COMMISSION STAFF WORKING DOCUMENT North Macedonia 2020 Report Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2020 Communication on EU Enlargement Policy
Date: 2020-10-06
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: North Macedonia, accession criteria, accession negotiations, coronavirus disease, epidemic, pre-accession strategy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 6.10.2020  SWD(2020) 351 final  COMMISSION STAFF WORKING DOCUMENT North Macedonia 2020 Report    Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions    2020 Communication on EU Enlargement Policy {COM(2020) 660 final} - {SWD(2020) 350 final} - {SWD(2020) 352 final} - {SWD(2020) 353 final} - {SWD(2020) 354 final} - {SWD(2020) 355 final} - {SWD(2020) 356 final}  
 
 
Table of Contents 

1. 

1.2. 

1.2. 

2. 

2.1. 

Introduction ................................................................................................................... 3 

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

Summary of the report .................................................................................................. 4 

Fundamentals first: political criteria and rule of law chapters...................................... 7 

Functioning of democratic institutions and Public Administration Reform ................. 7 

2.1.1.  Democracy .................................................................................................................... 7 

2.1.2 

Public administration reform ...................................................................................... 12 

2.2 

Rule of law and fundamental rights ............................................................................ 16 

2.2.1  Chapter 23: Judiciary and fundamental rights ............................................................ 16 

2.2.2  Chapter 24: Justice, freedom and security .................................................................. 35 

3. 

3.1. 

3.2. 

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 

5.17 

Fundamentals first: economic development and competitiveness .............................. 47 

The existence of a functioning market economy ........................................................ 47 

The capacity to cope with competitive pressure and market forces within the Union54 

Good neighbourly relations and regional cooperation ................................................ 57 

Ability to assume the obligations of membership ...................................................... 59 

Chapter 1: Free movement of goods ........................................................................... 59 

Chapter 2: Freedom of movement for workers ........................................................... 61 

Chapter 3: Right of establishment and freedom to provide services .......................... 61 

Chapter 4: Free movement of capital .......................................................................... 62 

Chapter 5: Public procurement ................................................................................... 63 

Chapter 6: Company law ............................................................................................ 66 

Chapter 7: Intellectual property law ........................................................................... 66 

Chapter 8: Competition policy .................................................................................... 67 

Chapter 9: Financial services ...................................................................................... 69 

Chapter 10: Information society and media ................................................................ 70 

Chapter 11: Agriculture and rural development ......................................................... 72 

Chapter 12: Food safety, veterinary and phytosanitary policy ................................... 73 

Chapter 13: Fisheries .................................................................................................. 75 

Chapter 14: Transport policy ...................................................................................... 75 

Chapter 15: Energy ..................................................................................................... 77 

Chapter 16: Taxation .................................................................................................. 78 

Chapter 17: Economic and monetary policy .............................................................. 79 

1 

 
 
 
5.18 

5.19 

5.20 

5.21 

5.22 

5.25 

5.26 

5.27 

5.28 

5.29 

5.31 

5.32 

5.33 

Chapter 18: Statistics .................................................................................................. 80 

Chapter 19: Social policy and employment ................................................................ 82 

Chapter 20: Enterprise and industrial policy .............................................................. 84 

Chapter 21: Trans-European networks ....................................................................... 86 

Chapter 22: Regional policy and coordination of structural instruments ................... 87 

Chapter 25: Science and research ............................................................................... 88 

Chapter 26: Education and culture ............................................................................. 89 

Chapter 27: Environment and climate change ............................................................ 92 

Chapter 28: Consumer and health protection ............................................................. 94 

Chapter 29: Customs union ........................................................................................ 95 

Chapter 31: Foreign, security and defence policy ...................................................... 98 

Chapter 32: Financial control ..................................................................................... 99 

Chapter 33: Financial and budgetary provisions ...................................................... 101 

Annex I – Relations between the EU and North Macedonia .................................................. 103 

2 

 
 
 
 
 
1. 

INTRODUCTION  

1.2.  Context  

The  Stabilisation  and  Association  Agreement  (SAA)  between  the  Republic  of  North 
Macedonia  and  the  EU  entered  into  force  in  April  2004.  Since  2009,  the  Commission  has 
continuously  recommended  to  the  Council  to  open  accession  negotiations  with  North 
Macedonia,  a  candidate  country  since  2005.  In  its  June  2018  Conclusions,  the  Council 
acknowledged  the  progress  achieved  and  set  out  the  path  towards  opening  accession 
negotiations in June 2019. In line with the Council Conclusions, the Commission started the 
preparatory work, including through the technical explanation of chapters of the EU acquis. 
In light of the progress achieved and the conditions set unanimously by the Council in June 
2018 having been met, the Commission recommended to open accession negotiations in May 
2019.  In  June  2019,  the  Council  postponed  its  decision  to  no  later  than  October  2019.  The 
European Council decided in October 2019 to ‘revert to the issue of enlargement before the 
EU-Western Balkans summit in Zagreb in May 2020’.  

The  Commission  has  continued  to  closely  monitor  developments  in  North  Macedonia  and 
reported in March 2020 that North Macedonia has increased its efforts and delivered further 
tangible and sustainable results in the key areas identified in the Council Conclusions of June 
2018 such as the judiciary, fight against corruption and organised crime, intelligence services 
reform  and  public  administration.  In  its  update  on  North  Macedonia  published  in  March 
2020, the Commission confirmed that the bases of the Commission’s 2019 recommendation 
to open accession negotiations with North Macedonia remain valid. On 26 March 2020, the 
European Council endorsed the Council’s decision to open accession negotiations with North 
Macedonia1. The authorities continued to demonstrate publicly their commitment to advance 
on their EU path.  

The  COVID-19  pandemic  is  a  global  shock  that  has  not  spared  the  Western  Balkans.  The 
final extent of its footprint in terms of loss of human lives and damage to the economies is 
still  difficult  to  assess,  but  early  estimates  foresee  a  drop  of  between  4  and  6%  of  Gross 
Domestic Product (GDP) in the region. Thousands of citizens are at risk of losing their jobs, 
and  temporary  government  support  measures  (unemployment  benefits,  deferrals/waivers  to 
tax and social security contributions, etc.) have an important fiscal impact. 

While the EU is itself heavily affected by the pandemic, it has spared no time and effort to 
provide  essential  and  unparalleled  support  to  the  Western  Balkans.  This  includes  financial 
support  of  more  than  EUR  3.3  billion  for  countries  in  the  region  to  address  the  immediate 
health crisis and resulting humanitarian needs, as well as longer term and structural impact on 
their societies  and economies. Given the European perspective of the Western Balkans,  the 
EU  is  also  treating  the  region  as  privileged  partners  by  associating  them  with  the  Union’s 
mechanisms  and  instruments.  These  include  the  Health  Security  Committee,  Joint 
Procurement  Agreements,  Union  Civil  Protection  Mechanism,  Solidarity  Fund,  consular 
assistance  in  repatriation  or  exemption  from  temporary  EU  export  restrictions  of  medical 
equipment. These and other measures have provided immediate relief and are a clear message 
of the EU’s political commitment towards the region. 

Due to the COVID-19 outbreak, the President of the Republic declared a state of emergency 
from  March  until  June  2020.  Restrictive  measures  were  put  in  place  to  protect  the  citizens 

1 https://www.consilium.europa.eu/media/43076/26-vc-euco-statement-en.pdf 

3 

 
 
 
                                                           
and contain the pandemic (e.g. curfews, limitation of non-essential movement or gatherings, 
freezing of air traffic  and closing of borders, suspension of procedural  deadlines in  judicial 
procedures and the move to online education). These were gradually phased out beginning of 
May, with a three-phase plan. The authorities have also taken measures to mitigate the socio-
economic  impact  of  the  crisis.  In  summer,  the  country  struggled  with  a  second  wave  of 
infections, which severely stretched the capacities of the health system. 

The  European  Commission  recommended  that  emergency  measures  taken  in  the  context  of 
the COVID-19 pandemic are proportionate, restricted to what is necessary and limited in time 
so that rule of law and democratic and human rights standards are respected. 

1.2. 

Summary of the report 

Concerning  the  political  criteria,  North  Macedonia  continued  to  implement  EU-related 
reforms throughout the reporting period. Efforts continued to strengthen democracy and the 
rule of law, including by activating existing checks and balances and through discussions and 
debates  in  key  policy  and  legislative  issues.  Opposition  parties  remained  engaged  in  the 
Parliament and supported key issues of common national interest, such as EU-related reforms 
and the NATO integration process, which North Macedonia joined in March 2020. Following 
the outcome of the European Council in October 2019, political parties decided in common 
agreement  to  hold  early  parliamentary elections on 12 April 2020.  In line with  the national 
legislation,  a  technical  government,  with  Ministers  and  Deputy  Ministers  from  the  main 
opposition party, was appointed in January 2020. Following the outbreak of the COVID-19 
pandemic, a state of emergency was declared between March and June 2020, which enabled 
the technical government to rule by decree. The early parliamentary elections were postponed 
to July 2020. The Office for Democratic Institutions and Human Rights at the Organisation 
for  Security  and  Cooperation  in  Europe  (OSCE/ODIHR)  assessed  that  these  elections  were 
generally  well  run  and  the  campaign  was  genuinely  competitive,  but  legal  stability  was 
undermined  by  substantial  revisions  of  the  legal  framework  and  subsequent  government 
decrees. During the reporting period, the Parliament improved its role as the primary forum 
for  constructive  political  dialogue  and  fullfilled  its  legislative  functions,  including  by 
adopting  key  EU-related  laws.  However,  the  significant  increase  of  the  use  of  fast  track 
procedures  raises  concerns  and  should  be  limited.  The  Parliament  operated  in  greater 
transparency  and  used  its  oversight  functions,  restoring  checks  and  balances  over  the 
executive. The Parliament dissolved in February 2020, in anticipation of early elections, and 
the  Speaker’s  view  was  that  it  could  not  reconvene.  Following  the  July  2020  elections,  the 
newly  constituted  Parliament  elected  the  government  in  August  2020.  The  inter-ethnic 
situation remained calm overall. Efforts were made to strengthen inter-ethnic relations and to 
implement the Ohrid Framework Agreement, which ended the 2001 conflict and provides the 
framework for preserving the multi-ethnic character of the society.  

Civil  society  remains  active  and  plays  a  key  role  in  policy  and  decision-making  processes. 
Measures  have  been  taken  to  implement  the  2018-2020  Strategy  and  Action  Plan  for  the 
Cooperation between Government and Civil Society. However, efforts are needed to ensure a 
more meaningful and timely consultation process.  

The ongoing reform of the intelligence services resulted in the setting up in September 2019 
of  the  National  Security  Agency,  designed  as  an  independent  state  body  without  police 
powers, unlike its predecessor the Bureau for Security and Counterintelligence (UBK). This 
is in line with recommendations of the Senior Experts’ Group on systemic rule of law issues. 
The  Operational  Technical  Agency  continued  to  function.  Further  efforts  are  needed  to 
ensure  that  it  has  access  to  all  necessary  tools  to  fulfil  its  mandate.  The  capacity  for 
parliamentary oversight over the intelligence services needs to be strengthened. 

4 

 
 
North Macedonia is moderately prepared with the reform of its public administration. Some 
progress  was  made  in  improving  transparency,  with  the  adoption  of  the  2019-2021 
Transparency  Strategy,  the  operationalisation  of  the  open  government  data  portal  and  the 
publication  of  data  on  government  spending.  The  monitoring  reports  on  implementation  of 
the  Public  Administration  Reform  Strategy  and  the  Public  Financial  Management  Reform 
Programme were produced and accompanied by adequate visibility actions. Ensuring respect 
for the principles of transparency, merit and equitable representation remains essential. The 
State Commission for Prevention of Corruption continued to address allegations of nepotism, 
cronyism and political influence in the process of recruitment of public sector employees. A 
proper  follow-up  to  the reports  and  recommendations  of  the State  Commission  needs  to  be 
ensured.  

The  judicial  system  of  North  Macedonia  has  some  level  of  preparation/is  moderately 
prepared.  There  was  good  progress  in  the  implementation  of  the  judicial  reform  strategy, 
thereby  addressing  the  ‘Urgent  Reform  Priorities’  and  recommendations  from  the  Venice 
Commission and the Senior Experts’ Group on systemic Rule of Law issues. Efforts are still 
needed to ensure systematic implementation of the updated action plan of the judicial reform 
strategy.  Judicial  institutions  are  implementing  new  rules  for  appointment,  promotion, 
discipline and dismissal of judges and the Judicial Council has been exercising its role more 
pro-actively. As a result of its reform efforts in recent years, North Macedonia has established 
mechanisms to ensure judicial independence and accountability, such as rules on merit-based 
appointments, checking assets and conflicts of interest and disciplinary procedures. It should 
ensure their determined and consistent use before envisaging further changes in this area. The 
Law on the Public Prosecutor’s Office entered into force in  June 2020.  The purpose of the 
law  is  inter  alia  to  ensure  a  sustainable  solution  for  the  cases  of  the  Special  Prosecutor’s 
Office and to establish accountability for the crimes arising from and surrounding the illegal 
wiretaps. The revised Law on the Council of Public Prosecutors was also adopted. Effective 
implementation  of  the  legal  framework  as  well  as  increased  efforts  by  all  stakeholders  to 
demonstrate their exemplarity will contribute to increasing public trust in the judiciary.  

As regards the fight against corruption, North Macedonia has some level of preparation/is 
moderately  prepared.  Good  progress  was  made  through  consolidating  its  track  record  on 
investigating, prosecuting and trying high level corruption cases. The State Commission for 
Prevention  of  Corruption  has  been  particularly  pro-active  in  preventing  corruption  and 
opened a high number of cases, including those involving high-level officials from across the 
political spectrum, in line with last year’s recommendation. Efforts continue to move forward 
with  the  Special  Prosecutor’s  Office  cases  and  establish  accountability  for  the  illegal 
wiretaps.  The  former  Chief  Special  Prosecutor  was  convicted  in  June  2020  in  the  first 
instance verdict in the so-called ‘racket case’ concerning alleged extortion and abuse of office 
in relation to a case of the Special Prosecutor’s Office. Corruption is prevalent in many areas 
and a more proactive approach from all actors engaged in preventing and fighting corruption 
needs to be ensured.  

The  country  has  some  level  of  preparation  in  the  fight  against  organised  crime.  The 
legislative  framework  is  broadly  in  line  with  European  standards,  and  efforts  to  implement 
strategies  against  organised  crime  must  continue.  Some  progress  was  made  in  meeting  last 
year’s recommendation to establish an asset recovery office in line with the EU acquis. The 
office  will  now  have  to  demonstrate  its  capacity  to  support  a  proactive  policy  of  asset 
confiscation. The country is engaged in threat assessment at the regional level, and will have 
to broaden its scope in line with the EU practices. There is some progress at the operational 
level, but more needs to be done to improve the effectiveness of law enforcement in fighting 
specific  forms  of  crime,  such  as  money  laundering  and  financial  crimes.  The  cooperation 

5 

 
 
with  Europol  is  increasing  across the different  criminal  areas. Coordination remains crucial 
for all stakeholders involved in fighting organised crime.  

Some progress has been made in the fight against terrorism and preventing/countering violent 
extremism in line with the objectives set out in the Joint Action Plan on counter-terrorism for 
the Western Balkans and the bilateral implementing arrangement. 

The  legal  framework  on  the  protection  of  fundamental  rights  is  largely  in  line  with 
European  standards.  The  deinstitutionalisation  process  is  under  way  and  resettlement  of 
children  to  community-based  care  is  being  carried  out.  The  Ministry  of  Labour  and  Social 
Policy  is  investing  in  community  services,  including  to  support  victims  of  gender-based 
violence. It is essential that these services continue to be made available. Additional efforts 
are needed to address recommendations of European and international human rights bodies, 
particularly  regarding  the  treatment  of  detained  and  convicted  persons.  The  Constitutional 
Court’s  decision  to  repeal  the  Law  on  Prevention  and  Protection  against  Discrimination  on 
procedural grounds means that the country currently lacks a comprehensive legal framework 
on non-discrimination  and an equality body. This serious  gap needs to  be addressed by the 
new  legislature.  It  is  also  important  for  the  country  to  enhance  implementation  of  the 
legislation on hate speech and of the national action plan for implementation of the Istanbul 
Convention. While the set-up of the external oversight mechanism of the police is complete, 
the  absence  of  genuinely  independent  investigators  may  impede  the  work  of  the  unit  to 
effectively  address  police  impunity.  The  country  should  take  urgent  measures  to  further 
improve the situation in prisons and to support alternatives to detention.  

The country has some level of preparation / is moderately prepared in the area of freedom of 
expression and has made limited progress during the reporting period. The overall situation 
and climate in which media operates remain generally conducive to media freedom and allow 
for  critical  media  reporting,  although  there  have  been  some  increased  tensions  during  the 
COVID-19  crisis  and  in  the  context  of  the  elections.  Self-regulation  efforts  need  to  be 
intensified to support advancement in professional standards and the quality of journalism. It 
is important to ensure greater transparency of media advertising by state institutions, political 
parties and public enterprises. Sustainable solutions to ensure the public service broadcaster’s 
independence, professional standards and financial sustainability are needed. It is essential to 
continue  supporting  media  pluralism,  promoting  professionalism,  unbiased  reporting  and 
investigative  journalism,  and  building  resilience  to  effectively  combat  disinformation.  The 
financial sustainability of independent media and working conditions of journalists remain a 
challenge.  

With  regard  to  regional  cooperation,  the  country  maintained  its  good  relations  with  other 
enlargement  countries  and  participated  actively  in  regional  initiatives.  It  is  important  to 
continue implementing bilateral agreements, including the Prespa agreement and the Treaty 
on Good Neighbourly Relations with Bulgaria.  

North  Macedonia  continues  to  play  an  active  and  constructive  role  in  the  management  of 
mixed migration flows. It remains on one of the main transit routes for mixed movement. It 
cooperates  effectively  with  neighbouring  countries  and  EU  Member  States,  including  with 
guest officers from the EU Member States on the ground. Considerable efforts to ensure basic 
living  conditions  and  services  for  all  migrants  staying  in  the  country  continued.  The 
registration of migrants and adequate protection-sensitive profiling improved but needs to be 
carried  out  in  a  more  systematic  manner.  The  Status  Agreement  with  the  European  Border 
and  Coast  Guard  Agency  has  not  been  signed  yet.  The  problem  of  frequent  smuggling 
activities at the northern border needs to be further addressed.  

6 

 
 
As  regards  the  economic  criteria,  North  Macedonia  is  at  a  good  level  of  preparation  in 
developing  a  functioning  market  economy  but  made  limited  progress  during  the  reporting 
period. Economic growth accelerated in 2019 as investment picked up, but, since April 2020, 
the COVID-19 crisis has left its mark on the economy and on public finances. The authorities 
have  taken  a  range  of  measures  supporting  companies  and  households,  to  mitigate  the 
economic  and  social  impact  of  the  crisis.  In  the  reporting  period,  fiscal  transparency  was 
further improved. However, fiscally significant reforms of income taxation and the pensions 
system,  introduced  at  the  beginning  of  2019,  were  reversed.  Moreover,  public  capital 
expenditure implementation remained markedly low, and public debt stabilisation is not  yet 
secured.  Before  the  COVID-19  crisis,  unemployment  rates  declined  further,  also  for  young 
workers, and informal employment decreased slightly. However, the impact of the COVID-
19 crisis will likely reverse those positive trends. Participation rates remain low, even though 
the share of women in the labour market increased. The financial sector remained robust and 
lending to the private sector strengthened. The business environment continues to be impeded 
by a high share of the informal economy.  

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,  reflecting  shortcomings  in  the  education 
system and the outflow of skilled workers, as well as infrastructure investment gaps  impair 
labour productivity and the competitiveness of the economy. While measures to mitigate the 
immediate adverse impact of the COVID-19 crisis on growth and employment are currently 
prevalent, addressing these structural  needs in  a timely manner would support  a swift post-
crisis economic recovery. 

As regards its ability to assume the obligations of membership, the country continues to be 
moderately prepared in most areas, including in the areas of competition, public procurement, 
statistics, financial control, transport, energy. The country shows a good level of preparation 
in  areas  such  as  company  law,  customs  union,  trans-European  networks  and  science  and 
research. The country is at  an early stage of preparation in  areas such as free movement  of 
workers as well as financial and budgetary provisions. Over the coming period, more focus is 
also  needed  on  administrative  capacity  and  effective  implementation.  The  country  has 
continued to improve its alignment with the EU common foreign and security policy.  

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS  

2.1. 

Functioning of democratic institutions and Public Administration Reform 

2.1.1.  Democracy 

The reporting period was marked by the historic decision to open accession negotiations with 
the  EU  and  by  the  accession  to  NATO.  North  Macedonia  has  increased  its  efforts  and 
continued  to  deliver  tangible  results  in  implementing  key  EU  reforms,  in  particular  in  the 
areas  identified  in  the  June  2018  Council  Conclusions2.  Efforts  continued  to  strengthen 
democracy  and  the  rule  of  law,  including  by  activating  existing  checks  and  balances  and 
though a broad public outreach, discussions and debates on key policy and legislative issues. 
Opposition parties remained engaged in Parliament and the main opposition party joined the 
technical  government  from  January  to  July  2020.  Due  to  the  COVID-19  outbreak,  the 
President  of  the  Republic  declared  a  state  of  emergency  from  March  until  June  2020. 
Measures were taken to protect the citizens and contain the pandemic. 

2 https://www.consilium.europa.eu/media/35863/st10555-en18.pdf 

7 

 
 
                                                           
Elections  

Overall, the legal framework is conducive to the organisation of democratic elections. Some 
progress was made in addressing and implementing the recommendations of OSCE/ODIHR. 
Due  to  the  COVID-19  outbreak,  the  early  elections  initially  foreseen  on  12  April  were 
postponed  to  15  July  2020.  The  comprehensive  review  of  electoral  legislation  should  be 
finalised to address the previous and upcoming recommendations of the OSCE/ODIHR and 
of  the  Venice  Commission,  in  a  timely  and  inclusive  manner.  The  state  institutions  and 
bodies, notably the Ministry of the Interior and the State Election Commission, should make 
further efforts to systematically update the voters’ list.  

Following the outcome of the European Council in October 2019, all political parties decided 
to  hold  early  parliamentary  elections  on  12  April  2020.  Due  to  uncertainties  posed  by  the 
COVID-19  outbreak  and  the  announcement  of  the  state  of  emergency  in  March  2020,  the 
government,  supported  by  the  political  party  leaders,  including  the  opposition,  decided  by 
decree  to  suspend  the  electoral  activities.  Following  protracted  negotiations,  an  agreement 
was reached among the political parties and the early elections were rescheduled for 15 July 
2020. Given the restrictions due to the COVID-19 pandemic, the OSCE/ODIHR deployed a 
Special  Assessment  Election  Mission.  The  team  assessed  that  the  election  day  proceeded 
smoothly, despite technical challenges in publishing results and longstanding issues related to 
the voter registration. However, the constant changes in legislation led to uncertainties. The 
campaign,  althought  negative  in  tone,  was  genuinely  competitive  and  participants  could 
deliver their messages despite the limitations due to the COVID-19 situation. The turnout was 
51.34 %. The coalition of SDSM3 and BESA Movement obtained 46 seats in Parliament out 
of 120, VMRO-DPMNE4 44 seats, DUI5 15 seats, the Alliance for Albanians and Alternative 
12  seats,  Levica  2  seats  and  DPA6  1  seat.  The  number  of  women  Members  of  Parliament 
dropped to 45 (37.5 %), two less than in the previous Parliament.  

The elections were well administered, including by the  State Election Commission (SEC), 
which  carried  out  its  duties  within  legal  deadlines,  despite  complications  caused  by  the 
suspension of the electoral process during the state of emergency. To ensure the stability and 
professionalism  of  the  SEC,  a  sustainable  solution  should  be  found  concerning  its 
composition  and  the  length  of  its  mandate  in  a  transparent  and  inclusive  manner.  Despite 
improvements  of  the  voters’  list,  the  relevant  authorities  need  to  make  further  efforts  to 
update and harmonise all relevant databases to ensure the continuous accuracy of the list.  

The  legal  framework  supports  the  conduct  of  democratic  elections.  In  February  2020, 
substantial amendments were made to the Electoral Code. These partially addressed previous 
recommendations  from  the  OSCE/ODIHR,  in  particular  regarding  registration  of  voters 
whose  IDs  expired  after  the  announcement  of  the  elections  and  extending  possibilities  to 
appeal against campaign violations. A day prior to the dissolution of Parliament and the call 
for early elections, amendments relating to  key  elements  of the  electoral  process,  including 
constituency  boundaries  and  the  redistribution  of  certain  responsibilities  among  election 
administration  and  state  agencies,  were  passed  hastily  and  with  limited  consultation.  The 
OSCE/ODIHR assessed that the legal stability was undermined by substantial revisions of the 
Electoral Code and subsequent ad hoc regulations enacted during the state of emergency. The 
reform  of  the  electoral  legislation  needs  to  be  finalised  ahead  of  the  next  election  cycle  to 
implement  the  outstanding  OSCE/ODIHR  recommendations.  These  include,  inter  alia,  the 

3 Social Democratic Union of Macedonia 
4 Internal Macedonian Revolutionary Organisation – Democratic Party for Macedonian National Unity 
5 Democratic Union for Integration 
6 Democratic Party of Albanians 

8 

 
 
                                                           
harmonisation  of  the  Electoral  Code  internally  and  with  other  relevant  laws  through  a 
comprehensive and inclusive review. 

Parliament  

The Parliament improved its role as the primary forum for constructive political dialogue and 
it  fullfilled  its  legislative  functions,  including  by  adopting  key  EU-related  laws.  However, 
the use of the shortened procedure needs to be limited. Parliament continued to restore checks 
and  balances  over  the  executive,  by  using  its  oversight  functions  and  operating  in  greater 
tranparency. All parties contributed to two successful rounds of the ‘Jean Monnet Dialogue’ 
with the European Parliament. The accountability for those who orchestrated and committed 
violence  on  the  27  April  2017  continued  to  be  established.  Parliament  promoted  the 
protection of human rights and deepened cooperation with the external oversight actors. The 
new  legislature  is  expected  to  work  in  an  inclusive  manner  to  build  upon  previous 
achievements, while further improving its functioning. Political parties need to enhance their 
internal democratic processes and improve transparency of their funding.  

Parliament was dissolved in February 2020, ahead of the early elections initially planned for 
April 2020. Following the COVID-19 outbreak, the Speaker’s view was that the Parliament 
could not reconvene and forwarded the proposal  of the technical  government to declare the 
state of emergency to the President of the Republic. The Constitutional Court did not accept 
the  request  to  examine  the  legality  and  constitutionality  of  the  decision  to  dissolve  the 
Parliament.  The lack of  a sitting Parliament  delayed the adoption, in  many sectors, of laws 
and  strategies  that  had  been  prepared.  Following  the  July  2020  elections,  the  constitutive 
session of the new Parliament took place in August 2020. 

Over the reporting period, the Parliament’s role as the main institution for political dialogue 
improved, with  the active participation of all parliamentary parties in  its work and political 
debates on key policy and legislative issues, including in the area of rule of law. It continued 
to adopt EU-related laws, with the support of the opposition in some cases which required 2/3 
majority  votes.  The  appointment  of  members  of  the  Programme  Council  of  the  Public 
Broadcasters and the Media Agency remain outstanding as cross-party compromise could not 
be reached. It is positive that a State Auditor was elected in December 2019.  

The  Parliament  faced  challenges  in  better  planning  and  coordinating  its  work  to  ensure  a 
more  predictable  law-making  process.  Over  the  reporting  period,  Parliament  adopted  over 
its  sessions  a  total  of  86  laws,  including  22  in  regular  legislative  procedure  and  11 
ratifications,  including  the  ratification  of  the  North  Atlantic  Treaty.  The  number  of  laws 
adopted  by  a  shortened  procedure,  mostly  upon  proposal  of  Members  of  Parliament,  rose 
significantly  during  the  reporting  period,  which  is  an  issue  of  concern  –  see  2.1.2.  Public 
Administration Reform. There should be limited use of fast track procedures as they prevent 
proper participation of the relevant  stakeholders  in  the legislative processes and democratic 
debates.   

Progress was made in implementing the Parliament’s 2018-2022 strategic plan. Its oversight 
of the executive improved, including through parliamentary questions and interpelation. The 
Parliament  also  strengthened  its  relations  with  external  oversight  actors.  In  February  2020, 
the Parliamentary Budget Office was launched to improve parliamentary financial oversight.  

All political parties participated in two rounds of the ‘Jean Monnet Dialogue’ held in June 
2019  and  February  2020.  In  January  2020,  the  amendments  to  the  Law  on  Parliament 
strengthened  the  independence  of  the  Parliament’s  human  resources.  The  political  parties 
reached  an  agreement  on  key  amendments  to  the  rules  of  procedure,  which  are  due  to  be 
adopted by the newly composed Parliament. These include rules on the constitutive session, 

9 

 
 
strengthened governmental oversight, public hearings, the budgetary calendar and procedures 
for EU-flagged laws.  

The  Parliament  helped  to  monitor  the  protection  of  human  rights  and  fundamental 
freedoms.  The  Club  of  Women  Members  of  Parliament  supported  several  human  rights 
initiatives  across  their  political  affiliation.  The  Parliament  also  adopted  a  cross-party 
declaration on the right of persons with disabilities to participate in the political processes. 

The  accountability  for  the  violent  attacks  in  Parliament  in  April  2017  continued  to  be 
established. The trial of those indicted for organising the attacks started in February 2020. 

Work  should  continue  on  improving  the  efficiency  of  the  democratic  system,  including 
transparency on the funding of political parties, along the recommendations of the Group of 
States  against  Corruption  (GRECO)  –  see  Chapter  23  –  Judicial  and  fundamental  rights. 
Political parties also should improve their internal democratic processes. 

Governance 

Democratic governance continued to be consolidated, with a focus on the EU reform agenda 
and NATO membership. Despite occasional tensions, the technical government fullfilled its 
mandate to organise early elections, while dealing with the consequences of the COVID-19 
pandemic,  including  during  the  state  of  emergency.  Existing  mechanisms  to  ensure  checks 
and  balances  were  activated  during  this  period,  including  by  the  Constitutional  Court.  The 
new government is expected to work together with all parts of society to further advance the 
EU reforms  and priorities, while addressing the  consequences of the COVID-19 crisis.  The 
inter-ethnic situation remained calm and efforts continued to strengthen inter-ethnic relations 
and to implement the Ohrid Framework Agreement.  

A government reshuffle, involving all coalition partners, took place in summer 2019. A new 
Ministry  for  Political  System  and  Relations  among  Communities  replaced  the  Government 
Secretariat for Implementation of the Ohrid Framework Agreement. Following the outcome 
of  the  October  2019  European  Council,  the  President  of  the  Republic  convened  a  meeting 
with all political party leaders, who agreed initially to hold early parliamentary elections on 
12  April  2020.  In  line  with  the  national  legislation,  Prime  Minister  Zaev  resigned  and  a 
technical  government,  with  the  participation  of  two  Ministers7  and  three  Deputy  Ministers 
from the main opposition party (VMRO-DPMNE), was appointed on 3 January 2020. Despite 
occasional tensions, the core responsibility of the technical government was to organise early 
elections,  while  ensuring  the  implementation  of  reforms  necessary  for  EU  and  NATO 
integration.  The  total  representation  of  women  in  the  technical  government  was  23%, 
including Ministers and Deputy Ministers. Due to the COVID-19 crisis, the President of the 
Republic  declared  the  state  of  emergency  from  March  until  June  2020,  which  enabled  the 
technical  government  to  rule  by  decree  with  the  force  of  law.  Control  mechanisms  were 
activated  during  the  state  of  emergency,  including  by  the  Constitutional  Court  and  the 
Ombudsman’s  Office.  The  Constitutional  Court  suspended  or  annulled  several  decrees, 
insisting  on  the  separation  of  powers,  respect  for  the  rule  of  law  and  principles  of 
proportionality  and  necessity.  The  Ombudsman  issued  recommendations  on  protection  of 
vulnerable categories, children and prisoners and detainees.  

The new government, led by Prime Minister Zaev, was elected by Parliament in August 2020 
and  is  composed  of  four  Deputy  Prime  Ministers  and  15  Ministers.  There  are  four  women 
Ministers (20%). 

7 The VMRO-DPMNE Minister of Labour and Social Policy Minister was dismissed in February 2020 over the 
refusal to use the new name of the country. No replacement was proposed and the post remained vacant.  

10 

 
 
                                                           
The inter-ethnic situation remained calm overall. A pre-electoral coalition across the ethnic 
lines was formed for the first time by SDSM and BESA Movement. The proposal by DUI of 
an ethnic Albanian candidate for Prime Minister triggered debates both within and between 
ethnic communities. An agency was created, along with an inspectorate to oversee the overall 
implementation of the law on the use of languages.  

The  country  has  been  committed  to  decentralisation  since  the  signature  of  the  Ohrid 
Framework  Agreement  in  2001.  In  2019,  municipalities  had  improved  their  financial 
management  and  collection  of  local  taxes.  The  government  initiated,  in  partnership  with 
municipalities and the Association of the Units of Local Self-Government (ZELS), a process 
to reform the legislation on the local self-government system, in order to grant municipalities 
additional powers and financial resources.  

Civil society  

The environment in which civil society operates has continued to improve, including with the 
implementation  of  the  2018-2020  Strategy  and  Action  Plan  for  the  Cooperation  between 
Government and Civil Society. Civil society remained active and played a key role in policy 
and  decision-making  processes.  However,  efforts  are  needed  to  ensure  a  more  meaningful 
and  timely  consultation  process.  Both  governmental  and  non-governmental  actors  should 
ensure  that  conditions  are  in  place  for  proper  checks  and  balances.  The  legal  and  financial 
frameworks still need to be improved and implemented in practice. 

An  empowered  civil  society  is  a  crucial  component  of  any  democratic  system  and  is 
recognised as such by the state institutions.  

The  legal  framework  guarantees  the  rights  of  freedom  of  expression,  assembly  and 
association and it paves the way for an enabling environment for civil society organisations. 
Since the adoption of the 2018-2020 Strategy and Action Plan, good progress has been made 
on the work of the Council for Cooperation between Government and Civil Society. Meetings 
between  members  of  the  Council  are  more  frequent.  Involvement  of  civil  society  in  policy 
and decision-making processes has continued to improve after the adoption of the 2018-2020 
Strategy,  although  practices  differ  among  Ministries.  Further  efforts  are  needed  to  ensure  a 
more meaningful and timely consulation process.  

The  Law  on  Associations  and  Foundations  specifies  that  organisations  may  receive  funds 
from  the  state  budget  and  the  budgets  of  the  municipalities.  However,  adequate 
administrative capacity and proper organisational set-up is needed in the Government unit for 
NGO Corporation, including sufficient state funding to ensure proper implementation of the 
2018-2020  strategy.  To  ensure  financial  sustainability  and  improve  the  institutional 
framework  of  civil  society  organisations,  the  focus  should  continue  to  be  on  establishing  a 
fully functional legal framework, by implementing the 2018-2020 strategy and harmonising 
the related fiscal legislation. 

Civilian oversight of the security/intelligence sector  

The  ongoing  reform  of  the  intelligence  services  resulted  in  the  setting  up  of  a  Council  for 
coordination  the  security  intelligence  community  which  has  met  twice  in  2020  and,  most 
importantly, in the establishment of the National Security Agency (NSA) in September 2019. 
The  Agency  has  completed  its  recruitment  procedures.  Its  mandate  is  to  gather  intelligence 
for  guaranteeing  state  security.  Unlike  its  predecessor,  the  Bureau  for  Security  and 
Counterintelligence (UBK), the NSA has been designed to be an independent Agency located 
outside  of  the  Ministry  of  Interior  and  without  police  powers.  This  is  in  line  with 
recommendations of the Senior Experts’ Group on systemic Rule of Law issues. It is essential 

11 

 
 
that the reform be fully completed and implemented, ensuring a non-partisan operation of the 
intelligence services. Legislation governing the Intelligence Agency and the Military security 
and intelligence agency still need to be revised. 

The Operational Technical Agency (OTA) continued to function. Further efforts are needed 
to ensure that it has access to all the necessary tools to fulfil its mandate. 

Parliamentary  oversight  over  the  intelligence  services  has  improved,  notably  in  the  area  of 
interception  of  communications,  but  it  needs  further  strengthening  to  be  efficient.  The 
relevant  parliamentary  oversight  committee  performed  several  inspections  and  visits  to  the 
relevant institutions related to the intelligence and security sector in 2019. Nevertheless, the 
procedure for hiring technical experts to assist the work of the committee over interception of 
communications  is  not  completed,  thereby  impeding  its  work.  The  capacities  of  all  three 
intelligence committees in Parliament should be reinforced.  

The president of the Citizen Oversight Council in Parliament and his deputy resigned in June 
2020 over the lack of financial resources  allocated to  this body. There is  an urgent  need  to 
ensure  required  resources  to  make  the  Council  fully  functional.  Civilian  oversight  of  the 
security/intelligence  sector  needs  to  be  ensured  as  this  will  also  have  a  positive  impact  on 
alleviating public mistrust in the intelligence institutions. All relevant laws need to be swiftly 
implemented, in cooperation with NATO and strategic partners.  

2.1.2  Public administration reform  

North Macedonia is moderately prepared with the reform of its public administration. Some 
progress  was  made  in  improving  transparency,  with  the  adoption  of  the  2019-2021 
Transparency  Strategy,  the  operationalisation  of  the  open  government  data  portal  and  the 
publication  of  government  finances  data.  The  monitoring  reports  on  implementation  of  the 
Public  Administration  Reform  Strategy  and  the  Public  Financial  Management  Reform 
Programme  were  produced  and  accompanied  with  adequate  visibility  actions.  The  public 
consultation process improved, with an increasing number of comments to draft regulations 
and greater involvement of civil society in policy-making. Ensuring respect for the principles 
of transparency, merit and equitable representation remains essential. The State Commission 
for Prevention of Corruption continued to address cases of nepotism, cronyism and political 
influence in the process of recruitment of public sector employees. A proper follow up to the 
reports  and  recommendations  of  the  State  Commission  needs  to  be  ensured.  In  terms  of 
accountability, after a long delay, the heads of the Directorate for Personal Data Protection, 
the  Agency  for  Free  Access  to  Public  Information  and  the  State  Audit  Office  were  finally 
appointed at the end of 2019 and in January 2020.  The new government  should ensure that 
the  public  administration  reform  remains  a  priority,  demonstrate  full  respect  for  the  public 
administration reform principles and follow on the reform efforts of the previous government.  

Further efforts are needed to address some of the 2019 recommendations.  

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

  put in place a legislative framework that ensures 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. 

12 

 
 
Strategic framework for public administration reform 

A  number  of  state  institutions  and  civil  society  organisations  were  pro-active  in  the 
implementation,  monitoring and reporting of the  2018-2022 public administration reform 
strategy and the 2018-2021 public financial management reform programme. The high-
level  Public Administration Reform  Council and the Public Financial Management Council 
continued  to  ensure  the  political  support  for  and  supervision  of  reforms.  The  Ministry  of 
Information  Society  and  Administration’s  capacity  to  drive  the  reform  at  technical  level 
improved.  The  Ministry  of  Finance’s  involvement  in  the  overall  reform  coordination 
increased,  also  thanks  to  a  greater  focus  on  managerial  accountability  (see  Chapter  32  – 
Financial  Control).  The  public  administration  reform  is  costed  as  a  separate  budget 
programme  in  the  state  annual  budget  but  the  PAR  budget  was  decreased  as  a  result  of 
reallocation of resources to economic measures in response to the COVID-19 crisis. 

Policy development and coordination  

The legal framework and institutional structures for a coherent policy-making system are in 
place. The responsibilities of some policy-making institutions need to be clarified and revised 
to  ensure  there  are  no  overlaps.  New  negotiating  structures  to  manage  the  process  of  EU 
integration  were  set  up  in  July  2019.  At  technical  level,  the  quality  of  the  EU  integration 
coordination system  for  policy measures  and providing assistance needs to  improve. Policy 
planning  needs  to  be  strengthened  and  to  be  consistent  with  the  medium-term  budgetary 
planning. The central coordination and quality control role of the General Secretariat remains 
insufficient.  

Evidence-based  policy  and  legislative  development  continue  to  be  partially  ensured. 
Administrative data collection improved but this data needs to be more consistently used in 
the decision-making process. Regulatory impact assessments were regularly prepared for all 
laws that the government sent to Parliament in regular procedure until autumn 2019, when a 
number  of  laws  were  promulgated  by  Parliament  without  impact  assessments  and  public 
consultations. The quality of regulatory impact assessments needs to be further improved, and 
the  budgetary  impact  assessments  are  either  missing  or  are  not  comprehensive.  Inter-
ministerial  consultations  at  various  levels  increased,  but  they  still  need  to  be  properly 
integrated  in  the  process.  Inclusive  participation  in  public  consultations  continued  to  be 
encouraged  through  the  national  electronic  consultation  system.  The  quality  control  of  the 
public consultation process needs to improve. The number of laws adopted under shortened 
procedures,  mainly  upon  proposals  of  Members  of  Parliament,  significantly  increased 
standing  at  61.6%  in  2019,  compared  to  20%  in  2018,  which  raises  concerns  (see  2.1.1. 
Democracy). These laws did not undergo a proper public consultation process and were not 
regularly underpinned by impact assessments. The quality of legislative drafting also remains 
an issue.  

Public  scrutiny  of  government  work  continued  to  improve  thanks  to  an  increase  in 
published government monitoring reports and improved communication.  

Public financial management 

to 

the  2018-2021  public  financial 
The  national  authorities  continued 
management (PFM) reform programme and 2019 Action Plan. The 2019 annual progress 
report on the implementation of the programme was adopted and published on the Ministry of 
Finance’s  website.  The  PFM  Council  meets  twice  per  year  in  order  to  monitor  the 
implementation  of  the  programme.  There  have  been  considerable  delays  in  finalising  and 
adopting of the new Organic Budget Law. 

implement 

13 

 
 
The  2020-2022  fiscal  strategy  was  adopted  following  a  parliamentary  debate.  It  was 
supplemented  by  a  comparative  analysis  of  the  mid-term  projections  made  by  national 
authorities and international institutions. In addition, data was provided on the main financial 
indicators  for  state-owned  public  companies  for 2018  (transfer  of  funds  from  the  budget  to 
public enterprises as well as paid gains and dividends in the budget of public enterprises and 
joint  stock  companies  in  state  ownership).  Efforts  were  made  to  increase  domestic  revenue 
mobilisation and to improve public procurement procedures (see also Chapters 5, 16 and 29). 

There  has  been  some  progress  on  improving  budget  transparency  in  the  management  of 
public  finances.  Various  monthly  and  quarterly  budgetary  reports  and  data  are  regularly 
published  on  the  Ministry  of  Finance’s  website,  including  the  2019  citizens’  budget.  The 
‘citizens’  budget’  web  application  gives  users  access  to  and  an  overview  of  the  budget 
through an interactive interface. It provides information on budget planning, distribution and 
income. The ‘open finance’ portal also went live, providing the general public with detailed 
information on all budget users’ transactions (at central level).  

The process to prepare the 2020 budget was improved and included open public consultation. 
The  budget  was  amended  twice  in  the  first  half  of  2020  to  meet  the  costs  arising  from  the 
COVID-19  crisis.  Parliamentary  scrutiny  on  budget  preparation  and  execution  needs  to  be 
improved. Transparency and accountability of management of public funds has to be ensured 
through efficient monitoring mechanisms both by the executive and by the Parliament. This 
includes following up on the State Audit Office’s recommendations. See also Chapter 32. 

Public service and human resources management 

The Law on Administrative Servants and the Law on Public Sector Employees ensure merit-
based  recruitment  and  fair  promotions  and  dismissals.  However,  they  are  not 
systematically  applied  across  the  administration.  The  Law  on  Internal  Affairs  includes 
contradictory rules  that allow employees to  be excluded from  the provisions of the Law on 
Administrative  Servants.  Procedures  for  temporary  or  service  employment  contracts,  with 
lower  criteria,  are  still  frequently  used,  bypassing  the  criteria  set  in  the  Law  on 
Administrative Servants. The grounds for dismissals should be made more transparent. The 
State Commission for Prevention of Corruption published the results of its investigations into 
some  of  the  cases  involving  public  allegations  of  appointments  of  family  members  by  the 
previous  governments.  It  also  issued  proposals  for  further  changes  in  the  recruitment 
processes of public institutions to make them more transparent and merit-based. Its findings 
and  recommendations  need  to  be  systematically  followed-up  by  the  concerned  institutions. 
See Chapter 23 – Judiciary and fundamental rights.  

The  Ministry  of  Information  Society  and  Administration  reinforced  its  coordination  and 
monitoring role for the management of human resources across the public administration. 
The willingness  and capacity  of  all involved institutions need to  be increased to  ensure the 
legislation  is  applied  systematically.  Line  institutions’  use  of  the  human  resources 
management  information  system  increased,  although  it  could  be  further  exploited.  The 
remuneration  system  needs  to  be  revised  to  ensure  more  consistent  levels  of  pay  and  to 
promote mobility.  

The  representation  of  women  in  the  public  service  is  over  50%,  including  in  middle 
management. Women are, however, less represented in top management positions. Equitable 
representation  of  minorities  remains  inconsistent  across  the  public  sector  and  across  all 
categories  of  civil  servants.  There  is  still  a  higher  representation  of  some  minorities  in  the 
institutions  whose  hierarchy  includes  that  minority.  Smaller  ethnic  minorities  remain 
underrepresented  in  the  public  sector.  The  number  of  public  employees  without  a  formal 

14 

 
 
assignment, who were recruited years ago and continue to receive a salary without having to 
show  up  for  work,  went  down  slightly,  as  a  number  of  them  were  finally  assigned  jobs  in 
2019. A decision on the final job assignment for the remainder of these employees needs to 
be taken by the relevant institutions, as this long-standing issue undermines the principles of 
merit  and  effectiveness.  The  principle  of  equitable  representation  and  fair  representation  of 
men, women and ethnic groups should be applied across the public sector. 

Professional  development  is  still  not  systematic.  There  is  no  centralised  database  of  the 
training  offered  by  various  institutions.  Integrity  in  the  public  service  is  well  regulated, 
including  whistle-blower  legislation.  However,  no  data  is  available  on  how  the  integrity 
mechanisms,  including  whistle-blower  legislation,  are  implemented  in  practice,  nor  on 
whether and how whiste-blowers are protected against retaliation actions.  

Accountability of the administration 

The functional review of 128 central government institutions was launched. The development 
of a proposal for reorganisation of functions per policy area was postponed as a result of the 
COVID-19 outbreak. The reorganisation should improve the administration’s efficiency and 
lines  of  accountability.  Some  institutions  still  report  to  both  their  line  ministry  and  to  the 
government  in  parallel.  Steps  were  taken  at  both  central  and  local  level  to  improve 
managerial  accountability  and  to  delegate  responsibility  to  various  management  levels 
although  delegation  of  decision-making  authority  to  middle  management  remains  limited. 
Further  efforts  are  needed  to  efficiently  mainstream  managerial  accountability  across  the 
whole public administration (see Chapter 32 - Financial Control). 

Legislation  ensures  that  citizens’  right  to  good  administration  is  protected  by  the 
independent  institutions,  especially  the  Ombudsman  and  the  State  Audit  Office.  Systematic 
follow-up  to  their  recommendations  is  not  yet  ensured.  Citizens’  right  to  access  public 
information  further  improved  thanks  to  the  2019-2021  transparency  strategy  adopted  in 
November  2019,  which  includes  setting  up  an  open  government  data  portal  and  publishing 
data on government finances. To ensure the system’s smooth functioning, all institutions need 
to regularly provide and update the data. A new Law on Free Access to Public Information, 
adopted  in  May  2019,  authorises  the  Agency  for  Protection  of  Free  Access  to  Public 
Information to monitor compliance with the rules on proactive disclosure of information, and 
reduces  the  grounds  upon  which  requests  for  public  information  can  be  refused.  The 
Agency’s  capacity  to  implement  the  new  law  needs  to  be  strengthened.  Being  without  a 
director  from  May  2018  until  January  2020,  the  Agency  did  not  respond  to  appeals  during 
that period, leading to an increase in unanswered requests for public information from public 
information  providers.  The  director  and  deputy  director  were  finally  appointed  in  January 
2020.  The  COVID-19  crisis  has  led  to  further  delays  in  responding  to  requests  for  public 
information by many institutions. 

The  Law  on  Administrative  Disputes  was  adopted  in  May  2019.  In  practice,  the  appeal 
procedure  for  citizens’  right  to  administrative  justice  remained  onerous,  complex  and 
lengthy,  comprising  several  appeal  layers  and  numerous  repetitions  of  procedures.  Most  of 
the decisions are not based on merit, but on procedural considerations. There were delays in 
enforcing administrative court rulings, which were themselves rarely decided on merit. The 
legislation  defines  the  citizens’  right  to  seek  compensation  and  the  liability  of  public 
authorities  in  cases  of  wrongdoing.  In  2019,  courts  awarded  compensation  for  damages  in 
nine cases. 

15 

 
 
Service delivery to citizens and businesses 

The  national  e-portal  for  services  was  upgraded  to  create  a  more  user-friendly 
administration.  The  portal  aims  to  serve  as  a  single  digital  contact  point  with  the  state 
administration,  enabling  equal  access  for  all.  More  commitment  by  all  state  institutions  is 
needed  to  exploit  the  full  potential  of  the  e-portal.  The  population  register  became 
operational,  serving  as  a  basic  source  of  information  about  the  interaction  of  both  state 
institutions  and  the  public  with  the  administration.  The  COVID-19  crisis  has  proved  the 
importance of digitalising the public administration and strengthening the provision of online 
services  to  citizens  and  businesses  through  the  e-portal.  A  Law  on  Electronic  Management 
and  Electronic  Services  was  adopted  in  May  2019.  Quality  management  tools,  such  as 
standards  for  services  and  guidelines  for  optimising  services,  were  introduced.  The 
interoperability framework increased in scope, but political will and funding are needed for it 
to reach its full potential.  

Simplifying  administrative  procedures  has  been  difficult  and  the  Law  on  General 
Administrative  Procedures  is  not  yet  systematically  implemented  across  the  administration. 
The government adopted a decree-law allowing for some legal deadlines set in the Law to be 
extended  during  the  state  of  emergency  resulting  from  the  COVID-19  outbreak.  Further 
training  and  awareness-raising  are  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. An effective  
(independent, quality and efficient) 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  EU 
acquis and European standards in this area. Overall, good progress has been made, including 
through  strengthened  judicial  independence  and  addressing  instances  of  police  impunity. 
New  reforms  have  been  adopted,  including  the  Law  on  the  Public  Prosecutor’s  Office, 
ensuring accountability for the crimes arising from and surrounding the illegal wiretaps. The 
implementation of previously adopted measures under the judicial strategy is under way. The 
State Commission for Prevention of Corruption has used its reinforced powers and continued 
to  deliver  results,  including  on  high-level  cases.  Corruption  is  prevalent  in  many  areas  and 
remains an issue of concern. There  was limited  progress  on fundamental rights.  As  regards 
the legal and policy framework, following its repeal by the Constitutional Court, the priority 
for  the  new  legislature  will  be  to  re-adopt  the  Law  on  Prevention  and  Protection  against 
Discrimination  and  establish  the  Commission  for  Prevention  and  Protection  against 
Discrimination.  The  Ombudsman’s  Office  has  additional  staff  and  funding  to  exercise  its 
role. Sustained efforts are needed to further improve the human rights situation in practice. It 
is  essential  to  complete  the  appointment  of  members  of  independent  and  regulatory  bodies 
based on merit. The functional independence of these bodies must be guaranteed at all times, 
including through appropriate allocation of funds.  

Functioning of the judiciary  

The  judicial  system  of  North  Macedonia  has  some  level  of  preparation/is  moderately 
prepared.  There  was  good  progress  in  the  implementation  of  the  judicial  reform  strategy, 
thereby  addressing  the  ‘Urgent  Reform  Priorities’  and  recommendations  from  the  Venice 
Commission and the Senior Experts’ Group on systemic Rule of Law issues. Efforts are still 

16 

 
 
needed to ensure systematic implementation of the updated action plan of the judicial reform 
strategy.  Judicial  institutions  are  implementing  new  rules  for  appointment,  promotion, 
discipline and dismissal of judges and the Judicial Council has been exercising its role more 
pro-actively. As a result of its reform efforts in recent years, North Macedonia has established 
mechanisms to ensure judicial independence and accountability, such as rules on merit-based 
appointments, checking assets and conflicts of interest and disciplinary procedures. It should 
ensure their determined and consistent use before envisaging further changes in this area. The 
Law on the Public Prosecutor’s Office entered into force in  June 2020.  The purpose of the 
law  is  inter  alia  to  ensure  a  sustainable  solution  for  the  cases  of  the  Special  Prosecutor’s 
Office and to establish accountability for the crimes arising from and surrounding the illegal 
wiretaps. The revised Law on the Council of Public Prosecutors was also adopted. Effective 
implementation  of  the  legal  framework  as  well  as  increased  efforts  by  all  stakeholders  to 
demonstrate their exemplarity will contribute to increasing public trust in the judiciary.  

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

  continue  the  consistent  implementation  of  the  judicial  reform  strategy  and  the  updated 
action  plan  in  an  inclusive  manner,  and  demonstrate  firm  commitment  to  the 
independence  of  the  judicial  system,  shielding  it  from  any  risk  of  political  interference, 
including  by  using  available  mechanisms  to  verify  the  professionalism  and  integrity  of 
judges and prosecutors; 

  finalise  and  start  implementing  the  human  resources  strategies  for  the  judiciary  and 
prosecution,  and  improve  the  automated  court  case  management  information  system 
(ACCMIS) to ensure that it is fully functional and reliable; 

  continue implementing the new legal framework related to reform of the Judicial Council 
and the Council of Public Prosecutors and the new law on the Public Prosecutor’s Office. 

Strategic documents 

Implementation of the Strategy on Judicial Reform (2017-2022) continued. Importantly, the 
Law  on  the  Public  Prosecutors’  Office  and  the  amendments  to  the  Law  on  the  Council  of 
Public  Prosecutors  entered  into  force.  However,  there  were  delays  in  the  adoption  of  some 
legislative  measures.  To  address  this  and  ensure  effective  implementation,  an  update  to  the 
Action Plan was approved in October 2019. Efforts to implement the latter should be stepped 
up. The Council for Monitoring the  Implementation  of the Judicial  Reform  was not  able to 
meet  due  to  the  COVID-19  crisis  and  has  yet  to  adopt  the  second  annual  implementation 
report. 

Management bodies 

The Parliament elected three new members of the Judicial Council, in line with the Law on 
Judicial  Council  and  meeting  the  requirement  of  equitable  representation.  Another  member 
was elected by judges. In December 2019, the Judicial Council took further steps to ensure its 
effective functioning by adopting rules of procedure and other implementing legislation. The 
Council has  demonstrated an increasingly proactive attitude in  delivering  on its mandate as 
guardian  of  the  independence  and  impartiality  of  judges.  The  President  of  the  Council  was 
the main contact point with the media and the public was regularly informed on the ongoing 
work via press releases.  

Six members of the Council of Public Prosecutors were elected, one by the Parliament and 
one  each  by  the  prosecutors  from  the  Higher  Public  Prosecutor’s  Office  of  Štip,  Skopje, 
Bitola  and  Gostivar  areas,  as  well  as  from  among  the  prosecutors  from  non-majority 
communities. The amendments to the Law on the Council of Public Prosecutors adopted in 

17 

 
 
February  2020  provide  for  strengthened  competences,  streamlined  procedures  for 
appointment and promotion, accountability of its members and procedures for their recusal, 
introduce  competences  with  regard  to  disciplinary  proceedings  against  public  prosecutors, 
and provide for financial independence of the Council. The Council, in line with the amended 
law, needs to provide reasoning of its decisions on appointments.In order to enforce the new 
measures, the Council needs to adopt a rulebook on the procedure for establishing liability of 
public  prosecutors.  A  positive  step  is  the  publication  of  agendas  for  sessions  and  Council 
decisions on its website. The Council still lacks the human and financial resources necessary 
to perform its tasks effectively.  

Independence and impartiality  

The  Constitution  guarantees  judicial  independence.  Implementation  of  measures  under  the 
judicial  reform  strategy  is  ongoing  and  have  contributed  to  improving  the  independence  of 
the judiciary but some of the reforms have yet to bear all their fruits. Full implementation of 
the  principles  of  independence  and  transparency  needs  to  continue  notably  to  curb  any 
criticism  of  the  judicial  system  succumbing  to  the  executive,  including  by  ensuring 
appointments  are  fully  based  on  merit  and  competence.  It  remains  essential  to  ensure  the 
judiciary  is  shielded  from  any  risk  or  perception  of  political  interference.  The  Judicial 
Council has played an active role by stepping up its efforts to protect judges’ independence 
and  to  strengthen  the  sector’s  resilience  against  potential  external  or  internal  pressure,  for 
instance  by  publicly  condemning  derogatory  statements  or  threats  in  two  cases.  The 
Association  of  Judges  has  also  been  active  in  this  regard.  The  Association  continued  to 
actively support reforms. 

The  Chief  Special  Prosecutor’s  mandate  expired  in  September  2019  and  cases  were 
transferred to the State Public Prosecutor. After her arrest in August 2019, the Chief Special 
Prosecutor  resigned  in  September  and  was  subsequently  formally  dismissed  by  Parliament. 
She was indicted for accepting bribes and misuse of office in October in the so called ‘racket 
case’  concerning  alleged  extortion  and  abuse  of  office  in  relation  to  a  case  of  the  Special 
Prosecutor’s Office. In a significant development, she was convicted in first instance to seven 
years’ imprisonment in June 2020. Efforts need to continue to put an end to corruption at all 
levels.  In  establishing  accountability,  the  manner  in  which  the  SPO  trial  cases  are  handled 
and  ultimately  closed  will  be  an  important  signal  to  restore  trust  in  the  system  and  end 
impunity.  The  prosecutors  from  the  Special  Prosecutor’s  Office  formally  returned  to  their 
original Public Prosecution Offices and continued to be in charge of their cases. Due to the 
inconsistency of proceedings during the transition period, some cases reached the statute of 
limitations and some trials had to restart. Following intensive discussions, a new Law on the 
Public  Prosecutor’s  Office  was  adopted  in  February  2020,  ensuring  sustainability  of  the 
SPO’s work and accountability for the crimes arising from and surrounding the wiretaps. The 
law  aims  to  provide  a  basis  for  a  professional  and  impartial  prosecutorial  system,  which  is 
more  resilient  to  political  and  other  pressures,  but  a  lot  will  depend  on  proper 
implementation.  

On  court  case  management,  the  inspections  of  the  automated  court  case  management 
information system (ACCMIS) continue and have yielded initial results. In August 2020, the 
former president of the Skopje Criminal Court was sentenced at first instance to 3.5 years in 
prison for manipulation of ACCMIS. Deficiencies identified previously in the system, such as 
reliability  of  statistics,  remain  to  be  addressed.  The  Law  on  court  case  management  was 
adopted  by  Parliament  in  February  2020,  providing  safeguards  to  ensure  a  smooth 
functioning  of  the  system,  including  by  mandatory  use  of  ACCMIS  in  assigning  and 
managing the flow of cases. Continued commitment is needed to ensure the system’s capacity 

18 

 
 
to  produce  automatically  reliable  statistical  data  (in  line  with  the  recommendations  and 
methodology of the CEPEJ) about the performance of both judiciary and prosecution. 

Accountability 

The Judicial Council lifted the immunity of one of its members who is the main suspect in a 
case  concerning  the  illegal  privatisation  of  construction  land,  but  did  not  allow  for  his 
detention, and of one judge. A new Council for Judicial Ethics was established under the new 
Code of Ethics and met for the first time in February 2020. Breaching of the Code of Ethics is 
not listed as a ground for disciplinary procedure in the law. In 2019, the Academy for Judges 
and  Prosecutors  organised  11  training  sessions  on  ethics,  ethical  behaviour,  and  anti-
corruption measures for 200 professionals in the judiciary. 

The  Judicial  Council  received  107  requests  for  determining  the  responsibility  of  a 
judge/president  of  court  in  2019,  filed  mainly  by  parties  in  court  cases.  It  dismissed  the 
President  and  two  judges  of  the  Supreme  Court,  as  well  as  3  other  judges,  including  the 
former  President  of  the  Basic  Criminal  Court  in  Skopje  for  tampering  with  the  case 
management  system.  Demonstrating  accountability  for  wrongful  acts  will  help  foster  a 
culture of independence, and impartiality in the judiciary.  

Professionalism and competence  

In  line  with  the  new  legal  framework,  the  Judicial  Council  changed  the  system  of 
appointment and promotion and has yet to approve qualitative criteria in the professional 
evaluation of judges. In the reporting period, the Judicial Council appointed 28 judges and 
16 Presidents of courts, and allowed 32 retired judges to perform their tasks for an additional 
year.  The  Council  of  Public  Prosecutors  appointed  18  graduates  from  the  Academy  for 
Training  for  Judges  and  Prosecutors  to  serve  as  prosecutors  in  Basic  Public  Prosecutors 
Offices,  appointed  heads  of  four  Basic  Public  Prosecutor’s  Offices  and  allowed  12  retired 
prosecutors to perform their tasks due to staff shortages. The two Councils appointed 31 out 
of  37  graduates  of  the  6th  generation  at  the  Academy  for  Judges  and  Prosecutors.  The 
appointment  process  was  completed  in  line  with  the  new  requirements  of  the  Law  on  the 
Judicial  Council,  whereas  the  new  legal  framework  for  the  Council  of  Public  Prosecutors 
entered  into  force  in  June  2020  and  implementing  legislation  is  being  prepared.  No 
complaints  or  appeals  on  these  appointments  were  lodged.  Both  Councils  improved 
transparency,  procedures,  and  respected  the  principle  of  meritocracy  in  appointments  and 
promotions.  The  Academy  for  Judges  and  Prosecutors  organised  a  total  of  253  in-service 
training sessions for 5,661 professionals. 

Quality of justice  

The  Academy  for  Judges  and  Prosecutors  continued  to  improve  its  operation,  by 
strengthening its curricula for basic and continuous training. The draft Law on the Academy 
for Judges and Prosecutors, which incorporates several key recommendations from a peer 
review mission on judicial training and reaffirms the Academy as the sole point of entry to 
the judiciary, is due to be adopted by the new composition of the Parliament. The Academy is 
an  observer  to  the  European  Judicial  Training  Network  (EJTN)  but  is  not  proactively 
benefiting  from  the  expertise  of  the  network.  The  post  of  Deputy  Director  remains  vacant 
since the establishment of the Academy in 2006. The initial programme for 60 candidates of 
the  7th  generation  –  a  significant  increase  in  numbers  –  will  start  in  autumn  2020.  It  is 
essential  to  further  consolidate  the  Academy,  including  by  guaranteeing  adequate  human 
resources as well as appropriate office and training space. 

The  Supreme  Court,  in  cooperation  with  four  Courts  of  Appeal  stepped  up  its  efforts  to 
improve  the  consistency  of  judgments  and  to  harmonise  court  practice.  Some  courts 

19 

 
 
improved  their  consistency  in  uploading  judgments  onto  the  central  database,  allowing  for 
greater online access to jurisprudence. It is essential that this is done in a systematic manner.  

The allocations of the 2020 state budget saw an increase of approximately 6% for the courts 
and  a  decrease  of  15%  for  the  Public  Prosecution  Office.  According  to  CEPEJ  data,  the 
budget expenditure for courts and prosecution offices remains lower than the Western Balkan 
average, at EUR 21 per inhabitant while the Western Balkan average for the judicial system 
(courts,  prosecution  services  and  legal  aid)  is  EUR  41.4.  There  are  respectively  496 
professional judges in the country (23.88 per 100 000 inhabitants), 198 men and 298 women 
and 190 prosecutors (9.15 per 100 000 inhabitants), with 89 men and 101 women. A total of 
five new members of staff were hired in courts and 106 under temporary contracts, and 37 in 
the Public Prosecutors' Offices. It remains essential to ensure an adequate assessment of the 
needs,  notably  in  the  prosecution  service  and  evidence-based  human  resource  strategies, 
currently  under  preparation,  should  be  adopted.  It  is  equally  important  to  ensure  adequate 
staffing,  including  expert  associates,  and  the  provision  of  funds  to  renew  and  properly 
maintain the IT infrastructure in the judiciary. The implementation of the IT strategy for the 
justice sector is heavily  dependent upon foreign assistance and funding. Three new IT staff 
were recruited in the Public Prosecutor’s Offices but none in the courts. The recruitment of IT 
staff is difficult due to uncompetitive salaries. 

Efforts  are  needed  to  further  promote  the  use  of  alternative  dispute  resolution,  including 
through  the  relevant  chambers.  The  number  of  mediation  cases  has  decreased  over  recent 
years, notably as regards labour disputes. 

Efficiency 

Nearly  all  courts  continued  a  positive  trend  by  maintaining  a  clearance  rate  of  100%  or 
higher,  with  the  exception  of  misdemeanour  and  second  instance  administrative  cases. 
Overall,  only  unfinished  cases  under  the  old  procedural  laws  suffer  from  protracted 
proceedings, impeding their resolution. In its Opinion on the Law on Use of Languages, the 
Venice Commission invited the legislator to re-examine the law and to take into account, in 
consultation with all parties concerned, its recommendations, including on provisions related 
to bilingualism in judicial proceedings. 

The  average  salaries  of  judges  and  prosecutors  are  slightly  below  the  Western  Balkan 
average. Judges are yet to receive all supplements to their salaries related to complexity and 
sensitivity  of  cases  they  handled.  The  claims  in  the  judicial  administration,  including  for 
career  advancement,  are  pending.  The  delayed  preparation  of  comprehensive  human 
resources  strategies  for  the  judiciary  and  public  prosecution  is  negatively  affecting  proper 
planning  and  allocation  of  human  and  budgetary  resources,  including  the  revision  of  court 
and Public Prosecutor’s Office networks in the country. 

Bailiffs  reacted  to  the  reduced  tariffs  for  their  services  by  organising  public  protests  and 
threatening to leave the profession. The overall cost and duration of enforcement procedures 
should  be  addressed  in  all  layers  of  the  enforcement  chain,  not  solely  at  the  bailiffs’  level. 
The  mandatory  presence  of  an  attorney,  including  for  payment  orders  procedures  and  for 
inheritance cases, is restricting or impeding access to justice for the poorest citizens. In May 
2020, the Constitutional Court annuled the article in the Law on enforcement on payment of 
interest rate from the debtor’s account. The Ministry of Justice started to  publish its annual 
plan  for  regular  inspections  of  enforcement  agents  as  well  as  the  final  decisions  of  the 
disciplinary  committee  of  the  Chamber  of  private  enforcement  officers  on  its  website,  to 
increase  transparency.  However,  the  monitoring  with  specific  indicators  should  be  further 
enhanced. 

20 

 
 
Following  the  outbreak  of  COVID-19,  the  government  adopted  a  decree  suspending  all 
deadlines  for  initiating  and  ongoing  criminal,  civil  and  non-contentious  court  cases, 
administrative disputes, misdemeanours, and proposals for enforcement or securing of claims 
until  the  end  of  the  state  of  emergency.  Exceptions  were  made  for  cases  close  to  reaching 
statute of limitations. Based on this decree, courts published lists of urgent cases which were 
set  to  continue,  including  ones  involving  detention.  Courts  also  implemented  preventive 
health measures and introduced hearings via online communication tools, whenever possible. 
Following  the  decree  and  instructions  from  the  Judicial  Council,  a  majority  of  the  courts 
adopted  internal  acts  to  regulate  their  work  but  there  is  an  absence  of  clear  and  precise 
regulation. The Judicial Council instructed the courts to prioritise cases dealing with domestic 
violence. A majority of the judges donated 20% of their April and May salaries to the fund 
for  fighting  againts  COVID-19.  In  June,  courts  started  to  gradually  resume  their  regular 
functions. Among the lessons learned from the crisis, it appears necessary to have measures 
in  place  for  the  organisation  and  work  of  courts,  as  well  as  for  communication  of  the 
judiciary with the wider public during states of emergency. Additionally, IT connections need 
to be prioritised, including full digitalisation of cases and summoning, ensuring training for 
judges and judicial staff. 

Fight against corruption  

North Macedonia has some level of preparation/is moderately prepared in the prevention 
and fight  against corruption.  Good progress has been made as the  country  consolidated its 
track  record  on  investigating,  prosecuting  and  trying  high  level  corruption  cases.  The  State 
Commission  for  Prevention  of  Corruption  has  been  particularly  pro-active  in  preventing 
corruption and opened a high number of cases, including those involving high-level officials 
from across the political spectrum, in line with last year’s recommendation. Efforts continued 
to  move  forward  with  the  Special  Prosecutor’s  Office  cases,  thereby  establishing 
accountability for the illegal wiretaps. The so called ‘racket’ case has raised serious concerns. 
The former Chief Special Prosecutor was convicted in June 2020 in the first instance verdict. 
After expiry of the mandate of the prosecutors of the Special Prosecutor’s Office, cases were 
transferred.  

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

  implement the new legislation transfering some of the prerogatives of the former Special 
Prosecutor’s  Office  to  the  Office  of  the  Public  Prosecutor  for  Prosecuting  Organised 
Crime and Corruption and regulating the status of the wiretaps so that accountability for 
the crimes arising from and surrounding the wiretaps continues; 

  increase the track record of final convictions in high-level corruption cases including by 

further confiscating criminal assets; 

  demonstrate  political  will  to  fight  corruption  by  supporting  relevant  bodies  with  further 
financial  and  human  resources  and  by  providing  clear  policy  guidance  to  all  state 
institutions on how to tackle corruption in line with the State Commission for Prevention 
of Corruption’s recommendations. 

Track record 

The  State  Commission  for  Prevention  of  Corruption  (SCPC)  has  been  pro-active  in 
preventing  corruption  and  opened  a  high  number  of  cases.  Progress  in  investigating, 
prosecuting  and  trying  corruption  cases  has  continued,  including  targeting  high  level 
officials. There were some new high level corruption cases. After the expiry of their mandate, 
the prosecutors of the Special Prosecutor’s Office (SPO) were transferred back to their Public 

21 

 
 
Prosecutor’s Office of origin. They retained competence over their SPO cases. Since  autumn 
2019,  a  total  of  25  cases  involving  178  persons  were  transferred  from  the  Special 
Prosecutor’s  Office  to  the  Public  Prosecutor’s  Office  for  Prosecuting  Organised  Crime  and 
Corruption.  Most  of  them  concern  abuse  of  office  or  position,  falsification  or  forgery  of 
documents,  embezzlement,  money  laundering  and  fraud.  There  were  final  convictions  in 
three  cases  against  four  defendants.  A  former  Minister  of  the  Interior  was  sentenced  to  six 
years  imprisonment.  In  the  second  case,  the  court  found  a  businessman  and  one  of  his 
associates  guilty  of  forging  documentation  for  winning  a  tender  from  the  state-owned 
electricity generation company. The legal entities involved in the case were also found guilty. 
The  asset  confiscation  verdict  was  confirmed  on  appeal.  In  the  third  case,  the  accused 
received a suspended sentence of six months’ imprisonment with two years’ probation. Trials 
are  ongoing  in  10  cases,  with  several  dozen  hearings  throughout  the  year.  Due  to 
inconsistency of proceedings, some cases reached the statute of limitations while others were 
forced to restart. 

The Public Prosecutor for Prosecuting Organised Crime and Corruption has opened ten 
new  investigations  involving  55  individuals  and  one  legal  entity  in  high-level  cases 
(compared  to  five  cases  involving  seven  suspects  in  2018)).  In  total,  there  are  six  ongoing 
cases involving 38 individuals and one legal entity. Some cases involve high-level officials 
such  as  the  former  Chief  Special  Prosecutor  who  was  convicted  in  first  instance  to  seven 
years imprisonment. The court issued first instance judgments against seven of the accused. 
The trend of 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  ordered  24  new  investigations 
involving 78 suspects. In 11 cases involving 41 individuals, investigations were closed (half 
of the cases initiated in 2017).  

In  2019,  the  State  Commission  for  Prevention  of  Corruption  received  7275  declarations  of 
assets.  As  regards  conflict  of  interest,  the  State  Commission  may  initiate  a  procedure  for 
determining the facts ex officio, or at the request of a third party. From February 2019 until 
31 March 2020, the State Commission opened investigations over allegations of nepotism in 
the public administration in 82 cases. It  closed 40 cases because no conflict of interest was 
determined  or  because  the  conflict  of  interest  was  removed.  In  two  cases,  the  cases  were 
transferred  to  the  Public  Prosecutor’s  Office.  In  16  cases,  the  competent  institutions  were 
requested to act on the State Commission’s recommendations and in 11 cases, the procedure 
is  still  ongoing.  Due  to  some  legal  requirements  and  deadlines  (e.g.  to  obtain  information 
from  other  bodies),  not  all  cases  could  be  resolved  yet.  In  addition,  the  State  Commission 
received  requests  for  opinions  from  officials  themselves  or  institutions  on  whether  or  not 
there  is  a  potential  conflict  of  interest.  There  are  213  requests  still  pending  while  84  are 
closed. In 2019, the department for internal control criminal investigations and professional 
standards brought charges against six law enforcement officers for allegations of corruption. 
All are under investigation.   

In 2018, the Council of Europe Group of States against Corruption (GRECO) had concluded 
in  its  compliance  report  on  the  ethics  and  integrity  of  parliamentary  members,  judges  and 
prosecutors, that out of 19 recommendations, six were satisfactorily implemented, eight were 
partially  implemented  and  five  were  not  implemented.  The  recommendations  which  were 
fully implemented concerned mainly the judiciary and legal amendments adopted in the Law 
on  judicial  council  and  the  Law  on  courts.  Those  recommendations  which  were  not 
implemented concerned mainly prevention of conflict of interest, contacts with lobbyists, and 
sanctions  for  misconducts.  In  2019,  the  country  has  undertaken  key  reforms  further 

22 

 
 
addressing  those  recommendations  by  revising  the  legal  framework  for  prevention  of 
corruption and conflict of interest and appointing a new State Commission for Prevention of 
Corruption  vested  with  additional  powers.  As  regards  ethics,  progress  was  made  with  the 
adoption  of  a  new  Code  of  Ethics  for  Judges  and  Lay  Judges  as  well  as  guidelines  for  its 
implementation,  and adoption of amendments  to the Code of Ethics for Public Prosecutors. 
Along  the  recommendations  of  GRECO  on  prevention  of  corruption  and  promotion  of 
integrity  at  the  central  government  and  the  law  enforcement  agencies,  the  government 
adopted a new Code of Ethics for members of the government and holders of public functions 
appointed by the government. 

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  all  members  are  stricter  and  require 
increased experience and a proven track record in the detection and prevention of corruption. 
The  Commission  is  vested  with  additional  powers  that  reinforce  its  capacity  to  verify 
statements  of  interest  and  assets  and  reinforce  its  authority.  The  State  Commission  for 
Prevention  of  Corruption  has  announced  its  intention  to  look  into  allegations  of  misuse  of 
authority and funds during the COVID-19 crisis, including in the area of public procurement. 
The  work  of  the  State  Commission  in  this  respect  is  important  to  maintain  the  trust  of  the 
citizens  in  the  institutions.  The  Commission  has  the  right  to  initiate  misdemeanour 
procedures.  Its  budget  has  steadily  increased.  The  State  Commission  deserves  to  be  further 
consolidated and continue to be supported with an appropriate methodology and resources.  

There  are  several  codes  of  ethics  in  place  in  various  state  institutions.  Efforts  continue  to 
improve transparency of public institutions. 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 needs to be connected with other relevant institutions. 

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.  The  newly  established  investigative  centre/judicial  police  in  the  Prosecutor’s  office 
must  demonstrate  its  capacity  to  support  the  office  in  stepping  up  its  investigations.  It  also 
needs to improve a comprehensive strategic approach to fight corruption. A new law on the 
Public  Prosecutor’s  Office  has  been  adopted  to  enable  the  Public  Prosecutor  for  Organised 
Crime and Corruption to inherit some of the prerogatives of the Special Prosecutor’s Office 
thus ensuring long-term accountability for the crimes arising from and surrounding the illegal 
wiretaps. 

The  Public  Prosecutor's  Office  must  demonstrate  its  capacity  to  be  proactive  in  pursuing 
cases referred by the State Commission for Prevention of Corruption, the State Audit Office 
and other institutions.  

The electronic case management system at the Public Prosecutor’s Office is in place but must 
become more efficient. In addition to the positive trend of adopting temporary measures for 
freezing bank accounts and property, the seizure and confiscation of criminal assets need to 
be increased. 

23 

 
 
Legal framework 

North  Macedonia  is  party  to  all  international  anti-corruption  conventions,  including  the 
United Nations Convention against Corruption. The 2018 Law on Prevention of Corruption 
and Conflict of Interests has increased the powers of the State Commission for Prevention of 
Corruption.  

The  Law  on  the  Financing  of  Political  Parties  stipulates  the  manner  and  procedure  for 
providing  financial  means  to  political  parties  and  ensure  their  management.  Rules  on  the 
financing of pre-electoral campaigns are set out in the Electoral Code. The State Audit Office 
exercises ex-post control. In 2019, the audit of regular operations of five political parties was 
initiated. The State Audit Office is also currently conducting an audit of electoral campaign 
expenses of candidates for the 2019 presidential elections. In the course of 2018 and 2019, 21 
final audit reports were submitted to the Public Prosecutor's Office and two were submitted to 
the State Commission for Prevention of Corruption on suspicion of a misdemeanor offence. 
The State Commission can carry out inspections on party financing.   

The law on free access to public information can be utilised to obtain information on public 
financing of political parties. 

The  Law  on  lobbying  adopted  in  2008  regulates  lobbying  activities,  the  registration  of 
lobbyists and includes a supervision mechanism. Its implementation needs to be stepped up. 
The  country  needs  to  regulate  rules  of  engagement  between  members  of  Parliament  and 
lobbyists as recommended by GRECO. 

The Law on the Protection of Whistle-blowers requires further alignment with the new EU 
acquis. 

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 
SCPC has adopted a new national strategy for 2020-2024 with an analysis of the sectors with 
the  highest  risks  for  corruption  and  prioritisation  of  these  sectors  for  future  action.  The 
strategy was drafted in  an inclusive process,  involving relevant  stakeholders and experts.  It 
needs to be adopted by the Parliament. 

Fundamental rights  

The legal framework on the protection of fundamental rights is largely in line with European 
standards.  The  deinstitutionalisation  process  is  under  way  and  resettlement  of  children  to 
community  based  care  is  being  carried  out.  The  Ministry  of  Labour  and  Social  Policy  is 
investing in community services, including to support victims of gender-based violence. It is 
essential that these services continue to be made available. Additional  efforts are needed to 
address  recommendations  of  European  and  international  human  rights  bodies,  particularly 
regarding  the  treatment  of  detained  and  convicted  persons.  The  Constitutional  Court’s 
decision to repeal the Law on Prevention and Protection against Discrimination on procedural 
grounds  means  that  the  country  currently  lacks  a  comprehensive  legal  framework  on  non-
discrimination  and  an  equality  body.  This  serious  gap  needs  to  be  addressed  by  the  new 
legislature. It is also important for the country to enhance implementation of the legislation 
on hate speech and of the national action plan for implementation of the Istanbul Convention. 
While the set-up of the external oversight mechanism of the police is complete, the absence 
of  genuinely  independent  investigators  may  impede  the  work  of  the  unit  to  effectively 
address  police  impunity.  The  country  should  take  urgent  measures  to  further  improve  the 
situation in prisons and to support alternatives to detention.  

24 

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

  swiftly  re-adopt  the  Law  on  the  Prevention  and  Protection  against  Discrimination, 
ensuring  it  is  in  line  with  the  EU  acquis  and  European  standards  on  non-
discriminationand  that  provisions  of  the  previously  adopted  law,  including  the  list  of 
protected  grounds,  be  preserved,  and  establish  the  Commission  for  Prevention  and 
Protection against Discrimination;  

  accelerate efforts to address recommendations of international monitoring bodies, notably 
with  regard  to  the  rights  of  persons  in  detention/prison;  promote,  protect  and  guarantee 
rights of persons with disabilities, children, and women; 

  improve community services to identify children at risk and to support children victims of 
violence,  Roma8  children  and  adults,  and  children  with  disabilities,  including  by 
improving inter-agency cooperation.  

North  Macedonia  has  ratified  most  international  human  rights  instruments.  In  January 
2020,  the  country  acceeded  to  the  1961  UN  Convention  on  the  Reduction  of  Statelessness. 
The  country  needs  to  make  additional  efforts  to  ensure  recommendations  of  international 
monitoring  bodies  are  addressed.  In  April  2020,  following  the  declaration  of  the  state  of 
emergency  in  the  context  of  the  COVID-19  crisis,  the  country  informed  the  Council  of 
Europe  that,  pursuant  to  article  15  of  the  European  Convention  on  Human  rights,  it  would 
exercise its right to derogate from its obligations under the Convention, thereby suspending 
or  restricting  certain  human  rights  and  fundamental  freedoms  guaranteed  under  the 
Constitution. In order to curb the spread of the disease, the government introduced measures 
restricting  freedom  of  movement  and  assembly.  Control  mechanisms  have  been  activated. 
The Constitutional Court has a mandate to review any decree adopted by the government and 
it has been actively performing its prerogatives.  

In  2019,  the  European  Court  for  Human  Rights  found  violations  of  the  European 
Convention on Human Rights in 9 out of 12 cases, relating mainly to right to a fair trial and 
property rights. In 2019, new applications allocated to a decision-making decreased further to 
262, from 305 the previous year. At the end of 2019, there were 345 cases pending before the 
Court.  The  country  reduced  the  number  of  judgements  still  to  be  executed  to  36,  of  which 
five  are  under  enhanced  supervision.  The  Council  of  Europe  Committee  of  Ministers' 
Deputies closed its examination of the execution of the judgment in the El Masri case.  

The promotion and enforcement of human rights continued to be strengthened with a new 
competence  granted  to  the  Ombudsman  who,  in  December  2019,  became  the  National 
Rapporteur on Human Trafficking and Illegal Migration. The Parliament appointed three new 
Deputy Ombudspersons. The Office’s budget was increased by 19% compared to 2018, and 
an  additional  8  staff  were  recruited.  Out  of  3,453  complaints  received  in  2019,  the  highest 
number  concerned  the  judiciary  (notably  bailiffs)  followed  by  consumer  rights,  labour 
relations, penitentiary institutions and children’s rights. The highest number of violations was 
confirmed  in  the  judiciary,  followed  by  children’s  rights,  finances,  health  protection  and 
consumer rights. The authorities need to improve their responsiveness to  the Ombudsman’s 
recommendations.   

As regards the prevention of torture and ill-treatment, the government continued to report 
to  the European  Committee for the Prevention of Torture (CPT) every quarter on its action 
plan to address the Committee's recommendations. However, despite high-level commitment 

8  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. 

25 

 
 
                                                           
and regular dialogue, many of the outstanding recommendations from previous CPT reports 
have yet to be implemented. Progress on the ground is very slow, in particular as regards the 
detention  conditions  in  some  prison  sections  and  the  dysfunctional  healthcare  system.  It  is 
imperative that the authorities turn commitments into real change. All outstanding and future 
recommendations of the CPT need to be thoroughly addressed. Training sessions on human 
rights for prison staff were organised throughout 2019 and new staff members were trained 
on  the  Code  of  Conduct  for  Prison  Staff  based  on  the  European  Code  of  Ethics  for  Prison 
Staff,  and  on  the  proper  conditions  for  and  methods  of  coercion.  However,  the  Prison 
Training  Centre  in  Idrizovo  still  lacks  a  structured  training  curriculum  for  initial  and 
continuous professional trainings.  

The  external  oversight  mechanism  for  the  police,  including  prison  police,  is  in  place.  The 
mechanism  for  civil  control  has  been  established  in  the  Ombudsman's  Office  and  became 
operational  in  July  2019.  Three  civil  society  members  were  selected  for  the  civil  control 
mechanism  in  December 2019. Despite the lack of fully independent  investigators assigned 
within  the  dedicated  section  in  the  Public  Prosecutors'  Office  for  the  Prosecution  of 
Organised Crime and Corruption, the system is functional. There were 248 cases against 446 
persons with  police powers or members of the prison police submitted to this section upon 
suspicion of criminal offence. As a result of investigations, six police officers have been put 
in  custody  and  18  have  been  indicted.  There  were  first-instance  verdicts  against  seven  of 
them,  including  four  imprisonment  sentences.  Two  police  officers  were  handed  one-year 
prison  sentences  in  first  instance,  one  police  officer  was  handed  26  months’  imprisonment, 
one police officer a five-month prison sentence and three police officers were handed 2-years 
suspended sentences.  

Systematic implementation of safeguards against ill-treatment by police needs to be ensured, 
in line with the Standard Operating Procedures for the Detention of Persons Deprived of their 
Liberty.  In 2019, 62 complaints were filed with the Directorate for Execution of Sanctions, 
including  three  complaints  for  ill-treatment.  In  these  cases,  extraordinary  oversight  was 
organised,  which  confirmed  the  indications  of  abuse  in  one  case,  but  the  disciplinary 
committee rejected the disciplinary procedures, finding no  grounds for  responsibility of the 
prison  police  officers.  The  Ombudsman’s  Office  received  12  complaints  for  torture  or  ill-
treatment  in  prisons  and  five  complaints  against  the  police  on  similar  grounds.  The 
Department  for  Internal  Control  and  Professional  Standards  at  the  Ministry  of  the  Interior 
handled 65 complaints on the use of physical force by police officers in 2019, out of which 
26 were found to be ungrounded and 38 had no evidence. In one case, criminal charges for 
severe bodily injury and an initiative for a disciplinary decision were filed against one police 
officer,  but  the  case  was  dismissed.  The  Department  has  submitted  97  notifications  to  the 
Section for the investigation and prosecution of criminal acts committed by individuals with 
police authority. The Department has filed seven criminal charges against ten police officers 
for  nine  criminal  acts,  including  for  five  crimes  of  abuse  of  official  position  and  authority, 
one  crime  of  severe  bodily  injury  and  one  crime  of  torture  or  other  inhuman  or  degrading 
treatment  or  punishment.  The  external  oversight  mechanism  for  the  work  of  the  police, 
including  the  prison  police,  has  raised  citizens'  expectations,  and  more  cases  have  been 
reported directly to the Public Prosecution Office.  

Work  to  improve  conditions  in  detention  facilities  is  progressing  unevenly.  It  essential  to 
urgently  address  the  poor  conditions  persistent  in  some  prisons,  police  stations,  social  care 
facilities  and  psychiatric  institutions.  The  Ombudsman  has  reported  allocation  of  adequate 
resources  for  the  activities  of  the  National  Preventive  Mechanism  against  Torture  and  the 
civil  control  mechanism  in  2019,  while  visits  to  places  of  deprivation  of  liberty  were 
suspended  during  the  COVID-19  outbreak.  In  March  2020,  the  National  Preventive 

26 

 
 
Mechanism  issued  recommendations  for  the  treatment  of  persons  deprived  of  their  liberty 
under the circumstances of the COVID-19 pandemic and reiterated the absolute prohibition 
of torture and ill-treatment, even in cases of emergency. 

While  construction  and  refurbishment  in  the  prison  system  continues,  conditions  in  the 
closed  section  and  ‘ambulanta’  of  the  Idrizovo  Penitentiary-Correctional  Facility  remain 
inhumane. The authorities should urgently transfer convicts out of the most derelict buildings 
and  accelerate  the  rehabilitation  of  unsuitable  facilities.  The  new  Law  on  the  execution  of 
sanctions entered into force in May 2019, with legal improvements to strengthen the system 
of  management  and  supervision  of  prisons.  Despite  the  implementation  of  the  2017 
corruption  mitigation  plan,  regular  supervision  is  essential  to  curb  the  persistent  issue  of 
corruption in prisons. The strategy for the development of the penitentiary system continued 
to be implemented, yet preparations for releasing convicted persons back into the community 
remains  insufficient.  Despite  recruiting  new  prison  officers,  the  penitentiary  sector  remains 
understaffed and underfunded. The payment of health insurance for convicted people to the 
Health Insurance Fund started in June 2019. However, healthcare in prisons remains an issue 
of serious concern, including with regard to juveniles and to treatment of drug addictions.  

Training for the probation officers and activities to develop the probation system increased in 
2019.  Througout  2019,  165  probation  cases  were  recorded,  most  of  which  were  for 
supervision  of  convicted  persons  conditionally  released  from  prison  and  for  cases  of 
suspended sentences  with  protected supervision.  A further 34 cases  were recorded in  2020. 
Cooperation  between  the  public  and  private  sector  and  civil  society  exists  and  it  should  be 
interagency  cooperation.  However, 
further  developed.  There  has  been  progress 
coordination  between  probation  officers,  judges,  public  prosecutors,  prison  staff  and  other 
institutions before the release of a convicted person should also be reinforced. The emphasis 
should remain on developing alternatives to detention in order to avoid overcrowding and to 
improve the resocialisation and rehabilitation of convicts with the aim of decreasing instances 
of  re-offending.  The  level  of  purposeful  activities  (educational,  recreational,  vocational)  on 
offer  is  insufficient  for  sentenced  and  inexistent  for  remand  prisoners.  Educational  and 
resocialisation  services,  as  well  as  treatment  programmes,  should  be  reinforced  in  all 
penitentiary facilities and especially in educational-correctional facilities. 

in 

On the protection of personal data, in December 2019, the country 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.  A  new  Law  on  Personal  Data 
Protection  was  adopted  in  February  2020,  to  align  with  the  General  Data  Protection 
Regulation  2016/679,  expanding  the  tasks  and  powers  of  the  new  Personal  Data  Protection 
Agency.  Thirteen  bylaws  were  adopted  in  May  2020.  There  was  no  concrete  progress  on 
alignment with Directive 2016/680 (Law Enforcement Directive). 

The Personal Data Protection Agency was consulted on the preparation of the ‘StopKorona’ 
contact tracing application to ensure its compliance with the new legislation. The Agency has 
published  recommendations  for  personal  data  protection  in  the  context  of  COVID-19 
pandemic on its website.  

The  absence  of  a  director  and  deputy  director  has  impeded  the  proper  functioning  of  the 
Directorate for Personal Data Protection, after the resignation of its Director in May 2019. A 
new director and deputy director were elected by Parliament at the end of December 2019. In 
the reporting period, the Directorate received 463 complaints and carried out 213 inspections, 
both  of  which  are  a  decrease  compared  with  2018  due  to  the  absence  of  a  director.  All 
supervisions  were  suspended  in  March  due  to  the  COVID-19  pandemic.  The  Agency 
conducted an ex officio extraordinary inspection to investigate a possible breach of the safety 

27 

 
 
of personal data processed by the State Election Commission (SEC), following an incident on 
the SEC website on the 15 July election day. Unplanned inspections upon citizens’ requests 
increased  in  2019,  including  at  the  Ministry  of  the  Interior,  establishing  some  breaches  of 
personal data protection legislation, which were later corrected. Most complaints concerned 
allegations  of  violation  of  personal  data  protection  rights  on  social  networks,  video 
surveillance  in  apartment  buildings,  alleged  unlawful  direct  marketing  and  processing  of 
personal identification numbers. Thirteen misdemeanour cases for breach of data protection 
laws were acted upon in the reporting period, eight of which dated from 2018, which resulted 
in eight misdemeanour fines, which remains low. In the reporting period, the Directorate gave 
17  opinions  and  recommendations  to  other  institutions  on  harmonising  sectoral  legislation 
with  the  Law  on  personal  data  protection.  However,  these  recommendations  are  not  fully 
implemented by the institutions concerned and not all laws and by-laws regulating personal 
data processing are submitted to the Directorate before adoption. The Directorate continued 
to provide training to personal data controllers and processors.  

to  be  guaranteed  and 
Freedom  of  thought,  conscience  and  religion  continued 
discrimination  on  grounds  of  religion  prohibited.  The  country  still  needs  to  implement  the 
April  2018  ruling  by  the  European  Court  of  Human  Rights  on  the  refusal  to  renew  the 
registration of the Bektashi Community.  

Freedom of expression  

The country has some level of preparation / is moderately prepared in the area of freedom 
of expression and has made limited progress during the reporting period. The overall situation 
and climate in which media operates remain generally conducive to media freedom and allow 
for  critical  media  reporting,  although  there  have  been  some  increased  tensions  during  the 
COVID-19  crisis  and  in  the  context  of  the  elections.  Self-regulation  efforts  need  to  be 
intensified to support advancement in professional standards and the quality of journalism. It 
is important to ensure greater transparency of media advertising by state institutions, political 
parties and public enterprises. Sustainable solutions to ensure the public service broadcaster's 
independence, professional standards and financial sustainability are needed. It is essential to 
continue  supporting  media  pluralism,  promoting  professionalism,  unbiased  reporting  and 
investigative  journalism,  and  building  resilience  to  effectively  combat  disinformation.  The 
financial sustainability of independent media and working conditions of journalists remain a 
challenge.  

Some of last year’s recommendations remain valid. In the coming year, the country should, in 
particular:  

  prioritise  the  reforms  of  the  public  broadcaster,  ensuring  its  financial  viability  and 
independence  and  finalise  appointments  for  the  public  service  broadcaster's  programme 
council and media regulator's council; 

  increase efforts to fight disinformation and build up resilience of media outlets; 

  ensure 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  in  which  the  media  operates  remained  generally 
conducive to the promotion of freedom of experession. The government showed a proactive 
stance in combating disinformation and allocated additional financial support for print media. 
Authorities also ensured support to media outlets in the context of the COVID-19 pandemic. 
Challenges  remain  in  the  implementation  of  the  Law  on  Audio  and  Audiovisual  Media 

28 

 
 
Services.  Additional  measures  are  needed  to  support  more  overarching  media  reforms  with 
the engagement of all relevant stakeholders through a genuine consultative process.  

Intimidation of journalists 

Since January 2019, 10 cases of intimidation of journalists were reported to the Ministry of 
the  Interior,  marking  an  increase  from  the  previous  year.  In  the  beginning  of  2020,  the 
Association of Journalists registered four new cases of female journalists being insulted and 
/or  threatened.  Law  enforcement  authorities  and  the  Public  Prosecutor’s  Office  effectively 
follow up incidents involving journalists, but further improvements are needed, especially in 
instances involving politicians. Media associations acknowledge the authorities’ commitment 
to the safety of journalists. Better coordination between different institutions is needed to act 
faster on reported violations. Politicians and public officials still need to demonstrate a higher 
level of tolerance towards criticism and promote freedom of expression. Training to improve 
procedures  for  police  conduct  towards  journalists  was  organised  as  part  of  the  cooperation 
between media associations and the police. Old  cases  concerning the most  serious physical 
attacks against journalists (13) have still not been resolved.  

Legislative environment 

The legislative framework has been subject to frequent amendments which have impacted the 
legal certainty for media outlets. The Law on Audio and Audiovisual Media Services was last 
amended in February 2020. Following the request of national TV stations related to respect of 
intellectual property rights in the transmission of foreign channels, the amendments imposed 
an  obligation  for  cable  operators,  in  order  to  register  TV  channels,  to  submit  inter  alia  a 
signed statement under moral, material and criminal responsibility. The government adopted 
several decrees between March and June 2020, in an effort to resolve the dispute between TV 
channels and cable operators but a sustainable solution has yet to be reached. Appointments 
of  the  new  members  of  the  public  service  broadcaster's  programme  council  and  media 
regulator's  council  were  delayed  in  Parliament,  thereby  impeding  the  anticipated  positive 
effects  of  the  reform  on  their  independence.  The  law  provides  an  option  for  authorities  to 
limit the allocation of funds to the regulator, the public broadcaster and the public enterprise 
for  broadcasting.  The  legal  framework  will  need  to  be  further  aligned  with  the  EU 
audiovisual  media  services  directive.  The  electoral  code  was  amended  prior  to  the  2019 
presidential elections, removing the monitoring of online media broadcasting of paid political 
advertisement  by  the  State  Election  Commission.  It  was  amended  once  more  in  February 
2020  as  well  as  through  decrees  during  the  state  of  emergency,  prior  to  the  start  of  the 
campaign for the 15 July early parliamentary elections. The possibility for political parties to 
use  state  funding  for  political  advertising  in  the  media  generated  concern  among  media 
associations  about  possible  influence  on  media  independence.  Hate  speech  is  illegal  both 
online and offline but remains prevalent online.   

Implementation of legislation/institutions 

As part of the media monitoring during the 2019 presidential elections, the Agency for Audio 
and  Audiovisual  Media  Services  initiated  four  misdemeanour  procedures  notably  for 
exceeding the limit for paid political advertising, violating election silence and broadcasting 
paid  political  advertising  in  an  informative  programme.  The  regulator  intensified  its 
engagement with civil society organisations and media outlets on promoting media literacy. It 
opened  an  investigation  on  hidden  media  ownership  and  published  several  reports  on  the 
respect  for  human  rights  and  gender  equality  in  the  media.  The  financial  stability  and 
independence  of  the  media  regulator  need  to  be  further  ensured.  In  2019,  the  Council  of 
Media  Ethics  received  83  complaints  for  disrespect  of  ethical  standards,  notably  online 

29 

 
 
76,5%.  The  Association  of  Journalists  reported  30  ongoing  court  cases  of  insult  and 
defamation involving journalists.  

Public service broadcaster 

The reform of the public service broadcaster is at an early stage and it needs to be prioritised. 
According  to  the  Law  on  Audio  and  Audiovisual  Media  Services,  the  amount  of  public 
funding  for  the  public  broadcaster  is  defined  as  a  percentage  of  the  state  budget,  with  a 
gradual increase over time (up to 0.8% in 2019; up to 0.9% in 2020; 1% as of 2021). Due to 
the authorities’ discretionary rights envisaged by the law, the transfer of funds continued to 
be executed at  a lower percentage (around 0.6%).  In spite of this, additional channels  were 
opened  in  early  April  2020.  The  financial  independence  and  sustainability  of  the  public 
broadcaster,  therefore,  remain  a  question.  It  is  equally  important  to  find  solutions  for  the 
public  service  broadcaster's  old  debts  towards  state  institutions.  Additional  efforts  are 
required to improve the quality of its reporting and to modernise its working procedures and 
its technical equipment. The public service broadcaster became a member of the Council of 
Media Ethics. It is essential to ensure the independence of the public broadcaster. A longer-
term strategic reform is under preparation and it needs to be developed in consultation with 
stakeholders.  During  the  COVID-19  outbreak,  the  public  broadcaster  cooperated  with 
relevant  institutions  to  convey  timely  and  accurate  information,  including  through 
establishing 11 correspondence centres around the country. Programmes destined to children 
were  broadcast  on  two  national  channels,  as  a  remedy  to  the  disruption  of  the  educational 
process. 

Economic factors 

The  media  landscape  has  a  high  number  of  media  outlets  considering  the  rather  small 
consumer  base.  The  Agency  for  Audio  and  Audiovisual  Media  Services  reported  that 
advertising  budgets  are  shrinking.  The  imbalance  between  media  outlets  and  available 
funding  raises  concerns  on  the  financial  viability  of  media  outlets  and  over  media  integrity 
and  independence.  Given  the  economic  situation,  it  is  important  to  continue  supporting 
professional  and  investigative  journalism.  Greater  transparency  on  media  ownership  and 
possible illegal media concentration is needed. The media agency is continuing its efforts in 
this area. At the local level, efforts are needed to ensure independence of media from political 
forces.  

Government  advertising  on  commercial  channels  is  banned.  The  possibility  for  political 
parties to use state funding for advertisement in the media generated concern among media 
associations  about  possible  political  influence  on  editorial  lines.  There  are  five  daily 
newspapers, including two in Albanian language. The authorities allocated an additional EUR 
800,000 to support the print media in 2020. During the COVID-19 pandemic, the authorities 
introduced  several  measures  supporting  the  media  sector,  including  both  traditional  and 
online media. 

Internet 

Online  media  is  not  regulated  by  law  and  diverging  opinions  continued  on  the  need  to 
regulate  the  work  of  the  internet  media  (especially  related  to  disinformation).  The 
establishment  of  self-regulation  mechanism  has  been  proposed.  In  December  2019,  the 
Association of Journalists and Council of Media Ethics established a registry of online media 
(promedia.mk) which is voluntary and sets a number of minimum professional requirements. 
Disinformation,  hate  speech,  disrespect  of  professional  standards  and  violations  of 
intellectual property rights  are frequent  in  online media.  In July 2019, authorities presented 
an action plan for decisive action against disinformation. It is essential that professionals and 

30 

 
 
the  public  at  large  understand  and  become  resilient  against  disinformation  efforts.  Media 
associations praised the  authorities’ proactive stance on  counteracting ‘fake news’, but  also 
warned about possible risks of censorship. The editor-in-chief of an online media outlet was 
handed a six-month suspended sentence for disclosing an official secret. Media associations 
condemned the procedure whereby three journalists were questioned by the police requesting 
to  disclose  their  sources  and  asked  authorities  to  investigate  those  responsible  for  the 
unauthorised audio recordings. The journalists were deprived of a complaints mechanism by 
the Agency on Free Access to Public Information, due to the Parliament’s delay in appointing 
its Director, which finally happened in December 2019.  

Professional organisations and working conditions 

Journalists’  working  conditions,  especially  their  labour  and  social  rights,  need  to  improve 
significantly,  especially  at  local  level.  Some  dismissals  and  resignations  of  journalists  and 
editors-in-chief  took  place  as  a  consequence  of  disagreements  with  media  owners.  Due  to 
poor labour conditions, journalists and media workers are vulnerable to self-censorship. The 
independent union of journalists and media workers negotiated and signed a collective union 
agreement  with  the  state-owned  information  agency.  In  consultation  with  the  Independent 
Trade  Union  of  Journalists,  the  authorities  adopted  a  decree  on  subsidising  social  security 
contributions for journalists/media workers for a period of three months, requiring as a pre-
condition that the media outlets be registered as legal entities, to have transparent ownership 
and a minimum of three employees. 

(See also Chapter 10 - Information society and media) 

The right to freedom of assembly and association is guaranteed by the Constitution. During 
2019 there were no restrictions on the exercise of these rights, including in terms of location. 
Occasional gatherings were held peacefully to draw attention to various social issues. These 
gatherings did not give rise to concerns in terms of use of force. On freedom of association, 
the Law on associations and foundations remains unchanged. 

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

Regarding  property  rights,  a  lack  of  coordination  among  relevant  institutions,  due  also  to 
the absence of strategic documents, still causes lengthy and expensive procedures. This leads 
to  delays  in  updating  registers,  particularly  at  municipal  level.  The  Cadastre  Office 
maintained  a  high  rate  of  over  90%  of  resolved  cases  in  2019.  Registration  of  land  and 
properties has been completed and laser scanning has been conducted on the entire territory. 
The  administrations  that  handle  restitution,  compensation,  and  legalisation  processes  still 
in  2018) 
struggle 
denationalisation cases remain to be resolved. 

their  caseload.  Approximately  6,500  (against  7,000 

to  manage 

In  May  2020,  following  the  challenge  presented  by  the  former  Commission  for  Protection 
from  Discrimination,  the  Constitutional  Court  repealed  the  Law  on  the  Prevention  and 
Protection against Discrimination adopted in 2019. The Court annuled the law for procedural 
reasons as in the repeated vote in Parliament following the former President of the Republic’s 
veto,  the  required  majority  of  MPs  had  not  been  reached  and,  as  such,  the  adoption  was 
unconstitutional. Given that the Parliament had been dissolved ahead of the elections and that 
no  new  vote  could  be  scheduled,  the  country  thus  was  left  without  a  comprehensive  legal 
framework on  non-discrimination. This  repeal also  annuls the  election process  of the new 
anti-discrimination  commission  which  had  been  seriously  delayed  and  leaves  the  country 
without an equality body. It is essential that the Law on the Prevention and Protection against 
Discrimination is re-adopted by the new legislature. This Law had been deemed in line with 

31 

 
 
the  EU  acquis  and  European  standards  on  non-discrimination  and  its  provisions,  including 
the  list  of  protected  grounds  covering  sexual  orientation  and  gender  identity,  need  to  be 
preserved.   

Weaknesses in terms of budgetary allocations and implementation of the 2016-2020 national 
strategy  for  equality  and  non-discrimination  remain.  The  Ombudsman’s  Office  received  60 
complaints  on  discrimination  and  issued  24  opinions.  Amendments  to  the  Criminal  Code 
adopted  in  December  2018  clarified  provisions  on  hate  crime  and  expanded  the  protected 
grounds.  However,  people  are  still  not  adequately  protected  against  hate  speech  and 
discriminatory  speech.  Non-systematic  collection  of  data  on  hate  speech  remains  an  issue. 
The country should make better use of its observer status in the Fundamental Rights Agency 
in  this  regard.  The  increasing  trend  of  hate  crime  cases,  registered  in  the  civil  society 
database,  continued  in  2019.  The  Agency  for  Audio  and  Audiovisual  Media  Services 
continued to react proactively to alleged hate speech and discrimination incidents. The role of 
the  National  Non-discrimination  Coordination  Body  in  implementing  the  law  has  been 
praised  by  civil  society  organisations.  The  Ministry  of  Labour  and  Social  Policy  has,  in 
cooperation  with  NGOs,  started  training  state  officials  on  how  to  tackle  discrimination  and 
hate speech. 

Some  progress  was  made  on  equality  between  women  and  men.  The  legal  framework  is 
largely in line with the EU acquis but it still needs upgrading following the ratification of the 
Istanbul  Convention.  A  Law  on  prevention  and  protection  against  violence  against  women 
and domestic violence, drafted in January 2020, was not adopted by the Parliament before its 
dissolution.  North  Macedonia  published  its  first  Gender  Equality  Index  in  October  2019, 
which indicated improvements regarding equality in decision making. Yet the gender gap in 
this field making remains significant.  

In  accordance  with  UN  Resolution  1325  on  Women,  Peace  and  Security,  a  gender 
perspective  was  integrated  into  the  strategic  documents  of  the  Ministry  of  Defence  and  the 
Army.  A  National  Action  Plan  has  been  developed  for  the  first  time.  Amendments  with 
reference to promotion of gender equality have been included in the Law on Defence and in 
the Law on Service in the Army in January and February 2020. However, the action plan for 
implementing the Resolution has not yet been adopted.  

The Ministry of Labour and Social Policy has continued to invest in community services to 
support  victims  of  gender  based  violence,  including  by  establishing  a  team  of  experts 
available  24  hours  a  day  to  act  in  cases  of  domestic  violence  and  gender  based  violence. 
Domestic  violence  cases  were  among  the  exceptions  still  being  processed  by  the  courts 
during  the  state  of  emergency.  Thirteen  new  services  for  victims  of  gender-based  violence 
were established during the reporting period. There are six shelters, three in Skopje and three 
in  the  Pelagonia,  Vardar  and  East  Region,  leaving  four  regions  without  access  to  such 
services. The shelters still do not meet the minimum standards of the Istanbul Convention and 
most  are  not  accessible  for  women  with  disabilities.  Systematic  data  gathering  on  gender-
based violence is lacking. The action plan for the Istanbul Convention lacks specific funding 
for  its  effective  implementation.  The  implementation  of  the  Law  on  Termination  of 
Pregnancy  requires  access  to  medical  procedures,  contraception  and  information  on  sexual 
and reproductive health throughout the country. Gender stereotyping persists, as do attacks on 
women.  Women  in  public  life  are  susceptible  to  particularly  vicious  attacks  through  social 
media.  

The legal framework for the rights of the child largely complies with international standards. 
The  Law  on  child  protection  was  amended  in  May  2019,  further  strengthening  the  social 
protection  of  children.  The  UN  Committee  on  the  Rights  of  the  Child  recommends 

32 

 
 
implementing  the  current  legal  framework  rather  than  reforming  it.  Mechanisms  to  address 
structural  barriers  are  insufficient,  and  challenges  persist,  such  as  a  lack  of  investment,  an 
ineffective  use  of  available  resources,  a  lack  of  staff  and  insufficient  inter-sectoral 
coordination.  There  is  also  a  need  to  improve  transparency,  accountability  and  planning.  A 
national strategy to promote and protect children’s rights needs to be prepared, accompanied 
by an appropriate budget, and the identification of sectoral models that will provide effective 
services for children, including at local level.  

The statutory body responsible for overseeing the implementation of the Convention on the 
Rights  of  the  Child  is  no  longer  operating.  In  December  2019,  the  government  signed  the 
1996 Convention on Child Protection, the 2005 Convention on Choice of Court Agreements, 
the 2007 Convention on Child Support and Family Maintenance as well as its Protocol on the 
Law Applicable to Maintenance Obligations. The government also signed the pledge to join 
the Global Partnership to End Violence Against Children. A national strategy to end violence 
against children (2020 – 2025) was developed, including an action plan for 2020-2022.   

Data collection on the incidence, prevalence and typology of violence involving children, as 
well as baseline data on child protection issues, is limited. Data on vulnerable groups such as 
children with disabilities or children from the Roma community need to be further improved 
to allow for solid policy analysis. Further efforts are needed in raising awareness on violence 
against  children  and  increasing  the  professionals’  capacity  to  identify  and  report  violence 
against  children.  Stakeholders  should  make  the  best  interest  of  the  child  their  guiding 
principle. 

With emergence of the COVID-19 crisis, the Ministry of Labour and Social Policy released 
from work duties one parent of children aged 10 years or below. The Ministry also distributed 
personal  hygine  parcels  to  the  most  vulnerable  families  and  provided  online  psychosocial 
support to children with disabilities. 

The  deinstitutionalisation  process  is  under  way  and  conditions  for  children  settled  into 
community based care homes are generally satisfactory. This process has led to the closure of 
three  residential  institutions.  Ensuring  quality  of  service  delivery  through  effective 
monitoring is essential. Additional community services are needed to identify children at risk 
and to support Roma children and children with disabilities who are victims of discrimination 
and segregation.  

The National unit for the suppression of human trafficking and migrant smuggling identified 
six  victims  of  trafficking  in  human  beings  in  2019,  four  of  whom  were  children  who  were 
trafficked  victims  for  forced  marriage,  sexual  and  labour  exploitation.  The  Ombudsman’s 
Office  registered  a  significant  increase  in  the  number  of  complaints  of  violations  of  child 
rights. The Office confirmed 139 violations of childrens’ rights in 2019. 

The application of the Law on juvenile justice needs to be improved, particularly the rules on 
access  to  justice,  legal  representation  and  the  capacity  of  public  officials  involved  in  the 
handling of children victims, children witnesses and children in conflict with the law. There 
were  no  improvements  in  the  material  conditions  and  availability  of  education  and 
resocialisation activities for detained children. The juvenile educational-correctional  facility 
near Tetovo is still not open resulting in juvenile detention in the adult prison in Ohrid under 
inadequate  conditions  and ill-treatment.  The role  of the State Council for  the Prevention of 
Juvenile Delinquency should be strengthened, as should the capacity of the local councils.  

There was some progress in improving the rights of persons with disabilities. The national 
coordination  body  for  implementing  the  UN  Convention  on  the  Rights  of  Persons  with 
Disabilities meets regularly and is guided by the national action plan on the Convention. The 

33 

 
 
national  monitoring  body  for  the  UN  Convention  began  its  work  in  2019  with  some  delay, 
but it does not systematically communicate and engage with organisations supporting persons 
with  disabilities.  The  new  Law  on  social  protection  and  the  new  Law  on  protection  of 
patients’  rights  adopted  in  2019  recognise  disability  as  a  ground  for  discrimination  and 
require personal assistance for such persons. The disability allowance has been extended to a 
wider  group  of  persons  with  disabilities.  The  new  Law  on  primary  education  emphasises 
inclusive education and  transforming special needs  schools into resource  centres. A lack of 
resources and inadequate teacher training remain obstacles to inclusive education. In 2019, 87 
children  were  resettled  from  residential  institutions  into  community-based  homes.  The 
moratorium  on  admitting  new  residents  to  the  Special  Institute  of  Demir  Kapija  is  still  in 
effect but conditions in this institution remain very poor. Persons with disabilities continue to 
face  considerable  discrimination,  both  direct  and  indirect,  due  to  infrastructure-related 
barriers, a lack of information and services, discriminatory attitudes and social exclusion. In 
2019,  the  Ombudsman’s  Office  reported  24  complaints  of  discrimination  against  children 
with disabilities. (See also Chapter 19 – Social Policy and employment) 

Following  the  decision  of  the  Constitutional  Court  repealing  the  Law  on  prevention  and 
protection  from  discrimination,  the  rights  of  lesbian,  gay,  bisexual,  transgender  and 
intersex (LGBTI) persons are no longer protected in the legal framework. It is essential that 
the Law, when it is put up for re-adoption in the new Parliament, includes sexual orientation 
and  gender  identity  as  protected  grounds.  The  Ministry  of  Labour  and  Social  Policy  has 
shown  consistent  support  for  LGBTI  persons.  In  June  2019,  the  authorities  enabled  the 
successful organisation of the first Pride Parade in the country (with presence of members of 
Parliament, government and other officials participating), which took place without incidents 
and  enjoyed  wide  media  coverage.  However,  an  LGBTI  activist  was  attacked  on  two 
occasions  in  2019  and  2020.  Hate  speech  online  was  prevalent  and  derogatory  terms  for 
LGBTI  persons  occasionally  crept  into  the  public  debate.  Investigations  of  the  2012,  2013 
and 2014 attacks on the LGBTI support centre have not progressed. Societal prejudice, hate 
speech,  discrimination  and  widespread  intolerance  against  LGBTI  persons  continue  to  be 
prevalent. Efforts are needed to  increase the capacity of law enforcement  officers and legal 
professionals to prevent and prosecute all instances of violence, hate crimes and hate speech 
more effectively. The legal framework does not allow for the official recognition of same-sex 
couples. Transgender persons’ access to healthcare remains limited. Little concrete progress 
was  made  towards  establishing  legally  regulated  gender  recognition  procedures,  following 
the ECtHR judgment from January 2019. 

The only development in procedural rights was the enactment of the new Law on legal aid. 
Primary legal aid is provided by the Ministry of Justice, authorised civil society organisations 
or  legal  clinics  in  the  form  of  counselling,  information  and  assistance  with  procedures. 
Secondary legal aid is for civil and administrative procedures, and sometimes for procedures 
with  notaries  and  bailiffs.  The  legal  framework  provides  for  the  presumption  of  innocence 
and  right  to  communicate  with  a  lawyer.  There  have  been  no  developments  regarding 
victims’ rights and the Law on compensation of victims of crime has still not been adopted. 

On  the  protection  of  minorities,  in  December  2019,  the  Venice  Commission  issued  its 
Opinion on the Law on the use of languages, in which it invited the authorities to re-examine 
some provisions of the new law. A new law clarifying the role and mandate of the Agency for 
Communities Rights Realisation was adopted in Parliament in January 2020. Under the new 
law, the Agency will have improved competencies to monitor and guide public institutions in 
upholding  their  legal  obligations  towards  minorities.  The  new  Ministry  of  Political  System 
and Inter-Community Relations is responsible for the ‘one society for all’ strategy adopted in 
September 2019. The Ministry needs to show that it is actively implementing the strategy and 

34 

 
 
to cooperate closely with stakeholders to establish social cohesion. However, implementation 
and monitoring structures for this strategy are still pending and interinstitutional cooperation 
between  relevant  stakeholders  is  weak.  In  the  context  of  implementation  of  the  strategy, 
particular  attention  is  needed  to  ensure  the  rights  of  smaller  non-majority  communities  are 
respected  and  that  their  underrepresentation  is  addressed.  The  institutions  in  charge  of 
minority-related  policies  remain  understaffed,  insufficiently  funded  and  politically  and 
ethnically  divided.  Without  clear  political  actions  to  manage  ethnic  divides  at  national  and 
local  level,  communities  will  remain  divided  along  ethnic  lines.  Recommendations  by  the 
Advisory  Committee  of  the  Framework  Convention  on  National  Minorities  have  still  not 
been addressed sufficiently nor their implementation monitored. 

Roma  inclusion  is  receiving  increased  attention  from  both  the  national  and  the  local 
authorities,  though  much  still  needs  to  be  done.  Implementation  of  the  Roma  inclusion 
policies  is  slow  and  lacking  sufficient  capacity  for  implementation,  coordination  and 
monitoring.  The  government  has  increased  funding  for  Roma  integration  policies  but  poor 
absorption of funds remains a problem.  

Roma people have limited economic opportunities and many fail to earn a living. Only 3% of 
those  benefiting  from  active  labor  market  policies  are  Roma.  The  housing  situation  is 
dramatic, with a high proportion of Roma living in illegal settlements and/or substandard and 
unhygienic environments. The Law on persons without regulated civil status, enabling access 
to  mainstream  services  for  the  750  Roma  identified  to  be  without  an  ID  document,  was 
adopted  but  its  implementation  is  hindered.  The  1961  UN  Convention  on  Reduction  of 
Statelessness has been ratified, creating prospects for a systemic solution for birth and civil 
registration  of  all  undocumented  persons.  The  Declaration  of  Western  Balkans  Partners  on 
Roma Integration within the EU Enlargement Process (Poznan Declaration) was endorsed by 
the  government,  but  no  steps  have  been  taken  to  implement  it.  The  2019  Roma  Seminar 
conclusions are yet to be implemented.  

Despite the existence of legal frameworks protecting human rights, Roma are often victims of 
racism,  discrimination  and  segregation.  Systematic  measures  to  address  the  issue  of  street 
children are lacking, and child beggars including young mothers and babies are recorded on 
the streets. There is no comprehensive approach on Roma asylum seekers and returnees. The 
Ministries of Health and Education continue to support Roma mediators. Effective actions for 
capacity building helped Roma NGOs to develop a strong core of well-trained activists ready 
to  handle  challenges  in  their  communities.  The  authorities,  in  cooperation  with  donors  and 
civil society, acted during the COVID-19 pandemic to support the most vulnerable, including 
the Roma. The Roma community is particularly vulnerable in the context of the COVID-19 
crisis and it is essential to guarantee full access to heath services in order to control the spead 
of  the  virus.  Overall,  many  Roma  continue  to  live  in  poverty,  and  face  unemployment  and 
substandard  living  conditions.  Their  access  to  education,  housing,  health  and  employment 
and  justice  remains  a  concern.  Roma  children  are  especially  at  risk,  as  poverty  and 
discrimination act as further barriers to receiving education. 

EU citizens’ rights 

Since December 2012, North  Macedonia has introduced a modification in  the law allowing 
the  acquisition  of  citizenship  for  special  economic  interest.  The  migratory  and  security 
risks this scheme could pose to the EU are being closely monitored. 

2.2.2  Chapter 24: Justice, freedom and security  

The EU has common rules for border control, visas, residence and work permits, external 
migration and asylum. Schengen cooperation entails the lifting of border controls within the 

35 

 
 
EU. EU Member States also cooperate with North Macedonia in the fight against organised 
crime and terrorism, and in judicial, police and customs matters and are supported by the 
EU Justice and Home Affairs Agencies. 

North Macedonia is moderately prepared to implement the EU acquis. Good progress was 
made including in meeting last year’s recommendation to effectively implement some of the 
institutional reforms of the security sector as well as the reform of the  intelligence services. 
The  operational  capacities  of  law  enforcement  agencies  also  improved.  Efforts  need  to 
continue  in  implementing  the  strategy  for  Strenghtening  the  Capacities  for  Conducting 
Financial  Investigations  and  Confiscation  of  Property.  Migration  management  efforts 
continued. The status agreement with the EU for cooperation with the European Border and 
Coast  Guard  Agency  has  not  been  signed  yet.  Registration  of  migrants  and  protection-
sensitive  profiling  still  needs  to  be  carried  out  in  a  more  systematic  manner.  Measures  to 
counter violent extremism and fight terrorism need to continue.  

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

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

  ensure implementation of the priorities of the Joint Action Plan on Counterterrorism and 

effective performance of the Coordinator's office.  

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  and  efforts  to  implement 
strategies against organised crime must continue.  Some progress was made in meeting last 
year’s recommendation to establish an asset recovery office in line with the EU acquis. This 
office  will  have  to  demonstrate  its  capacity  to  support  a  pro  active  policy  of  assets 
confiscation.  The  country  is  engaged  in  participating  into  threat  assessment  at  the  regional 
level, and will have to broaden its scope in line with the EU practices. There is some progress 
at  the  operational  level,  but  more  needs  to  be  done  to  improve  the  effectiveness  of  law 
enforcement  in  fighting  specific  forms  of  crime,  such  as  money  laundering  and  financial 
crimes. Efforts  are still needed to  establish  a centralised bank account  register, in  line  with 
the  5th  EU  Money  Laundering  Directive.  Coordination  remains  crucial  for  all  stakeholders 
involved in fighting organised crime. 

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

  further  bolster  the  track  record  of  investigations,  prosecutions  and  convictions  for 
organised  crime  and  money  laundering,  and  demonstrate  the  ability  to  effectively 
dismantle large organised criminal networks; 

  increase the use of confiscation of the proceeds of crime by the courts; 

  increase  the  functionality  and  capacity  of  the  investigative  centres  set  up  in  the 

prosecution. 

Institutional set-up and legal alignment  

The  country  has  213  uniformed  police  officers  (including  cadets)  per  100  000  inhabitants 
compared with the EU average of 326 per 100 000 people in 2017 according to Eurostat. In 

36 

 
 
2019, 533 new police officers were employed. One new public vacancy was announced for 
the recruitment of 600 police officers.  

Major restructuration was undertaken to improve the institutional setup in the security sector. 
Key institutions in the fight against organised crime are specialised police sectors within the 
Ministry  of  the  Interior.  Each  of  them  deals  with  different  types  of  organised  crime  and 
financial investigation. The Financial Intelligence Unit under the Ministry of Finance is also 
involved  in  financial  investigations.  It  collects  information  and  helps  identify  suspicious 
transactions.  New  specialised  financial  investigation  units  were  set  up  within  the  Custom 
Administration and within the Financial Police. They need to step up their performance. 

Some  police  units  are  well  equipped  and  trained.  The  Police  Training  Centre  within  the 
Ministry of the Interior provides both initial and vocational training.  

Intelligence  services  reforms  continued.  As  a  result,  the  Ministry  of  the  Interior  underwent 
restructuring. The Bureau for Security and Counterintelligence (UBK) ceased to exist. A new 
independent  National  Security  Agency,  in  charge  of  counterintelligence,  was  set  up  in 
September 2019. The Agency needs to change its premises, separate from the Ministry of the 
Interior. The recruitment process for the Agency which was carried out in line with the law, is 
complete. Former employees of the Bureau for Security and Counterintelligence were entitled 
to apply. The police competences of the former Bureau for Security and Counterintelligence 
have been transferred to the Directorate for the Suppression of Organised and Serious Crime 
within the Ministry of the Interior.   

the 
The  system  for  interception  of  communications  was  reformed,  resulting 
establishment  of  the  Operational  Technical  Agency  (OTA).  The  remaining  three  out  of  six 
authorised  bodies  i.e.  Public  Prosecution  Office,  the  Financial  Police  and  the  Customs 
Administration still need to be connected to the OTA. The technical conditions for a proper 
functioning of the system need to be ensured.  

into 

An  Asset  Recovery  Office  was  set  up  within  the  Public  Prosecution  Office.  The  National 
Cyber Security Council was established in July in accordance with the national cyber security 
strategy (2018-2022). The Council is composed of the Minister of Defence, the Minister of 
the  Interior  and  the  Minister  of  Information  Society  and  Administration.  The  Council  is 
responsible  for  coordinating  and  monitoring  the  implementation  of  the  strategy,  and 
providing strategic guidance. 

Regarding the legal framework, the Criminal Code is broadly in line with EU standards and 
criminalises trafficking in human beings, online child pornography, computer crime and drug 
trafficking. The Law for the prevention of money laundering and financing of terrorism was 
amended authorising cash payments of up to EUR 3000 compared to EUR 500 previously. 

On the strategic framework, the country is currently developing a regional threat assessment 
on serious and organised crime aiming to identify common priorities between members of the 
Southeast European Police Chiefs Association. It needs to be updated to ensure consistency 
with  the  Europol  policy  cycle/EMPACT,  a  four-year  policy  cycle  set  up  by  the  European 
Union  in  order  to  create  a  greater  measure  of  continuity  for  the  fight  against  serious 
international  and  organised  crime.  There  is  a  national  strategy  for  prevention  of  money 
laundering  and  financing  of  terrorism  (with  an  accompanying  action  plan)  for  2017-2019. 
The strategy for strenghtening capacities to conduct financial investigations and to confiscate 
property  for  asset  recovery  is  being  implemented  including  through  institutional  and 
operational reforms within the Ministry of the Interior.  

There is  also  a 2017-2020 national  strategy and  an action plan for  combating trafficking in 
human beings and illegal migration. The National Commission for Combating Trafficking in 

37 

 
 
Human Beings and Illegal Migration is responsible for monitoring the implementation of the 
Strategy.  The  decentralisation  of  the  National  Commission,  through  the  creation  of  local 
commissions at the municipal level, has yet to prove its effectiveness. The 2016-2020 police 
development strategy and the action plan, as well as the 2017-2020 national small arms and 
light  weapons  control  strategy  and  action  plan  and  a  2018-2022  national  cybersecurity 
strategy and action plan are all being implemented.   

Implementation and enforcement capacity  

In  2019,  North  Macedonia’s  track  record  for  fighting  organised  crime  improved  further. 
There is a steady increase in the number of criminal investigations opened against organised 
crime  groups,  especially  against  groups  involving  many  suspects,  i.e.  up  to  21  individuals 
charged for smuggling migrants. Until 31 March 2020, 19 new investigations were launched 
against  108  people,  and  two  investigations  from  2018  against  15  suspects  continued.  The 
investigations mainly concern migrants’ smuggling or drugs related offences. 31 trials were 
held  during  the  last  2  years,  resulting  in  first  instance  convictions  for  71  individuals 
(including plea bargaining). In 2019, there were 56 final convictions.  

So far, 99 individuals have been indicted (up from  37 in  2017 and 69 in 2018)  for various 
crimes such as falsification of documents, fraud, money laundering, smuggling or trafficking 
in human beings.  

The  external  oversight  mechanism  is  set  up.  The  Special  Department  in  the  Public 
Prosecutor's  Office  for  investigation  and  prosecution  of  crimes  committed  by  persons  with 
police powers and members of the prison police is missing 9 investigators. The department 
received  248  reports  of  brutality  or  other  crimes  by  446  police  officers  and  prison  police 
officers.  Such  reports  include  charges  reported  from  other  prosecutions  offices,  from  the 
Ministry  of  the  Interior,  from  individuals  and  anonymous  reports.  Six  suspects  were  put  in 
custody. Indictments were filed for 18 officers and first-instance verdicts were handed down 
against  seven  of  them,  including  four  with  imprisonment.  The  selection  of  three  NGOs 
members for the functioning of civil control mechanism within the Ombudsman is finalised. 
Their role is to assist and support the victims. 

The National Coordination Centre for the Fight against Organised Crime has improved 
its  operational  capacity.  All  relevant  institutions  assigned  their  representatives  and  are 
connected  to  the  Centre.  All  participating  authorities  have  access  to  their  respective 
databases.  The  Centre  is  focused  on  the  inter-institutional  exchange  of  information  and  not 
inter-institutional  cooperation  as  such.  Working  in  multidisciplinary  teams  has  to  be 
encouraged to make full use of the Centre’s capabilities.  

The Basic Public Prosecutor’s Office against Organised Crime and Corruption still does not 
have  enough  public  prosecutors.  Only  9  out  of  the  planned  15  positions  have  been  filled. 
Aside from insufficient human resources, there is also a lack of financial resources for expert 
services. Specialisation within the Office is needed, as well as a more proactive approach in 
pursuing the cases. 

Investigative centres were set up in the Basic Public Prosecution Office in Skopje, Kumanovo 
and Tetovo and in the Basic Public Prosecutor’s Office for Organised Crime and Corruption. 
Their purpose is to improve relations between prosecutors, the police and other relevant 
bodies.  They  need  to  have  sufficient  staff  including  experts  and  adequate  equipment  to 
become operational.  

The country participates in  international  police cooperation through the main cooperation 
channels.  Cooperation  with  Europol  is  well  established  following  the  conclusion  of  a 
strategic  agreement  in  2007  and  an  operational  agreement  in  2011.  There  is  operational 

38 

 
 
cooperation in  the fight  against trafficking  of human beings,  weapons,  and drugs.  A secure 
communication link for information exchange (SIENA) was established. Compared to 2018, 
in 2019, the number of new cases increased by 17% and the number of exchanged messages 
increased by 13%. Cooperation and data exchange can be further improved through a more 
proactive approach in information sharing. A liaison officer from North Macedonia has been 
posted in Europol headquarters in The Hague since 2015. In 2019, the country participated in 
five  international  operations  to  detect  and  dismantle  organised  criminal  networks  and 
participated  in  five  joint  action  days  with  EuropolThe  Training  Centre  is  implementing  the 
Working  Arrangement  between  the  Ministry  of  the  Interior  and  the  European  Police 
Academy (CEPOL) signed in August 2017. MoI and CEPOL signed a Training Cooperation 
Plan for the period 2019-2020. This plan stems from CEPOL’s commitment to increase co-
operation  with  third  countries  and  EU  candidate  countries  The  country  needs  to  continue 
being responsive by using opportunities offered by CEPOL, despite its budgetary constraints. 

On financial investigations, the law enforcement units and prosecution bodies should boost 
operational  capacity.  More  active  use  of  multidisciplinary  cooperation  between  them  is 
needed. Establishing a central bank account register, the access to which would significantly 
contribute to the quality of financial investigations, is pending finalisation and adoption of the 
new law on payment services. 

In 2019, confiscation of criminal assets was limited to 21 people. It included confiscation of 
real estate in three cases. Confiscation of criminal assets should become a strategic priority 
in the fight against organised crime, terrorism and high level corruption in the country. The 
country’s  tools  for  freezing,  managing  and  confiscating  criminal  assets  are  not  effective 
enough. There is a need for systematic use of the confiscation or extended confiscation for a 
limited list of offences. A real focus on the proceeds of crime is needed. 

A dedicated task force for fighting trafficking in human beings and illegal migration that 
includes representatives from the Ministry of the Interior and two prosecutors from the Basic 
Public Prosecutor’s Office for Prosecuting Organised Crime and Corruption is operational. In 
2019,  there  were  six  identified  victims  of  trafficking,  all  are  females  and  four  are  children 
(two victims of forced marriage, one of sexual exploitation and one of forced labour, one of 
whom is foreign). There were final convictions including plea bargains against 23 individuals 
for  trafficking  in  human  beings  or  migrants  smuggling.  In  the  first  quarter  of  2020,  five 
individuals were indicted for traffiking of human beings and 11 individuals were indicted for 
smuggling  of  migrants.In  2019,  there  was  one  final  conviction  for  money  laundering, 
against  one  individual.  Indictments  were  brought  against  five  individuals.  All  relevant 
institutions must still proactively implement anti-money laundering legislation.  

On  small  arms  and  light  weapons,  there  are  tangible  results  with  100  pieces  of  firearms 
seized.  In  2019,  more  than  600  pieces  of  weapons  were  destroyed.  In  2019,  138  criminal 
offences on illegal production, possesion and trading in weapons or explosives were detected, 
for which 153 perpetrators were  criminally  charged. There  are specific rules for the import 
and  sale  of  weapons  and  ammunition  including  specific  regimes  and  procedures  for  four 
separate  categories.  Two  of  the  five  EU  Policy  Cycle  /  EMPACT  action  days  concerned 
firearms trafficking. Four employees of the Minister of the Interior were nominated as focus 
point for firearms. 

Regarding cybercrime, a total of 56 computer crimes were detected in 2019 (105 in 2018). 
No cases of production and distribution of child pornography were reported. Steps were taken 
to  support  the  implementation  of  the  strategy  on  cybercrime,  including  monitoring  the 
darkweb.  North  Macedonia  should  continue  to  strengthen  its  law  enforcement  focusing  on 
detection, traceability and the prosecution of cyber criminals. 

39 

 
 
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 

The law on drug and psychotropic substance control needs to be revised to be fully aligned 
with  the  EU  acquis  and  provide  an  early  warning  system  for  detecting  new  psychoactive 
substances. 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.  

Implementation and enforcement capacity 

Until  the  31  March  2020,  the  track  record  of  North  Macedonia  for  seizing  drugs  and 
dismantling  organised  crime  groups  continued  to  improve.  There  was  an  increase  in  the 
detection  of  drug-related  criminal  offences  and  in  the  number  of  perpetrators.  16  criminal 
charges  were  pressed  against  28  individuals.  Altogether,  986  kilogrammes  of  various 
narcotics  were  seized  (1,538  kilogrammes  in  2018)  by  the  Ministry  of  the  Interior.  The 
largest  share  was  marijuana  (977.2  kilogrammes),  followed  by  heroin  (5,687.22  grammes), 
cocaine (1853.3 grammes), and hashish (5,419 grammes). The Custom Administration seized 
410,663.72 grammes of marijuana. Investigations resulted in the dismantling of six organised 
criminal groups (8 in 2018). Cooperation with neighbouring countries is good, including ad 
hoc cooperation.  

The operational capacity of the National Drugs Observatory still needs to be strengthened so 
it  can  implement  its  drug-monitoring  tasks.  Data  collection,  analysis  and  reporting  in  line 
with  the  European  Monitoring  Centre  for  Drugs  and  Drug  Addictions’  requirements  and 
methodologies requires further strengthening. There is still no national early warning system 
in North Macedonia. 

The lack of secure storage for drugs and drug precursors prior to destruction remains an issue 
of concern.  

Fight against terrorism 

Institutional set-up and legal alignment  

There  is  a  national  coordinator  for  counter-terrorism  and  countering  violent  extremism  and 
two deputies (one position is vacant) responsible for prevention of violent extremism and for 
the  fight  against  terrorism.  They  are  responsible  for  coordinating  interinstitutional 
cooperation.  The  coordinator  is  the  head  of  the  National  Committee  for  the  Prevention  of 
Violent  Extremism  and  the  Fight  against  Terrorism  where  key  institutions  are  represented. 
Some  of  them  rightfully  allocated  funds  for  activities  to  prevent  and  counter  violent 
extremism.  The  Office  of  the  National  Coordinator  and  the  National  Committee  have  been 
allocated  two  temporary  staff  by  the  International  Organisation  for  Migration  which 
improved the Office’s capacities.  

Part  of  the  terrorism-related  competences  of  the  dissolved  Directorate  for  Security  and 
Counterintelligence  (UBK),  were  transferred  to  the  Department  for  the  suppression  of 
organised  and  serious  crime  located  in  the  Ministry  of  the  Interior.  A  sector  for  the  fight 
against  terrorism,  violent  extremism  and  radicalism  was  created  and  it  is  responsible  for 
criminal investigations. 

The legal framework is largely aligned with the EU acquis and international anti-terrorism 
instruments. Terrorism-related issues are regulated by the Criminal Code which was amended 
in 2014 in line with UN Security Council Resolution 2178/2014 according to which all States 

40 

 
 
must ensure that their legal systems provide for the prosecution, as serious criminal offences, 
of  travel  for  terrorism  or  related  training,  as  well  as  the  financing  or  facilitation  of  such 
activities. 

North  Macedonia  has  a  national  counter  terrorism  strategy  (2018-2022)  and  a  strategy  for 
countering violent extremism (2018-2022) both with related action plans.  

terrorism.  North  Macedonia  has  submited 

In  October  2019,  the  country  and  the  EU  signed  a  bilateral  implementing  arrangement 
outlining concrete measures to be accomplished in the framework of the joint action plan on 
counter 
the 
implementation of the arrangement in July 2020. The finalisation of amendments to the Code 
on Criminal Procedure has been an important step in the implementation of the action plan. 
Work  on  the implementation  of  all  five  objectives  of  the  joint  action  plan  should  continue, 
especially as regards the creation of a joint terrorism threat assessment. 

interim  report  on 

its  first 

In  March  2020,  the  government  adopted  the  national  risk  assessment  on  money  laundering 
and financing of terrorism. 

Implementation and enforcement capacity  

There were no anti-terrorist operations or court cases in 2019. Four people, from among 23 
who  were  convicted  on  charges  of  participating  in  foreign  military,  police  and  paramilitary 
formations in 2016, were released from prison in 2019. In total, 10 people were released so 
far (six in 2018). Nine are still serving their sentences. 

An estimated 156 of the country's citizens left for conflict zones (Syria and Iraq) since 2012: 
of these, 76 have returned, 37 have been killed and 17 are still in conflict areas (plus around 
23 children). No one left in 2019. In February 2020, one foreign terrorist fighter was deported 
from  Turkey  and  was  charged  with  participation  in  a  foreign  army,  police  or  paramilitary 
formations. In March, one woman and two children were repatriated from the refugee camp 
in Turkey. 

There is regular exchange of information through Europol. A collaboration with the Europol 
Internet Referral Unit (IRU) has started for dealing with terrorist content online. The roll out 
of CT SIENA to the country increased the opportunities for direct and secure CT information 
exchange. Cooperation between law enforcement agencies, intelligence services and relevant 
key state institutions (education, health and social services) continued. There is need to step 
up  efforts  to  make  an  inter-institutional  joint  threat  assessment.  Local  mechanisms  for 
prevention  and  countering  of  violent  extremism  have  been  set  up  in  some  municipalities. 
Community action teams have been set up in the most sensitive areas namely Cair, Gostivar 
and Kicevo. In addition, the local preventive council has been reactivated in Kumanovo and 
similar  actions  are  planned  for  other  places.  These  mechanisms  need  to  demonstrate  their 
capacity to contribute to the early identification of radicalisation. 

Efforts were made to introduce de-radicalisation programmes in prisons. Prison staff received 
training and multi-faceted teams were set up in five prisons to work with radicalised prisoners 
on a daily basis. More needs to be done on reintegrating and resocialisating returnees.  

North Macedonia actively participates in the implementation of the Western Balkan Counter 
Terrorism initiative (WBCTi). 

41 

 
 
Legal and irregular migration 

Institutional set-up and legal alignment  

The  legal  framework  is  largely  in  line  with  EU  standards.  The  crisis  situation  at  the 
country’s borders was extended, authorising continued deployment of the army.  

The Ministry of the Interior is the main actor in the field of migration. The fragmentation of 
tasks  between  the  institutions  dealing  with  migration  persists,  making  management  less 
effective. Progress was made on implementing the standard operating procedures (SOPs) for 
unaccompanied  and  separated  children  and  for  vulnerable  categories  of  foreigners.  The 
National  Commission  for  Combating  Trafficking  in  Human  Beings  and  Illegal  Migration 
organised training for a large number of first line civil servants to help them implement the 
SOPs. 

The Resolution  on Migration Policy adopted by  the government  in  2015 is  the main policy 
document in this field. Although the new strategy for integration of refugees and foreigners 
was prepared three years ago, it is still pending adoption as there is no political will to move 
it forward. 

The country ratified the 1961 Convention on the Reduction of Statelessness. 

Implementation and enforcement capacity  

The country continues to plays an active role in the management of mixed migration flows. It 
remains  on  one  of  the  main  transit  routes  for  irregular  mixed  movement.  The  contingency 
plan to  manage large migratory  flows still needs to  be  finalised  and agreed upon. With the 
support of guest officers from EU Member States, effective control at the southern border has 
been ensured.  

The  country  has  still  not  set  up  a  fully  fledged  protection  sensitive  migration  management 
system.  Registration  of  all  individuals  apprehended  in  irregular  movement  for  migration 
management purposes still needs to be carried out in a more systematic manner. Registration 
should  be  followed  by  systematic  protection-sensitive  profiling  and  referring  anyone 
identified as being in need of international protection to national protection mechanisms. In 
the absence of a proper system for managing irregular movements, the practice of returning 
migrants  outside  of  a  legal  and/or  procedural  framework  reportedly  continued.  There  is  a 
systematic  substantial  discrepancy  between  the  figures  of  reported  illegal  crossings  and 
presence in the transit centres, which are often almost empty. 

Irregular movement through the territory continued at  an increased pace compared with the 
previous two years. The official number of irregular arrivals in 2019 stands at 20314, a 16% 
increase compared with 2018. However, the real number of arrivals in 2019 is estimated to be 
much higher. Movements are predominantly northward, from Greece towards Serbia. 

The migrant profile remained largely the same as in the previous two years, with nationals of 
Pakistan (35%) and Afghanistan (23%) constituting the largest groups, predominantly single 
males. People in irregular movement remain targets of organised criminal groups engaged in 
people smuggling, that often extort money and abuse them in various ways.  

The  number  of  detected  smuggling  attempts  has  increased,  and  although  police  operations 
and  some  arrests  took  place,  smuggling  continues  on  a  large  scale.  As  of  December  2019, 
around  119  people  were  stranded  in  the  country.  82  criminal  charges  were  filed  against  64 
individuals  for  smuggling  migrants.  There  were  convictions  against  23  individuals.  The 
number  of  migrants  smuggled  remains  high  and  combating  smuggling  networks  must  be 
improved and be a priority.  

42 

 
 
Both  reception  and  transit  centers  on  the  southern  and  norther  borders  provide  short-term 
accommodation for a total of 971 persons. Neither of the transit centres are suitable for long-
term  stays,  and  the  authorities  continue  to  be  reluctant  to  allow  for  more  than  a  temporary 
stay.  

The readmission agreement with the EU is being implemented in a satisfactory manner by the 
country. According to EUROSTAT, 3,850 citizens of North Macedonia were ordered to leave 
in 2019 (3,500 in 2018). There were 3,005 returned following an order to leave (a return rate 
of  78%)  in  2019  against  3,470  in  2018  (99%).  Assisted  voluntary  returns  procedures  were 
carried out for 25 migrants towards third countries.  Attention should be given to successful 
reintegration of returnees. 
Kosovo Roma refugees estimated at 343, remain in limbo, with an uncertain status. Except 
for  a  limited  number  (16)  of  recognised  refugees,  the  rest  have  either  subsidiary  protection 
(198) or no status (129), and are just tolerated in the country. After two decades of living in 
the country, with various statuses, they need the authorities to find a sustainable solution.  

Asylum 

Institutional set-up and legal alignment  

The Law on international and temporary protection, adopted in April 2018 is largely aligned 
with the EU acquis. By-laws deriving from the law on international and temporary protection 
were adopted. A gap remains in the area of detention for people in irregular movements, as 
the current legislation does not provide alternatives to detention. The law provides the right 
for  family  reunification.  Recognised  refugees  can  benefit  from  it  immediately  but  concerns 
remain  on  delayed  family  reunification  for  people  under  subsidiary  protection,  for  2  years 
following  status  recognition.  Since  subsidiary  protection  is  becoming  a  prevalent  form  of 
protection  granted  in  the  country,  including  for  unaccompanied  children,  such  delays  may 
significantly  affect  the  right  to  family  unity  and,  in  the  case  of  children,  contravene  the 
principle of the best interest of the child. 

A  new  Law  on  foreigners  entered  into  force  in  May  2019.  Among  other  benefits  it  grants 
long-term  residence  to  people  who  have  enjoyed  international  protection,  thus  facilitating 
their  local  integration.  However,  they  must  still  present  proof  of  regular  income  and  a 
registered place of residence to benefit from this provision. Given the extreme vulnerability 
of  some  applicants,  there  is  a  risk  that  this  new  provision  remains  only  theoretical.  Such 
requirements  are  especially  difficult  for  Kosovo  Roma  who  are  still  under  subsidiary 
protection. Their status is reviewed every  year and prevents them from acquiring long term 
employment.  

Implementation and enforcement capacity  

The asylum procedure still needs to be implemented fully in line with the EU acquis. Regular 
reception  capacity  remained  unchanged  and  is  adapted  to  current  needs.  The  arbitrary 
detention of people apprehended in irregular movements in the reception center for foreigners 
in  the  Gazi  Baba  municipality  to  ensure  their  testimony  as  witnesses  in  court  cases  against 
smugglers continued. As of the end of November 2019, a total of 214 asylum seekers (48% of 
all asylum applications) were detained in the centre for foreigners in Gazi Baba before being 
released  and  admitted  to  the  reception  center  for  asylum  seekers  in  Vizbegovo  (close  to 
Skopje).  The  safe  house,  previously  operated  by  the  Jesuit  refugee  service  under  the 
supervision  of  the  Ministry  of  Labour  and  Social  Policy,  is  no  longer  available. 

 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. 

43 

 
 
                                                           
Consequently,  the  practice  of  generally  not  detaining  women  and  children  for  migration 
related purposes changed and, as of the end of November 2019, a total of three women and 
32 children, including 29 unaccompanied children, were detained in Gazi Baba, although for 
a  short  period  of  time.  An  alternative  housing  solution  needs  to  be  found  for  the  most 
vulnerable.  However,  due  to  the  COVID-19  crisis,  the  Government  decided  that  all  new 
asylum  seekers  are  to  be  quarantined  for  an  initial  period  of  25  days  in  the  transit  center 
Vinojug, at the Southern border. 

Access  to  the  asylum  procedure  continued  to  be  ensured.  In  2019,  490  applications  for 
asylum were submitted (163 in 2017 and 299 in  2018), out of which 121 (27%) were from 
Pakistan,  112  (25%)  from  Afghanistan  and  50  (11%)  from  Syria.  Asylum  claims  were 
promptly  registered  and  processed.  The  existing  database  on  foreigners,  still  needs  to  be 
upgraded  through  the  development  of  a  new  asylum  module,  which  should  provide  a  case-
management  tool  for  processing  asylum  claims.  There  is  no  backlog  of  asylum  cases, 
although the majority of cases are discontinued, due to the high rate of claim abandonment. 
With the exception of a subsidiary protection status granted in 2019 on humanitarian grounds 
to one person from Kosovo, there have been no positive decisions for granting asylum since 
December 2018. Decisions on status determination are usually accompanied by an automatic 
ruling  of  expulsion  without  quality  assessment  of  whether  an  individual  may  be  subject  to 
persecution  upon  return.  The  quality  of  asylum  adjudication  remains  a  concern,  also  at  the 
appeal  level.  The  judicial  review  is  administrative,  and  the  Administrative  and  High 
Administrative  Courts  deliver  decisions  on  technical  rather  than  on  substantial  grounds. 
However, the new Law on administrative disputes should improve some critical points.  

In 2019, the Sector for Asylum continued the practice of terminating international protection 
for  refugees  from  Kosovo  who  were  granted  subsidiary  protection.  Between  January  and 
December  2019,  22  Kosovo  Roma  (14  cases)  lost  subsidiary  protection.  Such  practices 
undermine  the  possibilities  of  finding  a  durable  solution  for  the  remaining  refugees  from 
Kosovo and closing the long standing issue. Legal aid under the amended Law on free legal 
assistance,  remained  ineffective.  No  individuals  undergoing  an  asylum  procedure  were 
granted  state-funded  free  legal  aid.  A  positive  development  is  the  enrolment  of  asylum 
seeking children in the local schools, as of september 2019. This is in line with the new Law 
on  primary  education,  which  specifically  provides  for  inclusion  of  refugees  and  asylum 
seekers in the national education system and sets up measures to facilitate such integration. 

Further improvements of the asylum system are still needed. Following a period when it was 
relatively  high  on  the  government’s  agenda,  developments  are  left  mainly  to  the  technical 
level in the relevant Ministries. The country cooperates with the European Asylum Support 
Office  (EASO) on the basis of comprehensive  roadmaps. The first  Roadmap to  support the 
establishment of asylum and reception systems in line with EU standards was implemented 
between 2017-2019, a new roadmap for the period 2020-2022 is being finalised. 

Visa policy 

There  is  an  operational  link  since  2009  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.  

The visa regime is largely aligned with that of the EU. The Commission’s third Report under 
the Visa Suspension Mechanism of July 2020 concluded that North Macedonia continues to 
meet the visa liberalisation benchmarks. Short stay visas have been unilaterally abolished for 
nationals of third countries who are national holders of a permanent or temporary residence 
permit  issued  by  an  EU/Schengen  Member  State  as  well  as  for  nationals  of  third  countries 

44 

 
 
who  are  in  possession  of  valid  multiple  US,  Canadian  and  UK  visas.  The  visa-free  regime 
between North Macedonia and Ukraine entered into force. 

Visa policy needs to be further aligned for a number of countries currently on the EU white 
list, whose nationals are still required to have a visa to enter North Macedonia. These include 
Vanuatu,  Kiribati,  the  Solomon  Islands,  Dominica,  Grenada,  Marshal  Islands,  Micronesia, 
Palau, Samoa, Saint Lucia, Saint Vincent  and the Grenadines, East  Timor, Tonga, Trinidad 
and Tobago, and Tuvalu. Negotiations are ongoing for Georgia. The visa-free travel regime 
with the EU continued to work smoothly. The national authorities continued their cooperation 
to  tackle  unfounded  asylum  applications  made  in  Schengen  members  countries  and 
associated countries. The number of the first time asylum applications from the country in the 
EU and Schengen associated countries was 2,695, it fell by 20 % in comparison to the year 
2018.  

Visa policy is not fully in line with the EU list of countries whose nationals require a visa. 
North  Macedonia  exempts  nationals  from  Russia  and  Azerbaijan.  There  are  ongoing 
negotiations with authorities of both countries on future conditions of mutual travels for their 
nationals. North Macedonia does not require entry visa either for citizens of Botswana, Cuba, 
Kosovo, and Turkey. 

Schengen and external borders  

Institutional set-up and legal alignment  

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

The legislative framework for the management of external borders is largely aligned with EU 
standards.  The  2015–2019  integrated  border  management  strategy  is  aligned  with  the  2006 
EU  concept  on  integrated  border  management.  A  new  strategy  is  needed  as  well  as 
clarification on who is responsible for guiding the process. A risk management concept and 
methodology  for  border  operations  is  in  place.  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  EU 
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, Czechia, Hungary, Poland, Serbia, Slovenia and Slovakia, 
to manage migration flows. The national authorities cooperate extensively with the European 
Border  and  Coast  Guard  Agency  (Frontex),  including  as  observers  in  joint  operations.  The 
text of the status agreement between the EU and the country that would allow for deployment 
by Frontex of European border and coast guard teams on the territory of North Macedonia at 
its  common  borders  with  neighbouring  EU  Member  States  was  initialled  in  July  2018. 
Pending the signature and ratification of the agreement, the country cooperates with Frontex 
on developing an operational plan, so the teams can be deployed in the country rapidly. 

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. North Macedonia participates in 
the Western Balkans Risk Analysis Network led by Frontex. 

45 

 
 
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 specific track record of detection, investigation and prosecution of cross 
border crime is yet to be established. Equipment is satisfactory. 

Cooperation  with  neighbouring  countries  continues  to  be  good.  There  is  a  smooth 
implementation  of  border  agreements  with  most  of  the  neighbouring  countries.  A  formal 
agreement has not yet been concluded with Greece, but bilateral technical cooperation works 
in  practice.  Joint  border  patrols  with  neighbouring  countries  and  the  joint  police  contact 
centres  continued  to  regularly  exchange  information.  There  are  currently  two  common 
border-crossing points for local traffic with Serbia and Albania. The existing border crossing 
point  with  Serbia  on  the  northern  border  has  become  a  joint  crossing  point  also  for 
international  traffic.  North  Macedonia  and  Serbia  signed  an  agreement  on  the  opening  of  a 
new border-crossing at Lojane-Miratovac. The new border-crossing will first be open to local 
traffic and later will be upgraded to handle international traffic. 

Judicial cooperation in civil and criminal matters  

Progress was limited regarding the legal framework on cooperation in  civil and commercial 
matters. In December 2019, the Minister of Justice signed 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; 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  procedures  for  accession  and  ratification  are  to  be  completed.  The  new 
Law on International Private Law to apply as of February 2021 is harmonised with relevant 
EU regulations. The country issued 142 and received 478 requests for civil cases. 

The country issued or received 3,484 requests for mutual legal assistance in civil and criminal 
cases, out of which 2,484 concern criminal cases and 1,000 concern civil cases. The country 
sent 70 and received 21 requests for the transfer of sentenced nationals back to their country 
of origin. It issued 244 and received 78 extradition requests. 

Staff  in  the  Ministry  of  Justice  Department  of  International  Legal  Assistance  attended 
language courses. 

The  country  continues  to  have  good  cooperation  with  EUROJUST  through  a  liaison 
prosecutor  posted  to  EUROJUST  and  six  contact  points.  EUROJUST  was  involved  in  21 
cases, of which five were opened by the liaison prosecutor. 

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

46 

 
 
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  limited  progress  and  is  at  a  good  level  of  preparation  in 
developing  a  functioning  market  economy.  Economic  growth  accelerated  in  2019  as 
investment  picked  up,  but,  since  April  2020,  the  COVID-19  crisis  has  left  its  mark  on  the 
economy and on public finances. The authorities have taken a range of measures supporting 
companies  and  households,  to  mitigate  the  economic  and  social  impact  of  the  crisis.  In  the 
reporting  period,  fiscal  transparency  was  further  improved.  However,  fiscally  significant 
reforms  of  income  taxation  and  the  pensions  system,  introduced  at  the  beginning  of  2019, 
were reversed. Moreover, public capital expenditure implementation remained markedly low, 
and  public  debt  stabilisation  is  not  yet  secured.  Before  the  crisis  hit,  unemployment  rates 
declined  further,  also  for  young  workers,  and  informal  employment  decreased  slightly. 
However, the positive trend is likely to be reversed due to the COVID-19 crisis. Participation 
rates  remain  low,  even  though  the  share  of  women  in  the  labour  market  increased.  The 
financial sector remained robust and lending to the private sector strengthened. The business 
environment continues to be impeded by a high share of the informal economy. 

47 

201720182019North Macedonia - Key economic figuresGDP per capita (% of EU-28 in PPS)35.336.037.038.0Real GDP growth 2.60.22.73.6Economic activity rate of the population aged 15-64 (%), total64.665.365.466.3      female51.751.752.254.8      male77.278.478.377.3Unemployment rate (%), total28.422.521.017.4      female27.922.020.118.6      male28.722.921.516.6Employment (annual growth %)2.02.42.55.1Nominal wages (annual growth %)1.42.65.85.1Consumer price index (annual growth %)1.51.41.40.8Exchange rate against EUR61.5861.5761.5161.51Current account balance (% of GDP)-2.2-1.1-0.1-2.8Net foreign direct investment, FDI (% of GDP)2.81.85.62.6General government balance (% of GDP)-3.5-2.8-1.1-2.1General government debt (% of GDP)35.339.440.640.2Notes: (cid:10)Source: Eurostat and national sourcesTable :2011-16 average 
 
 
In  order  to  improve  the  functioning  of  the  market  economy,  North  Macedonia  should  in 
particular: 

  ensure  fiscal  space  to  support  post  COVID-19  crisis  recovery  by  improving  revenue 
collection,  implementing  more  growth-inducive  public  infrastructure  spending,  and 
improving the management of public investments; 

  strengthen fiscal governance, transparency and sustainability by establishing fiscal rules, 

a proper medium-term budget framework, and a fiscal council;  

  continue  implementation  of  the  2018  Strategy  and  Action  Plan  for  formalising  the 

informal economy, and address underlying incentives for informal employment; 

  improve the effectiveness and transparency of state aid. 

Economic governance 

The  government  has  reinforced  its  policy  focus  on  social  cohesion,  and  reversed  some 
recent  reforms  amid  political  challenges.  Important  reforms  of  personal  income  taxation 
and pensions indexation, which were introduced in 2019 to support fiscal consolidation, were 
reversed.  Investment  and  employment  subsidies  for  private  companies  were  stepped  up 
further.  The  authorities  have  bolstered  the  management  and  the  transparency  of  public 
finances  by  consistent  implementation  of  the  2018-2022  Public  Administration  Reform 
strategy  and  other  measures.  Since  March  2020,  the  government  has  adopted  a  number  of 
temporary  measures  to  cushion  the  impact  of  the  COVID-19  crisis  on  employment, 
companies’  liquidity,  and  household  income,  including  wage  subsidies  and  tax  deferrals. 
These  will  temporarily  set  back  the  envisaged  fiscal  consolidation  and  debt  reduction.  To 
address the increased financing needs in 2020, the government was granted assistance under 
the IMF’s Rapid Financing Instrument, as well as macro-financial assistance by the EU, and 
funding from the World Bank. The policy guidance jointly agreed at the May 2019 Economic 
and  Financial  Dialogue  between  the  EU  and  the  Western  Balkans  and  Turkey  has  been 
partially implemented. 

Macroeconomic stability  

Economic  growth  rebounded  in  2019  as  domestic  demand  strengthened.  Fuelled  by  a 
sizeable  fiscal  stimulus  to  households  and  companies,  GDP  growth  accelerated  to  3.6%  in 
2019,  from  2.7%  in  2018,  on  account 
of  strengthening  domestic  demand.9 
Private consumption, boosted by rising 
wages,  social  transfers,  remittances 
from abroad, and household credit rose 
faster  than  in  the  preceding  year,  and 
contributed  positively 
to  growth. 
Annual  investment  growth,  which  had 
been  weak  in  the  past  two  years  and 
remained flat  in the first half of 2019, 
picked up markedly in the second half. 
less 
The 
pronounced  than  one  year  earlier,  while  import  growth  accelerated,  driven  by  demand  for 
investment-related  intermediate  goods.  In  sum,  net  exports  detracted  from  annual  GDP 
growth,  like  in  almost  each  of  the  past  five  years.  Convergence  with  EU  income  levels 

in  exports  was 

increase 

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

48 

-50510201420152016201720182019Graph : North Macedonia -Real GDP growth and contributionsPriv. cons.Gov. cons.GFCFStocksNet exportsreal GDP growthSource: Macrobond, own calculations% y-o-y 
 
                                                           
remains sluggish. Real GDP per capita has increased only marginally in the past five years, 
from 36% of the EU-28 average in 2014 to 37% in 2018. 

Beginning  in  early  spring,  the  COVID-19  crisis  started  to  leave  a  mark  on  economic 
performance. The upswing ended abruptly in March, when the COVID-19 crisis required a 
massive lockdown of the economy, and similar measures in the main trading partners led to 
trade  disruptions.  Shop  and  factory  closures  and  curfews  on  households  hit  both  domestic 
activity and external trade, while travel bans impacted on tourism and transport. Exports are 
severely hit, in particular production by foreign companies that are integrated in global value 
chains and receive most of their inputs from abroad. Moreover, as a net exporter of iron and 
steel  and  metal  ores,  and  a  net  importer  of  non-ferrous  metals,  the  economy  is  sensitive  to 
commodity  price  fluctuations.  On  account  of  these  repercussions,  the  economy  is  likely  to 
slide into a recession in 2020. In the first quarter 2020, GDP growth slowed to 0.2% y-o-y. 
Only  household  and  government  consumption  contributed  to  growth.  Since  March,  the 
government has adopted three packages of measures to support the economy, totalling EUR 
500 million.  

The  current  account  deteriorated  in  2019,  but  remained  moderate.  Driven  by  a  higher 
deficit in merchandise trade, the current account deficit widened in 2019, compared to 2018, 
to 2.8% of GDP (2018: -0.1%). The inflow of private transfers from abroad strengthened, but, 
as a share of GDP, remained below its average of the past 5 years. Incoming foreign direct 
investment recovered over the summer 
of 2019, after a sluggish start into the 
year,  amounting  to  2.6%  of  GDP  for 
the  full  year,  which  is  below  the 
average share of the preceding 5 years 
(3.1%).  Yet,  there  was  a  marked 
increase  in  FDI  in  the  first  quarter  of 
2020.  External  debt,  which  increased 
by  almost  10pps  between  2013  and 
2018  on  the  back  of  both,  public 
sector 
and 
intercompany  debt,  decreased  slightly 
in  2019  (-1.1pps  y-o-y  to  72.2%  of  GDP),  as  external  public  sector  debt  declined  by  more 
than the rise in private sector debt.  At end-May, the government issued a EUR 700 million 
Eurobond  to  help  cover  crisis-related  financial  needs.  This  has  further  boosted  foreign 
exchange reserves, which at end-July were 19% higher compared to the same month one year 
earlier, covering over 4 months of prospective imports.   

borrowing 

abroad 

Monetary policy remains accommodating amidst a benign price environment. Consumer 
prices rose more moderately in 2019 than in the preceding year, by 0.8% compared to 1.5%. 
In the first seven months of 2020, the increase slowed down further, to 0.7%, on average. The 
moderation  in  inflation  came  mainly  on  the  back  of  a  drop  in  food,  energy  and  transport 
prices.  Core  inflation  also  remained  muted.  The  central  bank  continued  its  accommodative 
policy stance. Since summer 2018, it has lowered the key policy rate in six consecutive steps 
of 25bps to the historic low of 1.50%. It reacted swiftly to the onset of the COVID-19 crisis 
and adopted targeted measures to support the economy. In particular, it provided additional 
liquidity; reintroduced the non-standard measure which allows for reducing banks’ base for 
reserve requirements by the amount of newly approved and restructured loans to companies 
affected by the pandemic; and granted banks more flexibility for contractual terms of loans to 
households  and  companies.    The  currency  is  in  a  stable,  de-facto  pegged  exchange  rate 
regime with  the Euro. Overall, the monetary  policy  stance is  in  line with  current  economic 

49 

-12-9-6-3036-18-15-12-9-6-3036920152016201720182019Graph : North Macedonia -Current account selected components and FDI Workers' Remittances balanceGoods and services trade balanceCurrent account balance (rhs)Net FDI (rhs)% of GDPSource: IMF and National Bank of North Macedonia 
 
fundamentals,  moderate  inflation  dynamics,  and  the  heightened  domestic  and  external  risks 
due to the COVID-19 crisis. 

as 

(3%), 

target 

improved 

Amidst  rising  risks,  fiscal  balances  had  improved  further  before  the  COVID-19  crisis 
hit.  The  central  government  fiscal  deficit  has  been  declining,  in  terms  of  GDP,  each  year 
since  2014,  falling  below  the  authorities  annual  targets.  This  came  largely  on  the  back  of 
heavy  under-execution  of  budgeted 
capital  expenditure. 
In  2019fiscal 
further, 
performance 
supported  by  the  economic  recovery 
and by recent revenue and expenditure 
the 
measures.  At  2.1%  of  GDP, 
general  government  deficit  remained 
below 
capital 
expenditure  was  under-executed  at 
78%  compared  to  the  supplementary 
budget.  However,  shortcomings 
in 
revenue  collection and a large number 
of tax exemptions eroding the tax base have contributed to a decline in public revenue ratios 
in  recent  years,  adding  to  fiscal  risks  from  a  rising  pension  deficit,  large  indebtedness  of 
public  enterprises,  and  significant  budget  arrears,  which  the  authorities  started  clearing  in 
2018. In the first two months of 2020, revenue continued to rise, in annual terms (+4.3% on 
average). Yet, the sudden halt in economic activity in response to the onset of the COVID-19 
crisis  and  the  crisis-related  fiscal  response  sharply  increased  the  budget  deficit  thereafter. 
Altogether, in  the first  seven months of 2020, tax revenue dropped by  10.8%, compared to 
the same period one year earlier, while expenditure rose by 11.3%. In May, the government 
revised  the  2020  budget,  cutting  planned  revenue  by  11.5%  and  increasing  the  projected 
central  government deficit to 6.8% of GDP. Earlier in spring, it had reallocated funds from 
capital expenditure to financing the crisis-related support measures. 

The  composition  of  public  spending  has  become  less  growth-friendly.  The  structure  of 
government  expenditure  is  tilted  increasingly  towards  current  expenditure  and  income 
support,  at  the  expense  of  growth-enhancing  investment.  After  marked  increases  between 
2009  and  2012,  the  share  of  capital  expenditure  in  total  central  government  expenditure 
dropped from 12% (2012) to 6% in 2018, and increased marginally to 8.2% in 2019.10 The 
implementation  of  budgeted  capital  expenditure  remained  low  in  2019,  amounting  to  only 
78% of the revised budget. This came after historically low execution rates in the preceding 
two years, which were due to project review and implementation issues. On the other hand, 
the  government  raised  the  share  of  current  expenditure  by  bolstering  social  spending, 
including  pensions,  public  sector  wages,  and  firm-level  support.  In  2019,  social  transfers, 
including pensions, rose by 7.6%, in annual terms, which is over half of total expenditure.  

Recently  introduced  fiscal  measures  were  reversed  in  2019.  In  the  autumn  of  2019,  the 
government backtracked on fiscally important policy changes it had introduced in early 2019. 
It  suspended  the  introduction  of  a  second,  higher  rate  for  personal  income  taxation,  and  it 
reversed the restriction  of pensions indexation to the inflation rate only.  It also  put  on hold 
higher taxation of capital gains, which was planned for 2020.  

10 However, this does not account for capital expenditure carried out by off-budget entities, the most significant 
one  being  the  PESR,  which  is  implementing  a  sizable  investment  program  of  over  EUR  1  billion.  In  2018, 
central and local government accounted for only about one third of total public sector investment. 

50 

0204060-50510201420152016201720182019Graph : North Macedonia -Fiscal developmentsPrimary balance (lhs)Interest (lhs)CG balance (lhs)Public Debt (rhs, Q3)Source: National sources% ofGDP 
 
                                                           
Debt  stabilisation  remains  a  challenge  exacerbated  by  the  pandemic.  Primary  fiscal 
deficits  have  improved  since  2014,  but  still  not  enough  to  ensure  debt  stabilisation.  Public 
debt  has  increased  continuously  since  2013,  rising  by  8.6pps  to  48.9%  at  the  end  of  2019 
(with  the  ratio  of  government  debt  along  at  40.2%).  This  includes  the  debt  of  public 
enterprises (for the most part backed by state guarantees), which stood at 8.7% of projected 
full-year GDP at the end of 2019. The share of public debt denominated in foreign currency 
has increased in past years, and remains elevated, at some 77%, some 14pps above its level of 
end-2013.  A  large  share  of  public  debt  consists  of  short-term  maturities.  The  floating  rate-
share  (about  35%)  has  been  decreasing  in  recent  years  due  to  increased  Eurobond  issuing. 
COVID-19 crisis-related financial needs have contributed to a marked rise in debt levels in 
the first half of 2020. At end-June, public debt was higher by almost 18% compared to end-
2019, on account of an increase in government debt resulting mainly from the May Eurobond 
issue.  The transparency of public finances improved further.  In line with the December 
2017  Public  Financial  Management  Reform  Programme,  the  authorities  have  taken  further 
measures  to  increase  the  transparency  of  public  finances.  The  government  has  published 
information  on  the  finances  of  public  enterprises  in  the  2020-2022  Fiscal  Strategy  (May 
2019), including amounts transferred from and to the central government budget. Following a 
2019  amendment  of  the  Public  Debt  Law,  the  non-guaranteed  debt  of  public  enterprises, 
amounting to some 0.3% of GDP in 2018, is now included  in the definition of public debt. 
The  authorities  also  established  an  application  for  citizens  to  track  the  implementation  of 
capital  expenditure.  However,  North  Macedonia  is  the  only  country  in  the  region  that  does 
not yet have fiscal rules, and the new Organic Budget Law (OBL), which is meant to provide 
for  such  rules,  as  well  as  for  an  independent  fiscal  council,  and  a  comprehensive  medium-
term fiscal framework has not yet been put to public consultation. Moreover, the government 
has  not  yet  taken  steps  to  include  off-budget  entities  into  the  general  government  sector 
where warranted by international statistical standards. This concerns, in particular, the Public 
Enterprise for State Roads. 

The policy stance needs further adjustment to address  economic and fiscal challenges. 
The  pre-pandemic  policy  mix  of  slow  fiscal  consolidation  and  accommodating  monetary 
policy has supported economic recovery amid low inflation, but failed to firmly secure debt 
stabilisation.  This  should  be  addressed  once  the  COVID-19  crisis  related  measures  have 
taken effect and the post-COVID-19 economic recovery is ensured. The increase in income 
support and state aid,  the reversal  of recent  reforms  to  pensions indexation, and the lack of 
durable measures to substantially improve revenue collection increase fiscal risks amidst an 
already  restricted  fiscal  space  and  sizeable  debt  repayments  ahead.  Moreover,  recent  wage 
increases pose a challenge for external competitiveness, amidst sluggish labour productivity 
and skills shortages.  

Functioning of product markets 

Business environment 

Financial  discipline  in  commercial  transactions  and  enforcement  of  contracts  remain 
weak.  Delays  in  VAT  returns  and  timely  collection  of  receivables  from  public  bodies,  late 
payments in commercial transactions, and problems to enforce their right to collect delayed 
payment  penalties  continue  to  impact  negatively  on  companies’  liquidity.  In  June  2019,  an 
amendment  to  the  Law  on  Financial  Discipline  was  adopted  to  further  align  it  with  the 
respective EU Directive on combatting late payment in commercial transactions. Institutional 
capacity  to  enforce  the  law  should  further  improve,  and  resolving  a  commercial  dispute 
through a court is time-consuming and costly. The government is committed to reducing the 
number of unannounced inspections and the complexity of parafiscal charges. The new Law 

51 

 
 
on business inspections, expected to ensure transparent unselective inspections was adopted 
in 2019. The national e-services portal became operational at the end of 2019, but it does not 
include a register of parafiscal charges. The new bankruptcy law, intended to facilitate market 
exit by reducing the cost and time of procedures, is still under preparation. 

A  large  informal  economy  weighs  on  the  competitiveness  of  the  formal  private  sector. 
The large shadow economy and corruption remain major constraints for private companies to 
conducting business and impact negatively on investment behaviour. The size of the informal 
economy, estimated by the national statistical office (SSO) at about 17.4% of total output in 
2016 (latest figure available), is, in fact, possibly much bigger, according to other studies and 
methodologies.11 According to the SSO, the share of informal employment has decreased by 
3.9pps  between  2013  and  2017,  to  18.1%,  but  remains  significant,  especially  for  the  low-
skilled. The average tax wedge is highly regressive in North Macedonia at the bottom of the 
income  distribution,  meaning  that  the  average  contribution  rate  is  higher  for  low-income 
workers.  Implementation  of  the  government’s  2018-2020  Strategy  for  formalisation  of  the 
informal  economy  is  ongoing.  In  spring  2019,  the  government  increased  the  threshold  of 
maximum permissible cash payments following earlier reduction. To encourage the issuance 
of  fiscal  receipts,  in  December  2019  the  government  started  reimbursements  under  the 
“MyVAT” scheme, which refunds citizens’ VAT payments, but is costly and administratively 
burdensome.   

State influence on the product market 

State  aid  to  private  companies  was  increased,  while  transparency  remains  opaque.  In 
2019, the government stepped up firm-level support for investment, exports, innovation and 
employment by private firms. However, shortcomings in the rules and institutions of state aid 
have not been addressed, amplifying existing concerns about its efficiency and transparency. 
A large share of firm-level  support is  funding  firms’ working capital  rather than enhancing 
their  capabilities  to  compete  through  productivity  improvements,  or  to  increase  domestic 
value  added.  Aid  schemes  are  managed  by  a  multitude  of  institutions  leading  to  frequent 
overlap.  The  criteria  on  which  firms  are  selected  to  receive  aid  leave  ample  room  for 
discretion.  In January,  a draft law on Strategic  Investments  was presented without properly 
consulting  the  Commission  for  Protection  of  Competition  (CPC)  and  without  appropriate 
public consultation. To better tackle state aid  control, the CPC – dented in its capacities on 
account  of  staff  and  resource  shortages  –  would  benefit  from  technical  assistance  from 
international partners, but the government has so far not responded positively to its requests. 
In particular, as a first step, an updated, complete and transparent state aid inventory, which 
would allow for better monitoring of the effectiveness of state aid, is still missing.  

Privatisation and restructuring 

Liberalisation  of  the  electricity  markets  is  almost  complete.  In  2019,  the  regulation  of 
electricity  prices  for  the  main  electricity  producer  (state-owned  company  ELEM)  was 
abolished. The Energy Law, in force since January 2019, liberalised the electricity market for 
micro  and  small  companies  and  households.  However,  based  on  the  number  of  customers 
eligible  to choose  a  supplier,  liberalisation  amounts  to  only 47.26%  of  total.  Furthermore, 
secondary  legislation  as  regards  price  deregulation  and  protection  of  vulnerable  customers 
needs  to  be  implemented.  The  number  of  companies  in  which  the  government  held  a  stake 
remained  the  same  in  2019  as  in  the  three  preceding  years  (16  companies  in  full  state 
ownership and 40 companies in partial ownership, most of these with a state ownership share 

11 The IMF estimates the share of the informal economy at around 38% of GDP, according to its 2019 Article IV 
Report. 

52 

 
 
                                                           
of below 1% of issued capital.). The total value of state ownership in enterprises remained at 
10.7% of GDP, according to government data.12 

Functioning of the financial market  

Financial stability 

Risks  to  the  financial  sector  remained  contained  in  2019,  but  increased  in  light  of  the 
economic impact of the COVID-19 crisis. The banking sector remains well capitalised and 
liquid.  The  capital  adequacy  ratio  has  remained  stable  in  the  past  five  years  (end-2019: 
16.3%) and well exceeding the  regulatory minimum.  Liquid assets account  for one third of 
total assets and cover more than half of short-term liabilities. The quality of the loan portfolio 
has been improving gradually since end-2014, with the ratio of non-performing to total loans 
dropping by 6.2pps to 4.6% at the end of 2019, and provisioning for loan losses remains high 
(over 70% of Non Performing Loans (NPL) are covered). The central bank is on track with 
the  implementation  of  its  December  2018  NPL  strategy,  which  foresees  a  number  of 
regulatory  measures  to  improve  banks’  management  of  bad  loans.  The  central  bank  further 
implemented its strategy of ‘denarisation’ of banks’ balance sheets, aiming at increasing the 
share  of  local  currency-denominated  loans  and  deposits  in  banks’  portfolios,  and  hence 
mitigating  risks  arising  from  potential  currency  mismatches.  At  end-2019,  the  share  of 
foreign  currency-denominated  to  total  loans  stood  at  43.8%,  which  is  lower  by  3.4pps 
compared  to  five  years  earlier.  However,  given  the  COVID-19  crisis-induced  large-scale 
production  halt  and  liquidity  squeezes  of  companies,  it  is  likely  that  asset  quality  has 
deteriorated  since  spring  2020,  and  that  banks’  capital  conditions  as  well  as  credit  supply 
conditions tightened in the second quarter. 

Access to finance 

Bank lending picked up further in 2019 and beyond. In 2019, credit to the private sector 
expanded  at  a  faster  pace  than  one  year  earlier,  at  7.3%  y-o-y,  on  average.  It  continued  to 
grow  at  a  robust  pace  in  the  first  four  months  of  2020.  Growth  in  household  credit, 
accounting for the bulk of the rise, decelerated, while credit extension to non-financial private 
companies  accelerated,  even  though  it  lost  some  speed  compared  to  the  preceding  year. 
However, as a share of GDP, bank loans accounted for little more at the end of 2019 than five 
years earlier (48.7% compared to 48.1%). Lending to SMEs, which account for only one third 
of all business loans, remained subdued in recent years. Loan seekers point to strict collateral 
requirements and complex application procedures as problems for financing, which is likely 
to be exacerbated by the COVID-19 crisis. The existing credit guarantee scheme offered by 
the North Macedonia’s Development Bank has little uptake. To support bank lending in view 
of  the  COVID-19  crisis,  the  central  bank  has  lowered  the  key  interest  rate  in  two  steps  of 
25bps each since March and eased conditions for loan restructuring by banks.  

Financial deepening progressed further, but financial diversification and intermediation 
stagnate.  While  banks’  assets  stood  at  close  to  80%  of  GDP  at  the  end  of  2019  (+7pps 
compared to five years earlier), banks’ dominance of the financial sector is receding slowly: 
at end-2018 (latest available figure), banks accounted for 82% of sector assets, compared to 
87%  five  years  earlier.  Stock  market  capitalisation  has  remained  stagnant  over  the  past  5 
years,  at  about  26%  of  GDP.  Private  bond  markets  are  almost  non-existent.  There  is  hence 
ample  scope  for  developing  alternative  sources  of  financing,  in  particular  capital  markets-
based funding. 

12 Calculations by the EBRD show that shareholder funds in state-owned enterprises with state ownership above 
25 per cent were at 27 per cent of GDP in 2016. 

53 

 
 
                                                           
Concentration in the banking sector is declining slowly: about 57% of assets are held by the 3 
biggest,  out  of  15  banks,  compared  to  61%  five  years  earlier.  The  share  of  foreign  in  total 
equity has been consistently high in the past five years, at about 75%.  

Functioning of the labour market 

five  years 

In  spite  of  structural  deficiencies  and  supported  by  fiscal  stimulus,  the  labour  market 
improved further before the onset of the COVID-19 crisis. Job creation remained buoyant 
in 2019, with employment higher by 5.1% than one year earlier. In the first quarter of 2020, 
annual  employment  growth  slowed  to 
2.7%, but still exceeded the average of 
the  preceding 
(2.4%). 
However,  many  new  jobs  hinge  on 
government  support,  in  the  form  of 
public  sector  employment,  active 
measures  or  employer  subsidies.  The 
unemployment rate declined to 16.2% 
at  the  end  of  the  first  quarter  2020, 
from  21%  in  2018.  The  labour  force 
in  2019  and 
increased  somewhat 
beyond,  compared  to  2018,  as  more 
women  entered  the  labour  market,  surpassing  the  decline  in  the  male  workforce.  Yet, 
structural  problems  continue  to  impair  the  economy’s  potential  to  raise  productivity. 
Participation  rates  remain  low,  especially  so  for  women,  even  though  the  gender  gap  has 
narrowed further in 2019, to 21.2pps (76.7% of men participating in the labour market, and 
55.5%  of  women),  compared  to  the  average  of  the  preceding  5  years  (30pps).  Youth 
unemployment  has  slowly,  but  steadily  declined  in  recent  years,  dropping  by  over  12pps 
between 2015 and the first quarter of 2020, to 34.9%, largely on account of emigration, but 
also  supported  by  the  government’s  Youth  Guarantee  scheme.  The  employment  rate  has 
increased further, but remains low. Around 80% of unemployed are long-term unemployed, 
largely reflecting the skills mismatch.  

Wage pressures are  mounting as productivity remains muted. Wage growth accelerated 
in  2019  and  further  in  the  first  quarter  of  2020,  fuelled  by  several  increases  in  minimum 
wages and public sector wages, as well as subsidies to private employers to soften the impact 
of  salary  increases.  Minimum  wages  are  now  at  about  half  of  average  wage  levels,  which 
poses a challenge for competitiveness given sluggish labour productivity. 

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,  reflecting  shortcomings  in  the  education 
system and the outflow of skilled workers, as well as infrastructure investment gaps impair 
labour productivity and the competitiveness of the economy. While measures to mitigate the 
immediate adverse impact of the COVID-19 crisis on growth and employment are currently 
prevalent, addressing these structural  needs in  a timely manner would support a swift post-
crisis economic recovery.  

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

54 

404550556065700102030402013201420152016201720182019Graph : North Macedonia -Labour market trends (15-64 age group)Unemployment rate (lhs)Participation rate (rhs)Employment rate (rhs)Source:State Statistical office (SSO) 
 
  reform  the  education system with  a view to  improving skills  in  line with labour market 

needs; 

  improve  the  quality  of  road  infrastructure  through  improved  reconstruction  and 
maintenance,  with  a  view  to  enhancing  domestic  and  cross-border  transport  links  and 
integrating domestic companies in global value chains; 

  step up work to diversify energy sources towards renewable energy and increase energy 
efficiency,  notably  through  the  establishment  of  the  Energy  Efficiency  Fund  and  the 
implementation of Energy Efficiency Law. 

Education and innovation 

Reforms of the education system are at an early stage. Public expenditure on education, at 
some  3.7%  of  GDP  on  average  over  the  last  5  years,  remains  below  the  OECD  average. 
Enrolment and completion rates in secondary and post-secondary education have risen only 
marginally  in  this  period.  Education  outcomes  are  below  most  regional  peers,  even  though 
the  PISA  2018  results  indicate  improvement  in  all  three  assessed  subjects:  reading, 
mathematics and science. Efforts were made to ensure the smooth functioning of the Agency 
for  Quality  Assurance  in  Higher  Education,  although  it  is  still  early  to  have  a  proper 
assessment of the results. The systems for collecting data on labour demand and forecasting 
future  skills  needs  are  at  an  early  stage  of  development,  constraining  policy-making.  The 
government  has  recently  established  its  Skills  Observatory  as  a  department  within  the 
Ministry  of  Education  and  Science,  as  well  as  a  project  to  establish  a  web  platform  with 
information  on  education  programmes.  However,  the  practical  use  of  this  platform  is  held 
back by a lack of data harmonisation and inter-institutional cooperation. At the same time, the 
skills gap remains sizeable, as does large-scale emigration of high-skilled labour, calling for 
an integrated approach combining different policy areas.  

Innovation activity remains low. At 0.4% of GDP, the economy’s expenditure on research 
and innovation has not increased over recent  years, and remains significantly below the EU 
average.  Only  a  fourth  of  total  R&D  expenditure  is  accounted  for  by  private  companies, 
which  are  generally  slow  in  adopting  new  technologies  or  taking  advantage  of  public 
innovation support. The country remains a modest innovator, according to the 2019 European 
Innovation Scoreboard. Firm-level R&D support by the government is mainly through state 
aid  schemes,  and  increasingly  managed  by  the  Fund  for  Innovation  and  Technological 
Development,  which  was  set  up  in  2013.  Funds  increased  significantly  in  2019,  but  had  a 
slow take-up.  

Physical capital and quality of infrastructure  

Gaps in transport connectivity are impeding trade. The quality of transport infrastructure 
and  trade  logistics  remains  low,  including  delays  at  border  customs.  Road  Corridor  VIII 
needs further upgrading to highway level. The start of works on the Corridor X connection 
from  Skopje  to  Kosovo  is  delayed.  The  modernisation  of  cross-border  rail  connections  and 
the  facilitation  of  crossings,  in  particular  the  planned  Joint  Railway  Border  Station  with 
Serbia, is  slow.  Maintenance  and service of roads  and rails need improvement. As a result, 
the  potential  for  companies  to  engage  in  trade  and  global  production  chains  is  diminished. 
The bad state of most local roads increases the cost of companies in rural areas to participate 
in trade.  

The digitalisation of the economy progressed  further, but remains low compared with 
the EU. The percentage of households with internet access at home has increased by 11pps 
between 2014 and 2018 (79.3%) and mobile broadband penetration is at 61% of population.  

55 

 
 
Companies still face restrictions regarding fixed broadband access (19.4% in 2018 compared 
to 17.2% in 2014).  

Improvements  in  energy  efficiency  and  diversification  remain  slow.  The  economy  is 
characterised by high energy intensity and low efficiency in production and consumption, an 
aged  production  system,  and  high  dependence  on  coal  and  imports.  The  construction  of  a 
national  gas  distribution  system  continues,  while  connection  to  regional  gas  pipelines 
progresses slowly. Plans for a gas interconnection with Greece, to support diversification of 
natural gas sources and facilitate access to transit pipelines, are lagging behind schedule. At 
end-2019, the government adopted the 2018-2040 National Energy Strategy, in line with the 
Energy Community requirements. The integration of the system into pan-European electricity 
networks  is  slow.  The  construction  of  an  electricity  transmissions  interconnector  with 
Albania, providing the missing link in an East-West electricity transmission corridor uniting 
5  countries,  is  still  in  the  preparatory  phase.  The  government  pursues  annual  targets  for 
raising the share of renewables in energy consumption. 

Sectoral and enterprise structures 

The  share  of  manufacturing  in  the  economy’s  output  is  growing.  The  sectoral  and 
business structure of the economy has been transformed gradually, but slowly, in the past 5 
years.  At  over  60%,  services  accounted  for  the  largest  proportion  of  gross  value  added  in 
2019,  about  the  same  as  in  2013.  Industry  contributed  24%,  up  from  19%  in  2014,  at  the 
expense of agriculture, which accounted for 10% in 2019 (remainder is construction). 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).  Yet,  in  2019,  domestic  companies  in  these  sectors  contributed  an  increasing 
share  to  total  exports.  Over  half  of  the  economy’s  jobs  were  accounted  for  by  service 
industries  in  2019,  which  is  only  slightly  more  than  5  years  earlier,  followed  by  industry 
(31%,  compared  with  30%  in  2014)  and  agriculture  (16%,  down  from  19%  in  2014).  Over 
99% of all companies are SMEs, providing over 77% of value added in the economy and an 
almost  equal  amount  of  employment.  The  government  is  supporting  SMEs  through  the 
Competitiveness,  Innovation  and  Entrepreneurship  Programme,  and  the  2017  Economic 
Growth Plan. Yet, the impact of these schemes remains insufficiently evaluated.  

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 over 130% of GDP at the end 
of  2019,  compared  with  105%  in  2013.  In  the  reporting  period,  exports  to  the  EU,  which 
accounted for 86% of total exports, increased by 12% y-o-y, and imports from the EU were 
higher  by  9%.  While  trade  volumes  with  other  Western  Balkan  countries  continued  to 
increase  in  the  year  to  date,  their  share  in  total  trade  declined  further  (-0.8pps  to  10.2%  of 
total exports, and -0.8pps to 8% of imports). EU firms gradually increased their stake in the 

56 

020406080201120122013201420152016201720182019Graph : North Macedonia -Exports of goodsEUCEFTAOtherSource: WiiW% ofGDP020406080201120122013201420152016201720182019Graph : North Macedonia -Imports of goodsEUCEFTAOtherSource: WiiW% ofGDP 
 
 
country’s stock of foreign investment, accounting for almost 90% of total at the end of 2019. 
The economy’s structural transformation remains driven by foreign investors active in higher 
value-added  production.  However,  integration  of  domestic  companies  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), but 
also on account of technological and productivity shortcomings of local firms, low innovation 
dynamics  and  skills  mismatches.  The  international  cost  competitiveness  of  the  economy 
deteriorated somewhat  further in  the  year to  date. Even though the increase in  gross wages 
relented  somewhat,  it  continued  to  outpace  the  sluggish  growth  in  labour  productivity.  The 
real  effective  exchange  rate  (CPI-based)  remained  stable  between  2014  and  2018,  and 
depreciated somewhat in 2019, on account of favourable changes in relative prices.  

4. 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION  

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 and 
a  climate  conducive  to  addressing  open  bilateral  issues  and  the  legacies  of  the  past.  The 
government  has  taken  a  positive  approach  to  regional  cooperation  and  good  neighbourly 
relations. North Macedonia has continued to participate actively in regional initiatives such as 
the  Central  European  Free  Trade  Agreement  (CEFTA),  Energy  Community,  Transport 
Community, South East European Cooperation Process (SEECP), the Regional Cooperation 
Council,  RECOM  and  the  Regional  Youth  Cooperation  Office  (RYCO)13.  In  April  2020, 
North  Macedonia  became  a  member  of  the  EU  Strategy  for  the  Adriatic-Ionian  Region 
(EUSAIR).   

During  the  COVID-19  crisis,  inclusive  regional  cooperation  has  proven  essential.  The 
establishment  of  green  lanes  within  the  region  has  proven  the  capacity  of  the  region  to 
address  common  challenges  swiftly  and  efficiently.  Inclusive  regional  organisations  -  the 
Regional  Cooperation  Council,  the  Transport  Community,  and  the  CEFTA  -  have  been 
instrumental  in  responding  to  the  COVID-19  crisis.  These  achievements  need  to  be  turned 
into sustainable improvements. 

Building on the results of the previous summits with the region, the Western Balkans summit 
in Poznan focused on strengthening regional cooperation in the fields of economy and trade, 
the  digital  agenda,  connectivity,  security,  fight  against  corruption,  promoting  reconciliation 
and youth. The summit endorsed a number of achievements in these fields, in particular the 
Clean Energy Transition Declaration signed in Podgorica, the Regional Roaming Agreement 
signed in Belgrade, a substantial connectivity package and the Roma Integration Declaration. 
It  was  also  the  occasion  to  kick-start  the  preparation  of  a  Green  Agenda  for  the  Western 
Balkans. Bulgaria and North Macedonia are co-chairing the Berlin Process in 2020, aimed at 
stepping up regional cooperation in the Western Balkans.  

North  Macedonia  demonstrated  its  commitments  to  provide  a  renewed  impetus  to  regional 
cooperation and enhanced regional ownership at the Summits in Novi Sad, Ohrid and Tirana. 
It  is  important  that  regional  initiatives  include  all  partners  in  the  Western  Balkans  and  are 
based on EU rules, building on commitments previously taken in the framework of CEFTA, 
the Regional Economic Area (REA) or the Transport Community Treaty. Many commitments 
and  decisions  have  already  been  taken  in  these  regional  frameworks  and  they  need  to  be 
swiftly implemented.  

13  North  Macedonia  also  participates  in  the  ‘Brdo-Brijuni  process’,  Central  European  Initiative,  the  European 
Common Aviation Area Agreement, the Regional Initiative for Migration and Asylum, the Regional School of 
Public Administration (ReSPA), etc. 

57 

 
 
                                                           
At  the  Zagreb  Summit  on  6  May  2020,  EU  and  Western  Balkans  leaders  agreed  that 
deepening regional economic integration has to be a prominent part of recovery efforts of the 
Western Balkans. To do so, North Macedonia needs to play a constructive role in building a 
common  regional  market,  which  will  be  critical  to  increase  the  attractiveness  and 
competitiveness  of the  region.  It will help  North Macedonia to  speed up the recovery  from 
the aftermath of the pandemic – notably by attracting investors looking for diversification of 
supply and shorter value chains. Such a common regional market has to be inclusive, based 
on EU rules and built on the achievements of the regional economic area multiannual action 
plan. 

The  country  remained  constructively  committed 
enlargement countries and neighbouring EU Member States.  

to  bilateral  relations  with  other 

Bilateral relations with Albania intensified. During the reporting period, the two sides agreed 
to establish a commission for joint management of natural and cultural heritage of the Ohrid 
region,  and  to  improve  implementation  of  UNESCO  recommendations.  Frequent  bilateral 
visits took place during the reporting period. In October 2019, President Pendarovski paid his 
first  official  visit  to  Albania  in  the  context  of  the  Southeast  Europe  Peace  Summit.  In 
November  2019,  Albania  opened  an  Honorary  Consulate  in  Bitola.  In  the  context  of  the 
COVID-19 crisis, the Presidents of both countries had a telephone conversation in February 
2020 and the Ministers of Foreign Affairs also maintained close communication. 

Bilateral  relations  with  Bosnia  and  Herzegovina  are  good  and  several  agreements  are  in 
place,  including  on  cooperation  on  EU  integration.  In  January  2020,  a  Presidency  member 
paid a visit to Skopje, where he met President Pendarovski. 

Relations with  Kosovo  continued to  develop.  In  April 2019, an agreement  between Kosovo 
and North Macedonia on the mutual recognition of driving licenses entered into force. Police 
from  Kosovo  and  North  Macedonia  signed  a  protocol  for  establishing  a  joint  task  force.  In 
May 2020, the Prime Ministers discussed their cooperation during the COVID-19 crisis.  

Relations  with  Montenegro  remained  good.  A  Joint  Session  between  the  governments  of 
both countries was held in Podgorica at the end of May 2019 and saw the signing of a number 
of  agreements  (Agreement  on  the  Mutual  Protection  of  Classified  Information;  Protocol  of 
Collaboration  between  the  Ministries  of  Interior  in  the  Area  of  European  Integration; 
Agreement on Environmental Cooperation between the Ministries of Tourism; Memorandum 
of  Understanding  in  Healthcare  between  the  Ministries  of  Health).  The  President  of 
Montenegro  visited  North  Macedonia  and  the  Prime  Minister  of  North  Macedonia  visited 
Montenegro in the autumn 2019. 

Relations  with  Serbia  are  good,  including  through  frequent  communication  at  ministerial 
level. In August 2019, Prime Ministers Zaev and Brnabić inaugurated the Tabanovce-Presevo 
joint  border  crossing. President Pendarovski paid an official visit  to  Belgrade in  November 
2019. In May, the two Foreign Affairs Ministers exchanged experiences in the fight against 
the COVID-19 pandemic and information on the epidemiological situation.  

Turkey ratified in July 2019 the protocol for the accession of North Macedonia to NATO. In 
the  context  of  the  COVID-19  crisis,  Turkey  provided  assistance,  including  with  medical 
equipment.  

During the reporting period, there was a particular focus on the Treaty of Friendship, Good 
Neighbourliness  and  Cooperation  with  Bulgaria.  Prime  Minister  Borissov  paid  a  visit  to 
Skopje in August 2019 on the occasion of the second anniversary of the treaty. Earlier in June 
2019, the first meeting of the Joint Intergovernmental Commission was held in Sofia and was 
co-chaired by the Foreign Ministers of both countries. During the reporting period, both sides 

58 

 
 
signed  several  agreements  including  a  protocol  on  cooperation  in  combating  human 
trafficking,  as  well  as  a  memorandum  for  cooperation  in  the  area  of  transport  and  cross-
border  teamwork.  Several  meetings  of  the  Joint  Multidisciplinary  Commission  on 
Educational  and Historical  Issues took  place during the reporting period.  Bulgaria provided 
support to the country in the context of the COVID-19 crisis, including by providing medical 
equipment and supporting the repatriation of stranded citizens.  

During  the  reporting  period,  there  was  a  particular  focus  on  the  Prespa  Agreement  with 
Greece, including with increased cooperation between the two countries in the areas of trade 
and  economy,  energy,  defense  and  cross-border  cooperation.  The  Joint  inter-Disciplinary 
Committee of Experts on historic, archaeological and educational matters was established and 
held  four  meetings  during  the  reporting  period.  Concerning  commercial  names  and 
trademarks,  the  international  group  of  experts  was  established  and  held  its  first  meeting  in 
June 2019. In addition to that, the seventh meeting of the Standing Joint Border Committee 
was  also  held  in  June  2019  in  Skopje.  In  line  with  the  Prespa  agreement,  the  first  Greek 
Ambassador to North Macedonia handed his credentials to the President of North Macedonia 
in September 2019. High level political contacts continued. Greek Foreign Minister Dendias 
visited Skopje in November 2019. The two Ministers of Health met in Athens in May 2020 to 
exchange  experiences  on  access  to  treatment  and  prevention  of  COVID-19,  as  well  as  the 
challenges the countries were facing due to the pandemic.  

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 creating unjustified barriers to trade.  

North  Macedonia  is  moderately  prepared  on  the  free  movement  of  goods.  National 
legislation  to  allow  that  products  must  be  traded  freely  is  well  established  and  mostly 
following the EU legislation. There was no progress on last year’s recommendations. Non-
tariff  barriers  to  trade  remain  and  have  not  been  removed  yet  and  market  surveillance 
capacity remains insufficient. Last year’s recommendations remain valid. In the coming year, 
North Macedonia should:  

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

→ complete alignment with the General Products Safety Directive;  

→ strengthen the administrative capacity to enforce the legal framework.  

General principles  

The institutional framework for the  production, distribution and marketing of industrial 
products is in place. Plans for further aligning the legislation with the EU acquis, as set out 
in the national plan for adoption of the EU acquis, and in individual strategic documents for 
standardisation, metrology and accreditation, are slowly being implemented. As a response to 
COVID-19  and  upon  a  joint  initiative  by  the  Permanent  Secretariat  of  the  Transport 
Community  and  the  CEFTA  Secretariat,  North  Macedonia  alongside  all  the  other 
governments in the Western Balkans has successfully implemented measures to facilitate the 
transport and trade of essential goods within the region.  

Non-harmonised area 

59 

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

Harmonised area: quality infrastructure 

The  legal  basis  and  administrative  structure  are  in  place  and  fully  operational  for  technical 
regulations,  standards,  conformity  assessment,  accreditation,  metrology  and  market 
surveillance.  The  Law  on  general  product  safety  and  the  Law  on  technical  requirements  of 
goods have been drafted but not yet adopted.  

The  national  Standardisation  Institute,  a  full  member  of  the  European  Committee  for 
Standardisation  (CEN)  and  European  Committee  for  Electro-technical  Standardisation 
(CENELEC), adopted 25 032 European standards as national standards. 

There are 232 conformity assessment bodies for calibration, testing, medicinal laboratories, 
product and process certification and inspection. The Accreditation Institute is a member of 
the  International  Accreditation  Forum,  the  European  Cooperation  for  Accreditation  and  the 
International  Laboratory Accreditation Cooperation (IAF MLA).  In 2020, the Accreditation 
Institute  extended  the  IAF  MLA  Occupational  Health  and  Safety  Management  Systems 
Certification.  There  are  no  national  accreditation  schemes  for  the  certification  of  personnel 
and skills testing. 

The  Bureau  of  Metrology,  as  the  official  metrology  body,  is  an  official  member  of  the 
European  Association  of  National  Metrology  Institutes  and  of  the  General  Conference  on 
Weights and Measures. 

On market surveillance, in 2019 the State Market  Inspectorate carried out 359 inspections 
under the  general  product safety law  (down from  680 in  2018)  and 573 inspections under 
the  construction  products  law  (up  from  225  in  2018).  Following  these  inspections,  the 
Inspectorate  withdrew  35  harmful  products  from  the  market,  mostly  toys  and  children’s 
clothing. The Inspectorate’s market surveillance operations have been hampered by a lack of 
inspectors, outdated equipment and insufficient funds to carry out product sample tests. Joint 
inspections,  under  the  umbrella  of  a  coordinating  body,  continued  to  take  place.  The  State 
Market  Inspectorate  had  a  crucial  role  in  the  actions  against  the  COVID-19  pandemic  by 
prudent surveillance of the measures introduced to prevent the spreading of infections. 

Harmonised area: sectoral legislation 

For the ‘new and global approach’ to product legislation, the level of alignment with the 
EU acquis remains uneven. Some progress was made in aligning national legislation with the 
latest  EU  acquis  in  the  area  of  machinery,  low  voltage  devices,  pressure  equipment  and 
portable  pressure  equipment,  as  11  pieces  of  implementing  legislation  were  drafted  in  this 
area.  The  national  annexes  to  the  EUROCODES  have  not  yet  been  adopted.  Alignment  in 
other areas, notably vehicles, toys and medical devices, remained a challenge.  

While  some  national  legislation  under  the  ‘old  approach’  to  product  legislation  was 
designed  to  align  with  the  EU  acquis,  there  was  no  progress  on  the  EU  Regulation  on 
Registration,  Evaluation,  Authorisation  and  Restriction  of  Chemicals  (REACH).  Nor  was 
there  progress  on  chemicals,  classification,  labelling  and  packaging  of  substances  and 
mixtures,  good  laboratory  practices,  or  fertilisers  and  detergents.  While  the  national  legal 
framework is  designed to align with  the EU  acquis on firearms,  no progress  was made on 
strengthening administrative capacity in this area. 

On  procedural  measures,  the  Ministry  of  Economy  and  the  Standardisation  Institute  are 
responsible  for  the  notification  procedures  for  standards  and  technical  regulations.  Public 

60 

 
 
authorities  responsible  for  the  relevant  checks  and  supervision  are  in  place  and  fully 
operational. The licensing, monitoring and control systems for businesses dealing with drug 
precursors  and  civil  explosives  are  also  operational.  The  legislation  on  returning  cultural 
goods  unlawfully  removed  from  a  Member  State  is  designed  to  align  with  the  EU  acquis. 
There  is  no  external  border  check  for  conformity  with  product  safety  rules  on  products 
imported from non-EU countries.  

5.2 

Chapter 2: Freedom of movement for workers  

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

North Macedonia is at an early stage in the area of freedom of movement for workers.  No 
progress was made in the reporting period and last year’s recommendations still stand. In the 
coming year, the country should:  

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

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

measures would have to be introduced in preparation for future accession.  

Foreign workers’ access to the labour market is regulated by law. There was no progress in 
aligning national legislation with the EU acquis. No distinction is made between a foreigner 
and  an  EU  citizen  in  the  domestic  legal  framework  and  EU  citizens  do  not  have  access  to 
public administration posts. Every year, the country decides on a maximum quota of various 
types of work permits for foreigners. Work permits for foreign workers may be acquired by 
submitting a single application to a single authority. This process was further simplified by 
the  amendments  to  the  Law  on  Foreigners,  which  entered  into  force  in  May  2019.  No 
measures  were  taken  to  prepare  for  joining  the  European  network  of  employment  services 
(EURES) upon accession.  

The country has 23 bilateral agreements on the coordination of social security systems, 14 
of  which  are  with  EU  Member  States.  There  are,  in  total,  18  agreements  for  mutual  health 
insurance that allow people from one country to use health-care services in other country. Of 
these, 12 agreements are with EU Member States. In 2020, the country adopted guidelines for 
regulating temporary stay of referred workers in accordance with the bilateral agreements for 
social  insurance.  There  are  still  9  agreements  between  North  Macedonia  and  EU  Member 
States on the use of the European Health Insurance Card. 

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. 

North Macedonia is moderately prepared on the right of establishment and on the freedom 
to provide services. Some progress was made during the reporting period to revise national 
legislation in the area of services so that companies and legal persons from North Macedonia 
and the EU can provide cross-border services. First steps for an easy and direct access to the 
market  for  companies  were  initiated.  However,  the  opening  of  the  postal  market  was 
postponed again  limiting the provision of quality services to  citizens and businesses. More 
efforts  are  needed  to  further  align  with  the  EU  acquis  on  recognition  of  professional 
qualifications. Last  year’s recommendations were partly addressed and remain valid. In the 

61 

 
 
coming year, North Macedonia should in particular: 

  continue aligning national legislation with the EU acquis, notably on services and mutual 

recognition of professional qualifications;  

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

Services Directive;  

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

the liberalisation of the postal market. 

On the right of establishment and freedom to provide cross-border services, the country 
updated  its  action  plan  to  address  non-compliance  of  sectoral  laws  with  the  new  Law  on 
services, adopted in 2019. It started the preparations for a point of single contact, as required 
by the Services Directive, but these are still at an early stage. It also upgraded its e-services 
portal  to  include  a  catalogue  of  services  and  provide  better  information  to  citizens  and 
businesses  on  existing  services.  Certification  on  quality  assurance  of  national  public 
administration bodies by foreign companies can still not be offered, impeding their freedom 
to provide services. 

The liberalisation of the postal services market was again delayed with 1 January 2021 set as 
the  new  deadline  to  abolish  the  postal  monopoly.  The  Post  of  North  Macedonia,  the 
designated provider of the universal service, covers more than 90 % of the postal market. The 
Law  on  postal  services  needs  to  be  further  aligned  with  the  EU  acquis,  including  with  the 
Regulation  on  cross-border  parcel  delivery  services.  A  system  for  cost  accounting  and 
accounting separation is being prepared and needs to be put in place at the universal services 
provider. The authorities should guarantee the independence of the postal regulator, which in 
turn should further strengthen its administrative capacities. In 2019, 43 licensed postal service 
providers  were  active  on  the  postal  market,  with  licenses  covering  different  services  and 
geographical areas. The latest audit report from the State Audit Office on the Post of North 
Macedonia indicated findings of recurrent irregularities.  

Limited progress was made on the  mutual recognition of professional qualifications. The 
Law  on  recognition  of  professional  qualifications  designed  to  align  with  the  EU  acquis,  is 
under  revision  but  has  not  been  adopted.  The  authorities  need  to    adjust    national  law  to 
comply  with  the  minimum  training  requirements  outlined  in  the  EU  Directive.  The  data 
validation of the professional qualifications electronic register still needs to be finalised and 
the  accredited  professional  qualifications  included.  An  updated  and  transparent  list  of  all 
regulated  professions,  including  their  justifications,  needs  to  be  prepared.  The  institutional 
capacity of the Ministry of Education and Science’s section dealing with mutual recognition 
of professional qualifications also needs to be strengthened.   

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. 

North Macedonia is moderately prepared in the area of free movement of capital. In the last 
few  years, the country adopted measures to  reduce restrictions on free movement of capital 
and to facilitate cross-border payments, but the country needs to do more. North Macedonia 
is taking steps in the right direction to detect doubtful sources of money. Some progress was 
made  by  starting  to  implement  the  strategy  and  strengthen  the  track  record  on  the  fight 

62 

 
 
 
against  money  laundering  and  the  financing  of  terrorism.  In  the  coming  year,  the  country 
should, in particular:  

  prepare  a  road  map  with  actions  and  timelines  to  apply  EU  rules  in  the  area  of  free 

movement of capital; 

  adopt and implement the new legislation on payment system and services; 

  strengthen  the  capacity  of  relevant  stakeholders  in  fighting  money  laundering  and  the 
financing  of  terrorism,  to  ensure  the  systematic  conduct  of  financial  investigations  in 
criminal cases, and further align with the EU acquis in this area. 

On capital movements and payments, the country reduced restrictions to free movement of 
capital,  allowing  investment  in  foreign  securities  and  the  purchase  of  real  estate  abroad. 
However, other restrictions on capital movements remain. For example, residents cannot hold 
a  bank  account  abroad  although  foreigners  can  open  a  bank  account  in  the  country.  
Foreigners  cannot  own  agricultural  land  in  the  absence  of  a  reciprocity  agreement. 
Furthermore, there is still no registry of real owners of legal entities.  

The oversight of payments systems is regularly carried out by the National Bank. The new 
Law  on  payment  systems  and  services  that  aim  to  align  domestic  legislation  with  the  EU 
acquis, is still to be adopted.  

On  the  fight  against  money  laundering  and  the  financing  of  terrorism,  more  effort  is 
needed  to  align  with  the  EU  acquis.  Implementation  of  the  strategy  to  fight  money 
laundering,  which  follows  a  risk-based  approach,  has  started,  and  its  coverage  has  been 
extended  to  the  non-governmental  sector.  It  is  still  necessary  to  raise  the  law  enforcement 
authorities’ awareness  on the possible exposure  and involvement of legal  entities in  money 
laundering.  Financial  investigations  should  be  conducted  more  systematically.  The  national 
risk  assessment  of  the  fight  against  money  laundering  and  the  financing  of  terrorism  was 
adopted and will serve as a basis to revise the strategy. The National Bank adopted its manual 
on risk assessment for banks and non-banking institutions. However, it still needs to establish 
a  central  register  of  accounts  and  a  registry  of  real  owners  of  legal  entities.  The  Financial 
Intelligence Office increased its staff and upgraded its software to detect money laundering 
cases.  In  2019,  the  Office  reported  293  of  suspicious  transactions,  an  increase  on  the  194 
submitted in 2018. The Office sent 54 reports (46 in 2018) of money laundering and terrorism 
financing  cases  and  172  notifications  (183  in  2018)  of  other  cases  to  the  law  enforcement 
bodies.  As  a  result,  five  people  were  indicted  and  one  convicted  for  money  laundering  or 
terrorism financing. (See also Chapter 23 - Judiciary and fundamental rights and Chapter 24 
- Justice, Freedom and Security). 

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.  

North Macedonia is moderately prepared in the area of public procurement. Some progress 
was  made  with  the  adoption  of  the  law  on  public  procurement  in  the  area  of  defence  and 
security  and  of  relevant  implementing  legislation  to  the  Law  on  Public  Procurement.  The 
capacity of the main bodies that implement public procurement needs to be strengthened and 
its  e-procurement  platform  completed.  The  country  needs  to  increase  efforts  that  prevent 
irregularities  and  corruption  during  the  procurement  cycle  and  that  ensure  a  more  effective 
public  procurement  system,  following  the  principles  of  transparency,  equal  treatment  free 
competition  and  non-discrimination.  The  Commission’s  recommendations  from  2019  were 

63 

 
 
not fully implemented and remain valid. In the coming year, the North Macedonia should in 
particular:  

  ensure  implementation  of  the  public  procurement  law,  including  the  upgrade  of  the  e-
procurement  portal  with  new  modules,  and  further  align  with  the  EU  Directives  on  
concessions;  

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

offenders penalised; 

  strengthen  with  adequate  staff  the  administrative  capacity  of  the  Public  Procurement 
Bureau, the State  Appeals  Commission  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 

tenders  due 

to  professional  misconduct  (‘blacklisting’)  during 

The legal framework on public procurement is broadly aligned with the EU’s ‘classical’ and 
‘procurement  for  utilities’  Directives  of  2014.  Companies  can  no  longer  be  excluded  from 
future 
the  contract 
implementation  phase,  but  still  during  the  procurement  phase.  Their  number  slightly 
decreased with the application of the new law. The practice of excluding companies is not in 
line with the European Court of Justice jurisprudence. Some progress was made to align with 
the ‘defence and sensitive security’ procurement Directive. The legislation on public-private 
partnerships  and  concessions  needs  to  be  aligned  with  the  EU  Directives.  All  legal  and 
financial instruments used in the area of public procurement and concessions, including inter-
governmental agreements  concluded with  non-EU countries  for the implementation  of joint 
projects, should comply with the principles of transparency, competition, equal treatment and 
non-discrimination. 

Public  procurement,  as  an  integral  part  of  the  2018-2021  reform  programme  on  public 
finance  management  (see  section  on  Public  Administration  Reform),  is  being  regularly 
monitored based on performance indicators.  

The  Public  Procurement  Bureau,  the  principal  pillar  of  the  public  procurement  system, 
lacks  staff  with  adequate  competences  for  its  expanded  oversight  and  monitoring  mandate. 
Cooperation  between  public  procurement  bodies  and  stakeholders,  including  the  State 
Appeals  Commission,  the  State  Commission  for  Protection  of  Competition  and  the  State 
Commission for Prevention of Corruption, remained limited. 

The  public  procurement  portal  was  upgraded  and  adjusted  to  the  new  legal  framework. 
Awarded contracts, linked to contract notices, are now electronically available. More public 
procurement plans are published by contracting authorities, which increases transparency and 
reduces  the  risk  of  deviation  in  the  post-contracting  phase.  To  upgrade  the  e-procurement 
portal,  sections  on  e-appeals,  e-market  for  small  value  procurements  and  e-catalogues  are 
being developed. 

Implementation and enforcement capacity 

The public procurement market represented 11 % of the country's GDP and 24.79 % of the 
state budget in 2019. Central government institutions mostly comply with the requirement to 
publish  their  annual  procurement  plans.  Municipalities  and  smaller  contracting  authorities 
need  to  increase  transparency  and  prepare  the  procurement  cycles  better  through  annual 
plans.  On  the  monitoring  of  contract  award  and  implementation,  the  proportion  of  the 
overall  value  of  public  procurement  awarded  to  SMEs  continued  to  decrease,  falling  to 

64 

 
 
61.44%  in  2019.  The  use  of  negotiated  procurement  procedures  with  and  without  prior 
publication, increased to 9.08% of the total value of procurement in 2019. These negotiated 
procedures  were  mainly  used  by  a  few  large  contracting  authorities.  Tender  cancellations 
slightly  increased,  reaching  18.23%.  Within  its  new  prerogatives  in  the  framework  of  the 
COVID-19 crisis, the government issued a decree amending the Law on public procurement 
to respond to emergency needs and  the Public Procurement Bureau issued a notification on 
urgent  procurement  procedures.  Contracting  authorities  can  use  the  negotiated  procedure 
without  publication  and  without  requesting  prior  opinion  from  the  Public  Procurement 
Bureau.  Following  the  launch  of  these  emergency  procurements,  71  contracts  were  signed 
until April 2020 for a total amount of EUR 1.5 million. To mitigate the risks of fraud, it is 
especially  important  to  maintain  audit  trails. Posting  all  procurement  information  related  to 
COVID-19  on  government  portals  will  enhance  transparency  and  trust.  The  authorities 
established an e-procurement tool with data on public contracts connected with the COVID-
19  crisis,  increasing  transparency  and  accessibility.  Certificates  of  public  procurement 
officers that expired were extended until after the expiry of the state of emergency. The use 
of e-auctions and the lowest price as the sole award criterion continued, although they are no 
longer mandatory. Only a few contracting authorities opted to use the best-price-quality ratio. 
Training  and  clear  guidelines  on  applying  these  criteria  are  still  lacking  following  the 
introduction of the new legal framework, as are templates of tender documents. 

Centralised  purchasing  remains  limited  to  few  goods  and  services  of  common  interest. 
Framework  and  multiannual  agreements  are  scarcely  used  for  repetitive  procurements. 
Separation into extremely small lots makes tendering non-attractive to bigger operators and 
risks to limit competition. The focus should be on tenders of an adequate size and repetitive 
contracts  signed  for  periods  of  more  than  a  year.  Some  tenderers  have  been  excluded  from 
tender  evaluations  for  minor  administrative  omissions.  There  is  considerable  scope  for 
improvement  in  the  quality  of  tender  specifications  and  the  practice  of  dividing  them  into 
lots. Strengthening internal audit measures remains vital to improve contract implementation 
and monitoring (see Chapter 32 – Financial control). 

The Ministry of Economy, responsible for concessions and public-private partnerships, only 
has  two  members  of  staff  dealing  with  these  matters.  There  is  no  adequate  register  on 
concessions  or  public-private  partnerships  and  data  are  insufficient.  The  Skopje  airport  and 
Skopje city concessions are not accessible to the public.  

The  capacity  to  manage  public  procurement  processes  is  still  uneven  and  is  particularly 
challenging  for  smaller  contracting  authorities.  The  professionalisation  of  contracting 
authorities needs to be improved in line with the new legislative framework. 

The regulatory and institutional systems on integrity and conflict of interest, put in place to 
identify  and  address  corruption,  collusion  and  fraudulent  practices,  need  to  be  vigorously 
applied.  A  proper  risk  alert  system  that  signals  potential  integrity  problems  in  the 
procurement  process  still  needs  to  be  developed.  The  State  Commission  for  Prevention  of 
Corruption  launched  several  cases  on  potential  abuse  of  duty  in  the  area  of  public 
procurement.  The  number  of  integrity-related  reports  is  still  very  low  and  follow-up 
investigations and proper penalties are missing. 

Efficient remedy system 

The  legislation  on  the  right  to  legal  remedy  is  formally  in  line  with  the  EU  acquis.  The 
implementation  capacity  of  the  State  Appeals  Commission  increased  thanks  to  new  case-
handlers. The number of appeals rose from 737 in 2018 to 902 in 2019. The resolution rate 
remained stable at 94 % in 2019. Most of the case reviews looked at administrative and legal 

65 

 
 
aspects  without  analysing  the  substance  of  the  appeal  (technical  specifications).  Efforts  are 
being  made  to  improve  access  to  the  Commission’s  decisions  and  link  them  to  the  e-
procurement  system.  Less than one tenth of all of the Commission's decisions are appealed 
before the courts. The capacity of the courts to review and decide procurement cases on merit 
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.  

North Macedonia has a good level of preparation in the area of company law. The country 
is well advanced following the EU rules on the formation, registration, merger and division of 
companies. Some progress was made on further harmonising the company Law with the EU 
acquis during the reporting period, but more alignment with the latest EU acquis on corporate 
accounting and statutory audit is still needed. The Law on accounting and the Law on audit 
are  still  to  be  adopted.  The  financial  independence  of  the  Council  for  Advancement  and 
Oversight of Audit, who acts as an independent supervisory body, needs to be strengthened. 
As last year’s recommendations were partly addressed, in the coming year, North Macedonia 
should in particular:  

  adopt the latest amendments to the company Law; 

  adopt the Law on accounting and the Law on audit and align it with the latest EU acquis 

on corporate accounting and statutory audit.  

On  company  law,  amendments  to  the  company  Law  aimed  at  aligning  the  legislative 
framework  with  the  EU  Directive  on  cross-border  mergers  still  need  to  be  adopted.  The 
National Banking law includes a corporate governance code for the banking sector and for a 
few joint stock companies listed on the Stock Exchange. An amendment to the company Law 
has been prepared to extend this code to all listed joint stock companies. Further alignment of 
the  legislation  with  the  EU  acquis  is  needed,  including  on  shareholder  rights    and  on 
transparency requirements for listed companies.  

Both,  the  Law  on  accounting  and  the  Law  on  audit  are  still  to  be  adopted.  Corporate 
accounting  legislation  is  partly  aligned  with  the  EU  Accounting  Directive.  International 
financial reporting standards (IFRS) apply to all companies with no reduced obligations for 
SMEs.  Reporting  requirements  for  non-financial  information  have  not  been  met.  On 
auditing,  a  law  on  investigations  and  sanctions  still  needs  to  be  adopted.  The  Council  for 
Advancement  and  Oversight  of  the  Audit  acts  as  an  independent  body,  but  more  effort  is 
needed  to  strengthen  its  financial  independence.  The  Council  promotes  the  interests  of  the 
accountants  and  auditors  and  serves  as  a  bridge  between  both  institutions  and  the 
government.  The  Institute  of  Certified  Auditors  is  responsible  for  certifying  and  training 
auditors and for recognising their qualifications.  

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 protection of 
IPRs  cover  for  instance,  patents  and  trademarks,  designs,  biotechnological  inventions  and 
pharmaceuticals.  Rules  for  the  legal  protection  of  copyright  and  related  rights  cover,  for 
instance, books, films, computer programmes and broadcasting. 

66 

 
 
North Macedonia remains moderately prepared in this area. There was some progress with 
raising awareness about the fight against counterfeiting, smuggling and import of counterfeit 
goods including an increase of seized goods. The recommendations from 2019 were not fully 
implemented and remain valid. In the coming year, North Macedonia should in particular: 

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

IPRs; 

  further 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. 

Amendments  to  the legal  framework on  copyright and neighbouring rights  to  protect  the 
rights  of  those  concerned  have  been  further  delayed.  Consequently,  authors'  rights  are  still 
managed by only one organisation, the Association of Music Artists Rights, issuing collective 
management  licenses.  However,  under  the  current  legal  framework  parallel  organisations 
collect fees from authors without an authorisation from the Ministry of Culture. The relevant 
unit in the Ministry remains understaffed.  

For industrial property rights, the State Office for Industrial Property has further intensified 
its cooperation with the EU Intellectual Property Office, maintaining good cooperation with 
the European Patent Office and with the World Intellectual Property Office. This cooperation 
raises  awareness  about  counterfeit  goods  and  facilitates  exchanges  of  good  practices  on 
enforcing of IPRs. 

Some  key  activities  planned  under  the  current  strategy  on  industrial  property  rights  did  not 
take  place.  The  Law  on  industrial  property  is  still  not  aligned  with  the  EU  acquis  on  trade 
secrets, which further increases companies’ mistrust.  

The absence of an information platform for law enforcement bodies to exchange IPR-related 
data is an obstacle to the creation of a credible enforcement record and to gathering reliable 
statistics  on  the  institutional  handling  of  IPR  infringements.  The  coordination  body  for  the 
protection of intellectual property has not been established.  

The  fight  against  counterfeiting  and  piracy  and  protection  of  right-holders’  rights  has 
advanced  somewhat.  The  country’s  track  record  for  seizing  counterfeit  goods  produced 
nationally as well as imported from Turkey and China has improved. 

5.8 

Chapter 8: Competition policy 

EU rules protect free competition. They include antitrust rules against restrictive agreements 
between companies and abuse of dominant position, and 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 preventing distortion of competition.  

North  Macedonia  is  moderately  prepared  in  the  field  of  competition  policy.  The  main 
legislative  framework  of  State  aid  and  anti-trust &  mergers  is  broadly  harmonised  with  the 
EU rules, but  needs  to  be amended on implementing legislation covering various areas and 
sectors.  The  Commission  for  the  Protection  of  Competition  (CPC),  as  the  national 
competition authority, lacks administrative and enforcement capacity, both in terms of staff 
and  budget.  Significant  efforts  are  needed  on  enforcement.  No  progress  was  made  in  this 
field during the reporting period. Therefore, the recommendations of last year remain valid. 
In the coming year, North Macedonia should in particular:  

67 

 
 
  improve  the  independence  and  strengthen  the  capacity  of  the  national  competition 
authority  to  step  up  their  enforcement  record,  including  on  the  most  problematic  cases 
mentioned below; 

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

  further align implementing legislation in the area of State aid. 

Antitrust and mergers 

North Macedonia’s legislative framework is broadly aligned with the EU acquis in the area 
of antitrust and mergers, though some remaining pieces of implementing legislation have yet 
to be aligned. On antitrust, there is no leniency policy towards whistle-blowers. 

On the institutional framework, the Commission for the Protection of Competition (CPC) is 
responsible for implementing the Law on the protection of competition. The CPC, albeit not 
developed  to  its  full  extent  (see  below),  is  an  operationally  independent  authority  with  the 
right  to  adopt  enforceable  decisions  on  antitrust  and  mergers.  It  has  the  competence  to 
investigate ex- officio and handle complaints and notifications. It can impose fines, propose 
remedies  or  issue  an  opinion,  if  competition  rules  are  breached.  The  CPC  may  approve 
mergers, with or without conditions, or prohibit them. It submits opinions on draft legislation 
that may affect competition. Its opinions are not legally binding. However, its decisions are 
binding and can be subject to an appeal before the Administrative Court.  

The  CPC’s  enforcement  capacity  is  limited  as  it  is  not  adequately  staffed  and  training  is 
needed to increase its level of expertise. In addition, its annual budget is insufficient (it has 
the lowest percentage of GDP among Western Balkan countries) and varies each year. This 
impedes an effective expansion of its competences and raises concerns on independence and 
sustainability of operations. The capacity of national courts dealing with antitrust and merger 
cases also needs to be strengthened. 

On  implementation,  the  number  of  merger  decisions  decreased  from  61  in  2018  to  49  in 
2019 and the number of decisions adopted on cartels and abuse of dominant position dropped 
from 5 in 2018 to 3 in 2019. The CPC should improve its enforcement record by increasing 
on-site inspections and by using the leniency instrument more often. It should also continue 
to make full and transparent use of the possibility of fining, if applicable. The lack of capacity 
of the CPC and of courts dealing with anti-trust cases hinders proper enforcement. 

State aid 

The legislative framework on State aid broadly reflects Articles 107 and 108 TFEU and its 
corresponding provisions in the Stabilisation and Association Agreement (SAA). The Law on 
State  aid  and  implementing  legislation  on  certain  forms  of  aid  and  for  specific  sectors, 
including the regulation for granting aid of minor importance (de minimis), need to be further 
aligned  with  the  EU  acquis.  The  regional  aid  map  is  outdated  and  the  State  aid  inventory 
lacks transparency. 

On the institutional framework, the CPC is also responsible for implementing the Law on 
State aid. State aid grantors must notify the Commission of their plans to grant new State aid 
or alter existing State aid so that it can assess its compatibility. The Commission issues non-
binding opinions and binding decisions on State aid. If an aid measure is not notified, it has 
the power to investigate it ex-officio, and can order its recovery. However, the Commission 
has not exercised this power so far. 

68 

 
 
To  improve  its  enforcement  capacity,  the  staff  of  CPC  dealing  with  State  aid  control  and 
enforcement  increased  to  four,  but  this  is  still  insufficient.  Budget  constraints  and  outdated 
equipment hamper its operational capacity. Further training on the EU acquis is also needed. 

With regard to implementation, the CPC issued 21 decisions and 14 opinions on State aid in 
the  reporting  period,  none  of  them  negative  or  conditional.  The  European  Commission 
expressed concern on three cases. First, the scheme financed under the Law on Support for 
Financial Investments is not in line with the EU State aid  acquis and needs to be amended. 
Second,  the  financial  incentive  scheme  for  Skopje  and  Ohrid  airports  that  grants  financial 
support  to  domestic  and  foreign  airline  companies  needs  to  be  revised  to  confirm  that  it 
complies with the EU State aid acquis and the SAA. The third and most recent concern was 
about the hasty adoption of a Law on strategic investments, without prior notification to the 
CPC.  From  April  to  June  2020,  the  government  published  three  separate  calls  to  support 
businesses and citizens in overcoming the COVID-19 crisis. 

Liberalisation 

Anti-trust  and  State  aid  rules  also  apply  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. Until now, the country has submitted no 
enforcement  record  on  public  companies.  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 is moderately prepared. Limited progress was 
made on capital adequacy guidelines and liberalisation of capital markets in accordance with 
the  second  stage  of  the  Stabilisation  and  Association  Agreement  (SAA).  Therefore,  the  
recommendations  of  last  year  remain  valid.  In  the  coming  year,  the  country  should  in 
particular: 

  continue to implement Basel III requirements and complete the activities for designating a 

bank resolution authority;  

  collect data on unregistered and uninsured vehicles; 

  adequately address consumer protection. 

For banks and financial conglomerates, implementation of Basel III rules is ongoing. The 
rules  on  liquidity  risk  management  and  on  exposure  limits  have  been  upgraded.  Banks  are 
now  required  to  integrate  the  internal  liquidity  adequacy  assessment  process  into  their  risk 
management system. Progress  was  made on amending capital  adequacy  guidelines to  allow 
for  a  more  appropriate  treatment  of  the  settlement  risk  and  counterparty  credit  risk.  The 
macroprudential  policy  framework  is  not  yet  in  place.  Further  efforts  such  as  educational 
activities  and  information  sharing  were  made  to  protect  consumers  and  prevent  unfair 
banking practices. The legal provisions on the bank resolution authority are not yet in place. 

In response to the COVID-19 crisis, the National Bank has taken different measures in Spring 
2020, amongst them a revision of its credit risk regulation, to encourage banks to restructure 
loans  temporarily,  and  a  relaxation  of  the  loan  classification  standards  for  non-performing 
loans. 

69 

 
 
On  insurance  and  occupational  pensions,  the  insurance  market  continued  to  grow,  as  did 
consumer  protection  activities.  The  adoption  procedure  for  the  law  aligning  national  rules 
with the Solvency II Directive has not yet begun. With the second stage of the Stabilisation 
and Association Agreement entering into force in 2019, an EU based insurance company is 
allowed to open affiliation in the country but the licence for its operation still has to obtained 
from  the  insurance  market  regulator  and  supervisor.  The  legislation  that  authorises  the 
Ministry of Finance to set premiums for motor vehicle insurance, which is contrary to the EU 
acquis,  is  still  in  place.  There  are  no  relevant  data  on  the  proportion  of  vehicles  that  are 
uninsured.  According  to  the  analysis  provided  by  the  National  Insurance  Bureau,  which 
manages the guarantee fund for uninsured vehicles, annual insurance is not renewed in time 
for about half of all insured vehicles. Measures are needed to combat uninsured driving. The 
50 % limit on investing in non-domestic securities by pension funds is still in place, contrary 
to the EU acquis and the second stage of the SAA. 

There  was  no  development  regarding  financial market  infrastructure.  The  alignment  and 
the  Financial  Collateral  Directive  and  with  the  Settlement  Finality  Directive  is  still  not 
complete.  On  securities  markets  and  investment  services,  the  Law  on  capital  markets 
aiming to align national legislation to the EU acquis has still not been adopted. This includes 
the provisions on liquidity and solvency ratios for brokerage houses.  

5.10  Chapter 10: Information society and media 

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

internal  market 

functioning  of 

the  smooth 

the 

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 is 
advancing  in  preparations  for  the  long-term  information  and  communication  technology 
(ICT) strategy, established a national Broadband Competence Office (BCO) and enhanced e-
government  services.  The  national  population  register  and  the  national  e-portal  for  services 
became operational, offering digital access and electronic services to citizens and businesses.  

As some of the 2019 recommendations have not been fully implemented, in the coming year 
the country should in particular: 

  finalise the long-term information and communication technology (ICT) strategy ; 

  strengthen  the  independence  and  capacity  of  the  media  regulator  and  the  public  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 for Europe, the country continued to implement the priorities 
set  in  the  2019-2023  national  broadband  strategy  and  the  2018-2022  national  cybersecurity 
strategy.  The  public  benefited  from  decreased  roaming  prices  resulting  from  the  Regional 
Roaming Agreement. Preparations are under way to introduce the 112 European emergency 
number.  

On  electronic  communications  and  information  technology,  the  fixed  broadband 
penetration slightly increased. Mobile broadband, including 2G/3G/4G, increased to 62.70%. 
Investment in developing electronic communications continued at a similar pace as in 2018. 
Amendments  to  the  Law on Electronic Communications adopted in May  and July 2019, as 
well as a decree adopted in June 2020 further regulated the funding of the new Operational 

70 

 
 
Technical  Agency  (OTA).  Concerns  remain  over  the  independence  of  appointments  to  the 
board  and  to  the  management  of  the  Regulatory  Commission.  The  Law  on  Electronic 
Communications and the Law on Audio and Audio-visual Media Services need to be further 
aligned with the EU acquis.  

There were no relevant developments on competitive safeguards during the reporting period. 
Further efforts are needed to improve competition in the telecom sector.  

Regarding  information  society,  a  long-term  information  and  communication  technology 
(ICT) strategy is under preparation. The drafting of the strategy on the development of digital 
skills  has  started  and  digital  literacy  is  a  priority  in  the  new  education  strategy.  Electronic 
signatures  can  be  used  in  the  country’s  new  e-portal  for  services  by  both  individuals  and 
businesses.  The  use  of  the  interoperability  system  slightly  increased  during  the  reporting 
period,  although  many  institutions  do  not  use  it  despite  having  installed  equipment  and 
software. Preparations for a general e-government framework and services continued. Greater 
efforts  by  and  improved  coordination  between  institutions  are  needed  to  modernise  and 
digitalise the public administration. During  the COVID-19 pandemic, a few new e-services 
have  been  offered  by  the  institutions,  such  as  issuance  of  lockdown  moving  permits  for 
citizens  and  businesses  during  the  curfew.  E-commerce  increased  by  more  than  20% 
compared with the previous year. The threshold for imports of small value items increased to 
EUR 90.  

On  audio-visual  policy,  the  failure  of  the  Parliament  to  appoint  the  members  of  the  media 
regulator and the public broadcaster councils has delayed the implementation of the amended 
Law on Audio and Audio-Visual Media Services. The Law was further amended in February 
2020  to  introduce  a  requirement  for  cable  operators  to  submit  statements  under  moral, 
material and criminal liability on regulated intellectual rights. During the COVID-19 state of 
emergency,  the  government  adopted  several  decrees  in  an  effort  to  resolve  the  issue  but  a 
sustainable solution has yet to be reached. The media regulator continued to be proactive in 
issuing  warnings  for  inflammatory  or  discriminatory  language,  hate  speech,  unprofessional 
journalistic  reporting,  but  also  on  pressure  and  threats  on  journalists  and  media  outlets. 
Promotion  of  media  literacy  also  continued  to  be  a  priority.  The  regulator  continued  to 
monitor  transparency  of  ownership  of  media  outlets.  However,  the  launch  of  procedures 
about hidden ownership and illegal media concentration demonstrates that inter-institutional 
cooperation needs to be further improved. The government introduced an action plan to fight 
against  disinformation  and  started  a  process  to  improve  media  literacy  in  the  education 
system. Both are at an early stage and require extensive inter-institutional cooperation.  

During the COVID-19 crisis, the Govеrnment decided to give access to its press conferences 
to all broadcasters and print media registered in the media regulator’s register and to online 
media  registered  in  a  non-formal  register  established  by  the  Association  of  Journalists  and 
Media Ethics Council. This decision has been subject of criticism by the media regulator and 
some media associations. As a response to the COVID-19 state of emergency, the Agency for 
Audio and Audio-visual Media Services provided financial assistance to broadcasters for the 
purchase of protective equipment and for the production and procurement of programmes.  

Changes  to  the  electoral  code  introduced  prior  to  the  2019  presidential  elections,  which 
scrapped the monitoring of online media broadcasting of paid political advertisement by the 
State Election Commission and paid political advertisement financed from the state budget, 
continued  to  apply.  In  February  2020,  the  electoral  code  was  further  amended  to  include 
provisions regulating media work during elections. The authorities made several changes via 
decrees adopted during the state of emergency, including changes on the last day before the 
start of the election campaign, defining the distribution of increased timing for paid political 

71 

 
 
advertising  among  political  parties.  The  amendments  have  been  criticised  by  the  regulator 
and  media  associations.  The  independence  and  financial  stability  of  the  public  service 
broadcaster still need to be ensured. This will also increase the effectiveness of its operations 
and  management.  The  audio-visual  sector  continued  to  benefit  from  the  country’s 
participation  in  the  ‘Creative  Europe’  media  sub-programme  with  five  projects  being 
supported.  

5.11  Chapter 11: Agriculture and rural development 

The  common  agricultural  policy  (CAP)  supports  farmers  and  rural  development.  This 
requires  strong  management  and  control  systems.  There  are  also  common  EU  rules  for 
quality policy and organic farming. 

North  Macedonia  remains  moderately  prepared  in  the  area  of  agriculture  and  rural 
development. Good progress was made in the reporting period, in particular  as regards the 
implementation  of  the  Instrument  for  Pre-Accession  Assistance  for  Rural  Development 
(IPARD II) and the Farm Accountancy Data Network (FADN).  

As not all 2019 recommendations were implemented, in the coming year the country should 
in particular:  

  take strategic decisions on the decoupling of the direct payments and strengthen the role 
and capacity of the paying agency concerning the integrated administrative and control 
system (IACS);  

  implement actions for further institutional and legal alignment with the EU acquis in the 

area of common market organisation; 

  increase  the  administrative  capacity  of  the  IPARD  Managing  Authority  and  IPARD 

Agency to ensure full implementation of the available IPARD II funding.  

On  horizontal  issues,  the  functional  review  of  the  agriculture  institutions  was  completed, 
setting  out  recommendations  for  institutional  reorganisation.  Structural  reforms  on  land 
consolidation  and  agriculture  cooperatives  advanced.  Direct  payment  schemes  remained 
coupled  to  production  with  limited  application  or  enforcement  of  cross-compliance  rules. 
North  Macedonia  continued  to  apply  complex  coupled  direct  payment  schemes  combined 
with input subsidies and premium payments, as well as additional payments for mountainous 
areas,  young  farmers  and  organic  production.  The  annual  budget  allocations  for  direct 
payments  remained  stable,  at  around  EUR  100  million.  In  2019,  a  new  scheme  for  fuel 
subsidies to farmers was introduced, as was a new voluntary ‘small farmer’ scheme. Further 
commitments  are  needed  on  decoupling  at  policy  level  and  on  simplifying  the  heavy 
procedures of the paying agency.  

Good  progress  was  made  in  aligning  the  farm  accountancy  data  network  (FADN)  with  the 
EU  acquis,  in  improving  its  quality  and  increasing  its  use.  An  increase  in  human  and 
financial  resources  is  needed  to  sustain  the  FADN  system.  Public  advisory  services  lack 
sufficient capacity and resources to collect farm accountancy data. Key elements are in place 
for  the  integrated  administration  and  control  system  (IACS),  in  line  with  EU  acquis 
requirements.  The  geospatial  aid  application  is  delayed  as  the  system  is  still  based  on 
cadastral information. The use of the land parcel identification system (LPIS) is limited to on-
the-spot controls. Some strengthening of the paying agency’s capacity was noted, particularly 
for managing IT systems. Additional efforts are needed to complete the legislative framework 
for transferring the farm register and land parcel identification system to the paying agency 
and to finalise the IACS software.  

72 

 
 
Reforms to the farm advisory system were further delayed because the co-existence of private 
and public advisory services needs to be assessed. The public advisory service continued to 
be understaffed and insufficiently financed to properly support farming development. 

Good  progress  was  made  in  aligning  to  EU  rules  on  common  market  organisation 
registered, with the preparation of commodity-specific regimes  for dairy products, fruit and 
vegetables  and  pork  meat.  Additional  efforts  are  needed  to  implement  further  institutional 
and  legal  alignment  with  the  EU  acquis  in  the  areas  of  common  market  organisation, 
especially in recognising Producers’ Organisations for agricultural products, Associations of 
Producers Organisations and Inter-branch Organisations. 

In  the  area  of  rural  development,  good  progress  was  made  in  implementing  the  pre-
accession assistance programme for rural development (IPARD II). Some progress was made 
to increase in the number of staff at the Paying Agency, although more staff is needed at the 
agency and the Managing Authority to ensure the successful absorption of IPARD funds in 
the next  programming period. North  Macedonia  continued to  provide national support with 
most of its funding allocated to the construction of large irrigation schemes. In 2019, a pilot 
LEADER-type  programme  was  supported  with  national  funding.  Progress  is  still  needed  to 
adapt the rural development strategies and align the management and implementation of the 
national rural development policy with the relevant EU acquis. 

On  quality  policy,  the  basic  legislation  is  in  place.  However,  efforts  are  still  needed  to 
implement and control the policy, and to further develop and promote quality schemes.  

On organic farming, the legislation is in place. The competent authority, the control bodies 
and the accreditation and certification system are established and operational. In 2019, a third 
certifying body was accredited. Further efforts are needed by the competent authority and the 
designated  control  bodies  to  ensure  strict  control  and  enforcement  of  organic  rules  and 
regulations.  

5.12  Chapter 12: Food safety, veterinary and phytosanitary policy  

EU hygiene rules for food production ensure a high level of food safety. Animal health and 
welfare and the safety of food of animal origin and animal nutrition are safeguarded together 
with quality of seeds, 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 control of  animal  diseases of harmful 
organisms in the country.  

However,  as  not  all  2019  recommendations  were  implemented,  in  the  coming  year  the 
country should in particular:  

  further align the legislation on official control with the EU acquis;  

  strengthen capacities for data analysis on food safety; 

  adopt and implement legislation on plant protection control.  

On general  food safety, the Law on food safety was amended to  align it with  the new EU 
Regulation on official controls. The National Council for Food and Feed Safety continued to 
provide  scientific  and  technical  support  to  the  Food  and  Veterinary  Agency’s  activities.  A 
new  methodology  on  risk  identification  and  risk  registers  was  developed.  A  strategy  on 
animal  health  is  yet  to  be  adopted.  The  national  rapid  alert  system  for  food  and  feed  is 
operational,  as  are  the  Agency’s  internal  audit  and  training  systems.  The  Agency  actively 

73 

 
 
participates  in  European  Food  Safety  Authority  scientific  networks.  A  flexible  process  for 
implementing the food safety rules was launched.  

On veterinary policy, the implementing legislation on the internal market control system and 
on  the  non-commercial  movement  of  pet  animals  was  aligned  with  the  EU  acquis.  On  the 
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 Agency amended 
the  rules  on  veterinary  checks  on  pet  imports  of  pet  animals  and  identified  and  registered 
horses and other equidae animals during the reporting period.  

Good progress was made on control measures for animal diseases. The Agency continued to 
vaccinate foxes against rabies and bovine animals against lumpy skin disease. The mandatory 
vaccination  against  classical  swine  fever  ceased  with  the  successful  implementation  of 
control and eradication measures. Control and biosecurity measures related to African swine 
fever were introduced. The Agency continued with activities to upgrade biosecurity measures 
on  the  pig  holdings.  The  Agency  also  provided  the  national  centre  and  local  centres  for 
disease control with necessary equipment. Contingency plans on classical swine fever, sheep 
pox  and  goat  pox  and  on  aquaculture  diseases  were  adopted.  The  official  control  of 
aquaculture needs to be improved.  

The Agency continued to implement the monitoring programme on antimicrobial resistance. 
The  2019  national  monitoring  programme  on  control  of  residues  of  veterinary  medicinal 
products and contaminants in live animals and food stuffs of animal origin is in line with the 
EU  acquis  on  cattle,  sheep,  pigs,  poultry,  aquaculture,  milk,  eggs  and  honey.  The  agency 
continued  to  implement  the  animal  welfare  action  plan.  The  control  of  stray  dogs  was  not 
properly  managed  in  all  municipalities.  Micro-chipping  when  registering  pets  is  a  standard 
practice in the country. The capacity to further align with and implement the EU  acquis on 
zoo-technical issues needs to be improved. 

Good  progress  was  made  in  the  placing  of  food,  feed  and  animal  by-products  on  the 
market with the adoption of implementing legislation to align with the EU acquis. The Law 
on animal by-products was revised in order to cover the planned operation of the rendering 
plant for animal by-products, but is yet to be adopted. The government adopted the roadmap 
of activities and responsibilities for establishing the country’s animal by-products system.  

The Agency continued its programme for dairy farms in full compliance with the health and 
hygiene standards of raw milk.  

Good  progress  was  also  made  on  food  safety  rules.  Legislation  was  aligned  with  the  EU 
acquis on labelling, food for particular nutritional uses, quick-frozen foodstuffs and ionising 
radiation.  However,  checks  were  not  systematically  carried  out  according  to  EU  standards. 
Procedures  were  simplified  for  the  authorisation  of  health  claims  and  the  placing  on  the 
market  of  food  supplements  and  food  for  special  nutrition  use.  The  Agency  continued  to 
implement a program to monitor food safety, but the data needs to be further analysed. 

Regarding  specific  rules  for  feed,  the  legislation  was  aligned  with  the  EU  acquis  on  the 
placing  on  the  market  and  use  of  feed,  feed  additives  and  undesirable  substances.  The 
implementation of the programme to improve the safety of feed needs to be improved. 

Some  progress  was  made  to  align  with  EU  phytosanitary  standards.  For  example,  the 
country’s pest status was regularly updated and the Phytosanitary Directorate updated the list 
of harmful organisms in line with the new EU acquis. A law on plant protection products is 
yet  to  be  adopted.  The  system  for  controlling  the  use  of  pesticides  is  weak,  but  the 
phytosanitary inspection began to  introduce pests eradication measures through the monitor 
and  control  programmes.  Contingency  plans  for  two  harmful  organisms  were  prepared  and 

74 

 
 
work started on a phytosanitary information system. The Phytosanitary Directorate increased 
its  capacity  to  analyse  collected  data  by  involving  universities  and  scientific  bodies  in  the 
monitoring programme. Coordination between the relevant authorities improved.  

The Law on genetically modified organisms was aiming to be aligned with the EU acquis, 
but  the  ban  on  production,  placing  on  the  market  and  import  of  genetically  modified 
organisms  food  and  feed  prevent  full  alignment  before  accession.  The  country  records  the 
authorised genetically modified organisms. 

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.  

The country is moderately prepared in the area of fisheries. Limited progress was made in 
the  sector  with  implementation  of  structural  actions  to  support  investment  in  fisheries.  The 
fight  against  illegal,  unreported  and  unregulated  fishing  continued.  In  the  coming  year,  the 
country should in particular: 

  step up its efforts to further align and implement the relevant fisheries acquis; 

  improve the data collection system and reporting; 

  set-up multiannual support programmes for structural measures. 

As  North  Macedonia  only  has  inland  fishing  in  lakes  and  aquaculture,  a  large  part  of  the 
fisheries  acquis  is  not  applicable.  The  national  legal  framework  has  not  been  reflecting  the 
changes to the common fisheries policy.  

Administrative capacities for resource and fleet management, and inspections and control 
of fisheries policy remain insufficient, as does the capacity to control illegal fishing.  

Some  structural  measures  have  been  put  in  place,  to  support  investments  in  aquaculture. 
Measures  to  increase  fish  stocks  have  been  limited  due  to  the  decrease  in  funding  of  the 
annual fisheries programme.  

No progress was made on market policy. Policy measures to align to the EU Eel Regulation 
are pending. 

There were no major developments during the reporting period on market policy, State aid or 
international agreements. 

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  reporting  period  but  only  in  relation  to  connectivity.  Increased  political  commitment  is 
still  required  to  deliver  on  necessary  sectoral  reforms  and  more  efforts  are  needed  to 
strengthen the administrative and operational capacity for all modes of transport. There was 
no progress in completing key sector reforms and the 2019 recommendations remain valid. In 
the coming year, the country should: 

  strengthen  the  operational  and  administrative  capacity  of  the  inspection  bodies  and 

develop enforcement capacity to reduce fatalities along road and rail infrastructure; 

75 

 
 
  implement  the  connectivity  reform  measures  on  rail  reform  and  open  the  rail  transport 
market, set up a national system to continuously collect data on road crashes, and finalise 
pending border crossing agreements/protocols; 

  adopt  legislation  on  Intelligent  Transport  Systems  (ITS)  and  combined  transport,  and 
make further efforts to produce a strategic framework for implementing ITS and the core 
networks. 

On general transport acquis, the key strategic documents for transport and its sub-sectors are 
already  in  place.  The  2018-2030  national  transport  strategy  does  not  yet  have  a  dedicated 
action  plan.  There  was  no  progress  in  strengthening  the  operational  and  administrative 
capacity  for  all  modes  of  transport.  The  Law  on  air  and  railway  accident  investigation  is 
already  in  place.  However,  there  are  still  delays  in  setting  up  the  independent  rail  accident 
investigation  body.  Further  efforts  are  needed  to  implement  the  EU  passenger  rights 
legislation  in  all  modes  of  transport.  Further  efforts  are  also  needed  to  fully  transpose  the 
Intelligent  Transport  System  (ITS)  Directive  and  introduce  the  relevant  national  laws.  An 
overall strategy for ITS with accompanying resources is needed.  

The  legal  framework  for  road  transport  is  broadly  aligned  with  the  EU  acquis.  The 
legislation on dangerous goods is aligned with the EU acquis. No progress was made on the 
conformity assessment of the existing equipment for the transport of dangerous goods. Further 
efforts  are needed to  align with  the social  and safety EU  acquis. Additional  efforts are also 
needed  to  establish  a  national  system  for  continuous  road  crash  data  collection.  The  action 
plans on road safety inspection and audit need to be followed up and implemented. The State 
Transport  Inspectorate  needs  to  strengthen  its  enforcement  and  technical  capacities.  Further 
harmonisation is needed on penalties for infringing the European Agreement on the work of 
crews of vehicles engaged in international road transport (AETR). No progress was made on 
transposing the legislation  on clean energy  and energy  efficient road transport vehicles,  and 
intelligent transport systems, or on approving of the five-year road and rail maintenance plans. 

On rail transport, the main requirement of the EU acquis - make the national infrastructure 
management  independent  from  the  state-owned  railway  company  –  has  been  met.  The 
country’s  railway  sector  still  needs  to  be  transformed  and  there  are  delays  in  separating 
accounts  for  passenger  and  freight  operations.  Further  harmonisation  and  transposition  of 
large parts of the single European railway area acquis were delayed. No progress was made 
in  the  opening  up  of  the  rail  market  to  the  Orient  East/Med  corridor.  Railway  safety 
legislation is harmonised, but further efforts are needed to implement it correctly. The cross-
border  railway  cooperation  agreement  with  Greece  is  yet  to  be  signed  and  the  one  with 
Kosovo needs to be fully implemented. The accident and investigation body has not been set 
up  yet.  In  November  2019,  the  railway  authorities  signed  the  Declaration  on  European 
Railway Safety Culture, which aims to raise awareness and promote a positive safety culture 
throughout the industry. 

On  maritime  transport,  the  country  is  a  party  to  all  basic  transport  conventions  of  the 
International Maritime Organisation.  

In the area of inland waterway transport, the country is aligned with most of the EU acquis, 
except for the Regulation on the recognition of certification and transportation  of goods and 
passengers. There is no law on merchant shipping, as no goods are transported on the inland 
waterways. The country continues to participate actively in the International Commission of 
Sava river basin, but not in the EU strategy for the development of the Danube Region.  

On aviation, North Macedonia has maintained a good level of alignment with the EU acquis 
and has partially aligned with the aviation safety legislation. EU support is helping the Civil 

76 

 
 
Aviation Authority comply with requirements of the European Common Aviation Authority 
Agreement. Alignment and implementation of the Single European Sky legislation still needs 
to be verified by the European Aviation Safety Agency (EASA). Further efforts are needed to 
facilitate the EASA standardisation inspections. 

On combined transport, progress is needed in setting up a multimodal node near Skopje and 
in adopting specific legislation aligned with EU rules.  

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 continued to be  moderately prepared in this area.  Good progress was made, 
notably  through  the  adoption  of  implementing  legislation  in  relation  with  the  third  energy 
package. In the coming year, the country should in particular:  

  finish unbundling the gas transmission system operator; 

  increase the number of staff as well as the technical/engineering capacity of the Energy 

Department in the Ministry of Economy and the Energy Agency;  

  adopt and implement the Energy Efficiency implementing legislation. 

The national energy strategy that runs until 2040 has been adopted. It reflects the EU energy 
and  climate  policy  priorities  and  2030  targets,  as  well  as  the  integrated  energy  and  climate 
strategy. 

Concerning security of supply, the availability of coal for the Bitola thermal power plant still 
needs to be urgently addressed, including by investing in new resources. The entry into force 
on the  Law on compulsory oil reserves has been postponed again,  this time until  2021. Oil 
stocks  correspond  to  74  days  of  average  daily  consumption,  but  the  method  for  calculating 
them is  inadequate. The  adoption of implementing legislation and  action  plans that comply 
with  the  Oil  Stocks  Directive  has  also  been  delayed.  The  oil  industry  is  compensated  for 
holding emergency oil stocks. 

The construction of a new 400kV electricity transmission interconnector line with Albania is 
under  way.  On  gas  interconnections,  the  government  has  taken  measures  to  ensure  the 
necessary funding for the construction of an interconnection line with Greece and Serbia. A 
feasibility  study  on  the  interconnection  line  with  Kosovo  is  being  prepared.  The  electricity 
transmission system operator participates in the regional auction office in Southeast Europe. 
The  roadmap  for  electricity  coupling  with  Bulgaria  is  pending  the  establishment  of  a  day-
ahead market in North Macedonia. 

On the internal energy market, good progress has been made in further aligning the country 
with  EU’s  third  energy  package  in  gas  and  electricity.  The  electricity  and  gas  markets  are 
open  for  competition  and  the  country  is  well  on  the  path  to  adopt  the  corresponding 
implementing  legislation.  North  Macedonia’s  electricity  transmission  system  operator  has 
completed ownership unbundling and is certified. The gas transmission system operator is not 
unbundled,  as  required  by  the  third  energy  package,  due  to  the  ongoing  dispute  on  the 
ownership of the gas transmission pipeline, which needs to be resolved soon. The electricity 
distribution  system  operator  is  legally  and  functionally  unbundled,  and  the  possibility 
hasbeen  introducted  to  exempt  a  gas  distribution  system  operator  from  unbundling  when 
there are less than 100.00 customers is implemented. 

77 

 
 
The  National  Electricity  Market  Operator  of North  Macedonia  (MEMO),  established  as  a 
spin-off  of  the  transmission  system  operator,  became  operational  on  1  October  2019.  The 
Energy  Regulatory  Commission  approved  new  market  rules.  In  October  2019,  the 
government  adopted  a  decree  on  the  operation  of  the  organised  market  operator  and 
designated MEMO as an organised electricity market operator. 

The new balancing mechanism is fully market oriented. 

The retail market was liberalised on 1 July 2019. Universal supply and supply of last resort is 
performed by the supplier selected through competitive procedures.  

Third-party access to natural gas is in line with the EU acquis, but transparency needs to be 
improved.  Works  is  under  way  to  build  the  gas  transmission  pipeline  between  Negotino-
Bitola and Skopje-Tetovo-Gostivar. 

The  Energy  Regulatory  Commission  is  operational,  but  its  independence  is  hampered  by 
political interference.  

On  hydrocarbons,  the  Law  on  mineral  resources  aims  to  align  with  the  EU  Hydrocarbon 
Licensing Directive.  

The amended national renewable energy action plan aims to meet the revised binding target 
of 23% of energy coming from renewable energy sources by 2020 and 24% by 2025. In 2018, 
the country achieved only an 18.12% share. 

The  country’s  energy  Law  is  fully  aligned  with  the  EU  Renewables  Energy  Directive, 
following  adoption  of  several  pieces  of  secondary  legislation  to  implement  the  renewable 
energy rules. 

Feed-in-tariffs remain in place, and premiums have been introduced under a support scheme 
for solar power plants. In 2019, the first auctions for 62 MW of solar power plant took place. 
The contracting and building of small hydro power plants is not systematic or transparent.  

Provisions on the sustainability of biofuels are still not aligned with the EU acquis. 

The capacity  cap per type of  renewable  energy  technology  has to  be removed for the 2020 
renewable  energy  target  to  be  met.  Investments  in  hydropower  should  be  aligned  with  the 
relevant environmental EU acquis. 

The  fourth  action  plan  on  energy  efficiency  has  not  been  adopted.  A  new  Law  on  energy 
efficiency  that  aims  to  align  with  the  EU  energy  efficiency  and  the  energy  performance 
Directives,  has  been  adopted.  The  current  legislation  needs  to  be  enforced.  Adopting 
implementing legislation remains a challenge, due to limited human and technical resources 
at the Ministry of Economy’s energy department and the Energy Agency.  

Financing  to  promote  energy  efficiency  should  be  increased,  including  by  setting  up  the 
Energy Efficiency Fund. Household heating is a serious problem and has a major impact on 
air pollution. Municipalities should take steps to fully respect their obligation to develop and 
implement municipal energy efficiency programmes. 

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. 
The  government  adopted a national  policy for  radioactive waste management. There is  still 
no long-term and safe radioactive waste storage facility in the country.  

5.16  Chapter 16: Taxation 

78 

 
 
EU rules on taxation 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 adopting the 
law  on  excise  duties  and  ratifying  the  OECD  Convention  on  mutual  administrative 
assistance  in  tax  matters.  However,  the  reforms  introduced  in  2019  on  personal  income 
taxation  are  now  put  on  hold.  As  not  all  recommendations  of  the  2019  report  were 
implemented in the coming year, the country should in particular: 

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

efficiently implementing the tax system strategy; 

  develop a new integrated IT tax model for the Public Revenue Office, improve its risk 
management through automated processes and further extend e-services for tax payers. 

On  indirect  taxation,  while  the  Law  on  value  added  tax  (VAT)  still  contains  certain 
exemptions which are not in line with the EU acquis, VAT refunds are processed quicker and 
delays, if any, are shorter. Progress was made on excise duties with a new law entering into 
force on 1 January 2020. It provides for electronic control of the movement of excise goods 
under duty suspension.  The law includes  electricity,  gas and coal  in  its  scope and excludes 
motor vehicles, thus further aligning it with the EU acquis.  

Regarding direct taxation, most of the reforms  to personal taxation introduced in 2019 are 
now suspended. From 1 January 2020 and for the next 3 years, all types of personal income 
(with  the  sole  exception  of  games  of  chance  winnings)  are  again  taxed  at  the  rate  of  10% 
rather than subject to progressive rates of 10-18% as foreseen previously. Interest on savings 
and capital gains on securities are once again exempt.  

On  administrative  cooperation  and  mutual  assistance,  North  Macedonia  has  signed  50 
double  taxation  agreements  to  date  including  with  all  EU  Member  States  except  Portugal, 
Greece, Cyprus and Malta. A peer review report by the Global Forum on Transparency and 
Exchange  of  Information  for  Tax  Purposes  rated  the  transparency  and  exchange  of 
information  as  largely  compliant  with  the  international  standard.  In  September  2019,  the 
country  ratified  the  OECD  Convention  on  mutual  administrative  assistance  in  tax  matters. 
North  Macedonia  remains  committed  to  implementing  the  OECD  Inclusive  Framework  on 
Base Erosion and Profit Shifting minimum standards.  

Regarding  operational  capacity,  computerisation  and  the  informal  economy,  the  Public 
Revenue  Office  (PRO)  still  has  to  improve  its  business  processes,  implement  a  new 
integrated IT tax model, improve risk management through automated processes and further 
extend  e-services.  Internal  promotions  and  new  staff  recruitments  took  place  in  2019, 
including an increase in staff of the country’s large taxpayers office. The tax system strategy, 
covering  fair  taxation,  revenue  collection,  tax  transparency,  quality  of  services  and  green 
taxation, has yet to be adopted. The PRO supports voluntary compliance by issuing pre-filled 
annual  tax  returns  on  its  electronic  personal  tax  platform.  It  is  combating  the  informal 
economy  and  improving  tax  collection  by  providing  a  monetary  incentive  for  customers  to 
require invoices and tickets on their purchases and by participating in joint inspections with 
other national bodies to identify unpaid tax liabilities and unregistered taxpayers. 

5.17  Chapter 17: Economic and monetary policy 

79 

 
 
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  transparency  and  accountability  of  budget  expenditure.  The 
2019 recommendations were partially implemented. In the coming  year, North Macedonia 
should take further measures to: 

  amend the civil service law to grant the central bank full independence;  

  adopt  the  new  organic  budget  law  that  includes  fiscal  rules,  arrangements  for  an 
independent  fiscal  council  and  introduces  a  proper  comprehensive  medium-term 
budgetary framework;  

  ensure  the  implementation  and  the  assessment  of  economic,  social  and  environmental 
impact of the measures introduced to support the businesses affected by the COVID- 19 
crisis, in particular micro, small and medium-sized enterprises and self-employed.  

On monetary policy, the alignment of the country’s legal framework with the EU acquis is at 
an advanced stage. No progress  was made, however, on further aligning legislation to fully 
ensure the 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 objective, which is fully in line with the primary objective of the European System 
of Central Banks. The central bank adequately responded to the COVID-19 induced crisis by 
cutting its monetary policy rate and implementing regulatory changes to encourage banks to 
restructure debts of high-quality borrowers affected by the pandemic. 

Regarding economic policy, the work on sound budgetary policies and to further align fiscal 
policy with the Directive on Requirements for Budgetary Frameworks has advanced with the 
preparation  of  the  draft  organic  budget  law,  whose  adoption  is  pending.  The  draft  organic 
budget  law  foresees  the  establishment  of  fiscal  rules,  an  independent  fiscal  oversight  body 
and  a  medium-term  budgetary  framework.  Progress  was  achieved  in  the  transparency  and 
accountability of budget transactions that are disbursed by the Treasury with the introduction 
of the new web platform ‘Open Finances’. The definition of public debt has been broadened 
to  include  the  non-guaranteed  debt  of  public  enterprises  and  joint  stock  companies  fiscal 
reporting and notifications under the excessive deficit procedure are in line with the European 
System of National and Regional Accounts ‘ESA 2010’. The 2019 action plan of the 2018-
2021 public finance management reform programme was partially implemented. 

The  2020-2022  Economic  Reform  Programme  was  submitted  on  time.  The  country  was 
among  the  best  performers  for  the  implementation  of  the  2019-2021  Economic  Reform 
Programme. To select the most appropriate structural reform measures, the country needs to 
further develop the capacity to assess the economic and social impacts.  

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  implementing  the  pilot  phase  of  the  population  census  and  testing  the  new 
census methodology that partly relies on administrative data. Improvements are noted in all 

80 

 
 
statistical areas and further aligning of sectoral statistics with EU standards. Continued efforts 
are needed to improve the scope and data quality of macroeconomic and social statistics. As 
the last year’s recommendations were carried out, in the coming year, the country should in 
particular: 

  adopt  the  legislation  and  ensure  the  necessary  administrative  capacities  to  carry  out  the 

population census in 2021;  

  continue  to  align  financial  accounts  and  quarterly  national  accounts  with  the  European 

System of Accounts 2010 (ESA 2010);  

  ensure adequate staffing and sufficient financial resources for the State Statistical Office.  

The  legal  framework  for  statistical  infrastructure  is  broadly  in  line  with  the  European 
Statistics  Code  of  Practice.  In  2019,  the  Parliament  set  up  the  Statistical  Council  and 
appointed  its  members.  The  coordination  committee  of  national  authorities  responsible  for 
conducting statistical surveys was set up. Resources of the state statistical system need to be 
further  increased.  Regarding  other  main  statistics  providers,  the  central  bank  is  fully 
committed to the statistical standards’ code of practice and is improving its capacity to apply 
it.  The  Ministry  of  Finance  has  not  yet  appointed  a  head  of  statistics.  The  IT  systems  are 
being upgraded to increase speed, interconnectivity and storage capacity. Dissemination tools 
were improved. 

On classifications and registers, the main classifications comply with the EU acquis and are 
updated regularly. Progress was noted in the use of administrative data sources, including for 
preparing  the  population  census.  A  population  register  was  made  operational.  Data 
availability and quality improved but still need to be optimised. Data transmission to Eurostat 
further increased but remains incomplete. 

The  State  Statistical  Office  (SSO)  made  good  progress  on  macroeconomic  statistics.  Data 
on  annual  and  quarterly  GDP  in  current  and  constant  prices  are  compiled  and  transmitted 
according  to  ESA  2010  guidelines,  as  are  annual  sector  accounts.  Seasonally  adjusted 
quarterly  national  accounts  should  be  transmitted  to  Eurostat.  Annual  sector  accounts  are 
produced in  accordance  with  ESA 2010. Supply/use tables  are regularly  prepared. Progress 
was  made  in  improving  the  government  finance  statistics  (GFS)  and  the  excessive  deficit 
procedure  (EDP)  notifications.  In  the  GFS  and  EDP  data,  taxes  are  now  recorded  on  an 
accrual  basis.  In  2019,  the  financial  accounts  were  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. The business register model is being revised and updated with a 
new  delineation  of  enterprise  groups.  On  foreign  affiliates  statistics  (FATS),  data  for  2016 
and  2017  were  published  for  inward  FATS.  Statistics  on  research  and  development  and  on 
ICT  are  sufficiently  aligned.  For  services  statistics,  turnover  indices  are  now  regularly 
produced,  disseminated  and  transmitted  to  Eurostat  in  accordance  with  the  regulation.  On 
tourism, in  2019 the SSO set  up a regular survey  on travel  by the domestic population  and 
data  are  transmitted  to  Eurostat.  Preliminary  work  to  set  up  a  tourism  satellite  account  has 
started. Transport statistics have improved with the transmission to Eurostat of microdata on 
road freight. 

Good  progress  was  made  on  social  statistics,  with  the  successful  completion  of  the  pilot 
population  census  using  the  combined  methodology  and  computer-assisted  personal 
interview.  However,  the  Parliament  has  yet  to  adopt  the  census  law  and  the  census  is 

81 

 
 
postponed  to  2021.  The  survey  for  statistics  on  income  and  living  conditions  is  regularly 
carried  out.  Progress  was  achieved  with  improvements  in  social  protection  statistics. 
Migration statistics need to be further improved. Labour market statistics are largely aligned 
with  the EU acquis.  Activities are under  way to  improve statistics on crime, education and 
public  health  statistics.  The  harmonised  index  of  consumer  prices  data  are  transmitted  to 
Eurostat every month. 

Agricultural statistics are only partly in line with the EU acquis. The farm structure survey 
continues to be conducted regularly. For the annual crop statistics, the EU methodology for 
surveys  and  the  data-editing  procedure  was  tested.  For  animal  production  statistics,  it 
developed forecast and estimation models. Agro-monetary statistics are produced in line with 
the  EU  acquis.  Energy  and  environment  statistics,  including  environmental  protection 
expenditure,  waste,  water,  and  environment-related  taxes  are  mostly  in  line  with  the  EU 
acquis.  The  country  also  provides  short-term  energy  statistics  and  energy  balances. 
Compilation  work  has  begun  for  air  emission  accounts  and  physical  energy  flow  accounts. 
Material flow accounts are generated, although 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  remains  moderately  prepared  in  this  area.  There  was  some  progress  in  the 
reporting  period  in  reducing  the  unemployment  rate  and  increasing  the  benefits  of  social 
assistance.  The  Youth  Guarantee  Scheme  was  successfully  implemented  on  the  territory  of 
the  whole  country,  including  underdeveloped  regions.  The  Employment  and  Social  Reform 
Program  is  partially  implemented.  Implementation  of  the  new  Social  Protection  Act  should 
reduce the poverty rate, which remains a serious problem. As a follow on to the COVID-19 
crisis, the government of North Macedonia has taken a number of mitigating socio-economic 
measures. 

As  the  previous  year's  recommendations  were  not  fully  implemented,  they  remain  valid.  In 
the coming year, the country should in particular: 

  continue  to  implement  activation  measures  for  long-term  and  low-skilled  unemployed 

people, including women, persons with disabilities and Roma; 

  improve  capacities  of  the  State  Labour  Inspectorate  and  reinforce  the  bipartite  social 

dialogue between employers and workers; 

  continue  provision  of  assistance  to  all  vulnerable  groups  in  society  while  addressing 

poverty and anti-discrimination.  

The existing labour legislation allows for fair and equal treatment of workers and provides a 
relatively  good  protection  in  case  of  dismissal.  However,  enforcement  of  the  legislation 
continues to lag behind in many areas. A consultation on the new labour law is under way. 
Amendments  to  the  Law  on  Minimum  Wages,  which  provide  for  a  steady  rise  in  the 
minimum  wage,  aiming  to  boost  the  economy  through  private  consumption,  were  enacted. 
The professional performance of the State Labour Inspectorate remains low. There were no 
major issues regarding child labour. 

On  health  and  safety  at  work,  the  administrative  capacity  slightly  improved  with  the 
recruitment of additional inspectors. However, the capacity is still insufficient to ensure that 
the legal provisions are enforced. The number of inspections intensified during the COVID-
19  outbreak  and  focused  primarily  on  protection  of  workers’  health  and  compliance  of 

82 

 
 
employers with recommended protective measures. The 2017-2020 Strategy on Occupational 
Health  and  Safety  was  partially  implemented.  A  revision  of  the  current  Law  on  Safety  and 
Health at Work was initiated. Inter-institutional coordination and co-operation was weak, as 
was  the  implementation  of  occupational  health  and  safety  legislation.  According  to  civil 
society organisation reports, there were 141 reported injuries at workplace in 2019, of which 
22 were fatal.  

Limited  progress  was  made  on  social  dialogue.  The  Economic  and  Social  Council  was 
actively involved in the amendment of the Law on Labour Relations. Tripartite consultation 
structures were  established in  12 municipalities.  The bipartite social  dialogue in  the private 
sector  remains  poor,  as  does  the  commitment  of  social  partners  to  reinforce  the  collective 
agreements.  Trade  union  membership  is  decreasing,  undermining  workers’  representation. 
Overall, workers’ confidence in trade unions' capacity to function in an independent way is 
deteriorating.  The  implementation  of  the  Law  on  Peaceful  Settlement  of  Labour  Disputes 
remains  weak.  Overall,  social  dialogue  is  inadequate  and  social  partners’  capacities  remain 
weak. Out of 79 ratified International Labour Organisation Conventions, 77 are in force, with 
no new Conventions ratified during the reporting period. Concerns have been expressed that 
the new Law on Primary Education and the Law on Secondary Education contain provisions, 
allowing  for  the  replacement  of  striking  workers  in  primary  and  secondary  education,  that 
diverge  from  the  International  Labour  Organisation  Convention  87  on  Freedom  of 
Association and Protection of the Right to Organise.  

On  employment  policy,  the  unemployment  rate  dropped  to  its  lowest  level  since  the 
country’s independence at 16.2% in quarter one of 2020 before the onset of the COVID-19 
pandemic Women’s labour market participation also slightly increased (55.5% of the 15-64 
year-olds). These positive trends are however likely to be reversed as a result of the COVID-
19 crisis. The employment of Roma, the long-term and low-skilled unemployed and persons 
with  disabilities  is  supported  by  the  guaranteed  minimum  assistance  scheme  introduced  by 
the  Law  on  Social  Protection  and  expected  to  bring  further  reduction  of  poverty  through 
higher coverage and larger benefit. Since March 2020, the government has adopted a number 
of temporary socio-economic measures to mitigate the impact of the COVID-19 pandemic on 
employment.  The  implementation  of  the  2018-2020  Action  Plan  on  Employment,  which 
addresses  inclusion  of  vulnerable  groups  in  the  labour  market,  is  progressing.  The  youth 
unemployment  rate  decreased  compared  with  previous  years  to  35.6%  in  quarter  four  of 
2019. It however remains a major concern, addressed with the further implementation of the 
Youth Guarantee Scheme on the whole territory of the country. Measures on undeclared work 
under  the  2018-2020  Strategy  for  Formalisation  of  the  Informal  Economy  were  partially 
implemented.  The  occupational  outlook  was  further  developed  with  45  occupation 
descriptions published by quarter one of 2020. The Employment Service Agency’s capacity 
should be strengthened by recruiting additional staff, especially in light of the increased and 
diversified workload created by the newly adopted policy measures. Although the number of 
Roma benefiting from active employment measures increased, it is still 10 times lower than 
for  non-Roma  beneficiaries.  The  criteria  for  participating  in  active  employment  schemes 
should be reviewed to ensure increased participation of vulnerable people, including Roma.  

The  revised  Economic  and  Social  Reform  Programme  was  adopted  by  the  government  in 
December 2019, following a consultation with relevant stakeholders.  

Preparations  for  participating  in  the  European  Social  Fund  continued.  The  Sector 
Monitoring Committee to support education, employment and social policy was established. 

Progress continued on social inclusion and protection. The new Law on Social Protection 
was adopted, marking the start of a reform of the social protection system. As a response to 

83 

 
 
the  COVID-19  outbreak,  a  decree  was  adopted  amending  the  Law  on  Social  Protection  in 
order  to  allow  for  people  facing  loss  of  earnings  to  be  entitled  to  Guaranteed  Minimum 
Assistance from the following month. The proportion of employed people at risk of poverty 
was  8.8%,  while  for  pensioners  it  was  7.9%.  The  Gini  coefficient  to  measure  income 
distribution inequality was 31.9. Roma and persons with disabilities remain at the highest risk 
of poverty. 

A  social  pension  scheme  was  included  in  the  new  Law  on  Social  Protection,  providing 
assistance  to  people  above  64.  The  capacity  of  the  social  work  centres  must  be  further 
strengthened  to  allow  them  to  implement  the  newly  adopted  legislation,  in  line  with  the 
country’s policy of de-centralisation of social assistance.   

Implementation  of  the  2018-2027  National  Strategy  on  De-institutionalisation  has  started 
and has already  contributed to  the inclusion of children with  disabilities in  the society. Re-
settlement  of  children  and  adults  from  institutional  care  to  foster  families  or  community-
based  housing  is  ongoing.  The  relevant  institutions  are  highly  committed  to  the  de-
institutionalisation  process  but  have  underestimated  the  time  needed  to  prepare  the  process 
and fulfil the preconditions.  This  has  led to negative reactions by local  communities where 
group  homes  have  been  set  up.  Conditions  in  residential  institutions  for  adults  with 
disabilities remain very poor. 

On equality between women and men in employment and social policy, the first Gender 
Equality  Index  was  published  showing  significant  gender  differences  in  participation  and 
quality  of  work.  Women  are  less  likely  to  be  employed  fulltime  than  men.  In  2019,  the 
employment rate for men was 64.4% compared to 44.7% for women.  

While there is the national Law on Protection against Workplace Harassment and training of 
public  sector  workers  on  gender  equality  to  promote  gender  equality  and  eliminate  sexual 
harassment  in  the  workplace, there is  no  existing data on incidents  of sexual  harassment  in 
the  workplace  or  a  system  to  investigate  such  incidents.  According  to  the  Law  on  Health 
Insurance, women need to work at least 6 months with the same employer to be entitled to 
maternity  leave.  Measures  are  being  taken  to  increase  childcare  and  pre-school  capacity, 
which should help women return to the workplace. Both gender stereotyping and the gender 
pay gap persist.  

On non-discrimination in employment and social policy, in May 2020, the Constitutional 
Court  repealed  the  Law  on  Prevention  and  Protection  against  Discrimination  on  procedural 
grounds,  thus  depriving  the  country  of  a  comprehensive  legal  framework  on  non-
discrimination.  The  Ombudsman’s  2019  annual  report  refers  to  60  discrimination-related 
complaints,  out  of  which  the  Ombudsman  concluded  discrimination  in  24  cases.  (See  also 
Chapter 23 — Judiciary and Fundamental Rights) 

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).  

The  country  is  moderately  prepared  in  this  area.  Some  progress  was  achieved  in 
implementing  the  strategy  to  fight  the  informal  economy,  increasing  financial  support  to 
companies  and  improving  the  structure  of  public  dialogue  with  businesses.  As  not  all 
recommendations from the previous year were fully implemented, in the coming year North 
Macedonia should:  

84 

 
 
  consolidate  the  institutional  setup  and  further  clarify  the  mandates  of  public  bodies  and 
ensure  the  effective  implementation,  monitoring  and  evaluation  of  adopted  and 
implemented strategies and policy measures;  

  continue implementing, assess and renew the strategy and action plan for formalising the 

informal economy, with specific attention to its business environment component; 

  elaborate  further  productivity  raising  measures  to  increase  competitiveness  of  domestic 

companies and facilitate their integration in global value chains. 

Regarding enterprise and industrial policy principles, the economic growth plan (EGP) has 
become  the  country’s  main  enterprise  and  industrial  policy.  Several  other  strategies  and 
annual policy measures carried out by numerous public institutions are also relevant, though 
they  generally  have  relatively  modest  funding.  The  Plan  lacks  impact  indicators  and 
systematic evaluation of past interventions as well as further productivity-rising measures for 
domestic companies, complementary to actions in other policy areas. 

While  an  input-based  monitoring  mechanism  has  been  set  up  in  most  public  bodies, 
evaluation mechanisms are insufficient for most national strategies, and available indicators 
need  reviewing.  Little  evidence  can  therefore  be  obtained  as  to  whether  the  introduced 
measures  contribute  to  overall  competitiveness  and  economic  growth.  There  are  still 
numerous public bodies with overlapping and conflicting mandates. Some bodies largely use 
external  contractors  to  carry  out  their  tasks  rather  than  increasing  in-house  resources.  The 
management of public investments contributes to insufficiently high investment level leading 
to unfavourable consequences for competitiveness. 

Some progress in addressing structural obstacles in the business environment was made with 
the  implementation  of  the  strategy  and  action  plan  for  the  formalisation  of  the  informal 
economy.  Frequent  changes  to  the  regulatory  framework,  such  as  increasing  the  minimum 
wage, introducing and then reversing progressive taxation and thresholds for cash payments, 
are made without sufficiently consulting businesses. The lack of transparency of para-fiscal 
charges,  uneven  enforcement  of  business  regulations  and  skills  mismatches  in  the  labour 
market are still major obstacles to doing business.  

The government’s electronic system for consulting the private sector on proposed legislation 
is  operational.  However,  it  is  infrequently  used  for  business-related  laws.  A  new  energy 
strategy was adopted setting out measures to improve system efficiency in the manufacturing 
industry.  

On  policy  instruments,  the  aspects  of  the  Late  Payment  Directive  that  relate  to  public 
bodies’  payment  obligations  are  not  yet  fully  aligned  with  the  EU  acquis.  The  Law  on 
financial discipline should be amended to improve businesses prospects of collecting claims 
from public bodies. 

Overall, public funding for business support measures increased further in 2019. Most of the 
funds,  about  EUR  40  million,  were  disbursed  as  grants  to  about  120  companies  under  the 
EGP. An additional amount of around EUR 27 million was awarded to the private sector for 
technology  transfer  and  innovation.  Although  the  distribution  of  grants  under  the  EGP  is 
made following public calls, the overall process of grant award is not sufficiently transparent. 
The  new  Law  on  strategic  investments,  that  sets  specific  rules  on  financing  strategic 
investment  projects,  was  adopted  without  appropriate  public  consultations  and  without  the 
required prior consultation with the State aid authority. The law’s policy objective should be 
clarified. The Innovation Fund increased its number of full-time staff from four to eight.  

85 

 
 
Bank  lending  remains  the  main  source  of  private  sector  financing,  as  other  financing 
instruments  are  modest.  In  total,  four  investments  were  financed  from  the  Enterprise 
Development & Innovation Facility (EDIF) and eight projects benefited from the programme 
for the competitiveness of SMEs (COSME) since these instruments were set up. Efforts are 
needed on raising the private sector’s awareness on how to make better use of COSME and 
EDIF. Organisations from North Macedonia successfully participate in the COSME financed 
Enterprise Europe Network and Erasmus for Young Entrepreneurs. 

On sectoral policies, a new national strategy for tourism development is under preparation. 
Three  separate  sets  of  programmes  for  tourism  development  are  managed  by  Ministry  of 
Economy, the Agency for Tourism, and the Cabinet of Deputy Prime Minister for Economic 
Affairs. 

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 maintains a good level of preparation in the area of transport networks. Limited 
progress  was  achieved  during  the  reporting  period.  There  was  no  progress  in  completing 
sector reforms and the 2019 recommendations remain valid. 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  both  Trans-European  Transport 
(TEN  T)  and  Trans-European  Energy  (TEN  E)  networks,  and  harmonise  the  legal 
framework with the Trans European Network Regulation; 

  mobilise sufficient resources to implement the Transport Community Treaty;  

  sign the pending Railway Border Crossing Protocol with Kosovo. 

On transport networks, the country actively participates in the Transport Community Treaty 
and  is  actively  involved  in  its  meetings.  The  authorities  of  North  Macedonia  authorities  are 
encouraged  to  intensify  cooperation  under  this  Treaty.  As  a  reaction  to  the  COVID-19 
pandemic,  green  corridors  were  established  and  are  functioning  effectively  throughout  the 
major corridors.  

Road Corridor X is functional but works along Corridor X-d are delayed. The construction of 
the rail Corridor VIII towards Bulgaria is facing significant delays with only 28% completed. 
This  will  have  serious  consequences  for  opening  the  final  section  of  the  Orient/East  Med 
Corridor. A serious effort is needed to accelerate progress in all phases of this corridor and 
other priority sections of the core network for both rail and road. The lack of a staff retention 
policy by institutions and bodies involved in large investment projects considerably hampers 
the completion of strategic projects. Staff retention policies therefore need to be substantially 
improved. Connectivity related reform measures also need more attention in order to ensure 
the sustainability of infrastructures. The railway border crossing agreement with Greece has 
not  yet  been  finalised  and  no  actions  has  been  taken  to  sign  the  remaining  border  crossing 
protocol  with  Kosovo  that  need  to  be  finalised  without  any  further  delay.  Preparations  to 
build an adequate infrastructure close to the Serbian border, at the Tabanovce railway border 
station, should start. No progress was made on adopting five-year road and rail maintenance 
plans.  

On  energy  networks,  preliminary  works  to  build  the  Bitola-Elbasan  (Albania)  400kV 
electricity interconnection section are under way. On gas interconnections, the government is 

86 

 
 
taking  measures  to  ensure  the  necessary  funding  for  the  construction  of  an  interconnection 
line with Greece and Serbia. A preliminary study on the gas interconnectors with Kosovo is 
ongoing. The state-owned gas transmission operator completed construction of the Klecovce-
Štip gas transmission pipeline. Activities on the gas pipeline Stip–Negotino are ongoing.  

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.  The  established 
management  and  control  systems  are  functional  and  support  the  implementation  of  the 
Instrument for Pre-accession (IPA). In the coming year, the country should in particular:  

  upgrade  the  administrative  and  technical  capacity  across  the  IPA  operating  structures, 
adopt a retention policy and improve the dynamics in implementation of the EU-funded 
projects, particularly in the areas of transport and environment;  

  strengthen  significantly 

the  financial 
the  regional  development  policy, 
instruments put in place for its implementation and improve the administrative capacity at 
central and local level; 

improve 

  ensure the sustainability of project results.  

On the legislative framework, some progress was made in harmonising national law with the 
EU  acquis  by  creating  preconditions  for  implementing  existing  and  future  EU  structural 
funds. Improvement included laws on public procurement, on prevention and protection from 
discrimination  and  on  NUTS  classification.  The  introduction  of  a  new  medium-term 
budgetary  framework,  improved  budgetary  classification,  new  fiscal  rules,  financial  control 
and internal audit is still pending. 

In 2019, key strategic documents were adopted in support of economic and social cohesion 
with the EU, such as the economic reform programme and the revised economic and social 
reform  programme.  Although  it  is  gradually  increasing  the  annual  spending  on  regional 
development  policies,  the  country  still  needs  to  put  in  place  an  integrated  planning, 
management and monitoring system for regional development. The purpose is to address the 
disparities among the NUTS 3 regions, and to tailor the policies to the specific needs of the 
areas suffering economic and demographic handicaps. 

The institutional framework for managing the EU pre-accession assistance (IPA) has been 
set up and is operational. The country submitted the annual management declarations for year 
2019 for all ongoing EU programmes certifying the reliability of the accounts, the use of the 
EU  funds  for  the  intended  purpose  and  the  legality  and  regularity  of  the  underlying 
transactions. 

Administrative capacity significantly deteriorated in 2019 and no progress was made on the 
staff retention policy. The high middle management turnover rate in the central financing and 
contracting  department  and  line  ministries  considerably  weakened  the  internal  control 
functions and decreased the quality of procurement and contracting process.  The role of the 
National  IPA  Coordinator  (NIPAC)  as  principle  coordinator  and  EU  contact  point  for  the 
management  of  EU  funds  needs  to  be  strengthened.  The  IPA  training  centre  has  not  yet 
proved its efficiency in  monitoring the capacity  building needs of the established structures 

87 

 
 
and proposing credible training programmes. There is a need to increase capacity across the 
whole system, which requires an urgent response by the authorities.  

The  IT  capacity  of  the  operating  structures  has  increased.  Thanks  to  an  upgrade,  the 
management information system now enables good tracking of the procurement and contract 
management.  

On  programming,  the  sectoral  approach  has  had  a  positive  impact.  The  framework  for 
inclusive  policy-making  and  reporting  has  proven  effective  in  guiding  national  and  donor 
investments.  The  current  programming  rate  of  the  EU  funds  for  the  2014-2020  financial 
framework stands  at  104% and programming is  entirely integrated into the national  policy-
making  platforms.  The  National  Investment  Committee  is  operational.  The  single  project 
pipeline  is  under  revision.  However,  the  capacity  to  manage  capital  and  infrastructure 
investments needs significant improvement, particularly at the level of line ministries, which 
face serious delays in preparing mature and quality projects and ensuring the sustainability of 
results. 

Some progress was made in the area of monitoring and evaluation. The country developed 
a sector-based performance assessment framework that allows for transparent policy-making 
and  ‘on  the  ground’  reporting  of  clear  outcome  and  impact  indicators,  as  well  as  baselines 
and targets. All required IPA monitoring committees are operational and their effectiveness is 
increasing.  However,  the  country  needs  to  improve  its  monitoring  and  reporting  on  the 
implementation of the recommendations of the IPA Committee meetings and the related IPA 
Master plan.  

As regards financial management, control  and  audit,  the procurement  and contracting of 
EU funds, although gradually improving, remain an issue of concern. The deficiency in the 
quality  of  the  tender  forecasts,  procedures  and  documents  and  the  weaknesses  in  the 
institutional  set-up  put  the  big  EU  investments  around  Trans-European  Network  Transport 
(TEN T) network at significant risk.  

The  external  audit  function  is  well  established.  The  capacity  of  the  Audit  Authority 
improved,  while  the  State  Audit  Office  increased  its  involvement  in  auditing  the  EU 
programmes.  Some  progress  was  achieved  also  on  internal  audit,  in  particular  internal 
auditors increased their knowledge and performance audit was introduced into the procedure. 
However,  the  regularity,  coverage  and  quality  assurance  of  the  internal  audit  of  EU  funds 
need to  be improved,  and the number of competent internal  auditors needs to  be increased. 
Efforts are still needed to ensure that he anti-fraud coordination service within the financial 
inspection sector operates effectively. Transparency in the use of EU funds improved. 

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 the research and innovations capacities in the public and private sector 
and  in  the  development  of  the  Smart  Specialisation  Strategy.  Out  of  last  year’s 
recommendations, the country addressed investments in innovations in private companies and 
started the development of a Smart Specialisation Strategy (S3). Thus, in the coming year, the 
country should:  

  ensure  a  higher  level  of  investment  in  research  and  intensify  efforts  to  increase 
participation in the Horizon 2020 and future EU programmes for research and innovation;  

88 

 
 
  continue  to  work  on  completing  the  S3  to  underpin  national  research  and  innovation 

strategies and policies.  

Some progress  was  made on  research and innovation.  The 2012-2020 innovation strategy 
continues  to  be  the  country’s  main  policy  document  for  improving  innovation  in  private 
companies.  Investment  in  research  and  innovation  remains  low  and  significantly  below  the 
EU  average  at  0.4%  of  GDP,  with  negligible  but  slightly  improving  private  sector 
participation, which stands at 0.1% of GDP. There is a need for closer cooperation between 
academia and the private sector. 

The  country's  performance  in  the  Horizon  2020  framework  programme  continued  to  be 
low. Entities from  North Macedonia have participated  95  times in  72  collaborative actions, 
Marie  Skłodowska-Curie  actions,  European  Research  Council  actions  and  Small  and 
Medium-sized Enterprises Instrument actions of Horizon 2020, receiving EUR 10.6 million. 
The success rate of North Macedonia in Horizon 2020 was 11%, as compared to the overall 
average  of  12%.  No  significant  activities  to  promote  the  programme  or  support  applicants 
were organised in 2019.  

North  Macedonia  collaborates  with  the  European  Cooperation  in  Science  and  Technology 
Programme,  the  International  Atomic  Energy  Agency,  the  Central  European  Exchange 
Programme for University Studies.  

Regarding the European Research Area, the country’s research capacity is low, compared 
with  the  EU  average.  The  Centre  for  technology  transfer  and  innovation,  the  business 
accelerator within the State University ‘St. Kiril and Metodij’, as well as the programme of 
subsidies for young researchers should improve the country’s research prospects. The country 
started  preparing  the  national  roadmap  for  research  infrastructure.  North  Macedonia  is  a 
member of the European Strategy Forum on Research Infrastructures (ESFRI). As of January 
2020,  North  Macedonia  participated  in  two  ESFRI  Landmarks14  and  in  two  developing 
research infrastructure projects. 

On  innovation,  the  country  was  deemed  a  ‘modest  innovator’  in  the  2019  European 
Innovation  Scoreboard,  showing  a  decline  compared  with  2018.  Its  lowest  indicator  scores 
were  for  patent  applications,  design  applications  and  public-private  publications.  The  Fund 
for  Innovation  and  Technological  Development  continued  stimulating  innovations  through 
innovation grants and supporting start-ups and companies. 

The  country  completed  the  first  phase  of  the  preparations  for  the  Smart  Specialisation 
Strategy  (S3)  and  work  is  ongoing  for  the  launch  of  the  qualitative  analysis  of  the  six 
identified priorities with some delays as a result of the COVID-19 crisis. Once in place, the 
S3 will insrease the country’s research and innovation policy and improve its strategies in the 
field. 

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  discrimination15  and  ensure  quality  education  for 
children of migrant workers, including those from disadvantaged backgrounds.  

14  The  Landmarks  are  METROFOOD-RI  Infrastructure  for  Promoting  Metrology  in  Food  and 
Nutrition (HEALTH and FOOD) and METROFOOD-PP preparatory phase. 
15 In EU law, equal treatment in the area of education is provided irrespective of racial or ethnic origin 
(see  EU  Directive  2000/43/EC  of  29  June  2000)  but  not  in  relation  to  other  possible  grounds  of 

89 

 
 
                                                           
The  country  is  moderately  prepared  in  this  area.  Some  progress  was  made  with  the 
adoption of the new Law on Primary Education and the new Law on Teachers and Associates 
in Primary and Secondary Schools and with reforms in Vocational Education and Training. 
The  introduction  of  measures  from  the  comprehensive  2018-2025  Education  Strategy  is 
progressing  slowly.  The  recommendations  of  the  2019  report  were  only  partially  addressed 
and therefore, 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 and training was at 3.7% of GDP in 2019. As a result of the 
COVID-19  crisis,  early  childhood  education  and  care  activities  were  transferred  to  virtual 
broadcasts on a state TV channel  ‘TV classroom’ and the teaching process for primary and 
secondary education was organised through distance learning.  

Government investment in early childhood education and care increased and 1284 additional 
public  pre-school  places  were  made  available  in  2019.  However,  the  overall  level  of 
enrolment  remains  low.  Whereas  the  EU  Education  and  Training  target  for  2020  on  early 
childhood education and care attendance is set at 95%, only 40.2% of children from 3-6 years 
of  age  in  North  Macedonia  were  enrolled  in  licensed  early  childhood  education  and  care 
institutions in the 2019/2020 school year.  

A  total  of  185  955  pupils  were  enrolled  in  primary  education  and  a  total  of  68  087  in 
secondary education in the 2019/2020 school year. The new Law on Primary Education and 
the new Law on Teachers and Associates in Primary and Secondary Schools aim to improve 
the  quality  of  education.  They  include  measures  to  make  education  more  inclusive  and  to 
strengthen the professional development of teachers. 

The results of the 2018 OECD Programme for International Student Assessment indicate an 
improvement  in  student  performance.  Of  the  participating  countries,  North  Macedonia  was 
the  country  in  the  region  with  the  greatest  improvement,  ranking  11th  from  the  bottom, 
compared with 4th from the bottom in the 2015 Assessment. Substantial improvement is still 
needed  in  the  quality  of  primary  and  secondary  education  given  the  country’s  overall  low 
ranking,  also  compared  to  its  regional  peers.  North  Macedonia  participated  in  the  2019 
Trends in International Mathematics and Science Study and started preparations to participate 
in  the  2021  Progress  in  International  Reading  Literacy  Study  and  2021  Programme  for 
International Student Assessment. 

The  education  system  is  vulnerable  to  political  influence  and  corruption.  Access  to 
mainstream  education  for  children  and  students  with  disabilities  remains  poor  with  limited 
access  to  school  buildings,  lack  of  appropriate  supplies  and  learning  materials  and 
insufficient support for teachers. Children and students from Roma communities continue to 
face  barriers  to  regular  and  quality  education  and  training.  The  new  Law  on  Primary 
Education considerably strengthens the legal requirements for inclusive education. However, 

discrimination.  Regarding  vocational  training,  EU  law  provides  for  equal  treatment  irrespective  of 
racial  or  ethnic  origin,  sexual  orientation,  age,  disability  and  religion  or  belief  (see  EU  Directive 
2000/43/EC and EU Directive 2000/78/EC of 27 November 2000). 

90 

 
 
                                                                                                                                                                                     
government investment is also needed. As of January 2019, the cost for 400 Roma children 
enrolled in early childhood education and care is covered by the state budget through block 
donations  to  20  municipalities.  Separation  along  ethnic  lines  in  education  and  training 
continues. Barriers to integrated education and training remain significant. 

In  higher  education,  the  overall  enrolment  rate  of  students  was  33.3%  for  the  2018/2019 
academic  year,  26.4%  for  males  and  40.4%  for  females.  However,  the  completion  rate 
remains  low.  The  National  Agency  for  Quality  in  Higher  Education,  was  established  in 
December 2019. 

Under  the  national  qualifications  framework  system,  three  new  standards  of  qualifications 
have  been  created  since  June  2019.  A  new  National  Qualifications  Framework  Board  was 
formed in November 2019.  

The  revisions  made  to  the  Law  on  Vocational  Education  and  Training  (VET),  adopted  in 
December 2019, include explicit reference to the VET regional centres, thereby setting a base 
for  investment.  Throughout  2019,  a  reformed  four-year  VET  programme  was  rolled  out 
across  all  schools  in  the  country.  Additional  efforts  are  needed  to  address  the  mismatch 
between  skills  required  by  the  labour  market  and  education  and  training  outcomes. 
Establishing cooperation between VET schools and the labour market is a positive step in that 
direction. Increased government and private sector investment in VET and closer monitoring 
of VET outcomes, such as the labour market status of graduates, is still recommended.  The 
country  is  an  active  member  of  the  European  Alliance  for  Apprenticeships  (EAfA)  and 
committed  to  implementing  and  monitoring  the  2015  Riga  Conclusions  on  Vocational 
Education and Training. 

The  country  continues  to  actively  participate  in  the  Erasmus+  programme  and,  as  a 
programme country, is on an equal footing with EU Member States. Successful applications 
from  North  Macedonia  to  the  Erasmus+  programme  have  increased  year  after  year.  The 
National  Agency  for  European  Educational  Programmes  and  Mobility  is  now  a  member  of 
the European Youth Card Association.  

The  2018-2022  national  strategy  for  culture  development  is  still  at  an  early  stage  of 
implementation and work needs to intensify. The adoption of laws on culture and protection 
of  cultural  heritage,  as  well  as  the  national  strategy  for  protection  of  cultural  heritage  were 
further delayed. Awareness-raising, regular, and appropriate budget allocations are necessary 
to  protect  cultural  heritage.  Authorities  must  intensify  inter-institutional  cooperation  in  the 
protection  of  cultural  heritage  and  prevent  illegal  constructions  in  places  with  a  ‘cultural 
heritage  with  particular  importance’  status,  such  as  Ohrid  and  the  Skopje  Old  Bazaar. 
Activities to implement the 2005 UNESCO Convention on the Protection and Promotion of 
the Diversity of Cultural Expressions were further postponed to 2020. 

The  disbursement  of  funds  under  the  annual  programme  for  projects  of  significant  national 
interest,  which  provoked  criticism  by  numerous  cultural  operators  about  the  Ministry  of 
Culture’s work and the political influence over its decisions, has not been clarified yet. The 
Ministry  of  Culture’s  capacity  needs  to  be  strengthened,  in  line  with  public  administration 
principles, to ensure growth of cultural and creative industries and increase tolerance among 
communities.  The  country’s  level  of  participation  in  the  Creative  Europe  programme 
continues to be satisfactory. 

In December 2019, the National Agency for European Educational Programmes and Mobility 
launched  the  European  Solidarity  Corps,  which  specifically  supports  youth  participation, 
social  inclusion  and  volunteering.  The  local  branch  of  the  Regional  Youth  Cooperation 
Office  continued  to  organise  capacity  building  activities  and  training  for  civil  society 

91 

 
 
organisations  and  schools,  and  participated  in  the  legislative  reform  on  youth  and  student 
standards.  

The new Law on Primary Education requires that physical and health education in grades 1-5 
is taught by teachers with specialised training. This should improve the quality of sports and 
physical education. The annual budget for sport in 2019 increased by 5% compared with the 
2018 budget. Amendments were made to the income tax law and the Law on Sports which 
has helped increase the funding allocation for sport through a voucher system.   

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 was achieved in 
nature protection, civil protection and climate change areas. However, implementation in all 
sectors is still lagging behind. 

In  the  coming  year,  the  country  is  encouraged  to  considerably  step  up  ambitions towards  a 
green transition and should in particular: 

  improve inter-sectoral coordination and increase financial resources for reduction of  air 

pollution at the local and national level; 

  set up an integrated regional waste management system;  

  implement  the  Paris  Agreement,  including  by  developing  a  comprehensive  climate 
strategy  and  adopting  a  law,  consistent  with  the  EU  2030  framework,  and  develop  a 
National Energy and Climate Plan, in line with Energy Community obligations. 

Environment  

On  horizontal  issues,  administrative  capacity  at  all  levels  remains  weak  and  financial 
resources  are  still  insufficient  to  implement  existing  legislation.  There  is  a  continuous 
dialogue with civil society, but further efforts are needed to improve access to information, 
public  participation  and  consultations  in  decision-making  processes.  The  country’s  first 
Aarhus  Centre  has  been  set  up  and  will  support  public  participation  on  environmental 
matters.  Environmental 
impact  assessment  and  strategic  environmental  assessment 
procedures  need  to  be  further  improved.  The  quality  of  studies  and  public  consultation 
processes, especially for projects related to hydropower, mining and infrastructure, needs to 
be  further  improved.  The  Law  on  environmental  inspection  is  yet  to  be  adopted.  Some 
progress was made on the INSPIRE and environmental crime directives, but none was made 
in the area of environmental liability.  

On  air  quality,  insufficient  coordination  between  central  and  local  authorities  as  well  as 
weak inter-sectoral cooperation limits the implementation of measures to reduce air pollution. 
Progress  on  the  programme  to  reduce  air  pollution  is  slow.  The  national  air  quality 
monitoring  network  has  been  renewed  with  the  replacement  of  few  analysers,  but  it  still 
requires  considerable  reinforcement.  The  number  of  pollutant  exceedances  remains  well 
above the EU limits and air pollution is high in  major cities during winter. Few cities have 
prepared an air quality plan but the pace of their implementation should be increased. There 
is  an  increased  demand  from  the  public  for  immediate  and  stricter  measures  against  air 
pollution. The first lawsuit on air pollution and failure  to protect  citizens from the negative 
effects of pollutants has been filed with the Civil Court.  

92 

 
 
Regarding  waste  management,  the  laws  on  waste  management  and  special  waste  streams 
have  not  been  adopted  yet.  The  process  of  establishing  an  integrated  regional  system  for 
waste  management  continues  to  face  delays  due  to  insufficient  administrative  and  financial 
resources, and it suffers from lack of ownership. Economic incentives to promote recycling 
and  the  prevention  of  waste  generation  remain  limited.  A  systematic  approach  for 
remediation  of  environmental  hot  spots  is  not  in  place.  This  increases  the  risks  to  human 
health  and  the  environment,  as  illustrated  by  the  uncontrolled  leakage  of  deposited  methyl 
acrylate at former OHIS industrial site. 

On water quality, limited progress was made. Further steps were taken to secure funds for 
the  construction  of  the  wastewater  treatment  plant  in  Skopje,  and  work  on  wastewater 
collectors is ongoing. Finalisation and implementation of river basin management plans shall 
be  a  priority.  A  system  for  monitoring  quality  and  quantity  of  surface  and  groundwater  is 
needed  and  more  efforts  are  required  to  reduce  non-revenue  water.  The  country  needs  to 
make significant efforts to implement the EU acquis in this area. Administrative capacity and 
inter-institutional coordination need to be strengthened. 

On nature protection, some progress was made on mapping natural  habitats and identifying 
potential  NATURA  2000  sites.  Valorisation  studies  and  management  plans  have  been 
prepared  for  several  protected  areas  but  long  term  funding  is  still  missing.  A  five-year 
national  programme  for  biodiversity  monitoring  was  developed.  The  implementation  of  the 
Convention on International Trade in Endangered Species of Wild Fauna and Flora is still at 
an  early  stage.  A  national  red  list  was  developed  for  amphibians  and  reptiles  and  a 
conservation  status  has  been  determined  for  all  46  species.  Some  steps  were  taken  to 
implement the UNESCO conclusions on the natural and cultural heritage of the Ohrid region. 
However, considerable efforts are still needed, notably to prevent it from being included on 
the danger list of world heritage. 

On  industrial  pollution  and  risk  management  integrated  permits  continue  to  be  issued. 
Insufficient  enforcement  of  polluter  accountability  prevents  the  setting  up  of  a  system  to 
prevent  industrial  and  chemical  accidents.  Efforts  are  needed  to  align  with  the  Seveso  III 
Directive, EU Ecolabel regulations and environmental management audit system.  

No  progress  was  made  in  noise  pollution  during  the  reporting  period.  On  chemicals,  the 
Minamata Convention on mercury was ratified. 

Some progress was made on civil protection. A national platform for disaster risk reduction 
was  set  up  to  improve  disaster  mitigation  and  response.  A  team  of  national  protection  and 
rescue  experts  was  sent  to  Albania  to  assist  the  authorities  following  the  November  2019 
earthquake.  Some  steps  have  been  taken  to  finalise  the  technical  connection  to  the 
Commission’s common Emergency Communication and Information System (CECIS). North 
Macedonia is strongly encouraged to implement recommendations of the 2018 Peer Review, 
including  improving  cooperation  and  coordination  between  the  Protection  and  Rescue 
Directorate and Crisis Management Centre. 

The  COVID-19  highlighted  the  need  to  strengthen  the  legal  framework  and  institutional 
capacities as well as  human and financial resources of  civil  protection authorities also  with 
regard to health emergencies. North Macedonia is encouraged to step up their cooperation in 
the framework of the Union Civil Protection Mechanism (UCPM), which was activated in the 
context of the COVID-19 crisis. 

Climate change 

The  alignment  of  the  legal  framework  with  the  EU  acquis  remains  at  an  early  stage.  The 
preparation of a climate law and a comprehensive strategy on climate action, consistent with 

93 

 
 
the  EU  2030  framework,  is  ongoing.  More  efforts  are  needed  to  implement  the  Paris 
Agreement. The fourth national communication is under preparation while the third biannual 
update report to the United Nations Framework Convention on Climate Change (UNFCCC) 
has  being  finalised.  The  preparation  of  the  National  Energy  and  Climate  Plans  in  line  with 
Energy Community obligation and on mainstreaming climate action into other sectors is in its 
final  stage.  The  country  is  the  first  contracting  party  under  the  Energy  Community  that 
integrated the pillars of  energy  and  climate approach into the national  energy strategy. The 
Kigali amendment to the Montreal Protocol was ratified. Considerable efforts are still needed 
to align with the EU climate acquis and to strengthen technical and administrative capacity.  

5.28  Chapter 28: Consumer and health protection 

EU rules protect consumers’ economic interests and 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, and medicines for human and veterinary 
use.  The  EU  also  ensures  high  common  standards  for  upholding  patients’  rights  in  cross-
border healthcare, and serious tackling cross-border health threats including communicable 
diseases,. 

North  Macedonia  remains  moderately  prepared  in  this  area.  No  progress  was  made  on 
either consumer or health protection in the reporting period. In the coming year, the country 
should in particular: 

  align the legal framework with the EU acquis on consumer protection, particularly with 
regard  to  the  Law  on  Consumer  Protection,  and  strengthen  the  operational  structures 
serving consumer protection;  

  intensify efforts on tobacco control; 

  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 

There was no progress on consumer protection or on aligning national product safety rules 
with the EU acquis. The number of inspections carried out by the State Market Inspectorate 
and the State Sanitary and Health Inspectorate slightly increased. The planned web platform 
providing  information  on  consumer  protection  has  still  not  been  developed.  The  mediation 
scheme  is  still  expensive  and  difficult  for  consumers  to  access.  Further  efforts  are  needed 
with regard to the procedure governing consumers' appeals and means of compensation.  

Public Health 

Despite the amendments to healthcare law, which enable increased salaries and an improved 
retention  policy,  the  public  health  sector  still  faces  losses  of  medical  staff,  particularly 
specialists, who are leaving the country to work abroad. Advanced health equipment is still 
underused or not used at all, due to a lack of trained staff. Access to specialist doctors in the 
public health system remains problematic. Approximately one third of all health services are 
paid for by patients without being reimbursed, which increases social discrepancies.  

The tobacco control situation has further deteriorated. Although North Macedonia signed the 
Protocol to Eliminate Illicit Trade in Tobacco Products in 2014 it has still not been ratified. 
Smoking in public areas, cafes and restaurants has increased and enforcement of the rules on 
smoking in public places has weakened.  

94 

 
 
On communicable diseases, the country adopted an action plan to strengthen communicable 
diseases surveillance, prevention and control following a recommendation in a 2016 technical 
assessment report. A new national strategy for anti-microbial resistance control was adopted 
for  2019-2023.  However,  further  efforts  are  needed,  notably  to  align  to  EU  standards,  to 
ensure sustainability of the surveillance and crisis management systems, including laboratory 
capacity,  and  to  introduce  the  systems  for  electronic  reporting  and  control  of  health  care 
associated infections. Rapid measures were taken in 2019 to deal with the measles outbreak, 
with a vaccination  campaign covering almost 30,000 children in schools and kindergartens. 
The Ministry of Health also secured 28,000 doses of the influenza vaccine, which was made 
available free of charge to elderly people, people with chronic diseases, children up to 5 years 
of age and pregnant women. 

The authorities provided a swift initial response to the COVID-19 outbreak in March 2020, 
with a sufficient number of tests and restrictive measures such as curfew and quarantine on 
the  entire  territory  of  the  country,  targeting  the  risk  categories  of  the  population.  The 
restrictive measures - social distancing, ban on public gatherings and religious ceremonies, on 
sports, cultural events and recreational activities and schools, restaurants, and cafés closed - 
were  gradually  phased  out  beginning  of  May,  with  a  three-phase  plan.  In  Summer,  the 
country struggled with a second wave of infections, which severely stretched the capacities of 
the health system.  

North  Macedonia  has  positively  responded  to  the  EU’s  COVID-19  related  support 
mechanisms. It became a member of the Joint Procurement Agreement and an observer in the 
EU Health Security Committee, which also gives them access to the EU Early Warning and 
Response System. It is also providing the JRC data collection system with data on COVID-19 
and nominated a correspondent to the European Centre for Disease Control and Prevention.  

The EU provided an immediate support of EUR 4 million to provide medical equipment and 
protective equipment to strengthen the capacity of the healthcare system to fight COVID-19. 

There  was  no  progress  on  blood,  tissues,  cells  and  organs.  Proper  funding  and  further 
commitment  are  still  needed  in  order  to  align  the  national  rules  with  the  EU  acquis.  No 
progress was made on patients’ rights in cross-border healthcare and national legislation is 
still not aligned with the EU acquis.  

On health inequalities, the programme for active healthcare allows several target groups to 
access  healthcare,  including  the  Roma  community,  people  living  in  remote  areas,  people 
living  with  HIV/AIDS,  drug  users  and  people  with  disabilities.  The  same  programme  also 
helps  providing  contraceptives  to  women  from  socially  vulnerable  groups,  although 
distribution is done via hospitals. However, the government still needs to adopt a new multi-
annual strategy to combat HIV. 

Funding for cancer screening is insufficient. The data from the national and regional cancer 
registers  are  not  publicly  available.  There  is  no  national  programme  on  breast  and  cervical 
cancer screening.  

There was no progress in the reporting period on medicines for human and veterinary use. 
Nor was there progress on mental health there was no progress in the reporting period or 
on health promotion, nutrition and physical activity. 

The  national  registers  on  rare  diseases  are  operational  but  need  adequate  funding.  The 
definition of a rare disease still needs to be harmonised with international standards.  

5.29  Chapter 29: Customs union  

95 

 
 
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. 

North Macedonia has maintained a good level of preparation on the customs union. Good 
progress  was  made  in  the  reporting  period.  The  country  has  completed,  applied  and 
maintained  a  new  electronic  system  for  processing  customs  declarations  and  excise 
documents. The newly built  customs terminal  with  Albania became operational.  One-stop 
border control operations were established with Serbia.  

Last year’s recommendations were implemented. In the coming year, the country should:  

  continue consolidation and full application of its IT systems, ensure their upgrade and 

maintenance, and ensure business continuity; 

  fully implement CEFTA Protocol 5 on Trade Facilitation.  

The customs legislation is highly aligned with the EU acquis. The 2019 customs tariff was 
adopted  to  correspond  with  the  latest  changes  in  the  EU  combined  nomenclature.  The 
Customs Administration intensively promoted the concept of authorised economic operators 
(AEO) and 15 companies were AEO-certified. The country signed an agreement with Serbia 
to  mutually  recognise  AEO  certificates.  North  Macedonia  is  a  member  of  the  Common 
Transit Convention, applying the EU rules on transit movements and has chaired the annual 
joint  committee  meeting.  The  country  needs  to  finalise  the  procedure  for  ratifying  the 
Protocol on Elimination of Illicit Trade in Tobacco Products.  

On  administrative  and  operational  capacity,  the  standards  of  professional  integrity  and 
quality  controls  were  applied.  Revenue  collected  by  the  Customs  Administration  rose  by 
5.4% in 2019 compared with 2018, largely thanks to the systematic application of automated 
risk management with more targeted controls and better inter-agency cooperation. This also 
facilitated the seizures of drugs and counterfeit goods. 

The  newly-built  customs  terminal  at  the  main  border  crossing  with  Albania  started 
operations.  Progress  was  made  on  establishing  a  one-stop  border  control  with  Serbia  in 
August 2019, at Tabanovce-Presevo crossing point. Preparations began on establishing a one-
stop  control  with  Albania,  a  measure  that  has  received  the  official  endorsement  of  both 
governments. Good progress was made with the finalisation of the new ‘paperless’ electronic 
system  for  processing  customs  declarations  and  excise  documents  and  its  application  on  1 
June 2019. The use of the integrated tariff environment (ITE) system increased. The number 
of declarations processed through the new computerised transit system (NCTS) rose by 25% 
in  2019. The Customs  Administration signed maintenance contracts  for the NCTS and  ITE 
systems. 

The Customs Administration took part in 14 international operations to combat illicit trade in 
drugs, counterfeit goods and medicines, excise goods, weapons, explosives, dangerous waste 
and  chemicals,  wildlife  and  plants,  cultural  goods,  and  to  combat  trafficking  in  people. 
Cooperation  and  exchange  of  intelligence  with  the  customs  agencies  in  the  wider  region 
continued. The country has so far concluded 24 bilateral agreements for customs cooperation, 
of which 12 are with EU Member States. North Macedonia hosted the 14th World Customs 
Organisation’s ‘Partnership in customs academic research and development’ conference. 

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.  

96 

 
 
North  Macedonia  is  moderately  prepared  in  the  area  of  external  relations  and  some 
progress  was  made  in  meeting  the  2019  recommendations  over  the  reporting  period.  The 
country  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 is still insufficient. In the coming year, the country 
needs in particular to:  

  enhance overall administrative capacity regarding trade policy, the Central European Free 
Trade Agreement (CEFTA) and work in the WTO framework, in particular to efficiently 
implement the multiannual action plan for the development of a Regional Economic Area 
(REA) in the Western Balkans;  

  implement  actions  under  the  multiannual  action  plan  for  the  development  of  REA:  in 
particular,  ensure  the  full  implementation  of  CEFTA  Additional  Protocol  5  on  trade  in 
goods, ratify and implement CEFTA Additional Protocol 6 on trade in services, negotiate 
and ensure swift implementation of CEFTA Additional Protocol 7 on dispute settlement, 
adopt  regional  standards  for  international  investment  agreements,  and  pursue  the 
implementation of the ‘individual reform action plan’ (IRAP) on investment. 

Regarding  the  common  commercial  policy,  North  Macedonia  continued  to  coordinate  its 
positions  and  align  its  policies  closely  with  those  of  the  EU,  including  within  the  WTO.  It 
completed the second trade policy review in July 2019, in the framework of the WTO.  The 
country  implemented  most  of  the  trade  facilitation  agreement  provisions.  The  National 
Committee  on  Trade  Facilitation  met  twice  in  2019.  The  administrative  capacity  of 
institutions  in  charge  of  trade  policy,  in  particular  the  Ministry  of  Economy,  needs  to  be 
further strengthened.  

North  Macedonia  continued  its  active  participation  in  CEFTA.  The  country  is  yet  to 
implement  Additional  Protocol  5,  particularly  based  on  the  decisions  taken  by  the  CEFTA 
Joint  Committee  on  Authorised  Economic  Operators  (AEOs),  fruit  and  vegetables,  and  the 
risk  management  strategy  for  customs.  Swift  ratification  and  implementation  of  the  newly 
adopted  Additional  Protocol  6  on  liberalisation  of  trade  in  services  still  needs  to  be 
completed. Regarding Additional Protocol 7 on trade dispute settlement, North Macedonia’s 
constructive role is important for ensuring the completion of negotiations in 2020. Within the 
framework  of  REA,  standards  on  investment  at  regional  level  still  need  to  be  adopted  to 
reflect  the latest  EU policy  developments,  which will be used when negotiating investment 
treaties with  third  countries and reflected in  the  Bilateral  Investment  Treaty  (BIT) template 
under preparation. 

The system for export control of dual-use goods and technologies is operational. The country 
aligned  its  list  of  dual-use  goods  with  the  2018/1922  EU  Regulation  on  exports,  transfer, 
brokering  and  transit  of  dual-use  items.  There  was  regular  outreach  to  keep  the  industry 
informed about legislative changes.  

North  Macedonia  adopted  the  Law  on  control  of  foreign  trade  in  rough  diamonds  in  July 
2019,  which  is  aligned  with  the  Council  Regulation  2368/2002  on  implementing  the 
Kimberley  Process  certification  scheme  for  international  trade  in  rough  diamonds.  The 
number  of  bilateral  agreements  with  third  countries  is  40,  out  of  which  19  are  with  EU 
Member  States.  The  country  continued  working  on  updating  the  existing  model  agreement 
for BITs. 

There  was  no  progress  on  development  policy  and  humanitarian  aid.  The  country  is 
encouraged  to  establish  a  policy  framework  in  the  areas  of  development  and  international 

97 

 
 
cooperation as well as humanitarian aid towards non-EU countries in line with the applicable 
EU policies and principles.  

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. 

The  country  continues  to  be  moderately  prepared  in  this  area.  Some  progress  was  made 
during the reporting period, with continued participation in EU crisis management missions 
and  operations.  North  Macedonia  became  a  full  member  of  NATO  in  March  2020.  In  the 
coming year, the country should in particular:  

  continue to improve alignment with the EU common foreign and security policy.  

Regular  political  dialogue  on  foreign  and  security  policy  issues  between  the  EU  and  the 
country continued with two meetings held together with the other Western Balkan partners in 
June and December 2019. 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), the country aligned - 
when invited - with 84 out of 91 High Representative declarations on behalf of the EU and 
Council  Decisions,  representing  an  alignment  rate  of  92%  in  2019.  While  the  country 
continues  not  to  align  on  restrictive  measures  against  Russia,  it  did  align  with  all  other 
restrictive measures and declarations, including with those in view of Turkey’s unauthorised 
drilling activities in the Eastern Mediterranean in December 2019. 

North  Macedonia  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. 
Alignment with the EU position is therefore needed. 

On  non-proliferation,  North  Macedonia  participates  in  the  Proliferation  Security  Initiative 
and the Hague Code of Conduct but not in the Nuclear Suppliers Group, the Australia Group 
or  the  Missile  Technology  Control  regime.  The  country  is  committed  to  meet  the 
requirements to join the Wassenaar Arrangement. 

North  Macedonia  remained  actively  engaged  in  the  implementation  of  the  2018  Regional 
Roadmap for a sustainable solution to the illegal possession, misuse and trafficking of small 
arms and light weapons and their ammunition in the Western Balkans. 

The country continued to actively  cooperate with international organisations and aligned 
with  EU  statements  delivered  at  international  organisations  (UN,  OSCE  and  Council  of 
Europe). The NATO accession protocol, signed in February 2019, was ratified by all NATO 
allies, and North Macedonia joined the alliance in March 2020. During the reporting period - 
apart from the state of emergency - the only security measures were those related to border 
security in the context of the migration and refugee crisis. The law on Classified Information, 
based on the 2013 Council decision, entered into force in January 2020.  

The country continued to actively participate in the EU crisis management operations under 
the  common  security  and  defence  policy  (CSDP),  notably  EUFOR  Althea  in  Bosnia  and 
Herzegovina (1 person). Participation in the military training mission in the Central African 
Republic (EUTM RCA) with two staff officers was approved by the PSC and the deployment 
is planned in 2020. The country continues to contribute to the NATO-led ‘Resolute Support’ 

98 

 
 
mission  in  Afghanistan  with  44  people.  The  country  continued  to  contribute  to  KFOR 
through the Host Nation Coordination Centre and aims to become an operational partner and 
deploy staff officers. Formal cooperation with the European Defence Agency continued. 

A hybrid risk survey was launched with North Macedonia and the country responded to the 
questionnaire in July 2019 as part of a process aimed at identifying vulnerabilities to hybrid 
threats. 

5.32  Chapter 32: Financial control 

Based  on  international  standards,  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. 

North  Macedonia is  moderately  prepared  in  this  area.  Some progress  was made with  the 
implementation of the new policy paper on public internal financial control and the national 
anti-fraud  strategy.  Improved  internal  control  and  effective  follow-up  of  external  audit 
recommendations  have  yet  to  be  pursued.  Financial  inspection  is  still  not  efficient.  The 
independence of the State Audit Office (SAO) is not yet constitutionally guaranteed.  

As not all 2019 recommendations were implemented, in the coming year the country should 
in particular:  

  ensure  improved  managerial  accountability  and  transparency  through  the  effective 
implementation of internal control standards in public-sector organisations’ management 
processes; 

  improve  quality  of  external  audit  and  follow-up  of  SAO  recommendations  by  the 

government and Parliament;  

  strengthen the role of the anti-fraud coordination service (AFCOS), establish the AFCOS 
network and improve management of irregularities through the Irregularity Management 
System. 

Public internal financial control 

The  public  internal  financial  control  (PIFC)  strategic  framework  is  reflected  in  the  2019-
2021  PIFC  policy  paper  and  in  the  2018-2021  public  financial  management  (PFM)  reform 
programme  and  its  annual  action  plans.  The  implementation  is  supervised  by  the  PIFC 
Committee which meets twice a year and reports to the PFM Council chaired by the Minister 
of  Finance.  Two  semi-annual  progress  reports  on  the  implementation  of  the  PIFC  policy 
paper  were adopted by the  government.  The formal adoption of  a number of implementing 
guidelines and manuals prepared in 2019 is pending the adoption of a new PIFC law, which 
has  been  delayed  due  to  the  late  finalisation  of  the  new  organic  budget  law.  (See  also  the 
section on Public Administration Reform) 

The  adopted  PIFC  policy  paper  is  a  cornerstone  for  guiding  the  development  of  internal 
control with  a  particular focus on managerial accountability.  Managerial  accountability is 
not  efficiently  mainstreamed  throughout  the  public  administration  and  it  is  yet  to  be 
coherently applied in practice across the central and local level. There is limited delegation of 
decision-making  authority  to  the  middle  management  level.  A  new  manual  on  managerial 
accountability has been prepared based on international standards and its adoption is pending 
the adoption of the new PIFC law.  

99 

 
 
The  legal  framework  on  internal  control,  is  broadly  in  line  with  international  standards, 
however  it  is  not  yet  implemented  efficiently.  New  manuals  and  guidelines  on  financial 
management  and  control  (FMC)  were  developed  but  are  yet  to  be  adopted.  Rulebooks  and 
manuals on internal control need to be further updated and implemented by budget users at 
central and local level. Risk management registers have been adopted by most of the budget 
users  but  are  not  embedded  in  management  processes.  The  administrative  capacities  for 
centralised budget inspection were strengthened at the Ministry of Finance. Methodological 
tools  need  to  be  developed  to  ensure  that  budget  inspection  complements  internal  audit. 
Further harmonisation of the legal basis on internal control and financial inspection is needed 
as is developing and implementing sound financial inspection practice throughout the entire 
public  administration  in  order  to  ensure  a  more  comprehensive  approach.  The  2019  annual 
report on the work of the financial inspection in public sector was prepared and submitted to 
the government for approval. Exceptional management and control procedures or derogations 
applied  by  the  authorities  during  the  COVID-19  crisis  need  to  be  well  documented, 
accompanied by adequate safeguards and considered for special audits. 

With regard to  internal audit practice,  some progress  was made on implementing internal 
audit standards as new manuals and guidelines were developed but are yet to be adopted. The 
administrative  capacities  of  internal  audit  units  on  central  and  local  level  are  still  limited. 
Most audit units have strategic and annual plans, but quality assurance remains a challenge. 

The  central  harmonisation  unit  (CHU)  should  improve  its  monitoring  and  supervision  of 
the public administration’s overall system of internal control. Annual reporting on the PIFC 
system by the CHU  as well as the structure, scope, process  and quality of the annual  PIFC 
report  need  to  be  improved.  A  new  methodology  for  monitoring  and  quality  checking  of 
financial management and control and internal audit was elaborated, but is yet to be applied 
in  practice.  In  addition,  a  quality  assessment  manual  based  on  the  public  expenditure 
management peer assisted learning model was developed. Guidelines on the work of internal 
audit  units  in  public  sector  under  emergency  situation  caused  by  COVID-19  crisis  were 
elaborated by the CHU and published on the Ministry of Finance’s website. 

External audit 

The  State  Audit  Office  (SAO)  law  is  broadly  in  line  with  International  Organisation  of 
Supreme Audit Institutions (INTOSAI) standards. However, the SAO’s independence is not 
yet provided for in the constitution.  

The  SAO  has  sufficient  institutional  capacity  to  ensure  its  tasks,  with  68  certified  state 
auditors  out  of  90  auditors  in  total.  The  2018-2022  SAO  development  strategy  is  being 
implemented  as  reflected  in  the  annual  2020  SAO  programme  and  is  reported  on  in  the 
annual  SAO  report.  SAO  has  successfully  finished  the  implementation  of  its  2019  annual 
programme.  All  final  audit  reports  were  developed,  submitted  to  the  Parliament  and 
published on SAO’s website. The 2019 annual report on performed audits and operation was 
submitted to the Parliament within the legally set deadline of June 2020, and is to be adopted 
by the new Parliament. A new public procurement audit program providing updated guidance 
and methodological tools for auditors when performing such audits was introduced by SAO. 
A  new  website  was  elaborated  so  as  to  promote  SAO’s  work  and  conducted  audits  among 
key stakeholders and general public. 

The  quality  of  audit  work  improved  in  line  with  the  INTOSAI  standards.  However, 
performance  auditing  needs  to  be  further  improved.  In  2019,  the  SAO  finalised  six 
performance audits and initiated one more on IT which should be finalised in 2020. It carries 

100 

 
 
out  a  compliance  audit  on  the  final  government  accounts  of  the  core  budget  by  June  each 
year. The audit coverage of the total audit expenditure was 54% in 2019. 

On  the  impact  of  the  audit  work,  the  SAO’s  recommendations  were  not  systematically 
implemented by the auditees. Parliamentary supervision of audit reports’ findings still needs 
to be improved. Further efforts are needed for enhanced cooperation with the Parliament and 
in  particular, on the follow-up of SAO reports in  order to  improve the rate of implemented 
recommendations. 

Protection of the EU’s financial interests 

As regards EU acquis alignment, while the national legislation is to some extent harmonised, 
it  still  needs  to  fully  align  with  the  EU  Directive  on  the  fight  against  fraud  to  the  EU’s 
financial interests by means of criminal law. The anti-fraud coordination service (AFCOS) 
at  the  Ministry  of  Finance  is  now  fully  operational.  Its  capacity  to  play  a  key  coordination 
role  in  the  anti-fraud  system  have  to  be  enhanced.  The  implementation  of  the  2019-2022 
national  anti-fraud  strategy  has  started.  The  annual  report  on  the  work  of  public  sector 
financial  inspection  and  the  implementation  of  the  national  anti-fraud  strategy  for  the 
protection  of  the  EU  financial  interests  in  2019  was  adopted  by  the  government.  However, 
the AFCOS network is yet to be established. Cooperation with the Commission improved 
with  one  joint  investigation  carried  out  in  2019  and  49  irregularities,  of  which  2  suspected 
fraud  cases,  reported  through  the  irregularity  management  system,  compared  to  one  joint 
investigation and two reported cases in 2018, for a total of 73 until the end of 2019. A solid 
track-record on investigations and reporting of irregularities needs to be further developed.  

Protection of the euro against counterfeiting 

National legislation is to some extent aligned with the EU acquis as it sets the basis for the 
functioning of the overall system of fighting counterfeiting. Further development is needed, 
as is the efficient implementation of the relevant methodological tools. Technical analysis of 
counterfeit  money  is  carried  out  by  the  National  Bank.  However,  its  capacities  need  to  be 
increased  to  improve  its  detection  rate,  to  efficiently  update  the  relevant  database  and  to 
promptly exchange information with national and international authorities. 

There  is  still  insufficient  coordination  among  key  institutions  in  the  system.  An 
administrative  cooperation  arrangement  (ACA)  was  concluded  in  2019  between  the 
European  Commission  and  the  National  Bank  for  the  exchange  of  technical  and  statistical 
information  on  counterfeit  euro  coins,  and  for  technical  assistance  and  cooperation  on 
training.  No  formal  cooperation  agreement  is  in  place  with  the  European  Central  Bank  on 
banknotes. The country participates in the Pericles 2020 programme and 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. Limited progress was made under this chapter 
primarily  relating  to  the  legal  framework  for  taxation,  customs,  statistics  and  financial 
control.  A  sound  institutional  set-up  has  not  yet  been  established  to  enable  the  efficient 
functioning of the own resources system. 

As not all 2019 recommendations were implemented, in the coming year the country should: 

101 

 
 
  further  harmonise  the  legal  basis  for  the  underlying  policy  areas  affecting  the  correct 

application of the own resources system; 

  enhance  the  administrative  capacities  and  co-ordination  mechanisms  among  key 

stakeholders in the system. 

No progress was made on the specific own resources administrative conditions, as laid down 
in  the  own  resources  regulations.  This  is  valid  for  the  three  types  of  resources:  traditional 
own  resources  (customs  duties),  value  added  tax-based  resource  (VAT),  and  gross 
national  income-based  (GNI)  resource.  Further  efforts  are  needed  to  harmonise  the  legal 
framework  in  the  underlying  policy  areas  affecting  the  correct  application  of  the  own 
resources  system,  especially  on  customs,  taxation,  statistics  and  financial  control.  Some 
progress was made in the development of measures and tools for the fight against fraud, tax 
and  customs  evasion  as  well  as  the  informal  economy.  However,  their  efficient 
implementation is to be progressively ensured. The process of aligning national accounts and 
gross national income (GNI) calculations with European system of accounts (ESA 2010) has 
started. (For further information see developments under Chapter 16 - Taxation, Chapter 18 - 
Statistics, Chapter 29 - Customs union and Chapter 32 - Financial control). 

The administrative infrastructure needs to be set-up to enable for the efficient functioning 
of the own resources system as well as co-ordination mechanisms among all key institutions. 

102 

 
 
 
 
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  took  place  in  July  2020.  Discussions  focused 
on  the  decision  to  open  accession  negotiatings  and  the  progress  made  in  advancing  EU 
reforms,  in  particular in  the areas identified by the June 2018 Council Conclusions and the 
strengthening of good neighbourly relations.  

North  Macedonia  is  a  candidate  country  since  2005,  with  consecutive  recommendations  by 
the European Commission to open accession negotiations since 2009. On 26 March 2020, the 
European Council endorsed the Council’s decision to open accession negotiations with North 
Macedonia. 

Visa liberalisation for citizens of North Macedonia travelling to the Schengen area has been 
in force since December 2009. A readmission agreement has been in force since 2008. The 
Commission’s  July  2020  third  report  under  the  visa  suspension  mechanism  concluded  that 
North Macedonia continues to meet the visa liberalisation benchmarks. 

North Macedonia continued to increase its alignment with EU common foreign and security 
policy  positions  and  declarations.  North  Macedonia  continued  to  actively  participate  in  EU 
crisis management missions and operations under the common security and defence policy. 

The implementation of the Instrument for Pre-accession Assistance II for 2014-2020 (IPA 
II) is underway. The programming of the IPA II funds was successfully completed bringing 
the IPA package for the country to EUR 633 million. Of this amount EUR 214 million have 
been already contracted by end 2019. 

As part of the response to the COVID-19 crisis, North Macedonia has benefited from EUR 4 
million for urgent medical equipment, all of which has been delivered, and EUR 62 million 
for socio-economic recovery measures under IPA II. This package is being complemented by 
a  macro-financial  assistance  (EUR  160  million  in  loans).In  2020,  the  EUR  50  million 
performance  reward  was  re-directed  towards  responding  to  the  health  needs,  to  support  the 
country in its EU integration efforts and to mitigating the economic and social effects of the 
crisis.  

The  EU  supports  with  EUR  57.7  million  the  participation  of  the  country  in  12  EU 
programmes, including Erasmus+, Creative Europe, the programme for the Competitiveness 
of Enterprises and Small and Medium-sized Enterprises (COSME), Horizon 2020, Customs 
2020,  Fiscalis  2020  and  Europe  for  Citizens.  North  Macedonia  is  also  an  observer  of  the 
Agency for Fundamental Rights.  

103 

 
 
 
Note 

Note 

STATISTICAL DATA (as of 03.04.2020) 
North Macedonia 

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

National accounts 
Gross domestic product (GDP) (million national currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP per capita (in purchasing power standards (PPS)) 
GDP per capita (in PPS), relative to the EU average (EU-27 = 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) 
Labour productivity per person employed: GDP (in PPS) per person employed relative to EU 
average (EU-27 = 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 (%) 

Business 

Note 

Industrial production volume index (2015 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the reference period (t) divided by the number of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial business economy) (EUR million) 

2007 
2 042 
25 713 

2007 
372 889 
6 095 
2 980e 
7 380e 
30.1e 
6.5 
3.0 
3.4 

-6.2 
1.0 
44.3 

10.4 
17.1 
6.8 
65.7 
94.1 
22.7 
1.0 
44.1 
62.0 
: 

2007 
92.8 
: 
: 

: 

: 

: 

2014 
2 066 
25 713 

2014 
527 631 
8 562 
4 140e 
9 620e 
36.2e 
3.6 
2.4 
1.2 

3.7 
1.6 
43.4 

11.7 
18.3 
8.0 
62.0 
86.9 
23.4 
6.8 
47.7 
64.9 
: 

2014 
95.3 
53 749 
10.6 

10.8 

75.0 

2015 
2 069 
25 713 

2015 
558 954 
9 072 
4 380e 
9 980e 
36.4e 
3.9 
1.9 
2.0 

0.2 
2.2 
43.2 

11.1 
19.3 
8.1 
61.5 
85.8 
23.8 
6.5 
48.7 
65.0 
: 

2015 
100.0 
54 738 
10.3 

8.8 

74.4 

2016 
2 071 
25 713 

2016 
594 795 
9 657 
4 660e 
10 520e 
37.4e 
2.8 
1.6 
1.3 

5.0 
9.1 
44.2 

10.6 
19.7 
8.0 
61.7 
82.3 
24.4 
8.1 
50.7 
65.5 
: 

2016 
103.4 
55 469 
10.4 

9.7p 

75.4 

2017 
2 074 
25 713 

2017 
618 106e 
10 038e 
4 840e 
10 670e 
36.5e 
1.1 
3.0 
-1.8 

5.3 
10.8 
42.6 

9.1 
20.5 
7.5 
62.9 
81.6 
22.5 
9.7 
55.1 
69.0 
: 

2017 
103.6 
55 359 
9.2 

8.5p 

74.3 

2018 
2 075 
25 434 

2018 
658 053p 
10 698p 
5 150p 
11 370p 
37.7p 
2.7p 
: 
: 

: 
: 
: 

9.8p 
21.4p 
6.2p 
62.6p 
80.7p 
19.8p 
12.1p 
60.6p 
73.2p 
: 

2018 
109.2 
58 245p 
: 

: 

74.2p 

2 257 

2 413 

2 607 

2 698 

2 887p 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total value added (in the non-financial business economy) (EUR million) 

: 

3 460 

3 740 

4 031 

4 252 

4 562p 

Inflation rate and house prices 
Harmonised consumer price index (HICP), change relative to the previous year (%) 
**Annual change in the deflated house price index (2015 = 100) 

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net balance for primary income (million euro) 
Balance of payments current account: net balance for secondary income (million euro) 
Net balance for primary and secondary income: of which government transfers (million euro) 
**3 year backward moving average of the current account balance relative to GDP (%) 
**Five year change in share of world exports of goods and services (%) 
Net 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-27 countries (million euro) 
Foreign direct investment (FDI) in the reporting economy (million euro) 
of which FDI of the EU-27 countries in the reporting economy (million euro) 
**Net international investment position, relative to GDP (%) 
Year on year rate of change in gross inflow of remittances (in national currency) from migrant 
workers (%) 

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

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

Note 

Note 

1) 

Note 

Note 

2) 

2007 
2.2 
: 

2007 
-421.2 
-1 354.1 
209.7 
-280.8 
1 004.1 
24.3 
-3.3 
: 
506.9 
-0.9 
: 
506.0 
: 
-39.4 
11.0 

2007 
0.6 
23.5 
32.1 
31.5 

2007 
46.6 
107.9 
798.3 
2 754.1 
2 898.4 
2 092.6 
: 
: 
: 
3.58 

2014 
0.0 
: 

2014 
-43.2 
-1 855.7 
383.9 
-160.6 
1 589.2 
110.5 
-1.8 
: 
197.4 
7.7 
3.0 
205.1 
-25.4 
-53.1 
6.5 

2014 
-4.2 
38.1 
27.7 
31.9 

2014 
70.0 
146.6 
1 433.4b 
3 843.1b 
4 593.4b 
4 228.8 
12.6 
: 
: 
1.79 

2015 
0.1 
: 

2015 
-177.1 
-1 822.8 
348.8 
-286.1 
1 583.0 
54.3 
-1.4 
: 
202.8 
13.9 
5.4 
216.7 
22.4 
-56.0 
2.3 

2015 
-3.5 
38.1 
28.8 
32.3 

2015 
69.3 
142.2 
1 694.2 
4 130.8 
4 936.7 
4 625.9 
5.5 
: 
: 
0.99 

2016 
0.2 
: 

2016 
-275.5 
-1 812.9 
340.7 
-383.9 
1 580.6 
90.8 
-1.8 
22.5 
316.9 
21.6 
13.6 
338.4 
162.5 
-57.7 
-7.5 

2016 
-2.7 
39.9 
28.5 
31.2 

2016 
74.7 
146.7 
1 867.8 
4 395.9 
5 240.6 
4 632.0 
6.9 
: 
: 
1.02 

2017 
2.1 
: 

2017 
-105.2 
-1 787.3 
374.7 
-397.5 
1 704.9 
112.8 
-2.0 
42.4 
180.0 
1.8 
7.2 
181.7 
86.0 
-58.0 
0.4 

2017 
-2.7 
39.4 
29.1 
31.8 

2017 
73.4 
133.8 
2 053.3 
4 564.2 
5 480.3 
4 883.0 
1.9 
: 
: 
1.01 

2018 
2.3 
: 

2018 
-14.9 
-1 734.9 
362.2 
-450.7 
1 808.5 
109.1 
-1.3p 
52.4 
603.7 
10.4 
0.4 
614.1 
290.4 
-56.5 
3.2 

2018 
-1.8 
40.6 
28.6 
30.4 

2018 
73.3p 
121.6 
2 436.7 
5 103.4 
6 072.6 
5 237.6 
7.6 
: 
: 
0.99 

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

3) 
3) 

7.50 
: 
61.184 
: 
: 

3.75 
0.50 
61.623 
: 
: 

3.75 
0.25 
61.610 
: 
: 

4.25 
0.25 
61.595 
: 
: 

3.75 
0.25 
61.574 
: 
: 

3.00 
0.15 
61.511 
: 
: 

3) 

1 524.4 

2 436.5 

2 261.8 

2 613.4 

2 336.3 

2 867.1 

Note 

4) 

Note 

Note 

External trade in goods 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index * 100) (number) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

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

Labour market 
Economic activity rate for persons aged 20–64: proportion of the population aged 20–64 that 
is economically active (%) 
*Employment rate for persons aged 20–64: proportion of the population aged 20–64 that are 
in employment (%) 
Male employment rate for persons aged 20–64 (%) 
Female employment rate for persons aged 20–64 (%) 
Employment rate for persons aged 55–64: proportion of the population aged 55–64 that are 
in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share of total employment, persons aged 20–64 
(%) 
People employed in the private sector as a share of total employment, persons aged 20–64 
(%) 
Unemployment rate: proportion of the labour force that is unemployed (%) 
Male unemployment rate (%) 

2007 
3 834 
2 477 
-1 356 
110.3 
67.9 
50.9 

2007 
1.5 

10.3 
71.8 
75.9 

2007 
68.5 

45.0 

54.0 
35.8 
28.8 

: 
: 
: 
: 
: 

: 

34.9 
34.5 

2014 
5 505 
3 747 
-1 758 
96.5 
75.1 
51.2 

2014 
1.9 

9.9 
73.5 
77.5 

2014 
70.8 

51.3 

61.6 
40.8 
38.6 

18.5 
23.4 
7.0 
51.1 
: 

: 

28.0 
27.7 

2015 
5 801 
4 088 
-1 714 
99.5 
76.0 
52.4 

2015 
1.3 

8.6 
73.5 
77.4 

2015 
70.2 

51.9 

61.5 
42.1 
40.1 

17.9 
23.4 
7.1 
51.6 
: 

: 

26.1 
26.7 

2016 
6 177 
4 390 
-1 786 
95.9 
78.8 
51.3 

2016 
1.2 

11.9 
73.4 
77.5 

2016 
69.6 

53.3 

63.7 
42.5 
40.7 

16.6 
23.1 
7.2 
53.1 
: 

: 

23.7 
24.4 

2017 
6 825 
5 007 
-1 818 
95.0 
79.7 
52.8 

2017 
0.7 

9.2 
74.1 
77.9 

2017 
70.3 

54.8 

65.6 
43.7 
41.4 

16.2 
22.5 
7.2 
54.1 
: 

: 

22.4 
22.7 

2018 
7 676 
5 872 
-1 804 
: 
80.3 
52.9 

2018 
0.8 

5.7 
74.6 
78.8 

2018 
70.4 

56.1 

66.6 
45.2 
42.7 

15.7 
22.6 
7.4 
54.3 
: 

: 

20.7 
21.3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) (%) 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the inflation 
index) (2010 = 100) 
GINI coefficient 
Poverty gap 
*Early leavers from education and training: proportion of the population aged 18–24 with at 
most lower secondary education who are not in further education or training (%) 

Standard of living 
Number of passenger cars relative to population size (number per thousand population) 
Number of mobile phone subscriptions relative to population size (number per thousand 
population) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

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

Length of motorways (kilometres) 

Innovation and research 

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

Environment 
*Index of greenhouse gas emissions,  CO2 equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent per 1 000 euro GDP at 2010 constant 
prices) 
Electricity generated from renewable sources relative to gross electricity consumption (%) 
Road share of inland freight transport (based on tonne-km) (%) 

Note 

Note 

Note 

Note 

Note 
5) 

35.5 
57.7 
29.7 

41.2 

18.7 

2007 
14 584 
77.5 

: 
: 
19.9 

2007 
121.8 
884.2 

: 
: 

2007 
28.1 

221 

2007 
: 
0.17 
: 

16.5 

2007 
150.8 
472.7 

11.2 
88.4 

28.6 
53.1 
23.4 

31.0b 

19.6 

2014 
21 394 
94.6 

35 
36.1 
12.5 

2014 
179.8 
: 

50.6 
17.2 

2014 
28.1 

259 

2014 
: 
0.52 
: 

68.3 

2014 
70.2 
348.9 

15.5 
94.7 

25.1 
47.3 
21.3 

30.0 

18.9 

2015 
21 906 
97.1 

34 
33.1 
11.3p 

2015 
185.5 
1 005.9 

54.5 
17.5 

2015 
28.1 

259 

2015 
: 
0.44 
: 

69.4 

2015 
: 
329.3 

24.9 
96.0 

22.7 
48.2 
19.2 

28.8 

17.6 

2016 
22 342 
99.3 

34 
32.9 
9.9 

2016 
190.7 
989.9 

57.4 
18.4 

2016 
27.4 

259 

2016 
: 
0.44 
: 

75.3 

2016 
: 
324.9 

27.0 
96.9 

21.8 
46.7 
17.4 

25.5 

17.1 

2017 
22 928 
100.5 

32 
37.3 
8.5 

2017 
194.5 
968.3 

61.1 
19.1 

2017 
27.4 

259 

2017 
: 
0.35 
: 

73.6 

2017 
: 
327.3 

17.1 
96.4 

19.9 
45.4 
15.5 

23.1 

16.6 

2018 
24 276 
104.9 

32 
37.7 
7.1 

2018 
200.0 
935.9 

60.9 
19.4 

2018 
27.4 

287 

2018 
: 
0.37p 
: 

79.3 

2018 
: 
297.5 

26.1p 
97.2 

Energy 

Note 

2007 

2014 

2015 

2016 

2017 

2018 

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

Agriculture 
Agricultural production volume index of goods and services (at producer prices) (2010 = 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals (thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, end of period) 
Livestock numbers: live sheep and live goats (thousand heads, end of period) 
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) 

Note 

Source: Eurostat and the statistical authorities in North Macedonia 

1 552 
0 
1 254 
0 
1 461 
3 100 
6 498 

2007 
92.9 
1 077.0 
253.8 
255.1 
: 
: 
499.0 
7.8 
562.1 

1 331 
0 
986 
0 
1 396 
2 707 
5 374 

2014 
100.5 
1 263.0 
242.0 
165.1 
821.7 
436.2 
629.2 
0.0 
775.8 

1 266 
0 
876 
0 
1 395 
2 656 
5 646 

2015 
106.4 
1 264.0 
253.4 
195.4 
821.6 
417.4 
483.8 
0.0 
844.9 

1 111 
0 
745 
0 
1 590 
2 696 
5 630 

2016 
112.2 
1 267.1 
254.8 
202.7 
825.0 
463.4 
640.9 
0.0 
810.0 

1 153 
0 
849 
0 
1 553 
2 750 
5 600 

2017 
99.9 
1 266 
255.0 
202.2 
832.1 
448.8 
447.7 
0.0 
769.6 

1 133 
0 
800 
0 
1 509 
2 572 
: 

2018 
: 
1 264.1 
256.2 
195.5 
844.4 
463.6 
598.3 
0.0 
792.9 

: = not available 
b = break in series 
e = estimate 
f = forecast 
p = provisional 
s = Eurostat estimate 
u = low reliability 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

Footnotes 

1)  Secondary income only. 
2)  Weighted averages. Data cover bilateral over-night transactions. 
3)  End of year (31 December). 
4)  Ratio of Paasche unit value indices (2015 = 100). 
5)  Part of the greenhouse gas inventory prepared in the context of the Third National Communication (UNFCCC).