ECONOMIC AND EUROPEAN PERSPECTIVES OF WESTERN BALKAN COUNTRIES, Slavica Penev Tirana, Albanian Parliament 13 March, 2013
Mar 24, 2016
ECONOMIC AND EUROPEAN PERSPECTIVES OF WESTERN BALKAN COUNTRIES,
Slavica Penev
Tirana, Albanian Parliament 13 March, 2013
ECONOMIC TRENDS AND PROSPECTS OF WESTERN BALKAN COUNTRIES
Relatively small and underdeveloped region◦Less than 20 million people◦GDP is 68.9 billion EUR (7% of EU10, 0.5% of EU27) ◦GDP in PPP p.c. 7850 EUR (49% of EU10, 31% of
EU27 average) Size, population and level of economic
development vary among the countries of the region
_________
Western Balkans as a region1
1 Western Balkans covers: Albania, Bosnia and Herzegovina, Macedonia, Montenegro, Serbia, and Kosovo*
Population (million)
GDP (EUR bn)
GDP in EUR at PPP, per capita, EU 27=100
GDP in EUR at PPP, per capita
Albania 2.8 9.2 27 6800Bosnia and Herzeg. 3.8 13.3 27 6800
Macedonia 2.1 7.5 38 9500Montenegro 0.6 3.3 42 10500Serbia 7.2 30.9 35 8700Kosovo* 1.7 4.7 n/a 4810Western Balkans 18.3 68.9 34 7850
EU-10 98.9 972 63 15900EU-27 502.9 12630 100 25100
Table 1.1: Basic indicators, Western Balkan countries, 2011
-6
-4
-2
0
2
4
6
8
10
12
Albania BiH Macedonia Montenegro Serbia Kosovo* Western Balkans
EU-10
2001-2003 2004-2006 2007 2008 2009 2010 2011 2012 proj1
Strong economic growth in the pre crisis period, followed by sharp decline in 2009 and slow recovery after 2009
Figure 1.1: Real GDP growth (in %)
The economic crisis resulted in the reduction of imports and current account deficits
Figure 1.2: Current account deficit, 2007-2011 (% of GDP)
0
20
40
60
80
100
120
Albania BiH Macedonia Montenegro Serbia Kosovo* Western Balkans
2007
2008
2009
2010
2011
• External debt recorded permanent growth in the pre-crisis period.
• In spite of the reduced current account deficits in 2009 and 2010, foreign debt recorded further growth.
Figure 1.3: External debt, 2007-2001 (% of GDP)
• In 2007, the region had budget surplus of 0.3%. • In 2009, the regional budget deficit averaged 4.9
due to extensive borrowing from the IMF and other IFIs
• It remained below the average for CEEB (5.4%)
Figure 1.4: Fiscal balance, 2007-2011 (% of GDP)
• The general government debt increased from 37% of GDP in 2009 to 44% at the end of 2011
• Debt levels remain high compared to pre-crisis levels of around 30%
Figure 1.5: General government debt, 2007-2011 (% of GDP)
• FDI inflows strongly affected by the crisis. • In the pre-crisis period, FDI 5.688 mil. EUR in 2007
(9.3% of GDP). • in 2008 the region experienced a decrease in FDI
inflows, mostly due to the impact of the global economic crisis.
Figure 1.6: Inflows of FDI in Western Balkan countries, 2007-2011 (% of GDP)
STRENGTHS WEAKNESSES GDP growth remained positive during the crisis High exposure to the Eurozone crisis Contracting current account deficit High and growing general government debt Relatively low external debt (the lowest in the region)
Contracting fiscal deficit
Strengths and weaknesses – AlbaniaAchieved level of macroeconomic stability
STRENGTHS WEAKNESSES Contracting fiscal deficit Current account deficit Contracting current account deficit High and growing general government debt Slow recovery of GDP High exposure to the Eurozone crisis High external debt
Strengths and weaknesses – Western Balkan countriesAchieved level of macroeconomic stability
THE BUSINESS ENVIRONMENT AND COMPETITIVENESS OF THE WESTERN
BALKAN COUNTRIES
World Bank survey “Doing Business” is a comprehensive analysis of regulations and obstacles to starting, operating, and closing a business, compares the ease of doing business among more than 180 countries around the world
Figure 2.1: World Bank Doing Business Rankings: 2009-2013
Albania
BiH
Macedonia
Montenegro
Serbia
Kosovo
Western Balkans
EU-10
EASE OF DOING BUSINESS RANK 85 126 23 51 86 98 78 47
Starting a Business 62 162 5 58 42 126 76 77
Dealing with construction permits 185 163 65 176 179 144 152 85
Registering Property 121 93 50 117 41 76 83 41
Getting electricity 154 158 101 69 76 116 112 103
Getting credit 23 70 23 4 40 23 31 39
Protecting Investors 17 100 19 32 82 100 58 72
Paying taxes 160 128 24 81 149 44 98 90
Trading Across Borders 79 103 76 42 94 124 86 56
Enforcing Contracts 85 120 59 135 103 138 107 49
Closing business 66 83 30 44 103 87 69 56Values better than the Western Balkans average are in red
Table 2.1: World Bank Doing Business Rankings per dimension, 2012
Country rank Country CPI score95 Albania 3.1
91 Bosnia and Herzegovina 3.2
69 Macedonia 3.966 Montenegro 4.086 Serbia 3.3
112 Kosovo* 2.987 Western Balkans 3.455 EU-10 4.7
Transparency International’s Corruption Perception Index measures the perceived levels of public sector corruption in more than 170 countries. 1 Values better than the Western Balkans average are in red
Table 2.2: Transparency International’s Corruption Perception Index, 2011
Regulatory quality Rule of law Control of
corruptionAlbania 0.23 -0.44 -0.43
Bosnia and Herzegovina -0.1 -0.36 -0.32
Macedonia 0.28 -0.30 -0.06
Montenegro -0.06 -0.02 -0.33
Serbia -0.2 -0.39 -0.21
Kosovo* -0.04 -0.64 -0.64
Western Balkans 0.02 -0.36 -0.33
EU-10 0.97 0.61 0.25
WGI permit meaningful cross-country comparisons in governance as well as monitoring progress over time 1 Values better than the Western Balkans average are in red
Table 2.3: World Bank Worldwide Governance Indicators
0
20
40
60
80
100
120
Albania BiH Macedonia Montenegro Serbia WB5 Average EU10
89 8880
72
95
82
54
2008–2009 2009–2010 2010–2011 2011-2012 2012-2013
Figure 2.2: Global Competitiveness Index, overall ranking,2008/2009-2012/2013
Albania
Bosnia and Herzegovina
Macedonia
Montenegro
Serbia
Western Balkans
EU-10
Global Competitiveness Index - overall rankings 89 88 80 72 95 85 54
1. Basic requirements 87 81 71 74 95 82 552. Efficiency enhancers 92 97 84 74 88 87 473. Innovation and
sophistication factors 113 99 110 69 124 103 61The 2012/13 rank is out of 144 countries. The lower the rank number, the better1 Values better than the Western Balkans average are in red
Table 2.5: WEF Global Competitiveness pillars of competitiveness(rankings), 2012-2013
Figure 2.3: The most problematic factors for doing business, 2012/13
Figure 2.4: Top three most problematic factors for doing business by country and region, WEF GCR, 2012/13
STRENGTHS WEAKNESSES Macroeconomic stability Level of competitiveness Reduced business barriers in the area of protecting investors, starting a business, and closing a business
Capability for innovation
Quality of regulations above the regional average
Business barriers in the area of construction permits and registering property
Corruption Market size Rule of law
Strengths and weaknesses – AlbaniaBusiness environment and competitiveness
STRENGTHS WEAKNESSES Reduced business barriers in the area of protecting investors and closing a business
Level of competitiveness
Quality of regulations Capability for innovation Macroeconomic stability Business barriers in the area of construction
permits, enforcing contracts and paying taxes Corruption Market size Rule of law
Strengths and weaknesses – Western Balkan countriesBusiness environment and competitiveness
REGULATORY REFORM – BETTER AND SMART REGULATION AGENDA
Albania
BiH Macedonia
Montenegro
Serbia
Kosovo*
1.1. Systemic approach to a better regulation agenda
Regulatory reform strategy √ √ (RS) √ √ √
Segments of the regulatory reform strategy as a part of other country strategic documents √ (BiH state & FBiH) √
1.2. Main motive for the regulatory reform?
Need to boost competitiveness and growth √ √ √ √ √ √
International commitment (e.g. EU integration commitment) √ √ √ √ √ √
Government reform agenda √ √ √ √ √ √
1.3. Leadership of the regulatory reform implementation
Government √ √ (BiH state & FBiH) √ √ √ √
Businesses √ (RS) √ √
Citizens, national opinion √
NGOs √
Table 3.1: Systemic approach to a Better regulation agenda
Country Central regulatory oversight authorityAlbania Regulatory reform task force Bosnia & Herzegovina
- BiH State No oversight authority- BiH Federation No oversight authority- Republic of Srpska Council for regulatory reform
Macedonia Central body for better regulation and capacity building within the Ministry of Information Society and Administration (MIOA)1
Montenegro Council for Regulatory Reform and Improvement of Business Environment
Serbia Office for RIA and Regulatory ReformKosovo* Council on Economic Development
Table 3.2: Institutional framework for regulatory reform in the Western Balkan countries
Table 3.3: Better regulation agenda - use of Regulatory Impact Analysis (RIA) in the government
Alb
ania
Bos
nia
and
H
erze
govi
na
Mac
edon
ia
Mon
tene
gro
Ser
bia
Kos
ovo*
1. Regulatory Impact Analysis (RIA)
Formally introduced √ √ √
Initiated √ √ (BiH state, FBiH and RS)
None √ 2. Regulatory Impact Analysis
Government-wide √1 √ √ For specific sectors or policy areas RIA pilots √ √ (BiH state & RS)
Table 3.3: Better regulation agenda – use of Regulatory Impact Analysis (RIA) in the government
Alb
ania
BiH
Mac
edon
ia
Mon
tene
gro
Ser
bia
Kos
ovo*
1. Consultation with stakeholders in the government 1.1. Is consultation mandatory during the period of drafting laws?
For all laws √ √1 √
For complex and systematic laws √ √ √
1.2. Is public consultation with parties affected by regulations a part of developing draft laws?
Always √ √ √ √
In most of the cases √ √ In some cases
1.3. What forms of public consultation are routinely used: Broad circulation of proposals for comment (e.g. through Internet) √ √ √ √ √ √
Public meetings, roundtables, focus groups √ √ √ √ √ √
Advisors or experts √ √ √ √ √ √
2. Forward planning of regulatory activities 2.1. Plan of legislative activities
Fully implemented/publicly available plan √ √ √ √ √
Partially implemented/not publicly available plan √ 2.2. Is there monitoring of the implementation of the legislative activities plan √ √ √ √ √ √
Table 3.4: Better regulation agenda – use of regulatory quality tools related to the transparency in the legislation process
Figure 3.5: Timing of regulatory reform in Albania
INSTITUTIONAL FRAMEWORK
Regulatory reform Task Force
Inter-ministerial Coordination Body
Technical working groups, in 7 policy areas
2005
REGULATORY REFORM CONTINUATION
Two-pronged Regulatory reform - Reducing the existing barriers to businesses (Inspections) -RIA
2009
RIA IMPLEMENTATION
-RIA pilots -RIA trainings -RIA guidelines - RIA strategy: (December 2010)
2010
REGULATORY REFORM
2005
Two-pronged Regulatory reform - Reducing the existing barriers to businesses (business registration; l icensing) -RIA
STRENGTHS WEAKNESSES Strategic approach to regulatory reform Slow implementation of regulatory strategy Regulatory reform strategy as a separate strategic document
Regulatory reform office abolished
Established Institutional framework – Regulatory reform Task Force
Public consultation obligatory only for complex and systemic laws
Successfully implemented Program of reduction of administrative barriers to businesses - licensing system and business registration.
RIA implementation still in its initial phase
Publicly available plan of legislative activities Insufficient cooperation between the Government and the Parliament in the implementation of regulatory reform.
Strengths and weaknesses – AlbaniaRegulatory Reform – Better and Smart Regulation Agenda
STRENGTHS WEAKNESSES Mostly strategic approach to regulatory reform Insufficient cooperation between the
Government and the Parliament in the implementation of regulatory reform.
Established Institutional framework Insufficient interface between sub-national and national level of government in the regulatory reform process.
Implemented Program of reduction of administrative barriers to businesses
Uniqual progress in RIA introduction and implementation
Publicly available plan of legislative activities Lack of capacities for RIA implementation
Strengths and weaknesses – Western Balkan countriesRegulatory Reform – Better and Smart Regulation Agenda
THE WESTERN BALKAN COUNTRIES' PROGRESS IN TRANSITION IN THE CONTEXT OF THE EU
INTEGRATION PROCESS
STRENGTHS WEAKNESSES 2nd Copenhagen economic criteria
Broad political consensus on the essentials of economic policy
EU candidate status not yet granted
High private sector share in GDP Underdeveloped non-banking sector High level of trade liberalization Legal system weaknesses, in the area of rule of
law, property rights, and judicial independence High level of price liberalization Low share of R&D spending in GDP High level of trade integration with the EU Low level of state interference in the economy
Strengths and weaknesses – AlbaniaProgress in the EU integration process
STRENGTHS WEAKNESSES 2nd Copenhagen economic criteria
Broad political consensus on the essentials of economic policy
Moderate progress towards the EU
Underdeveloped non-banking sector High level of trade liberalization Legal system weaknesses, in the area of rule of
law, property rights, and judicial independence High level of price liberalization Low share of R&D spending in GDP High level of trade integration with the EU Unemployment rate
Strengths and weaknesses – Western BalkansProgress in the EU integration process
Economy related negotiating chapters of the EU acquis A
lban
ia
Bos
nia
and
Her
zego
vina
Mac
edon
ia
Mon
tene
gro
Ser
bia
Kos
ovo
Chapter 1: Free movement of goods Chapter 5: Public procurement
Chapter 6: Company law Chapter 8: Competition policy Chapter 9: Financial Services
Chapter 11: Agriculture and rural development Chapter 15: Energy
Chapter 16: Taxation Chapter 17: Economic and Monetary policy
Chapter 18: Statistics Chapter 20: Enterprise and industrial policy Chapter 28: Consumer Protection Chapter 29: Customs Union
Chapter 30: External Relations Yellow - the country has the capacity to comply with the requirements of the acquis in the
medium term; Orange – additional efforts are needed to align with the EU acquis and to implement it effectively in the medium term Brown - considerable and sustained efforts are needed to align with the EU acquis and to implement it effectively in the medium term.
3rd Copenhagen Criteria – Acceptance of the Community acquis
CHAPTER VTHE ROLE OF PARLIAMENTS IN THE
REGULATORY REFORM AND ECONOMIC REFORMS PROCESS
Unicameral BicameralAlbania √Bosnia and Herzegovina
- Bosnia and Herzegovina – state level √
- Federation of Bosnia and Herzegovina √
- Republika Srpska √Macedonia √Montenegro √Serbia √
Table 5.1: The structure of parliaments in Western Balkan countries
Albania BiH
Macedonia
Montenegro
Serbia
Kosovo*
Direct parliamentary oversight of the government activity Parliamentary questions and interpellations √ √ √ √ √ √Government annual reports to the parliament √ √ √ √ √ √Ministries’ quarterly reports to the related committees √ √Budgetary scrutiny and financial control √ √ √ √ √ √
Parliamentary oversight over implementing public agencies
Telecommunication regulatory body Agency submits reports to the parliamentary committees √ √ √ √ √ √Parliament adopts the reports √ √ √ √ √Parliament nominates executives √ √ √ √ √
Energy regulatory body Agency submits reports to the parliamentary committees √ √ √ √ √ √Parliament adopts the reports √ √ √ √ √Parliament nominates executives √ √ √ √ √ √
Table 5.2: Parliamentary oversight of the government activity
Number of parliamentary committees
Albania 8Bosnia and Herzegovina:- Bosnia and Herzegovina – state level1 16- Federation of Bosnia and Herzegovina2 27- Republika Srpska 22
Macedonia 21Montenegro 11Serbia 19+13
Kosovo* 164
Table 5.3: Number of parliamentary committees in Western Balkan countries’ parliaments
Country Parliamentary Committees for Economy and Finance
No. of committee members
Albania Economy and Finance Committee 23Bosnia and Herzegovina
Bosnia and Herzegovina – state level
Finances and Budget Committee 9
Joint committee for economic reforms and development 11
Federation of BiH Committee for economic and financial policy 11
Republika SrpskaFinances and Budget Committee 9+21
Audit Committee 9
MacedoniaCommittee on Financing and Budget 14 Committee on economy 12
Montenegro Committee on economy, finance and budget 12
Serbia
Committee on Finance, State Budget and Control of Public Spending 17
Committee on the Economy, Regional Development, Trade, Tourism and Energy
17
Kosovo*
Committee for Budget and Finance 11The Committee on Oversight of Public Finances 9Committee on Economy, Trade, Industry, Energy, Transport and Telecommunication
11
Table 5.4: Parliamentary Committees for Economy and Finance in Western Balkan Countries
Parliamentary Committees for Economy and Finance
Economic policies
State budget: consideration and
execution
State budget: oversight of
implementation
Public finances
Financial and banking system
Consideration of regulations in the
field of budget and finance
Consideration of regulations in the field of economy
Albania: Economy and Finance Committee
√ √ √ √ √ √ √
Macedonia:
Committee on Financing and Budget
√ √ √ √ √
Committee on economy
√ √
Montenegro: Committee on economy, finance and budget
√ √ √ √ √ √ √
Albania
BiH Macedonia
Montenegro
Serbia Kosovo*
Research department x x (state level) x x xNumber of employees 3 5 17 6 10 6Number of experts 3 1 4 2 7 4
Number of experts working for parliamentary department /committee(s)Department/ committee for Economy and Finance
Number of employees 43 (BiH state)
4 4 13* 1010 (FBiH) 3 (RS)
Number of experts 4
3 (BiH state)
2 1 4* 86 (FBiH)
1 (+2)3 (RS)
Department / committee for legislation
Number of employees 5
3 (BiH state)
11 6 4 35 (FBiH)
1 (RS)
Number of experts 5
3 (BiH state)
3 2 3 35 (FBH)
1 (+2) (RS)
EU integrations department
Number of employees 5
2 (BiH state)
6 5 7 32 (FBiH)
1 (RS)
Number of experts 5
2 (BiH state)8 (FBiH)
1 (+2) (RS) 1 1 6 3
Table 5.8: Parliamentary research departments and experts in WBCs
Albania
BiH
Macedonia
Montenegro
Serbia
Kosovo*
1. Budgetary independence of the parliamentBudget of the parliament as a segment of the government budget √ √ √ √
Partial budgetary independence - Budget Council √
Full budgetary independence √ 2. Available financial resources for drafting lawsSufficient Limited √ √ √ √ √ √
Table 5.9: Budgetary independence of parliaments
Albania
Bosnia and Herzegovina
Macedonia
Montenegro
Serbia
Kosovo*
1. Public hearing with stakeholders 1.1. Is public hearing in the parliament mandatory? conducted during the consideration of laws in the parliament?
Yes No √ √ √ √ √ √
1.2. Is public hearing conducted during the consideration of laws in the parliament?
For all laws For some laws √ √ √ √ √ √
2. Forward planning of regulatory activities2.1. Plan of legislative activities
Fully implemented/publicly available plan √ √ √ √
Partially implemented/not publicly available plan √
2.2 . Harmonization of forward planning of regulatory activities between government and parliament
√ √ √ √
3. Regulatory Impact Analysis (RIA) Formally introduced RIA as a part of explanatory note of the draft law (in the Rules of Procedure of the Parliament)
Initiated √
None √ √ √ √ √
Albania
Bosnia and Herzegovina
Macedonia
Montenegro
Serbia Kosovo*
1. Public hearing with stakeholders 1.1. Is public hearing in the parliament mandatory? conducted during the consideration of laws in the parliament?
Yes No √ √ √ √ √ √
1.2. Is public hearing conducted during the consideration of laws in the parliament? For all laws For some laws √ √ √ √ √ √
2. Forward planning of regulatory activities2.1. Plan of legislative activities
Fully implemented/publicly available plan √ √ √ √ Partially implemented/not publicly available plan √ √
2.2 . Harmonization of forward planning of regulatory activities between government and parliament √ √ √ √
3. Regulatory Impact Analysis (RIA) Formally introduced RIA as a part of explanatory note of the draft law (in the Rules of Procedure of the Parliament)
Initiated √ None √ √ √ √ √
Table 5.10: Use of better regulation: regulatory quality tools related to transparency in the legislation process in Western Balkan parliaments
1. Role of the committee in the consideration, execution and oversight of the implementation of the state budget:
- reports of the ministry of finance- active role of the committee in the budget decision-making role - monitoring of the implementation of the state budget- state audit institution report2. Strengthening the role of the committee in economic policy creation
Documents related to the effect of the crisis and external shocksNational development plans and strategies
3. Reports of the regulatory bodies/agencies that report to this committee- State audit institution- Competition Agency4. Cooperation of the Economy and Finance Committee with the EU Integrations Committee in the
following areas:- progress in the EU integrations process- State budget: consideration, execution and oversight of implementation- harmonization of the legislation with the EU acquis
Albania: Economy and Finance Committee
5. Types of analysis to be prepared in order to improve the efficiency of the Economy and finance committee
- consideration, execution and oversight of implementation of the state budget- economic policy analysis- fiscal policy analysis - sharing the knowledge and experience with the relevant committees from the region in the areas of
common interest
6. Cooperation with the private sector and NGOs- Chambers of commerce- Foreign investors council- SMEs- NGOs7. Improving the control function of the parliaments over executives:- annual government reports- reports of the relevant ministries related to their work - questions and interpellations
Albania: Economy and Finance Committee
Albania: EU integrations committee1. Cooperation of the EU Integrations Committee with other committees
(Economy and Finance Committee) in the following areas: - EU integrations and their influence on the state budget -
2. Types of analysis to be prepared in order to improve the efficiency of the EU Integrations Committee
- achieved progress in the EU integrations process - progress in the acceptance of the EU acquis - sharing the knowledge and experience with the relevant committees
from the region in the area of the EU integration process - initiatives of the committee related to EU integrations
3. Cooperation with the private sector and NGOs - Chambers of commerce - Foreign investors council - NGOs
4. Improving the control function of the parliaments over executives: - reports of the EU integration office related to its work - questions and interpellations related to the EU integration process