Macedonia’s Path to EU Integration: Economic and Monetary Affairs in Focus

The Former Yugoslav Republic of Macedonia has been a candidate for European Union (EU) membership since 2005, with its accession negotiations yet to begin due to ongoing progress on key objectives. In the latest Commission report, published this year, some positive developments have been noted in economic and monetary policy areas.

Establishing a Functioning Market Economy

The country has made significant strides in setting up a functioning market economy, with improvements in dialogue between the government and business community. However, weaknesses in the rule of law continue to hinder the proper functioning of the internal market.

Establishing a strong and independent judiciary
Improving transparency and accountability in public administration

Independence of Central Banks: A Concern

EU legislation on economic and monetary policy emphasizes the importance of independent central banks in Member States. Macedonia still lacks an independent central bank, which raises concerns about its ability to coordinate with EU partners.

Economic Growth and Unemployment

The country’s economy has been recovering since the second half of 2010, driven by external demand and investment. However, high structural unemployment remains a major concern, particularly among young people and those with poor education.

Implementing policies to reduce unemployment, such as vocational training programs
Improving access to education and skills development for young people

Structural Reforms on Track

Macedonia continues to implement its reform program aimed at reducing significant structural weaknesses. While some progress has been made in areas such as company registration, judiciary procedures, financial markets, and regulatory frameworks, much work remains to be done.

Continuing reforms in the area of company registration
Improving transparency and accountability in public administration

Institutional Capacity Still Lacking

Public administration efficiency is still low due to heavy procedures, staffing issues, and high turnover of officials. Regulatory and supervisory agencies also lack the necessary independence and resources to fulfill their functions effectively.

Financial Sector Recovery Slow

The financial sector has started recovering from the global financial crisis, but competition remains limited, and the level of financial intermediation is still low.

Implementing policies to increase competition in the financial sector
Improving access to finance for small and medium-sized enterprises (SMEs)

Way Forward

Macedonia’s path to EU integration remains challenging due to ongoing structural weaknesses. To overcome these challenges, the country must continue its reform program, focusing on improving institutional capacity, reducing unemployment, and enhancing economic competitiveness.

Recommendations for Macedonian Authorities

Implement structural reforms aimed at reducing high unemployment and improving the business environment
Enhance public administration efficiency by addressing staffing issues and reducing bureaucratic procedures
Strengthen regulatory and supervisory agencies to ensure their independence and effectiveness
Promote financial sector development through increased competition and improved financial intermediation

EU Support and Guidance

EU authorities should continue to provide support and guidance to Macedonian authorities as they work towards EU integration. By doing so, the country can make significant progress in its reform program and move closer to becoming a full member of the European Union.