North Macedonia

Although being spared the inter-ethnic violence following the break-up of Yugoslavia in the early 1990s, North Macedonia´s socioeconomic and political development has been hindered by decades of political turmoil. It included an ethnic-Albanian uprising in the beginning of the 2000s; a dispute over the country´s name with Greece, and years of authoritarian rule filled with suspicions of corruption. The country´s path took a different turn after 2017, following a popular massive protest. A set of reforms was launched, and in 2018, an agreement was reached with Greece on a new name – the Republic of North Macedonia.

North Macedonia was granted the EU candidate status in December 2005, but opening of the accession negotiations was later made conditional to implementation of the “Urgent Reform Priorities”. In light of the progress achieved, the path towards opening accession was unblocked in 2018. Progress was made in 2020 when the European Council adopted the conclusions on the enlargement, stabilisation and association process. At the same time, the draft negotiating framework was presented to the EU Member States. The EU integration outlook depends on progress in key areas, such as the judiciary fight against corruption and organised crime, and intelligence services and public administration, including managing public resources.

Public Finance for Development in North Macedonia

SINCE: 2018

North Macedonia became a programme partner country in 2018. The demand has been centred on problem solving related to the informal economy, the fight against tax evasion and tax fraud, fiscal decentralization and fiscal efficiency, and the procurement of public goods and services.

ACTIVITIES: The technical assistance programme is fully aligned with the measures and activities of the 2018-2020 PFM Reform Programme, and the Ministry of Finance of North Macedonia’s long-term vision regarding public finance management. The activities focus on reinforcing the capacities of the Ministry of Finance and the Public Revenue Office (at the level of local self-governments as well) in the following areas:

  1. Reducing informal economy through:
  • Setting up and streamlining the transfer pricing system;
  • Exchange of information for tax purposes;
  • Improvement of administration property taxes.
  1. Strengthening the Fiscal Autonomy and Revenue Mobilization Capacities of the Local Self-Government Units (fiscal decentralization)
  2. Strengthening Fiscal Efficiency and Discipline in Providing Public Goods and Services.
UNDP in North Macedonia website

Outcomes

  • As part of technical assistance related to transfer pricing system, a Manual for the effective implementation of transfer pricing was prepared by Slovak experts. At the same time, a mission of Slovak experts to North Macedonia took place. Subsequently, best practices and specific examples of transfer pricing application in the Slovak Republic were presented to 20 Macedonian officials during a study trip.
  • In the area of local tax administration, an Analysis and Manual of Local Tax Management was prepared. This was followed by a mission of Slovak experts to North Macedonia, and, subsequently, by a study trip of tax and financial experts from North Macedonia. The Ministry of Finance of the Slovak Republic presented a Slovak model of property tax administration and collection in relation to original competences of self-government and its right to self-financing.
  • As part of technical assistance related to exchange of information for tax purposes, a Manual for an effective increase in information exchange for tax purposes for the North Macedonian Public Revenue Office was prepared. Slovakia’s practical experience in this area was presented at a workshop during a two-day mission of Slovak experts to North Macedonia.