Growth Plan for the Western Balkans

The Growth Plan for the Western Balkans was adopted by the Commission on 8 November 2023. 

The Plan aims to:

• integrate the Western Balkan partners into the EU’s single market, 
• advance regional economic cooperation, 
• deepen EU-related reforms 
• increase pre-accession funding in view of accelerating socio-economic convergence of the Western Balkans to the EU. 

The Growth Plan incentivises enlargement partners’ preparations for EU membership, by bringing forward some of its benefits ahead of full integration into the EU. 

This in turn should significantly accelerate the speed of the enlargement process and the growth of their economies.

Economic convergence is an essential element in getting the Western Balkan partners closer to the EU. The lack of convergence is a major issue for the Western Balkan region; it is currently at around 35% of EU average level. 

The Growth Plan has the potential to double the size of the Western Balkan economies within the next decade.

To support this process a new €6 billion financial instrument, the Reform and Growth Facility for the Western Balkans was adopted for the period 2024-2027.

The Plan is based on four pillars, aimed at:

1. Enhancing economic integration with the European Union’s single market.
   
   Integration with the EU’s single market has been the main driver of economic growth for all countries that joined the EU. For countries on the path to EU accession, closer association with the EU’s single market would bring benefits that could be felt directly by their citizens.
   
   The offer to the Western Balkans included seven priority actions for integration into the EU’s single market:
   1. Free movement of goods;
   2. Free movement of services and workers;
   3. Access to the Single Euro Payments Area (SEPA);
   4. Facilitation of Road transport;
   5. Integration and de-carbonisation of Energy markets;
   6. Digital Single Market;
   7. Integration into industrial supply chain
       
2. Boosting economic integration within the Western Balkans through the Common Regional Market, based on EU rules and standards.
   
   The Common Regional Market (CRM) is vital to overcome small fragmented markets, make businesses competitive, attract investors and retain workers. Based on EU rules, it is a stepping-stone to the opportunities of the EU’s single market.
   
   Substantial opportunities for integration in the EU’s Single Market will happen only if the region delivers on regional economic integration.
    
3. Accelerating fundamental reforms, including on the fundamentals cluster, supporting the Western Balkans’ path towards EU membership, improving sustainable economic growth including through attracting foreign investments and strengthening regional stability.
   
   Each beneficiary prepares and implements a Reform Agenda, which is approved by the Commission following positive assessment by the Council.
    
4. Supporting convergence through increased financial assistance: the Reform and Growth Facility for the Western Balkans.
   
   The Facility has a total financial envelope of €6 billion for 2024-2027, consisting of €2 billion in grants and €4 billion in concessional loans, with payment conditioned on the Western Balkans’ partners implementing specific socio-economic and fundamental reforms.
    

The key to how the EU funds are divided among beneficiaries is determined in the Annex to the Reform and Growth Facility regulation.

The Reform and Growth Facility will reinforce the current financial assistance under IPA III.

The Reform and Growth Facility regulation entered into force on 25 May 2024.

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The Commission shall sign loan and facility agreements with each beneficiary having an approved Reform Agenda. 

Beneficiaries can request the release of a pre-financing of up to 7% of their total allocation foreseen under the Facility. 

The disbursement of pre-financing will be subject to the entry into force of the two agreements, and subject to the respect of the preconditions. 

In parallel, a pipeline of investments to be channelled through the Western Balkans Investment Framework is in preparation, for the decision of the next WBIF Board.