European Union Office in Kosovo
European Union Special Representative in Kosovo

Danielsson and Haradinaj launched Economic Reform Programme

04/10/2017 - 17:04
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Opening remarks for the launch of the Economic Reform Programme by Christian Danielsson, European Commission Director General for Neighbourhood and Enlargement Negotiations

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Prime Minister, Ministers, ladies and gentlemen,

I am happy to be here today to 'formally' launch the Economic Reform Programme process with you.

Today's launch takes place in a more positive context than only one year ago:

Firstly, Europe has emerged from the financial crisis with strong economic recovery: growth in the EU now stands above 2% and unemployment is at a nine year low. The economic outlook is also looking up for the Western Balkans.

Secondly, in his State of the Union speech President Junker just presented his vision for how the EU could evolve. He set out a very clear and credible European perspective for the whole of the Western Balkans.

This commitment cannot be underestimated. But this is a two-way street. The Western Balkan countries must undertake the necessary reforms in the rule of law and the economy. It is for this reason that today’s discussions and the Economic Reform Programme are so relevant.

The challenges that the economy of Kosovo faces are substantial and require bold action without further delay:

  • Unemployment is still too high, particularly for young people and women;
  • There is an over-reliance on the informal economy;
  • And, there are serious challenges in reforming the education system and improving the overall climate for investment – to name but a few.

Your citizens clearly expect you to implement the reforms necessary to stimulate Kosovo's economic development and to create jobs.

Today’s discussions are about helping you to address these challenges. This is where the Economic Reform Programme comes in.

The purpose of the ERP is to help Kosovo in designing more relevant, credible, affordable economic and social policies, thereby improving the lives of the population and their European aspirations.

The ERP, importantly, follows the same approach as in EU Member States and it is at the heart of the EU enlargement strategy.

As with Member States, Kosovo is asked every year to submit its plans for budget, macroeconomic and structural reforms. Based on the Commission assessment the Council provides country-specific recommendations for the next 12-18 months.

This now is the fourth ERP exercise for Kosovo. The previous three cycles have allowed experience to be gained both in the teams that are coordinating the exercise (in your office, Prime Minister, and in the Ministry of Finance) and also in the line ministries responsible for the relevant measures.

The credibility of the national economic reform programmes does not depend on the good design of the document, but on the successful implementation of the measures contained in it.

The recommendations arising from the previous exercise, and endorsed by EU Member States, were clear. Kosovo was asked and agreed to move on a number of key priorities, notably to:

  • Take action on energy efficiency and deregulation of the energy sector
  • Reduce the informal economy
  • Adopt an action plan on youth employment
  • Reform higher and vocational education to align them with the real needs of the labour market

The picture so far for is mixed and Kosovo has no time to lose. It will have to submit its new ERP at the end of January 2018 and show that it has delivered on the implementation of reforms that I have just outlined. The focus of the Commission's assessment this time must be much more on implementation.

Looking further ahead, Kosovo will, in time, be expected to meet the requirements of a functioning market economy capable of facing the competitive pressure of the EU single market.

Kosovo does not yet meet these criteria. Markets need to be further liberalised and accompanied by measures that encourage and facilitate economic growth, such as rule of law for a better investment climate, education, digitalisation, creativity and entrepreneurial spirit.

The government programme puts emphasis on many of these points, but the challenge as always will be in their delivery.

The government has a huge responsibility in this respect, and one which will require a collective effort of all stakeholders.

It is encouraging to see that you are involving representatives of civil society in the ERP preparation. It will be important that this be a genuine consultation process in particular with the private sector and social partners.

Allow me finally to comment on the regional dimension of many of these priorities. I am fully aware of some of the difficulties that Kosovo faces at regional level. Exporters in Kosovo experience longer delays and much higher costs than their counterparts in other countries in the region. Many of these difficulties have to do with internal obstacles in the regulatory and business environment. But others have to do with external ones, like non-tariff barriers, visa and mobility limitations.

This is why the recent endorsement at the summit in Trieste of a Multiannual Action Plan for a regional economic area by all Prime Ministers in the Western Balkans is so important. Kosovo should use this opportunity to address some of these obstacles with a proactive role at regional level. Kosovo's upcoming chairmanship of CEFTA will provide a good occasion to do so.

Prime Minister, I very much look forward to your new Government providing its full support for delivering on these priorities. And the EU in turn stands ready to support Kosovo in this endeavour.

Thank you very much.

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