Western Balkans Competitiveness Outlook 2024: North Macedonia

4. Access to finance

Abstract

Access to finance is crucial for developing the private sector in all economies. This chapter, along with three sub-dimensions, explores the necessity for businesses to be able to access financing sources to start up, grow, diversify and ultimately contribute to overall competitiveness. The first sub-dimension, bank financing framework, assesses the regulatory framework of bank financing, including the quality of banking industry legal framework, registration and information systems and the policies making bank finance inclusive. The second sub-dimension, access to alternative financing sources, focuses on the various means that businesses can get financing, encompassing access to capital markets, private equity as well as factoring and leasing. The third sub-dimension, digital finance, delves into the effects of digital solutions on payment services and the emergence of new avenues for business finance.

Key findings

North Macedonia’s access to finance score has increased since the 2021 assessment, from 2.4 to 2.9 (Table 4.1). North Macedonia has undertaken substantial measures to align its banking framework with international standards and has initiated various efforts to develop alternative financing sources, leading to improved scores in these sub-dimensions.

Table 4.1. North Macedonia’s scores for access to finance

Dimension	Sub-dimension	2018 score	2021 score	2024 score	2024 WB6 average
Access to finance	3.1: Bank financing framework			3.3	3.5
	3.2: Access to alternative financing sources			2.8	2.4
	3.3: Digital finance			2.3	2.3
North Macedonia’s overall score		3.1	2.4	2.9	2.8

The key findings are:

• North Macedonia has undertaken significant regulatory changes to align its banking industry’s legal framework with international standards. Notably, the European Commission adopted the Decision 2021/1753 in October 2021, assessing that the banking regulations and the supervision related to capital requirements implemented by the National Bank of the Republic of North Macedonia (NBRNM) are in line with the standards of the EU.

• Access to bank finance for the smallest businesses is impeded. The stringent collateral requirements, the limited size of credit guarantee schemes, and the absence of policies supporting microfinance are contributing factors. Consequently, SMEs constitute only 28.0% of total loan recipients from commercial banks in 2022, while this figure stands at 39.0% on average in the Western Balkan region. That discrepancy underscores the need for targeted interventions to improve SME financing conditions.

• Backed by a strategic framework, active efforts are under way in drafting legislation to establish comprehensive capital market legislation. As noticeable outcomes, the combined preparations of a Law on Alternative Investment Funds, Law on Financial Instruments, and Law on Securities Prospects and Transparency Obligations for Issuers are in progress.

• North Macedonia has made good progress in strengthening its legal framework for digital payments as part of its Single Euro Payments Area (SEPA) integration efforts. The legal framework aligns with the EU's Second Electronic Money Directive (EMD2) licensing for e-money institutions, facilitating electronic money issuance. Moreover, North Macedonia has extended banks’ payment services to third-party payment service providers with appropriate security requirements in line with the EU’s Second Payment Services Directive (EU PSD2).

• Alternative forms of financing, such as private equity and crowdfunding, currently lack regulation in North Macedonia. However, there are ongoing efforts in the drafting phase to introduce legal frameworks for these alternative financing forms. Notably, legislation to implement the EU Alternative Investment Fund Managers Directive (AIFMD) in North Macedonia entered the drafting process.

State of play and key developments

North Macedonia's financial sector is primarily anchored in the banking industry, although there has been a slight decrease in its share of the overall financial assets, dropping from 84.7% in 2016 to 79.2% in 2022. This contrasts sharply with the euro zone, where the banking sector represents only 50% of total financial assets (European Central Bank, 2023[1]). Banking sector consolidation was pursued in North Macedonia as the number of commercial banks decreased to 13 in 2022 (from 15 in 2019 and 16 in 2013), but competitive pressures remained relatively stable. Notably, the top three banks in North Macedonia collectively held around 56.5% of the total assets of the banking industry in 2022, compared to 61.1% in 2013 (World Bank, 2022[2]). This percentage remains considerably lower than the averages observed in the Western Balkans (68.8%) and the EU (71.5%).

Over the past decade, the Macedonian financial sector has experienced a decline in overall credit provision, indicating a contraction in the country's primary avenue for accessing finance. The total credit provided by the Macedonian financial sector substantially receded over the past decade. In 2022, domestic credit to the private sector was equivalent to 48.4% of GDP, while 53.7% in 2013. This figure is comparable to the Western Balkan region (46.4% in 2022) but falls short compared to the European Union (69.5%) (World Bank, 2022[2]).

Sub-dimension 3.1: Bank financing framework

North Macedonia's legal framework for the banking industry is moderately developed, fully implementing Basel II standards. Ongoing harmonisation with Basel III suggests a continual enhancement in the reliability of the bank finance supply for businesses thanks to increased financial stability. Substantial legal progress has been achieved since the last assessment cycle to further comply with international standards by adopting several amendments implemented from April 2021 to February 2023. These amendments cover a large spectrum of banking regulation, such as the determination of systemic banks, the definition and infringement of monetary penalties, the countercyclical capital buffer for exposures, the scope of audit of banks’ annual financial statements and operations, and the methodology for liquidity risk management.1 On capital requirements, the European Commission adopted Decision 2021/1753 in October 2021, assessing that the banking regulations and the supervision implemented by the National Bank of the Republic of North Macedonia (NBRNM) are in line with the standards of the EU.2 Finally, the NBRNM restructured its organisational setup by establishing a new department for banking regulation and bank resolution, separate from the bank supervision sector. Aligned with international standards, this restructuring aims to improve the overall quality of supervision.

Further alignment with the EU has been achieved by implementing the Decision on the Methodology for Credit Risk Management in January 2024, aiming to define non-performing and forborne credit exposures and enhance criteria for credit risk management. Additionally, the forthcoming Decision on Reports and Data Disclosure by the Bank, effective as of January 2025, will require banks to disclose more detailed qualitative and quantitative data, particularly related to risk management practices, exposures, and corporate governance. Furthermore, two draft projects are under way to ensure compliance with Basel III capital adequacy requirements (Decision on the Methodology for Determining the Capital Adequacy) and to strengthen resolution processes during bank failures (Law on Bank Resolution).3 However, no specific timeline for adoption and implementation has been communicated.

Regarding lending requirements, tangible and intangible assets can be used as collaterals. However, there are no loan thresholds below which collateral requirements are flexible for small and medium-sized enterprises (SMEs), limiting their access to bank finance.

North Macedonia established functional registration and information systems based on two registers and has experienced marginal legal changes since the last assessment cycle. The Real Estate Cadastre Agency manages cadastres that are publicly accessible on line and updated automatically. On the other hand, the register of pledges over moveable assets falls under the responsibility of the Central Registry of the Republic of North Macedonia. Information from this register, which is also automatically updated for each transaction, can be accessed upon request. Nonetheless, as assessed in the previous cycle, the registry still lacks ownership information for pledges on all registered assets. This incomplete coverage may impact the assessment of collateral values for Macedonian banks, potentially restricting access to bank finance for owners of unregistered assets. The RECA (Registry of Encumbered Moveable Property) had a strategic plan from 2020 to 2022 to expand its registry of pledges. As part of this plan, available data indicate that 9 452 assets that were not previously registered were registered in 2021, while the official target was the registration of 14 428 assets. Although no data are available from 2022, registration efforts are still ongoing in North Macedonia.

Regarding credit information systems, both the public Credit Registry of the NBRNM and the Private Credit Bureau oversee data collection.4 The latter keeps credit information data provided by financial institutions for a period of five years after payment of the obligation or closure of the subject's account. Financial institutions can request online data with written borrower consent. Non-regulated entities, including non-bank financial institutions, retailers and utilities, have their credit information collected by the Private Credit Bureau in North Macedonia, ensuring a comprehensive coverage of credit information. Implementing amendments to the Decision on the Contents and the Manner of Functioning of the Credit Registry in July 2023 introduced additional macroprudential measures on credit data protection, such as the individual right to challenge collected data. Overall, both institutions allow full coverage of credit information in North Macedonia, which facilitates comprehensive and accurate assessments of individuals' and businesses’ creditworthiness by banks.

Macedonian businesses face challenges in accessing bank finance, and there is a limited presence of policy initiatives to facilitate SMEs' access to finance. In 2022, loans from commercial banks directed to SMEs accounted for only 28.0% of the total bank loans in North Macedonia (International Monetary Fund, 2023[3]), marking a significant decline from 34.9% in 2013. This percentage is lower than the Western Balkans' average of 39.0% and considerably falls short compared to comparable economies from the EU, such as Slovak Republic (60.5%) or Latvia (76.0%) (OECD, 2022[4]). While relatively modest, credit guarantee schemes and credit lines aimed at improving SMEs’ access to bank finance are active in North Macedonia. Support from the Development Bank of North Macedonia (DBNM), a key institution providing credit guarantee schemes and credit lines to Macedonian SMEs, remained similar to the COVID-19 pandemic levels. In 2020, the DBNM extended EUR 81 million in loans to the Macedonian economy, accounting for 0.75% of GDP (Development Bank of North Macedonia, 2021[5]). In 2022, total loans amounted to EUR 92 million (0.71% of GDP), complemented by EUR 10 million in credit guarantees (0.08% of GDP) (Development Bank of North Macedonia, 2021[5]). The DBNM's activities are expected to be maintained, supported by its main funder, the European Bank of Investment (EIB), which renewed a EUR 100 million loan initially signed in November 2020 in July 2023 (European Investment Bank, 2023[6]).5 Continuing the largest Macedonian credit guarantee scheme and public credit lines will be crucial in preventing further deterioration in businesses’ inclusion in accessing bank finance.

The smallest Macedonian businesses can also rely on microfinance to access finance but without specific microcredit provision regulations. In this regard, no legal progress has been recorded since the last assessment cycle. The entities providing microcredit are the DBNM, the Macedonian Enterprise Development Foundation (MEDF), saving houses, financial companies, and associations (European Microfinance Network, 2019[7]).6 While public institutions like the DBNM and the MEDF provide microcredit programmes, the Macedonian Government has not implemented financial incentives, such as tax deductions or specific interest rate caps, that could further foster the development of microfinance.

Sub-dimension 3.2: Access to alternative financing sources

Capital markets in North Macedonia remain underdeveloped. In 2021, the stock market capitalisation in North Macedonia accounted for 31.1% of GDP (CEIC, 2022[8]), which aligns with the averages of the Western Balkans (34.3%) but significantly lags behind the EU (75.4%) (World Bank, 2022[2]). Moreover, corporate bonds do not exist in North Macedonia on the bond market.

However, legal progress in establishing dedicated frameworks has been recorded since the last assessment cycle. In July 2021, the Law on Investment Funds was amended to advance in alignment with the EU acquis, including the Undertakings for Collective Investment in Transferable Securities (UCITS) directive. Such legal advancement is expected to develop the Macedonian fund management industry by facilitating cross-border investments stemming from the EU capital market. In February 2022, the government of the Republic of North Macedonia adopted the Financial Market Development Strategy to expand demand for domestic securities to increase individual and institutional investor participation; broaden investment alternatives through increased equity and debt securities offerings; and enhance financial education and awareness for both the corporate sector and households. The first noticeable outcome of the Financial Market Development Strategy has been the preparation of the Law on Financial Instruments and the Law on Securities Prospects and Transparency Obligations for Issuers.7 These laws will be implemented to respectively harmonise with the EU Markets in Financial Instruments Directive (MiFID) II and Markets in Financial Instruments Regulation (MIFIR) regulations.8 Aligning with these standards would bolster the demand for capital market investments by implementing measures that enhance investor protection and increase transparency in financial markets, aligning with EU standards and facilitating investments from the EU capital market.

It should also be mentioned that the Macedonian Stock Market (MSE) offers greater flexibility for smaller companies, enhancing accessibility for SMEs. The MSE categorises listings into four categories: 1) super listing, 2) exchange listing, 3) mandatory listing, and 4) listings for small joint-stock companies. The last, designed for SMEs, requires a minimal capital of EUR 250 000 (compared to EUR 10 million for super listing) and audited financial statements for the past year (or the previous three years for super listing). However, despite flexible regulatory requirements that help increase the accessibility of the stock market, no financial incentives are in place to promote its use.

The development of private equity remains very limited, with barely any active equity funds present and no specific legal framework that governs them. These activities are currently regulated by the Law on Investment Funds, but a specific Law on Alternative Investment Funds is being prepared, with no particular timeline communicated. This Law will transpose the EU Alternative Investment Fund Managers Directive (AIFMD) in North Macedonia to create a specific set of rules to regulate and standardise the operations of managers handling alternative investment funds, aligned with EU legislation.9 This initiative is expected to encourage the development of private equity in North Macedonia by attracting investments from the EU capital market. Finally, in the absence of policies fostering the development of Business Angel Networks (BAN), the Macedonian operating BANs – i.e. Association of Business Angels, CEED Macedonia Business Angels Club, and Network of Macedonian Business Angels I2ban – continue to attract limited amounts of investment. In 2022, EUR 0.4 million was raised, a similar figure compared to the investment raised in 2019 (EUR 0.5 million) (European Business Angels Network, 2023[9]).

The legal framework for factoring has experienced strong development since the last assessment cycle. In July 2023, amendments to the Law on Financial Companies addressed various aspects of factoring, including categorising factoring types (domestic, international, with or without the right of recourse, and reverse factoring). The amendments also defined the content of factoring agreements and established bankruptcy procedures for both the factor and the creditor. This legal advancement is anticipated to stimulate the growth of factoring activities in North Macedonia, which were initially marginal.

The leasing regulation is more advanced and has progressed further, achieving additional milestones with the amendments to the Law on Leasing implemented in August 2022, which explicitly addresses legislation on offences and penalties, reducing transaction costs on leasing contracts. In tandem with this legal progress, leasing volumes have substantially developed, accounting for 1.09% of GDP in 2022 (approximately EUR 140.1 million), while only 0.62% in 2017 (EUR 62.3 million) (National Bank of the Republic of North Macedonia, 2023[10]). However, they remain far from the EU’s level, where leasing volumes represented 2% of GDP in 2022 (Leaseeurope, 2023[11]).

Sub-dimension 3.3: Digital finance

North Macedonia has made good progress in strengthening its legal framework for digital payments as part of its SEPA integration efforts, by implementing the amendments to the Law on Payment Services and Payment Systems in April 2022. Achieving the alignment with the EU's Second Electronic Money Directive (EMD2) licensing for e-money institutions, thereby facilitating electronic money issuance, this law also extended banks' payment services to Third Party Payment Services Providers (TPPs) with appropriate security requirements by complying with the Second Payment Services Directive (PSD2).10 Furthermore, the Law on Cryptocurrencies is currently being prepared to establish a framework for the utilisation and regulation of cryptocurrencies, paving the way for their potential use as a payment method in the future. In tandem with the improving legal framework, the digital payment and e-money services sector has continued to slowly expand in North Macedonia, with the number of firms reaching four in 2022 compared to only three in 2019 and two in 2013.

Despite the progress made in developing the legal framework for digital payments, their adoption remains limited. In 2021, only 74.3% of the Macedonian adult population reported having made or received a digital payment (World Bank, 2022[2]), which remains significantly lower than the EU average (93.0%). The data suggest that North Macedonia may be struggling with a digital skills deficit, hindering the widespread adoption of digital payment methods. The overall low penetration of digital payments poses several challenges, ranging from increased business transaction fees to hindered financial accessibility and higher citizen remittance costs. This is particularly crucial for North Macedonia, considering the importance of remittance inflows standing at 3.9% of GDP in 2022 (World Bank, 2024[12]). Moreover, increased digitalisation of the financial system can promote the use of bank accounts (Khera et al., 2021[13]). However, North Macedonia faces a challenge, with 85.3% of the adult population possessing a bank account in 2021 – a figure still falling below the EU's 95.1% (International Monetary Fund, 2023[3]). To foster financial inclusion, North Macedonia implemented the Strategy for Financial Education and Financial Inclusion (2021-25), which prioritises improving financial understanding, management skills, consumer protection, and information accessibility through initiatives such as a fee-comparison website launched in September 2023. However, this strategy does not explicitly address digital skills gaps, which might not foster the development of digital finance.

North Macedonia currently lacks a legal framework for crowdfunding, leaving it without active operators. Moreover, the absence of a legal structure for Distributed Ledger Technology (DLT) for financing indicates that smaller businesses cannot yet circumvent traditional banking requirements and regulatory requirements associated with capital markets using digital assets (OECD, 2019[14]). Nevertheless, North Macedonia has proactively addressed the security requirements related to using Distributed Ledger Technology for financing. Implementing the Law on the Prevention of Money Laundering and Financing of Terrorism in June 2022 demonstrated the country's commitment to aligning with the security standards specified in the EU Anti-Money Laundering Directive (AMLD5).11

Overview of implementation of Competitiveness Outlook 2021 recommendations

North Macedonia has made significant progress in aligning the legal framework of its banking industry with EU standards. However, the development of capital markets and alternative funding sources, such as private equity and crowdfunding, has been more limited. The critical developments based on the previous CO Recommendations are elaborated in Table 4.2.

Table 4.2. North Macedonia’s progress on past recommendations on access to finance

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Continue to align North Macedonia’s banking regulations with international standards	Regulation is being harmonised with Basel III standards, and significant legal progress has been achieved since 2021.	Strong
Continue to build a business environment with diverse financing sources	Efforts are being made to diversify alternative financing sources by developing specific legal frameworks. Preparing a Law on Alternative Investment Funds is in progress. Additionally, amendments to the Law on Financial Companies, implemented in July 2023, significantly enhanced the legal framework for factoring. Despite these advancements, there is no legal crowdfunding framework, and no active crowdfunding platform has been observed since 2022.	Moderate
Create a comprehensive strategy for capital market development involving government and private sector stakeholders, and formulate an action plan for undertaking appropriate development activities	North Macedonia's capital markets’ legal framework is still developing, and the corporate bond market is still nascent. There is no explicit mention of a dedicated legal framework for SMEs.	Limited

The way forward for access to finance

To ensure diverse financing options are available in the financial markets, policy makers should:

• Achieve harmonising banking regulations with Basel III standards. As in the other Western Balkans, the banking sector is the primary player in the financial industry. Given the importance of the banking sector for access to finance, it is essential to create a more robust and more stable global banking system that can withstand economic downturns and financial shocks.

• Make bank finance accessible for all businesses. To facilitate the growth and innovation of innovative businesses, it is crucial to expand the financing options available to SMEs, particularly those in knowledge-intensive sectors. Additionally, extending existing permanent credit guarantee scheme programmes could broaden financing opportunities for SMEs. Additionally, policies to develop the activity of existing microfinance facilities, such as interest rate caps and active platforms for SMEs, can help remove barriers to finance for the smallest businesses.

• Continue efforts to diversify financing sources. Non-bank financial intermediaries (e.g. leasing or factoring companies), as well as alternative investment funds (e.g. private equity) and capital markets can provide financing alternatives for larger corporations and mitigate the lack of availability of early (e.g. seed or venture) capital financing, which constrains the growth opportunities for promising SMEs.

• Make digital finance available to all individuals. Financial services are becoming increasingly digitalised, and individuals with low education levels, those residing in rural areas, and elderly people face more significant financial exclusion because of insufficient digital skills, which should be considered in financial inclusion strategies (Box 4.1).

Box 4.1. A national financial strategy for Austria

Austria’s national financial literacy strategy establishes a comprehensive framework aligning with the OECD Council Recommendation on Financial Literacy, adopted by OECD member countries at the Ministerial Meeting in October 2020.

The strategy focuses on four main policy priorities: fostering sound financial decision making early in life and preventing over-indebtedness; promoting responsible financial planning for long-term well‑being; raising financial literacy awareness; and ensuring access to quality financial education. Additionally, it incorporates three crosscutting priorities: achieving gender equality, encouraging sustainable financial choices, and addressing the impact of digitalisation on financial services.

The Austrian strategy has a strong focus on digitalisation. The strategy will provide the Austrian population with learning resources and tools to profit from the opportunities offered by the digitalisation of retail financial services taking place in EU financial markets, while ensuring they know how to protect themselves and their personal data (OECD (2018[15]); OECD (2020[16])). Austrian citizens will increasingly be confronted with using digital communication channels by established providers they are familiar with and new fintech actors entering the market. They will also need to master the integration of digital technologies in financial services: Application Programming Interfaces (API) under the EU PSD2, payment apps, digital authentication, and authorisation, as well as new digital products. Citizens will also need to learn how to defend themselves from scams and fraud that take place digitally. There has been a significant increase in fraud since the onset of the COVID-19 crisis, which was most notable in phishing practices, i.e. attempts at luring individuals into disclosing confidential account information. Around 60% of victims of fraud lost their money over the Internet, and around half of all fraud methods are linked to investments in crypto assets.

Source: Federal Ministry of Finance of the Republic of Austria (2021[17]).

References

[8] CEIC (2022), North Macedonia Market Capitalisation: % of GDP, https://www.ceicdata.com/en/indicator/macedonia/market-capitalization--nominal-gdp (accessed on 30 January 2024).

[5] Development Bank of North Macedonia (2021), Annual Report of the Development Bank of North Macedonia Operations in 2020, https://www.mbdp.com.mk/Upload/Documents/2020-annual-report.pdf.

[9] European Business Angels Network (2023), EBAN Statistics Compendium 2022, https://www.eban.org/eban-annual-statistics-compendium-for-2022/.

[1] European Central Bank (2023), ECB Data Portal, https://data.ecb.europa.eu/data-comparison/e595831e-7662-41cf-ab04-f191303138ac (accessed on 24 November 2023).

[18] European Commission (2023), North Macedonia 2023 Report, https://neighbourhood-enlargement.ec.europa.eu/system/files/2023-11/SWD_2023_693%20North%20Macedonia%20report.pdf.

[6] European Investment Bank (2023), North Macedonia: EIB Global Unlocks €100 Million of EU Investment with Development Bank of North Macedonia to Boost Green Transformation of SMEs, https://www.eib.org/en/press/all/2023-275-eib-global-unlocks-eur100-million-of-eu-investment-with-development-bank-of-north-macedonia-to-boost-green-transformation-of-smes (accessed on 23 January 2024).

[7] European Microfinance Network (2019), Legislative Mapping Report North Macedonia, https://www.european-microfinance.org/sites/default/files/document/file/north_macedonia.pdf.

[19] Eurostat (2023), Electricity Prices for Household Consumers, https://ec.europa.eu/eurostat/databrowser/view/nrg_pc_204__custom_9834069/default/table?lang=en (accessed on 1 March 2024).

[17] Federal Ministry of Finance of the Republic of Austria (2021), The National Financial Literacy Strategy for Austria, https://www.bmf.gv.at/en/the-ministry/National-Financial-Literacy-Strategy/overview-national-financial-literacy-strategy/about-the-strategy.html#:~:text=Improving%20financial%20education%20and%20financial,the%20area%20of%20financial%20education.

[3] International Monetary Fund (2023), Financial Acess Survey (FAS), https://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C&sId=1460043522778 (accessed on 24 November 2023).

[13] Khera, P. et al. (2021), “Is digital financial inclusion unlocking growth?”, IMF Working Paper, Vol. WP/21/167, https://www.elibrary.imf.org/view/journals/001/2021/167/article-A001-en.xml.

[11] Leaseeurope (2023), Solifi Releases their 2023 Global Leasing Report, https://www.leaseurope.org/solifi-releases-their-2023-global-leasing-report-1 (accessed on 24 November 2023).

[10] National Bank of the Republic of North Macedonia (2023), Financial Stability Report for the Republic of North Macedonia 2022, https://www.nbrm.mk/content/Regulativa/FSR_2022_ENG.pdf.

[4] OECD (2022), Financing SMEs and Entrepreneurs 2022: An OECD Scoreboard, https://doi.org/10.1787/e9073a0f-en.

[16] OECD (2020), Digital Government in Chile – Improving Public Service Design and Delivery, OECD Digital Government Studies, OECD Publishing, https://doi.org/10.1787/b94582e8-en.

[14] OECD (2019), Initial Coin Offerings (ICOs) for SME Financing, http://www.oecd.org/finance/initial-coin-offerings-for-sme-financing.htm.

[15] OECD (2018), Mapping of Investment Promotion Agencies in OECD Countries, https://www.oecd.org/investment/Mapping-of-Investment-Promotion-Agencies-in-OECD-Countries.pdf.

[12] World Bank (2024), Remittances Prices Worldwide, http://remittanceprices.worldbank.org/ (accessed on 17 January 2024).

[2] World Bank (2022), The Global Financial Development Database, https://www.worldbank.org/en/publication/gfdr/data/global-financial-development-database (accessed on 24 November 2023).

Notes

← 1. The related amendments are respectively associated with the Decision on the Methodology for Determining Systemically Important Banks (April 2021), the Banking Law (June 2021), the Decision on the Methodology for Determining the Rate of the Countercyclical Capital Buffer for Exposures in the Republic of North Macedonia (June 2021), the Decision on the Scope of the Audit of Bank’s Annual Financial Statements and Operations (March 2022) and the Decision on the Methodology for Liquidity Risk Management (February 2023).

← 2.  For more information, refer to: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32021D1753&from=EN.

← 3.  The draft project also includes implementing legislation and amendments to the Law on the Central Bank and the Banking Law.

← 4.  The Law regulates the Private Credit Bureau on Credit Bureau, while the public registry was established under the National Bank of the Republic of North Macedonia Law.

← 5.  The renewal addresses SMEs' liquidity and investment needs, focusing on the green transition. It should also be pointed out that the temporary credit guarantee schemes funded by the European Bank for Reconstruction and Development (EBRD) addressed to SMEs during the COVID-19 Pandemic – a EUR 20 million loan extended to Sparkasse Bank Makedonija in July 2020 and a EUR 15 million loan to ProCredit Bank Macedonia in November 2020 – have also both been renewed. The EBRD credit line to Sparkasse Bank Makedonija was renewed in October 2022, now totalling EUR 23 million with an additional EUR 7 million lines extended in October 2023 to support SMEs in their green transition endeavours (European Commission, 2023[18]). On the ProCredit Bank Macedonia loan, EUR 9 million was allocated in November 2023, mainly to promote the green transition of SMEs (Eurostat, 2023[19]).

← 6.  The Ministry of Finance supervises financial companies on a discretionary basis with scheduled and unscheduled inspections. However, only the savings houses and financial companies are supervised, suggesting that banks’ supervisory requirements do not fully extend to the entire microfinance sector.

← 7.  It should also be pointed out that in August 2022, the Securities and Exchange Commission of the Republic of North Macedonia issued a Handbook for Initial Public Offering to support companies interested in going public.

← 8.  MiFID II is a comprehensive set of regulations enhancing investor protection, increasing transparency and standardising regulatory disclosures across financial markets (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0065). MiFIR is a set of regulations that complements MiFID II within the European Union. It directly addresses issues such as transaction reporting, pre- and post-trade transparency, access to clearing and trading venues, and regulating commodity derivatives (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0600).

← 9.  The AIFMD directive regulates the activities of alternative investment fund managers (AIFMs) within the EU (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32011L0061).

← 10.  EMD2 directive: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32009L0110; PSD2 directive: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015L2366.

← 11.  EUAMLD5 directive: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018L0843.