Enhancing Growth: Former Yugoslav Republic of Macedonia

The objective of this Country Economic Memorandum (CEM) is to identify key areas affecting the acceleration of growth and investment over the medium term in the Macedonian economy and to provide policy suggestions that will enable the country to achieve and sustain higher output growth rates. Higher growth will help to contain rising unemployment and can therefore improve the living standards of the population. The implementation of major reforms since independence has substantially changed the Macedonian economy. However, there are still several unfinished items on the reform agenda. The key issues are: a) The macroeconomy: deepening and improving the quality of fiscal adjustment and enforcing financial discipline; managing external vulnerability and ensuring macroeconomic sustainability; and promoting exports. b) Ownership and property rights: developing good governance structures protecting rights of owners and creditors. c) Legislative framework: adopting a legislation supportive of private investment and enabling its implementation. d) Scarcity of information: lowering transaction costs which are high because of missing information.

Keywords: Macroeconomics; Reforms; Labor market; Property rights; Legislative framework; Information gaps; Taxes; Debts; State finance; Deficit financing; External finance; Privatization; Enterprises; Ownership; Bankruptcy; Legal framework; Financial sector; Land markets; Land ownership; Export competitiveness; Transaction costs; Reform implementation; Fiscal policy; Tax policy; Financial institutions; Fiscal deficits; Private sector development; Regulatory framework; Public services; Price controls; Judicial system; Foreign investment; Public works; Concessions; Creditors; Securities regulation