Project Context
The Economic Reform Programme is the most important document in the economic dialogue with the European Union and European integration process. It can be the key tool for formulating and implementing macroeconomic and structural reforms designed to improve sustainable competitiveness of a country and boost inclusive growth and job creation. The purpose of the dialogue on economic governance is to prepare candidate and potential candidate states for future participation in the coordination of EU economic policy, including the European Semester process.
Bosnia and Herzegovina have been participating in the economic and financial dialogue with the European Commission since 2015. Bosnia and Herzegovina every year prepares the Economic Reform Program and submits it to European Commission, after its adoption by the Council of Ministers of Bosnia and Herzegovina. Submitted inputs by entities are adopted on entity level.
Given the comprehensiveness and horizontal nature of the Economic Reform Program and division of competences in Bosnia and Herzegovina, coordination system for the ERP preparation in the country is complex. However, according to the EC, mainly as a result of insufficient cooperation between key ministries and bodies at different levels within the country, the quality of the BiH Economic Reform Program is low and the implementation of jointly adopted policy guidelines, which is a central part of the process, is limited. Although Bosnia and Herzegovina is taking part in the process of European Semester Light, its efforts to upgrade the document Economic Reform Program are very much needed since this document is assessed by the European Commission as of low-quality.
Project Objective
Objective of this Project is to strengthen economic fundamentals and growth in Bosnia and Herzegovina in a view of economic criteria for EU accession and of the requirements for the economic policy coordination in the European Semester.
Project Approach
The Economic Reform Programme (ERP) is a strategic document that contains a medium-term macroeconomic and fiscal framework, including fiscal measures and a comprehensive structural reform programme aimed at improving long-term inclusive growth and competitiveness of Bosnia and Herzegovina.
The specific objective of this contract is to improve Economic Reform Programme preparation and implementation. Bosnia and Herzegovina faces particular challenges related to the co-ordination of the preparation of the Economic Reform Programme in terms of institutional arrangements, which hinder the entire planning process in the country. The lack of a functional framework of coordination (institutional and normative) appears to be significant. A major problem is the coordination of economic policies at the level of economic decision makers, which is not developed through a coherent planning framework, and includes all levels of government. Moreover, there is a lack of coordination of policy development not only across levels of government, but also within each level of government. In particular, process of strategic planning, three years planning, medium term expenditures, and public investment planning and ERP should be aligned. The leading institution responsible for the process of coordination of the preparation of the Economic Reform Programme is the Directorate for Economic Planning of the Council of Ministers of Bosnia and Herzegovina.
The Directorate for Economic Planning, in co-operation with the coordinators for the preparation of the Economic Reform Programme, appointed by the Entity Governments, is drafting a Plan of Activities for the elaboration of the ERP, which includes specific activities to be undertaken with the deadlines for each activity. The Plan of Activities is the basic document that regulates the process of coordination of the preparation of the Economic Reforms Programme and Co-operation between different levels of government, the Council of Ministers of BiH, the Government of the Federation of Bosnia and Herzegovina. Capacity development activities implemented through this project will support relevant stakeholders to overcome the main challenges they are facing in the process of coordination, drafting, planning, implementing, monitoring and reporting of the Economic Reform Programme.
Project Results
- Output 1: Capacities of line ministries and other government institutions for preparation and implementation of ERP strengthened and improved;
- Output 2: Capacities of the institutions of the ERP coordinators strengthened and improved.