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The World Bank's Strategy in FYR of Macedonia: 2011-2014

Available in: Macedonian

It has been nearly two decades since FYR Macedonia’s 1991 independence. The country has made important progress in many areas of social and economic development. There are, however, enduring and emerging challenges. The authorities are committed to meeting these challenges. The World Bank Group’s objective over the FY 2011-2014 is to provide selective and targeted financing and knowledge advisory services in support of faster, more inclusive and greener economic growth.

The Country Partnership Strategy (CPS) is consistent with the Bank Group’s regional strategy for Europe and Central Asia (ECA). The Bank will accelerate consolidation of the portfolio to achieve a lending program of fewer, larger projects. The total volume of new IBRD commitments under the CPS over FY11 and FY12 is expected to amount to a little over US$100 million.

Executive Summary
Full Report
Kомплетен документ [in Macedonian]
Technical Annexes
 
Country Context and Development Achievements
FYR Macedonia is a landlocked country of two million people. It is ethnically diverse, with some 65 percent of the population made up of ethnic Macedonians, 25 percent ethnic Albanians, 4 percent ethnic Turks, and nearly three percent Roma. The center-right Internal Macedonian Revolutionary Organization – Democratic Party for Macedonian National Unity party strengthened its mandate in early parliamentary elections in 2008 and in presidential and local elections in 2009. EU accession continues to be highly popular and remains the anchor of reform in nearly every area of government and public services. Economic performance improved considerably prior to the global crisis. Macroeconomic policies supported stability and accelerated growth and were complemented by structural reforms. The economy is projected to grow by 2 percent in 2010 - but risks remain significant.

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Development Challenges
FYR Macedonia’s development achievements have been substantial, but continued effort across a range of areas will be required to generate economic growth that puts people to work and improves living standards for all. The Government and the World Bank Group agree that such growth will have to be faster, more inclusive and, increasingly, "greener.” Continued growth and employment creation will depend on sustained macroeconomic stability. The sluggish pace of employment growth despite a relatively strong pre-crisis economic expansion raises concerns. Reducing stubbornly high unemployment - and creating employment - will require a thorough analysis of structural problems.

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Country Priorities and Strategy Framework
FYR Macedonia has established a generally clear and consistent policy direction. The current Government campaigned on and is now carrying out a development program for 2008 to 2012 - Rebirth in 100 Steps - which set out clear overarching objectives. Though advocating reforms in diverse sectors, the Government program highlights growth and employment challenges and states that “a strong economy is the basis for everything.” In addition to the broad national goals identified above, FYR Macedonia has clearly identified its path to EU membership.

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The World Bank Group's Program

World Bank Group support over the FY07-FY10 CPS was highly relevant under both CPS pillars: (i) fostering job-creating economic growth and (ii) improving governance and transparency. Both of these areas have remained central to FYR Macedonia’s development agenda, and Bank Group activities were designed to provide direct support through targeted interventions. The FY07-10 CPS Completion Report assessed results in four "outcome clusters" linked to the CPS pillars and EU accession.

The World Bank supports a portfolio of 14 loans and four grants totaling US$337.4 million in commitments. Current financial management arrangements will continue to be used for project implementation as the performance to date has been generally satisfactory.

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Risks

Implementation of the CPS is subject to the following risks: FYR Macedonia’s growth outlook is subject to uncertainties on the timing, speed and shape of the recovery from the global crisis; failure to resolve negotiations with Greece on the “name issue” could continue to slow EU accession and dampen public support for reforms; continued high unemployment may directly affect the social balance in the country, provoke social tensions and undermine Government support to the reform program; FYR Macedonia is vulnerable to natural disasters, including, increasingly, severe climate pressures.

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