European Union Office in Kosovo 
European Union Special Representative in Kosovo

The Western Balkans and Turkey commit to key socio-economic reforms

17/05/2019 - 15:53
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EU ministers of finance met in Brussels today with their counterparts from the Western Balkans and Turkey as part of the region’s annual economic and financial dialogue with the EU.  The ministers agreed Joint Conclusions outlining the key economic challenges for the Western Balkans and Turkey, as well as targeted policy guidance addressing the most acute socio-economic reform needs the region has.

"I am very pleased to see the commitment of our partners in the Western Balkans and Turkey to implement important and sometimes difficult structural reforms. Without a functioning rule of law, deep public administration reform and a strengthened economic governance, sustainable growth will not happen. This is the only way to ensure more prosperous and inclusive economies", said Johannes Hahn, Commissioner for European Neighbourhood Policy and Enlargement Negotiations.

The dialogue is based on Economic Reform Programmes, prepared by each partner government and assessed by the European Commission and the European Central Bank. The exercise supports the strengthening of economic governance in the countries concerned -  key to macroeconomic stability and the capacity to implement structural reforms. The whole process mirrors the economic policy coordination between EU member states that takes place during the European Semester.

Jointly agreed country-specific policy guidance

The policy recommendations invite Turkey to promote domestic savings, improve fiscal and monetary policy to keep inflation down. In the area of structural reforms, the authorities committed to strengthen the rule of law and improve efforts to reduce the number of companies remaining under trusteeship. They also committed to reduce government influence over consumer prices. The authorities also agreed to work on reducing the informal sector, improving pre-school and school enrolment and encouraging female labour participation.

The reform measures agreed with Montenegro include containing public debt and public spending on wages, and improving budgetary planning. Montenegro also committed to reduce non-performing loans further, improve the regulatory environment for businesses and fight informality. The authorities committed to strengthen employment activation measures and their coordination with social services. The government also agreed to improve monitoring of practical learning outcomes in vocational and higher education.

Serbia agreed to focus on measures to preserve fiscal stability and increase public investment in infrastructure. Serbia also agreed to increase the credibility of its fiscal rules and to promote the use of the local currency. The authorities committed to finalise the new industrial strategy and to ensure timely consultation of businesses and social partners on all new legislation drafts. There was an agreement to finalise the unbundling of public energy companies and to adjust electricity tariffs to reflect actual costs. The authorities agreed to increase funding for active labour market policies, to encourage the formalisation of jobs and to reduce the non-wage labour cost of low-wage jobs.

North Macedonia agreed to more fiscal consolidation measures and to increase public finance transparency. The authorities agreed to work on resolving non-performing loans and to encourage the use of the local currency. They committed to improve the functioning of business inspectorates, to create a register of para-fiscal charges and to strengthen the capacity of civil courts to handle commercial disputes. The government also agreed to encourage the formalisation of the economy. Finally, the government agreed to implement the youth guarantee in the whole territory, modernise the education system and adopt the law on social protection.

The policy recommendations agreed for Albania focus on pursuing fiscal consolidation, improving public finance transparency and public investment planning. Albania also agreed to work on resolving non-performing loans. The authorities committed to implementing the justice reform. They also agreed to improve support services for SMEs and encourage investments in tourism. Albania also agreed to ensure effective liberalisation of the energy market and to improve energy efficiency and increase the use of renewable energy. Finally, the authorities committed to improve active labour market policies and implement vocational education reform, to improve capacities for assessment of social care needs and to increase spending on early childhood education and care.

The policy recommendations for Bosnia and Herzegovina focus on improving fiscal planning, enhancing public sector transparency and on improving country-wide statistics. The authorities agreed to increase public investment and improve targeting of social benefits. The authorities committed to the resolution of non-performing loans. There was agreement to advance the restructuring or privatisation of state owned enterprises. The authorities agreed to simplify and harmonise business registration procedures. Finally, the country agreed to review the income tax and social contributions to encourage employment and review education enrolment policies to improve links with labour market needs.

Kosovo agreed to complete the war veteran certification and reclassification processes. The authorities agreed to improve transparency of state owned enterprises and increase public investments. The authorities committed to improving access to finance. Kosovo agreed to adopt further energy efficiency incentives and a plan to cope with expected increases in energy costs, and to support renewable energy. Kosovo agreed to encourage the formalisation of the economy. Finally, Kosovo agreed to increase both active labour market measures for women and the provision of vocational education for professions in demand, and to increase investment in education, especially in early childhood education.

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