European Western Balkans

EU Growth Plan for the Western Balkans: Release of new funds upon implementation of Reform Agenda

Presentation of the 2023 Enlargement Package and Growth Plan; Photo: European Union

BRUSSELS – The European Commission yesterday adopted the new Growth Plan for the Western Balkans, with the stated intention to bring some of the benefits of membership to the region in advance of accession, boosting economic growth and accelerating socio-economic convergence.

The European Commission has built the Growth Plan for the Western Balkans around four key pillars. The first pillar focuses on enhancing economic integration with the European Union’s single market, while the second pillar seeks to boost economic integration within the Western Balkans through the Common Regional Market.

The third pillar aims to accelerate fundamental reforms, while the fourth pillar aims to provide increased financial assistance to support these reforms through a Reform and Growth Facility for the Western Balkans. The European Commission plans to implement these measures between 2024 and 2027.

Under this growth plan, each Western Balkan partner will be invited to prepare a Reform Agenda based on existing recommendations, including the annual Enlargement Package and the conclusions of the Economic and Financial Dialogue based on the countries’ Economic Reform Programmes (ERP). The Agenda will be consulted with, assessed and adopted by the Commission.

The Reform Agenda will identify a limited set of priority reforms, broken down into qualitative and quantitative steps which will serve as payment conditions. Upon achievement, they will trigger the release of funds under the new Reform and Growth Facility according to a pre-determined timeline.

As part of this growth plan, the Commission has identified seven initial priority areas the EU could offer to the Western Balkan countries. Such integration would deliver substantial economic benefits to the region and ensure a broad-level playing field amongst enlarged countries.

The seven priority areas are: free movement of goods, free movement of services and workers, access to the Single Euro Payments Area (SEPA), facilitation of road transport, integration and de-carbonization of energy markets, Digital Single Market and integration into industrial supply chains.

The Commission plans to propose amendments to the Stabilisation and Association Agreements (SAAs) that would introduce a mechanism to empower the SAA bodies to extend the rights and obligations of the EU acquis to the Western Balkans once they meet the necessary conditions. This mechanism would enable the SAA institutions to adopt annexes containing a list of single market legislation (“acquis”) in specific areas. The Western Balkans countries would transpose this legislation into domestic legislation and rules on monitoring.

In terms of financing, the new Reform and Growth Facility for the Western Balkans will provide essential support to implementing the new growth plan and its four pillars through significantly increased financial assistance. The proposed Facility will cover the period 2024-2027 and It would provide financial support in the form of non-repayable support (up to EUR 2 billion) and loans (up to EUR 4 billion) through direct disbursements to the national budgets or as capital investment financing through the Western Balkans Investment Framework (WBIF).

The new growth plan for the WB countries builds on the existing enlargement methodology and creates a package of mutually reinforcing measures that will multiply the potential benefit of each action. It also, according to the document, provides for more incentives and the benefits of integration ahead of EU accession, aiming to speed up accession negotiations. The plan stresses the urgency of prompt action, with the objective of the growth plan effectuating tangible change by the upcoming year.

According to the Commission, the growth plan will incentivize countries to accelerate the adoption and implementation of the acquis. Moreover, as stated, a strong focus on integration within the Western Balkan region should help the governments focus on their expected future as members of the EU and overcome bilateral challenges.

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