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REPORT (COM(2023)0692 – C90408/2023 – 2023/0397(COD))

On the proposal for a regulation of the European Parliament and of the Council on establishing the Reform and Growth Facility for the Western Balkans

A-9-2024-0085

Committee on Foreign Affairs Committee on Budgets · Rapporteur: Tonino Picula, Karlo Ressler

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Parliament's amended version of the Commission proposal sets up the Reform and Growth Facility for the Western Balkans, a financing instrument for 2024-2027. It provides up to EUR 6 billion: EUR 2 billion in non-repayable support and up to EUR 4 billion in loans, with at least half channelled through the Western Balkans Investment Framework. Support is conditional on preconditions such as democratic mechanisms, rule of law, media freedom, alignment with the common foreign and security policy including restrictive measures against Russia, and normalisation of relations between Serbia and Kosovo. Each Beneficiary must submit a Reform Agenda with measurable milestones and targets, and funds are released twice a year against fulfilment of payment conditions. The text sets rules on protecting the Union's financial interests, including an independent Audit Board, reporting of irregularities, and an annual report to Parliament.

Committee position. The Committee on Foreign Affairs and the Committee on Budgets adopt Parliament's position at first reading, amending the Commission proposal to set up the Reform and Growth Facility for the Western Balkans with conditions, governance and financial rules.

Key points

  1. The Facility complements the Instrument for Pre-Accession assistance and supports reforms and investments aligned with Union values in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.
  2. Its general objectives are to accelerate regional economic integration, socio-economic convergence and alignment with Union laws and values with a view to Union membership.
  3. Specific objectives include sustainable and climate-neutral economies, the Common Regional Market, integration with the single market, connectivity, green and digital transition, education, and strengthening the fundamentals of enlargement.
  4. Preconditions for support are effective democratic mechanisms, free media, rule of law, human rights, alignment with the common foreign and security policy including restrictive measures against Russia, and normalisation of relations between Serbia and Kosovo.
  5. The Commission monitors preconditions and may withhold funds if they are not met, after consulting Parliament and the Council.
  6. The Facility provides up to EUR 6 billion for 2024-2027: EUR 2 billion in non-repayable support and up to EUR 4 billion in loans, with at least 50% channelled through the Western Balkans Investment Framework.
  7. Loans have a maximum duration of 40 years, repayment of principal does not start before 2034, and provisioning is constituted at 9%.
  8. Each Beneficiary submits a Reform Agenda with reforms, investments, milestones, targets and an indicative timetable; payment conditions must be met by 31 August 2027.
  9. Funds are released twice a year against fulfilled payment conditions, subject to general conditions of macro-financial stability, sound public financial management, and budget transparency and oversight.
  10. Each Beneficiary may receive pre-financing of up to 7% of the total amount foreseen under the Facility.
  11. An independent Audit Board is set up to provide information on possible mismanagement and to obtain an annual statement of assurance through an independent external auditor.
  12. The Commission reports annually to Parliament and the Council, and a Facility scoreboard showing progress and final recipients is to be operational by December 2024.

Who is affected

  • Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, which must meet preconditions and submit Reform Agendas to receive support.
  • The Commission, which assesses Reform Agendas, monitors preconditions, releases funds and reports to Parliament and the Council.
  • The European Parliament and the Council, which receive documents and are consulted on assessments and decisions.
  • Entities and persons receiving Union funds, who must report suspected fraud and ensure visibility of Union funding.

Figures and deadlines

  • EUR 6 billion: overall maximum Union support for 2024-2027.
  • EUR 2 billion: financial envelope for 1 January 2024 to 31 December 2027.
  • EUR 4 billion: maximum amount of loans for 1 January 2024 to 31 December 2027.
  • At least 50% of the overall amount to be channelled through the Western Balkans Investment Framework.
  • Up to 7% of the total amount foreseen under the Facility available as pre-financing.
  • 9%: provisioning rate for loans.
  • 40 years: maximum duration of loans.
  • 31 August 2027: deadline for payment conditions to be implemented.

Legal basis: Article 294(2) and Articles 212 and 322(1) of the Treaty on the Functioning of the European Union.