Economic Reform Program

The document Economic Reform Program 2019-2021 can be downloaded from the following link.

In order to support better economic governance, the European Union (EU) in the Enlargement Strategy of October 2013 introduced a new approach called the European Semester Light, with the countries of the Western Balkans and Turkey being invited by the European Commission (EC) from October 2014 to improve economic policies and strengthen economic governance through the preparation of economic reform programs - ERP.

The Republic of Macedonia participates in the process of pre-accession harmonization of economic policies with the European Union and prepares an annual ERP that contains macroeconomic and fiscal policies and indicators, as well as structural reforms and measures to improve the country's competitiveness and reduce unemployment. The preparation of ERP at the level of the Government is coordinated by the Ministry of Finance and submitted to the EC after its adoption by the Government of the Republic of Macedonia no later than January 31.

After delivering ERP to the EC, it is assessed through assessment missions in the country by the EC, the European Central Bank and Eurostat. Then a dialogue within the Council of the EU begins. First, a technical level discussion within the auxiliary bodies of the Council takes place in preparation for a dialogue within the Council of the EU represented by the so-called "trio", i.e. the current and two consecutive presidencies, the finance ministers and the central bank governors of the countries - candidates for EU membership of the Western Balkans and Turkey. The process ends with the adoption of common conclusions based on the ERP assessments and recommendations that are given to improve the macroeconomic policy of the country, the management of public finances and the quality of structural reforms (the so-called Policy Guidance). The candidate countries, when preparing the next ERP, are obliged to report on the level of implementation of the recommendations in the last year, in order to fulfil the first economic criteria for accession to the EU - the existence of a functioning market economy.

The Economic Reform Program 2019-2021 was adopted by the Government of the Republic of Macedonia on 22 January 2019 and officially submitted to the European Union on 31 January 2019.The preparation of ERP as a coherent strategic document and its timely submission to the EC is a confirmation of the capacity of the country's administration in terms of coordination of economic policies and work efficiency. ERP is a common result of several institutions, and the overall preparation is coordinated by the Ministry of Finance.

ERP is a complex document that is prepared according to the European Commission's Guide for the preparation of ERP from April 2018.

When selecting key sectoral structural reforms, institutions take into account the challenges and problems in the respective areas, which influence the increase of the competitiveness and economic growth of the country, as well as the creation of jobs. During the preparation of ERP 2019 - 2021 several strategic and other documents were taken into account:

• The Work Program of the Government of the Republic of Macedonia 2017-2020, published by the Government https://vlada.mk/node/14647?ln=en-gb

• Revised fiscal strategy 2019 - 2021 https://www.finance.gov.mk/en/node/771

• Budget of the Republic of Macedonia for 2019 https://www.finance.gov.mk/mk/node/575

• National Program for the Adoption of the Acquis of the European Union, published by SEA http://www.sep.gov.mk/en/content/?id=13#.XFL6uPZFyUk

• Stabilization and Association Agreement with the European Communities and their Member States, published by the SEA http://www.sep.gov.mk/en/content/?id=17#.XFL62vZFyUk

• Joint conclusions - recommendations from the Ministerial Dialogue of 25 May 2018, published by the Council of the European Union https://www.consilium.europa.eu/en/press/press-releases/2018/05/25/western-balkans- and-turkey-joint-conclusions-of-the-economic-and-financial-dialogue /

Public Finance Management Reform Program 2018-2021

• Program for Employment and Social Policy Reform 2020 - ESPR, published by the Ministry of Labour and Social Policy http://www.mtsp.gov.mk/espr-espr.nspx

• The Industrial Strategy of the Republic of Macedonia 2018-2027, published by the Ministry of Economy https://konkurentnost.mk/index.php/en/strategies-and-action-plans/

• Strategy for formalizing the informal economy in the Republic of Macedonia 2018-2022, published by the Ministry of Labour and Social Policy http://www.mtsp.gov.mk/dokumenti.nspx  in the section on Documents in the field of labour relations and employment

• The Strategy for Innovation of the Republic of Macedonia 2012-2020, published by the Fund for Innovation and Technological Development http://www.fitr.mk/wp-content/uploads/2015/02/InnovationStrategy-EN-vers...

• The Competitiveness Strategy of the Republic of Macedonia 2016-2020, published by DPMGRM https://www.vicepremier-ekonomija.gov.mk/?q=node/36

• The Europe 2020 Strategy, published by the European Union https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-economic-governance-monitoring-prevention-correction/european -semester / framework / europe-2020-strategy_en

• The Southeast Europe 2020 Strategy, published by the Regional Cooperation Council https://www.rcc.int/pages/62/south-east-europe-2020-strategy

• Assessment of direct payments (subsidies) and their impact on the reforms in the agricultural sector with recommendations / guidelines for alignment with the EU Common Agricultural Policy, published by the Ministry of Agriculture, Forestry and Water Economy http://www.mzsv.gov.mk/ cms / Upload / docs / 2017-389748% 20Revised% 20Final% 20Report% 2031102018.pdf

• Strategy for encouraging the management and improvement of the management of nonperforming loans

• Denarization strategy of the Republic of Macedonia

• UNIDO Competitive Industrial Performance Index 2018 https://stat.unido.org/country/MKD.pdf;jsessionid=5302677C31C67CE81999C66B812E7916

• Analysis of the IMF on Foreign Direct Investments in the New Member States and the Western Balkans http://www.imf.org/en/Publications/WP/Issues/2018/08/21/Foreign-Direct-Investment-in-New-Member -State-of-the-EU-and-Western-Balkans-Taking-Stock-and-46152

• European Innovation Table 2018 https://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_en

• OECD Report - Competitiveness in Southeast Europe: Policy Review 2018 http://www.oecd.org/south-east-europe/programme/competitiveness-south-east-europe.htm

• National Transport Strategy 2018-2030, published by the Ministry of Transport and Communications http://www.mtc.gov.mk/predlog-nacionalna-transportna-strategija-2018-2030

• National Strategy for Small and Medium Enterprises 2018 - 2023, published by the Ministry of Economy http://economy.gov.mk/docs/strategii

• Strategy for Development of Women Entrepreneurship in the Republic of Macedonia 2019 - 2023, published by the Ministry of Economy http://economy.gov.mk/doc/2501

• “Seizing a Brighter Future for All”: World Bank Systematic Country Diagnostic for Macedonia, conducted by the World Bank http://www.worldbank.org/en/news/press-release/2018/11/29/seizing-bright...

 

Summary of reform measures included in ERP 2019

Energy and transport market reform

Measure 1: Increasing the competitiveness of the electricity market

Measure 2: Promotion of renewable energy sources and improvement of energy efficiency

Measure 3: Facilitating Macedonia-Serbia cross-border crossing

Measure 4: Implementation of an Intelligent Transport System (ITS) along Corridor 10

Agriculture sector development

Measure 5: Improving of irrigation system

Measure 6: Consolidation and defragmentation of agricultural land

Measure 7: Agricultural cooperatives

Industry sector development

Measure 8: Financial support of investments

Measure 9: Financial support for micro, small and medium enterprises

Services sector development

Measure 10: Increasing competitiveness in the tourism and hospitality sector

Business environment and reduction of the informal economy

Measure 11: Harmonization of the Public Procurement Legal framework with the Acquis

Measure 12: Development of a National E-Services Portal. This measure is linked to the fifth policy guidance from the Joint Conclusions of the Economic and Financial Dialogue from May 2018 “Create a register of para-fiscal charges on central and local levels that clearly states the purpose of each charge and make it publically available”.

Measure 13: Reducing the informal economy. This measure is linked to the fourth policy guidance from the Joint Conclusions of the Economic and Financial Dialogue from May 2018 “Prepare risk assessments focusing on sectors and branches most vulnerable to informalities, identify and apply appropriate corrective measures”.

Research, development and innovation and the digital economy

Measure 14: Improving Infrastructure and Access to Finance for Research, Development and Innovation

Trade-related reforms

Measure 15: Trade facilitation

Education and skills

Measure 16: Further development of the qualification system

Employment and labour markets

Measure 17: Youth guarantee. This measure is linked to the sixth policy guidance from the Joint Conclusions of the Economic and Financial Dialogue from May 2018 “Facilitate women's access to the labour market and ensure sufficient capacity of the Employment Service Agency for implementing the Youth Guarantee”.

Social protection and inclusion

Measure 18: Enhancement of financial benefits in the field of social protection. This measure is linked to the first and sixth policy guidance from the Joint Conclusions of the Economic and Financial Dialogue from May 2018 “Streamline and better target social spending and agricultural subsidies” and “Adopt the law on social protection to better target those at risk of social exclusion”.

 

More information on the European Semester and Economic Governance from the aspect of fulfilling the Copenhagen criteria can be found on the following web pages:

https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-economic-governance-monitoring-prevention-correction/european-semester_en and

https://ec.europa.eu/neighbourhood-enlargement/policy/policy-highlights/economic-governance_en

At the Ministry of Finance web site you can find all previous Economic Reform Programmes and Pre-Accession Economic Programmes