The process of decentralization in Macedonia is five years old. During its implementation, the local government system has moved forward successfully in many areas, and at the same time, shortfalls and challenges have been identified in others. In the five years of implementation, the system has generated important information required in designing policies for addressing these challenges. The Macedonia Local Government Activity (MLGA) is using this information to assist both ZELS and the central government to design these policies.
MLGA Intergovernmental Finance Policy component focuses on two key areas of assistance:

1. Improving the intergovernmental transfer system, with a specific focus on equalization, and
2. Transferring the authority for construction land management to the municipalities - key to the local economic development. 

The design and implementation of a comprehensive Municipal Finance Database (commissioned by the Association of the Units of Local Self-Government in Macedonia [ZELS]) is basis of MLGA Intergovernmental Finance Policy activities.  Using the unprecedented detail and comprehensiveness of the database, MLGA have been able to present a picture of how local government finances have evolved over the last four years. Further, it has enabled the project to provide suggestions about what can be done to improve the efficiency, effectiveness, and equity of intergovernmental financial relations in Macedonia. The Municipal Finance Database is essential in the efforts for structuring and facilitating the dialogue among the main stakeholders with the goal of designing policies for furthering and improving the Intergovernmental system of financing in Macedonia. MLGA works closely with ZELS in building its capacities to make use of this analytical tool during and beyond the life of MLGA.

Another key area important to the success of the process of decentralization is the transfer of the authority for management of construction land to municipalities. MLGA directly participated and informed the Ministry of Transport and Communications (MOTC) working group process in designing the Strategy for Decentralization of the Management of Construction Land adopted by the Government of the Republic of Macedonia in December 2009. Following the adoption of the Strategy document, MLGA continued to provide support and directly participate in an inclusive working group process for the design of the legislative framework with the goal of authorizing local governments to effectively and efficiently manage and use public lands for local economic development.