The stopwatch of the EU growth plan is ticking: Will part of the funds intended for Pristina be redirected elsewhere?

Kosovo is on track to receive €62 million from the Western Balkans Growth Plan through pre-financing, after its parliament ratified the agreements with the EU. This payment is not conditional upon fulfilling the steps set out in the Reform Agenda and is now certain. However, the next tranche is already hanging in the balance. If, within the next three months, the steps from the agenda that Kosovo was supposed to complete by June 2025 are not implemented—and for which the EU has effectively granted an additional 12-month grace period—part of the funds allocated to Kosovo could be redistributed to other countries in the region, Kosovo Online’s interlocutors warn.

Written by: Dusica Radeka Djordjevic

Compared to the rest of the Western Balkans, Kosovo is only one step ahead of Bosnia and Herzegovina, which has yet to ratify the agreement with the EU on the Reform and Growth Instrument and the accompanying loan. At the same time, Kosovo lags far behind Montenegro, which first received €26.8 million through pre-financing, followed by €10.2 million in the first tranche and €8.1 million in the second.

The Government of Kosovo adopted its Reform Agenda on 9 October 2024. Ratification of the agreements with the EU was delayed due to last year’s elections and the dysfunction of the Assembly. Once MPs confirmed the agreement on 13 February, a request for pre-financing was promptly submitted.

Across the region, pre-financing amounts to 7 percent of the total allocated sum. For Kosovo, which has been earmarked €882.6 million under the Growth Plan, that share amounts to nearly €62 million.

Kosovo’s Reform Agenda envisages 111 reform steps to be implemented by the end of 2027. However, it remains uncertain whether it will manage to complete those for which the extended deadline expires this June.

Agim Shahini, President of the Kosovo Business Alliance, assesses that there is little time left.

“We can plan to use the funds allocated to Kosovo, but we do not have much time because we must submit our projects by June, and I doubt we will manage. So far, other states—Albania, Serbia, and North Macedonia—have each received more than €160 million, while we have received nothing,” Shahini told Kosovo Online.

He notes that several criteria apply to the disbursement of funds to Kosovo, with European integration being paramount—encompassing public administration, human rights, minority rights, and the fulfillment of economic standards.

Marko Todorovic, a researcher at the Centre for European Policies in Belgrade, says that after the Assembly of Kosovo ratified the agreements with the European Commission, Kosovo currently meets the conditions only for pre-financing. Even for that, however, several procedural steps remain, including establishing the institutional structure for implementing the Reform Agenda—namely appointing a national coordinator and forming a supervisory board for implementation.

“Once all of that is completed—which should happen very quickly, as these are procedural matters—Kosovo can receive seven percent of the total sum available to it. That seven percent amounts to €62 million, and that is what Kosovo will certainly receive. Everything thereafter is linked to specific reforms stemming from the Reform Agenda, and we are talking about millions of euros that could be lost in the coming period,” Todorovic told Kosovo Online.

High Risk of Losing Funds

As he explains, Kosovo must now implement reform steps not only from the current semester, but also those whose deadlines were December 2024, June 2025, and December 2025. The most problematic, he assesses, are those with the June 2025 deadline.

“Kosovo is currently expected to work on reforms from four semesters, which is, of course, an extremely difficult task, and there is a significant risk of losing funds. For each semester there is a certain grace period during which a country may delay implementation but still withdraw the funds in the end. For reforms due in December 2024, the grace period is two years, meaning Kosovo can implement them by the end of this year. However, for later reform steps the grace period is one year. That means reforms due in June 2025 have a grace period until the end of June this year. In other words, only a few months remain, and it is quite likely that some funds will be lost,” he points out.

If Kosovo implements planned reforms after the grace period expires, the allocated funds should not be disbursed. The same rule should apply to all Western Balkan countries in such a situation, with the funds then redistributed to neighboring states.

“Then the neighbors receive a larger amount of money at their disposal for their own reform steps. That is essentially the logic of the entire Western Balkans Growth Plan. We have not yet faced a situation where any actor in the region has exceeded the grace period. We will see whether the European Commission, when that happens, will attempt to find a way to disburse the funds or possibly grant an additional extension. However, that would require amendments to the signed agreements and, in my view, would alter the very logic of the Growth Plan, which is meant to link reforms to funding. I would consider that negative, because funds should not be disbursed at any cost if reforms have not been implemented,” Todorovic emphasizes.

Normalization of Relations with Belgrade Also on the Scale

When it comes to Kosovo, Todorovic recalls that a specific prerequisite for disbursing funds is normalization of relations with Belgrade—just as normalization with Pristina is a condition for Belgrade.

“It is important that the financial incentive be significant in matters related to normalization and minority rights in Kosovo. It is very likely that Pristina will be required to undertake concrete steps regarding normalization. I cannot go into details about what the European Commission will demand, but it certainly will not remain merely on paper,” he says.

When Serbia received funds from the first tranche, an assessment was also made of whether it had acted as a constructive partner in normalization. At that moment, it was confirmed that it had, but this will again be evaluated for each subsequent tranche.

Serbia, it should be recalled, received €111 million in pre-financing and on 16 January this year received official approval from the European Commission for the disbursement of part of the first tranche in the amount of €56.5 million.

Shahini also points out that dialogue with Belgrade is one of the conditions applicable to Kosovo.

“The condition has been fulfilled for representatives of the Serbian community to return to the north of Kosovo,” he states.

Asked whether the EU might condition disbursement on submitting the European draft statute of the Community of Serb-Majority Municipalities to the Constitutional Court for review, Shahini says this is possible.

“We have been surprised several times by various EU demands. We do not know whether this will happen, but it could. The important thing is that we no longer have sanctions. That is positive, but it does not mean we cannot return to sanctions if, as a state and as leaders, we behave in a way that ignores the international community. Therefore, we must carefully open ourselves toward the European Union and the international factor, advance economic growth, ensure open borders without obstacles for the movement of goods and capital, and move together toward the EU,” Shahini assesses.

The 111 steps of Kosovo’s Reform Agenda are grouped into five areas: “Governance, Public Administration Reform and Public Financial Management,” “Green and Digital Transition,” “Private Sector Development and Business Environment,” “Human Capital Development and Retention,” and “Rule of Law.”

The €6 billion Western Balkans Growth Plan was adopted by the European Commission on 8 November 2023. Its objective is to encourage the region’s six partners to prepare for EU membership by integrating into the EU Single Market, enhancing regional economic cooperation, deepening EU-related reforms, and increasing pre-accession financing in order to accelerate the socio-economic convergence of the Western Balkans with the European Union.