Contacts: In Skopje: Denis Boskovski (389-23) 117-159, dboskovski@worldbank.org In Washington: Steven Jouy (202) 473-4215, sjouy@worldbank.org WASHINGTON, March 27, 2007 - The World Bank today approved a US$30 million Second Programmatic Development Policy Loan (PDPL 2) for the Former Yugoslav Republic of Macedonia. The project will support the Government in its effort to improve the investment climate and strengthen public sector governance. PDPL 2 is the second in what is expected to be a series of three loans over a three to four year period. The objective of the PDPL series is to assist the country in carrying out intensive structural and institutional reforms that are required for European Union integration. The Government’s macroeconomic policies have built an impressive track record of macroeconomic stability. Over the past decade, inflation has been held to a minimum and, unlike many countries in the region, external and public debt ratios have remained modest. Gross external debt and gross public debt have slowly fallen to about 40 percent of GDP. However, while real GDP growth rose to about three percent in 2003 and 2004, such growth rates do not compare favorably with other countries’ performance in the region. Economic growth remains narrowly focused on a few key sectors and the unemployment rate is persistently high. Business climate surveys from the past few years indicate serious impediments to private sector growth and foreign direct investment (FDI), which continue to experience low growth rates. Surveys have identified specific barriers to private sector growth, of which the most prevalent include an inefficient and opaque judicial system, poor access to credit, burdensome regulations (including in labor markets), political risk, corruption, and policy unpredictability. “The Programmatic Development Policy Loan supports reforms that are designed to promote sustainable economic growth and job creation”, says Bruce Courtney, head of the World Bank team designing the project. “If implemented consistently and persistently, the reform program will address over time many of the key obstacles to improve the living standards in FYR Macedonia. The reform program is also consistent with the country’s aspiration to joining the European Union in the future.” The project consists of two main components. The Investment Climate Pillar targets judicial reform, labor market reform, financial sector reform, and business regulatory reform. The second pillar meanwhile focuses on Public Sector Governance, and includes public administration reform, health care reform, and promotes further decentralization. The loan has a maturity of 17 years, including a 5-year grace period. FYR Macedonia joined the World Bank in 1994. Since then, commitments to the country total more than US$700 million. ### For more information, please visit www.worldbank.org.mk |
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