What will Serbia get under the Western Balkans Growth Plan?

President Aleksandar Vučić announced recently that the first 125 million euros will soon arrive in Serbia as part of the Growth Plan for the Western Balkans, adding that this is not an unconditional donation from the European Union, but rather funds that are conditional on our country meeting certain standards.

In order to receive financial support as part of the Growth Plan for the Western Balkans, the countries covered by the plan need to implement reforms that will provide their respective citizens with better living conditions. Serbia has a greater task in relation to the region, which concerns the normalization of relations between Belgrade and Pristina.

Although the 6 billion euros that the EU plans to provide for the Western Balkans between 2024 and 2027 should “boost” the countries’ economic growth, the main goal here is still of a political nature and implies encouraging countries to comply with laws, values, policies and practices of the EU, in order to become its members in the future.

On the other hand, the economic goal of these funds is integration into the single European market (free movement of goods), integration and decarbonization of energy markets, access to a single euro area, free movement of services and workers, and more.

Of this amount, two billion euros will be allocated through grants, and the remaining four billion euros through loans with more favorable interest rates.

Therefore, the question arises to what extent the funds that will arrive from the European Union have the power to bring our country closer to the EU, as well as whether Serbia is capable of fulfilling the prerequisites for being granted this money.

President Aleksandar Vučić announced that the first 125 million euros will soon arrive in Serbia as part of the Growth Plan for the Western Balkans. But that this is not an unconditional donation from the European Union, but funds for which our country will have to meet certain standards.

In order to receive financial support as part of the Growth Plan for the Western Balkans, states need to implement reforms that will provide citizens with better living conditions, and Serbia has a greater task in relation to the region, which concerns the normalization of relations between Belgrade and Pristina.

Although the six billion euros that the EU plans to provide for the Western Balkans in the period between 2024 and 2027 should “boost” the countries’ economic growth, the main goal is still of a political nature, and refers to encouraging countries to comply with laws, values, policies and practices of the EU, in order to become its members in the future.

On the other hand, the economic goal of these funds is integration into the single European market (free movement of goods), integration and decarbonization of energy markets, access to a single payment area in euros, free movement of services and workers, and more.

Of this amount, two billion euros will be allocated through grants, and the remaining four billion euros through loans with more favourable interest rates.

Therefore, the question arises to what extent the finances that will arrive from the European Union have the power to bring our country closer to the EU, as well as whether Serbia is capable of fulfilling the prerequisites for their inflow.

Economist Mihailo Gajić explains that the Plan is a financial instrument of the European Union whose goal is to accelerate economic growth in the Balkans and to bring that area closer to Europe by connecting countries within the region, but also the entire region with the EU.

However, he thinks that one should not expect too much in terms of its effects, especially considering that the European Union has had similar projects for years implemented via the European Bank for Reconstruction and Development, which also invests in infrastructure projects at low interest rates.

He explains that the Growth Plan for the Western Balkans differs from the previous ones in that the money does not go through existing mechanisms such as IPA or IBRD, but is allocated directly from the European Union budget. Another novelty is that, if the prerequisites for this financial support are not met, the EU can decide to suspend the release of funds.

“The money is intended primarily for the construction of infrastructure in the region. It was also announced that these funds could be blocked if the candidate countries did not respect certain minimum standards regarding media freedom, democracy, the rule of law, etc. The IPA, which until now was the EU and EBRD’s main financial instrument, did not impose such conditions”, says Gajić.

He also points out that we should never forget the fact that the money provided is not free or a donation, but that the largest part is made up of loans that must be repaid.

“This is not free money falling from the sky. The loan conditions are favourable because the interest rate will be lower than the one at which Serbia borrows in the free financial market and it is also good that they will be matched with the already existing infrastructure priorities of our state. There is no conditionality in the sense that the EU gives money only for something we may not need, but common priorities are coordinated and harmonized in this case”, explains this economist.

(Danas, 15.05.2024)

https://www.danas.rs/vesti/ekonomija/plan-rasta-za-zapadni-balkan-srbija/

This post is also available in: Italiano

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