3.  Relatively small and underdeveloped region ◦ Less than 20 million people ◦ GDP is 68.9 billion EUR (7% of EU10, 0.5% of EU27) ◦ GDP in PPP p.c. 7850 EUR (49% of EU10, 31% of EU27 average)  Size, population and level of economic development vary among the countries of the region _________ 1 Western Balkans covers: Albania, Bosnia and Herzegovina, Macedonia, Montenegro, Serbia, and Kosovo*

4. Population (million) GDP (EUR bn) GDP in EUR at PPP, per capita, EU 27=100 GDP in EUR at PPP, per capita Albania 2.89.2276800 Bosnia and Herzeg. 3.813.3276800 Macedonia 2.17.5389500 Montenegro 0.63.34210500 Serbia 7.230.9358700 Kosovo* 1.74.7n/a4810 Western Balkans 18.368.9347850 EU-10 98.99726315900 EU-27 502.91263010025100

5. Strong economic growth in the pre crisis period, followed by sharp decline in 2009 and slow recovery after 2009 Figure 1.1: Real GDP growth (in %)

6. The economic crisis resulted in the reduction of imports and current account deficits Figure 1.2: Current account deficit, 2007-2011 (% of GDP)

7. External debt recorded permanent growth in the pre-crisis period. In spite of the reduced current account deficits in 2009 and 2010, foreign debt recorded further growth. Figure 1.3: External debt, 2007-2001 (% of GDP)

8. In 2007, the region had budget surplus of 0.3%. In 2009, the regional budget deficit averaged 4.9 due to extensive borrowing from the IMF and other IFIs It remained below the average for CEEB (5.4%) Figure 1.4: Fiscal balance, 2007-2011 (% of GDP)

9. The general government debt increased from 37% of GDP in 2009 to 44% at the end of 2011 Debt levels remain high compared to pre-crisis levels of around 30% Figure 1.5: General government debt, 2007-2011 (% of GDP)

10. FDI inflows strongly affected by the crisis. In the pre-crisis period, FDI 5.688 mil. EUR in 2007 (9.3% of GDP). in 2008 the region experienced a decrease in FDI inflows, mostly due to the impact of the global economic crisis. Figure 1.6: Inflows of FDI in Western Balkan countries, 2007-2011 (% of GDP)

14. World Bank survey “Doing Business” is a comprehensive analysis of regulations and obstacles to starting, operating, and closing a business, compares the ease of doing business among more than 180 countries around the world

15. Albania BiH Macedonia Montenegro Serbia Kosovo  Western Balkans EU-10 EASE OF DOING BUSINESS RANK85126235186987847 Starting a Business 621625584212676 77 Dealing with construction permits1851636517617914415285 Registering Property 1219350117417683 41 Getting electricity1541581016976116112103 Getting credit237023440233139 Protecting Investors 1710019328210058 72 Paying taxes 16012824811494498 90 Trading Across Borders 7910376429412486 56 Enforcing Contracts 8512059135103138107 49 Closing business 668330441038769 56 Values better than the Western Balkans average are in red

16. Country rankCountryCPI score 95Albania3.1 91 Bosnia and Herzegovina 3.2 69Macedonia3.9 66Montenegro4.0 86Serbia3.3 112Kosovo * 2.9 87Western Balkans3.4 55EU-104.7 Transparency International’s Corruption Perception Index measures the perceived levels of public sector corruption in more than 170 countries. 1 Values better than the Western Balkans average are in red

17. Regulatory qualityRule of law Control of corruption Albania0.23-0.44-0.43 Bosnia and Herzegovina-0.1-0.36-0.32 Macedonia0.28-0.30-0.06 Montenegro-0.06-0.02-0.33 Serbia-0.2-0.39-0.21 Kosovo*-0.04-0.64 Western Balkans0.02-0.36-0.33 EU-100.970.610.25 WGI permit meaningful cross-country comparisons in governance as well as monitoring progress over time 1 Values better than the Western Balkans average are in red

19. Albania Bosnia and Herzegovina Macedonia Montenegro Serbia Western Balkans EU-10 Global Competitiveness Index - overall rankings 89888072958554 1.Basic requirements 87817174958255 2. Efficiency enhancers 92978474888747 3. Innovation and sophistication factors 113991106912410361 The 2012/13 rank is out of 144 countries. The lower the rank number, the better 1 Values better than the Western Balkans average are in red

25. Albania BiH Macedonia Montenegro Serbia Kosovo* 1.1. Systemic approach to a better regulation agenda Regulatory reform strategy√ √ (RS) √√√ Segments of the regulatory reform strategy as a part of other country strategic documents √ (BiH state & FBiH) √ 1.2. Main motive for the regulatory reform? Need to boost competitiveness and growth√√√√√√ International commitment (e.g. EU integration commitment)√√√√√√ Government reform agenda√√√√√√ 1.3. Leadership of the regulatory reform implementation Government√ √ (BiH state & FBiH) √√√√ Businesses √ (RS) √ √ Citizens, national opinion √ NGOs √

26. CountryCentral regulatory oversight authority AlbaniaRegulatory reform task force Bosnia & Herzegovina - BiH StateNo oversight authority - BiH FederationNo oversight authority - Republic of SrpskaCouncil for regulatory reform Macedonia Central body for better regulation and capacity building within the Ministry of Information Society and Administration (MIOA) 1 Montenegro Council for Regulatory Reform and Improvement of Business Environment SerbiaOffice for RIA and Regulatory Reform Kosovo*Council on Economic Development

35.  Yellow - the country has the capacity to comply with the requirements of the acquis in the medium term; Orange – additional efforts are needed to align with the EU acquis and to implement it effectively in the medium term Brown - considerable and sustained efforts are needed to align with the EU acquis and to implement it effectively in the medium term. 3 rd Copenhagen Criteria – Acceptance of the Community acquis

37. UnicameralBicameral Albania√ Bosnia and Herzegovina - Bosnia and Herzegovina – state level√ - Federation of Bosnia and Herzegovina√ - Republika Srpska√ Macedonia√ Montenegro√ Serbia√ Table 5.1: The structure of parliaments in Western Balkan countries

38. Albania BiH Macedonia Montenegro Serbia Kosovo* Direct parliamentary oversight of the government activity Parliamentary questions and interpellations√√√√√√ Government annual reports to the parliament√√√√√√ Ministries’ quarterly reports to the related committees √ √ Budgetary scrutiny and financial control√√√√√√ Parliamentary oversight over implementing public agencies Telecommunication regulatory body Agency submits reports to the parliamentary committees√√√ √√√ Parliament adopts the reports√√ √√ √ Parliament nominates executives√√√ √√ Energy regulatory body Agency submits reports to the parliamentary committees√√√√√√ Parliament adopts the reports√√ √√ √ Parliament nominates executives√√√√√√ Table 5.2: Parliamentary oversight of the government activity

39. Number of parliamentary committees Albania8 Bosnia and Herzegovina: - Bosnia and Herzegovina – state level 1 16 - Federation of Bosnia and Herzegovina 2 27 - Republika Srpska22 Macedonia21 Montenegro11 Serbia19+1 3 Kosovo*16 4 Table 5.3: Number of parliamentary committees in Western Balkan countries’ parliaments

40. Country Parliamentary Committees for Economy and Finance No. of committee members AlbaniaEconomy and Finance Committee23 Bosnia and Herzegovina Bosnia and Herzegovina – state level Finances and Budget Committee9 Joint committee for economic reforms and development 11 Federation of BiHCommittee for economic and financial policy11 Republika Srpska Finances and Budget Committee9+2 1 Audit Committee9 Macedonia Committee on Financing and Budget14 Committee on economy12 MontenegroCommittee on economy, finance and budget12 Serbia Committee on Finance, State Budget and Control of Public Spending 17 Committee on the Economy, Regional Development, Trade, Tourism and Energy 17 Kosovo* Committee for Budget and Finance11 The Committee on Oversight of Public Finances 9 Committee on Economy, Trade, Industry, Energy, Transport and Telecommunication 11 Table 5.4: Parliamentary Committees for Economy and Finance in Western Balkan Countries

41. Parliamentary Committees for Economy and Finance Economic policies State budget: consideration and execution State budget: oversight of implementation Public finances Financial and banking system Consideration of regulations in the field of budget and finance Consideration of regulations in the field of economy Albania: Economy and Finance Committee √√√√√√√ Macedonia: Committee on Financing and Budget √√√√√ Committee on economy √√ Montenegro: Committee on economy, finance and budget √√√√√√√

42. Albania BiH Macedonia Montenegro Serbia Kosovo * Research departmentxx (state level)x xx Number of employees3517 610 6 Number of experts314 27 4 Number of experts working for parliamentary department /committee(s) Department/ committee for Economy and Finance Number of employees 4  3  (BiH state) 4 4  13  * 10  10  (FBiH) 3  (RS) Number of experts 4  3  (BiH state) 2 1  4  *  8  6  (FBiH) 1  (+2) 3 (RS) Department / committee for legislation Number of employees 5  3  (BiH state) 11 6  4  3  5  (FBiH) 1  (RS) Number of experts 5  3  (BiH state) 3 2  3  3  5  (FBH) 1  (+2) (RS) EU integrations department Number of employees 5  2  (BiH state) 6 5 7  3  2  (FBiH) 1  (RS) Number of experts 5  2  (BiH state) 8  ( FBiH) 1  (+2) (RS) 1 1 6  3  Table 5.8: Parliamentary research departments and experts in WBCs

43. Albania BiH Macedonia Montenegro Serbia Kosovo* 1. Budgetary independence of the parliament Budget of the parliament as a segment of the government budget √√√√ Partial budgetary independence - Budget Council √ Full budgetary independence √ 2. Available financial resources for drafting laws Sufficient Limited√√√√√√ Table 5.9: Budgetary independence of parliaments

44. Albania Bosnia and Herzegovina Macedonia Montenegro Serbia Kosovo* 1. Public hearing with stakeholders 1.1. Is public hearing in the parliament mandatory? conducted during the consideration of laws in the parliament? Yes No√√√√√√ 1.2. Is public hearing conducted during the consideration of laws in the parliament? For all laws For some laws√√√√√√ 2. Forward planning of regulatory activities 2.1. Plan of legislative activities Fully implemented/publicly available plan √ √ √ √ Partially implemented/not publicly available plan √ 2.2. Harmonization of forward planning of regulatory activities between government and parliament √ √ √ √ 3. Regulatory Impact Analysis (RIA) Formally introduced RIA as a part of explanatory note of the draft law (in the Rules of Procedure of the Parliament) Initiated √ None√ √ √ √ √ Albania Bosnia and Herzegovina Macedonia Montenegro Serbia Kosovo* 1. Public hearing with stakeholders 1.1. Is public hearing in the parliament mandatory? conducted during the consideration of laws in the parliament? Yes No√√√√√√ 1.2. Is public hearing conducted during the consideration of laws in the parliament? For all laws For some laws√√√√√√ 2. Forward planning of regulatory activities 2.1. Plan of legislative activities Fully implemented/publicly available plan√ √ √ √ Partially implemented/not publicly available plan √ √ 2.2. Harmonization of forward planning of regulatory activities between government and parliament √ √ √ √ 3. Regulatory Impact Analysis (RIA) Formally introduced RIA as a part of explanatory note of the draft law (in the Rules of Procedure of the Parliament) Initiated √ None√ √ √ √ √ Table 5.10: Use of better regulation: regulatory quality tools related to transparency in the legislation process in Western Balkan parliaments

45. 1.Role of the committee in the consideration, execution and oversight of the implementation of the state budget: -reports of the ministry of finance -active role of the committee in the budget decision-making role -monitoring of the implementation of the state budget -state audit institution report 2.Strengthening the role of the committee in economic policy creation Documents related to the effect of the crisis and external shocks National development plans and strategies 3.Reports of the regulatory bodies/agencies that report to this committee -State audit institution -Competition Agency 4.Cooperation of the Economy and Finance Committee with the EU Integrations Committee in the following areas: -progress in the EU integrations process -State budget: consideration, execution and oversight of implementation -harmonization of the legislation with the EU acquis Albania: Economy and Finance Committee

46. 5.Types of analysis to be prepared in order to improve the efficiency of the Economy and finance committee -consideration, execution and oversight of implementation of the state budget -economic policy analysis -fiscal policy analysis -sharing the knowledge and experience with the relevant committees from the region in the areas of common interest 6.Cooperation with the private sector and NGOs -Chambers of commerce -Foreign investors council -SMEs -NGOs 7.Improving the control function of the parliaments over executives: -annual government reports -reports of the relevant ministries related to their work -questions and interpellations Albania: Economy and Finance Committee

47. Albania: EU integrations committee