Macedonia – Country partnership strategy progress report for the period FY07-FY10

This Country Partnership Strategy Progress Report (CPSPR) assesses progress in implementing the FY07-10 Country Partnership Strategy (CPS) for the Former Yugoslav Republic of Macedonia.

In November 2008, the European Commission noted in its annual progress report some headway toward European Union (EU) standards, particularly on economic criteria, but insufficient advances on political criteria. Given relatively little progress on the political front, which is reflected in the lack of constructive political dialogue and the need for further strengthening of the judiciary, the report did not recommend a date for the start of EU accession negotiations. EU membership enjoys the overwhelming support of the population, and remains a key government goal and a driving force of the government program.

The recent fiscal expansion raises concerns given the rapidly deteriorating current account deficit and the historic global financial crisis and economic downturn. Rising energy and food prices in the first half of 2008 represented a terms of trade shock, which, together with high imports of investment goods, contributed to widening the current account deficit from 4.4 percent of Gross Domestic Product (GDP) in 2007 to 13.2 percent in 20O8. This deficit was financed in part by Foreign Direct Investment (FDI), which reached 6.8 percent of GDP in 2008. However, FDI dropped sharply in the fourth quarter of 2008 and by end-2008 reserves began to fall.

• Primary Source

World Bank: Macedonia - Moving to faster and more inclusive growth : a country economic memorandum (Vol. 2 of 2) : Main report and annex, June 2009 http://web.worldbank.org/external/default/main?pagePK=51083066&piPK=51083078&theSitePK=258599&menuPK=64187510&searchMenuPK=311712&theSitePK=258599&entityID=000333038_20090710033026&searchMenuPK=311712&theSitePK=258599

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