Financial Crime World

Comprehensive Assessment of Public Financial Management (PFM) System in Macedonia

The World Bank has released a comprehensive report evaluating the public financial management (PFM) system in the former Yugoslav Republic of Macedonia. This assessment focuses on budgeting, reporting, internal control, and internal auditing, as well as examines the country’s procurement system.

Progress in Public Financial Management System

  • Budgeting: Significant advancements have been made in core budgeting since 2003.
  • Reporting: Progress has also been noted in reporting, with improvements aligned with international best practices.
  • Internal Control and Auditing: The report highlights achievements in internal control and auditing, although work remains to be done.
  • Donor Assistance: Donor assistance played a crucial role in implementing changes, but there is still room for improvement.

European Commission Assumes Responsibility

The European Commission (EC) now assumes primary responsibility for upgrading the public internal financial control systems in Macedonia.

Key Findings and Recommendations for Procurement System

  • The Public Procurement Law (PPL) has made strides toward transparency, accountability, and efficiency but contains features inconsistent with EU legislation and international best practices.

Implementation Issues

  • Procurement Plans: Procurement plans are not matched with available budgetary allocation before expenses are committed.
  • Complaints Review Mechanism: The complaints review mechanism is ineffective due to under-resourcing and lack of direct access for complainants.
  • Implementation Capacity: Implementation capacity in ministries is weak, leading to “undue influence” from senior levels that jeopardizes the integrity of the procurement process.

Recommendations for Improvement

The report highlights areas where Macedonia needs improvement, particularly:

  1. Implementing Existing Laws and Regulations: The country should focus on implementing existing laws and regulations.
  2. Strengthening Complaints Review Mechanism: Efforts should be made to strengthen the complaints review mechanism.
  3. Enhancing Implementation Capacity: The implementation capacity in ministries needs to be strengthened.