North Macedonia

North Macedonia was granted EU candidate status in December 2005.The prospect of EU integration depends on progress in key areas, including the judiciary’s efforts to combat corruption and organized crime, as well as improvements in intelligence services and public administration, particularly in the management of public resources. 

Programme support for North Macedonia

In North Macedonia, we are part of the effort to establish a sound and transparent public finance management system. Digital transformation of society and inclusive ecosystems is the principal objective of activities focused on investing in SDGs. We also supported projects that engage private sector in development cooperation. North Macedonia has been a programme partner since 2018. 

Participation in the Public Finance for Development programme strengthened Public Revenue Office’s capacities to introduce international taxation as well as the knowledge in the transfer pricing segment. The expert guidance from the Financial Administration of the Slovak Republic at the organized on-job trainings improved tax officials’ acquaintance of international practices and we learned from Slovak experience in the transfer pricing regulation, conducting financial risk analysis, and transfer pricing audit.

Sanja Lukarevska

former Director of the Public Revenue Office - North Macedonia

The State Audit Office successfully enhanced the state audit capacities under the Public Finance for Development Programme. We conducted five training courses through which the SAO employees exchanged knowledge and experience with leading international and local experts. They significantly improved state auditors’ skills and capacities and are now applied in ensuring high-quality and transparent audit reports, available to all the stakeholders. Insights transferred by the Slovak experts are particularly significant, due to country’s strategic commitment for EU membership.

Maksim Acevski

Auditor General, State Audit Office - North Macedonia

In cooperation with UNDP and under the Public Finance for Development programme, the Ministry of Finance of North Macedonia has over the past three years improved its operations in fiscal decentralization and tax policy, transfers from the central budget, audit and accounting, informal economy and cash flow reduction. Together, we conducted a study identifying the leading factors behind the informal economy, followed by an awareness raising campaign on the “grey economy” consequences. The ministry’s staff greatly valued the trainings and study visits, which effectively conveyed Slovakia’s expertise in automatic data exchange for tax purposes.

Fatmir Besimi

former Minister of Finance - North Macedonia
PUBLIC FINANCE

Leveraging the expertise and successful experience from Slovakia’s public finance reforms can help align North Macedonia’s financial governance with EU standards. Current activities focus on strengthening tax compliance, improving the monitoring of national strategic development and SDGs alignment, and promoting fiscal decentralization and local governance. All contribute to one common objective – to support public finance management reform in the country. 

Key achievements

  • We succeeded to introduce and enforce transfer pricing regulations in North Macedonia. For the Public Revenue Office (PRO), we developed legislative amendments and new guidelines for auditing transfer pricing. As a result of capacity building (see also), the Transfer Pricing Working Group produced the country’s first ever detailed transfer pricing reports1 for several international companies. 
  • The capacity building and the development of new legislation and internal guidelines for the Automatic Exchange of Information for Tax Purposes, was another milestone of the project aligning North Macedonia with international standards. Integration into the Integrated Financial Management Information System is underway, ensuring transparent tax information exchange positioning North Macedonia for global compliance by January 2026. 
  • We achieved notable results in addressing the informal economy. By conducting a comprehensive study on the informal economy2 and integrating its recommendations into the Ministry of Finance  2023 action plan for formalizing the informal economy, the project catalyzed significant progress of the country in the fight against the informal economy. This included the development of monitoring indicators and capacity-building workshops for computational models, enabling the MF to calculate the shadow economy’s percentage of GDP for the first time in 19 years. Supported by citizen surveys and targeted media campaigns, the initiative not only increased public awareness but also encouraged government efforts to educate the public on the benefits of business formalization, fostering fairer competition and economic stability. The website, initially proposed by UNDP and now managed by the Ministry of Finance, is dedicated to this effort. 
  • The project efforts for reducing reliance on cash payments included a comprehensive analysis to identify the main drivers of high cash usage and provided actionable recommendations, culminating in the creation of Strategy for Reducing Cash Flow in North Macedonia. The strategy promotes alternative payment methods and addresses factors influencing cash usage. 
  • The project made significant contributions to the implementation of the PFM Reform Program, particularly in enhancing financial reporting of the local administration and State Audit Office, and the administration of local property and communal taxes.  
  • The project under the auspices of this area also contributed to the practical increase in the efficiency of local tax collection. Testing of a digital tool for property tax management and collection in the municipality of Sveti Nikole resulted in a 250% increase in local revenue mobilization. This improvement in local tax systems has demonstrated improved financial sustainability for local governments and improved service delivery to citizens, supporting a model of modernization of municipal revenue collection nationwide. 
PRIVATE SECTOR ENGAGEMENT

Thanks to co-funding from the private sector, we are implementing a project to prevent threats to cybersecurity systems in water companies. This will strengthen the cyber security of water infrastructure operators, improve coordination with national cyber security agencies and promote a safer and more resilient water infrastructure.   

In the past, projects supported through Resource Mobilization Facility (RMF) focused mainly on digital transformation of municipalities and waste management. See details for each project below. 

Projects funded by RMF
UNDP in North Macedonia website