Author: igalmk

In the context of the Growth Plan for the Western Balkans (GPWB) and the broader EU integration process, the establishment of structured platforms for dialogue and collaboration is essential to foster national ownership, ensure the sustainability of reforms, and align implementation efforts with EU priorities and benchmarks. The effective implementation of the national Reform Agendas (RAs), as a key operational instrument of the GPWB, requires an inclusive and well-coordinated approach that actively involves all relevant stakeholders. Cross-sectoral participation plays a vital role in ensuring that reforms are not only formally enacted, but also impactful, transparent, and responsive to the development needs of each country.

To support this process, the Think for Europe Network (TEN) led by the European Policy Institute – Skopje (EPI) is implementing a three-year regional initiative “WB Reform and Growth Monitor” with financial support from the European Union. The initiative aims at supporting stakeholder participation in the implementation of the Reform Agendas in the Western Balkans.

By convening a diverse range of stakeholders, the Launch Event – WB Reform and Growth Monitor aims at facilitating transparent, inclusive, and evidence-based dialogue on the Reform Agendas. The event takes place at the period of establishment of the National Consultation Mechanisms for the Reform Agendas. These mechanisms, either newly created or built upon existing platforms, will aim to coordinate with RA coordinator institutions and facilitate regular, structured dialogue among CSOs, public authorities, academia, and the private sector on the implementation of the Reform Agendas.

The Reform and Growth Facility (RGF) is a new financial instrument proposed by the European Commission in 2023, designed to accelerate the socio-economic convergence of the Western Balkans Six (WB6): Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia with the European Union. Building on the foundations of the 2020 Economic and Investment Plan for the Western Balkans, the RGF forms the cornerstone of the EU’s Growth Plan for the Western Balkans (2024–2027), which aims to foster closer integration with the EU Single Market and improve the region’s competitiveness and resilience.

The RGF provides up to EUR 6 billion in EU financial assistance, comprising EUR 2 billion in grants, and EUR 4 billion in concessional loans, to support the implementation of ambitious and country-specific Reform Agendas. These agendas are aligned with EU accession priorities and reforms under the European Semester model. The Facility represents a concrete step towards applying key EU governance and financial instruments to candidate countries in a pre-accession phase.

Reform Agendas: The Strategic Pillar of the Growth Plan

Each Western Balkan country has developed a Reform Agenda, in coordination with the European Commission, outlining its priorities across key policy areas such as:

• Public Administration Reforms (PAR) and Public Finance Management Energy Transition
• Digital Transformation
• Human Capital
• Business Environment and Private Sector Development
• Rule of Law and Fundamental Rights

The Reform Agendas serve as policy contracts between the EU and each partner country, outlining concrete measures, timelines, and milestones. They include a detailed costing and sequencing of reforms, and are subject to monitoring and assessment by both national authorities and the European Commission.

To qualify for funding, each country must demonstrate clear political commitment and implementation capacity. Annual disbursements will be based on the achievement of reform benchmarks and performance indicators established in each national agenda.

Conditions and Priorities

The RGF introduces conditionality mechanisms to ensure that funding is linked to tangible reforms. Although each country is eligible for different funding amounts and creates its own Reform Agenda, there are certain conditions that need to be met in all six cases.  Some of the conditions embedded in all Reform Agendas are as follows:

• At least 30% of the funding must support the green transition, including energy efficiency, renewables, and environmental protection.
• A minimum of 15% must support digitalisation, such as digital public services, e-governance, and broadband expansion.
• Reforms must be consistent with EU values, including democratic governance, the rule of law, and respect for human rights.
• Progress in public financial management, public procurement, and anti-corruption measures is a prerequisite for disbursements. 

Financing the Facility

The RGF is financed through the EU’s external budget instruments under the Multiannual Financial Framework (2021–2027), primarily through the Instrument for Pre-Accession Assistance (IPA III). The loan component of the Facility will be managed through bilateral arrangements with each country and include favourable terms in line with EU macro-financial assistance rules.

Disbursements are planned on an annual basis, subject to the Commission’s positive assessment of reform implementation. Funds are channelled directly into the national budgets of partner countries under strict monitoring mechanisms. The European Commission, in cooperation with national governments and civil society, will oversee the regular reporting, tracking, and evaluation of progress.

Monitoring, Disbursement, and Transparency

The European Commission will publish regular updates on disbursements, reform implementation milestones, and country progress. A dedicated online dashboard will track the status of each Reform Agenda, including the following:

• Approved measures;
• Budgeted vs. disbursed funds;
• Reform completion status;
• Key performance indicators;
• External audits and evaluations.

Civil society organisations, think tanks, and oversight bodies will be encouraged to participate in the monitoring process, ensuring transparency and accountability.

The Reform and Growth Facility is not just a financial instrument but a political commitment to bridge the gap between the Western Balkans and the EU. It sets a precedent for “accession through reform delivery,” anchoring long-term transformation in the region’s economies and institutions.

By linking funding to reforms, and reforms to EU membership prospects, the RGF has the potential to reshape the EU’s enlargement methodology, turning promises of integration into tangible results for the citizens of the Western Balkans.

The Reform and Growth Facility (RGF) for the Western Balkans Six (WB6) is a  EUR 6 billion EU instrument designed to support the implementation of structural reforms and investment priorities in each country. The Facility provides EUR 2 billion in grants and EUR 4 billion in concessional loans over the period 2024–2027. It forms the financial arm of the EU’s Growth Plan for the Western Balkans and is directly tied to each country’s implementation of a national Reform Agenda.

Structure of Financing

Total funding under the RGF is set at EUR 6 billion, of which EUR 2 billion is distributed as grants and EUR 4 billion as loans. These funds are allocated across the six WB countries based on a distribution formula laid out in the annexe of the Facility’s founding regulation, which considers population size, needs, and implementation capacity.

At least 50% of the total funding (both grants and loans) is earmarked for investments and will be channelled through the Western Balkans Investment Framework (WBIF). The remainder of the loan envelope will be provided directly to the beneficiaries’ national treasuries as budget support to be used in line with the agreed reform and investment priorities.

Allocation Methodology and Adjustments

The allocation of EU funds under the RGF to each Western Balkan beneficiary is determined in the annexe to the Facility regulation. Each country’s allocated funds are based on a formula that considers both population size and GDP per capita in relation to the regional average. 

Importantly, these allocations are provisional and may be adjusted based on reform performance. Final disbursements are tied to the successful implementation of country-specific Reform Agendas. If a beneficiary fails to meet preconditions, general conditions, or payment benchmarks, the European Commission may reduce or reallocate that country’s funds to better-performing partners. 

Country	Indicative Percentual Allocation	Indicative Allocation (EUR million)	Provisioning for Loans (EUR million)
Albania	16.40%	922.1	59.2
Bosnia & Herzegovina	19.30%	1,085.10	69.6
Kosovo	15.70%	882.6	56.6
Montenegro	6.80%	383.5	24.6
North Macedonia	13.40%	750.4	48.2
Serbia	28.30%	1,586.40	101.8

 

This performance-based model strengthens accountability and rewards reform progress. A portion of the funds (EUR 30 million) is reserved for technical and administrative support and is excluded from the country-level allocation.
Additionally, EUR 360 million in loan provisioning will be paid into the EU’s Common Provisioning Fund and not disbursed to the beneficiaries.

Facility and Loan Agreements

In order to access the funds, each country must sign two legally binding agreements with the European Commission:

• The Facility Agreement, which provides the framework for disbursement and sets conditions related to monitoring, reporting, auditing, and evaluation.

• The Loan Agreement, which outlines the terms of the concessional loan, including repayment schedules, interest rates, and disbursement modalities.

Disbursement of both grants and loans is conditional upon the entry into force of these agreements.

Disbursement Process, Conditionality, and Pre-financing

Disbursements from the RGF are performance-based and subject to multiple levels of conditionality. Payments are made twice per year, following a formal request by the beneficiary country and a verification process conducted by the European Commission.

Each national Reform Agenda is divided into quantitative and qualitative benchmarks, referred to as payment conditions. These are time bound and tailored to the country’s reform priorities. The Commission verifies the fulfillment of these conditions before each disbursement.

There are three main sets of conditions:

• Preconditions, which must be upheld continuously and include adherence to democratic standards. For Serbia and Kosovo, this includes constructive engagement in normalising relations.

• General conditions, which relate to macro-financial stability, sound public financial management, and budget transparency.

• Payment conditions, which are specific to each country and are detailed in the Reform Agenda.

Failure to meet any of these conditions can lead to the suspension or reduction of payments.

Beneficiaries may request pre-financing of up to 7% of their total RGF allocation. This pre-financing is intended to support early implementation efforts and is disbursed after the Facility and Loan Agreements enter into force.

Role of the WBIF

The Western Balkans Investment Framework (WBIF) is a central financing and coordination platform under the RGF. At least half of the entire RGF envelope will be channelled through the WBIF to support regional and national investment projects in areas such as transport, energy, digital infrastructure, and environmental protection. The WBIF also provides technical assistance, supports project preparation for implementation, and enables the blending of EU funds with international financial institutions and bilateral donors.

Monitoring and Transparency

The European Commission will assess the implementation of the Reform Agendas twice a year and verify whether the relevant conditions are met before releasing payments. These assessments include desk reviews and on-site verifications. All payments and evaluations will be published online to ensure transparency.

National governments are expected to maintain full transparency in the use of RGF funds, including publishing budget data and cooperating with civil society and oversight bodies. Independent audits and evaluations will also be carried out to ensure compliance and results.

The Growth Plan for the Western Balkans (WB) was adopted by the Commission on 8 November 2023. The Growth plan was formed with the idea of fostering an increase in socioeconomic convergence of WB states. The Plan is based on four pillars aimed at:

• Enhancing economic integration with the European Union’s single market
• Boosting economic integration within the WBs through the Common Regional Market
• Accelerating fundamental reforms
• Supporting convergence through increased financial assistance

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 WB partners implementing specific socio-economic and fundamental reforms. 

Each country is receiving a different amount of financial support, and for Bosnia and Herzegovina (BiH) this amount is 1,085 billion€. The Growth Plan for the WBs is an opportunity for BiH to receive funds after fulfilling concrete reforms that should create conditions for stronger economic growth, including more functional institutions, a stronger rule of law and a better business climate. In addition to investments and reforms, the Growth Plan opens opportunities for BiH to have greater access to the European single market, as well as to establish a common regional market in the WB.

Process of development and adoption of the Reform Agenda in the national context: Challenges on the way

To access the funds, BiH should create and submit to the European Commission a reform agenda. The key two steps are to agree on a list of indicative reforms and steps in the reform process and to prepare the narrative of the Reform Agenda. The working team was created in January 2024, composed of the Chairwoman of the Council of Ministers of BIH, Prime Ministers of both entities, State Ministers of Foreign Trade and Economic Relations, Communication and Transport, Finance and Treasury, the Ministry of Justice, as well as Entity Finance Ministers. The members of the working team are the prime ministers of all 10 cantons in the Federation of BiH, the mayor of Brčko District and the directors of the BiH Directorate for Economic Planning and the Directorate for European Integration.

Representatives of the parliaments in BiH didn’t actively participate in the process of creating the reform agenda. As stated in the previous paragraph, the members of the Working Team for the Reform Agenda were the presidents of the entity governments as well as the ministries of the entity governments. During the design process of the reform agenda, public consultations were not organised, moreover, the content of the reform agenda was never publicly presented. As in many cases so far, including this process, the design of creating a strategic document was presented to the public as an important step forward in the process of progress towards European integration, and it was represented in the media, but public opinion was unable to perceive the positive or negative aspects of the process itself or the content of the document.

After the formation of the Working Team, the process of creating a reform agenda began in accordance with the working version of the document, Reform Plan for BiH, which was previously sent to the European Commission, as a basis for creating an indicative list of projects and priorities. It is a document that contains four priorities, namely: Green and digital transition, Development of the private sector and business environment, Development and retention of human capital and Rule of law. But already at the very beginning, the Working Team faced problems. The second session of the Working Team for drafting the Reform Plan wasn’t held due to the lack of quorum, as representatives from Republika Srpska did not respond to the session.

Deputy Chairman of the Council of Ministers, Staša Košarac, and at the same time a member of the Working Team, requested the postponement of the session a day earlier. Zoran Zeljko, the Coordinator of the Working Team, Director of the Directorate for Economic Planning of BiH, pointed out that ”the deadlines stated on several occasions by the Delegation of the EU and the European Commission leave no room for delay, especially at this stage of the process, that the European Commission needs our position on indicative reforms so that we can continue the consultative process regarding reforms that are possibly unacceptable or unclear”.

The chairwoman of the Council of Ministers, Borjana Krišto, emphasised that BiH doesn’t have time to delay the process of bringing reforms and is necessary to continue the consultative process on reforms that are possibly unacceptable or unclear. As a country, without a statement on the reforms, we can’t even proceed with the preparation of the Reform plan for those that are indisputable, especially if we consider that the deadline for BiH’s response to the proposal for indicative reforms was January 22, 2024.

As a follow-up, the Working Team decided to make a list of reforms from the indicative list that all members of the Working Team in BiH have marked as acceptable, which will be forwarded to the European Commission with the request to continue with further activities for those reforms. The conclusion of the third session of the Working Team for drafting the reform plan is the decision to inform the European Commission about the reforms for which no agreement was reached, and in connection with this to urgently organize thematic meetings where the representatives of the institutions that didn’t give their agreement will receive additional clarifications from the representatives of the European Commission and pointed out their individual positions.

The deadline for submitting the list of reforms as part of the reform agenda was April 30, 2024. At that moment, BiH was the only one of the six countries of the WB that didn’t finalise the key prerequisite, which is submission to the list of reforms. At the very last moment, the last day before the deadline for submission to the list of reforms, the document was still not created in its entirety by the representatives of the authorities in BiH. Namely, on the last day of the deadline for submitting the list of reforms, there were no answers from the institutions of Republika Srpska. The responsible ministers from this entity didn’t declare themselves on this issue.

The working team still managed to complete the reform agenda and BiH submitted this document to the European Commission. The list of reforms approved by the Work Team was also fully harmonised with recommendations by the European Commission, meaning more than 97% reform activities agreed between representatives of the European Commission and BIH Directorate for European Integrations.

However, the document had numerous comments and corrections and was returned to B&H authorities by the European Commission for further coordination. At the end of July, the content of the document was updated again. Pressure from the public increased, demanding greater involvement in the creation of the document. However, now the cantonal ministers are involved in these negotiations, without whose consent the document will not go to Bussels, although this was not the case when the document was delivered on April 30.

A new document on the reform agenda was sent in September. The Chairperson of the Council of Ministers, Borjana Krišto, sent the draft of the Reform Agenda without the two incompatible measures. The document was sent without the consent of the lower levels of government, which showed that seeking the canton’s consent was an unnecessary move in the context of the Growth Plan. It is important to emphasise that in the process of creating the document, there were no public consultations where non-state actors would have had the opportunity to comment on the content. Moreover, the content of the document has never been disclosed in its entirety.

The document did not meet the criteria of the European Commission, ”Unfortunately, BiH hasn’t submitted a final reform agenda, and we continue to encourage the country to do so as soon as possible”, said Gert Jan Kopman, Director General of the Directorate for Enlargement in the European Commission, during his visit to BiH, in November 2024.

Contested or Blocking reforms: The Constitutional court and Council for state aid 

The process of developing the reform agenda in BiH is defined as an important step forward for BiH in the process of joining European integration, but with different visions when it comes to the aspirations of the representatives of the two entities in BiH. Namely, during the process of creating the reform agenda, the representatives of the RS didn’t deviate from the process of decentralisation, or did they want to establish a complete system that would bring the reform agenda to a functional level on the territory of the entire country. On the other hand, representatives of Federation of BiH see the reform agenda as a progressive means of action in terms of financial resources that would be provided by the fulfilment of all reforms from the Growth plan. The high level of decentralisation is a problem in the functioning of BiH. The fundamental problem of BiH is the constitutional order that is being abused by representatives of all the leading political parties. This level of decentralisation simply doesn’t enable functionality. Furthermore, all three levels of government in BiH must unanimously adopt the content of the reform agenda.

The prime ministers of four cantons in the Federation of BiH (Tuzla Canton, Zenica-Doboj Canton, Central-Bosnia Canton, Una-Sana Canton) sent their consent with certain conditions, which the Council of Ministers didn’t accept. As there was no consensus, the Reform Agenda wasn’t sent to Brussels.

This document, which received the support of all actors and levels of government except these four cantons, had 111 harmonised measures out of a total of 113 measures. This time, again, the measures that the authorities in the Republika Srpska consider controversial, which refer to the filling of the Constitutional Court of BiH and compliance with the decisions of this body, and the removal of the entity veto from the Council for State Aid, were left out of the document.

The leaders of the party of the Alliance of Independent Social Democrats, the leading party in the Republika Srpska, do not want to lose the right to vote by entity when it comes to the decisions of the Constitutional Court. They don’t want the decisions of the Constitutional Court to be implemented on the entire territory of BiH. Also, representatives of the leading parties from the Republika Srpska entity do not give up the possibility that the entity authorities can put veto on the decisions of the BiH State Aid Council.

The second attempt officially failed, BiH was left without the possibility to receive 70 million€, precisely, the pre-financing tranche of the Plan, and mutual accusations began among the politicians in BiH. The leaders of the SDA Party, from which the prime ministers of the cantons who didn’t agree to this document came, criticized leaders of Our Party, People and Justice and Social Democratic Party for “accepting a plan that is not complete”, while the answer from other side was that “the four prime ministers blocked the entire country.”

Earlier, the Minister of Foreign Trade and Economic Relations, Staša Košarac, announced via social networks fact that the European proposal is not aligned with the Dayton Agreement is controversial for the Republic of Srpska. “Certain issues, which are within the constitutional jurisdiction of the RS and the FBiH, cannot be transferred to a common level under the guise of ambition towards the EU, such as the law on gas at the BiH level or the abolition of entity voting, because these are things that the RS will never agree to”, said Košarac.

The Prime Ministers of four cantons who expressed disagreement in terms of the content of the reform agenda, point out that “the document is too important to be taken lightly.”, The process of harmonising the document was conducted in a non-transparent, biased and methodologically extremely questionable manner”. Furthermore, they emphasize that reform agenda represents “the covert erasure of the state institutions of Bosnia and Herzegovina under the guise of reforms’’ and special observation is related ‘’on deleted obligation to appoint constitutional judges and the obligation to apply the decisions of the Constitutional Court of BiH on the territory of the whole country.’’

The ruling party in the Republika Srpska, the Alliance of Independent Social Democrats, is characterised as the main culprit for the unsuccessful process of adopting the document due to the non-acceptance of two measures in the reform agenda. On the other hand, the prime ministers of the four cantons were marked as the brakemen of the process because they did not want an incomplete document to be sent to Brussels that would deny the stability and integrity of BiH.

Gert Jan Kop, the Director-General of the Neighbourhood and Enlargement Negotiations, visited BiH in the middle of November and organised a meeting with several decision makers who hold the key to the adoption of the Reform Agenda document. He set a new deadline of December 4 for the adoption of the Reform Agenda. Koopman repeated the position of the European Commission that any document without all 113 agreed-upon measures will not be accepted in Brussels.

Opinions related to the status and concept of the reform agenda after this visit and meetings with the members of the state coalition are still incomplete. Representatives of the leading political parties from the Republic of Srpska are still unyielding in their positions when it comes to harmonising the content of the reform agenda. They don’t want to accept any kind of imposition when it comes to the status of foreigners in the Constitutional Court. Radovan Višković, Prime Minister of the Republic of Srpska, emphasised point: ‘’the road map related to the resolution of the status of foreigners in the Constitutional Court of BiH is mentioned. We do not accept such wording. We want it to be written clearly and loudly that a new law on the Constitutional Court should be passed, in which the issue of foreigners sitting in the Constitutional Court of BiH will be resolved’’.

Conclusion 

The work of the working team in the process of adopting the reform agenda was painstaking and full of obstacles. Despite all efforts, key decision-makers failed to complete this process. Representatives of the authorities from Republika Srpska did not want to give up their position that the remaining two measures refer to the filling of the Constitutional Court of BiH and compliance with the decisions of this body, and the removal of the entity veto from the Council for State Aid, to be harmonized. On the other hand, the four cantonal prime ministers didn’t agree with the proposed content of the reform agenda, pointing out that in this way the integrity of BiH is denied.

The reform agenda was never completed, and the first tranche of 70 million€ was lost. Representatives of the authorities in BiH spent the entire year 2024 harmonising positions on the content of the reform agenda, and they failed in their attempts to do that. There is a new opportunity in March 2025, but judging by the previous scenarios, it will also be a futile attempt.