Reform and growth facility for the Western Balkans

Budget programming and implementation

Budget programming (million EUR): 

[notranslate]WBWeb:budg_01:pie[/notranslate]

Loans (million EUR): 

Cumulative budget implementation at the end of 2024 (million EUR):

Implementation and performance

Key performance indicators: 

N/A

Regulation (EU) 2024/1449[1]establishing the Reform and Growth Facility for the Western Balkans entered into force in May 2024. In October 2024, the European Commission endorsed the Reform Agendas submitted by Albania, Kosovo[2], Montenegro, North Macedonia and Serbia. The Commission is actively engaged with the authorities of Bosnia and Herzegovina to support them in the submission of their Reform Agenda.

As of 31 December 2024, the beneficiaries are finalising legal procedures to sign and ratify their respective facility and loan agreements. It is important to note that the implementation phase for each beneficiary will start after entry into force of these agreements. 

Contribution to horizontal priorities

Contribution to green budgeting priorities (EUR million):

Activities under the Facility aim to help advance progress towards EU social, climate and environmental standards, as well as the United Nations Sustainable Development Goals, the Paris Agreement adopted under the United Nations Framework Convention on Climate Change, the United Nations Convention on Biological Diversity and the United Nations Convention to Combat Desertification. These activities will not contribute to environmental degradation or cause harm to the environment or climate.

The Facility aims to meet the target of 30% of Union budget expenditure supporting climate objectives and 7,5 % in 2024 and 10 % in 2026 and 2027 supporting biodiversity objectives. In the absence of specific requirements on biodiversity in the regulation of this facility, the Commission has not yet had the time to perform a thorough assessment as to whether actions under the Western Balkans Facility will contribute positively to biodiversity. In the absence of such an assessment, the Commission prefers to provide a prudent estimate of zero contribution, which we may update once further information is available.

At least 37 % of non-repayable financial support through the Western Balkan Investment Framework (WBIF) will be dedicated to climate objectives, calculated using the Rio markers and reported according to the EU international climate finance obligations to the OECD, as well as other international agreements or frameworks. The Facility will align with the approach of other Heading 6 instruments, including the Instrument for Pre-Accession assistance (IPA III), once they start applying EU climate coefficients, set out in the Commission Staff Working Document entitled ‘Climate Mainstreaming Architecture in the 2021-2027 Multiannual Financial Framework’ (SWD(2022) 225), in order to ensure consistent climate reporting in the region. 

The Facility supports activities that fully respect EU climate and environmental standards and priorities of the Union and the principle of ‘do no significant harm’ within the meaning of Article 17 of the Taxonomy Regulation.

The Reform Agendas align with beneficiaries’ accession priorities and relevant documents, such as the Stabilisation and Association Agreement, the National Energy and Climate Plan, the Nationally Determined Contribution under the Paris Agreement and the ambition to reach climate neutrality by 2050. Each Reform Agenda explains the expected contributions to climate and environmental objectives and their compatibility with the "do no significant harm" principle. For example, Montenegro’s Reform Agenda promotes decarbonization and the implementation of just transition actions in the coal mining and coal power production region of Pljevlja. It also aims to foster the deployment of renewable energy and work towards carbon pricing, with the goal of having an EU-aligned Emission Trading System in place by 2030. The country commits to ensuring that the rules governing the fundamental building blocks of MRVA are in place by 2025. This will allow monitoring of emissions to start in 2026, in line with its obligations as a contracting party to the Energy Community.

Implementation of the facility will start upon the signing of the facility and loan agreements with the beneficiaries. Currently, only the financial climate contribution is available. The other horizontal priorities will be quantified once implementation begins. In the case of the Bosnia and Herzegovina, a reform agenda has not yet been adopted and implementation is therefore delayed to 2025, including also possible climate contribution for 2024.

Contribution to gender equality (EUR million*): 

(*)   Based on the applied gender contribution methodology, the following scores are attributed at the most granular level of intervention possible:

• 2: interventions the principal objective of which is to improve gender equality;
• 1: interventions that have gender equality as an important and deliberate objective but not as the main reason for the intervention;
• 0: non-targeted interventions (interventions that are expected to have no significant bearing on gender equality);
• 0*: score to be assigned to interventions with a likely but not yet clear positive impact on gender equality.

• In accordance with Regulation (EU) 2024/1449, beneficiaries and the Commission must ensure that gender equality and the integration of a gender perspective as indicated in the Reform Agendas are taken into account and promoted throughout the implementation of the Facility. They must take appropriate steps to prevent any discrimination based upon gender, but also racial or ethnic origin, religion or belief, disability, age or sexual orientation. The Commission will report on these measures in the context of its regular reporting under the Gender Action Plans. For the moment, it can only be assigned a gender score once the implementation starts. This explains the temporary score 0*

  Each Reform Agenda includes an explanation of the extent to which the measures are expected to contribute to gender equality and the empowerment of women and girls, and the promotion of women and girls’ rights. For example, Albania's Reform Agenda aims to ensure fair representation of females among graduates from VET schools who subsequently get employed in sectors relevant to their studies. To achieve this, authorities are required to report disaggregated data on this target. On Kosovo’s Reform Agenda, a dedicated reform is foreseen to ‘Strengthen implementation of the legislative and strategic framework on the protection against domestic and gender-based ‘.

Contribution to the digital transition (EUR million): 

N/A

• Digitalisation is one of the key components of the Facility. It represents both one of the key areas for reforms, as identified under the Reform Agendas, and one of the key priority areas for investments under Western Balkan Investment Framework. Additionally, the digital transition features in the specific objectives of the Facility, in particular the promotion of digital transformation and digital skills as an enabler of sustainable development and inclusive growth, as well as boosting of innovation, research, and cooperation between academic institutions and industry in support of the green and digital transitions.
• The Facility supports investment and reforms that promote the beneficiaries’ path to the digital transformation of the economy and society in line with the EU vision for 2030 presented in the Commission communication ‘2030 Digital Compass’.

• Each Reform Agenda contains an explanation of the extent to which the measures are expected to contribute to digital transformation. For example, the Serbia Reform Agenda outlines steps to increase the digital literacy of its adult and rural populations by establishing permanent digital corners in more than 50 municipalities, which will provide training in basic digital skills.

   

Contribution to sustainable development goals: 

N/A

Support to reforms

• Actions undertaken through the programme will be based on Reform Agendas of each beneficiary. These agendas outline a comprehensive, coherent and prioritised set of targeted reforms and priority investment areas for each beneficiary. Those include payment conditions that indicate satisfactory progress or completion of related measures, along with an indicative timetable for implementation. The reforms focus on key socio-economic reforms areas, as well as fundamentals of the enlargement process. Upon fulfilment of a given payment condition, a pre-defined amount will be disbursed. directly to the beneficiary’s Treasury, or to the Western Balkans Investment Framework Operation Board for consideration of eligible projects.
• The current financial assistance to the Western Balkans and Türkiye under the Instrument for Pre-Accession (IPA III) will continue in its current form, targeting the increasing alignment of national legislation and public administration to the EU acquis and EU standards in view of future Union membership. The new Facility will complement the IPA III approach by focussing on the specific determinants for social and economic growth. In addition, this new Facility will have a payment mechanism based on ex-ante conditionality, innovatively combining grants and loans to create a stronger incentive for beneficiaries to implement key structural reforms. Such a delivery mechanism and the setting of ex-ante conditionality are not possible under IPA III.

• The reforms are broadly clustered into the following policy areas: Rule of Law and fundamentals, Governance and Public administration reform, Private sector development and business environment, Energy and green transition, Digitalisation and Human Capital. 

   

Contribution to strategic technologies (STEP) 

N/A

Archived versions from previous years

• Reform and growth facility for the Western Balkans PPS 2024: Reform and growth facility for the Western Balkans PPS Published in 2024

[1] Regulation (EU) 2024/1449 of the European Parliament and of the Council of 14 May 2024 on establishing the Reform and Growth Facility for the Western Balkans (OJ L, 2024/1449, 24.5.2024, ELI: http://data.europa.eu/eli/reg/2024/1449/oj).

[2] This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence.