Macedonia Faces Banking Industry Compliance Challenges

The banking industry in Macedonia has been plagued by compliance challenges due to institutional weaknesses and a lack of trained officials. The country’s recent turmoil, including the Kosovo crisis and security threats, has contributed to a general laxity in law enforcement, particularly with regards to public procurement.

Institutional Weaknesses

Despite the Ministry of Finance being formally charged with authority over public procurement, it only recently dedicated resources to perform key oversight functions. The Public Procurement Division of the Ministry’s Legal Department lacks the stature and capacity to discharge its functions effectively.

• Insufficient Resources: The division lacks sufficient personnel and infrastructure to carry out its duties efficiently.
• Inadequate Training: Public officials responsible for procurement lack proper training in procurement procedures, leading to errors and inefficiencies.

Lack of Awareness and Trained Officials

A low level of awareness of public procurement laws and regulations contributes to weak enforcement. The State Auditor’s Office, which should play an indispensable role in performing oversight of public procurement, has not yet been operating effectively due to:

• Inadequate Dissemination: Public officials are not adequately informed about the law’s provisions.
• Severe Shortage of Trained Officials: Most public officials responsible for procurement lack the necessary training and expertise.

Bad Practices

The assessment identified several bad practices in Macedonia’s public procurement system, including:

• Failure to Disclose Bid Evaluation Criteria: Bidders are not provided with formal, written bidding documents.
• Over-Use of Accelerated Procedure: The provision is often misused, leading to a lack of transparency and accountability.
• Subjective Methods of Evaluating Bids: Public purchasers rely on subjective methods instead of transparent evaluation criteria.

Recommendations

To address these weaknesses, the report recommends short-term measures to plug the most pressing gaps in Macedonia’s national public procurement system. Longer-term recommendations aim at more wide-reaching reform and development of the legal and institutional framework for procurement.

• Short-Term Measures: Immediate actions to improve transparency, accountability, and efficiency in public procurement.
• Longer-Term Recommendations: Comprehensive reforms to strengthen the legal and institutional framework, ensuring better governance and effective oversight.