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The Buzz in North Macedonia: Interview with Kristijan Polenak of the Polenak Law Firm

The Buzz in North Macedonia: Interview with Kristijan Polenak of the Polenak Law Firm

North Macedonia
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Despite North Macedonia’s agreement to adopt its current name and its joining of NATO in March 2020, the country's EU accession process has recently taken a hit, says Polenak Managing Partner Kristijan Polenak. “Notwithstanding recognition received from the entire international community, one EU member country vetoed the start of the negotiations,” says Polenak, referring to Bulgaria’s opposition to moving forward with consideration of North Macedonia’s EU accession. This led to a “decline of internal support for EU membership, caused by disappointment with the inconsistent application of European values. This opposition in early December strengthened the political streams opposing our EU membership.” 

The combination of opposition to EU membership and the ongoing effects of the COVID-19 pandemic, Polenak says, has “constructed a playing field for anybody who may have an interest in destabilizing North Macedonia and, indirectly, the Western Balkans.” 

“On the home political front,” Polenak continues, “the parliamentary elections held in July 2020 resulted in the continuation of the existing coalition Government. The government majority is thin but stable.”

The existing coalition has exhibited a long period of “legislative inactivity,” Polenak says, “which is not unexpected, given that this was an election year fraught with a pandemic.” Still, that’s not to say there’s nothing happening. In fact, he says, “there are several interesting legislative projects in the pipeline, including amendments to the Law on Civil Procedure and the Law on Bankruptcy, although these are still in the drafting phase.”

Reporting on the country’s economic status, Polenak says that GDP fell 5.9% during the first three quarters of 2020, but he points out that it dropped “14.9% in the second quarter and 3.3% in the third.” He believes that “this shows a normalization and a balancing of economic performance.” The IMF has predicted a 5.5% GDP growth in 2021, although the government of North Macedonia is predicting a lower 4.1% rate. Polenak stresses that it is still “very difficult to make predictions on the short-term recovery, but it seems that the vaccination and tough economic policies will make the government’s prediction the more accurate one.”  

Polenak believes that it is unlikely that businesses will be able to pick up speed in the first half of 2021, but he is confident that the country has “passed the tipping point,” and he says that “my expectation is that the economy will keep the current levels until worldwide efforts to fight the pandemic show results, at which point the newly gained optimism will lead to recovery and growth.”

Finally, looking at recent deals in North Macedonia, Polenak reports that, despite the pandemic, there are “a few worth mentioning, such as the announced accession of Ohridska Banka in Sparkasse Bank Macedonia (which will result in the latter becoming one of the top four systemic banks in the country), the announced privatization of the post office, the greenfield investment efforts of Magna Mirrors, [and] a couple of wind farm projects, all of which may — and I believe will — affect their respective industry sectors and improve the economic performance of the country.”