The review was undertaken, and completedagainst a background of substantial political economicdisruption: the Kosovo crisis of 1999 threatened toundermine the country's accomplishments in buildingmacroeconomic, and fiscal stability; and, the securitycrisis of 2001, tested once again Macedonia'spolitical, and economic integrity. Both instances weresuccessfully surpassed, showing significant steps towardsbecoming a market oriented state within the Europeancontext, and, in its willingness to accept, and ratify thePeace Agreement of November 2001. But, expenditure pressuresrose, leading to additional spending, while revenuesdeclined owing to economic weakness, and decreased taxenforcement; clearly, fiscal stability stands on thebalance. Not surprising, the quality of expenditures becamean important issue, for although acceptable aggregatetargets were being achieved, the budget's economiccomposition was not suited for promoting economic growth.Institutional aspects show that budget preparation, andprocesses provide no link between policy commitments, andavailable resources, aggravated by unfounded credibility onthe budget, as an instrument for policy formation.Recommendations call for improved resource allocation withinfiscal constraints, i.e., reducing public resources, and,laying the foundation for a budget process legal framework.In addition, reforms should be institutionalized throughaccountability, and capacity building.
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