According to the 2004 World Economic Freedom Index, Macedonia ranks 73rd in the world.

2004 Index of Economic Freedom

Source: Heritage Foundation, 2004

the late spring of 2001, Macedonia dissolved in ethnic conflict. An August 2001 truce averted full-blown civil war, but the prospects for peace and stabilization are still highly uncertain because the fighting has greatly increased inter-ethnic polarization. The present government, a coalition of ethnic Albanian and Macedonian political parties, is scheduled to introduce legislation aimed at achieving significant governmental decentralization in 2003. Under a standby agreement concluded with the International Monetary Fund in 2002, the government is committed to harsh austerity measures, but such a policy could prove destabilizing in a country whose GDP grew at a rate of about 0.3 percent in 2002. Corruption still pervades the economy, and the unemployment rate remains chronically high; only one of every 10 Macedonians receives income from regular work on a regular basis, and an estimated one-quarter of all employees are not paid wages on time. In addition, political instability has had a debilitating effect on foreign investment. Macedonia’s fiscal burden of government score is 0.1 point worse this year, and its government intervention score is 0.5 point worse; however, its trade policy score is 1 point better, and its informal market score is 1.5 point better. As a result, Macedonia’s overall score is 0.19 point better this year.

According to the International Monetary Fund, Macedonia’s top income tax rate is 18 percent, down from the 35 percent reported in the 2003 Index. The top corporate income tax rate is 15 percent.