The World Bank in North Macedonia

COUNTRY CONTEXT

Last Updated: May 06, 2025

The World Bank's Country Partnership Framework (CPF) 2024-2028 for North Macedonia was endorsed by the Board of Directors on January 23, 2024. The CPF’s overarching objective is to support North Macedonia in becoming more competitive, sustainable, inclusive, and resilient, with a focus on competitiveness, human capital development, and environmental sustainability. Building on lessons from the previous CPF, the new framework focuses on three high-level objectives:

1: Improve public service delivery by enhancing efficiency and transparency. This includes strengthening administrative capacity at central and municipal levels, improving infrastructure asset management, and increasing revenue-raising abilities. It also aims to make public expenditures more efficient in education, health, and social protection.

2: Create more productive private sector jobs by strengthening conditions for private sector-led growth and foundational skills, with digitalization as a cross-cutting theme. This involves promoting access to regional and global markets through better connectivity and trade facilitation and supporting the human capital strategy in areas like early childhood development, education, school-to-job transitions, and the care economy.

3: Increase climate resilience by addressing environmental constraints to ensure sustainable economic growth and quality of life. The CPF will advance energy efficiency and transition agendas, focus on decarbonization, reduce air pollution, and improve transport and connectivity infrastructure. It also commits to scaling up climate-resilient infrastructure in response to climate change adaptation and natural disaster preparedness priorities.

The recently published North Macedonia Public Finance Review: Ensuring Stability and Boosting Resilience highlights that the recent strategy of relying on economic growth to reduce North Macedonia’s fiscal imbalances has not produced sufficient results. Over the past decade, the country has faced higher fiscal deficits than its peers in the Western Balkans, with a debt level exceeding 62% of its gross domestic product (GDP). Consequently, increased efforts are necessary to ensure that North Macedonia remains on its path toward convergence with the European Union (EU).

Last Updated: May 06, 2025

North Macedonia’s economic growth accelerated in the first semester of 2025, reaching 3.2%, supported primarily by domestic demand, and robust activity in the services and construction sectors. On the fiscal front, both deficit and debt remain above the fiscal rules set in 2022, and public debt is projected to exceed last year’s level and stay above 60% of GDP in 2025.

The medium-term outlook is positive, though downside risks remain. Growth is projected to average 3% in 2025–2027. Risks include weak investments and slower activity in key trading partners. Headline inflation is expected to drop below the 2% long-term average by 2027, as core pressures ease gradually.

Moving to high income will require higher productivity, better competitiveness, and sustainable growth. Key priorities include unlocking the underused labor potential, promoting fair competition, boosting innovation, and shifting resources to higher value-added sectors.

Last Updated: Oct 14, 2025