Apostolova submitted 2016 Kosovo Report to Veseli and Mustafa

Check against delivery

Ladies and Gentlemen,

A warm welcome to everybody for this year's long awaited launch of the Enlargement Package and 2016 Kosovo Report which was adopted today.

This year marks a new era in Kosovo's relations with the EU with the entry into force of the Stabilisation and Association Agreement. As the first contractual relationship between the EU and Kosovo it represents a huge milestone in our relations and Kosovo's path towards a European future. It entails mutual rights and obligations and covers a wide variety of sectors. The SAA focuses on respect for key democratic principles and core elements that are at the heart of the EU's single market.

We expect it now to be translated into reality through economic and rule of law reforms, with concrete benefits for citizens.

Kosovo should now focus on implementation of the SAA, guided by the European Reform Agenda which Commissioner Hahn will launch together with Prime Minister Mustafa on Friday.

There is no denying, it has been a challenging year for Kosovo, with much of the year marred by political polarisation between the government and opposition and increased tensions between coalition partners. These domestic challenges have hampered EU-related reforms in some areas.

All political actors should work towards finding a way to end the protracted stalemate, return to political debate in the parliament and focus on real reform vital for citizens.

Kosovo and Serbia have made some progress in normalisation of their relations, although it remains limited. It is important that both Pristina and Belgrade remain committed to the process, including the implementation of agreements.

Despite the challenging year, some positive reforms and efforts have been made and that I want to highlight those.

I want to congratulate Kosovo's rule of law institutions on the hard work in delivering wide-ranging reforms, allowing the European Commission to propose visa liberalisation for Kosovo. It is now up to the Assembly and Kosovo's rule of law institutions to fulfil the remaining two requirements and then for the European parliament and EU Council to decide.

There are already first visible steps aiming at a track record of high-level corruption and organised crime investigations. This is due to the Good Progress over the last year noted on the Rule of Law areas mad by law enforcement and judicial institutions. Especially on the Fight against Corruption the report commends Kosovo for the establishment of the multi-disciplinary teams under the Special Prosecution Office and the introduction of a tracking mechanism for high-profile corruption and organised crime cases. This comes as a result of EU conditionality under the Visa roadmap.

However, corruption remains prevalent in Kosovo and stronger political will to tackle this remains necessary.

On public administration reform the report notes good progress made with the adoption of a comprehensive public financial management system and the adoption of the law on general administrative procedures. That said, more efforts – including strong continued high-level political commitment – is needed to overcome the fragmentation, limited accountability and overlapping responsibilities of agencies and bodies – which remain at risk of politicisation. We are looking forward to further assisting Kosovo in this regard in the upcoming period when substantial and important reforms are foreseen on the civil service, the organisation of public administration and public salaries.

Appointments to independent institutions and regulatory bodies remain vulnerable to undue interference and important reforms and commitment remains necessary to ensure they are done transparently and based on merit. This is also a message that you will hear from Commissioner Hahn on Friday.

Some progress was made in the area of public procurement, especially as regard the further alignment of legislation, good first steps towards electronic procurement and the expansion of centralised procurement as well as the elimination of preferential treatment for domestic bidders.

Unfortunately, we see little positive change on the economy and competitiveness. The fiscal situation has improved but concerns remain about the fiscally unsustainable decision on war veteran's benefits. Generally, there is still little progress. Some progress was made on supporting export-oriented businesses, access to finance, improved contract enforcement.

But, overall the persistent trade deficit reflects a weak production base and reliance on remittances. Kosovo remains broadly uncompetitive internationally, and unfortunately no progress can be noted on improving the quality of education, which is a key driver of long-term competitiveness and growth.

Here the situation has not changed substantially from previous years. Structural economic reforms remain necessary to address the key economic challenges of high unemployment, mismatch between education and the labour market, in order to combat informality.

These are some of the key issues from this year's report that I wanted to highlight. It is clear that Kosovo remains at an early stage of preparation for taking on obligations of a membership. The Kosovo report highlights key achievements and challenges that urgently need to be tackled. It is clear that much work is needed to overcome significant shortcomings if Kosovo is to make progress on its European path.

Ladies and Gentlemen,

With this year's Enlargement package and country reports the European Commission reconfirms its continued commitment to the principles of "fundamentals first" as essential to enlargement.

These are: rule of law, including security, fundamental rights, democratic institutions and public administration reform, as well as economic development and competitiveness. A strong role for civil society and stakeholders more broadly remains crucial in all reform efforts.

Building on last year, the 2016 Enlargement strategy and the country reports continue with and expand the strengthened reporting methodology. It offers greater comparability between the reports, allowing for an overall assessment where Enlargement countries stand on preparation for the challenges of EU membership vis a vis their neighbours.

Finally,

Coming back to the SAA. The focus should now be on building a track record in implementing it. The EU is ready to assist this politically and financially, and we are looking forward to working in particular towards the European Reform Agenda with Kosovo. The Agenda is based on three broad pillars:

Rule of Law and Good Governance

Competitiveness and Investment, and

Employment and Education

Its priorities, and the actions the Government commits itself to undertake to meet them, are aimed at addressing key ''stumbling blocks'' for economic growth. As such, this Agenda will be an important SAA implementation tool aimed at fully seizing the opportunities of the SAA as the main vehicle for advancing Kosovo's EU agenda.

Its aim is to focus attention over the next 12 to 18 months on key reforms that will help to kick start implementation.

This is where the focus should be now and it will be a vehicle for taking forward work on the challenges and necessary reforms.

Thank You.