21st Subcommittee on Economic and Financial Issues and Statistics between the EU and the Republic of North Macedonia

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21st Subcommittee on Economic and Financial Issues and Statistics between the EU and the Republic of North Macedonia

17.10.2024 Press and information team of the EU Delegation to the Republic of North Macedonia

The 21^st Subcommittee meeting under the Stabilisation and Association Agreement between the EU and the Republic of North Macedonia on Economic and Financial Issues and Statistics took place on 17 October in Skopje. The meeting was co-chaired for North Macedonia by Mr Andrija Aleksoski, Assistant Head of Department in the Department for International Finance Relations of the Ministry of Finance, and by Mr Andras Tari, Deputy Head of Unit in the Directorate General Economic and Financial Affairs of the European Commission. The meeting took stock of the most important economic, monetary and financial developments and reforms over of the past year.

The Commission recalled that economic convergence with average EU levels in terms of GDP per capita in purchasing power standards remains slow. It is essential for the Western Balkans, for the European Union and for the accession process that this rate of convergence accelerates. To foster this, the Commission set out a Growth Plan for the Western Balkans, which includes a new Facility with payments conditional on implementing a 'Reform Agenda', a coherent and prioritised set of targeted reforms.

In terms of fiscal policy, the Commission noted that the authorities' deficit and debt projections for 2024 and the medium-term had been revised upwards. Fiscal consolidation and compliance with the fiscal rules (now postponed to 2027) remains key to strengthening macro-fiscal stability. This should be supported by concrete revenue and expenditure measures; improved fiscal governance including the full operationalisation of the Fiscal Council; and a careful management of fiscal risks stemming, among others, from the Corridor VIII/X road project, the energy sector, payment arrears and spending pressures from pension and public wage increases. In view of ambitious public capital spending plans, improving public investment management remains important.

As regards monetary policy, the National Bank is focused on price stability. Ensuring a sufficiently tight policy stance to anchor inflation expectations and support the currency peg, as well as safeguarding the independence of the central bank in its key statutory tasks including in staffing and wage issues, are essential. North Macedonia briefed about measures to increase the competitiveness of the economy and referred to the adoption as well as implementation of the smart specialization strategy and of the export promotion strategy as well as measures to address the informal economy.

On statistics, the Commission commended the progress made, but stressed the need to conduct the agricultural census and to ensure adequate staffing and sufficient financial resources for the State Statistical Office is vital. The Commission and North Macedonia also agreed that the country will continue to improve macroeconomic statistics and to enhance the use of administrative data for statistical purposes.

Finally, the Commission recommended to efficiently adopt and implement the new law on public internal financial control as well as the state audit law aimed at improving the state audit office's operational independence and reinforce the use of audit reports by the legislative. On the protection of the EU's financial interests, it was agreed to continue strengthening the efficient functioning of the Anti-Fraud Coordination Service (AFCOS) network and build up the track-record of reporting of irregularities as well as cooperation on investigations.