In this report we highlight some of the progress that has been made in the reform of the system of intergovernmental fiscal relations in Macedonia, but we dedicate more space and attention to those areas of the system where challenges still remain. The report is structured along the main pillars of the decentralization system and provides an assessment of the main challenges and issues the Government of Macedonia faces in each of these areas. The main areas covered include: vertical structure and scope of the government sector, expenditure assignments revenue assignment, intergovernmental transfers, and borrowing. In the final section, we outline a possible agenda for reform.
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