedonia  has  some  level  of 
preparation. Good progress has been made through further consolidating a track record 
on investigating, prosecuting and trying high level corruption cases and through changes 
to  the  legislative  framework.  In  this  regard,  the  new  legal  framework  for  preventing 
corruption  has  improved  and  the  appointment  of  the  new  members  of  the  State 
Commission  for  Prevention  of  Corruption  has  been  far  more  transparent  than  in  the 
previous years. The Commission has taken important steps to proactively fight against 
corruption,  involving  high  level  officials  across  the  political  spectrum.  The  Special 
Public Prosecutor has confirmed its leading role in investigating and prosecuting high-
level corruption cases. The authorities have to further step up efforts to demonstrate that 
fight  against  corruption  is  a  national  priority  at  all  levels  of  powers.  However, 
corruption is prevalent in many areas and remains an issue of concern. 

In the fight against organised  crime, the  country  has some level  of preparation. The 
legislative  framework  is  broadly  in  line  with  European  standards,  and  efforts  to 
implement strategies against organised crime and actively measuring their impact need 

4 

 
 
to continue. Some progress was also made in meeting last years’ recommendations on 
improving the track record, stepping up law enforcement cooperation and substantially 
improving  the  operational  capacity  to  fight  trafficking  in  human  beings.  Further 
progress  was  made  at  the operational  level  through improving the  effectiveness  of the 
National Coordination Centre for the Fight against Organised Crime and participation in 
joint operations with EU Member States and neighbouring countries. 

The  legal  framework  for  the  protection  of  fundamental  rights  is  largely  in  line  with 
European  standards  and  the  country  made  good  progress.  It  increased  the  protection 
against  hate  crime  and  discrimination  with  amendments  to  the  Criminal  Code  and  the 
adoption of the Law on Prevention and Protection from Discrimination. It also adopted 
an  ambitious  de-institutionalisation  strategy  and  it  transcribed  its  objectives  to  fight 
violence against women into an action plan for implementing the Istanbul Convention. 
However, the external oversight mechanism of the police is not yet fully operational and 
the country needs to develop further the use of alternative sanctions and probation. The 
country  also  needs  to  make  additional  efforts  to  consistently  disseminate  and  address 
recommendations of European and international human rights bodies, notably regarding 
treatment  of  detained  persons,  women  and  persons  with  disabilities.  The  country  has 
some level of preparation / is moderately prepared in the area of freedom of expression 
and it has made  good progress  over the last  year. The  climate for media  freedom and 
freedom of expression continued to improve. It is essential that public officials and the 
political  elites  demonstrate  a  higher  level  of  tolerance  towards  criticism,  thereby 
upholding  freedom  of  expression.  The  country  needs  to  make  sustained  efforts  to 
improve the independence and professional standards of the public broadcaster as well 
as  its  financial  sustainability.  Amendments  to  the  Law  on  Audio  and  Audio-visual 
Media Services have been adopted and their implementation will require strong political 
commitment  to  guarantee  professionalism,  respect  for  the  principles  of  transparency, 
merit-based appointments and equitable representation. 

With  regard  to  regional  cooperation,  the  country  maintained  its  good  relations  with 
other  enlargement  countries  and  participated  actively  in  regional  initiatives.  Historic 
steps  have  been  taken  to  improve  good  neighbourly  relations,  including  through  the 
entry into force of the Prespa agreement and its implementation, putting an end to one 
of  the  oldest  disputes  in  the  region.  The  Commission  looks  forward  to  the  continued 
implementation of the bilateral treaty with Bulgaria.  

As regards the economic criteria, North Macedonia has made some progress and is at a 
good  level  of  preparation  in  developing  a  functioning  market  economy.  Economic 
growth  resumed  after  a  year  of  stagnation,  though  investment  remained  subdued.  The 
government took measures to improve public finance management and transparency. It 
adopted reforms of income taxation and the pensions system. However, the composition 
of spending worsened, and fiscal consolidation needs to be more ambitious in order to 
put  public  finances  on  a  sustainable  path.  The  functioning  of  the  labour  market  is 
impaired  by  persisting  structural  problems.  Contract  enforcement  and  large  informal 
economy continue posing challenges for the business environment.  

North  Macedonia  has  made  some  progress  and  is  moderately  prepared  to  cope  with 
competitive pressures and market forces within the EU. Integration with the EU in trade 
and investment deepened further. Exports and manufacturing output diversified further 
towards higher-value products. However, skills shortages, and a lack of skills alignment 
5 

 
 
with  those  required  by  companies,  reflecting  shortcomings  in  education  curricula, 
impair  labour  productivity  and  the  competitiveness  of  the  economy.  Important 
investment gaps in public infrastructure remain. 

As  regards  its  ability  to  assume  the  obligations  of  membership,  the  country  is 
moderately  prepared  in  most  areas,  including  in  the  areas  of  competition,  public 
procurement,  transport  and  energy.  The  country  shows  a  good  level  of  preparation  in 
areas  such  as  company  law,  customs  union,  trans-European  networks  and  science  and 
research.  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 free movement of workers 
as  well  as  financial  and  budgetary  provisions.  More  focus  is  also  needed  on 
administrative  capacity  and  effective  implementation.  The  country  has  continued  to 
improve  its  alignment  with  the  EU  declarations  and  Council  decisions  on  Common 
Foreign and Security Policy. 

North Macedonia continues to play an active and constructive role in the management 
of  mixed  migration  flows.  It  cooperates  effectively  with  EU  Member  States  and 
neighbouring  countries.  Considerable  efforts  to  ensure  basic  living  conditions  and 
services for all migrants staying in the country continued. There are still uncertainties on 
the  scope  and  structure  of  migration  flows.  The  inconsistent  registration  of  migrants 
apprehended in irregular movements prevents regular and adequate protection-sensitive 
profiling, as well as referral to national protection mechanisms. Effective control at the 
southern border has been ensured, including with the deployment of guest officers from 
EU  Member  States  at  the  border.  The  European  Border  and  Coast  Guard  Status 
Agreement  with  the  EU  was  initialled.  However,  the  problem  of  frequent  smuggling 
activities at the northern border need to be further addressed. The country continues to 
be under severe pressure due to its geographic location.  

2.  FUNDAMENTALS  FIRST:  POLITICAL  CRITERIA  AND  RULE  OF  LAW 

CHAPTERS  

2.1. Functioning of democratic institutions and Public Administration Reform 

2.1.1. Democracy 

In  parallel  to  the  implementation  of  the  Prespa  agreement,  North  Macedonia  has 
continued  to  show  its  commitment  to  deliver  tangible  results  in  implementing  EU 
reforms  in  key  areas  such  as  (i)  the  judiciary,  fight  against  corruption  and  organised 
crime;  (ii)  intelligence  services;  and  (iii)  public  administration  reform,  including 
through  the  ‘Plan  3-6-9’  and  ‘Plan  18’.  The  culture  of  compromise  among  political 
actors  has  improved  by  the  government’s  efforts  to  reach  out  to  all  stakeholders, 
including the opposition and civil society, in an inclusive and transparent manner. The 
government  has  taken  steps  to  restore  proper  checks  and  balances,  and  to  strengthen 
democracy and the rule of law.  

Elections  

Overall, the legal  framework is  conducive to  the organisation  of democratic elections. 
Some progress has been made in addressing and implementing the recommendations of 

6 

 
 
the  Office  for  Democratic  Institutions  and  Human  Rights  of  the  Organisation  for 
Security and Cooperation in Europe (OSCE/ODIHR). The consultative referendum2 was 
well  organised  and  fundamental  freedoms  were  respected.  The  presidential  elections 
took  place  in  a  peaceful,  orderly  and  transparent  atmosphere.  The  conduct  of  these 
elections paved the way  towards further strengthening the democratic processes in the 
country.  The  work  on  the  electoral  legislation  needs  to  be  finalised  to  address  the 
remaining recommendations of OSCE/ODIHR and of the Venice Commission ahead of 
the  next  election  cycle.  The  state  institutions  and  bodies,  notably  the  Ministry  of  the 
Interior  and 
to 
systematically improve the accuracy of the voters list (‘Urgent Reform Priority’).  

the  State  Election  Commission,  should  make  further  efforts 

OSCE/ODIHR assessed that both rounds of the presidential elections (21 April and 5 
May 2019) were well organised and the fundamental freedoms were respected, allowing 
the citizens to  make an informed choice between candidates. Three  candidates ran  for 
the  presidency,  a  woman  and  two  men,  including  an  ethnic  Albanian.  None  of  the 
candidate had an official party affiliation, but all of them were supported either by the 
ruling  coalition  or  the  opposition  parties.  In  the  second  round,  the  coalition  candidate 
won  with  51.7%  against  the  opposition  candidate,  who  was  supported  by  44.8%  of 
voters. The turnout was 46.7%. President Pendarovski took office in May 2019. 

A consultative  referendum  was  held  on 30 September 2018. Of the 36.9% of voters 
who  cast  their  ballots,  91.5%  supported  EU  and  NATO  membership  by  accepting  the 
Prespa agreement. OSCE/ODIHR assessed that the referendum proceeded in an orderly 
manner  without  major  irregularities.  Parliament  was  the  ‘authorised  proposer’  of  the 
referendum  and  financed  a  public  campaign  for  the  referendum.  The  ‘For’  campaign 
was led mainly by the ruling parties and across ethnic lines. Media provided voters with 
extensive  information  and  diverse  views,  despite  the  absence  of  an  active  ‘against’ 
campaign. Calls for ‘boycott’ were mainly relayed on social media and through rallies.  

New provisions in the Electoral Code provided the grounds for electing the new State 
Election Commission (SEC), composed of members proposed by political parties, and 
the  extension  of  their  term  to  cover  the  presidential  elections.  SEC  organised  the 
referendum and the presidential elections impartially and professionally, and generally 
enjoyed public trust. A sustainable solution for the composition of the SEC needs to be 
found in a transparent and inclusive manner. Despite improvements of the voters’ list, 
discrepancies between databases need to continue to be addressed.  

In  line  with  the  recommendations  of  OSCE/ODIHR  and  the  Venice  Commission,  the 
government  undertook  steps,  in  cooperation  with  civil  society  and  political  parties, 
towards  a  comprehensive  reform  of  the  electoral  legislation.  The  legal  framework 
underwent several changes, including the reimbursement of paid political advertisement 
from  the  state  budget.  Although  the  legal  framework  is  conducive  to  the  conduct  of 
democratic  elections,  the  referendum  and  the  presidential  elections  highlighted  that 
some aspects, such as campaign financing, remain unaddressed. The initial work on the 
electoral legislation needs to be finalised ahead of the new election cycle, in cooperation 
with OSCE/ODIHR.  

2 Following the signature of the Prespa agreement, the consultative referendum, held in September 2018, 
asked  the  following  question  ‘Are  you  in  favour  of  EU  and  NATO  membership  by  accepting  the 
agreement between the Republic of Macedonia and the Republic of Greece?’ 

7 

 
 
                                                           
Parliament  

the  Prespa  agreement, 

The Parliament improved its performance as a forum for constructive political dialogue 
and enhanced its legislative function. It has made some progress in restoring checks and 
balances  over  the  executive  power,  focusing  on  deepening  the  reforms,  further 
increasing  its  oversight  capacity  and  its  transparency.  The  Parliament  carried  out  the 
the  promulgation  of 
ratification  process  of 
constitutional  changes.  Parliament  also  engaged  constructively  in  the  ‘Jean  Monnet 
Dialogue’ with  the European Parliament.  The  accountability for those  who committed 
violence  and  orchestrated  the  attacks  of  April  2017  in  Parliament  continued  to  be 
established.  Further  efforts  are  needed  to  address  security-related  issues.  A  functional 
oversight  of  the  work  of  the  government  and  of  intelligence  services,  as  well  as  the 
capacity to monitor the protection of human rights and fundamental freedoms, should be 
further strengthened. Political parties need to further improve their internal democratic 
processes.  

including 

Parliament’s  role  as  the  main  institution  for  political  dialogue  has  improved 
considerably. Over the reporting period, there was an intense activity in Parliament with 
debates and adoption of EU-related laws. Consensus across party and ethnic lines was 
established on several occasions, including for the amendments to the laws requiring 2/3 
majority,  particularly  in  the  areas  identified  by  the  Council  Conclusions  such  as  the 
judiciary, fight against corruption and intelligence services. The former President of the 
Republic  refused  to  sign  the  laws  adopted  under  the  new  name  of  the  country,  which 
required a second passage of these laws in the Parliament. The process of constitutional 
changes  to  implement  the  Prespa  agreement  revealed  divisions  between  VMRO-
DPMNE3  leadership  and  some  of  its  members  of  Parliament,  which  resulted  in  the 
formation of a new parliamentary group. 

The country continued to deal with the aftermath of the violent attacks in Parliament of 
27  April  2017.  Accountability  for  those  who  committed  violence  and  orchestrated  the 
incidents  continued  to  be  established  by  the  courts.  The  verdict  of  the  trials  were 
announced in March 2019. 16 defendants, including high-level officials, were sentenced 
from 7 to 18 years in prison. The Public Prosecutor’s Office also opened investigations 
on those who ordered the attacks, including high-level politicians. As part of a broader 
reconciliation  process,  a  Law  on  Amnesty  was  adopted  in  December  2018.  This  law 
does  not  provide  for  impunity  regarding  the  organisation  or  perpetration  of  serious 
crimes related to April 27 attacks.  

Although  Parliament  faces  challenges  in  better  planning  and  coordinating  its  work  to 
achieve  a  more  effective  legislative  oversight,  the  number  of  shortened  and  urgent 
procedures  have  significantly  decreased.  In  2018,  20%  of  laws  were  adopted  in  a 
shortened  procedure  and  none  in  urgent  procedure  (compared  with  75%  in  shortened 
procedure and one law in urgent procedure in the previous reporting period). Parliament 
adopted  and  started  implementing  its  first  2018-2022  strategic  plan.  New  inter-party 
groups  on  Roma4  and  youth  started  working.  The  Parliament’s  oversight  role  was 
interception  of 
significantly 

the  oversight  of 

strengthened, 

including 

the 

3 Internal Macedonian Revolutionary Organisation – Democratic Party for Macedonian National Unity 
4 In line with the terminology of European institutions, the umbrella term ‘Roma’ is used here to refer to a 
number of different groups, without denying the specificities of these groups. 

8 

 
 
                                                           
communications.  The  Parliament  should  continue  to  work  on  the  efficiency  of  the 
democratic  political  system,  including  on  the  implementation  of  the  Group  of  States 
against Corruption (GRECO) recommendations on transparency of party funding.  

Parliament  engaged  constructively  in  the  ‘Jean  Monnet  Dialogue’,  an  initiative  of  the 
European  Parliament,  aiming  at  creating  an  atmosphere  of  national  dialogue  and 
consensus  among  the  political  parties.  The  first  round  of  dialogue  took  place  in  May 
2018  and  the  second  round  is  being  prepared.  The  adoption  of  the  Code  of  Ethics, 
aiming at addressing GRECO recommendations, was a concrete result of this process, 
and inclusive work on the Rules of Procedure is at an advanced stage.  

The  ethnic  representation  of  members  of  Parliament  largely  reflects  the  ethnic 
composition of the population. Women’s representation in the Parliament is 38.3%.  

Despite the latest changes, the transparency in financing of political parties needs to be 
further improved - see Chapter 23 – Judiciary and fundamental rights. Political parties 
also  need  to  strengthen  their  democratic  processes  by  further  promoting  freedom  of 
assembly and expression.  

Governance 

Democratic  governance  was  strengthened  over  the  reporting  period.  The  government 
continued to consolidate democracy and rule of law. It has sustained its commitment to 
deepen  the  reform  momentum  and  to  deliver  tangible  results,  including  through  EU-
related  reform  plans.  It  continued  to  improve  its  decision-making  process  and  the 
transparency  of  its  work.  The  inter-ethnic  situation  continued  to  be  calm  overall.  The 
government  has  sustained  efforts  to  foster  inter-ethnic  relations  and  to  implement  the 
Ohrid Framework Agreement (OFA).  

The Law on Government was amended to provide for the establishment of the technical 
government  and  the  so-called  ‘Pržino  government’  arrangements  (i.e.  Ministers  and 
deputy  Ministers  from  the  opposition  in  key  ministries)  in  advance  of  future 
parliamentary  elections.  During  the  reporting  period,  the  Minister  of  Justice  was 
replaced  and  there  was  a  government  reshuffle  in  June  2018  to  include  two  ethnic 
Albanian  parties,  Democratic  Party  of  Albanians  (DPA)  and  Alternativa.  The  total 
representation  of  women  in  the  appointed  functions  and  in  decision-making, 
management  and  governing  bodies  is  11%.  Out  of  these,  15%  were  appointed  as 
Ministers, 7% as deputy Ministers, 25% as state secretaries and 9% in other appointed 
positions. 

Following the ‘Plan 3-6-9’, the government developed the ‘Plan 18’ for continuing the 
implementation  of  the  EU  reform  agenda,  prioritising  the  areas  identified  in  the 
Council Conclusions. The administration participated actively in the meetings organised 
by the European Commission for the technical explanation of the acquis. 

The  inter-ethnic  situation  remained  calm  overall,  despite  some  occasional  tensions. 
The government pursued good relations among communities. A reference to the Ohrid 
Framework  Agreement  (OFA),  which  ended  the  2001  conflict  and  provides  the 
framework for preserving the multi-ethnic character of the society, is mentioned in the 
preamble of the Constitution. The Law on the Use of Languages, which is considered by 
ethnic Albanian political parties as an important legislative element that contributes to 
complete the implementation of the OFA, entered into force in January 2019. The law 
9 

 
 
was sent to the Venice Commission for its opinion.  

Decentralisation  has  been  a  commitment  since  the  OFA  was  signed  in  2001.  The 
transition towards effective fiscal decentralisation to municipalities is still ongoing. The 
law on reporting and recording of public institutions’ obligations was changed to allow 
the state to take over up to 51% of existing debts of municipalities as a one-off measure. 
At  the  same  time,  work  on  introducing  sound  fiscal  rules  for  local  government  has 
begun. These measures aim to avoid a possible relaxation of financial discipline among 
municipalities.     

Civil society  

The  environment  in  which  civil  society  operates  has  continued  to  improve,  with  its 
involvement  in  policy-making  and  legislative  processes.  Strategic  documents  were 
adopted,  guiding  the  government's  cooperation  with  civil  society  organisations.  Both 
governmental and non-governmental actors should ensure that safeguards are in place to 
further  strengthen  checks  and  balances  and  should  aim  for  a  meaningful  consultation 
process.  An  improved  legal  and  financial  framework  is  still  needed  to  strengthen  an 
enabling environment for civil society. 

An  empowered  civil  society  is  a  crucial  component  of  any  democratic  system  and  is 
recognised  as  such  by  state  institutions.  Good  progress  was  made  towards  the  regular 
functioning of the Council for Cooperation between Government and Civil Society and 
the  adoption  of  the  2018–2020  strategy,  including  its  action  plan.  Further  efforts  are 
needed to address limited transparency, including through a more inclusive internal and 
sectorial  consultation  process  within  the  Council.  Additional  efforts  are  needed  to 
address  the financial  sustainability of  civil  society  organisations such  as  a broader tax 
harmonisation and predictable public budgeting.  

Civilian oversight of the security/intelligence sector  

Thanks  to  cross-party  compromise,  the  legal  framework  enabling  the  reform  of  the 
interception  of  communication  was  adopted  with  2/3  majority.  The  new  Operational 
Technical  Agency  (OTA)  started  working  in  November  2018.  The  parliamentary 
oversight  committee  over  interception  of  communications  is  in  the  process  of  hiring 
experts to assist its work in this area. The Committee performed four inspection visits to 
the  Bureau  for  Security  and  Counterintelligence  (UBK),  the  OTA,  the  Customs 
Administration and the Financial Police in 2018 and 2019.  

A broader reform of the intelligence services is under way, in cooperation with NATO 
and other partners. New laws on the National Security Agency and on the coordination 
of the intelligence and security community have been adopted. It is essential that these 
laws  are  swiftly  implemented,  in  cooperation  with  NATO  and  strategic  partners.  It  is 
foreseen  for  the  new  Agency  to  replace  the  existing  Bureau  for  Security  and 
Counterintelligence  as  an  independent  state  body,  without  police  powers  and  with  the 
competence to gather intelligence for guaranteeing the security of the State.     

2.1.2  Public administration reform  

North Macedonia is moderately prepared with the reform of its public administration. 
Good  progress  was  achieved  with  the  implementation  of  the  public  administration 
reform strategic framework and in the area of policy development and coordination. The 

10 

 
 
Ministry  of  Information  Society  and  Administration  has  now  a  designated  team  to 
coordinate public administration reform efforts with other key institutions, and the first 
government  monitoring  reports  have  been  published.  The  Ministry  has  also  set  up  a 
team  to  support  public  authorities  with  implementation  of  the  Law  on  General 
Administrative  Procedures.  Further  steps  have  been  taken  to  improve  transparency, 
including by publishing the number of public service employees and increasing the use 
of public consultations. The State Commission for Prevention of Corruption has started 
to  address  cases of politicised appointments by the current  and previous  governments. 
Further  efforts are needed to  enhance accountability of the administration and prevent 
politicisation  of  public  service.  The  Commission’s  2018  recommendation  on  merit-
based  recruitments 
in  open  competitions  remains  valid,  especially  on  senior 
management  appointments.  The  respect  for  principles  of  transparency,  merit  and 
equitable representation remains essential. 

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

  ensure  full  respect  of  merit-based  recruitment  for  senior  civil  service  and  other 

positions;  

  finalise  the  horizontal  functional  review  and  start  implementing  it  to  ensure  clear 

accountability lines between institutions; 

  ensure full implementation of the Law on General Administrative Procedures. 

Strategic framework for public administration reform 

The  2018-2022  public  administration  reform  strategy  and  the  2018-2021  public 
financial  management  reform  programme  are  the  umbrella  strategies  for  public 
administration  reform.  The  government  has  started  to  monitor  and  report  on  their 
implementation,  but  an  integrated  monitoring  and  reporting  framework  has  yet  to  be 
the 
established.  Civil  society  has  actively  participated 
government’s reform efforts. The high-level Public Administration Reform Council and 
the Public Financial Management Council ensure political support and supervision of 
reforms.  The  Ministry  of  Information  Society  and  Administration  has  increased  its 
capacities to  drive the  reform  at  the technical  level.  The  Ministry  of  Finance needs to 
become increasingly involved in the overall reform coordination, also due to increased 
focus  on  managerial  accountability  (see  Chapter  32  –  Financial  Control).  The  reform 
also  needs  to  be  made  financially  sustainable  and  systematically  costed  in  the  state 
annual  budget  and  the  medium-term  expenditure  framework.  Implementation  of  the 
reform strategies is still very much dependent on external donor funding.   

the  monitoring  of 

in 

Policy development and coordination  

The legal  framework  and institutional  structures provide for a  policy-making system, 
including for managing the process of EU integration. Policy planning still needs to be 
reinforced  and  become  consistent  with  medium-term  budgetary  planning.  The 
government  updated  guidelines  on  preparation,  monitoring  and  reporting  of  strategic 
planning  documents  in  August  2018.  The  General  Secretariat  needs  to  enhance  its 
central  coordination  and  quality  control  role  to  follow  up  on  implementation  of  these 
guidelines.  It  will  also  need  to  upgrade  the  procedural  rules  and  guidance  on 
development  and  monitoring  of  sector  strategies.  In  December  2018,  the  government 
adopted  a  decision  to  improve  coordination  among  the  main  ‘centre  of  government’ 
11 

 
 
institutions. The improved coordination will be addressed in detail by the amendments 
to the government’s rules of procedure.  

Evidence-based  policy  and  legislative  development  are  only  partially  ensured. 
Administrative data collection and consistent use of data for decision-making need to be 
strengthened. The quality of regulatory impact assessments has slightly improved, while 
budgetary  impact  assessments  are  still  either  missing  or  they  are  not  comprehensive. 
Inter-ministerial  consultations  need  to  be  properly  integrated  in  the  process.  Public 
consultations  have improved through the national  electronic  consultation  system. The 
government's proposals to use shortened and urgent procedures for adopting legislation 
have significantly decreased (see 2.1.1. Democracy).  

Public scrutiny of government work has improved, thanks to the increased number of 
published government monitoring reports and communication.  

Public financial management 

The  government  has implemented the 2018-2021 public financial management reform 
programme  and  published  the  first  annual  monitoring  report  in  early  2019.  The 
programme  covers  seven  priorities.  The  2019-2021  fiscal  strategy  report  underwent 
sufficient  parliamentary  debate.  It  further  strengthens  budget  management  and  fiscal 
discipline to maintain macroeconomic stability, achieve gradual fiscal consolidation and 
maintain a low budget deficit. The preparation of the 2018 and 2019 budgets has been 
enhanced and subjected to public consultation.  Further efforts should be considered to 
strengthen the government’s investment management and planning capacities. 

Progress has been made in improving budget transparency through the publication of 
a citizens' budget and increased budgetary data. Budget transparency and accountability 
of  public  fund  management  should  be  ensured  through  efficient  monitoring  by  the 
executive  and  the  Parliament.  This  includes  following  up  on  the  State  Audit  Office 
recommendations.    

Public service and human resources management 

While the Law on Administrative Servants and the Law on Public Sector Employees in 
principle ensure  merit-based recruitment, promotion and dismissals, these laws are 
not  fully  applied  across  the  administration.  There  are  contradicting  provisions  in  the 
Law on Internal Affairs, which allow employees to be excluded from the application of 
the Law on Administrative Servants. Procedures for temporary or service employments 
with  lower  criteria  are  used  in  many  cases,  bypassing  the  criteria  set  in  the  Law  on 
Administrative Servants. The grounds for dismissals need to be made more transparent. 
Following  public  allegations  of  appointments  of  family  members  by  the  previous  and 
current  government,  measures  have  been  taken  by  the  government  and  investigations 
have  been  launched  by  the  State  Commission  for  Prevention  of  Corruption.  The 
findings  of  the  State  Commission  for  Prevention  of  Corruption  may  require  further 
changes  in  the  recruitment  processes  of  public  institutions  to  make  them  more 
transparent and merit-based. – See Chapter 23 – Judiciary and fundamental rights.  

While  the  government  followed  a  specific  procedure  for  the  appointment  of  senior 
managers,  after  the  latest  early  parliamentary  and  local  elections,  there  have  been 
concerns over consistent non-application of the principle of merit. A number of senior 
deputy positions were introduced without merit criteria. The government is preparing a 

12 

 
 
new  law  to  regulate  the  conditions  for  recruitment  and  dismissals  for  top  managerial 
positions.  

The  Ministry  of  Information  Society  and  Administration  is  in  charge  of  coordinating 
and monitoring the management of human resources across the public administration. 
However, its capacity needs to be strengthened to ensure systematic application of the 
legislation.  Better  functionality  of  the  Human  Resources  Management  Information 
System and its systematic use by line institutions has to be ensured. The remuneration 
system needs to be revised. 

The  representation  of  women  in  the  public  service  has  remained  over  50%.  Equitable 
representation is not consistent across the public sector and across all categories of civil 
servants.  There  is  higher  representation  of  some  minorities  in  the  institutions  whose 
hierarchy includes that  minority. Smaller ethnic minorities remain underrepresented in 
the public sector. Despite the government’s announcements, no decision has been taken 
by  the  responsible  institutions  on  how  to  tackle  the  issue  of  public  employees  not 
showing up for work and on determining their final job positions.  

Professional  development  is  not  yet  systematic,  and  a  centralised  database  of  the 
training offered by various institutions is  yet to be established. While  integrity in the 
public service is sufficiently regulated, including whistle-blower legislation, data needs 
to be made available on how integrity mechanisms are implemented in practice.  

Accountability of the administration 

To  improve  the  administration’s  rationality  and  lines  of  accountability,  a  functional 
review  has  been  launched  to  assess  around  128  governmental  institutions  and  their 
functions  and  possible  overlaps.  A  number  of  institutions  have  continued  to  report  to 
both their line ministry and to the government in parallel. Managerial accountability is 
not  systematically implemented within institutions, and there is  insufficient  delegation 
of  responsibility  through  the  various  management  levels  (see  Chapter  32  -  Financial 
Control). 

Citizens’  right  to  good  administration  is  protected  by  the  independent  institutions, 
especially  the  Ombudsman  and  the  State  Audit  Office.  Systemic  follow-up  to  their 
recommendations  still  needs  to  be  ensured.  Citizens’  right  to  access  public 
information has improved through increased transparency of most central government 
institutions  and  the  publication  of  21  standard  sets  of  documents.  An  open  data 
mechanism  was  set  up.  It  requires  a  commitment  by  all  state  institutions  to  regularly 
provide and update data. The delays in appointing of the Commission for Protection of 
Free Access to Public Information from May 2018 until the end of March 2019 made it 
non-responsive  to  appeals  in  that  period.  Its  capacities  have  remained  insufficient  to 
monitor compliance with the proactive disclosure of information requirements.  

The  law  on  administrative  disputes  was  adopted  in  May  2019.  In  practice,  the  appeal 
procedure for citizens’ right to administrative justice is overly complex and lengthy. 
Delays  occur  in  enforcing  administrative  court  rulings.  While  legislation  defines 
citizens’ right to seek compensation and the liability of public authorities in cases of 
wrongdoing, data is yet to be collected to monitor compensation for damages. 

13 

 
 
Service delivery to citizens and businesses 

The  national  portal  for  services  is  being  upgraded  to  create  a  more  user-oriented 
administration that will serve as a single contact point and allow for equal access and a 
digital interface with the state administration. The population register is yet to become 
functional  as  the  basic  source  of  information  for  both  state  institutions  and  citizens’ 
interaction  with  the  administration.  The  application  of  the  interoperability  framework 
increased but political will and funding are needed for it to reach its full potential. The 
quality  of  services  to  citizens  has  remained  lower  than  the  services  offered  to 
businesses.  

Simplifying  administrative  procedures  has  been  extremely  difficult,  as  the  Law  on 
General Administrative Procedures has not yet been implemented systematically across 
the administration. The Ministry of Information Society and Administration has set up a 
‘help  desk’  team  to  support  central  and  local  government  authorities  in  applying  the 
law.  Considerable  further  training  and  awareness-raising  is  needed  to  ensure  legal 
certainty for citizens and businesses. 

2.2 

Rule of law and fundamental rights  

2.2.1  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  an  effective  fight  against  corruption  are  of 
paramount importance, as is the respect for fundamental rights in law and in practice.  

The  country  has  some  level  of  preparation  /  is  moderately  prepared  to  apply  the 
acquis  and  European  standards  in  this  area.  Recent  legislative  changes  have  largely 
addressed the ‘Urgent Reform Priorities’, recommendations of the Venice Commission 
and  the  Senior  Experts’  Group  on  systemic  Rule  of  Law  issues.  This  led  to  good 
progress in completing the amendments to the legal framework, particularly in the area 
of  judiciary  and  non-discrimination,  to  address  police  impunity  and  to  reinforce  the 
protection of fundamental rights. The courts have pronounced final convictions in high 
profile  cases  under  the  remit  of  the  Special  Prosecutor’s  Office.  The  Office  has 
intensified its work in investigating and prosecuting crimes arising and surrounding the 
wiretaps.  Discussions  are  ongoing  between  the  government  and  the  opposition  to 
finalise  a  sustainable  solution  for  the  status  of  the  Special  Prosecutor’s  Office.  It  is 
essential  to  continue  establishing  legal  accountability  for  the  crimes  arising  from  and 
surrounding the wiretaps. The anti-corruption framework has been reinforced by a new 
law and new competences for the State Commission for the Prevention of Corruption. 
The work of the new Commission has already  yielded results, including  on high level 
cases. The full implementation of the new framework will be key to demonstrating the 
ability  of  the  authorities  to  prevent  corruption  and  conflict  of  interests.  However, 
corruption  is  prevalent  in  many  areas  and  remains  an  issue  of  concern.  The  legal  and 
policy  framework  for  fundamental  rights  is  generally  in  place  and  the  Ombudsman’s 
Office  has  been  granted  additional  responsibilities.  Efforts  have  been  made  to  further 
improve the human rights situation in practice but a substantial allocation of funds and 
strong  leadership  are  needed  to  ensure  implementation  and  sustainability  of  measures 
taken. It is essential that choices made in appointment of members of independent and 
regulatory  bodies  are  based  on  merit  to  ensure  that  they  are  composed  of  competent 

14 

 
 
persons  whose  integrity  cannot  be  questioned.  The  functional  independence  of  these 
bodies must be guaranteed at all times, including through adequate funding.  

Functioning of the judiciary  

The  judicial  system  has  some  level  of  preparation  /  is  moderately  prepared.  There 
was good progress in addressing the ‘Urgent Reform Priorities’ and recommendations 
from the Venice Commission and the Senior Experts’ Group on systemic Rule of Law 
issues.  The  Venice  Commission  praised  the  authorities’  constant  efforts  to  bring  the 
rules  governing  the  judicial  system  in  line  with  international  standards  and  practices. 
The country stepped up the implementation of the judicial reform strategy and revised 
its  action  plan.  Regular  monitoring  at  all  levels  is  needed  to  ensure  that  timelines  are 
respected. All stakeholders need to remain engaged to deliver a reform that will benefit 
citizens.  Implementation  of  the  new  legal  framework  provides  a  firm  basis  for  lasting 
change.  Beyond  legal  changes,  it  is  essential  that  all  judicial  institutions  demonstrate 
their exemplarity and contribute, through additional efforts, to restoring public trust in 
the judiciary.  

In the coming year, the country should in particular:  

  continue implementing the judicial reform strategy, prioritising the development of 
a  human  resources  strategy  and  improving  the  automated  court  case  management 
information system (ACCMIS) to ensure it is fully functional and reliable;   

  ensure  consistent  implementation  of  the  new  rules  for  appointment,  promotion, 
discipline  and  dismissal  of  judges,  and  demonstrate  that  the  independence  of  the 
judicial system is respected and promoted at all levels, shielding it from any risk of 
political interference;  

  fully  implement  the  new  legal  framework  related  to  the  reform  of  the  Judicial 

Council and adopt a reform of the Council of Public Prosecutors. 

Strategic documents 

The  2017-2022  Strategy  on  Judicial  Reform  is  the  guiding  document  for  reform  in 
this sector and the implementation of the related action plan, updated in October 2018, 
is  well  under  way.  The  country  adopted  amendments  to  many  laws  governing  this 
sector,  notably  the  Laws  on  Courts  and  on  the  Judicial  Council  in  line  with  Venice 
Commission  recommendations  as  well  as  the  Criminal  Code,  and  the  law  on 
misdemeanours.  The  country’s  consistent  efforts  to  bring  the  rules  governing  the 
judicial system  in  line with  international  standards and best  practices have been noted 
by  the  Venice  Commission  in  its  March  2019  Opinion  on  the  Law  on  the  Judicial 
Council.  The  Council  for  Monitoring  the  Implementation  of  the  Judicial  Reform 
established  in  April  2018  meets  regularly.  It  acted  as  a  forum  for  debate  among 
professionals  on  the  implementation  of  strategic  steps.  The  Council  adopted  the  first 
annual report on implementation of the Strategy in January 2019.  

Management bodies 

The Judicial Council maintained its mixed composition. In 2018, judges elected six new 
members  of  the  Judicial  Council  from  among  their  peers  and  the  new  Council 
President  was  elected  from  this  contingent  in  April  2019.  The  Law  on  the  Judicial 
Council was amended in May 2018 and in April 2019 following consultation with the 
15 

 
 
Venice Commission and the Council updated its internal rules accordingly. The Council 
sessions are public and partly broadcast on audio-visual media. The changes made to the 
legal  framework  increased  the  accountability  of  the  Council’s  members.  The  Council 
remains a professional full-time body but the new provisions remove the possibility for 
immediate renewal of the six-year mandate for its judges-members and the voting rights 
of both ex-officio members for all procedures.  

The  Parliament  elected  two  practicing  lawyers  as  new  members  of  the  Council  of 
Public  Prosecutors.  The  planned  amendments  to  the  Law  on  the  Council  of  Public 
Prosecutors  have  yet  to  be  adopted.  The  Council  still  lacks  adequate  human  and 
financial  resources  and  has  no  separate  budget,  which  brings  into  question  its 
independence from the State Public Prosecutor’s Office. The Council has not increased 
its transparency, with decisions on appointments still lacking reasoning and it needs to 
fulfil its role more proactively.  

Both Councils need to demonstrate a decidedly more proactive attitude in delivering on 
their respective mandates.  

Independence and impartiality  

Judicial  independence  is  enshrined  in  the  Constitution.  Measures  taken  have  had  a 
positive impact on the independence of the judiciary but continuous efforts are needed 
to  remove  the  risk  or  perception  of  political  interference.  Provisions  in  the  newly 
amended laws, provided they are properly implemented, can ensure the independence of 
the judiciary. The Association of Judges continued to actively participate in reforms. It 
established the first Judicial-Media Council bringing together judges and journalists to 
strengthen transparency. The Judicial Council’s efforts to protect judges’ independence 
were  limited  and  it  is  essential  that  it  steps  up  its  efficiency  to  shield  them  from 
potential external or internal pressure.   

The  Special  Prosecutor's  Office  (SPO)  continued  its  work,  filed  several  indictments 
and opened new investigations (more details under Fight against corruption). There are 
different interpretations concerning the right of the SPO to open new investigations and 
file  indictments  after  18  months  following  the  handover  of  wiretaps.  A  draft  law  to 
incorporate  the  SPO  within  the  Public  Prosecutor’s  Office  is  under  discussion  with  a 
view to enabling the SPO to continue its work.  In September 2018, the SPO published 
a  special  report  highlighting  evidence  of  judicial  misconduct  revealed  in  the 
unauthorised interception of communications. The State Commission for the Prevention 
of  Corruption  has  opened  a  file  over  alleged  abuse  of  power  and  corruption  targeting 
some members of the judiciary. 

The audit of the automated court case management information system (ACCMIS) was 
completed  in  the  courts  with  extended  competence  and  the  Ministry  of  Justice, 
following  adoption  of  a  plan  for  regular  supervision  of  the  courts’  application  of  the 
system, has started its implementation. The audit led to investigations being open both 
by  the  Public  Prosecutors'  Office  and  the  Judicial  Council.  The  investigations  are 
ongoing  but  have  not  yet  yielded  concrete  results.  An  upgrade  of  the  system  is 
envisaged to address some of its deficiencies. It is essential that the country introduces a 
case  management  system  that  is  fully  functional,  interconnected  and  reliable  and  that 
permits to extract data at the central level. 

16 

 
 
Accountability 

Both  judges  and  prosecutors  are  obliged  to  declare  their  assets  upon  election  or 
following a change which exceeds an amount defined by law. Amendments to the Law 
on  Courts  and  to  the  Law  on  the  Judicial  Council  positively  revised  the  criteria  for 
disciplinary responsibility of judges and introduced the possibility for anyone to initiate 
a procedure before the Judicial Council, leading to six such requests being filed by legal 
professionals  and  lawyers.  Additionally,  the  Law  on  the  Judicial  Council  introduced 
accountability  for  members  of  the  Judicial  Council,  thereby  addressing  a  previously 
noted shortcoming. The Advisory Council for Judicial Ethics met twice but its impact is 
as yet limited. The Academy of Judges and Prosecutors organised training sessions on 
ethics and conflict of interest. 

In  terms  of  accountability  of  judges,  following  the  abolition  of  the  Council  for 
Determination of the Facts, the Judicial Council is processing five files against judges or 
Presidents  of  Courts,  including  of  the  Supreme  Court.  None  has  been  completed, 
leading  to  some  of  the  judges  concerned  perceiving  this  as  a  form  of  pressure.  One 
judge was dismissed for unprofessional and inapt performance of duty in February 2019 
and  10  disciplinary  procedures  were  initiated  in  2018.  Disciplinary  procedures  were 
launched against three prosecutors. There was slow progress in enforcing the decisions 
of the European Court of Human Rights on dismissed judges.  

Professionalism and competence   

judges, 

The amendments to the Law on Courts and the Law on the Judicial Council improved 
the  system  of  appointment  and  promotion  and  introduced  qualitative  criteria  in  the 
the  Venice  Commission's 
in 
professional  evaluation  of 
recommendations  and  the  ‘Urgent  Reform  Priorities’.  The  amendments  also  provide 
that appointments to the first instance give prominence to candidates’ ranking upon their 
completion  of  the  training  in  the  Academy  for  Judges  and  Prosecutors  in  the 
appointment  procedure.  In  2018,  the  Judicial  Council  appointed  4  judges  and  2 
Presidents  of  courts.  The  amendments  introduced  a  procedure  for  appeals  to  the 
Supreme Court regarding appointment procedures.  

line  with 

The  Council  of  Public  Prosecutors  appointed  25  prosecutors  at  different  levels  and 
enabled  21  prosecutors  to  perform  their  tasks  beyond  retirement  age  to  address  the 
shortage  of  staff.  Both  Councils  need  to  improve  the  transparency  of  their  work  and 
ensure  respect  for  meritocracy  in  appointments  and  promotions.  The  Academy  for 
Judges and Prosecutors organised a total of 189 in-service training sessions. Consistent 
implementation of the new legal framework is essential for the following period.     

Quality of justice  

The  Academy  remains  the  sole  entry  point  into  the  judiciary,  in  line  with 
recommendations of the Senior Experts’ Group on systemic Rule of Law issues. A new 
managing board for the Academy for Judges and Prosecutors was elected in October 
and  a  new  Director  selected  by  the  Board  in  November  2018.  The  post  of  Deputy 
remains vacant.  

The Supreme Court continued to work on improving the consistency of judgments and 
on  harmonising  court  practice.  According  to  figures  received  from  the  authorities,  in 
2018,  the  budget  allocated  to  courts  increased  by  approximately  2%  and  it  stood  at 

17 

 
 
0.29% of GDP. The budget for prosecution offices increased at a similar rate. In mid-
2018, the country had 25 judges and 8.4 prosecutors per 100 000 inhabitants, compared 
to the 2016 European average of 21.5 judges and 11.7 prosecutors (as reported by the 
European Commission for the Efficiency of Justice). A procedure for hiring 190 staff in 
courts is ongoing and 33 new staff provided reinforcements to the Public Prosecutor’s 
Offices in February 2019. 

The  information  technology  situation  in  the  judiciary  is  improving  along  with  the 
implementation  of  an  IT  strategy  for  the  justice  sector  but  it  remains  predominantly 
dependent on donor funding. Lack of funds and staff continues to hamper the renewal 
and maintenance of the IT tools. The physical conditions in courts are very varied and 
accessibility  remains  a  challenge  across  the  country,  for  instance  in  the  civil  court  in 
Skopje. 

Whereas  the  Supreme  Court  started  holding  regular  meetings  with  the  four  courts  of 
appeal  on  consistency  of  jurisprudence  in  civil  law  cases,  not  all  courts  managed  to 
promptly upload judgements in the database for online access to jurisprudence. Courts 
do not always have access to judgements of other courts, thereby impeding consistency. 
The procedure for secondments to the European Court of Human Rights was completed, 
thus fulfilling this ‘Urgent Reform Priority’.  

Efforts are needed to promote the use of alternative dispute resolution. Arbitration is 
still not considered as a viable tool to ensure justice, either by parties or by the courts. 
The effects of the implementation of the new law on mediation, adopted in 2013 are still 
to be assessed.  

Efficiency 

Nearly  all  courts  maintained  a  clearance  rate  of  100%  or  higher,  demonstrating 
continued  efficiency.  There  is  no  issue  of  backlog  of  cases  in  courts.  The 
implementation of the law on languages may affect the efficiency in courts and public 
prosecutor’s offices. 

In December 2018, amendments to the Law on Salaries of Judges were adopted as well 
as to the Law on Judicial Service, providing for modalities on payment of supplements 
to  salaries  of  judges  and  of  the  judicial  administration  following  previous  salary 
increases in the prosecution.       

An initial assessment of the court network was carried out as a preliminary step to the 
development of a comprehensive human resources strategy in the judiciary. Work on a 
similar  exercise  for  the  prosecution  has  been  initiated.  This  will  help  to  ascertain  the 
real  needs  in  public  prosecutor’s  offices.  The  insufficient  number  of  expert  associates 
and other support staff puts a strain on the functioning of courts and Public Prosecutors’ 
Offices. The absence of a strategy affects the proper planning and allocation of human 
and budgetary resources.  

Amendments to the Law on Notaries and to the Law on Enforcement were adopted in 
December 2018. A new tariff for enforcement officers was adopted in  February 2019, 
following  challenging  negotiations.  Overall,  the  system  has  proved  to  be  an 
improvement compared to the previous system of enforcement by the courts. The notary 
payment order works well, discharging the burden on the courts.  However, the overall 
cost  of  enforcement  and  the  length  of  the  procedure  still  obstruct  the  system’s 

18 

 
 
efficiency.  This,  together  with  the  mandatory  presence  of  an  attorney  for  procedures 
before  notaries  (including  for  inheritance)  risks  impeding  access  to  justice.  The 
monitoring of the enforcement officers’ activities by the Chamber and the Ministry of 
Justice needs to be improved. A holistic approach to the reform of the sector covering 
the different stakeholders is needed to address remaining challenges. 

Fight against corruption  

North Macedonia has some level of preparation in the fight against corruption. Good 
progress has been made through further consolidating its track record on investigating, 
prosecuting and trying high level corruption cases and by making changes to legislation. 
The new legal framework for preventing corruption has improved and the appointment 
of the new members of the State Commission for Prevention of Corruption has been far 
more transparent than in previous years. The Commission has taken important steps to 
proactively  fight  against  corruption,  involving  high  level  officials  across  the  political 
spectrum. The Special Public Prosecutor has confirmed its leading role in investigating 
and prosecuting high-level corruption cases. A new law on the Public Prosecutor Office 
to  integrate  the  Special  Public  Prosecutor  within  the  prosecutorial  system  has  been 
prepared.  There  is  an  awareness  at  political  level  of  the  need  to  effectively  address 
corruption.  The  criminal  justice  response  against  high-level  corruption  has  started  to 
generate concrete results, which needs to continue. The authorities have to further step 
up  efforts  to  demonstrate  that  the  fight  against  corruption  is  a  national  priority  at  all 
levels of power. 

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

  proactively  implement  the  new  rules  for  preventing  and  fighting  corruption  and 
encourage, from the highest political level, a more proactive attitude on the part of 
all actors engaged in this area;  

  reaffirm  its  political  will  to  fight  corruption  by  supporting  all  relevant  institutions 
with the necessary autonomy in exercising their prerogatives as well as human and 
financial resources; 

  consolidate  the  track  record  of  final  convictions  in  high-level  corruption  cases, 
including by confiscating criminal assets; ensure that the legal accountability of the 
wiretaps is continued independently from ongoing reforms within the prosecutorial 
system.  

Track record 

North  Macedonia  continued  to  build  on  its  track-record  for  investigating,  prosecuting 
and trying high level corruption cases. The Special Prosecutor’s Office (SPO) filed 18 
indictments for serious criminal offences. Most of them concern abuse of office, abuse 
of position, forgery of documents, embezzlement, and large-scale fraud. One indictment 
is pending confirmation by the Court. A total of 112 individuals are on trial in 17 cases. 
Furthermore, the SPO has established its jurisdiction over two major cases where there 
were  suspicions  of  procedural  and  substantial  irregularities.  In  the  case  dubbed 
‘Monster’  where  five  people  were  murdered,  six  individuals  are  standing  trial.  In  the 
corruption  case  dubbed  ‘Magyar  Telekom’,  three  individuals  are  standing  trial.  Court 
hearings in several prominent cases have resumed involving former senior officials such 
as the former Minister of Transport, the former Minister of the Interior, several former 
19 

 
 
Security and Counterintelligence officials, key business people and local officials. The 
courts  ordered  pre-trial  detention  for  the  former  Minister  of  Transport,  the  former 
Secretary General of the Government and the former Director of the Bureau for Security 
and  Counterintelligence.  This  was  commuted  into  house  arrest.  In  2018,  the  courts 
issued five judgments against 19 individuals, including three verdicts based on a guilty 
plea. Final sentences were pronounced against the former Prime Minister, his assistant, 
the former Minister of the  Interior  and the former Director of the  Bureau for Security 
and  Counterintelligence.  In  first  instance,  the  court  pronounced  a  guilty  verdict  and 
imprisonment  sentences  from  3  years  to  4  years  and  6  months  against  four  former 
members  of  the  State  Election  Commission,  the  leader  of  the  Democratic  Party  of 
Albanians  (DPA)  and  the  former  Head  of  Security  and  Counterintelligence.  There  are 
108 individuals currently under investigations in 19 ongoing investigations. The Courts 
need  to  consolidate  their  track  record  to  demonstrate  that  the  practice  initiated  in 
cooperation with the Special Prosecutor’s Office is reinforced.  

The  Public  Prosecutor  for  Prosecuting  Organised  Crime  and  Corruption  has 
opened  five  new  investigations  involving  seven  individuals  in  high-level  cases 
(compared to six in 2017 involving 10 suspects). In total, together with four cases still 
under investigation since 2017, there are nine ongoing cases involving 17 individuals. 
Cases  mainly  concern  violation  of  procurement  rules.  Some  cases  involve  high-level 
officials  such  as  the  former  Minister  of  Health,  the  former  Deputy  Minister  of 
Economy, and the former Secretary General of the Government. This is in line with the 
SPO practice of investigating senior officials to establish legal accountability of public 
office  holders  and  tackle  their  impunity.  The  court  issued  a  first  instance  judgment 
against  one  of  the  accused.  In  one  case,  one  defendant  is  standing  trial.  Investigating 
and prosecuting high-level cases needs to continue.  

Regarding investigations of other officials such as administrative Directors, the Public 
Prosecutor  for  Prosecuting  Organised  Crime  and  Corruption  opened  11  new 
investigations  involving  16  suspects.  In  three  cases  involving  four  individuals, 
investigations  were  closed.  There  are  also  14  cases  involving  26  suspects  currently 
under pre-investigation.  

In 2018, the State Commission for Prevention of Corruption received 1 590 statements 
of  interest  and  1 852  declarations  of  assets.  In  total,  there  are  6 633  declarations  from 
elected  and  appointed  officials  currently  published  on  the  Commission’s  website.  In 
March  2018,  five  out  of  the  Commission’s  seven  members,  including  its  President, 
resigned. The resignation was triggered by public reactions to the findings of the State 
Audit Office on alleged financial irregularities. Consequently, the regular verification of 
statements of interest and declarations of assets was hampered by procedural restrictions 
during  the  year.  As  a  result,  within  the  short  lapse  of  time  between  January  and 
February 2018 the Commission initiated only 26 procedures to determine the existence 
of  conflict  of  interest  (149  were  initiated  for  the  whole  of  2017).  Under  the  previous 
law,  the  Commission  still  had  limited  powers  to  act  promptly  and  efficiently.  The 
Commission  sent  seven  cases  to  the  Basic  Court  for  Misdemeanour  proceedings.  In 
three  cases,  the  court  pronounced  fines,  and  in  one  case,  it  issued  a  warning.  The 
Commission  sent  eight  requests  to  the  Public  Revenue  Office  after  the  violation  by 
officials of their obligation to declare their property. With the new law, the Commission 

20 

 
 
will be able to act and pronounce sanctions autonomously for a more meaningful impact 
of its assessments and decisions.  

The  new  Commission,  whose  members  were  appointed  in  February  2019,  opened 
investigations  over  allegations  of  nepotism  in  the  public  administration  in  65  cases. 
Investigations  already  yielded  results.  The  commission  determined  that  out  of  the  36 
cases  examined  so  far,  there  were  21  cases  of  possible  nepotism  and  wrongdoings 
during  the  recruitment  process.  Those  cases  fall  either  under  the  responsibility  of 
previous  officials  or  under  the  current  administration.  Consequently,  in  at  least  four 
cases, family relatives already resigned, and two misdemeanour procedures are ongoing 
against one Minister and against the President of the Council of Public Prosecutors. The 
Commission  closed  15  cases  due  to  the  lack  of  determining  elements  or  because  no 
conflict  of  interest  was  determined.  The  Commission  also  opened  in  May  additional 
cases  involving  current  and  former  high  state  officials.  The  State  Commission  for 
Prevention  of  Corruption  also  calls  for  reviewing  several  laws  for  preventing  use  of 
discretionary powers in the recruitment process. 

During  2018,  within  the  Ministry  of  the  Interior,  the  Department  for  Internal  Control, 
Criminal  Investigations  and  Professional  Standards  started  five  individual  disciplinary 
procedures  (14  in  2017).  Procedures  are  ongoing.  The  Department  also  initiated 
criminal  proceedings  on  seven corruption-related  charges  against six of the Ministry’s 
employees (compared with 13 proceedings against 15 employees in 2017).  

Institutional framework 

Prevention measures 

A new State Commission for Prevention of Corruption was appointed in February 2019. 
In accordance with the new law, selection criteria for members are stricter and require 
increased  experience  and  a  proven  track  record  in  the  fight  against  corruption  (10/12 
years).  Neither  the  members  nor  the  President  can  be  former  members  of  Parliament, 
former  government  members  or  a  donor  or  former  member  of  a  political  party’s 
management board in the last 10 years. In an effort to be more inclusive and transparent, 
the  selection  is  the  result  of  a  three  tier  process  involving  members  of  the  political 
parties,  the  opposition,  and  representatives  of  specialised  NGOs,  and  then  a 
representative  of  the  Ombudsman  Office,  journalists  associations  and  members  of  the 
Academy of Sciences. Interviews of the candidates were broadcast on the parliamentary 
channel.  

To strengthen its capacity in fighting impunity and lack of integrity, the Commission is 
vested  with  additional  powers.  It  will  be  able  to  directly  request  information  from 
numerous financial institutions – banking, traffic institutions to facilitate the process of 
verification of the officials’ statements of interest and of assets. It  will also be able to 
initiate  misdemeanour  procedures.  The  competence  sharing  with  other  competent 
institutions  has  been  clarified  and  a  long-overdue  mechanism  to  support  functional 
independence established. The budget will be voted directly by the Parliament and not 
through the Ministry of Finance to strengthen its financial autonomy. The new law also 
provides  its  Secretariat  with  extended  executive  (operational)  powers  to  manage  its 
work. 

21 

 
 
There are several codes of ethics in place in various state institutions. Efforts continue 
to improve integrity policies, transparency and accountability of public institutions and 
state  enterprises.  However,  they  need  to  be  complemented  by  an  effective  and  timely 
control mechanism for public procurement, concessions, public-private partnerships and 
execution  of  public  contracts.  There  is  a  need  to  be  able  to  apply  administrative 
penalties to contracting authorities in case of breach of the procurement law.  

The  State  Audit  Office’s  IT  infrastructure  has  been  improved  but  is  still  not 
interconnected with other relevant institutions.  

Existing  penalties  under  the  Law  on  the  Prevention  of  Corruption  and  Conflict  of 
Interest and the Electoral Code need to be applied more systematically and visibly.    

Law enforcement 

The main institutions dealing with law enforcement are the Department for Serious and 
Organised  Crime  within  the  Ministry  of  the  Interior  and  a  specialised  Public 
Prosecutor's Office for Prosecuting Organised Crime and Corruption within the Public 
Prosecutor's Office. A draft law is under discussion to enable the Special Prosecutor’s 
Office to continue its work.  

In cases of corruption, the police refer the cases to the public prosecutor who then leads 
investigations. The long overdue investigative centres were established, as required by 
the  Law  on  Criminal  Procedure.  The  investigative  centres  will  support  the  public 
prosecutor assuming their leading role in investigations. The Public Prosecutor's Office 
must also  demonstrate its capacity to  act  proactively in  pursuing cases referred by the 
State  Commission  for  Prevention  of  Corruption,  the  State  Audit  Office  and  other 
institutions. In the field of economic crime, experienced and trained police officers are 
working  at  central  level,  and  some  public  prosecutors  have  solid  knowledge  about 
conducting  financial  investigations.  Those  skills  need  to  be  fully  used  through  a 
comprehensive  strategic  approach  with  clear  priorities  within  the  public  prosecutorial 
office.  Setting  up  the  investigative  centres  aims  to  support  this  process  and  alleviate 
shortcomings at local level.  

The electronic case management system at the Public Prosecutor’s Office is in place but 
must  become  more  efficient.  Investigations  of  corruption  in  public  procurement  and 
concessions are becoming more frequent due to the SPO’s activities. The SPO has also 
started  financial  investigations  and  making  use  of  confiscation  of  assets.  The  powers 
and resources of the police, the Public Prosecutor’s Office, the courts and the Agency 
for Management of Confiscated Property need to be strengthened to allow seizure and 
confiscation of criminal assets, including in the early stages of criminal investigations. 
This  should  confirm  the  positive  trend  of  adopting  temporary  measures  for  freezing 
bank  accounts  and  property.  It  was  decided  to  freeze  bank  accounts  in  four  cases 
compared to only one last year.  

Legal framework 

North Macedonia is party to all international anti-corruption conventions, including the 
United  Nations  Convention  against  Corruption.  The  criminal  code  penalises  a  wide 
range  of  corruption  related  offences.  In  2018,  the  government  improved  the  legal 
framework  for  preventing  corruption  by  adopting  a  new  Law  on  Prevention  of 
Corruption  and  Conflict  of  Interests.  The  new  law  increases  the  powers  of  the  State 

22 

 
 
Commission for Prevention of Corruption. It clarifies and strengthens a set of key rules 
governing  incompatibilities  between  certain  public  functions,  or  restrictions  on  doing 
business  while  holding  public  functions.  The  law  also  includes  sanctions  against 
institutions that fail to provide information. It facilitates the collection of information by 
establishing a single form for the declaration of assets and statement of interests in line 
with  the  GRECO  recommendations.  The  forms  are  submitted  electronically  into  the 
database to ease control and verification.  

The Law on the Financing of Political Parties stipulates the manner and procedure for 
ensuring  financial  means  and  their  management  to  political  parties.  Rules  on  the 
financing of pre-electoral campaigns are set out in the Electoral Code. Amendments to 
the  Law  on  the  Financing  of  Political  Parties  from  the  state  budget  increased  the 
proportion  of  funds  available  from  0.06%  to  0.15%,  to  increase  the  financial 
independence of political parties. In parallel, the maximum amount of donations by both 
legal  entities  and  individuals  was  decreased.  The  State  Audit  Office  exercises  ex-post 
control and the State Commission for Prevention of Corruption’s new powers will allow 
it  to  carry  out  inspections  at  any  time,  allowing  the  continuous  monitoring  of  party 
financing.     

Amendments  to  the  law  on  free  access  to  public  information  were  adopted.  These 
amendments incorporate the right to request information on public finances of political 
parties. 

The Law on lobbying adopted in 2008 regulates lobbying activities, the registration of 
lobbyists  and  includes  a  supervision  mechanism.  There  is  still  a  need  for  introducing 
rules on how members of Parliament engage with lobbyists and other third parties who 
seek to influence the legislative process.  

Amendments  to  the  Law  on  the  Protection  of  Whistle-blowers,  and  secondary 
legislation,  implement  the  recommendations  of  the  Venice  Commission  but  require 
further alignment with the new EU acquis on this issue. A ‘Manual for the protection of 
whistle-blowers’  was  prepared,  and  a  software  was  developed  to  encrypt  the  data 
received by the State Commission for Prevention of Corruption.  

Strategic framework 

The  State  Programme  for  Prevention  and  Repression  of  Corruption  and  Reduction  of 
Conflict  of  Interests  with  a  multiannual  action  plan  (2016-2019)  is  the  fifth  strategic 
document.  The  priorities  are  to  strengthen  the  institutional  and  legal  framework,  and 
ensure  effective  sanctions  against  corruption.  It  also  aims  to  increase  public 
participation  and  ensure  efficient  coordination,  monitoring  and  evaluation.  The  recent 
reforms contribute substantially to achieving these objectives, notably the strengthening 
of the institutional and legal system, and the repression part via the work of the Special 
Public Prosecutor’s Office. 

Fundamental Rights  

The  legal  framework  on  the  protection  of  fundamental  rights  is  largely  in  line  with 
European standards. Good progress was made with the adoption of amendments to the 
Criminal Code on hate crime and the adoption of the Law on Prevention and Protection 
from  Discrimination,  a  national  action  plan  for  implementation  of  the  Istanbul 
Convention  and  the  de-institutionalisation  strategy.  However,  the  external  oversight 
23 

 
 
mechanism  of  the  police  is  not  yet  fully  operational.  The  country  also  needs  to  make 
additional efforts to consistently disseminate and address recommendations of European 
and  international  human  rights  bodies,  notably  regarding  the  treatment  of  detained 
persons, women and persons with disabilities. The probation system needs to be further 
developed by ensuring availability of alternative sanctions, as this will have a positive 
effect on both individuals and on the penitentiary system as a whole. Continued efforts 
are needed to implement the judgments of the European Court of Human Rights.  

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

  ensure that all recommendations of European and international human rights bodies 
are  systematically  disseminated  and  implemented,  in  particular  those  related  to 
detention, gender equality and the rights of persons with disabilities;  

  develop  further  community  services  to  identify  children  at  risk  and  to  support 
children  victims  of  violence,  Roma  and  children  with  disabilities,  including  by 
improving inter-agency cooperation; 

  implement  the  new  Law  on  the  Protection  and  Prevention  against  Discrimination, 
ensure the harmonisation of other laws with this new law, and improve follow-up of 
all new and outstanding cases of discrimination, hate crime and hate speech.  

The  country  has  ratified  most  international  human  rights  instruments.  In  the 
reporting period, the country underwent the United Nations’ Universal Periodic Review 
by  the  Human  Rights  Council  and  was  reviewed  by  the  UN  Committees  on  the 
Elimination  of  Discrimination  against  Women  and  on  the  Rights  of  Persons  with 
Disabilities  respectively.  Practitioners  working  in  those  areas  must  be  made  aware  of 
the recommendations stemming from these bodies so that they may introduce adequate 
changes in their working practices.   

The  European  Court  for  Human  Rights  (ECtHR)  has  found  violations  of  the 
European  Convention  on  Human  Rights  in  12  cases  related  mainly  to  freedom  of 
association  in  conjunction  with  freedom  of  religion,  right  to  liberty  and  security  and 
right to a fair trial. The number of new applications lodged with a decision-making body 
decreased  to  305  and  there  are  339  cases  pending  before  the  court.  The  number  of 
pending ECtHR judgements to be executed stood at 51 at the end of March 2019, with 
four undergoing an enhanced monitoring procedure. The authorities have made progress 
in execution of protracted judgments and in April 2018 they issued a public apology in 
the  El  Masri  case.  The  staff  of  the  Bureau  for  Representation  before  the  ECtHR  was 
increased to five people in 2018.  

The  promotion  and  enforcement  of  human  rights  was  strengthened  with  the  new 
competences granted to the Ombudsman’s office on the external oversight of the police. 
The  Ombudsman’s  office  was  also  tasked  with  monitoring  implementation  of  the  UN 
Convention  on  the  Rights  of  Persons  with  Disabilities.  The  government  made  good 
progress  on  the  implementation  of  measures  stemming  from  the  Ombudsman’s  2016 
report. The Office’s budget was increased and additional staff recruited. This additional 
staff will help  the  Ombudsman’s Office to  fully  exercise its prerogatives. However, it 
will  need  further  strengthening  to  effectively  fulfil  its  new  obligations.  The  Office 
received  3  458  complaints  in  2018,  with  the  largest  share  concerning  the  judiciary 
followed  by  labour  relations,  penitentiary  conditions  and  consumer  rights.  The  largest 
24 

 
 
number of confirmed violations related to financial and tax issues, followed by labour 
relations, child rights and judiciary.  

The  government  has  prepared  an  action  plan  to  address  the  recommendations  of  the 
European Committee for the Prevention of Torture and provided quarterly reports to the 
Committee. This led to improvements in the prevention of torture and ill-treatment. 
Staff members in penitentiary and educational-correctional institutions were trained on 
the new Code of Conduct for Prison Personnel  based on the European Code of Ethics 
for  Prison  Staff.  Amendments  to  the  Laws  on  Courts  and  on  the  Public  Prosecution 
Office  completed  the  legislative  framework  for  establishing  an  external  oversight 
mechanism  over  the  work  of  the  police  and  the  prison  police.  Prosecutors  have  been 
assigned and have started their work on overseeing the police. However, the mechanism 
is not fully operational as investigators still need to be nominated and the civil society 
members of the civil  control mechanism with  the Ombudsman's Office have  yet  to  be 
selected.  

Work  is  ongoing  to  take  the  most  derelict  facilities  out  of  operation  to  address  the 
inhumane  conditions  noted  by  the  Committee  for  the  Prevention  of  Torture  in  some 
detention  facilities.  Poor  conditions  in  police  stations,  social  care  facilities  and 
psychiatric institutions need to be urgently addressed. Despite reinforcements in terms 
of staff, the National Preventive Mechanism against torture continues to be hindered by 
insufficient resources.   

In 2018, only three complaints for excessive use of force and ill-treatment were filed to 
the Directorate for Execution of Sanctions. However, this could indicate a low level of 
trust in complaint mechanisms. The nine complaints filed with the Ombudsman’s Office 
for ill-treatment in prisons were dismissed as unfounded while three complaints for ill-
treatment by the police were transmitted to the Public Prosecutor’s Office. Out of the 64 
complaints from citizens on the use of force by police officers, only five were deemed 
admissible by the Unit for Internal Control and Professional Standards at the Ministry of 
Interior.  In  turn,  the  unit  submitted  criminal  charges  for  ill-treatment  in  three  cases 
involving  four  police  officers  and  notified  two  other  cases  involving  three  police 
officers  to  the  Public  Prosecutor’s  Office.  The  number  of  criminal  charges  against 
police and prison officers for cases of ill-treatment remains very low. It is expected that 
the new external oversight mechanism over the work of the police and the prison police 
will address the perception of impunity. From January to mid-March 2019, the relevant 
unit within the Public Prosecutors’ Office received and started investigating 50 reports 
against police officers and a few reports of the use of excessive force in prisons.  

Construction  and  refurbishment  in  the  prison system  is  ongoing.  New  semi-open  and 
open  units  were  inaugurated  in  Idrizovo  Prison  but  the  transfer  of  inmates  to  the  new 
premises  is  slow.  The  new  Law  on  Execution  of  Sanctions,  adopted  in  March  2018 
addresses weaknesses in the development of a professional management approach in the 
prison  system  and  introduces  new  rules  limiting  the  duration  of  solitary  confinement. 
The  strategy  for  the  development  of  the  penitentiary  system  continued  to  be 
implemented and some prison  staff were trained on the treatment  of violent  prisoners, 
dynamic security, and on international standards and national legislation.   

The penitentiary sector remains underfunded, understaffed and overly reliant on donor 
assistance.  Healthcare  in  prisons  remains  deficient  and  the  transfer  to  the  Ministry  of 

25 

 
 
Health  is  still  not  finalised.  The  release  of  795  persons  based  on  the  December  2017 
Law on Amnesty reduced prison overcrowding but is not a sustainable solution as the 
probation system is still at an early stage of development. The rollout of probation was 
further delayed until probation officers were recruited for 26 basic courts in November 
2018.  Following  the  adoption  of  the  relevant  secondary  legislation  in  May  2018,  the 
courts  have  slowly  started  issuing  alternative  sanctions  to  detention.  Developing 
alternatives  to  detention  is  fundamental  for  sustainably  alleviating  overpopulation, 
improving the resocialisation and rehabilitation of convicts and reducing the risk of re-
offending. Additional  efforts  are required to  ensure that  education  and re-socialisation 
services are available in all penitentiary and educational-correctional facilities. 

On the protection of personal data, the Directorate for Personal Data Protection needs 
adequate  resources  to  perform  its  tasks  effectively.  In  2018,  the  Directorate  received 
396 complaints and carried out 291 inspections, including in the fields of judiciary and 
law enforcement. Most complaints concerned alleged abuse of personal  data on social 
networks,  and  alleged  unlawful  direct  marketing  and  video  surveillance.  Nine 
misdemeanour cases were initiated in 2018 but the number of administrative sanctions 
in cases of breach of personal data protection legislation remains low. The Directorate 
has continued to review draft legislation, including on the reform of the interception of 
communication,  to  ensure  its  compliance  with  data  protection  rules.  The  Directorate 
continued  to  provide  training  to  personal  data  controllers  and  processors  and  to  law 
enforcement personnel and judiciary personnel. Although amendments to the Criminal 
Code  strengthened  personal  data  protection  in  criminal  cases,  there  was  no  concrete 
progress  on  alignment  with  the  General  Data  Protection  Regulation  2016/679  and 
Directive 2016/680 (Law Enforcement Directive). The country has not signed the 2018 
Protocol amending the Convention for the Protection of Individuals with regard to the 
Automatic Processing of Personal Data of the Council of Europe. 

Freedom  of  thought,  conscience  and  religion  continued  to  be  guaranteed  and 
discrimination on grounds of religion prohibited. In April 2018, the European Court of 
Human  Rights  ruled  that  the  State  violated  the  Convention  by  refusing  to  renew  the 
registration  of  the  Tetovo-based  Bektashi  Community.  The  Court's  rejection  of  the 
country's  complaint  on  the  Orthodox  Ohrid  Archdiocese  (Greek-Orthodox  Ohrid 
Archdiocese  of  the  Peć  Patriarchy)  judgment  with  respect  to  freedom  of  association 
seen  in  the  light  of  freedom  of  religion  means  it  now  has  to  be  implemented.  The 
Committee  of  Ministers  of  the  Council  of  Europe  examined  the  same  case  in  March 
2019 and it welcomed the decision to reopen the registration proceedings and to ensure 
redress for the applicants in compliance with the Convention. Pope Francis visited the 
country in May 2019. 

---------------------------------------------------------------------------------------------------------
Freedom of expression  

The  country  has  some  level  of  preparation  /  is  moderately  prepared  in  the  area  of 
freedom  of  expression  and  made  good  progress.  The  climate  for  media  freedom  and 
freedom of expression has improved. Open political debate and critical media reporting 
continued. Further self-regulation efforts are required to improve professional standards 
and  the  quality  of  journalism.  The  ban  on  government  advertising  was  respected. 
Sustained  efforts  are  needed  to  improve  the  independence,  professional  standards  and 
financial  sustainability  of  the  public  broadcaster.  It  is  essential  that  the  authorities 
26 

 
 
continue  to  promote  freedom  of  expression.  Amendments  to  the  Law  on  Audio  and 
Audio-visual Media Services have been adopted and their implementation will require 
strong political commitment to guarantee professionalism, respect for the principles of 
transparency,  merit-based  appointments  and  equitable  representation.  The  financial 
sustainability of private media and working conditions of journalists remain a challenge. 
The country has addressed some of the recommendations from the 2018 report, notably 
by creating a climate that is favourable for expressing pluralistic viewpoints.  

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

  continue  supporting  media  pluralism,  promoting  professionalism,  objective 
reporting  and  investigative  journalism.  Build  resilience  to  effectively  combat 
disinformation; 

  continue  reforming  the  public  broadcaster,  ensuring  its  financial  viability  and 

independence; 

  continue  paying  attention  to  the  swift  and  effective  follow-up  by  law  enforcement 
and  judicial  authorities  of  all  instances  of  physical  and  verbal  violence  against 
journalists.  

The  overall  situation  and  political  climate  for  media  continued  to  improve.  The 
government intensified its efforts to support media through legislative changes and by 
providing  financial  subsidies  for  print  media.  The  open  dialogue  and  increased 
transparency of institutions is acknowledged by professional organisations. Challenges 
remain however and additional measures are needed to support freedom of expression. 

Intimidation of journalists 

Since March 2018, there were five new cases of intimidation of journalists, marking a 
decrease from the previous year. The Ministry of the Interior started to cooperate with 
the  Association  of  Journalists  to  establish  accountability  for  incidents  of  physical  and 
verbal  abuse  or  threats  against  journalists.  However,  there  were  two  incidents  of 
statements against the media being made by high government officials. Politicians and 
public  officials  still  need  to  demonstrate  a  higher  level  of  tolerance  towards  criticism 
and promote freedom of expression. Procedures for police conduct towards journalists 
and  registration  of  attacks  need  to  be  improved.  Law  enforcement  authorities  and  the 
Public Prosecutor’s Office need to effectively follow-up all incidents against journalists. 
Old  cases  of  the  most  serious  physical  attacks  against  journalists  (13)  have  not  been 
resolved due to unprofessional conduct in the investigations.  

Legislative environment 

The  Law  on  Audio  and  Audiovisual  Media  Services  was  amended  in  December  2018 
and  February  2019.  The  law  is  now  in  general  accordance  with  European  and 
international  standards  on  audiovisual  media.  Some  stakeholders  criticised  the  opacity 
of the process and absence of public consultation on last minute changes to the law. In 
view of changing market realities, the legislative framework will nonetheless need to be 
further  aligned  with  the  new  Audio-visual  Media  Services  Directive.  Hate  speech  is 
illegal  both  online  and  offline.  Preliminary  steps  have  been  taken  to  reduce  fines  for 
defamation  to  a  symbolic  amount  which  is  expected  to  improve  the  sense  of  balance 
between freedom of expression and protection of reputation.  

27 

 
 
Implementation of legislation/institutions 

The  Agency  for  Audio  and  Audiovisual  Media  Services  has  been  exercising  its 
supervisory role, including during the referendum and the presidential elections. Due to 
ambiguities  in  the  legal  framework,  the  State  Election  Commission  and  the  media 
regulator  each  presented  contradictory  instructions  on  the  access  of  referendum 
stakeholders  to  paid  advertising.  As  part  of  the  media  monitoring  during  the 
referendum, the Agency initiated five misdemeanour procedures notably for misuse of 
paid public propaganda and disrespecting deadlines.  

The  number  of  investigative  articles  rose  from  0.8%  in  2017  to  2%  in  2018  but  the 
quality  of  reporting  and  respect  for  professional  standards  need  further  improvement. 
The  Public  Prosecutor’s  Office  opened  an  investigation  against  a  journalist  on  the 
grounds of hate speech.  In 2018, the Council of  Media Ethics  received 68 complaints 
for disrespect of ethical standards, notably online (76.5%). Since March 2018, 12 new 
lawsuits on defamation were registered against journalists.   

Public service broadcaster 

The reform of the public service broadcaster is at an early stage. As provided for by the 
Law on Audio and Audiovisual Media Services, funding for the public broadcaster, the 
regulator  and  the  broadcasting  public  enterprise  from  the  state  budget  will  increase  to 
0.8%  after  the  budget  rebalance.  The  financial  sustainability  of  the  public  broadcaster 
needs to  be ensured. Upholding the public broadcaster’s independence and preventing 
undue political influence needs continuous attention. Additional efforts are required to 
improve  the  quality  and  objectivity  of  its  reporting,  to  improve  procedures  and  to 
modernise  its  technical  equipment.  A  longer-term  strategic  reform  needs  to  be 
developed in consultation with stakeholders.  

Economic factors 

The media agency increased its efforts to disclose the possible existence of illegal media 
concentration. It is essential to further strengthen the capacity of the regulator to identify 
collusion  between  media  and  politics  which  impedes  editorial  independence.  The 
economic impact of rapid technological developments on the audio-visual media market 
needs to be evaluated by the authorities when preparing new legislation.  

Government  advertising  on  commercial  channels  is  banned.  Media  stakeholders 
expressed  concerns  that  legal  changes  permitting  public  funding  of  the  referendum 
campaign  via  media  advertisements  risked  repeating  influence  of  political  parties  on 
editorial  lines.  There  are  six  daily  newspapers,  including  two  in  Albanian  language. 
Following the recommendations of the Senior Experts' Group on systemic Rule of Law 
issues  in  2017,  the  authorities  allocated  approximately    EUR  700  000  to  support  the 
print media.  

Internet 

The  legislation  prohibiting  internet  service  providers  from  controlling  internet  traffic 
continued  to  be  applied.  Online  media  remains  unregulated.  Disinformation,  hate 
speech, disrespect of professional standards and violations of intellectual property rights 
are  frequent  in  online  media.  The  authorities  need  to  take  measures  to  effectively 
combat  disinformation.  Self-regulatory  principles  and  ownership  transparency  are 
needed to increase the respect for ethics and professionalism in online media.  

28 

 
 
Professional organisations and working conditions 

There was no progress  on improving  the labour  and social rights  of journalists whose 
working  conditions  are  very  poor.  Consequently,  journalists  still  practice  self-
censorship. Lengthy negotiations led by the independent union of journalists and media 
workers did not result in any collective union agreement with any media outlet. Union 
members are part of working groups working on updating relevant laws.  

(See also Chapter 10 - Information society and media) 

to 

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Freedom  of  Assembly  and  Association  are  guaranteed  by  the  Constitution  which, 
similar 
the  Law  on  Public  Assemblies,  allows  assemblies  without  prior 
announcement.  However,  no  new  legal  safeguards  were  introduced  regarding  the 
provision  on  ‘participation  in  a  crowd  which  commits  a  crime’  during  the  process  of 
amendments  to  the  Criminal  Code.  During  2018  there  were  no  restrictions  on  the 
exercise of these rights, including in terms of location. The ‘boycott’ campaign against 
the  30  September  referendum  took  the  form  of  rallies  and  social  media  activity.  It 
featured nationalistic language which was often inflammatory. Regular gatherings also 
took place to protest against the process of changing the name of the country resulting 
from the Prespa agreement. These gatherings did not give rise to concerns in terms of 
use of force. On freedom of association, the Law on Associations and Foundations does 
not contain undue restrictions to the exercise of this right. 

Issues  of  labour  and  trade  union  rights  are  further  covered  in  Chapter  19  -  Social 
policy and employment. 

Regarding  property  rights,  the  absence  of  strategic  documents  results  in  lengthy 
procedures  and  insufficient  coordination  between  institutions.  This  leads  to  delays  in 
updating registers by the municipal authorities and the Central  Register.  The Cadastre 
Office maintained a high rate of resolved cases in 2018 (98%). The reduction of costs 
introduced  in  January  2018  led  to  improvements  in  citizens’  access  the  Cadastre 
services.  Registration  of  land  and  properties  is  complete  and  in  December  2018,  a 
funding agreement was signed for the laser scanning of the country's territory. However, 
the  administrations  that  handle  restitution,  compensation,  and  legislation  processes 
struggle to manage their caseload. There remain approximately 7 000 denationalisation 
cases which still need to be resolved.  

The  legal  framework  on  non-discrimination  has  been  further  aligned  with  the  EU 
acquis  and  European  standards  with  the  adoption  of  the  Law  on  Prevention  and 
Protection  against  Discrimination.  This  law  covers  a  wide  range  of  protected  grounds 
which  now  also  includes  sexual  orientation  and  gender  identity.  A  National 
Coordinative Body was set up to monitor the implementation of the legal and strategic 
framework on non-discrimination.  

Weaknesses  in  terms  of  budgetary  allocations  and  implementation  of  the  2016-2020 
National  Strategy  for  Equality  and  Non-Discrimination  remained.  Deficiencies  in  the 
work of the Commission for Protection from Discrimination persisted while its premises 
and  financial  resources  remained  inadequate.  There  is  public  mistrust  of  this  body, 
which is seen as politicised and linked to the former ruling party. The new Law foresees 
the election of a new Commission. The Ombudsman’s Office received 77 complaints on 

29 

 
 
discrimination. Amendments to the Criminal Code adopted in December 2018 clarified 
provisions on hate crime and expanded the protected grounds. The Public Prosecutor’s 
Office  became  more  proactive  in  opening  investigations  for  alleged  hate  speech. 
Collection  of  data  on  hate  speech  is  not  systematic  while  an  increase  in  cases  of  hate 
crime was noted in the Civil Society database. The Agency for Audio and Audiovisual 
Media Services reported one case of alleged hate speech and discrimination, which was 
rejected by the Commission for Protection from Discrimination.  

Some progress was made on equality between women and men. The legal framework 
is largely in line with the acquis but it needs upgrading following the ratification of the 
Istanbul Convention. The government adopted a national action plan for implementing 
the  Convention  and  a  national  action  plan  for  gender  equality  (2018-2020)  which 
proposes  to  introduce  a  50%  quota  for  ensuring  participation  of  women  in  electoral 
processes  and  decision-making  by  2020.  The  plan  envisages  measures  to  raise 
awareness of gender equality and address gender stereotyping. The Parliament adopted 
a new Law on Termination of Pregnancy, which removes some of the restrictions and 
administrative  obstacles  (compulsory  counselling  followed  by  a  three-day  waiting 
period)  which  had  been  previously  introduced  in  2013.  Gender  budgeting  provisions 
were implemented at ministerial level.  In 2018, three new crisis centres for victims of 
sexual  violence  were  set  up  in  Skopje,  Tetovo  and  Kumanovo.  However,  additional 
shelters for victims of sexual and gender-based violence and human trafficking will be 
needed to meet the standards of the Istanbul Convention. The gender equality unit of the 
Ministry of Labour and Social Policy plays a key coordination role and it needs to be 
adequately resourced to ensure legal and policy tools are implemented effectively.  

The  legal  framework  for  the  rights  of  the  child  largely  complies  with  international 
standards.  The  amendments  to  the  Criminal  Code  adopted  in  December  2018  expand 
the  definition  of  violence  against  a  child,  explicitly  covering  psychological  violence, 
online violence and peer violence and raise the minimum age for unwed life with a child 
from  16  to  18.  Implementation  of  legislation  needs  to  be  reinforced  and  stakeholders 
should make the best interest of the child a guiding principle. The national Coordination 
Body for Protection of Children from Abuse and Neglect has been monitoring violence 
against children against a set of indicators. Following the monitoring of the Lanzarote 
Committee of the Council of Europe, a number of recommendations were issued to the 
country  related  to  protection  of  children  from  sexual  abuse,  covering  for  example 
prevention, awareness-raising and screening of professionals in contact with children.  

A new action plan for children is still pending since the last one expired in 2015. The 
deinstitutionalisation  process  is  under  way  and  resettlement  of  children  to  community 
based care has started, leading to the closure of three residential institutions. Additional 
community  services  are  needed  to  identify  children  at  risk  and  to  support  Roma  and 
children with disabilities who are victims of  discrimination and segregation. 2018 saw 
an increase in child trafficking and a study found that 8 out of 10 children in the country 
inter-agency  cooperation, 
faced  violence.  Despite  measures 
coordination  in  preventing  and  responding  to  violence  is  limited.  The  Ombudsman’s 
Office confirmed 66 violations of child rights in 2018. The Law on Juvenile Justice is 
being  implemented  but  access  to  justice  and  legal  representation  should  be  improved. 
There were no improvements in the material conditions and availability of education for 
detained children. 

improve 

taken 

to 

30 

 
 
There  was  some  progress  in  improving  the  rights  of  persons  with  disabilities.  The 
national  coordinative  and  monitoring  bodies  for  implementing  the  UN  Convention  on 
the  Rights  of  Persons  with  Disabilities  were  established.  In  October  2018,  the  UN 
Committee  on  the  Rights  of  Persons  with  Disabilities  recommended  further  efforts  to 
guarantee non-discrimination, to  repeal  provisions allowing involuntary  deprivation  of 
liberty,  to  improve  accessibility,  to  ensure  inclusive  education,  etc.  The  government 
adopted  an  ambitious  National  Strategy  on  Deinstitutionalisation  (2018-27)  and 
corresponding  action  plan.  The  government  is  committed  to  ensuring  that  by  2020  no 
child under 3 years old will be institutionalised. The resettlement of some children with 
disabilities  to  small  community  homes  has  begun.  The  moratorium  on  admitting  new 
residents to the Special Institute of Demir Kapija remains in effect but conditions in this 
institution remain very poor. In 2018, the Ombudsman’s Office reported 21 complaints 
related to discrimination against children with disabilities. (See also Chapter 19 – Social 
Policy and employment) 

The  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons  are 
better protected following amendments  to  the Criminal  Code and adoption of the new 
Law on Prevention and Protection from Discrimination. Sexual orientation and gender 
identity  are  grounds  for  protection  in  both.  The  positive  attitude  from  the  political 
leadership  and  advocacy  by  the  LGBTI  inter-party  group  of  13  MPs  continued. 
However, societal prejudice, hate speech, discrimination and widespread intolerance are 
prevalent  against  LGBTI  persons.  Incitement  to  homophobic/transphobic  hatred  and 
violence  needs  to  be  more  effectively  prevented  and  prosecuted.  No  final  convictions 
have  been  issued  for  the  2012,  2013  and  2014  attacks  on  the  LGBTI  support  centre. 
Further  efforts  are  needed  on  tackling  and  collecting  data  on  hate  crimes  and  hate 
speech based on sexual  orientation and gender identity. The legal framework does not 
allow for the official recognition  of same-sex couples. Transgender persons’ access  to 
healthcare  remains 
legally  regulated  gender 
recognition procedures were initiated in November 2018. In January 2019, the ECtHR 
found  the  country  to  be  in  violation  of  the  Article  8  of  the  Convention  related  to  the 
right to private and family life following a case related to the absence of legal  gender 
recognition procedures.  

limited.  Preparations 

to  establish 

the 

legal  framework  notably  provides  for 

Regarding  procedural  rights, 
the 
presumption of innocence and the right to communicate with a lawyer. Amendments to 
the Law on Criminal Procedure to transpose provisions of the EU acquis related to the 
right to interpretation and translation, the right to information and victims' rights have 
yet to be adopted. However, the country already partly provides these rights in practice. 
There were delays in adopting the law on legal aid which impeded  access to justice of 
the most vulnerable people including children. The Law on Compensation for Victims 
of  Crime  has  yet  to  be  adopted.  The  broadcasting  of  ‘Basic  Court  Skopje  1’  issuing 
verdicts  to  suspects  in  cases  of  the  Special  Prosecutor’s  Office  in  May  2018  and  in 
March 2019 raised concerns on the respect for the presumption of innocence.  

Regarding  the  protection  of  minorities,  work  is  ongoing  to  strengthen  the  legal 
framework on minorities on non-majority communities. The Parliament adopted the law 
enabling the establishment of a new Ministry of Political System and Inter-Community 
Relations.  This  Ministry  would  take  over  the  functions  of  the  Secretariat  for  the 
Implementation  of  the  Ohrid  Framework  Agreement  and  of  directorates  dealing  with 

31 

 
 
communities’ issues  under the Ministry of  Education and Science  and the Ministry of 
Culture.  This  new  Ministry  needs  to  work  closely  with  the  Agency  for  Communities 
Rights Realisation. Institutions in charge of minority-related policies are politically and 
ethnically  divided,  with  unclear  roles  and  are  left  outside  the  mainstream  policy  and 
decision-making  process.  The  absence  of  bias  disaggregated  data  collection  does  not 
allow  the  level  of  discrimination  faced  by  members  of  minorities  to  be  verified. 
However,  the  authorities  and  the  media  must  pay  attention  to  this  issue.  While  the 
government  shows  commitment  to  the  integration  of  all  people,  including  through  the 
work initiated on drafting of a strategy under the motto ‘One society for all’, more work 
needs  to  be  done  on  improving  social  cohesion.  There  is  no  system  to  monitor  the 
implementation  of  the  recommendations  issued  by  the  Advisory  Committee  of  the 
Framework Convention  on National  Minorities,  and existing measures,  mainly funded 
by donors, are insufficient.  

Implementation of the Roma inclusion strategy (2014-2020) and corresponding action 
plans for education, employment, housing and gender, and health, is gradual and much 
remains to be done on Roma inclusion. The government is committed to continuously 
increasing  funding  for  Roma  integration  policies,  but  the  lack  of  expenditure 
monitoring, combined with the poor absorption of existing funds, remains a problem.  

According to a regional survey on Roma inclusion, the country has fared well compared 
to its neighbours and has improved in all five priority areas, albeit at different rates. The 
completion  rate  of  compulsory  education  stands  at  70%.  However,  this  figure  is 
significantly lower than that of the mainstream population living in similar areas. Roma 
girls  are  particularly  affected,  often  due  to  early  marriages.  Segregation  in  school 
remains  high,  with  40%  of  marginalised  Roma  students  attending  majority  Roma 
schools.  Systematic,  rather  than  reactive  measures  by  state  institutions  are  required  to 
address  the  issue  of  street  children.  The  Ombudsman's  Office  reports  about  337  child 
beggars  recorded  on  the  streets.  Of  these,  328  are  Roma  of  all  age  groups,  including 
babies.  

The  Roma  Information  Centres,  together  with  Roma  health  and  education  mediators, 
provide  good  support.  Regarding  housing,  the  objective  to  reduce  the  gap  between 
Roma  and  non-Roma  citizens  is  progressing  very  slowly  and  most  of  the  planned 
measures  have  not  been  implemented.  Many  Roma  settlements  are  not  included  in 
existing  urban  plans  and  only  17.6%  of  all  allocated  social  housing  is  reserved  for 
Roma. At 49%, the unemployment rate of Roma is significantly above that of their non-
Roma  neighbours.  In  addition,  the  number  of  Roma  benefiting  from  concrete 
employment measures is very limited. A revision of the mechanism in place to promote 
Roma employment at all levels is needed. Although efforts have been made to decrease 
of the number of Roma without identification documents, through a public call and the 
work of civil society organisations, no preventive measures were taken to avoid future 
cases.  There  is  no  mechanism  to  identify  or  determine  statelessness  and  no  stateless 
protection  status.  The  number  of  Roma  without  identity  documents  is  estimated  to  be 
around 700. The set of priority actions identified in the November 2017 Roma seminar 
are  only  partially  addressed  with  the  monitoring  and  reporting  responsibilities  being 
unclear.  

32 

 
 
2.2.2  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 within the EU. There is also 
cooperation in the fight against organised crime and terrorism, and in judicial, police 
and customs cooperation.  

North  Macedonia  is  moderately  prepared  to  implement  the  acquis.  Good  progress 
was  made,  including  on  legal  alignment  in  the  area  of  migration.  The  operational 
capacities  of  law  enforcement  agencies  improved.  Good  progress  was  also  made  in 
meeting  last  year’s  recommendations  by  implementing  the  reform  of  the  system  of 
interception of communication in line with the ‘Urgent Reform Priorities’. This needs to 
be reinforced by  completing police and intelligence sector reforms. With the adoption 
of the Strategy for Strengthening the Capacities for Conducting Financial Investigations 
and  Confiscation  of  Property  and  the  setting  up  of  a  dedicated  financial  investigation 
unit in the police, major steps were taken to prioritise financial investigations and asset 
recovery.  Migration  management  efforts  continued,  including  the  initialling  of  an 
agreement  with  the  EU  for  cooperation  with  the  European  Border  and  Coast  Guard 
Agency.  Systematic  registration  of  migrants  and  protection-sensitive  profiling,  to 
guarantee  that  their  needs  are  addressed,  need  to  be  enhanced.  Measures  to  counter 
violent extremism and fight terrorism need to continue.  

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

  provide all necessary means to effectively implement the Strategy for Strengthening 
the Capacities for Conducting Financial Investigations and Confiscation of Property;  

  ensure  that  institutional  reforms  of  the  security  sector  (criminal  police,  financial 
units,  intelligence  services,  National  Coordination  Centre  for  the  Fight  against 
Organised  Crime)  are  effective  and  translated  into  a  proactive  policy  of 
implementing the strategic documents and achieving further tangible results;  

  ensure that priorities are clearly defined when preventing and fighting terrorism and 

that the Coordinator's office can effectively perform its mandate.  

Fight against organised crime 

The  country  has  some  level  of  preparation  in  the  fight  against  organised  crime.  The 
legislative framework is broadly in line with European standards. Efforts to implement 
strategies against organised crime and actively  measure their impact  need to  continue. 
Some  progress  was  also  made  in  meeting  last  year’s  recommendations  by  further 
improving the track record, stepping up law enforcement cooperation and substantially 
improving  the  operational  capacity  to  fight  trafficking  in  human  beings.  Further 
progress  was  made  at  the  operational  level  by  improving  the  effectiveness  of  the 
National Coordination Centre for the Fight against Organised Crime and participating in 
joint  operations  with  EU  Member  States  and  neighbouring  countries.  However,  more 
needs  to  be  done  on  threat  assessments  and  on  prioritising  the  fight  against  money 
laundering  and  financial  crimes.  Coordination  remains  crucial  for  all  stakeholders 
involved in fighting organised crime.  

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

  based on an improved threat assessment capacity, further bolster the track record of 
33 

 
 
investigations,  prosecutions  and  convictions  for  organised  crime  and  money 
laundering, and demonstrate the ability  to  effectively dismantle organised criminal 
networks;  

  increase  the  effectiveness  of  the  national  asset  recovery  system,  including  by 

establishing an asset recovery office in line with the EU acquis;  

  continue  the  work  on  establishing  a  centralised  bank  account  register,  in  line  with 

the provisions of the 5th EU Money Laundering Directive. 

Institutional set-up and legal alignment  

The country has 213 uniformed police officers per 100 000 inhabitants compared with 
the EU average of 318 per 100 000 people in 2016 according to Eurostat. In 2018, 593 
new  police  officers  were  hired.  No  new  public  vacancies  were  announced.  500  new 
police  candidates  started  their  one-year  training  programme.  The  internal  organisation 
and  systematisation  of  the  Ministry  of  the  Interior  was  put  on  hold,  pending  ongoing 
broader security sector reforms that are affecting the intelligence sector.  

Key  institutions  in  the  fight  against  organised  crime  include  specialised  police 
departments  within  the  Ministry  of  the  Interior  that  deal  with  different  types  of 
organised  crime.  In  addition,  two  specialised  units  deal  with  financial  crimes:  the 
Financial Intelligence Unit under the Ministry of Finance collects information and helps 
identify suspicious transactions, the Unit for Financial Crime under the Ministry of the 
Interior also collects information and has investigative powers. To reform the financial 
crime sector, preparations are underway to set up new specialised financial investigation 
units within the Customs administration and within the Financial Police Directorate.   

Some sectors of the police – border police for instance – are well equipped. The Police 
Training Centre within the Ministry of the Interior provides both initial and vocational 
training, however it is not yet fully operational. 

intercepting  communications  was  reformed,  resulting 

The  system  for 
the 
establishment  of the Operational  Technical  Agency  (OTA),  which became operational 
on 1 November 2018. The director of the Agency was nominated by the Parliament with 
a 2/3  majority. The procedure for employing personnel  was completed. The OTA is  a 
new  independent  institution,  which  upon  an  anonymised  court  order,  permits  the 
intermediation  between  the  telecom  operators  and  the  authorised  bodies,  to  intercept 
communications  for  the  protection  of  the  security  of  the  state  and  for  the  purpose  of 
criminal investigations. Some authorised bodies still need to set up the connection to the 
OTA.  Those  which  are  connected  can  intercept  communications  as  per  their 
competences. The establishment of OTA is in line with the ‘Urgent Reform Priorities’.  

in 

Regarding  the  legal  framework,  the  Criminal  Code  is  broadly  in  line  with  European 
standards  and  criminalises  trafficking  in  human  beings,  online  child  pornography, 
computer crime and drug trafficking. Amendments were adopted to incorporate the non-
punishment  principle,  so  that  victims  of  trafficking  in  human  beings  are  not  punished 
for offences committed in the course, or as a consequence, of being trafficked.  

Legal developments also include amendments to the law on weapons with the view to 
aligning with  the  acquis  on control of small  arms and light  weapons (SALW) and the 
Law  for  the  Prevention  of  Money  Laundering  and  Financing  of  Terrorism  adopted  in 

34 

 
 
June 2018. The Law on the Freezing, Confiscation and Management of Criminal Assets 
has  yet  to  be  further  amended  and  fully  harmonised  with  the  recent  strategy  on 
Strengthening  Capacities  for  Financial  Investigations  and  Confiscation  of  Assets.  The 
legal status and functions of the Agency for Management of Confiscated Property need 
to  be  strengthened.  The  Law  on  Witness  Protection  was  amended  to  ensure  witnesses 
are included in the protection programme upon the Special Public Prosecutor’s  Office 
request due to the high sensitivity of the cases it deals with. 

North Macedonia has established a strategic framework for fighting organised crime, 
including the Police Development Strategy and a 2016-2020 action plan, which is being 
implemented.  A  national  assessment  of  threats  of  serious  and  organised  crime  in  line 
with EUROPOL’s Serious Organised Crime Threats Assessment methodology needs to 
be  developed  and  should  inform  decisions  on  operational  priorities  in  addressing 
organised crime in the years ahead.  

The  adoption  in  February  2018  of  the  2018-2020  Strategy  for  Strengthening  the 
Capacities  for  Conducting  Financial  Investigations  and  Confiscation  of  Property 
together with an action plan is a positive step towards introducing a systemic approach 
for  asset  recovery.  It  complements  the  2017-2019  National  Strategy  for  the  Fight 
against  Money  Laundering  and  Financing  of  Terrorism  and  the  2014-2020  National 
Drugs Strategy. It requires the setting up of separate organisational units for conducting 
financial investigations in the Public Prosecution Office, the Ministry of the Interior, the 
Financial  Police  Directorate  and  the  Customs  Administration.  Its  implementation  is 
ongoing.  Four  investigative  centres  are  also  set  up  at  the  main  Public  Prosecution 
Office.  

The  2018-2022  National  Cybersecurity  Strategy  adopted  in  July  2018  is  an  additional 
effort to address key security issues. It is based on the EU Cybersecurity Strategy and 
the NATO Cyber Defence Pledge. The relevant 2018-2022 action plan was adopted in 
December 2018. It covers cyber resilience, cybercrime and cyber defence. In addition, 
the Cybercrime Strategy was adopted in September 2018.   

Implementation and enforcement capacity  

The  number  of  criminal  investigations  opened  at  the  prosecutor’s  office  in  relation  to 
criminal  organised  groups  increases  regularly.  In  2018,  23  new  cases  were  under 
investigation  (compared  to  12  cases  in  2017  and  16  cases  in  2016).  The  number  of 
indictments also increased and 87 individuals suspected of being members of organised 
criminal groups were indicted (against 37 in 2017). The courts have issued first instance 
judgments  in  11  cases  and  have  pronounced  prison  sentences  against  29  individuals 
ranging  from  one  to  12  years.  Most  of  the  investigations  and  trials  concern  drug 
trafficking  and  smuggling  of  migrants.  The  department  of  the  Ministry  of  the  Interior 
dealing with organised crime launched financial investigations in four cases against 57 
individuals. Of those individuals, 39 are suspects so far. Those figures do not reflect the 
total number of cases where serious criminal offences such as smuggling migrants are 
committed by one or two individuals and therefore do not fall under the strict definition 
of organised criminal networks but do constitute offences subject to investigations and 
prosecution. The Customs administration also conducted two financial investigations on 
organised crime.  

35 

 
 
The  external  oversight  mechanism  has  been  established  to  ensure  the  independent 
supervision of law enforcement authorities and address potential abuses. Following the 
amendments to the relevant laws adopted by the Parliament, the Special Department for 
investigation  and  prosecution  of  crimes  committed  by  the  individuals  with  police 
powers  and  members  of  the  prison  police  in  the  Basic  Public  Prosecutor's  Office  for 
Prosecuting  Organised  Crime  and  Corruption  was  set  up  in  December  2018.  Since  its 
establishment  this department  has opened cases against 15 people, two of whom  have 
been indicted and two of whom are in detention. The civil control mechanism within the 
Ombudsman  needs  to  be  established  for  the  whole  oversight  mechanism  to  be  fully 
operational.  This  is  an  important  step  in  securing  accountability  of  law  enforcement 
bodies.  

The  National  Coordination  Centre  for  the  Fight  against  Organised  Crime  has 
significantly  improved  its  operational  capacity.  Relevant  institutions  such  as  the 
Ministry  of  the  Interior,  Customs,  the  Financial  Intelligence  Unit,  and  the  Public 
Revenue  Office,  assigned  their  representatives  and  are  connected  to  the  centre.  All 
participating  authorities  have  access  to  their  respective  databases.  Only  the  Public 
Prosecutor's  Office  and  financial  police  still  exchange  information  via  email  in  the 
absence  of  their  own  database.  The  centre  has  demonstrated  its  capacity  to  efficiently 
collect,  exchange,  and  analyse  information.  Verifications  were  undertaken  for  316 
people and 57 legal entities linked to organised or serious crimes with effective results.  

Progress was made in further improving the relations between prosecutors, the police 
and other relevant bodies and agencies as a result of the long overdue establishment of 
investigative centres in the respective Public Prosecutor’s Offices in Skopje, Kumanovo 
and  Tetovo,  and  the  Public  Prosecutor’s  Office  for  Prosecuting  Organised  Crime  and 
Corruption.  The  prosecution  service  can  now  fully  play  its  leading  role  in  the 
investigations.  

Organised  crime  and  corruption  need  to  be  further  prioritised  in  terms  of  human 
resources  in  the  Prosecution  Office.  The  Basic  Public  Prosecutor's  Office  for 
Prosecuting Organised Crime and Corruption does not have enough public prosecutors 
(only  10  out  of  the  planned  15  positions  are  filled).  Inter-operability  has  been  set  up 
between  the  police,  the  Public  Prosecutor’s  Office,  and  other  law  enforcement  bodies 
and  its  implementation  should  be  monitored.  The  implementation  of  the  merit-based 
recruitment policy and career system enshrined by the law requires continuous scrutiny. 
Special investigative measures were used in two organised crime cases. The concept of 
intelligence-led  policing  is  being  implemented  but  needs  to  be  strengthened  and 
aligned  with  ongoing  judicial  and  police  reforms.  The  country  needs  to  continue  its 
efforts to act along the priorities of the EU policy cycle. 

The  country  participates  in  international  police  cooperation  through  the  main 
cooperation channels. It has access to various platforms and databases as well as direct 
communication  with  Interpol.  Cooperation  with  Europol  is  well-established  following 
the conclusion of a strategic agreement in 2007 and an operational agreement in 2011. 
A  liaison  officer  from  the  country  has  been  posted  in  Europol  headquarters  in  The 
Hague  since  2015.  In  2018,  the  country  participated  in  the  annual  planning  of 
operational  actions  under  the  European  Multidisciplinary  Platform  against  Criminal 
Threats  (EMPACT)  on  facilitation  of  irregular  migration.  The  country  participated  in 
three regional operations within the framework of the EMPACT Joint Action Days. It 
36 

 
 
also committed itself to participate in five operational actions together with EU Member 
States to combat migrant smuggling in 2019. The country’s law enforcement authorities 
should make use of regional initiatives, such as the Joint Operational Office in Vienna, 
and  the  Task  Force  Western  Balkans,  which  is  serving  as  a  regional  operational 
platform  for  international  investigations  into  migrant-smuggling  organised  -  crime 
groups. 

Law  enforcement  and  prosecution  bodies  must  further  build  up  operational  capacity, 
including  for  systematically  conducting  financial  investigations.  Despite  some 
progress, there is still a need to further improve coordination, operational capacity and 
the  systemic  exchange  of  data.  Establishing  a  central  bank  account  register  whose 
access  would  significantly  contribute  to  the  quality  of  financial  investigations,  is 
pending the finalisation and adoption of the new Law on Payment Services.  

The  confiscation  of  criminal  assets  should  now  also  be  a  strategic  priority  in  the 
national  fight  against  organised  crime,  terrorism  and  high-level  corruption.  The 
country’s  tools  for  freezing,  managing  and  confiscating  criminal  assets  are  still  not 
effective  enough.  A  more  integrated  operational  approach  to  effectively  ensure  asset 
recovery is needed.  

Following  the  implementation  of  the  National  Strategy  for  Combating  Trafficking  in 
Human Beings and Illegal Migration (2017-2020), a dedicated Task Force was set up, 
including representatives from the Ministry of the Interior and two prosecutors from the 
Basic Public Prosecutor's Office for Prosecuting Organised Crime and Corruption. This 
is  a  positive  step  towards  a  greater  efficiency  in  fighting  trafficking  in  human  beings 
and  illegal  migration  as  it  ensures  real  time  communication  between  the  relevant 
authorities. In  February  2019,  this  approach  resulted  in  the  arrest  of  a  group  of  21 
members  against  whom  criminal  charges  for  smuggling  migrants  were  brought.  The 
task  force  supported  the  arrest  of  members  of  three  other  groups  against  which 
investigations are currently ongoing. In one group involving nine individuals, measures 
were  adopted  to  temporarily  freeze  53  bank  accounts  of  four  physical  entities  and  24 
bank accounts of three legal entities. Measures were adopted to ensure the seizure of 13 
real  estate  properties.  Final  sentences  were  pronounced  against  11  individuals  for 
migrant  smuggling  related  activities  ranging  from  1  to  6  years  imprisonment.  Figures 
show that the number of detected smuggling cases increased from 17 in 2017 to 58 in 
2018.  The  Basic  Public  Prosecutor’s  Office  for  Prosecuting  Organised  Crime  and 
Corruption filed criminal charges in 44 cases involving a total of 73 individuals.  

Against  Trafficking  in  Human  beings,  five  mobile  teams  for  identifying  vulnerable 
categories,  including  victims  of  human  trafficking  were  formally  established  on  5 
February 2018 in Skopje, Bitola, Kumanovo, Tetovo and Gevgelija. The mobile teams 
are  composed  of  members  of  relevant  institutions  (Ministry  of  the  Interior  and  the 
Ministry of Labour and Social Policy) and civil society organisations. In 2018, a higher 
number of victims of trafficking were identified compared to last  year, 10 including 6 
minors, and 6 criminal charges were brought against 17 individuals. In one case, three 
people were sentenced between 13 and 12 years in prison.  

Criminal  charges  for  money  laundering  were  brought  in  20  cases  against  23 
individuals,  and  two  final  judgements  were  pronounced  against  two  individuals.  All 
relevant  institutions  must  properly  apply  anti-money  laundering  legislation.  Both  the 

37 

 
 
Financial  Police  Directorate  and  the  Financial  Intelligence  Unit  have  insufficient 
resources and capacities.  

On  small  arms  and  light  weapons  there  are  operational  results  with  129  pieces  of 
firearms seized. In 2017, no arms were destroyed, while in 2018, 590 pieces of various 
dysfunctional,  damaged  and  unusable  weapons  were  destroyed.  In  2018,  187  criminal 
offenses on illegal production, holding and trading with weapons or explosive materials 
were  detected,  for  which  203  perpetrators  and  two  legal  entities  were  criminally 
charged.  This  is  a  45%  increase  in  the  detection  rate  compared  with  last  year.  18 
verdicts  were  pronounced  against  20  individuals.  In  18  cases,  the  items  used  for 
committing  the  crime  were  seized.  There  are  specific  rules  for  the  import  and  sale  of 
weapons  and  ammunition  including  specific  regimes  and  procedures  for  four  distinct 
categories.  The  country  also  participated  in  one  of  the  regional  operations  under  the 
European  Multidisciplinary  Platform  against  Criminal  Threats  for  the  prevention  of 
illegal  trade and smuggling of weapons and ammunition,  illegal  migration, illicit drug 
trafficking and fraud with documents. 

Regarding  cybercrime,  a  total  of  105  computer  crimes  were  detected  including  two 
involving  the  production  and  distribution  of  child  pornography  and  two  involving 
displaying pornographic material to a child. There are no established procedures so far 
to  systematically  monitor  the  darknet.  North  Macedonia  should  now  also  strengthen  a 
more  effective  law  enforcement  response  focusing  on  detection,  traceability  and  the 
prosecution of cyber criminals. 

Proactively fighting organised crime and corruption remains fundamental to countering 
criminal infiltration of the political, legal and economic systems. 

Cooperation in the field of drugs 

Institutional set-up and legal alignment 

Progress  was  made  in  taking  steps  for  aligning  drugs-related  legislation  with  the  EU 
acquis  through  amending  the  Law  on  Drug  and  Psychotropic  Substance  Control.  The 
draft  amendments  aim  to  establish  a  stronger  system  for  detecting  new  psychoactive 
substances. This needs to be supported by the formal establishment of a national early 
warning  system  as  required  by  the  EU  acquis.  A  National  Drugs  Observatory  exists 
since 2007 in the Ministry of Health.  

The  2014-2020  National  Drug  Strategy  is  aligned  with  the  2013-2020  EU  Drugs 
Strategy and its new 2018-2020 action plan, has been adopted .  

Implementation and enforcement capacity 

In 2018,  good progress  was made in  developing the track  record of seizing drugs and 
dismantling  organised  crime  groups.  There  was  an  increase  in  the  detection  of  drug-
related  criminal  offences  and  in  the  number  of  perpetrators.  There  were  673  criminal 
acts  detected  on    illicit  production  and  illegal  circulation  of  narcotics,  psychoactive 
substances and precursors (467 in 2017) involving 782 perpetrators (532 in 2017) and 
116  acts  of  facilitating  the  use  of  narcotics  (88  in  2017)  with  124  perpetrators  (97  in 
2017).  Altogether,  1  538  kilograms  of  various  narcotics  were  seized,  more  than  four 
times the quantity of narcotics seized in 2017. The largest share was marijuana with 1 
532  kg  seized,  followed  by  heroin  with  1.9  kg  seized,  and  cocaine  with  587  grams 
seized.  Investigations  resulted  in  the  dismantling  of  eight  organised  criminal  groups 
38 

 
 
involving 46 people trafficking marijuana. Cooperation with neighbouring countries is 
good, including ad-hoc cooperation. In 2018, one international drug shipment of liquid 
cocaine was intercepted. Five international criminal investigations were also conducted, 
confirming the good cooperation with third countries including under EMPACT.   

The operational capacity of the National Drugs Observatory needs to be strengthened to 
allow it to correctly implement its drug-monitoring tasks. Data collection, analysis and 
reporting in line with the European Monitoring Centre for Drugs and Drugs Addiction 
requirements and methodologies requires further strengthening.  

The lack of secure storage for drugs and drug precursors prior to destruction remains an 
issue of concern. According to current legislation, it is not possible to keep only a small 
sample as material evidence for court proceedings, instead of the entire seized quantity. 
An appropriate process for destroying precursors has yet to be set up.  

Fight against terrorism 

Institutional set-up and legal alignment  

is  National  Coordinator  for  Counter-Terrorism  and  Countering  Violent 
There 
Extremism,  and  two  deputies  responsible  for  preventing  violent  extremism  and  for 
fighting  terrorism.  The  Coordinator  is  the  head  of  the  National  Committee  for 
Countering  Violent  Extremism  and  Countering  Terrorism.  The  Office  of  the  National 
Coordinator and the National Committee have improved their capacities through various 
basic  and  specialised  training  and  are  more  operational.  Cooperation  has  increased 
between  law  enforcement  agencies,  intelligence  services  and  relevant  key  state 
institutions (education, health, and social services). More needs to be done on relations 
with local communities and civil society organisations. Necessary human and financial 
resources need being secured. 

The Basic Public Prosecutor’s Office for Prosecuting Organised Crime and Corruption 
is  responsible  for  terrorism  related  offences.  So  far,  the  Bureau  for  Security  and 
Counterintelligence  is  responsible  for  internal  security  and  counterintelligence, 
including foreign fighter returnees, but it is undergoing major reforms. 

The Criminal Code is  largely aligned with the acquis and international instruments on 
anti-terrorism.  

The  2018-2022  National  Counter  Terrorism  Strategy  and  the  2018-2022  Strategy  for 
Countering  Violent  Extremism,  and  their  relevant  action  plans,  by  which  the 
government  moved  from  a  purely  security  based  approach  to  a  more  integrated  and 
preventive  approach,  are  being  implemented.  Steps  have  been  taken  to  set  up  a 
community  action  team  involving  various  stakeholders  at  local  level  to  support 
prevention  and  early  identification  of  radicalisation  in  the  communities.  Training  was 
organised  for  education  personnel.  In  October  2018,  the  country  signed  the  Joint  EU-
Western Balkans Action Plan on Counter-Terrorism,  which sets  out concrete steps for 
enhanced  cooperation  in  countering  terrorism  and  preventing  radicalisation  over  the 
next two years. 

Implementation and enforcement capacity  

There  have  been  no  anti-terrorist  operations  since  November  2016,  when  25  people 
(operations  dubbed  “Cell  1”,  “cell  2”,  “cell  3”)  were  convicted  on  charges  of 

39 

 
 
participating  in  foreign  military,  police  and  paramilitary  formations.  In  2018,  six  of 
those  convicted  were  released  from  prison.  But  there  is  no  systematic  mechanism  for 
monitoring  them  after  their  release.  Systematic  mechanisms  are  needed  to  monitor 
foreign terrorist fighters once returned and/or released. 

It is estimated that around 106 of the country's citizens left for conflict zones (Syria and 
Iraq) since 2012. No one left in 2018. Approximately 103, i.e. 2/3 of the ones that left, 
have since returned to the country, around 20 are still in Syria and 30 have been killed 
there. 

Steps were undertaken for de-radicalisation programs in prisons. This needs to continue. 

North Macedonia is actively participating in the implementation of the Western Balkan 
Counter Terrorism Initiative (WBCTi). 

Legal and irregular migration 

Institutional set-up and legal alignment  

Progress was made in improving the legal framework with the adoption of amendments 
to the Law on International and Temporary Protection and the Law on Foreigners. The 
crisis  situation  at  the  country’s  borders  was  extended  until  30  June  2019,  authorising 
continued deployment of the army. 

There  is  a  fragmentation  of  tasks  between  the  institutions  dealing  with  migration. 
Responsibilities are shared between the Ministry of the Interior's Unit for Border Affairs 
and  Migrants  (which  deals  with  security  aspects  and  management  of  the  borders),  the 
Ministry  of  Labour  and  Social  Policy  (which  manages  access  to  services  and 
socioeconomic  integration  of  migrants  and  refugees)  and  the  Department  for  Serious 
and Organised Crime’s specialised unit fighting trafficking in human beings and people 
smuggling.  

Implementation and enforcement capacity  

North Macedonia continues to play an active and constructive role in the management 
of  mixed  migration  flows.  It  cooperates  effectively  with  EU  Member  States  and 
neighbouring  countries.  Considerable  efforts  to  ensure  basic  living  conditions  and 
services for all migrants staying in the country continued. There are still uncertainties on 
the  scope  and  structure  of  migration  flows.  The  inconsistent  registration  of  migrants 
apprehended in irregular movements prevents regular and adequate protection-sensitive 
profiling and the referral to national protection mechanisms. With the assistance of the 
army and deployment of guest officers from EU Member States effective control at the 
southern border has been ensured. However, the problem of regular smuggling activities 
at the northern border needs to be further addressed.  

The country continues to be under severe pressure due to its geographic location. The 
migratory  flows  continued  to  be  largely  transitory,  with  most  migrants  arriving  from 
Greece and leaving North Macedonia after a couple of days. The number of officially 
reported  illegal  crossings  has  substantially  increased  compared  with  the  previous  year 
(16 895 attempts in 2018 compared to 2 831 in 2017) reportedly mainly on the southern 
border  with  Greece  (13  494).  This  could  include  repeated  attempts  from  the  same 
individuals.  Most  migrants  are  from  Pakistan,  Iran  and  Afghanistan.  The  number  of 
migrants  transiting  the  country  is  considered  to  be  much  higher  than  official  figures. 

40 

 
 
About 32 500 migrants are considered to have illegally crossed the country's borders in 
both directions since the beginning of 2018, including many Iranians crossing illegally 
from Serbia and moving onwards to Greece.  

As  of  November  2018,  around  60  people  are  stranded  in  the  country.  44  criminal 
charges were filed against 62 individuals for smuggling migrants resulting in verdicts in 
nine cases (16 convicted, charges dismissed against 7). Combating smuggling networks 
needs to be a priority.  

The  Resolution  on  Migration  Policy  adopted  by  the  government  in  2015  is  the  main 
policy  document  in  this  field.  One  of  its  strategic  priorities  is  to  identify  migrants, 
profile them, and refer them to the appropriate protection system.  

Progress  was  made  on  improving  reception  conditions  in  the  asylum  centre  in 
Vizbegovo.  In  2018,  a  total  of  299  individuals  applied  for  asylum.  The  country 
continued to arbitrarily detain a number of people apprehended in irregular movements 
in order to ensure their witness statements in court cases against smugglers. The transit 
centres  for  migrants  near  Gevgelija  and  Tabanovce  are  almost  empty.  Neither  of  the 
transit centres is suitable for long-term stays, and the authorities continue to be reluctant 
to provide more than a temporary stay.  

The readmission agreement with the EU is being implemented in a satisfactory manner 
in  regards  to  own  nationals.  The  return  rate,  which  remains  above  100%,  shows  that 
citizens who are ordered to leave the EU are effectively returned, with a high share of 
Roma.  The  country  needs  to  develop  services  for  returnees  and  to  revive  the 
coordinating  body  on  returnees.  In  2018,  the  number  of  third  country  nationals  who 
returned to their country of origin remained low. Assisted voluntary returns procedures 
were carried out for 21 migrants. The country needs to put in place a return mechanism 
for irregular migrants, in line with the acquis.  

More  effort  is  needed  to  successfully  reintegrate  returnees,  especially  the  most 
vulnerable such as Roma - who represent a large part of returns. Increased cooperation 
communication and coordination is needed between central  level  governments, among 
central and local authorities and with international organisations and NGOs active in the 
reintegration of returnees. The government should consider reviving and reinforcing the 
coordination  body  of  returnees  under  the  leadership  of  the  Ministry  of  Labour  and 
Social Policy. 

Asylum 

Institutional set-up and legal alignment  

Further important steps were taken to align the national legislation with the EU acquis. 
A  new  Law  on  International  and  Temporary  Protection  was  adopted,  improving  the 
concept of safe third country and family reunification. A list of safe countries of origin 
was adopted. Standard Operating Procedures (SOPs) on unaccompanied children and on 
vulnerable  categories  of  foreigners  are  in  place  but  further  efforts  are  necessary  to 
ensure its systematic implementation. 

Institutions  and  procedures  to  handle  asylum  claims  are  in  place,  with  a  three-level 
decision  system.  There  is  also  an  accelerated  procedure  for  cases  of  manifestly 
unfounded applications.  

41 

 
 
The  2017-2027  Integration  Strategy  for  Refugees  and  Foreigners  has  not  yet  been 
adopted.  There  is  a  programme  and  budget  allocated  for  its  implementation  under  the 
Ministry of Labour and Social Policy’s responsibility. After a decade of existence, the 
Ministry  abolished  the  integration  centre,  a  separate  unit  tasked  with  initiating, 
supporting  and  coordinating  activities  for  promoting  integration.  Instead,  the  Inter-
Municipal centre for Social Work Skopje took over some of the integration tasks. More 
efforts are needed to address negative public attitudes towards migrants and refugees.  

Implementation and enforcement capacity  

The  Ministry  of  the  Interior  is  upgrading  the  existing  database  on  foreigners  by 
developing  a  new  asylum  module  to  provide  a  case-management  tool  for  processing 
asylum claims.  

Progress  was  made  in  reducing  the  time  it  takes  to  process  asylum  applications  and 
arbitrary  practices  related  to  accessing  the  asylum  procedure  are  no  longer  a  concern. 
However,  the  quality  of  decision  making  on  asylum  procedures  should  be  improved, 
including  at  the  appeal  level.  Difficulties  persist  in  providing  translation  during 
interviews with asylum-seekers and free legal aid is not accessible in practice due to a 
number of requirements which asylum seekers are not able to fulfil. 

In  the  absence  of  an  adequate  system  for  the  orderly  management  of  irregular 
movements,  in  particular  the  possibility  to  effectively  implement  some  readmission 
arrangements  with  neighbouring  countries,  illegal  returns  continued.  Since  January 
2018, international organisations recorded 8 823 persons returned irregularly to Greece. 
On 1 June 2018, a protocol related to the readmission agreement with Kosovo* entered 
into force. 

In  2018,  299  applications  for  asylum  were  submitted,  six  individuals  were  awarded 
subsidiary  protection,  but  none  were  granted  refugee  status.  One  refugee  status  was 
granted for one  person from Kosovo present  in  the country since 1999, a new-born at 
the time. Most cases were discontinued as the applicants disappeared before a decision 
was  taken.  Most  decisions  involved  denying  or  revoking  asylum.  Decisions  on  the 
cessation  of  the  right  of  asylum  mainly  affected  Kosovo  refugees,  whose  status  was 
discontinued after 18 years of residence in the country. These individuals remain on the 
territory with no legal status. Kosovo Roma were particularly affected. From September 
2017  to  December  2018,  subsidiary  protection  was  lifted  in  64  cases  affecting  184 
individuals,  all  Kosovo  Roma,  including  six  cases  on  grounds  of  threat  to  national 
security. These cases are being challenged before the administrative court. 

Visa policy 

In order to ensure a well-managed migration and security environment as the underlying 
condition for the continuous fulfilment of the benchmarks, the country needs to ensure 
full alignment with the EU visa policy. Since 2009, there has been an operational link 
between  the  country's  diplomatic  and  consular  missions,  the  national  visa  information 
system N-Vis and the Visa Centre at the Ministry of Foreign Affairs.  

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and 
the ICJ Opinion on the Kosovo declaration of independence. 

42 

 
 
                                                           
 
The  visa-free  travel  regime  with  the  EU  continued  to  work  smoothly.  The  national 
authorities  continued  cooperation  to  tackle  unfounded  asylum  applications  made  in 
Schengen members and associated countries. The number of applications decreased. It 
came down from 505 to 285 six months later.   

Schengen and external borders  

Institutional set-up and legal alignment  

The  Department  of  Border  Affairs  and  Migration  is  a  specialised  strategic  unit  within 
the Ministry of the Interior. The Border Police is structured into four regional centres, 
within  which  police  stations  for  border  surveillance  and  police  stations  for  border 
checks operate.  

The  legislative  framework  for  the  management  of  external  borders  is  largely  aligned 
with EU standards. In line with the current Police development strategy, there are plans 
to  further  upgrade  the  strategic  and  legal  framework.  The  2015–19  Integrated  Border 
Management  strategy  is  aligned  with  the  2006  EU  concept  on  Integrated  Border 
Management. A concept and methodology of risk management for the border operations 
is in place and it regulates the management and implementation of risk analysis by the 
border police.  

The  Schengen  Action  Plan,  adopted  in  2008,  must  be  upgraded  and  adapted  to  recent 
acquis  developments.  The  National  Coordination  Centre  for  Integrated  Border 
Management, set up for efficient coordination, data-exchange, information sharing and 
greater efficiency, needs to be strengthened. 

Implementation and enforcement capacity  

Mixed police patrols are being deployed on the southern border involving members of 
the  border  police  of  Austria,  Croatia,  the  Czech  Republic,  Hungary,  Poland,  and 
Slovakia,  to  manage  migration  flows.  The  national  authorities  cooperate  extensively 
with the European Border and Coast Guard Agency (EBCGA), including as observers 
in  joint  operations.  The  text  of  the  status  agreement  between  the  EU  and  the  country 
was  initialled  in  July  2018.  Following  the  signature  and  ratification  of  the  agreement 
and the development of an operational plan, the teams will be deployed in the country. 
North Macedonia actively participated in the Western Balkan Risk Analysis network. 

The  implementation  of  the  2015-2019  Integrated  Border  Management  Strategy  and 
related  action  plan  need  to  continue.  Although  the  National  Coordination  Centre  for 
Integrated Border Management prepares regular reports on risk analysis, its institutional 
and operational capacity still needs to be strengthened. IT and technical expertise must 
be stepped up, as a matter of priority.  

Border  guards,  customs  and  other  bodies  still  do  not  have  mutual  access  to  databases 
and  there  is  no  formalised  and  secure  information  exchange  arrangement  with  the 
appropriate security services. A track record of detection, investigation and prosecution 
of cross border crime remains to be established.  

There continues to be good cooperation with neighbouring countries. There is a smooth 
implementation  of  border  agreements  with  all  neighbouring  countries.  A  formal 
agreement has not  yet been concluded with Greece, but bilateral technical cooperation 
works in practice. Joint border patrols conducted with Albania, Bulgaria, Kosovo, and 

43 

 
 
Serbia  and  the  joint  contact  centres  with  these  countries  continued  with  regular 
exchanges of information. There are currently two common border-crossing points for 
local traffic with Serbia and Albania.  

Judicial cooperation in civil and criminal matters  

Regarding  the  legal  framework  on  cooperation  in  civil  and  commercial  matters, 
procedures  are  pending  for  accession  to  and  ratification  of  the  following  Hague 
Conventions:  1996  Convention  on  Jurisdiction,  Applicable  Law,  Recognition, 
Enforcement  and  Cooperation  in  Respect  of  Parental  Responsibility  and  Measures  for 
Protection of Children; 2005 Choice of Court Convention; and 2007 Convention on the 
International recovery of Child Support and Other Forms of Family Maintenance and its 
Protocol  for the  Law  Applicable to  Maintenance. The  country issued 264 requests for 
civil cases and received 384. 

For  judicial  cooperation  in  criminal  matters,  the  country  issued  184  requests  and 
received 804. The country sent 10 requests for the transfer of sentenced nationals back 
to  their  country  of  origin,  and  received  76  requests.  It  issued  200  extradition  requests 
and received 87.  

The Ministry of Justice Department of International Legal Assistance works with two-
thirds  of  its  planned  staff.  Six  of  them  work  in  the  unit  that  handles  mutual  legal 
assistance requests in criminal and civil matters, and four work in the unit that handles 
the  extradition  and  transfer  of  sentenced  individuals.  There  is  a  new  software  for 
registering  cases  and  for  the  movement  of  requests  for  mutual  legal  assistance  and 
statistical reports.   

The  national  liaison  prosecutor  for  Eurojust  was  appointed  and  started  working  in 
November  2018.  In  addition  to  the  contact  point  that  is  in  place  since  2011,  three 
additional  contact  points  for  relations  with  Eurojust  were  appointed  in  August  2018, 
creating  conditions  for  intensifying  cooperation  and  already  resulting  in  an  improved 
exchange of information. 

All  aspects  of  customs  cooperation  are  now  covered  under  Chapter  29  –  Customs 
Union.  

44 

 
 
 
 
3. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS 

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. 

Economic  governance  has  become  even  more  central  in  the  enlargement  process  in 
recent years. The Commission’s monitoring takes place in two processes: the Economic 
Reform  Programme  exercise  and  the  below  assessment  of  compliance  with  the 
economic  criteria  for  accession.  Each  enlargement  country  prepares  an  annual 
Economic  Reform  Programme  (ERP),  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 

North  Macedonia  has  made  some  progress  over  the  last  12  months  and  is  at  a  good 
level  of  preparation  in  developing  a  functioning  market  economy.  Economic  growth 
resumed  after  a  year  of  stagnation,  though  investment  remained  subdued.  The 
government took measures to improve public finance management and transparency. It 
adopted reforms of income taxation and the pensions system. However, the composition 
of spending worsened, and fiscal consolidation needs to be more ambitious in order to 
put  public  finances  on  a  sustainable  path.  The  functioning  of  the  labour  market  is 
impaired by persisting structural problems.  

In order to improve the functioning of the market economy, North Macedonia should in 
particular: 

45 

 
 
 
  stabilise  the  debt  ratio  by  moving  towards  a  balanced  primary  budget  and  by 

improving revenue collection; 

  improve  fiscal  governance  by  adopting  fiscal  rules  and  a  proper  medium-term 

expenditure framework; 

  implement  measures  to  reduce  the  informal  economy  in  accordance  with  the 

2018-2020 strategy and action plan; 

  implement  the  youth  guarantee  in  the  whole  territory  of  the  country  with  an 

emphasis on underdeveloped regions. 

Economic governance 

The government pursues market-based economic policies, with an increased focus 
on social cohesion, while also enhancing state aid. In collaboration with the IMF, the 
World  Bank  and  the  European  Commission,  the  government  implemented  reforms  to 
improve  public  finance  management,  and  to  introduce  progressive  income  taxation.  It 
adopted  changes  to  the  pensions  system,  which  are  expected  to  lead  to  lower  pension 
expenditure  and  higher  government  revenue  in  the  medium  term.  The  government 
continued to implement the 2017 public administration reform strategy. It took steps to 
ensure the independence of the judiciary, and to fight corruption. Financial support for 
business investment and employment was increased, while criteria for and beneficiaries 
of state aid remained opaque. Minimum wages were raised, while productivity growth is 
subdued and the informal economy remains sizeable. The policy guidance jointly agreed 
at  the  May  2018  Economic  and  Financial  Dialogue  between  the  EU  and  the  Western 
Balkans and Turkey has been partially implemented. 

Macroeconomic stability 

household 

Economic  growth  picked  up  in  2018,  but  investment  remained  muted.  After 
stagnating  in  2017  as  confidence  suffered  due  to  political  uncertainty,  GDP  growth 
accelerated to 2.7% y-o-y5. Consumer spending was boosted by rising wages, transfers, 
and 
credit. 
Investment,  however,  which 
had  been 
increasing  at  an 
average  annual  rate  of  5 % 
between  2012  and  2016,  did 
not  recover  from  the  trough  it 
entered in 2017. Manufacturing 
output  continued  to  expand, 
though  at  a  slower  pace  than 
the  average  of  the  preceding  5 
years.  Convergence  with  EU 
remains 
levels 
income 
sluggish. Real GDP per capita has increased from 34% of the EU-28 average in 2012 to 
37% in 2017. 

External  vulnerabilities  remain  contained.  The  current  account  deficit  narrowed  by 
0.7 percentage points (pps) year over year (y-o-y) in 2018, to 0.3% of estimated GDP, 

5 According to a first estimate from the national statistical office. 

46 

 
 
                                                           
driven  by  further  improvement  in  the  trade  balance.  Private  transfers  remained  stable 
compared to 2017, but still below their average of the past 5 years, by over 1pp. Inflows 
from  foreign direct  investment  also  increased markedly in  2018 after a slump in  2017 
and stood at 5.8% of GDP, well above their average of 2.6% in the preceding 5 years. 
External debt has, however, been rising rapidly since 2009 on the back of heavy public 
sector  borrowing  abroad  and  rising  intercompany  debt.  At  74%  of  GDP  at  the  end  of 
2018, it is higher by 4pps than the average in 2013-2017. Moreover, the high degree of 
euroisation of banks’ loans and deposits poses a further challenge on the external side. 
Foreign  exchange  reserves  were  replenished  in  2018  after  having  dropped  in  the 
previous  year,  which  more  than  compensated  for  the  government’s  early  partial 
repayment  of  a  Eurobond  due  in  2020.  At  the  end  of  2018,  reserves  stood  some  23% 
higher than 1 year earlier and covered some 4-5 months of prospective imports. 

The monetary policy stance remains supportive of price stability and the currency 
peg. In 2018, consumer prices increased by 1.5% on average, only slightly faster than in 
the previous year (1.4%). Inflation was driven by rising energy prices and related spill 
overs, in particular to the transport sector. Core inflation remained muted. Stable foreign 
exchange markets and solid economic fundamentals prompted the central bank between 
March 2018 and March 2019 to lower the key interest rate in four consecutive steps of 
25  basis  points  (bps)  each  to  a  historic  low  of  2.5%.  The  central  bank  continued  to 
pursue the ‘denarisation’ of banks’ balance sheets, with moderate success. The share of 
foreign currency-denominated loans to total loans dropped further, to 41.4% at the end 
of 2018 (-1.1pps y-o-y), but remains high. Overall, the current monetary policy stance is 
considered to be in line with economic fundamentals, given, in particular, still moderate 
inflation dynamics, low risks to external stability and a fairly mild pick-up in corporate 
lending. 

tilted 

The composition of public spending has worsened. Government expenditure has been 
towards 
increasingly 
current expenditure over the last 
6 years. Social transfers made up 
half of total expenditure in 2018, 
only  a  slight  decline  from  the 
preceding  year.  The  proportion 
of  capital  expenditure,  after 
having  risen  between  2009  and 
2012,  has  declined  since,  from 
12%  in  2012  to  6%  in  2018. 
Overall, 
in 
primary  fiscal  deficits  between 
2015  and  2018  mainly  resulted  from  under-implementation  of  capital  expenditure 
(however,  this  does  not  account  for  capital  expenditure  carried  out  by  off-budget 
entities).  Including  the  public  enterprise  for  state  roads  (PESR),  primary  deficits 
amounted on average to around 2.4% of GDP between 2008 and 2017. Smaller deficits 
are  needed  to  ensure  the  stabilisation  of  public  debt  in  the  medium-  to  long  run.  The 
government  has taken some measures to  raise revenue and tackle the pensions deficit. 
The  2019  budget  incorporates  higher  pension  contribution  rates,  and  a  change  of 
pension indexation to inflation-only, as well as a return to progressive income taxation, 

improvement 

the 

47 

 
 
and  an  increase  in  capital  gains  tax.  Yet,  increased  state  aid  and  social  transfers  have 
added risks to fiscal consolidation. 

Fiscal deficits drive public debt levels. Public debt, in terms of GDP, dropped slightly 
in  2017  for  the  first  time  since  2009  and  increased  again  only  marginally  in  2018,  to 
48.4% at the end of the year. The government financed a large part of the fiscal deficit 
and  debt  redemption  from  its  deposits  at  the  central  bank  and  from  foreign  reserve 
accumulation.  Vulnerabilities  arise 
foreign-currency 
denominated debt (about 80%), which increased in the last years, and a large share of 
short-term maturities. With the growing reliance on Eurobonds, the floating rate-share 
of debt (about 35%) has been decreasing in recent years. 

the  high  share  of 

from 

The  management  of  public  finances  improved  further.  The  government  continued 
the  clearance  of  unpaid  public  sector  liabilities  and  previously  blocked  VAT  refunds, 
and  set  up  accounting  tools  to  prevent  the  build-up  of  future  arrears.  The 
implementation  of  the  Public  Financial  Management  Reform  Programme,  which  was 
adopted  in  December  2017,  is  on  track  for  the  most  part.  However,  the  new  organic 
budget  law,  which  sets  out  fiscal  rules,  a  medium-term  budget  framework,  and  the 
establishment of an independent fiscal council has not yet been adopted. Moreover, the 
borrowing  of  public  enterprises  tasked  with  major  public  infrastructure  works 
increasingly  drives  public  debt  and  contingent  liabilities  for  the  government.  The 
financing of these off-budget entities remains opaque, and is generally not included in 
general government fiscal reporting even where required by statistical standards.  

The  policy  stance  needs  further  adjustment  to  address  economic  and  fiscal 
challenges.  The  current  policy  mix  of  expansive  fiscal  policy  and  accommodating 
monetary  policy  is  still  largely  appropriate  given  the  moderate  rebound  of  economic 
activity  amidst  contained  inflation.  The  government’s  reforms  to  reduce  the  pension 
deficit and return to progressive income taxation are likely to improve public finances in 
the  medium-term.  However,  fiscal  space  has  narrowed  in  past  years  and  the  recent 
stepping-up of income support and state aid carries new risks to fiscal sustainability. In 
addition,  the  increase  in  minimum  wages  poses  a  challenge  for  competitiveness  given 
stagnating  labour  productivity  and  shortcomings  in  workers’  skills.  Addressing  these 
issues  requires:  (i)  a  well-calibrated  interaction  between  more  ambitious  fiscal 
consolidation  through  lower  primary  deficits  and  preservation  of  growth-enhancing 
capital expenditure; (ii) further structural reforms to make labour and product markets 
more competitive; and (iii) progress in the rule of law and the fight against corruption. 

Functioning of product markets 

Business environment 

Contract  enforcement  is  still  inefficient.  Institutional  capacity  to  enforce  the  law 
remains  weak,  and  resolving  a  commercial  dispute  through  a  court  is  time-consuming 
and costly. Some optimism for business comes from the government’s commitment to 
reduce the number of unannounced inspections and the amount of para-fiscal fees. The 
legislation on inspections is currently being amended with a view to also reducing the 
fines  for  various  misdemeanours.  It  is  important  to  ensure  that  the  new  legislation 
introducing  transparent  inspections  procedures  carried  out  by  inspectorates  with  clear 
mandates  is  applied.  The  delays  in  VAT  returns  and  public  bodies’  compliance  with 
their  payment  obligations  to  the  private  sector  as  required  by  the  EU  Late  Payment 
48 

 
 
Directive continue to impact negatively on companies’ liquidity. Legislative reforms are 
under way to improve the independence and impartiality of the courts. Amendments to 
relevant  laws  concerning  disciplinary  liability  of  judges  and  procedures  have  been 
adopted.  In  2018,  the  number  of  new  companies  decreased  by  5%  compared  with  the 
previous  year.  No  further  measures  were  taken  in  the  reporting  period  to  simplify 
company  registration.  Deletions  on  the  company  register  decreased  by  39%  and  new 
bankruptcy procedures by 48%. The new bankruptcy law is still under preparation. 

Competition  from  the  informal  economy  weighs  on  the  competitiveness  of  the 
formal  private  sector.  The  size  of  the  informal  economy,  estimated  by  the  national 
statistical office at about 17.4% of total output in 2016, has decreased only slowly over 
the  past  years,  in  spite  of  previous  measures.  In  2018,  the  government  adopted  a 
strategy  and  action  plan  to  reduce  informal  employment,  outlining  a  number  of 
measures  for  the  formalisation  of  jobs  and  targeting  shortcomings  in  the  business 
environment considered likely to drive firms to informality. Companies define the large 
shadow  economy  and  the  entrenched  corruption  as  major  obstacles  to  doing  business 
and as negatively affecting investment behaviour. 

State influence on the product market 

Private ownership is dominant, but the transparency of state aid is still an issue. At 
the  end  of  October  2018,  the  number  of  companies  in  which  the  government  held  a 
stake  remained  the  same  as  in  the  three  preceding  years  (16  companies  in  full  state 
ownership). The value of state assets as a percentage of GDP remained at the level of 
previous  years  (11.4%).  However,  the  governance  of  state-owned  enterprises  (SOE) 
falls behind  on international  good practice on some counts. Companies continue to  be 
subject  to  para-fiscal  charges  with  no  clear  purpose,  in  particular  at  local  level.  In 
addition,  the  large  share  of  state-owned  land  remains  an  obstacle  to  agricultural 
development, restricting its use as collateral. Transparency on selection procedures and 
beneficiaries  of  state  aid,  which  was  enhanced  through  the  government’s  ‘Plan  for 
Economic  Growth’  is  still  an  issue.  There  is  no  single  state  aid  registry,  which 
undermines  the  capacity  of  the  Commission  for  Protection  of  Competition  (CPC)  to 
disclose, monitor or evaluate the effectiveness of state aid. The regime’s compatibility 
with EU rules is also questionable. 

Privatisation and Restructuring 

There  were  no  further  privatisations  of  state-owned  companies  in  the  reporting 
period. The government ruled out the privatisation of electricity producer ‘ELEM’. The 
company  is  putting  in  place  ownership  unbundling,  in  line  with  the  Third  EU  Energy 
Package. The restructuring of the privatised tobacco company ‘Tutunski kombinat AD 
Prilep’, one of the companies with the biggest government share, which entered into a 
strategic partnership with Philip Morris in 2014, is proceeding slowly. The government 
is  still  in  the  preparatory  stages  of  privatising  the  composite  material  producer 
‘Eurokompozit AD Prilep’. 

Functioning of the financial market  

Financial stability 

The  banking  sector  further  improved  its  resilience.  Banks  dominate  the  country’s 
financial  sector,  even  though  their  share  in  total  financial  sector  assets  fell  to  83%  in 

49 

 
 
2017, down from  88% in  2013. Concentration remains high and unchanged  compared 
with  previous  years,  with  some  58%  of  assets  held  by  the  three  biggest  banks  (out  of 
15). Liquidity is abundant — liquid assets account for one third of total assets and cover 
more than half of short-term liabilities. The capital adequacy ratio rose further in 2018, 
well  exceeding  the  regulatory  minimum.  The  share  of  non-performing  loans  (NPL)  in 
total  loans  to  the  non-financial  sector  (including  mandatory  write-offs)  dropped  by 
1.1pps y-o-y to 5.2% at the end of 2018. The decline is mainly due to the collection of 
non-performing  claims  in  the  corporate  sector.  However,  a  proportion  of  NPL  was 
shifted  off  banks’  balance  sheet,  impeding  loan  restructuring.  The  share  of  euro-
denominated deposits and loans remains high, in spite of a number of measures by the 
central bank to incentivise lending and saving in local currency. 

Access to finance 

The level  of financial intermediation deepened further.  Financial sector assets  rose 
further  during  the  reporting  period,  to  76.2%  of  GDP  (+1.3pps  y-o-y)  at  the  end  of 
2018.  Private,  non-financial  sector  loans  rose  by  an  average  of  6.2%  on  the  previous 
year. Households accounted for most of the credit increase, while growth of corporate 
credit,  which  has  been  picking  up  continuously  since  autumn  2017,  also  accelerated. 
However,  strict  collateral  requirements  and  complex  application  procedures  remain  a 
problem  for  loan  seekers.  Commercial  bank  loans  remain  by  far  the  main  source  of 
financing for small and medium-sized businesses. 

Functioning of the labour market 

job 

pace 

Declining 
unemployment 
conceals  structural  problems. 
government 
Supported 
by 
creation 
programmes, 
though 
continued  at  a  solid, 
on 
decreasing 
(2.4% 
average  between  2012 
and 
2018). Amidst a declining labour 
annual 
force, 
unemployment  rate  (15-64  age 
group) dropped by almost 10 pps 
to 21% between 2012 and 2018. 
However,  structural  problems  in  the  labour  market  impair  the  economy’s  potential  to 
raise  productivity.  The  decrease  in  overall  unemployment  partly  reflects  low  activity 
rates. The  gender gap remains significant,  with  about  78% of men participating in  the 
labour market, compared with 52% of women, with little change over the past 5 years. 
Youth unemployment, which has slowly, but steadily declined in recent years, remains 
high.  The  employment  rate  has  increased  from  44%  in  2012  to  51.7%  in  2018,  but 
remains  low  by  regional  comparison.  Around  80%  of  unemployed  are  long-term 
unemployed, reflecting the skills mismatch. In the last 5 years the labour force declined 
by almost 1%, mainly because of high emigration. 

average 

the 

Informal  employment  continues  to  decline,  but  the  proportion  remains  high.  The 
proportion  of  informal  employment,  at  18.1%  in  2017,  has  decreased  steadily  from 
28.6% in 2008, but remains significant, especially for the low-skilled. The high labour 

50 

 
 
tax  wedge  affects  participation  and  formal  employment.  In  August  2018,  the 
government  adopted  an  action  plan  to  implement  its  2018-2020  strategy  for 
incentivising  the  formalisation  of  informal  work,  flanked  by  improvements  to  the 
administration’s monitoring capacity. The government has also taken measures to curb 
cash and ‘envelope’ payments.  

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

North Macedonia has made some progress and is moderately prepared to cope with 
competitive pressures and market forces within the EU. Integration with the EU in trade 
and investment deepened further. Exports and manufacturing output diversified further 
towards higher-value products. However, skills shortages, and a lack of skills alignment 
with  those  required  by  companies,  reflecting  shortcomings  in  education  curricula,  as 
the 
infrastructure 
well  as 
competitiveness of the economy.  

labour  productivity  and 

investment  gaps 

impair 

In order to improve competitiveness and long-term growth, North Macedonia should in 
particular:  

  complete investment in road and rail transport; 

  strengthen governance and efficiency of spending in the education sector in order to 

accelerate the modernisation of the education system at all level; 

  address  the  causes  for  weak  integration  of  domestic  companies  in  global  value 

chains. 

Education and innovation 

The skills mismatch is obstructing competitiveness and growth. Public expenditure 
on  education  —  around  4%  of  GDP  on  average  over  the  last  5  years  —  is  only 
somewhat  lower  than  the  EU  average.  However,  enrolment  and  completion  rates  in 
secondary (about 87% completion) and post-secondary education remain below the EU 
average  and  have  risen  only  marginally  in  this  period.  Education  outcomes  are  below 
most regional peers, and lower than could be expected from the country’s income level, 
as shown in the latest (2015) PISA ranking and the 2018 World Bank’s Human Capital 
Index.  The  gap  between  skills  offered  by  graduates  and  those  sought  by  companies, 
restrains  potential  growth  and  is  exacerbated  by  the  large-scale  emigration  of 
high-skilled  labour.  The  government  has  piloted  reformed  vocational  curricula, 
including  grants  for  cooperation  between  companies  and  schools.  In  spring  2018,  it 
adopted a new education strategy, but implementation is largely outstanding. Reform of 
quality assurance and standardisation in primary and secondary education is also still on 
the agenda. The lack of qualified workers further complicates the cooperation between 
established foreign and domestic companies, impeding the structural transformation of 

the economy. 

Public and private spending on 
research 
and  development 
(R&D) remains low. At 0.4% of 
GDP  in  2017,  the  economy’s 
research  and 
expenditure  on 

51 

02004006008001000MK, 2006EU, 2006MK, 2016EU, 201604812North Macedonia: Selected indicators relative to populationElectricity production, GWh per 1000 inhabitantsRoad length, km per 1000 inhabitantsRail passenger-km per inhabitant, lhsSource: Eurostat 
 
innovation has not increased over recent years, and remains significantly below the EU 
average  (2%  in  2016).  The  business  sector  accounts  for  only  around  26%  of  overall 
R&D expenditure. The government supports private R&D through the Innovation Fund, 
which  started  disbursements  in  2015,  but  had  a  slow  take-up.  In  2018,  funds  were 
bolstered  and  the  regulatory  framework  was  amended  resulting  in  an  increase  in 
disbursements. 

Physical capital and quality of infrastructure 

Investment  gaps  hamper  productivity  growth.  The  quality  of  the  capital  stock  is 
generally low, even though foreign direct investment has upgraded production plants in 
some  sectors  in  recent  years.  The  widely  outdated  transport,  energy,  health  and 
education  infrastructure  negatively  affects  labour  productivity.  The  investment  gap  is 
particularly  big  in  the  energy  sector.  Low  capacity  for  power  production  leads  to 
transmission  and  distribution.  The 
frequent  power-cuts  and 
establishment of a cross-border power exchange is hampered by price regulation in the 
national electricity market. The construction of an electricity line with Albania is at an 
early stage, and a planned gas interconnection with Greece is still at the funding stage.  

in  power 

losses 

Cross-border  connectivity  in  transport  is  advancing.  The  last  part  of  the  ‘Corridor 
X’  motorway  was  completed  in  2018  and  road  works  on  ‘Corridor  VIII’,  which  had 
been  stalled  temporarily  on  the  section  Kicevo-Ohrid,  have  resumed.  However,  the 
upgrading  of  rail  connections  to  neighbouring  countries  and  the  facilitation  of  cross-
border  crossings  is  slow.  Cumbersome  procurement  procedures  and  contractors’  poor 
performance  hamper  implementation.  Given  these  shortcomings,  investment  spending 
remains  insufficient  —  in  2018,  gross  capital  formation  amounted  to  33%  of  GDP, 
unchanged from one year earlier. The digitalisation of the economy is progressing, but 
remains low compared with the EU. The percentage of households with internet access 
at  home  has  increased  by  21pps  between  2012  and  Q1  2018  (79.3%)  and  mobile 
broadband  penetration  is  expanding  further.  However,  fixed  broadband  penetration  is 
still restricted, which negatively affects business competitiveness. Online sales are also 
developing sluggishly. 

Sectoral and enterprise structures 

The  structural  transformation  of  the  Macedonian  economy  remains  slow.  The 
sectoral  and business structure of the economy has remained largely unchanged in the 
past  5  years.  At  some  60%,  services  account  for  the  largest  proportion  of  gross  value 
added. Industry contributed 19.5%, which is only slightly above its share in 2013, and 
agriculture  accounted  for  10%.  Mainly  due  to  foreign  companies,  industry’s  share  of 
higher value-added manufactured goods (machinery and equipment, chemical products) 
rose at the expense of basic goods (iron, steel and clothing). Over half of the economy’s 
jobs are provided by services, which is only slightly more than 5 years earlier, followed 
by industry (31%, compared with 30% in 2013) and agriculture (16%, down from 19% 
in 2013). Over 99% of all companies are SMEs, providing over 77% of value added in 
the  economy  and  an  almost  equal  amount  of  employment.  40%  of  companies  were 
active  in  the  trade  sector,  and  13%  in  manufacturing.  The  government  is  supporting 
SMEs through the Competitiveness,  Innovation and Entrepreneurship Programme, and 
the Economic Growth Plan. In 2018, the government adopted a new SME strategy for 

52 

 
 
2018-2023.  In  February  2018,  it  adopted  a  medium-term  programme  for  financial 
support of micro and SMEs through co-financed grants from the Innovation Fund. 

Economic integration with the EU and price competitiveness 

The  importance  of  the  EU  as  a  trade  and  investment  partner  continues  to  grow. 
The economy posts a high and growing degree of trade openness, at 126% of GDP in 
2018  (+8pps  y-o-y).  Exports  to  the  EU,  which  accounted  for  82%  of  total  exports, 
increased by 18.4% y-o-y, and imports from the EU were higher by 11.5%. While trade 
volumes with other Western Balkan countries continued to increase in 2018, the share in 
total  trade  declined  further  (-0.7pps  to  11%  of  total  exports,  and  -0.8pps  to  8.8%  of 
imports).  EU  firms  also  increased  their  share  in  the  country’s  stock  of  foreign 
investment in the past  years, accounting for some 82% of total in 2017 (+3pps y-o-y). 
The economy’s structural transformation remains driven by foreign investors. However, 
integration  in  global  production  networks  remains  scarce,  mainly  due  to  the  type  of 
products manufactured by the FDIs, and the position of FDIs in the structure of global 
value chains (i.e. upstream or downstream). The international cost competitiveness of 

the economy deteriorated somewhat further in 2018, as the increase in gross wages (on 
average +5.7 %  y-o-y), reinforced by the rise in  minimum wage levels decided by the 
government,  outpaced  labour  productivity  growth.  The  real  effective  exchange  rate 
(CPI-based) has remained stable in the past 5 years. 

4 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION 

The reporting period was marked by the historic agreement reached with Greece, under 
the auspices of the United Nations and with the strong support of the European Union, 
resolving the name dispute. This agreement strengthens good neighbourly relations and 
sets an example of reconciliation for the region and Europe as a whole. Greece was the 
first  country  to  ratify  the  NATO  accession  protocol,  following  which  the  Prespa 
agreement  entered  into  force  in  February  2019.  As  part  of  the  agreement,  the  Joint 
Interdisciplinary  Committee  of  Experts  on  Historical,  Archaeological  and  Educational 
Issues  was  created  and  met  twice  during  the  reporting  period.  In  April  2019,  Prime 
Minister  Tsipras  visited  North  Macedonia.  Nine  agreements  were  signed  during  the 
visit,  including  on  defence  cooperation  and  on  the  opening  of  a  new  border  crossing 
point. Direct air transport service of passengers between North Macedonia and Greece 
was re-established.  

Good  neighbourly  relations  and  regional  cooperation  form  an  essential  part  of  the 
country’s process of moving towards the EU. They contribute to stability, reconciliation 
53 

0102030405060201020112012201320142015201620172018North Macedonia: Exports compositionEUCEFTAOtherSource: WiiW% ofGDP0255075201020112012201320142015201620172018North Macedonia: Imports compositionEUCEFTAOtherSource: WiiW% ofGDP 
 
 
and a climate conducive to addressing open bilateral issues and the legacies of the past. 
The  government  has  taken  a  very  positive  approach  to  regional  cooperation  and  good 
neighbourly  relations.  The  country  has  continued  to  participate  actively  in  regional 
initiatives  such  as  the  South  East  European  Cooperation  Process,  the  Regional 
Cooperation Council, CEFTA, the Energy Community Treaty, the European Common 
Aviation  Area  Agreement,  the  Central  European  Initiative,  the  Regional  Initiative  for 
Migration and Asylum, RECOM, RYCO, the Regional School of Public Administration 
(ReSPA), Adriatic Ionian Initiative and the ‘Brdo-Brijuni process’. 

North  Macedonia  took  part  in  the  implementation  of  the  Multiannual  Action  Plan 
(MAP)  for  the  development  of  a  Regional  Economic  Area  in  the  Western  Balkans, 
although more attention is needed to secure timely adoption of the incurred measures as 
well  as  streamlining  regional  commitments  into  national  policies.  The  country 
participated in the Western Balkans summit in London in July 2018. The Minister of 
the Interior signed the Memorandum of Understanding between the EU-28. Building on 
the  results  of  previous  summits,  the  July  2018  London  Summit  brought  a  renewed 
commitment to the connectivity agenda. Dialogue with the Western Balkans continued 
in  Skopje  on  the  implementation  of  the  Digital  Agenda,  to  which  all  leaders  of  the 
region had committed through a statement of support. More particularly concerning the 
negotiations on roaming fees, a regional agreement was signed at the Western Balkans 
Digital Summit in Belgrade in April 2019 enabling Roam like at Home (RLAH) as of 
July  2021.  The  European  Commission's  regional  conference  on  media  (Media  Days) 
was  also  held  in  Skopje.  Member  States  and  the  Western  Balkan  partners  signed  the 
Joint  Action  Plan  on  Counter  Terrorism  for  the  Western  Balkans  at  the  Justice  Home 
Affairs  Ministerial  in  Tirana  in  October  2018.  In  February  2019,  at  the  Ministerial 
Meeting  on  Clean  Energy  Transition  held  in  Podgorica,  the  Ministers  of  Energy  and 
Environment of the Western Balkans committed to adopting concrete measures aiming 
at  the  implementation  of  the  Paris  Agreement  and  the  Energy  Community  obligations 
based on the EU Clean Energy for All Europeans Package.  

The  country  remained  constructively  committed  to  bilateral  relations  with  other 
enlargement countries and neighbouring EU Member States.  

Bilateral relations with Albania have intensified. Albania provided strong support to the 
Prespa  agreement.  Albania's  Foreign  Minister  paid  an  official  visit  to  Skopje  in 
September  2018.  Prime  Minister  Zaev  visited  Tirana  in  March  2019.  Albania  ratified 
the NATO accession protocol.  

The  Law  ratifying  the  Agreement  with  the  Council  of  Ministers  of  Bosnia  and 
Herzegovina for the traveling of citizens of the two countries was adopted in June 2018. 
A Memorandum of Cooperation was signed with the national institute of metrology of 
Bosnia  and  Herzegovina.  Several  bilateral  agreements  are  in  place,  including  on 
cooperation in the EU accession process. 

Relations with Kosovo continued to develop, despite the challenges created by Kosovo's 
decision in  July 2018 to temporarily introduce  customs duties for import of fruits and 
vegetables, which had a negative impact on bilateral trade. On 1 June 2018, a protocol 
related to the readmission agreement with Kosovo entered into force. Contacts between 
government officials continue to intensify. Works on the new crossing point at Stancic - 
Belanoc were inaugurated in June 2018. 

54 

 
 
Relations  with  Montenegro  remained  good.  In  March  2019,  Montenegro  ratified  the 
protocol  on  the  accession  of  North  Macedonia  to  NATO.  A  plan  for  bilateral 
cooperation  in  defense  area  for  2018  was  signed  in  April  2018.  An  agreement  on 
fighting  human  trafficking  was  signed  in  July  2018.  Consultations  between  the  two 
Foreign Affairs Ministries on NATO cooperation were held in July 2018 in Podgorica. 
In November 2018, the two countries signed an agreement on property relations. 

Relations with Serbia improved. In May 2018, the Speaker of the Parliament of North 
Macedonia  visited  Belgrade.  President  Vucic  and  Prime  Minister  Zaev  met  at  the 
Presevo  border  crossing  in  September  2018  to  announce  the  launch  of  an  integrated 
border management project. The Law ratifying the Agreement with the Government of 
Republic of Serbia for Cooperation in Tourism was adopted in February 2018.  

Relations  with  Turkey  remained  good.  Steps  have  been  taken  by  the  Turkish  State 
Development  Agency  TIKA  in  the  areas  of  healthcare,  education,  and  historical  and 
religious  heritage  preservation.  The  laws  ratifying  the  agreement  on  military  and 
financial cooperation, and amendments to Protocol 2 to the Agreement for Free Trade, 
were adopted in May 2018.  

implementation  of 

The 
the  Treaty  of  Friendship,  Good  Neighbourliness  and 
Cooperation with Bulgaria is ongoing, with several meetings of the Joint Commission 
on  Historical  and  Educational  Matters  taking  place  in  a  constructive  atmosphere.  The 
Law ratifying the agreement with the government of Bulgaria on cooperation in case of 
catastrophes was adopted in May 2018. Prime Minister Zaev visited Sofia in February 
2019. The joint intergovernmental commission on trade and economic cooperation held 
its first meeting in Skopje in March 2019, 10 years after it was set up. Bulgaria ratified 
the NATO accession protocol.  

5.  ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

5.1 

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. No progress was 
made in the reporting period and last year’s recommendations still stand. In the coming 
year, the country should:  

→ intensify efforts to remove non-tariff barriers to trade;  

→ complete alignment with the General Products Safety Directive; 

→ ensure adequate administrative capacity to enforce the legal framework.  

General principles  

The  country  has  a  well-established  institutional  framework  for  the  production, 
distribution  and  marketing  of  industrial  products.  Plans  to  further  align  the 
legislation with the acquis are set out in the National Plan for Adoption of the acquis, 
and in individual strategic documents for standardisation, metrology and accreditation. 
However, these plans need to be implemented.  

55 

 
 
Non-harmonised area 

The  Ministry  of  Economy  is  the  main  body  in  charge  of  the  follow-up  and 
implementation of Articles 34-36 of the Treaty on Functioning of the European Union 
(TFEU). Nine non-tariff barriers to trade remain and have not yet been removed. 

Harmonised area: quality infrastructure 

The  legal  basis  and  administrative  structure  for  technical  regulations,  standards, 
conformity  assessment,  accreditation,  metrology  and  market  surveillance  are  in  place. 
There was no progress in further harmonising the national legislation with the acquis in 
the areas of general product safety and market surveillance.  

The  Standardisation  Institute  is  a  full  member  of  the  European  Committee  for 
Standardisation/European  Committee  for  Electro-technical  Standardisation  (CEN  and 
CENELEC).  It  adopted  25  608  European  standards  and  technical  standardised 
documents as national standards.  

There  are  182  active  conformity  assessment  bodies  in  the  country  for  calibration, 
testing,  medicinal  laboratories,  product  and  process  certification  and  inspection.  The 
Accreditation  Institute signed agreements with the International Accreditation Forum, 
the  European  Cooperation  for  Accreditation  and 
the  International  Laboratory 
Accreditation Cooperation. The European Cooperation for Accreditation has completed 
a  second  positive  monitoring  verification  on  the  way  the  Institute  operates,  and  there 
was  a  recognition  of  certificates  for  quality  management  systems  in  the  reporting 
period.  A  new  accreditation  scheme  on  calibration  and  testing  of  laboratories  was 
prepared. Accreditation schemes for the certification of personnel and the organisational 
set-up of skills testing are still missing.   

The  Bureau  of  Metrology  is  the  country's  official  metrology  body.  It  has  been  a 
member of the European Association  of National Metrology  Institutes since 2007 and 
has  signed  an  agreement  with  the  General  Conference  on  Weights  and  Measures.  Its 
capacity has been strengthened. Five new employees have joined, bringing the total to 
42.  A  Memorandum  for  Cooperation  has  been  signed  with  the  National  Institute  of 
Metrology of Bosnia and Herzegovina. 

In the area of market surveillance, the State Market Inspectorate conducted more than 
680 inspections in connection with the Law on General Product Safety in 2018 (down 
from 752 in 2017), mostly on household appliances, toys and children’s clothing. It also 
conducted  225  inspections  on  construction  products  (down  from  524  in  2017).  The 
inspectorate  has  withdrawn  35  harmful  products  from  the  market  as  disclosed  on  its 
website. However, no measures were taken to improve the State Market Inspectorate’s 
human  resources  capacity  and  equipment.  Budget  limitations  continue  to  prevent 
effective  market  surveillance  operations  and  proper  testing.  A  coordinating  body  on 
market  supervision  continues  to  coordinate  activities  of  the  State  Market  Inspectorate 
with other inspectorates and the customs authorities.  

Harmonised area: sectoral legislation 

On  the  ‘New  and  global  approach’  product  legislation,  the  level  of  alignment  with 
the acquis continues to be uneven. The country has adopted legislation designed to be 
aligned  with  the  acquis  in  many  sectors,  particularly  toys,  gas  appliances,  machinery 
and  medical  devices.  However,  in  the  reporting  period  no  progress  was  made  on 
56 

 
 
aligning  national  laws  with  the  latest  acquis  in  these  and  other  areas,  including  civil 
explosives and motor vehicles.  

National legislation has  been designed to align with almost all of the ‘Old approach’ 
product legislation. A modest start of harmonisation with the acquis has been made on 
the Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals 
(REACH) and on the legislation on chemicals, classification, labelling and packaging of 
substances  and  mixtures  and  the  good  laboratory  practices.  However,  in  the  reporting 
period  no  progress  was  made  on  further  aligning  legislation  or  on  strengthening 
administrative  capacity  in  this  area.  The  categories  of  fertilisers  covered  by  national 
legislation are designed to be fully aligned with the acquis. Legislation designed to align 
with the acquis and relevant procedural measures on firearms is incorporated into the 
national legal framework. 

On  procedural  measures,  the  Ministry  of  Economy  and  the  Standardisation  Institute 
have been identified as the bodies responsible for notification procedures on standards 
and technical regulations. Public authorities that control and supervise the application of 
the  laws  are  in  place  and  fully  operational.  There  is  no  external  border  check  of 
conformity with the product safety rules for products imported from non-EU countries. 
The licensing, monitoring and controlling systems for economic operators dealing with 
drug precursors and civil explosives are in place but the relevant national legislation is 
only designed to be aligned with the acquis that was replaced by a newer acquis. The 
Law on Protection of Cultural Heritage was amended to align with the acquis on the 
return of cultural goods.  

5.2 

Chapter 2: Freedom of movement for workers  

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

Preparations in the area of freedom of movement for workers are still at an early stage. 
No progress was made in the reporting period. In the coming year, the country should:  

  continue to adapt the legal framework in line with the acquis on access to the labour 
market, particularly regarding non-discrimination on grounds of nationality against 
EU workers;  

  take  steps  in  coordinating  social  security  systems  to  identify  which  administrative 

measures should be introduced in preparation for future accession.  

The Law on Employment of Foreigners regulates the  access to the labour market of 
foreign  workers.  Every  year,  the  country  decides  on  the  maximum  quota  of  working 
permits for foreigners divided by types. A foreign worker can obtain a single permit by 
submitting a single application to one authority under the current institutional set up. EU 
citizens do not have access to posts in the public administration. As no steps were taken 
to further align national legislation with the acquis, there is no distinction made between 
a foreigner and an EU citizen.  

There are 23 bilateral agreements that coordinate social security systems, 14 of which 
are with EU Member States. No new agreement was ratified in 2018. The country has 
18 mutual agreements for health insurance that allow citizens from one country to use 
health care services of another country, on the basis of temporary employment, tourism 

57 

 
 
or  business  travel,  education,  science  and  cultural  cooperation.  There  are  nine 
agreements on the use of the European Health Insurance Card  between the country 
and Member States. No new agreement was ratified in 2018. 

5.3 

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 on the freedom 
to  provide  services.  Some  progress  was  made  during  the  reporting  period,  last  year’s 
recommendations remain valid. In the coming year, the country should in particular: 

  continue  aligning  national  legislation  with  the  acquis,  mainly  with  the  Services 

Directive and with the mutual recognition of professional qualifications;  

  establish a point of single contact including a company registration in line with the 

Services Directive;  

  continue  aligning  national  legislation  with  the  acquis  on  postal  services  and 

complete the full liberalisation of the postal market. 

As  regards  developments  on  the  right  of  establishment  and  on  the  freedom  to 
provide  cross-border  services,  the  Law  on  Services  was  adopted  in  March  2019. 
Articles 26 and 27 of the Services Directive should be included in consumer protection 
identifies 
legislation.  The  screening  process  of  sectoral 
incompatibilities  with  the  acquis,  needs  to  continue.  The  point  of  single  contact, 
including  a  company  registration,  as  required  by  the  Services  Directive,  has  not  been 
established.  It  is  recommended  to  launch  a  test  phase  for  its  establishment.  Foreign 
companies  still  cannot  offer  ISO  9001  certification  on  quality  assurance  to  national 
public  administration  bodies.  This  remains  an  impediment  to  the  freedom  to  provide 
services. 

legislation,  which 

The postal services market  liberalisation was  further delayed, with  1 January 2020 as 
the new deadline for  abolishing the reserved  area or postal  monopoly of the universal 
service. AD Macedonian Post provides for universal service, covering more than 90% 
of the postal market. The introduction of a separate accounting system for the universal 
postal service and the financing of a net cost of the universal service obligations are still 
under  preparation.  Authorities  should  guarantee  and  fully  respect  the  independence  of 
the Postal Agency and strengthen its administrative and regulatory capacity. In 2018, 37 
licensed  postal  service  providers  actively  operated  on  the  postal  market,  with  licences 
for different types and scopes of services and geographic operating areas.  

For the mutual recognition of professional qualifications, no significant progress has 
been  made.  There  has  been  no  development  in  adopting  the  Law  on  Recognition  of 
Professional  Qualifications  designed  to  align  with  the  acquis.  The  necessary 
adjustments to national law to comply with the minimum training requirements outlined 
in  the  EU  Directive  -  training  of  the  ‘sectoral  professions’  that  benefit  from  an 
automatic recognition of their professional qualifications - have not been implemented. 
The data validation of the professional qualifications electronic register still needs to be 

58 

 
 
finalised and the accredited professional qualifications need to be included. An updated 
and transparent list of all regulated professions containing justifications for each is still 
missing.  There  is  also  a  need  to  further  strengthen  the  institutional  capacity  for  the 
mutual recognition of professional qualifications. 

5.4 

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. 

The  country  is  moderately  prepared  in  the  area  of  free  movement  of  capital.  Some 
progress was made by  enacting new legislation on fighting money laundering and by 
drafting a new law on payment  services  and systems.  In the  coming  year, the country 
should, in particular: 

  apply  the  rules  for  free  movement  of  capital  after  entry  into  force  of  the  second 

stage of the Stabilisation and Association Agreement (SAA);  

  adopt and implement the new legislation on payment services; 

  demonstrate a sound track record in fighting money laundering and the financing of 

terrorism, and further align with the acquis in this area. 

On  capital  movements  and  payments,  the  country  progressed  to  the  second  stage 
requirements of the SAA. However, restrictions on capital movements remain, namely 
for  residents  who  cannot  hold  a  bank  account  abroad.  Foreigners  can  open  a  bank 
account  in  the  country,  but  they  cannot  own  agricultural  land,  unless  a  reciprocity 
agreement is in place.  

On  payments  systems,  the  central  bank  is  governing  its  oversight.  A  new  payment 
system law was drafted to align with the latest modifications in the relevant directives. 

On the fight against money laundering and the financing of terrorism, further work 
is  needed  to  align  with  the  acquis.  The  country  was  removed  from  the  MONEYVAL 
follow-up procedure after it had addressed the system's shortcomings. The strategy for 
fighting  money  laundering  is  being  implemented.  A  new  law  on  fighting  money 
laundering  was  adopted,  focusing  on  ultimate  beneficial  ownership  and  enhanced 
customer  due  diligence.  A  new  Memorandum  of  Understanding  regulates  the 
cooperation  between  law  enforcement  agencies,  intelligence  services  and  relevant  key 
state institutions as the Central Bank. In 2018, the Financial Intelligence Office reported 
an  increase  from  109  to  194  of  suspicious  transactions  submitted.  The  Office  sent  64 
reports  (34  in  2017)  of  money  laundering  and  terrorism  financing  cases  and  183 
notifications  (94  in  2017)  for  other  actions  to  the  law  enforcement  bodies.  As  a 
consequence, nine people were indicted and two people convicted for money laundering 
or  terrorism  financing  (see  also  Chapter  23  -  Judiciary  and  fundamental  rights  and 
Chapter 24 - Justice, Freedom and Security). 

59 

 
 
5.5 

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 remains moderately prepared in this area, which is particularly vulnerable 
to  corruption.  Some  progress  was  made  with  the  adoption  of  the  new  public 
procurement  law  in  January  2019  to  ensure  a  more  transparent  and  effective  public 
procurement system. Further efforts are needed to prevent irregularities and corruption 
during the procurement cycle. In the coming year, the country should in particular:  

  ensure  further  alignment  with  the  2014  EU  Directives  on  public  procurement, 
especially  on  public-private  partnerships,  concessions  and  defence,  and  adopt 
relevant  secondary  legislation  of  the  new  public  procurement  law  to  allow  its  full 
implementation; 

  ensure that reports of public procurement irregularities are properly investigated and 

offenders penalised;  

  strengthen  the  administrative  capacity  of  the  Public  Procurement  Bureau  and  the 
Supreme Audit Office for the oversight and monitoring of public procurement and 
of the Ministry of Economy for the management of concessions and public-private 
partnerships. 

Institutional set-up and legal alignment 

The new legal framework on public procurement is broadly aligned with the 2014 EU 
classical  and  utilities  Directives  on  public  procurement.  With  its  entry  into  force  in 
April 2019, the use of ‘mandatory’ e-auctions and of the lowest price as the sole award 
criterion  are  no  longer  applied.  However,  companies  continue  to  be  excluded  from 
future tenders due to professional misconduct ('blacklisting'), which is not in line with 
the  European  Court  of  Justice  case  law.  The  approximation  with  the  EU  Directive  on 
Defence  and  Sensitive  Security  Procurement  is  still  under  development.  All  legal  and 
financial instruments used in the area of public procurement and concessions, including 
inter-governmental 
the 
implementation  of  joint  projects,  should  comply  with  the  principles  of  transparency, 
competition, equal treatment and non-discrimination.   

concluded  with  non-EU 

agreements 

countries 

for 

The conditions for registration in the e-procurement system are now equal for both EU-
based  and  national  companies.  The  new  legal  framework  provides  for  oversight  and 
monitoring powers of the Public Procurement Bureau, maintaining its role as the pillar 
of the public procurement  system.  Cooperation is  limited between public procurement 
bodies  and  stakeholders, 
in  Public 
Procurements,  the  State  Commission  for  Protection  of  Competition  and  the  State 
Commission  for  Prevention  of  Corruption.  The  Ministry  of  Finance’s  administrative 
capacity,  considering  its  responsibility  for  the  overall  supervision  and  reporting 
mechanism  of  these  processes,  remains  insufficient.  Centralised  purchasing  remains 
limited. 

the  State  Appeals  Commission 

including 

Public procurement is embedded in the 2018-2021 reform programme on public finance 
management  (see  section  on  Public  Administration  Reform).  This  inclusive  approach 

60 

 
 
leads to the digitalisation of public procurement by introducing e-appeals, e-market for 
small value procurements and e-catalogues.  

Implementation and enforcement capacity 

On the awarding of public contracts, the public procurement market constituted 9% of 
the  country's  GDP  and  20.6%  of  the  state  budget  in  2018.  The  use  of  mandatory  e-
auctions is not in line with the acquis and was rectified with the entry into force of the 
new law. The linking of awarded  contracts  to  their annexes is  required under the new 
legal  framework  on  public  procurement.  Contracts  awarded  under  the  ‘Skopje  2014’ 
project are being investigated by the Special Prosecutor's Office, but remain untraceable 
in  the  e-procurement  system.  Tender  cancellations  increased,  particularly  after  the 
abolishment of the Public Procurement Council.  

The new legal framework on public procurement obliges the contracting authorities to 
publish  their  procurement  plans  in  order  to  increase  transparency  and  allow  planning 
and  preparation  on  an  annual  basis.  The  proportion  of  the  overall  value  of  public 
procurement awarded to SMEs has steadily decreased in the last three years, arriving at 
65.6% in 2018. 

The link between  contract  notices  and contracts  awarded in  the e-procurement system 
increased transparency and reduced the risk of deviation in the post-contracting phase. 
The  use  of  negotiated  procurement  procedures  with  and  without  previous  publication 
was 5.7% of the total value of procurement in 2018, down from 2017. 

The  Special  Prosecutor's  Office  continued  to  investigate  cases  of  abuse  of  official 
authorisation  and  abuse  of  official  position  involving  numerous  public  procurement 
procedures. There have been final verdicts in some small cases including ones involving 
the  former  Prime  Minister  and  former  high-level  officials.  The  strengthening  of  the 
internal audit function remains vital to improve contract implementation and monitoring 
(see Chapter 32 – Financial control). 

The  Ministry  of  Economy  is  still  in  charge  of  concessions  and  public-private 
partnerships but has only two employees dealing with these matters. There is no register 
on concessions  or on public-private partnerships  and data  are insufficient. The Skopje 
airport  and  Skopje  city  concessions  are  not  publicly  available.  The  Public-Private 
Partnership Council is still not operational. 

The  capacity  to  manage  public  procurement  processes  is  uneven  between 
contracting authorities and is particularly challenging for small contracting authorities.  

The new legal framework on public procurement requires the professionalisation of the 
contracting authorities that manage the public procurement processes. A regulatory and 
institutional  framework  on  integrity  and  conflict  of  interest  exists.  A  new  State 
Commission  for  Prevention  of  Corruption  was  appointed  under  a  fully  revised  legal 
framework. The Commission is vested with additional powers and shall demonstrate its 
ability  to  fulfil  its  mandate  also  in  the  procurement  sector.  The  number  of  integrity-
related reports remains very low and follow-up investigations and proper penalties are 
missing. 

61 

 
 
Efficient remedies system 

The new legal framework on public procurement ensures the independence of the legal 
remedy system and the structure remains formally compliant with the acquis. Following 
the  abolition  of  the  Public  Procurement  Council  in  November  2017,  the  number  of 
appeals  increased from  an average of 650 per  year to  737 in  2018. The State Appeals 
Commission’s  resolution  rate  remained  stable  at  95%  including  in  2018.  Penalties  for 
misdemeanours  occurring  during  the  review  process  are  now  set  out  in  the  Criminal 
Code. The State Appeals Commission’s president and four members were replaced after 
their  term  of  office  ended  in  November  2018.  Efforts  are  needed  to  reinforce  the 
professionalisation  of  the  Commission’s  staff.  It  is  necessary  to  increase  transparency 
by  improving  access  to  the  Commission’s  decisions  and  web  browsing  tools  and  by 
linking them to the E-Procurement system. The Courts implementation capacity also 
needs to be strengthened. 

5.6 

Chapter 6: Company law 

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

The  country  has  a  good  level  of  preparation  in  the  area  of  company  law.  As  no 
progress was made during the reporting period, the country should in particular:  

  align  the  company  law,  in  particular  with  the  acquis  on  corporate  accounting, 

statutory audit, and cross-border mergers. 

The legislative framework for  company law is still not aligned with the EU Directive 
on  cross-border  mergers.  A  public  register  for  the  e-registration  of  companies  and 
disclosure  of  their  financial  statements,  compulsory  for  any  company  registration 
regardless of size, is managed under the central register. A corporate governance code 
has yet to be established under company law. 

Corporate accounting legislation is partly aligned with the EU Accounting Directive. 
International Financial Reporting Standards (IFRS) and the IFRS for SMES are applied, 
which  is  beyond  the  specifications  of  the  EU  accounting  directive.  Reporting 
requirements  for  non-financial  information  have  not  been  met.  On  auditing,  a  law 
introducing an effective system of investigations and sanctions still needs to be adopted. 
The Council for Advancement and Oversight of the Audit acts as an independent body. 
Preparations  are  under  way  to  formally  request  the  granting  of  equivalence  and 
adequacy  by  the  Commission.  The  Institute  of  Certified  Auditors  is  responsible  for 
certifying and training auditors and for recognising their qualifications. Public-interest 
entities  are  defined  in  the  audit  law,  which  has  some  specific  requirements  on  their 
statutory  audit  (e.g.  the  obligation  to  form  an  audit  committee  and  the  mandatory 
rotation of auditors). A statutory audit is performed according to adopted international 
auditing standards. Overall, further efforts are needed to align with the latest acquis on 
corporate accounting and statutory audit. 

5.7 

Chapter 7: Intellectual property law 

The  EU  has  harmonised  rules  for  the  legal  protection  of  intellectual  property  rights 
(IPR), and for  the legal protection of  copyright and related rights. Rules for  the legal 

62 

 
 
IPRs  cover 

protection  of 
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. 

instance,  patents  and 

for 

The country  remains  moderately  prepared in  this  area.  Some progress  was made in 
raising awareness about counterfeiting and its threats to health. In the coming year, the 
country should in particular continue to: 

  increase  the  number  of  investigations  and  infringements  of  intellectual  property 
particularly  in  the  area  of  industrial  property,  with  a  focus  on  the  misuse  of 
trademarks; 

  improve  the  legal  framework  on  intellectual  property,  notably  the  collective  rights 
management system  by  aligning with  the Collective Rights  Management Directive 
and  the  industrial  property  rights  by  aligning  with  the  Enforcement  Directive  and 
with the Trade Secrets Directive; 

  establish an information platform for law enforcement institutions to exchange data 

on IPRs.  

Amendments to the legal framework on copyright and neighbouring rights have been 
delayed.  The  authors'  rights  are  safeguarded  by  the  single  licensed  collective 
management organisation. The current legal framework allows for parallel organisations 
to collect fees from authors, but without a licence. The unit responsible in the Ministry 
was upgraded but staffing remained low, with only four members of staff dealing with 
this  issue.  Weak  capacity  leads  to  weak  cooperation,  both  with  national  and 
international counterparts. 

For  industrial  property  rights,  the  State  Office  for  Industrial  Property  continued  its 
strategic cooperation with  the European Patent Office, the World  Intellectual  Property 
Office  and  the  European  Union  Intellectual  Property  Office.  This  cooperation  focuses 
on raising awareness about counterfeit goods, rather than best practices on enforcement 
of  IPRs.  The  provision  of  good  quality  services  to  the  business  community  remains  a 
challenge. 

The crucial activities planned under the 2016-2018 strategy on industrial property rights 
were not implemented, including the setting-up of an information platform to exchange 
IPR-related data among law enforcement institutions. This prevents the establishment of 
a credible enforcement record and of reliable statistics on institutional handling of IPR-
infringements.  The  Coordination  Body  for  Intellectual  Property  lacks  political  support 
in  its  efforts  to  fight  counterfeit  and  piracy  and  protect  right-holders  rights.  The 
government did not replace its former ex-officio members. 

5.8 

Chapter 8: Competition policy 

EU  rules  protect  free  competition.  These  include  antitrust  rules  against  restrictive 
agreements between companies and abuse of dominant position. They also include rules 
on  concentrations  between  companies  which  would  significantly  impede  competition. 
EU  rules  also  set  out  a system  of  State  aid  control.  Governments  are  only  allowed  to 
grant  State  aid  if  restrictive  conditions  are  met,  with  a  view  to  prevent  distortion  of 
competition.  

63 

 
 
The  country  is  moderately  prepared  in  the  area  of  competition  policy.  No  progress 
has  been  made  in  this  field  during  the  reporting  period.  As  none  of  last  year’s 
recommendations have been addressed, they remain valid. Significant efforts are needed 
on enforcement.  

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

  step up the enforcement record of the Commission for the Protection of Competition 

(CPC), including on the most problematic cases mentioned below;  

  increase the transparency of State aid granted by the government; 

  ensure independence and capacity of the CPC. 

Antitrust and mergers 

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

On the institutional framework, the CPC is responsible for implementing the Law on 
Protection of Competition. Formally, the CPC is an operationally independent authority 
with  the  capacity  to  adopt  enforcement  decisions  in  antitrust  and  mergers.  Its  four 
members  and  President  were  appointed  by  Parliament  in  October  2018  for  another 
five-year term. The delays in appointing the new CPC created a backlog of cases. The 
CPC  is  not  adequately  staffed  and  the  level  of  expertise  needs  to  improve  through 
training activities. The budget allocated to CPC is not sufficient for the execution of its 
tasks and varies each year, raising concerns about its independence as well as creating 
issues  of  staff  retention.  The  technical  equipment  is  outdated.  The  CPC  acts  on 
complaints, notifications or on its own initiative. It  can issue requests for information, 
carry out unannounced on-site inspections and conduct sector enquiries. If competition 
rules are breached, it can impose fines and propose remedies. A leniency policy towards 
whistle-blowers of cartels is in place, but has never been used. The CPC may approve 
mergers,  with  or  without  conditions,  or  prohibit  them.  It  submits  opinions  on  draft 
legislation that may affect competition. Its decisions can be subject to an appeal before 
the Administrative Court. 

On enforcement, the number of merger decisions increased from  50 in  2017 to  61  in 
2018  and  the  number  of  decisions  adopted  on  cartels  and  abuse  of  dominant  position 
dropped from seven in 2017 to five in 2018. No guidelines on the definition of the level 
of fines do exist. The CPC must strengthen its enforcement policy by increasing on-site 
inspections and by promoting the use of leniency. It should also continue to make full 
use  of  the  possibility  of  fining,  if  applicable  and  in  a  transparent  manner.  Concerns 
remain over the lack of independence and the capacity of courts to deal with anti-trust 
cases. The CPC has been consulted on draft laws affecting competition. 

State aid 

The  legislative  framework  on  state  aid  control  broadly  reflects  Articles  107  and  108 
TFEU  and  its  corresponding  provisions  in  the  SAA.  The  Law  on  State  Aid  and  the 
Regulation for granting aid of minor importance (de minimis) still need to be amended. 
64 

 
 
Implementing the legislation on certain forms of aid and specific sectors still needs to be 
aligned with the acquis. In addition, the state aid inventory and the regional aid map are 
outdated and lack transparency. 

With  regard  to  the  institutional  framework,  the  CPC  is  also  responsible  for 
implementing  the  Law  on  State  Aid.  State  aid  grantors  must  notify  the  CPC  of  their 
plans to grant new or alter existing state aid so that it can assess its compatibility. If an 
aid measure is not notified, the CPC has the power to investigate it  ex-officio, and can 
order its recovery. 

However,  the  CPC's  administrative  capacity  to  deal  with  state  aid  control  and 
enforcement remains insufficient with only three staff, outdated equipment and budget 
constraints.  

More decisions were adopted in the area of  enforcement. Notified and approved state 
aid represents 0.2% of the country's 2018 GDP. Concerning specific cases, the Ministry 
of Transport set up state aid schemes for air transport from 2012 to 2014 and from 2015 
to  2018,  to  support  one  air  carrier.  The  call  for  2018  to  2021  failed  twice,  before  the 
third  call  was  awarded  to  the  same  carrier.  Compliance  of  these  schemes  with  the 
market  economy  operator  principle,  the  aviation  guidelines  and  the  provisions  of  the 
SAA, needs to be confirmed. The Law on Support to Financial Investments was adopted 
in  June  2018  to  provide  government  incentives  to  the  private  sector.  However,  this 
scheme is not in line with the state aid acquis. In the future, the implementation of State 
aid  rules  should  also  be  monitored  by  the  CPC  in  large  projects  in  cooperation  with 
third  countries.  Safeguards  to  ensure  that  state  aid  measures  are  free  from  conflict  of 
interest, still need to be put in place. 

Liberalisation 

Anti-trust  and state aid  rules apply also  to state-owned undertakings and undertakings 
entrusted  with  special  or  exclusive  rights,  except  when  applying  them  would  obstruct 
the  performance  of  the  particular  tasks  assigned  to  them.  However,  the  country  still 
needs  to  demonstrate  that  these  rules  are  being  enforced.  There  is  no  evidence  on  the 
existence of commercial monopolies within the meaning of Article 37 TFEU. 

5.9 

Chapter 9: Financial services 

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

In  the  area  of  financial  services,  the  country  remains  moderately  prepared.  Some 
progress  was  made  on  applying  the  regulations  and  strengthening  the  enforcement 
capacity  of  financial  markets  regulators.  The  central  bank  was  designated  as  a  bank 
resolution  authority.  The  campaign  on  increasing  financial  literacy  and  consumer 
protection is ongoing. In the coming year, the country should focus on: 

  further aligning with the banking capital requirements (CRR/CRD) framework and 

the insurance Solvency II framework;  

  collecting data on unregistered and uninsured vehicles; 

65 

 
 
  preparing  a  timetable  of  activities  for  implementing  the  second  stage  of  the 
Stabilisation and Association Agreement (SAA) in the area of financial services. 

On banks and financial conglomerates, the Financial Stability Committee designated 
the central bank as a bank resolution authority, pending formal adoption in the law. The 
new rules on good corporate banking practices were adopted, in line with the European 
Banking  Authority’s  guidelines  The  central  bank  adopted  a  new  methodology  for 
managing  credit  risks  and  licensing  banks,  following  the  Basel  core  principles  for 
effective  banking  supervision.  A  new  strategy  on  the  management  of  non-performing 
loans  was  also  adopted.  The  credit  bureau  can  now  prepare  a  credit  report  for  the 
borrowers,  contributing  to  better  management  of  banks  loan  portfolio  and  reducing 
credit risks. However the institutional set-up, resolution tools and mechanisms need to 
be further defined. The efforts to align national law with EU regulations on prudential 
supervision to protect consumers and prevent unfair banking practices need to continue. 

Concerning insurance and occupational pensions, the insurance market continued to 
grow  steadily.  Around  half  of  all  premiums  were  for  motor  vehicle  insurance.  The 
legislation  authorising  the  ministry  of  finance  to  set  premiums  for  motor  vehicle 
insurance, which is contrary to the acquis, has not been removed. Relevant data on the 
proportion of uninsured vehicles is still unavailable. The number of uninsured vehicles 
indicates that the one-off police checks to remove such vehicles from the road are not 
sufficient.  Aligning  national  rules  with  the  Solvency  II  Directive  has  not  begun.  The 
transfer of ownership of one fully-funded pension fund was completed and an offer to 
establish a third pension fund was submitted to the pension insurance market regulator. 
The  provision  setting  a  50%  limit  on  investing  in  non-domestic  securities  by  pension 
funds is still applied, contrary to the acquis and second stage of the SAA. 

There was no development in the financial market infrastructure. Alignment with the 
Financial  Collateral  Directive  and  with  the  Settlement  Finality  Directive  remains 
incomplete.  Concerning  the  securities  markets  and  investment  services,  additional 
transparency obligations, such as the extension of the period of compulsory listing for 
companies, have been included in the securities law. The long announced law on capital 
markets to, align the national legislation to the acquis, including provisions prescribing 
liquidity and solvency ratios for brokerage houses, has still not been adopted. 

5.10  Chapter 10: Information society and media 

The  EU  supports  the  proper  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. 

The  country  is  moderately  prepared  in  the  field  of  electronic  communications  and 
information society. Some progress was made during the reporting period as the country 
amended  the  Law  on  Audio  and  Audio-visual  Media  Services,  prepared  a  national 
cybersecurity strategy, started preparations for the 112 emergency number and aligned 
electronic identification,  authentication and trust  services  with  the  acquis. As some of 
the 2018 recommendations have not been implemented, in the coming year the country 
should in particular:  

  prepare a long-term information and communication technology (ICT) strategy;  

  strengthen  the  independence  and  capacity  of  the  media  regulator  and  the  public 
66 

 
 
service broadcaster;  

  continue  to  implement  the  action  plan  for  introducing  the  112  emergency  number 

and allocate the necessary financial resources. 

As  part  of  the  Digital  Agenda,  the  country  completed  the  mapping  of  the  national 
broadband of existing electronic communication networks built with public funds and of 
‘next generation’ access networks by commercial operators. The 2019-2023 broadband 
strategy has undergone wide public consultation and the adoption is in the final phase. 
The  government  adopted  the  2018-2022  national  cybersecurity  strategy  in  July  2018 
and the related action plan in December 2018. Authorities took part in negotiating the 
Regional  Roaming  Agreement  and  signed  the  agreement  in  April  2019.  In  addition, 
preparations began for introducing the European emergency number 112.  

In  electronic  communications  and  information  and  communications  technologies 
(ICT), the fixed broadband penetration slightly increased to 19.46% (>30Mbps is 3.8% 
and for the  >100Mbps  around 0.16% of the population). Mobile broadband, including 
2G/3G/4G,  decreased  to  61%.  Investments  in  developing  electronic  communications 
increased.  Public  consultation  procedures  with  operators  intensified  during  the 
preparation of the amendments to the Law on Audio and Audio-visual Media Services.  

Regarding information society, the strategy on the development of digital skills has not 
yet been developed, while the new education strategy includes digital literacy among its 
priorities.  The  application  of  electronic  signatures  is  limited  to  a  few  institutions  that 
provide  services  to  businesses.  The  interoperability  system  is  only  used  by  some 
institutions despite the equipment and software having been installed. E-government is 
at an early stage of preparation. Since modernisation of the public administrations is a 
key  element  for  successful  digitalisation,  North  Macedonia  should  put  more  effort  in 
implementation  of  e-government  frameworks  and  services.  E-commerce  has  increased 
by  62%  in  2018.  However,  existing  barriers  to  e-commerce  have  not  been  removed, 
including customs duties and VAT on imports for small value items.  

On  audio-visual  policy,  the  Law  on  Audio  and  Audio-Visual  Media  Services  was 
amended in December 2018 and  February  2019,  with  the aim to  bring it  closer to  the 
EU  acquis.  The  media  regulator  has  continued  its  proactive  approach  to  reporting 
inflammatory  or  discriminatory  language  and  hate  speech,  as  well  as  unprofessional 
journalistic reporting. Cooperation with civil society, media and state actors to promote 
media literacy intensified. Developing a more systematic approach to media and digital 
literacy  remains  a  priority.  The  regulator  monitored  ownership  transparency  of  media 
outlets,  reminding  media  outlets  of 
legal  obligations.  However,  further 
their 
strengthening  the  regulator's  capacity  and  increasing  inter-institutional  cooperation  on 
disclosing hidden media ownership and illegal media concentration is needed.    

On  the  media  reporting  during  the  September  2018  referendum,  discrepancies  were 
noted in  various legal  acts,  such as the  Law on  Referendum and Electoral  Code. This 
led to a different reading by the State Election Commission and by the media regulator 
on the access of referendum stakeholders to paid advertising.  

Concerns  remained  over  the  public  service  broadcaster’s  reforms.  Strengthening  its 
independence  and  ensuring  effective  operations  and  management  continues  to  be  a 

67 

 
 
priority.  The  audio-visual  sector  started  benefiting  from  the  country’s  participation  in 
the media sub-programme of ‘Creative Europe’, with eight projects supported.  

5.11  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  remains  moderately  prepared  in  the  area  of  agriculture  and  rural 
development.  Some  progress  was  made  in  the  reporting  period,  in  particular  on  the 
Farm Accountancy Data Network.  

In the coming year, the country should in particular:  

  finalise the national Farm Accountancy Data Network legal and procedural 

alignment to the acquis;  

  prepare an action plan for further institutional and legal alignment to the acquis in 

the area of common market organisation; 

  implement the Instrument for Pre-Accession in Rural Development (IPARD II) and 
ensure  full  absorption  of  the  EU  funding  by  strengthening  the  administrative 
capacity and competences of the IPARD Agency.  

The  country's  legal  framework  for  this  chapter  is  largely  aligned  with  the  acquis.  On 
horizontal  issues,  the  5-year  national  programme  for  direct  payments  and  rural 
development  support  has  been  adopted.  Direct  payments  remained  coupled  to 
production  with  limited  application  of  cross-compliance  rules.  Annual  spending 
continued in 2018, as in 2017, at around EUR 100 million. Decisions must be taken on 
decoupling  direct  payments  from  production  and  further  policy  alignment.  Further 
developments of the Integrated Administrative and Control System (IACS) need to be 
complemented  with  strategic  policy  decisions  on  direct  support  measures.  Efforts  are 
also needed to align state aid measures to the acquis.  

Aligning  the  Farm  Accountancy  Data  Network  (FADN)  with  EU  rules  is  also 
underway.  Efforts  have  also  been  made  to  improve  data  quality  and  widen  its  use  for 
policy and research purposes. Concerning the Land Parcel Identification System (LPIS), 
new ortho-photo maps have been produced and the agricultural land is being digitised. 
However,  the  system’s  use  of  the  remains  limited  as  cadastral  records  are  still  the 
reference  for  area-based  payments.  Discrepancies  between  total  agricultural  area  and 
declared agricultural parcels needs to be further addressed.  Farm advisory services are 
provided by the National Extension Agency, which is chronically short in capacity and 
financing.  The  new  legislation  for  advisory  services  opens  the  market  for  private 
advisory services.  

On  common  market  organisation,  the  legal  framework  on  quality  and  marketing 
standards  for  agricultural  products  mostly  in  place.  Legal  provisions  on  market 
interventions in line with the EU acquis exist, but still need to be implemented. Progress 
is still needed in aligning of commodity-specific schemes and in supporting for public 
and  private  storage,  producer  organisations,  and  market  intervention.  Implementation 
capacity needs to be strengthened. 

68 

 
 
In rural development, although some progress has been made in the increase of staff at 
the  Implementing  Agency  and  the  Managing  Authority,  capacity  to  absorb  funding 
under  the  EU  pre-accession  programme  for  rural  development  (IPARD  II)  remains 
insufficient,  increasing  risk  of  de-commitment  of  the  EU  funding  and  delaying 
entrustment of new measures. On quality policy, the sectoral legislation is aligned with 
the  acquis  but  progress  has  been  limited  on  developing  and  promoting  of  quality 
schemes.  Capacity  to  implement  and  control  the  quality  schemes  needs  to  be 
strengthened.  

On  organic  farming,  the  legislation  is  aligned  with  the  acquis.  The  required 
infrastructure  is  in  place  (competent  authority,  accreditation  system  for  control  bodies 
and  certification  system)  and  organic  farming  is  supported  via  increased  direct 
payments. The monitoring of organic certification and products need to be strengthened. 
The national market for organic products remained limited.  

5.12  Chapter 12: Food safety, veterinary and phytosanitary policy  

EU  hygiene  rules  for  food  production  ensure  a  high  level  of  food  safety.  The  rules 
ensure  animal  health  and  welfare,  the  safety  of  food  of  animal  origin  and  animal 
nutrition, the quality of seed, plant protection material and protection against harmful 
organisms.  

The country has a good level of preparation in the area of food safety and veterinary 
policy.  Good progress  was made, particularly on improving animal identification and 
registration, animal disease control and determination of the pest status in the country.  

In the coming year, the country should in particular:  

  continue  with  activities  to  improve  hygiene,  animal  welfare  and  biosecurity 

standards on farms;  

  establish an action plan to collect and treat animal by-products; 

  adopt and implement legislation on pesticides.  

On general food safety, the Law on Food Safety was amended, aligning with the new 
EU  Regulation  on  official  controls.  The  National  Council  for  Food  and  Feed  Safety 
provides scientific and technical support to the Food and Veterinary Agency’s activities. 
Furthermore, the National Rapid Alert System for Food and Feed has been set up and 
the  Agency’s  internal  audit  and  training  systems  are  operational.  The  Agency  is 
performing its work according to  ISO 9001:2015 quality management standards.  New 
veterinary  and  phytosanitary  border  inspection  facilities  have  been  built  with  EU 
assistance  at  the  border  with  Kosovo.  The  Agency  has  established  a  system  for  food 
fraud  control,  it  reports  regularly  to  the  European  Food  Safety  Authority  and  actively 
participates in their scientific networks.  

On veterinary policy, the existing implementing legislation an internal market control 
system and on the non-commercial movement of pet animals is aligned with the acquis. 
On a control system for imports, the Agency provides regular updates on the safeguard 
measures of imports and import requirements for live animals and animal products. The 
reliability of the animal  identification and registration system  has been improved. The 
Agency improved the identification and registration of pigs and undertook activities to 
establish and upgrade biosecurity measures on the pig holdings.  

69 

 
 
Progress  has  been  made  on  control  measures  for  animal  diseases.  The  Agency  is 
vaccinating foxes against rabies and vaccinating against lumpy skin disease. It has put 
in  place  the  antimicrobial  resistance  programme.  Some  implementing  legislation  on 
intra-EU trade in live animals, semen, ova and embryos has been amended. The initial 
survey  of  equids  and  farms  with  equids  has  been  completed.  Micro-chipping  and 
registering of pet  animals is standard practice. The Agency has also  adopted a plan to 
control  residues  from  pesticides,  contaminants  and  microbiological  hazards  and  to 
examine physical characteristics and chemical ingredients of food of non-animal origin 
and food contact materials from import. The animal protection and welfare of animals 
strategy  and  action  plan  have  been  adopted.  The  capacity  to  further  align  with  and 
implement the acquis on zoo-technical issues remains weak. 

On  placing  on  the  market  of  food,  feed  and  animal  by-products,  the  Agency 
continues  its  programme for dairy  farms’ full compliance with  the health and hygiene 
standards.  Existing  legislation  on  animal  by-products  is  aligned  with  the  acquis. 
However, a collection and treatment system for animal by-products has not yet been set 
up. Existing rules for funding are based on EU-defined minima.  

There has been some progress has been made on food safety rules. Some implementing 
legislation  has  been  adopted  on  the  safety  requirements  for  food  supplements  and 
fortified  food.  Existing  legislation  is  aligned  with  the  acquis  on  labelling,  additives 
authorised  and  purity  criteria,  food  enzymes,  extraction  solvents,  flavourings,  food 
contact  materials,  food  for  particular  nutritional  uses,  quick-frozen  foodstuffs, 
contaminants,  novel  foods,  ionising  radiation,  and  mineral  waters.  Checks  are  not 
always carried out according to EU standards. The Agency regularly updates the health 
claims to help avoid misleading consumers. 

Regarding specific rules for feed, the existing legislation is aligned with the acquis on 
the  placing  on  the  market  and  use  of  feed,  feed  additives  and  undesirable  substances. 
The  Agency  is  implementing  a  programme  to  monitor  feed  safety  and  to  improve  the 
feed safety system. 

There  has  been  progress  on  phytosanitary  policy.  The  country’s  pest  status  has  been 
determined. A law on plant protection products has yet to be adopted. The phytosanitary 
inspection  is  starting  to  introduce  measures  to  the  eradicate  pests  determined  with  the 
monitoring and control programmes. The Law on Seed and Propagation materials was 
amended. The setting up of the phytosanitary information system has started. However, 
the capacity of the Phytosanitary Directorate to provide an analysis of collected data and 
to  define  corresponding  programmes  for  pest  control  and  eradication  remains  limited. 
Coordination  between  the  competent  authorities  has  not  improved.  In  general  the 
administrative  capacity  is  weak,  though  the  State  Phytosanitary  Laboratory’s  capacity 
has been strengthened with new equipment.  

The Law on Genetically Modified Organisms defines the measures for monitoring and 
labelling  of  these  organisms,  and  their  combination  at  all  stages  of  their  deliberate 
release in the environment and is aligned with the acquis. The alignment will continue 
with  finalising  legislation  on  lifting  the  ban  on production,  placing  on  the  market  and 
import  of  genetically  modified  organisms  food  and  feed.  The  Food  and  Veterinary 
Agency  is  the  competent  authority  for  genetically  modified  food  and  feed  and  the 
control and monitoring activities are carried by food inspectors.  

70 

 
 
5.13  Chapter 13: Fisheries 

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

North Macedonia continues to be moderately prepared in this area. No progress was 
made on last year’s recommendation to further align market policy with the  acquis. In 
the coming year, the country should: 

  further  align  its  legislation  with  the  acquis  and  ensure  its  implementation  and 
enforcement,  in  particular  for  illegal,  unreported  and  unregulated  fishing,  data 
collection, structural support and state aid. 

As the fishery sector is based on commercial lake fishing and aquaculture, the acquis on 
catch quotas, managing fleet capacity, inspection  and control hardly  applies to  the 
national context. During the reporting period, there were no developments on  fisheries 
management,  inspection,  control,  surveillance,  monitoring,  structural  actions  and 
international fisheries agreements.  

North Macedonia should take steps to ensure full alignment with the acquis on illegal, 
unreported and unregulated fishing as well as on inspection and control. Data collection 
on  fishing  and  aquaculture  should  be  improved  in  line  with  the  relevant  acquis.  As 
North  Macedonia  confirmed  that  their  inland  waters  hosted  European  eel  (Anguilla 
Anguilla),  the  country  needs  to  ensure  implementation  of  the  EU  Eel  Regulation,  by 
defining Eel Management Units and implementing management plans. 

Structural measures for small-scale fisheries or inland fisheries were introduced based 
on  the  annual  programme  for  financial  support  of  fisheries  and  aquaculture  with 
national  budgetary  commitments  of  around  EUR  1  million.  The  Annual  Program  for 
financial support on fisheries and aquaculture in 2019 was adopted. Structural assistance 
combines  investment  support  for  aquaculture,  financial  support  for  increasing  fish 
stocks and for promotion and marketing. North Macedonia did not apply any state aid 
measures in the reporting period.  

The  administrative  capacity  for  the  management,  inspection  and  control  of  the 
fisheries policy needs further strengthening.  

5.14  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.  Limited  progress  was 
made in the past year. Increased political commitment is required to deliver on necessary 
sectoral reforms. The administrative and operational capacity for all modes of transport 
also needs to be strengthened. The country should in particular: 

  strengthen the operational  and  administrative capacity  of the inspection  bodies and 
develop  the  enforcement  capacity  to  reduce  fatalities  along  road  and  rail 
infrastructure; 

71 

 
 
  implement the connectivity reform measures on rail open the rail transport market at 
least  for  domestic  and  regional  undertakings  and  set  up  a  national  system  to 
continuously collect data on road crashes;  

  adopt legislation on intelligent transport systems and combined transport and make 
further  efforts  to  produce  a  strategic  framework  for  implementing  the  systems  and 
the core networks. 

The key strategic documents for the transport sector and its related sectors are already in 
place.  The  new  2018-2030  national  transport  strategy  was  adopted  in  December  2018. 
There was no progress on strengthening the low operational and administrative capacity 
for all modes of transport. Efficient rail reform measures are needed to reduce reliance 
from road transport. The independent rail accident investigation body has  still not been 
established. Further efforts are needed to EU passenger rights legislation in all modes of 
transport.  

On road transport, the legal framework is broadly aligned with the acquis. Legislation 
on dangerous goods is also aligned with the acquis. However, the conformity assessment 
of the existing equipment for transporting dangerous goods still needs to be introduced. 
As  in  the  previous  year,  the  country’s  alignment  with  the  social  and  safety  acquis 
remains incomplete. Further efforts are needed to improve education and training, and to 
increase  and  strengthen  enforcement  capacity,  particularly  the  administrative  and 
technical  capacity  of  the  State  Transport  Inspectorate.  The  responsible  authorities  are 
urged  to  prepare  a  three-year  road  safety  inspection  (RSI)  plan  for  the  core  and 
comprehensive  network  and  implement  pilot  RSIs  on  high  accident  sections.  Further 
efforts are also needed to set up a national system for continuously collecting road crash 
data.  Penalties  for  infringing  the  European  agreement  on  the  work  of  vehicles  crews 
engaged in international road transport also need to be harmonised. However, legislation 
on clean energy and energy-efficient road transport vehicles and on intelligent transport 
systems  still needs  to be aligned with  the  acquis. The legislation on market  access  for 
goods,  passengers  and  pricing  is  aligned  with  the  acquis.  The  acquis  on  access  to 
international markets for coach and bus services has already been aligned. 

For rail transport, the major requirements of the acquis are met in terms of unbundling 
the  infrastructure  manager  and  national  operator.  However,  there  are  still  delays  in 
separating the accounts of the national operators on passenger and freight operations and 
in  aligning with  and applying many of the Single European Railway Area rules. More 
commitment and effort is needed to fully open the rail market. Railway safety legislation 
is aligned with the acquis but needs to be applied. The cross-border railway cooperation 
agreements  with  Greece  and  Kosovo  still  need  to  be  fully  implemented.  The  accident 
and investigation body has not yet been set up. In addition, the safety authority body is 
not yet fully operational. 

On  maritime  transport,  despite  being  landlocked,  the  country’s  is  party  to  all  the 
International  Maritime  Organisation’s  basic  transport  conventions.  But  as  it  has  no 
maritime ports, it cannot become a member of the Paris Memorandum of Understanding.  

National law is aligned with the relevant acquis for inland waterways transport, apart 
from the Regulation on the recognition of certification and transportation of goods and 
passengers. The Law on Merchant Shipping Needs is not aligned to the acquis as there is 

72 

 
 
no transport of goods on the inland waterways. The country actively participates in the 
International Commission of Sava River Basin but is not yet part of the EU strategy for 
the  development  of  the  Danube  Region.  The  country  signed  the  main  international 
agreements on inland waterways and has good bilateral cooperation with neighbouring 
countries. 

On air transport, the country has maintained good level of alignment with the  acquis 
and  is  partially  aligned  with  both  aviation  safety  and  security  legislation.  No  progress 
was  made  in  complying  with  the  requirements  of  the  European  Common  Aviation 
Authority  Agreement’s  first  transitional  phase.  The  European  Aviation  Safety  Agency 
still  needs  to  check  that  the  country  is  fully  aligned  with  and  implement  the  Single 
European  Sky.  Most  safety  areas,  except  the  ones  covered  by  the  recent  air  traffic 
management inspection, have not  been inspected by the Agency since 2012-2014. The 
working  arrangement with  the agency covers all aspects  of the  acquis  in  civil  aviation 
safety and environmental protection of products, organisations and personnel. However, 
further  efforts  are  needed  to  facilitate  the  Agency’s  standardisation  inspections.  On 
combined  transport,  no  progress  was  made  in  finalising  the  relevant  national 
legislation,  but  there  has  been  some  progress  setting  up  of  a  multimodal  node  near 
Skopje. 

5.15  Chapter 15: Energy  

EU  energy  policy  covers  energy  supply,  infrastructure,  the  internal  energy  market, 
consumers, renewable energy, energy efficiency, nuclear energy and nuclear safety, and 
radiation protection.  

The country is moderately prepared in this area. Good progress was made in aligning 
the national rules with the third energy package. In the coming year, the country should 
in particular:  

  finish unbundling (certification) the electricity and gas transmission systems; 

  increase  the  number  of  staff  and  the  technical/engineering  capacity  of  the  Energy 

Department in the Ministry of Economy and the Energy Agency;  

  finalise  new  or  updated  secondary  legislation  in  compliance  with  the  Energy  Law 
and  the  third  energy  package,  adopt  the  Energy  Efficiency  Law  to  align  with  the 
Energy  Efficiency  Directive  and  the  Energy  Performance  of  Buildings  Directive. 
Continue  efforts  to  align  the  work  under  way  with  the  Energy  Strategy  and  the 
Climate  strategy,  ensuring  consistency  among  objectives  and  preventing  adverse 
incentives. 

The  national  energy  strategy  until  2035  is  being  prepared  and  should  be  finalised  by 
mid-2019. It should take account of EU energy and climate policy priorities and targets 
for 2030 and the upcoming integrated energy and climate strategy. 

The  availability  of  coal  for  the  Bitola  thermal  power  plant  still  needs  to  be  urgently 
addressed, as this concerns security of supply and requires action, including investment 
in  new  and  sustainable  resources.  The  2014  Law  on  Compulsory  Oil  Reserves  was 
amended  for  the  fourth  time  and  its  entry  into  force  in  January  2020  will  be  5  years 
overdue. Corresponding implementing legislation and action plans that comply with the 
Oil Stocks Directive have been prepared, but are also delayed. The country’s oil stocks 

73 

 
 
correspond  to  63  days  of  average  daily  consumption,  but  the  method  for  calculating 
them is deemed to be inadequate. The oil industry is still not adequately  compensated 
for  holding  emergency  oil  stocks.  It  therefore  does  not  participate  in  the  calls  for 
procurement of oil and petroleum products, which would allow the country to maintain 
and increase the oil stock. 

Electricity transmission inter-connectors being developed and preparatory activities for 
constructing  a  new  400kV  electricity  line  with  Albania  are  under  way.  On  gas 
interconnections, the government is taking measures to ensure the necessary funding for 
the  construction  of  an  interconnection  line  with  Greece.  The  Transmission  System 
in  Southeast  Europe.  A 
the  regional  auction  office 
Operator  participates 
Memorandum  of  Understanding  on  electricity  day-ahead  market  coupling  with  the 
Independent Bulgarian Energy Exchange was signed, with a target date of mid-2019. 

in 

For internal energy market, the country adopted framework legislation in line with the 
EU’s  third  energy  package  in  gas  and  electricity.  The  electricity  and  gas  markets  are 
open for competition. The corresponding secondary legislation is in the process of being 
adopted.  The  appropriate  market  players  have  been  identified.  The  electricity  and  gas 
transmission  and  distribution  are  formally  unbundled.  The  electricity  transmission 
operator  applied  to  the  Energy  Regulatory  Commission  for  certification  and  a 
preliminary  decision  is  to  be  submitted  to  the  Energy  Community  Secretariat  for  an 
opinion. The gas transport operator has not yet applied for certification. The unbundling 
of  the  electricity  distribution  system  operator  is  complete  and  the  revised  compliance 
programme  following  the  Law’s  adoption,  has  been  approved  by  the  regulatory 
authority. The electricity transmission system operator is  in  the process  of completing 
its restructuring by spinning-off the market operator in a new company as a first step in 
establishing of organised market operator and coupling it with a neighbouring market. 
The Energy Regulatory Commission approves new market rules. The government has to 
adopt the decision on the form of an operator of the organised market.  

The  full  balance  responsibility  of  all  market  participants,  required  by  law  to  be 
introduced  by  1  January  2019  and  the  competitive  provision  of  services  have  been 
postponed again.  

A supplier of last resort and a supplier providing the overall service in the government’s 
competitive  public  tendering  procedure  should  be  appointed  by  March  2019,  after  the 
selection  committee  has  completed  the  selection  procedure.  A  programme  to  protect 
vulnerable consumers has not yet been developed. 

Currently,  around  50%  of  total  electricity  consumption  is  covered  by  the  open 
electricity  market.  This  mainly  covers  sales  to  large  industry  consumers.  From  1 
January  2019  all  customers,  including  small  customers  and  households,  are  legally 
eligible  and  entitled  to  switch  suppliers.  Price  regulation  apart  from  supply  to  small 
customers and household in the universal service regime, has been abolished.  

Third-party  access  to  the  natural  gas  system  is  regulated  in  the  Energy  Law,  which  is 
aligned with the acquis, but capacity allocation and transparency needs to be improved. 
No progress was made in setting up an entry-exit transmission tariff system, as required 
by the acquis and no positive developments were made in sorting out the dispute over 
the ownership of the gas transmission pipeline. 

74 

 
 
In the area of hydrocarbons, the Law on Mineral Resources law aims to align with the 
Hydrocarbon Licensing Directive.  

The Energy Community lowered the 2020 renewable energy target from 28 % to 23 %.  

The  amended  national  renewable  energy  action  plan  is  now  in  line  with  the  binding 
target  of  23  %  of  energy  coming  from  renewable  energy  sources  by  2020.  The  new 
Energy Law is fully aligned with the Renewables Energy Directive. The implementing 
legislation is in the process of being adopted. The new Energy Law determines a feed-in 
premium as a new mechanism for renewable energy sources support that will be granted 
on a competitive basis.  

Investment in hydropower should be compliant with the relevant environmental acquis.  

After having adopted its third national energy efficiency action plan, the country is on 
track  to  meet  its  mandatory  targets.  The  energy  service  market  still  needs  to  be 
developed and the existing legislation amended so that energy service companies can be 
contracted.  Financing  to  promote  energy  efficiency  should  be  improved  including  by 
setting up the Energy Efficiency Fund. Municipalities should take steps to fully respect 
their obligation to develop and implement municipal energy efficiency programmes.  

The  country  has  drafted  a  new  Energy  Efficiency  Law,  aligning  with  the  Energy 
Efficiency Directive and the Energy Performance of Buildings Directive. This new law 
is  currently  in  the  public  consultation  phase.  Preparing  and  applying  the  secondary 
legislation  remains  a  considerable  challenge,  due  to  limited  human  and  technical 
capacity at the Energy Department of the Ministry of Economy and the Energy Agency.  

Regarding  investment  in  infrastructure,  the  county  continues  to  build  the  following 
gas  transmission  pipeline  sections:  Stip  –  Negotino,  Negotino  –  Bitola  and  Skopje-
Tetovo-Gostivar. 

For nuclear energy, nuclear safety and radiation protection, the country has ratified 
the relevant international conventions on nuclear safety and radiation protection and is a 
full  member  of  the  European  Community  Urgent  Radiological  Information  Exchange 
system (ECURIE).  

5.16  Chapter 16: Taxation 

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

The  country  is  moderately  prepared  in  this  area.  Some  progress  was  made  in 
reducing the administrative burden for taxpayers and in shortening the time needed to 
process annual income tax returns. In the coming year, the recommendations from the 
previous year remain valid and the country should in particular: 

  improve  the  capacity  of  the  central  and  local  tax  administration  by  adopting  and 

efficiently implementing the tax system strategy; 

  further align the legal framework with the acquis, in particular the Law on Excise 
Tax,  and  amend  the  Laws  on  Personal  Income  Tax  and  Tax  Procedures  in 
accordance with the tax system strategy;  

  ensure 

the  ratification  of 

the  OECD  Multilateral  Convention  on  mutual 

75 

 
 
administrative assistance in tax matters by the end of 2019. 

On indirect taxation, the VAT Law still contains certain exemptions not provided for 
in the acquis. Delays in the refund of VAT are less common than in the past. Regarding 
excise  duties,  the  legal  framework  has  to  be  further  aligned  with  the  acquis.  The 
movement of excisable goods under duty suspension is still subject only to paper-based 
verification and electronic checks have not yet been set up.  

Regarding  direct  taxation,  the  law  on  personal  income  tax  has  been  amended  to 
introduce progressive taxation, to reduce the administrative burden for taxpayers and to 
shorten the time needed to process annual income tax returns.  

On  administrative  cooperation  and  mutual  assistance,  the  government  signed  new 
agreements with EU Member States and non-EU countries to avoid double taxation and 
prevent fiscal evasion. In total, 49 such agreements have been signed, including 24 with 
Member States. On mutual assistance, a new procedure on international exchange of tax 
information has been adopted by the Public Revenue Office reflecting the latest OECD 
standards  in  this  area.  In  June  2018  the  country  signed  the  OECD  Mutual  Assistance 
Convention in Tax Matters and has until the end of 2019 to ratify it. In August 2018, the 
country joined the OECD Inclusive Framework on Base Erosion and Profit Shifting.  

Regarding operational capacity and computerisation, the Public Revenue Office still 
has  to  improve  its  business  processes,  implement  a  new  integrated  IT  model,  risk 
management  tools  and  e-services.  The  tax  system  strategy,  covering  fair  taxation, 
revenue collection, tax transparency, quality of services and green taxation, has yet to be 
adopted. On the informal economy, the Public Revenue Office continued to participate 
in  joint  inspections  with  other  national  bodies  to  identify  unpaid  tax  liabilities  and 
unregistered taxpayers, thus improving tax collection.  

5.17  Chapter 17: Economic and monetary policy 

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

The  country  remains  moderately  prepared  in  the  area  of  economic  and  monetary 
policy.  Some  progress  was  made  in  implementing  the  public  finance  management 
reform  programme.  Not  all  recommendations  of  the  2018  report  were  fully 
implemented. In the coming year, North Macedonia should take further measures to: 

  set  up  a  proper  medium-term  expenditure  framework  to  further  improve  fiscal 

discipline and transparency;  

  improve fiscal governance by adopting fiscal rules;  

  include  public  enterprises  in  the  general  government  fiscal  reporting  framework 

where mandated by European statistical standards. 

On  monetary  policy,  aligning  of  the  legal  framework  with  the  acquis  remains 
advanced. However, further alignment is needed to ensure central bank’s financial and 
institutional  independence.  According  to  the  Law  on  the  Central  Bank,  monetary 
financing  of  the  public  sector  is  prohibited  and  the  public  sector  does  not  have 
privileged access to financial institutions. Price stability is the central bank’s principal 

76 

 
 
objective, which is fully in line with the primary objective of the European System of 
Central Banks.  

Regarding  economic  policy,  the  work  to  conduct  sound  budgetary  policies  and  to 
further  align  fiscal  policy  with  the  Directive  on  Requirements  for  Budgetary 
Frameworks has advanced. The new draft organic budget law foresees the establishment 
of  fiscal  rules  and  independent  fiscal  oversight,  has  been  prepared,  but  is  still  to  be 
adopted.  To  increase  transparency  and  accountability,  more  information  was  made 
available on the use of public resources. In 2018, a law was adopted on registering and 
reporting  liabilities  and  arrears.  Fiscal  reporting  and  notifications  under  the  excessive 
deficit  procedure  are  in  line  with  the  European  system  of  National  and  Regional 
Accounts ‘ESA 2010’. The 2018-2020 public finance management reform programme 
is under way and the 2018 action plan was implemented.   

The  2019-2021  Economic  Reform  Programme  was  submitted  on  time  and  its 
analytical  diagnostics  improved.  Further  efforts  are  needed  to  develop  sufficient 
capacity for designing the structural reforms and implementing them promptly.  

5.18  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.  Good  progress  was 
made,  especially  in  preparing  the  population  census  and  further  aligning  of  sectoral 
statistics  with  EU  standards.  The  notification  for  the  extensive  deficit  procedure  was 
submitted  though  further  improvement  in  data  is  needed.  Continued  efforts  are  also 
needed to improve the scope and data quality of macroeconomic and social statistics. In 
the coming year, the country should in particular: 

  implement the pilot phase of the population census, partly relying on administrative 

data;   

  align financial accounts and quarterly national accounts with the  European System 

of Accounts 2010 (ESA 2010);  

  keep an adequate amount of personnel and budget sufficient financial resources for 

the State Statistical Office. 

For  statistical  infrastructure,  the  legal  framework  is  still  broadly  in  line  with  the 
European Statistics Code of Practice. In 2018, the government signed the Commitment 
on  Confidence  to  ensure  the  professional  independence  of  the  State  Statistical  Office. 
The  Office  increased  its  personnel.  However,  resources  need  to  be  increased  further. 
Sufficient funds have been allocated to carry out the population census. Regarding other 
main statistics providers, the central bank is fully committed to the statistical standards 
code of practice. The Ministry of Finance has not yet appointed a head of statistics. On 
classifications  and registers,  the main  classifications comply with  the  acquis  and are 
updated  regularly.  The  use  of  administrative  data  sources  has  increased,  including  for 
preparing the population census. Data availability and quality improved but still needs 
to be optimised. Data transmission to Eurostat further increased but remains incomplete. 

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On  macroeconomic  statistics,  the  State  Statistical  Office  provides  macroeconomic 
statistics and data on annual and quarterly GDP in current and constant prices, aligned 
with ESA 2010. Annual sectoral accounts and supply/use tables are prepared, although 
the time series is not yet complete. Quarterly national accounts are not fully available. 
For  government  finance  statistics,  the  delimitation  of  the  general  government  sector’s 
units  was  published.  The  notifications  for  the  excessive  deficit  procedure  were 
submitted,  though  data  quality  needs  to  improve  further.  The  financial  accounts  have 
been  prepared  and  submitted  in  experimental  data  form.  The  central  bank  produces 
statistics  on  the  balance  of  payments  and  foreign  direct  investment  according  to  the 
latest standards.  

Structural business statistics and short-term statistics for the industry and construction 
sectors  are  well  developed.  There  have  been  further  improvements  in  short-term 
statistics  for  services,  which  were  published.  The  business  register  is  in  place  and  an 
outline  to  improve  it  has  been  agreed.  The  framework  to  produce  foreign  affiliates’ 
statistics  was  set  up.  Tourism  and  transport  statistic’s  alignment  with  the  acquis 
improved.  Statistics  on  research  and  development  and  on 
information  and 
communication technologies are sufficiently aligned. 

Concerning  social  statistics,  a  new  population  and  housing  census  using  a  combined 
methodology is well advanced. The survey for statistics of income and living conditions 
was  conducted.  Social  protection  statistics  improved.  Migration  statistics  need  to  be 
further  expanded.  Labour  market  statistics  are  generally  aligned  with  the  acquis. 
Statistics on crime, education and public health need improvement. 

Agricultural  statistics  are  only  partly  adequate  compared  to  the  acquis.  The  farm 
structure  survey  continues  to  be  regularly  conducted.  The  EU  methodology  for  the 
annual crop statistics was tested to align it with the acquis. Agro-monetary statistics are 
produced  in  line  with  the  acquis.  Supply  balance  sheets  also  saw  an  improvement  for 
the livestock component. Energy and environment statistics, including environmental 
protection  expenditure,  waste,  water,  and  environment-related  taxes  are  mostly  in  line 
with  the  acquis.  Short-term  energy  statistics  and  energy  balances  are  supplied.  Air 
emission accounts are not produced, however. Material flow accounts are generated, but 
material flow balances are not yet included. 

5.19  Chapter 19: Social policy and employment  

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

The country is moderately prepared in this area. Some progress was made during the 
reporting  period.  The  employment  and  social  reform  programme  is  closely  monitored 
by the government but lacks financing. The Youth Guarantee Scheme was piloted and 
measures  were  taken  to  include  the  long-term  and  inactive  unemployed  in  the  labour 
market. Poverty remains a serious problem but improvements are expected with the new 
Law  on  Social  Protection  that  aims  to  ensure  guaranteed  minimum  assistance  for  all 
unemployed. There have been efforts to focus policies more on people at risk of in-work 
poverty. As the previous year’s recommendations have not been fully carried out, they 
remain valid. In the coming year, the country should in particular: 

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  improve the activation of unregistered, long-term and unskilled unemployed people, 

including women, persons with disabilities and Roma; 

  intensify efforts to improve the capacity of the State Labour Inspectorate (SLI) and 

reinforce collective bargaining between employers and workers; 

  implement  the  poverty  alleviation  strategy,  the  Roma  inclusion  strategy,  and 

relevant action plans.   

Amendments to the current Law on Labour Relations were adopted to clarify the rules 
and provide equal rights to people who have terminated their contract due to bankruptcy 
or  liquidation.  A  new  labour  law  is  under  preparation.  A  new  Law  on  Private 
Employment  Agencies  aligned  with  the  ILO  Convention  (C  181,  1997)  was  also 
adopted as well bylaws deriving from this law. The Law on Minimum Wage was also 
amended. 

The capacity of and coordination between the relevant institutions tasked with enforcing 
the  labour  law,  have  not  really  improved.  The  staffing  and  professional  performance 
level of the State Labour Inspectorate is too low to adequately cover the country’s needs 
and  will  decrease  further  due  to  staff  retiring  in  the  next  years.  The  country  has  no 
major issues with child labour. 

Efforts  were  made  to  improve  the  responsiveness  of  and  cooperation  between 
employers  and  staff  dealing  with  health  and  safety  at  work.  This  work  remains 
incomplete due to the lack of capacity of the State Labour Inspectorate responsible for 
supervising the application of laws and other regulations in the field of labour relations, 
employment,  occupational  health  and  safety.  Implementation  of  the  2017-2020 
occupational  health  and  safety  strategy  remains  deficient.  Various  awareness-raising 
activities  were  organised  under  the  action  plan  for  the  2017-2020  occupational  health 
and  safety  strategy.  According  to  State  Labour  Inspectorate  data,  in  2018  the 
construction  sector  had  the  highest  number  of  fatal  accidents  per  year.  According  to 
civil society organisation data, there were 92 reported injuries at the workplace in 2018, 
of which 22 were fatal. 

Limited  progress  was  made  on  social  dialogue.  The  social  partners  are  involved  in 
drafting  the  new  Law  on  Labour  Relations,  which  include  rules  on  freedom  of 
association, collective bargaining and strikes. The law, which is still at an early stage of 
drafting, will further regulate branch collective agreements, employer’s agreements and 
the  process  of  setting  up  a  trade  union.  The  Local  Economic  and  Social  Councils  are 
expected to be developed further in 2019.  

The unemployment rate fell slightly from 22.4% in 2017 to 20.7% in 2018. In parallel, 
women’s labour market participation (52.2% of the 15-64 years old in 2018) and that of 
Roma and persons with disabilities did not improve and continued to be low.   

The focus of employment policy remained on youth and the long-term unemployment. 
The piloting of the Youth Guarantee scheme targeting young people not in employment, 
education  or  training,  its  introduction  and  extension  throughout  the  country  is  a  very 
positive and important step in this regard. 

The  first  medium-term  strategy  for  the  formalisation  of  the  informal  economy  (2018-
2022)  and  its  2018–2020  action  plan  were  adopted.  They  set  out  measures  for  the 

79 

 
 
regulatory  and  business  environment  to:  (i)  increase  the  prominence  of  institutions  in 
the labour market; (ii) increase inspections; and (iii) raise awareness among individuals 
and businesses on the importance of formalising informal activities. Adequate resources 
should be allocated to ensure that the action plan is carried out within the set timeframe. 
The  occupational  outlook  was  further  developed,  with  21  occupational  descriptions 
published by Q3 2018. 

Progress  was  made  on  social  inclusion  and  protection.  The  new  Law  on  Social 
Protection  has  been  prepared.  The  law  provides  for  major  reforms  in  the  social 
protection  system.  The  risk  of  poverty  in  2017,  considering  the  poverty  threshold  of 
60% of median  equalised income, was 22.2%. The rate of employed people at  risk of 
poverty  was 9%, while for pensioners it was  7.7%. The Gini  coefficient  of measuring 
income distribution inequality was 32.4. 

Following  a  pilot  phase,  where  64  people  were  given  the  opportunity  to  use  it,  the 
personal assistance scheme is now gradually being incorporated into the new policy.  

Roma  and  persons  with  disabilities  remain  at  the  highest  risk  of  poverty.  A  social 
pension scheme will be included in  the new  Law on Social Protection. It  will provide 
assistance  to  people  aged  above  64  who  are  not  entitled  to  any  income  support.  The 
Social Work Centres’ capacity is insufficient and the field level support to those in need 
of  social  services  is  inadequate.  Measures  that  aim  to  reduce  poverty  remain 
insufficient. Social protection for children with a disability is still inadequate. National 
legislation, policy and programmes need to be harmonised with the UN Convention on 
the  Rights  of  Persons  with  Disabilities.  Employment  opportunities  for  persons  with 
disabilities are still limited.  

The  new  2018-2027  national  strategy  on  deinstitutionalisation  was  adopted.  Concrete 
measures  on  deinstitutionalisation  are  under  way  and  alternative  community-based 
services are being developed in parallel. Two community-based housing units have been 
made  available  to  accommodate  children  from  the  Special  Institution  for  Disabled 
People  in  Demir  Kapija  and  other  community-based  housing  units,  including  foster 
family  accommodation  for  children  from  other  institutions,  have  been  founded. 
Conditions for adults with disabilities living in residential institutions remain very poor. 

On  equality  between  women  and  men  in  employment  and  social  policy,  the  new 
Law on Prevention and Protection against Discrimination was adopted in March 2019. 
The 2018-2020 national action plan for gender equality, adopted by the government in 
2018, is currently being implemented. The Ministry of Labour and Social Policy started 
to  develop  a  national  gender  equality  index  in  cooperation  with  the  State  Statistical 
Office. According to the 2018 statistics, the employment rate for people aged 15-64 is 
41.7% for women and 61.4% for men. 39.2% of women employed in the private sector 
earn  lower  salaries  than  men.  In  the  public  sector,  there  is  no  difference  in  salaries 
between women and men. 

The  government  set  up  the  National  Coordination  Body,  which  is  in  charge  of 
promoting and monitoring non-discrimination and equal opportunities in all spheres 
of social life. The Ombudsman’s 2018 annual report reveals 25 discrimination cases, of 
which 16 are complaints about discrimination in employment. In 2018, the Ombudsman 
received 77 complaints on discrimination grounds, but only confirmed discrimination in 
25 cases. (see also Chapter 23 — Judiciary and Fundamental Rights) 

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5.20  Chapter 20: Enterprise and industrial policy  

EU  enterprise  and  industrial  policy  strengthens  competitiveness,  facilitates  structural 
change  and  encourages  a  business-friendly  environment  that  stimulates  small  and 
medium-sized enterprises (SMEs).  

North Macedonia is moderately prepared in this area. Some progress was made in the 
reporting  period  on  the  adoption  of  strategies  and  the  implementation  of  measures  to 
facilitate  SMEs’  access  to  finance  and  link  foreign  direct  investments  (FDI)  with 
domestic firms. In the coming year, North Macedonia should:  

  consolidate the institutional setup and further clarify the mandates of public bodies 

to ensure the effective implementation of policies;  

  improve the structure and quality of public dialogue with businesses in all aspects of 

enterprise and industrial policy and corresponding measures;  

  make  a  systematic,  sustained  effort  to  raise  skills  in  domestic  companies,  notably 

SMEs, and ensure they adopt new methods and technologies. 

On enterprise and industrial policy principles, the strategies for SME development, 
for  industrial  policy  and  for  women’s  entrepreneurship  were  adopted.  The  new 
2018-2020 industry strategy aims to raise the economic weight of manufacturing, adds 
resource  efficiency,  however,  insufficiently  addresses  digitalisation.  The  government 
also adopted 2018-2022 strategy for the formalisation of the informal economy with an 
action  plan  that  includes  measures  in  the  regulatory  and  business  environment. 
Adequate  resources  should  be  allocated  to  ensure  that  the  action  plan  is  carried  out 
within the set timeframe. 

There  are  still  numerous  public  bodies  with  overlapping  and  conflicting  mandates.  A 
trend  towards  implementation  at  a  level  that  would  not  ‘own’  the  output  of  measures 
could  be  observed.  Communication  between  the  government  and  the  private  sector 
should  be  further  improved.  Additional  structural  reforms  are  needed  to  improve  the 
business environment.  

Regarding  policy  instruments,  the  aspects  of  the  Late  Payment  Directive  on  public 
bodies’ payment obligations is not yet fully aligned with the acquis. The country should 
amend  the  Law  on  Financial  Discipline  as  soon  as  possible  as  businesses  still  face 
difficulties in collecting claims from public bodies. 

The  budget  for  business  support  measures  increased  in  2018.  However,  reporting  on 
their  implementation  and  evaluation  of  results  remain  at  an  early  stage.  The 
transparency of the allocation process should be improved and the compliance with the 
country’s  state  aid  rules  should  be  ensured.  Under  the  plan  for  economic  growth  the 
government  offers  grants  to  companies.  These  grants  intend  to  enable  companies  to 
adopt  new  methods  and  technologies,  and  to  stimulate  cooperation  between  FDI  and 
local companies by subsidising the investments and reimbursing the co-operation costs 
of the investors. However, the effects on increasing domestic supply to FDI production 
remain unclear. The Innovation Fund disbursed grants to companies and to establish the 
accelerators.  To  function  effectively  the  fund  requires  the  deployment  of  full-time 
competent  staff.  Businesses  should  be  made  aware  of  the  availability  of  technology 

81 

 
 
transfer  and  co-operation  services,  for  example  through  the  announced  national  office 
for technology transfer.  

Bank lending remains the main source of private sector financing, with other financing 
instruments  being  modest  or  absent.  Investment  by  the  Enterprise  Development  & 
Innovation Facility (EDIF) in the private sector is modest. EU financing instruments for 
business  development  under  the  Programme  for  the  competitiveness  of  SMEs 
(COSME) and EDIF remain underused. More efforts  are needed to  raise awareness  in 
the private sector on the available instruments.  

On sectoral policies, the 2018-2022 strategy for tourism development has not yet been 
adopted. The country should participate in the annual Tourism Advisory Committee. 

5.21  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. 

The country has a good level of preparation in this area. Some progress was made in 
the area of Trans-European networks during the reporting period.  

In the coming year, the country should in particular: 

  further  strengthen  the  operational  and  technical  capacity  of  all  management  and 
stakeholder  institutions  dealing  with  the  development  of  Trans  European  T  and 
Trans European E networks; 

  mobilise sufficient resources to implement the Transport Community Treaty;  

  harmonise of the legal framework with the Trans European Network Regulation. 

On transport networks, the country  continued to  participate in  the South-east  Europe 
Transport  Observatory  and  to  respect  the  commitments  of  its  Memorandum  of 
Understanding. 

The motorway section along Corridor X, co-financed by the EU, was opened to traffic in 
May 2018. Other reconstruction works along Corridor X and VIII were also completed. 
The  lack  of  political  commitment  and  decision-making  significantly  delayed  the 
construction of the rail Corridor VIII towards Bulgaria. Additional efforts are needed to 
accelerate  progress  on  this  Corridor  and  other  priority  sections  on  the  core  and 
comprehensive  network,  both  in  rail  and  road.  Additional  efforts  are  required  to  carry 
out road safety audits in line with the Directive 2008/96/EC on all projects on the core 
and comprehensive network. 

The  capacity  of  institutions  and  bodies  involved  in  carrying  out  large  investment 
projects  must  be  strengthened.  The  country  needs  to  focus  on  connectivity  reform 
measures  to  ensure  the  sustainability  of  such  infrastructures.  Future  infrastructure 
investments need to be made in compliance with EU standards on public procurement, 
State aid and environmental impact assessment. Projects should be channelled through a 
single project  pipeline, confirming the strategic orientation  towards the trans-European 
networks.  A  condition  of  the  railway  border  crossing  agreement  signed  with  Serbia  is 
that  North  Macedonia  needs  to  build  the  adequate  infrastructure.  However,  this  is  still 
pending.  Furthermore,  the  authorities  have  still  not  signed  the  remaining  rail  border 
crossing  protocols  with  Kosovo,  even  though  it  was  agreed  that  the  implementation 
82 

 
 
agreement  between  the  two  customs  authorities  would  be  exchanged  and  that  the 
negotiation process for the border police protocol would start at the beginning of 2018. 
Additional  efforts  are  required  to  ensure  opening  of  the  rail  market  on  the  indicative 
extension of the Orient/East-Med corridor. Adopting the multiannual maintenance plans 
for the entire core network (rail and road) remains a challenge. 

On energy networks, the design to build the Bitola-Elbasan (Albania) 400kV electricity 
interconnection section is still ongoing. The feasibility study and project documentation 
are being prepared for the gas interconnection with Greece. Further efforts are needed to 
revive the interconnection line with Serbia. 

5.22  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  for  implementation,  which 
requires adequate administrative capacity and sound financial management of project’ 
design and execution. 

The country is moderately prepared in the area of regional policy and coordination of 
structural instruments. Some progress was made in strengthening the national capacity 
for  strategic  planning  and  sector-based  programming  and  monitoring  of  EU  funds. 
Management and control systems have been successfully set up and good results have 
been achieved in the implementation of IPA I. In the coming year, the country should in 
particular:  

  upgrade the administrative capacity across the  Instrument for Pre-Accession  (IPA) 
the  contracting  and 
management  structure  and 
implementation of the EU-funded projects, particularly in the areas of transport and 
environment;  

the  dynamics 

improve 

in 

  complete the performance assessment framework;  

  ensure the sustainability and visibility of project results.  

Regarding the legislative framework, some progress was made in harmonising national 
law with the acquis in other chapters, creating preconditions for the implementation of 
European funds and future structural funds. 

In 2018, key strategic documents were adopted to support economic and social cohesion 
with  the  EU,  such  as  the  economic  reform  programme,  economic  and  social  reform 
programme, economic growth plan, national plan on agriculture and rural development, 
and the national strategy on transport.  

The  institutional  framework  for  managing  the  EU  pre-accession  assistance  has  been 
set  up  and  is  operational.  The  procedure  for  entrusting  authorities  with  management 
powers  in  the  education,  employment  and  social  inclusion  sectors  was  completed  in 
June 2018, recognising progress made in addressing previous recommendations.  

Regarding administrative capacity, further strengthening is needed. The staff retention 
policy and the management of human resources has become a concern.  

The  ICT  systems  within  the  structures  do  not  provide  for  reasonable  assurances  for 
information  security  management.  The  relevant  action  plan,  adopted  by  national 
authorities on 28 December 2017 still needs to be implemented.  

83 

 
 
In programming, the sectoral approach has proved positive. 

On  financial  management,  control  and  audit,  although  the  procurement  and 
contracting of EU funds is gradually improving, it remains a concern. The reliability of 
the procurement, contracting and payment forecasts need to improve, along with the line 
ministries’ capacity to complete mature projects on time.  

The  internal  auditing  of  EU  funds  should  be  improved  in  terms  of  regularity  and 
coverage. More high quality internal auditors are needed. The amendments to the Law 
on  Financial  Inspection,  adopted  by  the  Parliament  in  September  2018,  should 
strengthen the financial control environment. 

Transparency  in  the  use  of  EU  funds  improved.  However,  a  more  structured 
participation  of  national  authorities  is  required  to  better  inform  citizens  and 
communities on the opportunities and benefits of EU funds for the country. 

5.25  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,  especially  where  there  is  scientific 
excellence and solid investment in research.  

The country has a good level of preparation in the area of science and research. Some 
progress  was  made  in  science  and  research  activities  and  specifically,  in  innovation 
support  measures  for  companies.  However,  last  year  recommendations  have  not  been 
fully addressed. In the coming year, the country should:  

  ensure  a  higher  level  of  investment  in  research  and  innovation  and  promote 

participation in the EU’s Horizon 2020 research programme;  

  develop a smart specialisation strategy to underpin national research and innovation 

strategies and policies.  

Some progress was reported in the area of research and innovation policy. The 2012-
2020  innovation  strategy  continues  to  be  the  country’s  main  policy  for  the  improving 
innovation  in  private  companies.  However,  other  relevant  policy  documents  on 
research, higher education and smart specialisation remain to be developed. Investments 
in research and innovation remain low at 0.43% of GDP and comes almost entirely from 
public sources. 

Regarding  the  EU  framework  programme,  the  country’s  annual  participation  in  and 
funding received from the Horizon 2020 programme is of concern, as 2018 figures are 
far  below  expectations.  The  Horizon  2020  success  rate  remained  somewhat  low  at 
11.2%  (compared  with  a  15.3%  average  overall  success  rate).  Efforts  on  organising 
promotional  events  and  assistance  to  applicants  increased  but  have  not  yet  had  a 
tangible impact.  

Concerning the European Research Area, the country has a limited research capacity 
compared with the European average. The national roadmap for research infrastructures 
aimed at making use of public investments is not yet in place. However, Open Science 
activities have commenced.  

On  innovation,  the  2018  European  Innovation  Scoreboard  assesses  the  country  as  a 
modest  innovator,  having  steadily  improved  its  performance  since  2010.  Intellectual 

84 

 
 
assets  are  among  the  weakest  innovation  areas.  The  Fund  for  Innovation  and 
Technological  Development  invested  in  companies  to  help  the  introduction  of 
innovation. The INNOFEIT centre for technology transfer and innovation is producing 
its  first  tangible  results.  North  Macedonia  launched  a  scientific-technological  park  to 
encourage innovation in the country.  

The Smart Specialisation (S3) process in North Macedonia started in March 2018. An 
inter-institutional  working  body  was  established,  consisting  of  representatives  of  the 
government, relevant ministries and the academic community (S3 working group).  

5.26  Chapter 26: Education and culture 

The  EU  supports  cooperation  in  education  and  culture  through  funding  programmes 
and the coordination of Member State policy through the open method of coordination. 
The  EU  and  the  Member  States  must  also  prevent  discrimination  and  ensure  quality 
education  for  children  of  migrant  workers,  including  those  from  disadvantaged 
backgrounds.  

The country is moderately prepared in this area. Limited progress was made with the 
adoption of the new Law on Higher Education. The introduction of measures from the 
comprehensive 2018-2025 education strategy remained limited. As none of last  year’s 
recommendations was implemented, they remain valid. In the coming year, the country 
should in particular:  

  implement  the  new  strategic  framework  for  education,  particularly  the  targets  for 

pre-school education;  

  increase  support  for  teacher  training  and  teacher  professional  development  and 

ensure an effective assessment process;  

  improve  access  to  quality  education  for  all,  in  particular  preschool  enrolment, 

children with disabilities and children from Roma communities. 

Public spending on education, training, youth and sport remained at 3.8% of GDP in 
2018.  

The level of enrolment in early childhood education remains a concern. It falls far short 
of  the  EU  Education  and  Training  2020  target  of  95%,  with  only  30%  of  children 
attending  licensed  preschool  institutions  in  the  2018/2019  school  year.  However,  the 
government has taken measures to increase resources and preschool places by investing 
in preschool infrastructure and high-quality preschool education teacher training. 

Substantial  improvements  is  still  needed  in  the  quality  of  primary  and  secondary 
education.  While  there  are  high  general  completion  rates  in  primary,  lower  and  upper 
secondary  education,  an  estimated  10%  of  children  from  Roma  communities  do  not 
regularly  attend  primary  school  and  their  dropout  rates  remain  high.  A  new  country-
wide project is developing a series of measures to support the inclusion of children in 
schools  during  the  current  2018-2019  academic  year.  The  quality  of  education  is  a 
concern  at  all  levels  and  the  system  remains  vulnerable  to  political  influence  and 
corruption.  Children  and  students  with  disabilities  and  those  from  Roma  communities 
continue  to  face  barriers  to  regular  and  quality  education  and  training.  In  December 
2018,  the  Ministry  of  Labour  and  Social  Policy  adopted  a  decision  requiring 
municipalities to cover all pre-school costs for enrolled Roma children as from January 
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2019. Compliance with this important measure should be closely monitored. Separation 
along  ethnic  lines  in  education  continues.  There  has  not  been  any  reduction  in  the 
number  of  schools  where  students  are  separated  and  barriers  to  integration  remain 
significant.  

In higher education, the overall enrolment rate of students increased to more than 40% 
in  the  2018/2019  academic  year.  However,  the  completion  rate  remains  low.  The 
government  adopted  a new  Law on Higher Education in  May  2018 after  adopting the 
2018-2025  education  strategy  and  the  related  action  plan  in  January.  This  new  law 
reinforces the principle and practice of university autonomy and separates the structures 
for  the  assessment  and  development,  accreditation  and  external  evaluation  of  higher 
education facilities and study programmes. The law also sets out that a National Council 
for  Higher  Education,  an  Accreditation  Board  for  Higher  Education  and  a  separate 
Evaluation Board for Higher Education should be set up during 2019. 

the  national  qualifications  framework  system, 

Under 
three  new  standards  of 
qualifications  have  been  created  for  post-secondary  education.  Regarding  cooperation 
with  workplaces, five sectoral  qualification committees were set  up in  February 2018. 
These  committees  are  responsible  for  analysing  existing  qualifications,  considering 
proposals  for  the  introduction  of  new  qualifications,  and  giving  opinions  on  the 
compliance  of  occupational  and  qualification  standards  with 
the  examination 
programmes. 

In  vocational  education  training  (VET)  and  adult  education,  work-based  learning  and 
quality  improvements  in  practical  learning  are  ongoing.  Further  investment  in  VET 
teachers’ professional development and introducing a more flexible, modularised VET 
curriculum  with  the  direct  involvement  of  employers  in  education  and  training  is 
required. Closer monitoring of VET outcomes (e.g. labour market status of graduates) is 
also recommended. 

The  country  is  also  aiming  at  increasing  adult  literacy  rates  with  the  launch  of  adult 
training programmes to complete primary and secondary education (this is a step in the 
right  direction  but  not  enough  resources  are  allocated).  The  approval  of  systems  for 
validating non-formal and informal learning is another positive step. 

The country continues to actively participate in the Erasmus+ Programme and is on an 
equal  footing  with  EU  Member  States  in  this  respect.  There  were  602  incoming  and 
outgoing  students  involved  in  such  exchange  programmes  in  2018  and  35  projects 
involving  local  beneficiaries  are  currently  being  implemented.  The  country  has  been 
actively  involved  in  the  Bologna  Process  Monitoring  Group,  hosting  and  chairing 
sessions in Skopje in February 2019.  

In 2018, North Macedonia participated in the 2018 OECD Programme for International 
Student Assessment (PISA) for the second time. Results of this assessment are due to be 
published  in  December  2019.  The  country  will  also  participate  in  the  Trends  in 
International  Mathematics  and  Science  Study  2019  and  Progress  in  International 
Reading Literacy Study 2021. 

The 2018-2022 national  strategy for  culture development, adopted in May 2018, is at 
an early stage of implementation. The new Law on Protection of Cultural Heritage and 
the  national  strategy  for  the  protection  of  cultural  heritage  are  still  under  preparation. 

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The country played an active role in celebrating the 2018 European Year for Protection 
of  Cultural  Heritage.  However,  in  addition  to  awareness-raising  activities,  regular  and 
appropriate budget allocations are still needed to protect cultural heritage.  

The  only  measure  planned  for  implementing  the  2005  UNESCO  Convention  on  the 
Protection and Promotion of the Diversity of Cultural Expressions is some basic public 
promotion in 2019.  

The  disbursement  of  funds  under  the  annual  programme  for  projects  of  significant 
national interests provoked criticism by numerous cultural operators on the Ministry of 
Culture's work and the political influence over its decisions. The Ministry of Culture’s 
capacity  needs  to  be  further  strengthened,  so  that  cultural  and  creative  sectors  can 
contribute to societal development and increase tolerance among communities. Overall, 
the  country  shows  a  satisfactory  level  of  participation  in  the  Creative  Europe 
Programme. 

On  youth,  the  local  branch  of  the  Regional  Cooperation  Office  opened  in  Skopje  in 
August 2018. Ongoing government priorities for young people include promoting youth 
participation in the democratic process, ensuring their education is relevant to the labour 
market to address high levels of youth unemployment and social inclusion, as presented 
in  the  2016–2025  national  youth  strategy.  See  also  Chapter  19  –  ‘Social  policy  and 
employment’.  

The  Law  on  sports  has been  amended  to  introduce  tax  relief  measures  for  companies 
investing  in  sports.  The  governmental  procedure  on  the  law  began  in  Q1  2019.  The 
strategy  on  sports  still  needs  to  be  developed.  The  annual  budget  for  sports  increased 
from  0.3%  in  2017  to  1.4%  in  2018,  increasing  young  people’s  participation  in  sport 
activities.  North  Macedonia  participated  for  the  first  time  in  the  European  Week  of 
Sports by organising a large number of sport activities in the country.  

5.27  Chapter 27: Environment and climate change  

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

The  country  is  at  some  level  of  preparation in  this  area.  Limited  progress  has  been 
achieved in further aligning policies and legislations with the acquis in the water, nature 
protection  and  waste  sectors.  Implementation  and  enforcement  are  lagging  behind.  In 
the coming year the country should in particular: 

  implement  air  quality  improvement  measures  by  ensuring  efficient  coordination 
between  central  and  local  authorities,  and  the  allocation  of  sufficient  financial 
resources; 

  implement  the  adopted  regional  waste  management  plans  and  establish  an 

integrated regional waste management system;  

  implement  the  Paris  Agreement  by  developing  a  comprehensive  strategy  on 
climate-related action, consistent with the EU 2030 framework and start the process 
of developing a National Energy and Climate Plan, in line with Energy Community 
obligation. 

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Environment  

Administrative  capacity  at  central  and  local  level  remain  weak  and  insufficient. 
Cooperation with civil society has improved, but further efforts are needed for effective 
public participation and consultation in decision-making processes. The implementation 
of  Environmental  Impact  Assessment  and  public  consultations  need  to  improve, 
especially  at  the  local  level.  No  progress  has  been  made  in  adopting  the  Law  on 
Environmental 
INSPIRE  and 
Environmental Crime Directives are still not fully aligned and implemented.  

the  Environmental  Liability, 

Inspection  and 

the 

legislative  alignment 

its 
On  air  quality,  although 
implementation  remains  weak.  The  lack  of  sufficient  administrative  and  financial 
resources is still the main obstacle to putting in place air quality improvement measures. 
Air pollution levels are high in major cities. Insufficient human, technical and financial 
support for the national air quality monitoring network resulted in several interruptions. 
A special  allocation to  fund air quality improvement measures  has been introduced in 
the 2019 state budget for the first time.  

is  almost  complete, 

Regarding  waste  management,  further  progress  was  made  in  aligning  the  legal 
framework with the EU rules. The new Law on Waste and the national waste prevention 
plan  have  not  been  adopted,  but  the  new  2018-2024  national  waste  management  plan 
has  been  prepared.  Several  laws  on  special  waste  streams  are  pending  adoption.  The 
regional waste management plan for the Polog region is under way. The regional waste 
management structures face a lack of administrative and financial resources and are still 
not fully operational. The integrated waste management system is still delayed as setting 
up  the  regional  structures  took  longer  than  expected.  Economic  incentives  to  promote 
recycling are still limited and the lack of an organised extended producer responsibility 
scheme is hindering the market. 

On  water  quality,  the  country  made  some  progress.  After  having  developed 
implementation  plans  for  the  Urban  Waste  Water  Treatment  and  Drinking  Water 
Directives  and  a  national  investment  programme  for  the  water  sector,  the  new  tariff 
methodology based on full cost recovery is applied. A public consultation is ongoing on 
the  river  basin  management  plans  for  Vardar,  Strumica  and  Crn  Drim  rivers.  Flood 
hazard  and  risk  mapping  has  been  developed  for  almost  all  areas  of  the  country,  but 
significant  efforts  are  needed  to  further  align  legislation  with  the  acquis.  Inter-
ministerial cooperation in the water sector requires considerable improvement. 

For nature protection, a national strategy for nature protection and a national strategy 
for  the  protection  of  biodiversity  were  adopted.  The  annual  program  for  nature 
conservation for 2019 was adopted by the government. Work continues on identifying 
potential NATURA 2000 sites. Valorisation studies and management plans, required by 
the  Birds  and  Habitats  Directives,  were  prepared  for  two  protected  areas  and 
commenced  for  two  potential  protected  areas.  Steps  have  been  taken  to  establish 
ecosystem  services.  However,  sustainable  and  long-term  funding  for  protected  areas 
from  the  central  level  is  still  absent.  The  implementation  of  the  Convention  on 
International Trade in Endangered Species of Wild Fauna and Flora Regulation is still at 
an  early  stage.  Any  further  development  of  hydropower  should  be  in  line  with  EU 
environmental legislation. 

88 

 
 
On industrial pollution and risk management, the new law on industrial emission and 
its related implementing legislation has not yet been adopted. However, the process of 
issuing  integrated  permits  has  improved  in  terms  of  quality  and  quantity.  The 
administrative capacity in these areas needs to be strengthened at both local and central 
level.  Aligning  national  rules  with  the  SEVESO  III  Directive,  EU  Eco  Label 
Regulations and Environmental Management Audit System is still at an early stage.  

On  chemicals  there  have  been  no  developments  on  implementing  Registration, 
Evaluation,  Authorisation  and  Restriction  of  Chemicals  and  Classification,  Labelling 
and Packaging Regulations.  

On noise, strategic noise maps and action plans are under preparation. Inter-institutional 
cooperation  and  coordination  between  the  key  institutions  is  needed  to  ensure  data 
collection.  

There has been no progress on civil protection. The country continues to participate in 
the Union Civil Protection Mechanism, but lacks streamlined, coordinated and efficient 
disaster mitigation and response action at all levels. An inter-institutional working group 
has been set up to propose recommendations for improvement. The country is still not 
connected  to  the  common  emergency  communication  system  and  information  system 
(CECIS)  of  the  Commission,  but  the  country  need  first  to  set  up  the  secure 
trans-European services for telematics between administrations (sTESTA) connections.  

Climate change 

The  alignment  of  the  legal  framework  with  the  acquis  is  still  at  an  early  stage.  The 
country  has  started  developing  a  comprehensive  strategy  on  climate  action,  consistent 
with  the  EU  2030  framework.  It  should  also  pursue  efforts  to  implement  the  Paris 
Agreement,  which  North  Macedonia  ratified  in  November  2017.  In  2018  the  country 
submitted its second Biennial Update Report on climate change to  the United Nations 
the  4th  National 
Framework  Convention  on  Climate  Change  and  currently 
Communication  and  3rd  Biannual  Update  Report  to  the  UNFCCC  are  in  preparation. 
Technical,  institutional  and  administrative  capacity  remains  weak  and  needs  to  be 
strengthened  at  all  levels.  The  efforts  to  mainstream  climate  action  into  other  sectors 
(such as energy and transport) need to be intensified.  

5.28  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  in  cross-border 
healthcare,  and  serious  cross-border  health  threats  including  communicable  diseases, 
as well as medicines for human and veterinary use. 

The  country  is  moderately  prepared  in  the  area  of  consumer  and  health  protection. 
No progress was made on either consumer or health protection. In the coming year the 
country should: 

  align the legal framework with the  acquis on consumer protection and strengthen 

the operational structures serving consumer protection; 

  increase the sustainability, efficiency, cost-effectiveness and quality of services in 
the field of communicable diseases, and implement the recommendations from the 

89 

 
 
Technical Assessment Report on the country's capacity in this area;  

  publish reports on the registers for cancer and individual rare diseases and ensure 
adequate  funding  and  specialised  knowledge  for  early  detection  and  treatment, 
based on registers' data.   

Consumer Protection 

No  progress  was  made  on  the  cross-cutting  aspects  of  consumer  protection,  where 
alignment  with  the  general  Product  Safety  Directive  and  the  collective  redress  acquis 
needs  to  be  completed.  No  positive  development  was  made  on  the  mediation  scheme, 
which remains expensive for  consumers. No  additional resources have been allocated, 
either  in  terms  of  staffing  in  the  Ministry  of  Economy  or  state  grants  for  consumer 
protection. Current resources are limited and only cover advisory services and fees from 
international  consumer  organisations.  Outreach  is  modest  and  only  takes  the  form  of 
brochures and  educational  materials  developed by  consumer organisations. The use of 
more contemporary communications tools should be ensured. Action should be taken to 
reinforce  market  supervision  on  product  safety-related  issues.  Alignment  with  the 
product  safety  acquis  remains  incomplete. A web platform where citizens can find all 
information on consumer protection and more awareness on non-safety-related issues is 
needed.  

Public Health 

Concerning  Macedonian  public  health,  amendments  to  healthcare  law  provide  for 
increased  salaries  and  improved  retention  policy.  However,  a  high  number  of  staff 
continues  to  leave  the  country.  Inadequate  use  of  sophisticated  health  equipment 
remains  an  issue.  Data  from  e-medical  registers  should  be  used  for  proper 
policymaking.  Lack  of  financial  resources  continues  to  seriously  hamper  the 
implementation of public health policies. More than one third of all health services are 
paid  for  out  of  pocket,  indicating  the  quality  of  healthcare,  and  creating  social 
discrepancies.  There  was  backsliding  in  the  area  of  tobacco  control.  The  country  has 
signed,  but  has  yet  not  ratified  the  Protocol  to  Eliminate  Illicit  Trade  in  Tobacco 
Products. Smoking in public areas is not penalised. The amended legislation now allows 
smoking in some public areas and enforcing tobacco control has further deteriorated.  

Action  should  be  taken  in  the  area  of  blood,  tissues,  cells  and  organs, where  further 
efforts and proper funding are needed to align national rules with the acquis. The new 
country coordinator participated as an observer at EU events on transplants. A first-ever 
blood-stem transplant from a non-relative donor was made. Kidney transplantation from 
deceased donors resumed after several years. 

Regarding  mental health  substantial  efforts  should  be made to  improve their sanitary 
and human resource conditions. 

Concerning  socio-economic  determinants  of  health,  no  additional  efforts  were  made 
in improving nutrition and physical activity and decreasing obesity.  

Regular  activities  on  drug  abuse  prevention  and  harm  reduction  continued.  On  health 
inequalities, 
to  provide  socially 
underprivileged  women  with  contraception.  However,  this  measure  only  applies  to 
women  who  visit  hospitals  for  reproductive  health  care,  is  not  available  in  primary 

the  Ministry  of  Health  allocated  a  budget 

90 

 
 
healthcare  facilities.  Improved  access  to  healthcare  services  is  needed  for  the  Roma 
community  and  more  funding  is  needed  to  treat  persons  with  severe  physical  and 
intellectual  disabilities.  Alcohol  consumption  and  the  associated  prevention  measures 
remained the same. 

Funding for cancer screening is insufficient. The national and regional cancer registers 
were  established and should  provide quality data on the level  of cancer  incidence  and 
the funds and treatment needed to ensure proper treatment and prevention. However, no 
reports  on  the  registers  are  publicly  available.  There  is  no  national  program  on  breast 
and cervical cancer screening programme. Protocols for breast and cervical cancer have 
been designed, but still need to be approved and implemented. Inclusiveness needs to be 
improved  so  that  all  eligible  patients  in  the  relevant  target  groups  have  access  to 
screening.   

No  substantial  measures  were  taken  on  health  and  environment,  apart  from  the 
recommendation  to  wear  masks  and  the  advice  to  people  in  risk  categories  to  avoid 
going outdoors during periods of high air pollution.  

The  national  registers  on  rare  diseases  were  set  up  but  need  adequate  funding.  The 
definition  of  a  rare  disease  still  needs  to  be  harmonised  with  international  standards. 
Funding  and  access  to  specialised  knowledge  for  treating  rare  diseases  is  limited  and 
non-transparent, and is left to civil society organisations or families.  

No  progress  was  made  on  patients’  rights  in  cross-border  healthcare  and  national 
legislation  is  still  not  aligned  with  the  acquis.  Similar  to  last  year,  the  national 
legislation  on  medicines  for  human  and  veterinary  use  remains  partly  aligned  with 
the acquis. The list  of  medicines for human use, available through the  national  health 
insurance system, was updated after many years. However, the practice that medicines 
covered by the national health insurance are only available to patients in the first days of 
the month,  continued. The country  still needs to introduce supplementary  measures to 
ensure proper quality and traceability checks of medicines for human and veterinary use 
subject to parallel trade, i.e. medicines bought in other countries at a cheaper rate. 

Measles  epidemic  has  been  declared  in  December  2018.  The  Ministry  of  Health  has 
taken steps to  control the situation, by direct  vaccination  in  schools and kindergartens 
and by launching a large vaccination campaign. 

5.29  Chapter 29: Customs union  

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

The country has maintained a good level of preparation on the customs union. Good 
progress was made. A new electronic system for processing customs declarations and 
excise  documents  was  finalised  and  newly  built  customs  terminals  became 
operational.  Several  customs  provisions  under  the  law  on  Zones  for  Technological 
and Industrial Development are still not in line with the acquis. The country should: 

  continue  to  complete  and  apply  its  IT  systems  and,  ensure  their  continuous 

upgrading and maintenance, and ensure business continuity.  

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The  customs  legislation  is  at  a  high  level  of  alignment  with  the  acquis.  The  2018 
customs tariff was adopted to correspond with the latest changes in the EU Combined 
Nomenclature.  The  Customs  Code  was  amended  to  align  its  provisions  on  authorised 
economic  operators  (AEO)  with  the  Union  Customs  Code  (UCC).  The  customs 
administration  organised  a  series  of  awareness-raising  events  and  the  first  two 
companies  were  AEO-certified.  Misdemeanour  fines  were  reduced  for  minor  customs 
offences, and the use of guarantees for the payment of customs debt for goods in transit 
was further aligned with the acquis.  

The country is a member of the Common Transit Area, applying the EU rules on transit 
movements. The Regional Convention on Pan-Euro-Mediterranean preferential rules of 
origin is applied. The country ratified the amendments to the Convention on a Common 
Transit Procedure. The amended Protocol 2 of the Free Trade Agreement with Turkey, 
which  harmonises  it  with  the  Pan-Euro-Mediterranean  Convention,  entered  into  force 
on 1 August  2018.  Legislation on customs enforcement of intellectual property  rights, 
risk  management,  drug  precursors,  duty  relief  and  cultural  goods  are  broadly  aligned 
with the acquis. Several customs provisions of the Law on Zones for Technological and 
Industrial Development are still not in line with the acquis. The customs administration 
still charge a fee for processing customs declarations, which is also not in line with the 
acquis.  

Regarding  administrative  and  operational  capacity,  the  standards  of  professional 
integrity  and  quality  controls  were  applied  systematically.  Revenue  collection  was 
higher in  2018 than in  2017 thanks to  the introduction of automated risk management 
with  more  targeted  controls,  better  inter-agency  cooperation,  and  increased  voluntary 
compliance. The Commission´s e-learning modules  on the UCC to  train  both  customs 
officers  and  economic  operators,  have  been  translated  and  published  on  the  Customs 
Administration website. 

The newly-built customs terminal at the main border crossing with Serbia was put into 
operation.  Preparations  for  a  joint  border  crossing  control  with  Serbia  intensified, 
receiving the official endorsement of both governments. The new electronic system for 
processing  customs  declarations  and  excise  documents  was  finalised.  Customs  is  also 
preparing  to  increase  the  use  of  the  Integrated  Tariff  Environment  (ITE)  system.  The 
number  of  declarations  processed  through  the  New  Computerised  Transit  System 
(NCTS)  continued  to  rise.  Customs  signed  maintenance  contracts  for  both  the  NCTS 
and the ITE systems and should ensure maintenance, upgrade and business continuity of 
all customs IT systems. Awareness needs to be raised among economic operators of the 
benefits of the customs IT systems.   

5.30  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.  

North  Macedonia  is  moderately  prepared  in  the  area  of  external  relations  and  some 
progress was made during the reporting period. The country ratified CEFTA Additional 
Protocol 5 on trade facilitation. It continued its good cooperation with the EU, including 
within the World Trade Organisation (WTO). Institutional capacity to fully participate 
in the EU commercial, development and humanitarian policies remains insufficient.  

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In the coming year, the country needs in particular to: 

  strengthen the overall administrative capacity in the relevant ministries as concerns 
trade policy, the Central European Free Trade Agreement (CEFTA) and work in the 
WTO  framework,  particularly  to  efficiently  implement  of  the  multiannual  action 
plan for the development of a Regional Economic Area in the Western Balkans;  

  implement  actions  under  the  multi-annual  action  plan  for  the  development  of  a 
Regional  Economic  Area,  in  particular  implement  CEFTA  Protocol  5  on  Trade 
Facilitation,  adopt  and  implement  the  pending  CEFTA  Protocol  6  on  Trade  in 
Services and negotiate and ensure a swift adoption of CEFTA Protocol 7 on Dispute 
Settlement.  

Regarding  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. 
In accordance with the WTO Trade Facilitation Agreement, the government established 
the National Committee on Trade Facilitation, consisting of 22 institutions, which met 
twice in  2018. The  administrative capacity of institutions in  charge of trade policy, in 
particular the Ministry of Economy, should be further strengthened.  

The  country  continued  its  active  participation  in  CEFTA  and  continued  to  implement 
the  multi-annual  action  plan  for  the  development  of  a  Regional  Economic  Area.  The 
country  participated  in  pilot  projects  with  Serbia  and  Moldova  for  the  mutual 
recognition  of  authorised  economic  operators  in  the  CEFTA  region.  An  investment 
policy  reform  action  plan  was  adopted.  Negotiations  with  the  CEFTA  parties  on  the 
Agreement  on  mutual  recognition  of  professional  qualifications  have  started.  The 
country  nominated  its  negotiating  team  and  adopted  the  negotiating  mandate  for  the 
CEFTA dispute settlement mechanism. 

The system for export control of dual-use goods and technologies has been set up and is 
in operation. The country aligned its list of dual-use goods with the 2017 EU regime on 
exports, transfer, brokering and transit of these items. Its application for membership in 
the  multilateral  export  control  regimes  can  contribute  to  the  implementation  of  the 
acquis on dual-use goods exports control.  

The  country  started  aligning  national  law  with  Council  Regulation  2368/2002 
implementing the Kimberley Process certification scheme for the international trade in 
rough diamonds. 

As  concerns  bilateral  agreements  with  third  countries,  the  number  of  bilateral 
investment agreements (BITs) remained at 39, of which 20 are with EU Member States.  

No progress was made in the areas of development policy and humanitarian aid. The 
country is encouraged to establish a legal framework covering international cooperation 
and  development  policy,  as  well  as  humanitarian  aid  towards  non-EU  countries  in 
accordance with EU policies and principles. 

93 

 
 
5.31  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. 

North  Macedonia  continues  to  be  moderately  prepared  in  this  area.  Some  progress 
was  made  during  the  reporting  period,  with  continued  participation  in  civilian  and 
military crisis management missions. The ratification of the NATO accession protocol 
is ongoing.  

In the coming year, the country should in particular:  

  improve alignment with EU declarations and Council decisions on common foreign 

and security policy (CFSP).  

Regarding  the  regular  political  dialogue  on  foreign  and  security  policy  issues 
between the EU and the country, consultations continued during the reporting period. A 
political  dialogue  between  the  EU  and  North  Macedonia  on  UN  issues  took  place  in 
October  2018.  The  institutional  framework  enabling  the  country’s  participation  in  the 
common foreign and security policy (CFSP) and common security and defence policy 
(CSDP) is in place.    

On  common  foreign  and  security  policy  (CFSP),  North  Macedonia  supports  the 
Global  strategy  for  foreign  and  security  policy  of  the  European  Union.  During  the 
reporting  period  from  beginning  of  March  2018  to  end  of  February  2019,  the  country 
aligned, when invited, with  75 out  of 87 relevant  High Representative declarations on 
behalf of the EU and Council decisions representing an alignment rate of around 86 %. 
The country  did  not align with  EU restrictive measures related to Russia and  Ukraine 
among others.  

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  continued  to  participate  in  some,  but  not  all,  international  export  control 
arrangements  and  instruments  on  non-proliferation.  Following  its  application  for 
membership in the Wassenaar Arrangement, the country continues to work on the entry 
requirements. 

The  country  continued 
international 
organisations  and  aligned  with  EU  statements  delivered  to  international  organisations 
(UN,  OSCE  and  Council  of  Europe).  The  NATO  accession  protocol  was  signed  in 
February 2019 and its ratification process is ongoing.  

in  cooperation  with 

to  engage  actively 

During the reporting period, no security measures were introduced beyond those related 
to border security in the context of the migration and refugee crisis.  

The country continued to actively participate in military crisis management operations 
under  the  common  security  and  defence  policy  (CSDP),  notably  EUFOR  ALTHEA 
Bosnia and Herzegovina and the NATO-led ‘Resolute Support’ mission in Afghanistan. 

94 

 
 
The country continued to contribute to the ‘2014-2020 European Union Battle Group’ 
and KFOR through the Host Nation Coordination Centre. Formal cooperation with the 
European Defence Agency continued.  

In  December  2018,  North  Macedonia  officially  applied  to  participate  in  the  EU’s 
Hybrid  Risk  Survey  in  order  to  identify  their  key  vulnerabilities  and  strengthen 
resilience  against  hybrid  threats.  In  January  2019,  the  survey  was  launched  with  the 
Ministry of Defence. 

5.32  Chapter 32: Financial Control 

The  EU  promotes  the  reform  of  national  governance  systems  to  improve  managerial 
accountability,  sound  financial  management  of  income  and  expenditure,  and  external 
audit  of  public  funds.  The  financial  control  rules  further  protect  the  EU’s  financial 
interests  against  fraud  in  the  management  of  EU  funds  and  the  euro  against 
counterfeiting. 

to  be  constitutionally  guaranteed.  Further  efforts  are  needed 

North Macedonia is moderately prepared in this area. Some progress was made with 
the adoption of the new Public Internal Financial Control (PIFC) policy paper and the 
2019-2022  national  anti-fraud  strategy.  The  independence  of  the  State  Audit  Office  is 
yet 
to  address 
harmonisation  of  legislation,  managerial  accountability,  including  delegation  of 
decision-making  responsibilities,  and  functioning  of  internal  control.  The  timely 
implementation  of  internal  and  external  audit  recommendations  should  be  ensured. 
High-level of political support will remain instrumental for implementation of PIFC at 
all levels of the administration.   

In the coming year, the country should in particular:  

  start implementing the new PIFC policy paper to improve managerial accountability 

and internal control in the public sector; 

  ensure  more 

systematic  and 

timely 

implementation  of  external  audit 

recommendations;  

  start  implementing  the  national  anti-fraud  strategy,  and  formally  set  up  the 

anti-fraud coordination service (AFCOS) and the AFCOS network. 

Public internal financial control 

A  strategic  framework  is  partially  in  place.  All  main  aspects  of  internal  control  are 
addressed in a recently adopted PIFC policy paper. Some elements are, however, to be 
further defined and clarified based on experience gained through the implementation of 
implementation  of  managerial 
pilot  projects.  Some  enabling  conditions 
accountability  are  also  addressed  in  the  public  administration  reform  strategic 
framework,  especially 
the  areas  of  policy  development,  human  resources 
management and accountability. The PIFC Policy Paper provides for the establishment 
of  a  committee  for  monitoring  the  implementation  of  PIFC.  In  order  to  ensure 
appropriate coordination of all related reforms, this Committee will report, through the 
Public  Finance  Management  (PFM)  council,  to  the  country’s  Public  Administration 
Reform (PAR) council. (See also the section on Public Administration Reform) 

for 

in 

95 

 
 
Managerial  accountability  still  needs  to  be  fully  embedded  in  the  administrative 
culture  of  the  public  sector.  The  managerial  culture  within  public  institutions  is 
centralised with little delegation of decision-making and budgetary authority to middle 
management.  Managerial  accountability  is  further  limited  by  a  primary  focus  on 
compliance, rather than on performance. 

The legal framework for internal control is broadly in-line with international standards. 
However, a proposed new PIFC law should address the comprehensive scope of internal 
control  outlined  in  the  new  PIFC  policy  paper.  Relevant  secondary  legislation  and 
methodological guidance will need to be updated. The public funds entities’ capacities 
to  implement  internal  control  standards,  including  risk  management  tools,  have  to  be 
further  enhanced  both  at  central  and  local  government  level.  The  legal  framework  for 
centralised budget inspection function needs to be improved. 

Internal  audit  practice  is  regulated  in-line  with  international  standards.  However, 
further  efforts  are  needed  to  efficiently  roll  out  internal  audit  standards  in  the  public 
sector. Most audit units have only one  auditor and further  efforts are required to  train 
and  certify  audit  staff.  A  quality  review  methodology  is  not  yet  systematically 
implemented. 

The Central Harmonisation Unit (CHU) is in charge of developing and disseminating 
methodological  guidance, and monitoring  and reporting on PIFC implementation.  The 
CHU  should  significantly  increase  its  monitoring  and  supervision  capacity,  including 
through dedicated internal control and internal audit quality reviews. The CHU prepares 
annual reports on the state of PIFC implementation. Future reports should be adopted in 
a timely manner. 

External audit 

While  the  independence  of  the  State  Audit  Office  (SAO)  is  not  yet  anchored  in  the 
Constitution,  the  legal  framework  ensures  SAO’s  independence  broadly  in  line  with 
standards of the International Organisation of Supreme Audit Institutions (INTOSAI).  

The  institutional  capacity  of  the  SAO  should  be  further  improved.  The  SAO  carries 
out  a  compliance  audit  on  the  final  government  accounts  of  the  core  budget  by  June 
each year. The annual audit programme was adopted by December 2018 in line with the 
legal requirements. The SAO is implementing its 2018-22 strategic development plan.  

On  the  quality  of  audit  work,  further  efforts  are  needed  to  improve  performance 
auditing in particular. In 2018, the SAO instigated eight performance audits; four were 
completed during the year in the other four are to be completed in 2019.   

Regarding  the  impact  of  audit  work,  many  SAO’s  recommendations  have  not 
systematically  and  timely  implemented  by  the  audited  institutions.  While  the  SAO 
annual  audit  report  is  discussed  in  the  relevant  parliamentary  committee,  increased 
parliamentary scrutiny and follow-up still needs to be ensured. 

Protection of the EU’s financial interests 

National legislation addresses the main elements of the acquis, but further alignment is 
still needed. A 2019-2022 national anti-fraud strategy was adopted in December 2018. 
An anti-fraud coordination service (AFCOS), previously within the Financial Police, 
needs to be made fully operational in the Ministry of Finance. An AFCOS network still 

96 

 
 
needs  to  be  set  up.  Cooperation  with  the  Commission  has  continued,  and  one  joint 
investigation with the European Commission was carried out in 2018. Reporting to the 
Commission  on  irregularities  and  suspected  fraud  cases  continued  via  the  online 
Irregularity  Management  System  (IMS).  Since  2012,  20  cases  have  been  reported 
through the system, including two cases in 2018.  

Protection of the euro against counterfeiting 

Concerning the acquis alignment, national legislation defines counterfeiting procedures 
as well as the roles and responsibilities of the institutions involved. The National Bank 
performs  the  technical  analysis  and  the  e-register  of  counterfeit  money  is  under  the 
Ministry of Interior’s responsibility. Further efforts are needed to improve coordination 
among key institutions and to effectively exchange data between existing databases. No 
formal  cooperation  agreements  are  in  place  with  the  European  Central  Bank  on 
banknotes or with the European Commission on coins. North Macedonia participates in 
the Pericles 2020 programme and in  the regional Balkan Network for Euro Protection 
initiative.  

5.33  Chapter 33: Financial and budgetary provisions 

This chapter covers the rules governing the funding of the EU budget (‘own resources’). 
These resources mainly consist of: (i) contributions based on the gross national income 
of  each  Member  State;  (ii)  customs  duties;  and  (iii)  a  resource  based  on  value-added 
tax.  Member  States  must  have  the  appropriate  administrative  capacity  to  adequately 
coordinate and ensure the correct calculation, collection, payment and control of own 
resources.  

Preparations in this area are at an early stage. Some progress was achieved in aligning 
the legal framework on taxation, customs and statistics. The institutional setup needed 
for the efficient functioning of the own resources system has yet to be established. 

In the coming year, the country should: 

  develop legal framework and implementing rules for the efficient functioning of the 

own resources system; 

  establish  solid  institutional  and  coordination  structures  and  enhance  administrative 

capacity of key institutions in the system. 

the 
Regarding  customs  duties,  revenue  collection 
implementation  of  automated  risk  management  with  more  targeted  controls,  better 
inter-agency cooperation, and increased voluntary compliance.  

increased  as  a  result  of 

No progress was made on traditional own resources; value added tax-based resource 
(VAT) and gross national income-based (GNI) resource. Further efforts are needed 
to  harmonise  the  legal  framework,  especially  on  customs,  taxation,  statistics  and 
financial  control.  Instruments  to  fight  and  reduce  tax  evasion,  fraud  and  informal 
economy as well as to improve internal control in the public sector have to be applied. 
The exhaustiveness of the national accounts and GNI calculations has yet to be achieved 
(For further information see developments under Chapter 16  - Taxation, Chapter 18 -
Statistics, Chapter 29 - Customs union and Chapter 32 - Financial control). 

97 

 
 
With regard to administrative infrastructure, some progress was made in building up 
capacities of relevant key institutions in this area. However, further efforts are needed in 
order  to  ensure  the  timely  and  efficient  functioning  of  the  process  of  calculation, 
collection,  payment  and  control  of  own  resources  as  well  as  to  improve  the  reporting 
and coordination mechanisms among all bodies involved. 

98 

 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND NORTH MACEDONIA 

North Macedonia has been participating in the  Stabilisation and Association process 
since 1999. The Stabilisation and Association Agreement (SAA) with the EU, signed in 
2001, sets  the framework for  relations  with  the  EU, including political,  economic  and 
technical  dialogue.  Experts  met  in  seven  subcommittees  and  one  Special  Group, 
according to schedule. The Stabilisation and Association Committee met in June 2018, 
followed  by  the  Stabilisation  and  Association  Council  meeting  in  July  2018.  A 
Stabilisation and Association Council was held in March 2019. Discussions focused on 
the progress made to advance the EU reforms, in particular in the areas identified by the 
June 2018 Council Conclusions and the strengthening of good neighbourly relations.   

The country continued to implement its commitments under the SAA. On 4 December 
2018, the SA Council adopted the decision on the passage to stage II of the SAA, based 
on the Commission’s 2009 proposal.   

The implementation of the Instrument for Pre-accession Assistance II for 2014-2020 
(IPA II) is underway. By the end of 2018, programmes totalling EUR  395 million have 
been adopted, out of which EUR  151 million have been already contracted. Significant 
progress was made on a sector-based programming involving all stakeholders. 

Programmes under the Instrument for Pre-accession Assistance for 2007-2013 (IPA 
I), have been progressively implemented and finalised. By the end of 2018, 62.7% of all 
funds allocated for the country under IPA I have been paid. 

A  revised  Indicative  Strategy  Paper  was  adopted  in  August  2018,  enhancing  the 
response to new challenges such as migration, terrorism and violent extremism, climate 
change and economic governance.  

The  main  risk  factor  impeding  the  swift  implementation  of  IPA  pre-accession  funds 
remains the limited administrative capacity of the national authorities to prepare mature 
projects and insufficient commitment to ensure sustainability of project results. Urgent 
measures are needed to improve the planning, programming and management capacities 
in the national IPA structures, particularly with respect to managing large infrastructure 
projects.  The  national  authorities  need  to  better  promote  the  sound  financial 
management  and  control  system  established  within  the  national  IPA  structures  across 
the  whole  of  the  public  administration,  thus  contributing  to  the  public  administration 
reform itself. 

The  EU  supports  the  participation  of  the  country  in  12  EU  programmes  with  EUR  
57.7  million.  To  make  the  most  of  this  investment,  the  national  authorities  need  to 
enhance  the  participation  in  the  EU  programmes  by  better  promoting  funding 
opportunities,  supporting  preparation  of  mature  projects,  as  well  as  maximising  the 
results of funded projects. 

99 

 
 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 29.04.2019) 

North Macedonia 

Basic data 

Population (thousand) 

Total area of the country (km²) 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

2 038.5 

2 062.3 

2 065.8 

2 069.2 

2 071.3 

2 073.7 

25 713 

25 713 

25 713 

25 713 

25 713 

25 713 

National accounts 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

Gross domestic product (GDP) (million national currency) 

  334 840 

501 891 

527 631 

558 954 

594 795  616 600p 

Gross domestic product (GDP) (million euro) 

5 472 

8 150 

8 562 

9 072 

9 657 

10 014p 

GDP (euro per capita) 

2 700e 

3 900e 

4 100e 

4 400e 

4 700e 

4 800p 

GDP per capita (in purchasing power standards (PPS)) 

7 200 

9 300e 

9 900e 

10 400e 

10 800e 

10 800p 

GDP per capita (in PPS), 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 (in volume) 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 (2010 = 100) 

29e 

5.1 

4.6 

0.5 

9.6 

-6.7 

35e 

2.9 

5.6 

-2.5 

-1.7 

-1.9 

36e 

3.6 

2.4 

1.2 

3.7 

1.6 

36e 

3.9 

1.9 

2.0 

0.2 

2.2 

37e 

2.8 

1.6 

1.3 

5.0 

9.1 

36p 

0.2p 

: 

: 

: 

: 

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 (%) 

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 (%) 

43.7 

42.8 

43.3 

43.0 

44.1 

: 

10.3 

17.0 

7.9 

64.8 

95.6 

20.1 

1.2 

37.8 

54.8 

: 

11.5 

17.3 

8.2 

63.0 

89.3 

23.7 

5.0 

43.4 

61.5 

: 

11.7 

18.3 

8.0 

62.0 

86.9 

23.4 

6.8 

47.7 

64.9 

: 

11.1 

19.3 

8.1 

61.5 

85.8 

23.8 

6.5 

48.7 

65.0 

: 

10.6 

19.7 

8.0 

61.7 

82.3 

24.4 

8.1 

50.7 

65.5 

: 

9.1p 

20.6p 

7.2p 

63.1p 

80.8p 

: 

11.0p 

55.4p 

69.2p 

: 

Business 

Industrial production volume index (2010 = 100) 

Note 

2006 

105.4 

2013 

107.3 

2014 

112.5 

2015 

118.0 

2016 

122.0 

2017 

122.2 

Number of active enterprises (number) 

1) 

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 (%) 

: 

: 

: 

54 305 

53 749 

54 738 

55 469 

55 203p 

10.0 

10.6 

10.3 

10.4 

: 

: 

8.8 

9.7p 

: 

: 

101 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

: 

: 

: 

78.0 

75.0 

74.4 

75.4 

74.8p 

2 251 

2 257 

2 413 

2 607 

2 693p 

3395 

3460 

3740 

4031 

4 227p 

Inflation rate and house prices 

Note 

2006 

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

**Annual change in the deflated house price index (2010 = 100) 

3.7 

: 

2013 

2.7 

2014 

0.0 

2015 

0.1 

2016 

0.2 

2017 

2.1 

: 

: 

: 

: 

: 

Balance of payments 

Balance of payments: current account total (million euro) 

Note 

2006 

-23 

2013 

-134 

2014 

-43 

2015 

-177 

2016 

-275 

2017 

-103 

Balance of payments current account: trade balance (million euro) 

-1 128 

-1 863 

-1 856 

-1 823 

-1 813 

-1 788 

Balance of payments current account: net services (million euro) 

Balance of payments current account: net balance for primary 
income (million euro) 

Balance of payments current account: net balance for secondary 
income (million euro) 

153 

-21 

375 

-193 

384 

-161 

349 

-286 

341 

-384 

377 

-398 

973 

1 547 

1 589 

1 583 

1 581 

1 706 

Net balance for primary and secondary income: of which 
government transfers (million euro) 

2) 

**3 year backward moving average of the current account balance 
relative to GDP (%) 

59 

: 

74 

110 

54 

91 

113 

-2.4 

-1.8 

-1.4 

-1.8p 

-1.9p 

102 

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

Net balance (inward - outward) of 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 (%) 

: 

: 

: 

: 

22.54 

43.00 

344.7 

229.4 

197.4 

202.8 

316.9 

180.0 

0.1 

: 

22.8 

0.4 

7.7 

3.0 

13.9 

5.5 

21.6 

13.6 

1.8 

8.6 

344.8 

252.2 

205.1 

216.7 

338.4 

181.7 

272.7 

226.7 

13.8 

-15.2 

212.8 

108.8 

-34.5 

14.8 

-55.9 

-3.3 

-53.1 

-56.0 

6.5 

2.3 

-57.7 

-7.5 

-58.1 

0.4 

Public finance 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

***General government deficit / surplus, relative to GDP (%) 

***General government gross debt relative to GDP (%) 

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

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

-0.5 

30.6 

31.1 

31.6 

-3.8 

34.0 

27.9 

31.9 

-4.2 

38.1 

27.7 

31.9 

-3.5 

38.1 

28.8 

32.3 

-2.7 

39.9 

28.5 

31.2 

-2.7 

39.5 

29.1 

31.9 

Financial indicators 

Note 

2006 

Gross external debt of the whole economy, relative to GDP (%) 

45.7 

2013 

64.0 

2014 

70.0 

2015 

69.3 

2016 

74.7 

2017 

73.6p 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross external 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, 42 countries (2005 
= 100) 

**3 year change (T/T-3) in the trade-weighted effective exchange 
rate index, 42 countries (2005 = 100) 

123.9 

147.9 

146.6 

142.2 

146.7 

133.7 

601 

1 172b 

1 433 

1 694 

1 868 

2 053 

2 141 

3 581b 

3 843 

4 131 

4 396 

4 564 

2 232 

1 504 

4 215b 

3 842b 

4 593 

4 229 

4 937 

4 626 

5 241 

4 632 

5 480 

4 883 

: 

: 

: 

5.72 

9.50 

: 

1.4 

12.6 

5.5 

6.9 

1.9 

: 

: 

1.86 

3.75 

0.75 

: 

: 

1.79 

3.75 

0.50 

: 

: 

0.99 

3.75 

0.25 

: 

: 

1.02 

4.25 

0.25 

: 

: 

1.01 

3.75 

0.25 

61.188 

61.583 

61.623 

61.610 

61.595 

61.574 

3) 

4) 

4) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Value of reserve assets (including gold) (million euro) 

4) 

1 417 

1 993 

2 436 

2 262 

2 613 

2 336 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
External trade in goods 

Value of imports: all goods, all partners (million euro) 

Value of exports: all goods, all partners (million euro) 

Note 

2006 

2 980 

1 918 

2013 

4 983 

3 235 

2014 

5 505 

3 747 

2015 

5 801 

4 088 

2016 

6 177 

4 390 

2017 

6 825 

5 007 

Trade balance: all goods, all partners (million euro) 

-1 062 

-1 748 

-1 758 

-1 714 

-1 786 

-1 818 

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 
(%) 

5) 

89 

97 

97 

100 

96 

: 

66.4 

55.0 

72.6 

62.7 

76.5 

63.4 

77.0 

62.0 

80.0 

61.9 

81.1 

62.9 

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 (%) 

Note 

2006 

1.9 

2013 

1.9 

2014 

1.9 

2015 

1.3 

2016 

1.2 

2017 

0.7 

11.5 

10.2 

9.9 

8.6 

11.9 

9.2 

71.7 

76.2 

Note 

2006 

68.0 

73.4 

77.5 

2013 

70.4 

73.5 

77.5 

2014 

70.8 

73.5 

77.4 

2015 

70.2 

73.4 

77.5 

2016 

69.6 

74.1 

77.9 

2017 

70.3 

43.9 

50.3 

51.3 

51.9 

53.3 

54.8 

Male employment rate for persons aged 20–64 (%) 

53.6 

59.7 

61.6 

61.5 

63.7 

65.6 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Female employment rate for persons aged 20–64 (%) 

Employment rate for persons aged 55–64: proportion of the 
population aged 55–64 that are in employment (%) 

Employment by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

People employed in the public sector as a share of total 
employment, persons aged 20–64 (%) 

People employed in the private sector as a share of total 
employment, persons aged 20–64 (%) 

Unemployment rate: proportion of the labour force that is 
unemployed (%) 

Male unemployment rate (%) 

Female unemployment rate (%) 

Youth unemployment rate: proportion of the labour force aged 15–
24 that is unemployed (%) 

Long-term unemployment rate: proportion of the labour force that 
has been unemployed for 12 months or more (%) 

Unemployment rate for persons (aged 25–64) having completed at 
most lower secondary education (ISCED levels 0-2) (%) 

Unemployment rate for persons (aged 25–64) having completed 
tertiary education (ISCED levels 5-8) (%) 

34.0 

27.9 

: 

: 

: 

: 

: 

: 

40.7 

37.9 

18.7 

23.5 

6.9 

50.9 

: 

: 

40.8 

38.6 

18.5 

23.4 

7.0 

51.1 

: 

: 

42.1 

40.1 

17.9 

23.4 

7.1 

51.6 

: 

: 

42.5 

40.7 

16.6 

23.1 

7.2 

53.1 

: 

: 

43.7 

41.4 

16.2 

22.5 

7.2 

54.1 

: 

: 

36.1 

29.0 

28.0 

26.1 

23.7 

22.4 

35.3 

37.2 

59.7 

29.0 

29.0 

51.9 

27.7 

28.6 

53.1 

26.7 

25.1 

47.3 

24.4 

22.7 

48.2 

22.7 

21.8 

46.7 

31.1 

23.9 

23.4 

21.3 

19.2 

17.4 

39.3 

33.2 

31.0b 

30.0 

28.8 

25.5 

19.1 

20.1 

19.6 

18.9 

17.6 

17.1 

106 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Social cohesion 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

Average nominal monthly wages and salaries (national currency) 

13 517 

21 145 

21 394 

21 906 

22 342 

22 928 

Index of real wages and salaries (index of nominal wages and 
salaries divided by the inflation index) (2010 = 100) 

73.4 

93.2 

94.6 

97.1 

99.3 

100.5 

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 (%) 

: 

: 

22.8 

37 

39.0 

11.4 

35 

36.1 

12.5 

34 

33.1 

11.3p 

34 

32.9 

9.9 

32 

37.3 

8.5 

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) 

Infrastructure 

Density of railway network (lines in operation per thousand km²) 

Length of motorways (kilometres) 

Note 

2006 

118.9 

2013 

168.2 

2014 

179.8 

2015 

185.5 

2016 

190.7 

2017 

194.7 

695.1 

1 083.9 

: 

1 005.9 

989.9 

968.3 

: 

: 

Note 

2006 

28.1 

216 

: 

: 

2013 

28.1 

259 

51 

17 

2014 

28.1 

259 

55 

18 

2015 

28.1 

259 

57 

18 

2016 

27.4 

259 

61 

19 

2017 

27.4 

259 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Innovation and research 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

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 (%) 

: 

0.19 

: 

: 

0.44 

0.02 

: 

0.52 

0.01 

: 

: 

: 

0.44 

0.44 

0.36p 

: 

: 

: 

Percentage of households who have internet access at home (%) 

14.0 

65.1 

68.3 

69.4 

75.3 

73.6 

Environment 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

*Index of greenhouse gas emissions,  CO2 equivalent (1990 = 100)  6) 

91.5 

: 

: 

: 

: 

: 

Energy intensity of the economy (kg of oil equivalent per 1 000 
euro GDP at 2010 constant prices) 

Electricity generated from renewable sources relative to gross 
electricity consumption (%) 

482.5 

373.3 

350.5 

331.1 

326.8 

334.0p 

18.7 

18.7 

15.5 

24.9 

27.0 

17.1 

Road share of inland freight transport (based on tonne-km) (%) 

93.1 

92.4 

94.7 

96.0 

96.9 

96.4 

Energy 

Primary production of all energy products (thousand TOE) 

Primary production of crude oil (thousand TOE) 

Primary production of solid fuels (thousand TOE) 

Primary production of gas (thousand TOE) 

Note 

2006 

1 657 

0 

2013 

1 425 

0 

1 296 

1 053 

0 

0 

2014 

1 331 

0 

986 

0 

2015 

1 266 

0 

876 

0 

2016 

1 111 

0 

745 

0 

2017 

1 161 

0 

853 

0 

Net imports of all energy products (thousand TOE) 

1 325 

1 300 

1 396 

1 395 

1 590 

1 551 

108 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross inland energy consumption (thousand TOE) 

Gross electricity generation (GWh) 

2 965 

7 006 

2 783 

6 094 

2 707 

5 374 

2 656 

5 646 

2 696 

5 630 

2 762 

5 600 

Agriculture 

Agricultural production volume index of goods and services (at 
producer prices) (2010 = 100) 

Note 

2006 

94.8 

2013 

98.6 

2014 

100.5 

2015 

106.4 

2016 

112.2 

2017 

: 

Utilised agricultural area (thousand hectares) 

1 226 

1 260 

1 263 

1 264 

1 267 

1 266 

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) 

Raw milk available on farms (thousand tonnes) 

Harvested crop production: cereals (including rice) (thousand 
tonnes) 

Harvested crop production: sugar beet (thousand tonnes) 

Harvested crop production: vegetables (thousand tonnes) 

255 

238 

242 

253 

255 

255 

167 

: 

: 

602 

0 

586 

167 

807 

430 

562 

0 

687 

165 

822 

436 

629 

0 

776 

195 

822 

417 

484 

0 

845 

203 

825 

463 

641 

0 

810 

202 

832 

449 

448 

0 

770 

: = not available 
b = break in series 
e = estimate 
p = provisional 
* = 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 

109 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ESA rules. 

Footnotes 

1)  Excluding NACE Rev. 2 Sections A, O, T and U and Class 64.20. 
2)  Secondary income only. 
3)  Weighted averages. Data cover bilateral over-night transactions. 
4)  End of year (31 December). 
5)  Ratio of Paasche unit value indices (2015 = 100). 
6)  Part of the greenhouse gas inventory prepared in the context of the Third National 

Communication (UNFCCC). 

110