On 19 May 2020, the Western Balkans and Turkey came together via video-conference for their annual multilateral economic and financial dialogue with the EU. Ministers of Finance of the seven partners met with their EU counterparts and agreed on Joint Conclusions outlining the key economic challenges faced by the Western Balkans and Turkey, as well as targeted policy guidance focusing on immediate fiscal, economic and social policy response to mitigate the impact of the pandemic as well as on the transition from the short-term to more structural measures to foster the economic recovery.
Parties briefly reviewed the main challenges faced by Western Balkans and Turkey in the current situation. They also stressed the need to ensure a high level of implementation of the jointly agreed policy guidance, which will be essential to cushion the impact of the crisis and lay the grounds for a strong and sustainable recovery thereafter.
The dialogue is based on Economic Reform Programmes, prepared by each enlargement partner and assessed by the European Commission and the European Central Bank. The whole process mimics part of the economic policy coordination between EU member states that takes place during the European Semester.
In light of the assessment of the ERP for Albania, the country is invited to:
Keep the increase of fiscal deficit and public debt temporary while accommodating the fiscal costs of post-earthquake reconstruction and addressing the pandemic impact in a transparent and cost-effective manner. Albania also agreed to set time-limits for tax-relief measures, while paying all VAT refunds in time as well as to adopt the medium-term revenue strategy, with a particular focus on reviewing tax expenditures. Prevent any increase of the stock of all the arrears of public expenditure; increase institutional capacities for monitoring and containing fiscal risks stemming from public-private partnerships, concessions and state-owned enterprises. Closely monitor financial stability challenges arising as a result of the coronavirus pandemic and take appropriate action if needed. Resolve remaining legal impediments to NPL resolution.
With a view to mitigating the economic consequences of Covid-19 pandemic and stimulating economic recovery, Albania is invited to establish an effective and transparent mechanism to support the businesses affected by the crisis, in particular small and medium-sized enterprises and self-employed; extend social protection coverage Take short-term measures to preserve employment including through short-time work schemes, and once the Covid-19 pandemic subsides, ensure an increased provision of active labour market policies, especially training, upskilling and reskilling. Increase access to healthcare and public health insurance coverage while reducing the share of out-of-pocket payments on total health expenditure.
Considering the big investments to be made for the post-earthquake reconstruction, speed up the adoption the secondary legislation for the laws on energy efficiency and energy performance of buildings and provide incentives for energy efficiency measures in the private sector and households.
The link to the Joint Conclusions of the Dialogue with the Western Balkans and Turkey can be found here: https://www.consilium.europa.eu/media/44029/st08101-en20.pdf
Note: The Economic Reform Programme exercise prepares candidate countries and potential candidates for their eventual participation in the European Semester, but even more importantly, supports the strengthening of economic governance. Strong economic governance is the foundation for macroeconomic stability and the capacity to implement structural reforms and ultimately improve the lives of citizens through enhanced growth and job creation. Strengthened economic governance will also help the Western Balkans and Turkey mitigate the negative impact of the pandemic, foster the economic recovery and build up economies’ resilience as well as gradually meet the economic accession criteria of having a functioning and competitive market economy.