World Bank2012-06-142012-06-142008-02https://hdl.handle.net/10986/8044Progress in advancing political and economic reforms has been substantial this decade. The authorities have moved with determination in implementing the Framework Agreement for Peace (the Ohrid Agreement) that ended the 2001 hostilities, including enhancing the representation of minorities in governmental structures. This, together with economic reforms and the implementation of the Stabilization and Association Agreement (SAA) with the European Union (EU), led the European Council to grant FYR Macedonia the status of a candidate country in December 2005. In 2003, the Government introduced a stabilization program focused on tighter fiscal policy and supported by the continuation of the de facto pegging of the exchange rate against the euro. The budget deficit was virtually eliminated in the first year of the program and in the subsequent years spending has been sharply reduced as a share of Gross Domestic Product (GDP). The fiscal adjustment helped improve financial stability and placed public debt ratios on a steadily declining path, with government debt amounting to about 30 percent of GDP at the end of 2006. The balance of payments has improved since 2003, and especially since 2005. In fact, FYR Macedonia has the smallest current account deficit in the region equivalent to 0.4 percent of GDP. A key challenge for the new Government is to adopt policies that will facilitate formalization of economic activity, including employment. In this context, the authorities are urged to explore options to reduce social security contribution rates, starting with the elimination of the minimum contribution threshold which represents an enormous disincentive for formal sector employment for low-wage and part-time workers.CC BY 3.0 IGOACCOUNTINGADMINISTRATIVE REFORMSAVERAGE PENSIONAVERAGE WAGEAVERAGE WAGESBALANCE OF PAYMENTSBANKRUPTCYBANKSBASELINE SCENARIOBONDSBUDGET DEFICITBUDGET ENVELOPEBUDGET PREPARATIONBUDGET PREPARATION PROCESSBUDGETARY FUNDSBUSINESS PLANSCALCULATIONSCAPITAL EXPENDITURECAPITAL EXPENDITURESCAPITAL INVESTMENTCAPITAL MARKETSCOMMODITIESCOMMODITYCOMPOSITION OF PUBLIC SPENDINGCONSUMERCONTRIBUTIONCONTRIBUTION RATESCONTRIBUTIONSCOST RECOVERYCREDITORCREDITORSCREDITSCURRENT ACCOUNTCURRENT EXPENDITURECURRENT EXPENDITURESCURRICULADEBTDEBT DYNAMICSDEBT SUSTAINABILITYDECENTRALIZATIONDECENTRALIZATION PROCESSDEPOSITSDEPRECIATIONDIRECT INVESTMENTDISABILITYDISABILITY INSURANCEECONOMIC ACTIVITYECONOMIC CLASSIFICATIONECONOMIC GROWTHECONOMIC MANAGEMENTEDUCATION EXPENDITURESEDUCATION PERFORMANCEEDUCATION SPENDINGEDUCATIONAL ATTAINMENTEFFECTIVENESS OF PUBLIC SPENDINGETHNIC GROUPEXCHANGE RATEEXCHANGE RATESEXCHANGE RESERVESEXPENDITURE CUTSEXTERNAL DEBTFINANCIAL CONDITIONFINANCIAL INSTITUTIONSFINANCIAL SITUATIONFINANCIAL STABILITYFINANCIAL TRANSACTIONSFISCAL ACCOUNTSFISCAL ADJUSTMENTFISCAL BALANCEFISCAL DEFICITFISCAL DEFICITSFISCAL ENVELOPEFISCAL IMPACTFISCAL POLICIESFISCAL POLICYFISCAL POSITIONFISCAL PRESSURESFISCAL PRUDENCEFISCAL RISKFISCAL RISKSFISCAL SUSTAINABILITYFISCAL TRANSFERSFOREIGN CURRENCIESFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN INVESTMENTGENERAL PUBLICGENERAL REVENUESGOVERNMENT DEBTGOVERNMENT EXPENDITURESGOVERNMENT PRIORITIESGOVERNMENT REVENUESGOVERNMENT SPENDINGHEALTH CAREHEALTH CENTERSHEALTH EXPENDITURESHEALTH FINANCINGHEALTH INSURANCEHEALTH INSURANCE PREMIUMSHEALTH OUTCOMESHEALTH SECTORHEALTH SERVICESHEALTH SPENDINGINCOMEINCOME LEVELSINCOME TAXINCOME TAXESINDEBTEDNESSINFLATIONINFORMATION TECHNOLOGYINTEREST PAYMENTSINTEREST RATESINTERNAL AUDITINVESTMENT CLIMATEINVESTMENT EXPENDITURESINVESTMENT PROGRAMJOB CREATIONLABOR FORCELABOR MARKETLABOR MARKETSLIVING STANDARDSLOANLOAN PORTFOLIOMACROECONOMIC STABILITYMAINTENANCE COSTSMARKET ECONOMYMARKET FORCESMARKET SHAREMEMBER COUNTRIESMINIMUM CONTRIBUTIONMINIMUM PENSIONMINIMUM PENSIONSMONETARY POLICYMUNICIPALITIESNATIONAL ACCOUNTSNATIONAL ACCOUNTS STATISTICSNATIONAL BANKNEW JOBNEW JOBSPAYROLL TAXESPENSIONPENSION BENEFITSPENSION CONTRIBUTIONSPENSION COVERAGEPENSION FUNDPENSION FUNDSPENSION INCOMESPENSION REFORMPENSION REFORMSPENSION SYSTEMPENSIONERSPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPOVERTY LEVELSPOVERTY RATEPOVERTY REDUCTIONPRICE STABILITYPRIMARY EDUCATIONPRIVATE PENSIONPRIVATE PENSION FUNDSPRIVATE SECTORPRIVATE SECTOR RESPONSEPRODUCTIVITYPROGRAMSPUBLIC ASSETSPUBLIC CONSUMPTIONPUBLIC DEBTPUBLIC EXPECTATIONSPUBLIC EXPENDITUREPUBLIC EXPENDITURE REVIEWPUBLIC EXPENDITURESPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC PROCUREMENTPUBLIC SECTORPUBLIC SERVICEPUBLIC SERVICE DELIVERYPUBLIC SPENDINGPURCHASESPURCHASING POWERQUALITY OF SERVICESREPLACEMENT RATEREPLACEMENT RATESRESPONSIBILITIESRETIREMENTRETIREMENT AGEROAD MAINTENANCEROAD NETWORKSALARIESSALARYSALESALESSAVINGSSECOND PENSIONSECONDARY EDUCATIONSECONDARY SCHOOLSECONDARY SCHOOLSSECURITIESSOCIAL ASSISTANCESOCIAL INSURANCESOCIAL SECURITYSOCIAL SECURITY CONTRIBUTIONSOCIAL SECURITY CONTRIBUTIONSSPENDING LEVELSSTRATEGIC PRIORITIESSTRUCTURAL REFORMSTAX ADMINISTRATIONTAX BASETAX BURDENTAX RATETAX RATESTAX SYSTEMTEACHER TRAININGTRANSFER PAYMENTSTREASURY REFORMSUNEMPLOYMENTUNEMPLOYMENT BENEFITSWAGE GROWTHWAGESWORLD TRADEWORTHWorld Bank10.1596/8044