EU urges Macedonia to further efforts to tackle corruption, improve the rule of law, enhance transparency

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The EU and the Western Balkans will hold the Economic and Financial Dialogue on Tuesday, which is to focus primarily on the socio-economic consequences from the crisis triggered by the COVID-19 pandemic. The draft-conclusions of the Council of the EU regarding North Macedonia note that structural weaknesses have been exacerbated by the Covid-19 pandemic, highlighting the strong need for continued structural reforms. Effective and well-coordinated structural reforms, according to the conclusions, will contribute to mitigating the impact of pandemic and accelerate the post-crisis economic recovery.

The EU and the Western Balkans have economic dialogues on regular basis to look into the region’s progress in terms of economic and financial reforms and the preparedness of the hopefuls to tackle challenges once they join the EU.

It would be vital for North Macedonia to further efforts to tackle corruption, improve the rule of law, enhance transparency to better tackle the consequences from the crisis, according to the EU.

Strengthening the public health sector is one of the key structural reforms Macedonia should focus on in the future.

“The main challenges posed by Covid-19 are linked to strengthening the public health sector, preserving employment and improving social protection, enhancing the business environment and providing support to the private sector. The pandemic is putting the health system under stress, revealing persistent under-funding and weak capacities to cope with the crisis,” reads the document.
Macedonia submitted its Economic Reform Programme 2020-2022 in February. The policy guidance set out in the conclusions of the Economic and Financial Dialogue of May 2019 has been ‘partially implemented,’ it is noted, even though economic growth strengthened in 2019, driven by firming domestic demand and supported by expansionary policies. North Macedonia’s macroeconomic picture has been put at risk by the coronavirus crisis, both at domestic level and because of the country’s reliance on the EU – its main trade partner. Due to the emerging state of play, EU’s 2019 projections are no longer valid.

The initial ‘swift and bold’ reactions by the authorities are welcomed ‘to assist those sectors most affected by liquidity shortages, by, inter alia, exempting companies from corporate tax advances, providing SMEs with interest-free loans, subsidizing employer contributions, wage subsidies, allowances for vulnerable families in the informal economy, and establishing a tourism support fund and a solidarity COVID-19 fund.

The EU is aware that as a result of the recovery measures and global recession, North Macedonia will face difficulties to implement public debt reduction, but it says it expects the authorities to reprioritize its reduction once the initial shock dissipates.

In the conclusions, the recent progress in the labor market is welcomed, however, the authorities are warned that the crisis may put jobs at risk, including those in the informal sector.

“The crisis has also highlighted the need to continuously review the social protection system with the aim of improving its coordination with employment activation to improve its capacity to reduce social exclusion and poverty,” adds the document.

Furthermore, the bloc warns that the coronavirus crisis will considerably affect SMEs, self-employed and small family enterprises and they will need urgent support.

“The effectiveness of support measures depends on good governance, coordination and inclusiveness, as well as the ability to take into consideration the large informal sector,” says the EU.

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