Brussels, 08/05/2007 (Agence Europe) - On Tuesday, EU ministers met their counterparts and the representatives of candidate country central banks for an exchange of views on the pre-accession economic programmes of these three countries (Former Yugoslav Republic of Macedonia, Croatia, Turkey). In their conclusions, the EU27 ministers welcome progress made with a view to transforming the Croatian, Turkish and Macedonian economies but call for budgetary reforms to be continued and for macro-economic stability to be ensured. It was quite right to place emphasis on growth, said Joaquin Almunia, who nonetheless asked whether the scenarios of these programmes were not over-ambitious. The main structural challenges to be raised by the candidate countries are thus: progress in privatisation, an improved business climate, stimulation of investment, increased competitiveness, strengthened administrative capacities and rule of law, reform of the labour market, and a reduction in the share of the informal economy. Efforts to increase the means of national statistical offices must also be completed in order to meet the terms of the action plan on economic, monetary and financial statistics adopted in May 2003 (at the time of the ten countries which joined the EU in 2004, and Bulgaria and Romania).
The Croatian economy has, hitherto, been performing well, with strong growth (4.8% in 2006 and 2007 according to the Commission's spring economic forecast - EUROPE 9421), relatively low inflation (3.2% in 2006 and 2.3% in 2007) and exchange rate stability. Croatia's pre-accession economic programme for 2007-2009 offers a coherent medium-term macro-economic and budgetary framework and sets out a vast array of reforms, ministers say. Macro-economic projections seem to be realistic, although a larger budgetary adjustment might be needed, with there being a number of expenditure risks in pensions and wages, and also public subsidies. The budget deficit could go from 2.2% of GDP in 2006 to 2.4% in 2007, the Commission says in its economic forecast. The structural reform plan, based on increased competition, stimulation of employment and rationalisation of social spending, is appropriate, although more could still be done in some areas. The country is called on to adopt a tighter fiscal stance, given the risks caused by external imbalances.
The FYR Macedonia, which presented its first pre-accession economic programme for 2007-2009, will still have to make further progress towards a market economy, according to ministers. The programme's generally coherent economic scenario sets out an ambitious budget strategy and several areas for structural reform. Recent economic performance has been solid, but the level of growth predicted in the programme seems too optimistic and the document lacks reliable statistics, the conclusions say. The economic scenario, however, is not improbable and, in its recent forecast, the Commission predicted growth of 3.1% in 2006 and 4.3% in 2007. Inflation, which was running at 3.2% last year, should fall to 2% this year. The public finance deficit could double, from 0.6% in 2006 to 1.2% in 2007, the Commission says. The budgetary aspects of the FYR Macedonian economic programme seem prudent, but lack detail on expenditure and receipts. The planned structural reform focuses on liberalisation of network industries, privatisation of the last state ownerships, enhancing the rule of law, improving the business climate, strengthening competitiveness and reform of the labour market. This reform agenda, however, is not in line with reform requirements ahead of EU accession, the conclusions note.
Ministers approve the response of the Turkish authorities following the financial turbulence of spring 2006. With exchange rate volatility and inflationist pressure, the monetary restraint and pursuit of budget consolidation decided on by Ankara proved to be good for growth, which has remained robust (6.1% in 2006 and 4.6% in 2007), say ministers. The macro-economic projections of the programme are plausible, the conclusions say, welcoming the reduction in medium-term spending, but regretting the lack of detail on budgetary and structural measures. The introduction of a new social security system and, in more general terms, the medium- and long-term costs of the pensions and health systems should be monitored very closely, and investment in infrastructure should be increased in the least developed regions, ministers add. The main thing is to ensure the implementation of structural reforms in due course, they say, recommending that the emphasis be put on reform of the labour market, support for job creation and the follow-up on state aid. (ab)