As of May 2014 the European Union will give recommendations to Western Balkans countries, including Serbia, on how to improve their economies within a new approach on economic governance, launched in February.
Head of the European Integration Section of EU’s Delegation to Serbia Freek Janmaat, who briefed reporters in Belgrade on the new approach, said it was too early to say what would be recommendations to Serbia, but that considering the current situation, they would likely relate to high unemployement rate, fiscal situation with forecast budget deficit of 7.1 percent of the GDP and s rising public debt.
The recommendations will be part of the new approach towards the Western Balkans countries that the European Union has introduced – Economic Governance aimed at helping the candidate member states and those who would potentially be that to become a functioning market economy and to build up capacity to face the competitive pressure on the EU’s internal market. The approach is also expected to make Western Balkans more attractive for domestic and foreign investors, which in turn would lead to economic growth and benefits for citizens.
“We will have economic governance as one of key priorities for the next six years together with the rule of law and this is just one more way to integrate our policies vis-a-vis enlargement countries with our support that we are giving in terms of technical assistance,” Janmaat said.
To help the countries becoming functioning market economies “we have decided to associate the enlargement countries much more with processes that are going on in Brussels between members states and the Commission when it comes to economic and fiscal policy making, so that they get used to what it’s like when they are a member of the European Union,” Janmaat said.
From now on the countries will be required to make three different programs, he said.
First will be an annual National Economic Reform Program that would focus on external sustainability and structural economic reform such is labour, pensions, business environment or privatisation.
The program will be reviewed each May by the Council of Economic and Finance Ministers who will make specific non-binding recommendations for each country. These will be “very concrete recommendations based on best practises in members states,” Janmaat said, adding that “the recommendations will be feasible in one or two years horizon and we would like to see progress” in their implementation.
Candidate member states and those who will become so will also be asked to draw bi-annual programs on competitiveness and growth that would cover sectoral reforms, meaning transport, energy, education, environment, competition, internal market etc. The European Commission will assess the programs in its annual progress report and make recommendations.
“We will monitor implementation of these recommendations during Stabilisation and Association Agreement (SAA) subcommittees,” Janmaat said. This program will be first time considered in 2015, he said.
Finally, Western Balkans states that want to join the EU will be asked to draw an Action Plan on Public Finance Management supporting issues such as budgeting, treasury and tax collection. This plan will be a precondition for IPA budget support that will be given in addition to technical assistance program.
“One important aspect of this overall new approach on economic governance is that we will work very closely together with the international financial institutions,” Janmaat said.
European Commission will work closely with IMF, especially on technical assistance to support the Country Specific Recommendations’ implementation. Close coordination is also planned with other important international financial institutions for competitiveness and growth programs: World Bank, EIB and EBRD.
“We have decided to move to this new approach of economic governance in order to strengthen coordination between the governments of this region with the European Union, to be able to prepare them already for what is going to happen after accession,” Janmaat said.
