Books on Macedonia
% of GDP
Update No: 103 (28/11/05)
Macedonia to receive candidate status for EU membership
The European Commission will recommend that Macedonia receive candidate status
for EU membership. The European Commission gave this recommendation in the
opinion on the EU questionnaire, issued on November 9th.
If that proposal of the European Commission is approved by the EU leaders at the
summit in December, it won't automatically result in the start of the Macedonia-EU
entry talks. "If everything goes right, we will recommend a candidate
status. It is a political signal, but a second solution of the European Council
will be needed, before starting of membership negotiations", stated the
same source for Reuters, adding that Turkey needed six years from receiving
candidate status to opening of entry talks.
"I'm not a great fan of dates. We need to stress substance rather than
deadlines," said European Enlargement Commissioner Olli Rehn. Presenting,
in Brussels, a series of reports on the Western Balkans and Turkey, Rehn talked
of the Macedonian 'success' story.
"The country is a European success story in terms of economic development
and political stability. Four years ago, Macedonia was on the brink of civil
war. Today, Skopje is knocking at the EU's door."
Rehn pointed to the Orhid agreement, signed on 13 August 2001, as instigating
positive change in relations between ethnic Albanians, Macedonians and other
groups in the former Yugoslav republic with a population of 2 million.
But despite words of praise, Rehn was not forthcoming on the Balkan country's EU
bid made on 22 March 2004. "We have to recognize the serious administrative
difficulties and problems related to reaching EU standards," said Rehn.
"We have come to the conclusion to recommend candidate status for the
Former Yugoslav Republic of Macedonia," said Rehn, sticking to the EU's
official name for Macedonia. "Accession negotiations should only be opened
when the country has reached a sufficient degree of compliance with the
membership criteria. No date has yet been set."
Name issue continues
The European Commissioner also refused to speculate on Greece's likely
reaction, with the power to block any final decision by EU Member States, on
whether to open negotiations with Macedonia. "The name issue is a bilateral
affair between Greece and the Former Yugoslav Republic of Macedonia. We expect
it will be solved soon," said Rehn, although this sounds .
Greece still insists on a name change, whilst Skopje, and much of the rest of
the world, continues to refer to itself as Macedonia, a name that has gained
wide recognition during 14 years of Macedonian independence. Brussels diplomats
expect negotiations to open despite the lack of agreement between Athens and
Greece, insisting that all EU documents refer to Macedonia as FYROM or the
Former Yugoslav Republic of Macedonia, wants Skopje to choose another name.
Despite numerous examples of similarly named regions and countries, Athens
argues that the name Macedonia should be used solely by the Greek province of
that name. Barring that the Greek government may insist that EU talks be put on
Premier confident of success
"We have been able to resolve inter-ethnic conflict in Macedonia,
especially during the crisis in 2001, because everybody knew that the agreement
would facilitate our path to Europe. That's an ambition shared by everyone in
Macedonia," said Macedonian Prime Minister Vlado Buckovski.
Despite dampened enthusiasm for enlargement, especially in the richer Western
countries of the Union, Macedonia has, as have all Balkan countries, been
promised a 'European' future inside the 25-member bloc.
Macedonia, with just 2 million people, a quarter of whom are ethnic Albanians,
narrowly managed to maintain avoid falling into the violent break-up of
Yugoslavia in the early 1990s. Following the Kosovo crisis in 1999, ethnic
conflict ignited between ethnic Albanian rebels and government security forces.
Agreement between the ethnic communities came about due to massive international
pressure and the prospects of closer relations with the EU.
"Not only Macedonia, but all countries in the region, without a clear
European perspective, will by definition return to the past. And the recent past
in this part of the world is both painful and tragic," said Prime Minister
Buckovski. He believes a negative response by the EU to Macedonia's entry bid
could once again sour inter-ethnic relations between Macedonians and Albanians.
"Now, four years after the crisis we already feel that we have turned
attention to the issues of economic development and that's what matters most for
the every day life of our people."
Fitch gives Macedonia positive outlook
Senior Director in the Fitch Sovereigns Group, Edward Parker, said,
"Macedonia's BB ratings are supported by its relatively high level of
income, track record of macroeconomic stability, prudent fiscal policy, moderate
public and external debt burdens, low debt service ratios and potential EU
accession," New Europe reported.
However, the ratings are constrained by structural weaknesses such as high
unemployment that is now on track to pick up to about 3.8 per cent this year. A
narrow export base, risks to political stability, sizeable current account
deficits and an under-developed domestic debt market are other factors. The
government undertakes an ambitious programme of structural reforms in
co-operation with the IMF, World Bank and EU.
A trade deficit of around 20 per cent of GDP testifies to a narrow and low
value-added export base, which is vulnerable to shocks to commodity prices and
competition in the textiles sector. After a small budget surplus last year, the
government targets a deficit of just 0.8 per cent of GDP in 2005 and 0.6 per
cent in the medium term, which should contribute to favourable debt dynamics.
Planned privatisation receipts of 5.5 per cent of GDP in 2006 would further
improve the government and external position, though timing will be tight as
they must be finalised in March, six months before parliamentary elections in
The government's near-term financing requirement is moderate owing to the long
maturity of its debt. But the local debt market is under-developed and some 90
per cent of public debt is denominated in foreign currency.
Like most transition countries, Macedonia has a sizeable current account deficit
that has averaged close to 6 per cent over the past five years. But foreign
direct investment has been relatively low and the deficit is a potential source
of vulnerability in the medium term, particularly in the context of the exchange
rate peg of the denar against the Euro.
Foreign exchange reserves are moderate at 3.3 months cover of current account
payments, though they should increase to four months cover by end-2006.
But short-term external debt and debt service are low so that the overall
external liquidity position is comfortable.