The deadline for the countries to submit Reform Agendas to the European Commission, on the basis of which they will receive funds from the new Reform and Growth Facility for the Western Balkans, is 24 August. If a Reform Agenda gets the green light from the European Commission, the first funds from the Facility will be released by the end of this year.
In May, the institutions of the European Union adopted the Regulation establishing the Reform and Growth Facility for the Western Balkans, based on the Growth Plan officially presented by the European Commission in November 2023. The Regulation entered into force on 24 May, starting the three-month deadline for submitting the Reform Agendas – lists of measures that each country will have to implement in order to receive funds from the Facility.
The European Union’s Regulation foresees a total of 2 billion euros in grants and 4 billion euros in loans from 2024 to 2027. These funds will be distributed to Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia in proportion to their population and the size of their economy.
According to the Regulation, following the submission of the Reform Agenda, a beneficiary may request the release of a pre-financing of up to 7% of the total amount foreseen under the Facility. After that, the funds will be released twice a year, if the payment conditions are met. Experts, however, are not sure how strictly the fulfilment of these conditions will be evaluated.
European Commission confirms for our portal that both the requests for the release of the pre-financing as well as requests for the release of the first instalments are expected after the adoption of the Reform Agendas, still in 2024.
What are all the conditions for the release of funds?
As stated in the Regulation of the European Union, twice per year the beneficiaries will submit a request for the release of funds in respect of fulfilled payment conditions.
Before any funds are released, the European Commission will assess whether a beneficiary meets two general prerequisites. The first is that beneficiaries “uphold and respect effective democratic mechanisms, including a multi-party parliamentary system, free and fair elections, pluralistic media, an independent judiciary and the rule of law, and guarantee respect for all human rights obligations, including the rights of persons belonging to minorities”.
For Serbia and Kosovo, there is an additional precondition, that they “engage constructively with measurable progress and tangible results in the normalisation of their relations”.
In addition, the general preconditions for the disbursement of funds are macro-financial stability, sound public financial management, transparency and oversight of the budget.
When these prerequisites are met, the Commission will assess whether a beneficiary has fulfilled the specific measures from the Reform Agenda, for which the deadlines will be set and which will be the conditions for the release of the funds twice a year.
If the European Commission finds that some conditions are not met, it will withhold the funds corresponding to such conditions. If the receiving country does not meet these conditions after a certain time, the Commission shall reduce the amount of funds corresponding to these conditions.
What should the Reform Agenda contain?
The Reform Agendas will contain measures that meet the objectives of the Regulation, namely alignment with European Union standards in the context of enlargement, regional economic integration and cooperation in the Western Balkans, gradual integration into the European Union Single Market and convergence of the economies.
According to the Regulation, the Reform Agendas must be drawn up in consultation with social partners and civil society organizations.
Most of the governments in the region have not published their draft Reform Agendas. The Government of Montenegro, meanwhile, published its draft at the end of June. This Reform Agenda contains 32 measures divided into four areas.
The areas covered by the draft Reform Agenda of Montenegro are the business environment and development of the private sector, digital and green transition, development of the human capital and the rule of law.
In the area of the rule of law, the Montenegrin Reform Agenda includes, among other things, the implementation of ODIHR’s recommendations for the improvement of electoral framework, as well as the effective implementation of anti-corruption legislation.
Will these conditions be strictly applied?
Already during the preparation of the Facility, there were concerns that the conditions would not be applied consistently. In a piece published on our portal in March, experts for the Western Balkans pointed to the opinion of the European Court of Auditors, according to which there is a risk that the conditions will not be ambitious enough nor will it be possible to measure them precisely.
Adnan Ćerimagić, senior analyst of the European Stability Initative from Berlin, says for our portal that it is difficult to assess how flexible the Commission will be in interpreting the conditions, because the process of drafting reforms is insufficiently transparent.
“Since Commission tried to sell the entire exercise as a major silver bullet for boosting reforms in the region, we simply have to sit, wait, and hope they have not oversold it”, Ćerimagić says.