2005 pre-accession economic programmes of acceding and candidate countries

European Commission Directorate-General For Economic And Financial Affairs

Description

Economy - Finance
Central and Eastern Europe
Mediterranean countries
Target audience: Specialised/Technical

Informations

• Publié par: EUROPEAN-COMMISSION-DIRECTORATE-GENERAL-FOR-ECONOMIC-AND-FINANCIAL-AFFAIRS
• Nombre de lectures: 10
• Langue: English

Extrait

ENLARGEMENT PAPERS
ISSN 1608-9022
http://europa.eu.int/economy_finance
Number 27 May 2006
2005 Pre-accession Economic Programmes of acceding
and candidate countries
by
Directorate General for Economic and Financial Affairs


ECFIN.D.I/2006/REP/52943– EN This paper only exists in English.















































KC-AA-06-027-EN-C

ISBN 92-79-01383-1

© European Communities, 2006

Contents
Page
Introduction ...............................................................................................................3
PRE-ACCESSION ECONOMIC PROGRAMME OF BULGARIA ...................5
1. Introduction .......................................................................................................5
2. Macroeconomic developments..........................................................................6
3. Budgetary targets and the medium-term path of the public finances ........10
4. Structural reforms...........................................................................................14
5. The quality and sustainability of public finances .........................................19
PRE-ACCESSION ECONOMIC PROGRAMME OF ROMANIA...................23
1. Introduction .....................................................................................................23
2. Macroeconomic developments........................................................................24
3. Budgetary targets and the medium-term path of the public finances ........31
4. Structural reforms...........................................................................................38
5. The quality and sustainability of public finances .........................................42
PRE-ACCESSION ECONOMIC PROGRAMME OF CROATIA....................48
Summary and conclusions ......................................................................................48
1. Introduction .....................................................................................................51
2. Macroeconomic developments........................................................................52
3. Budgetary targets and the medium-term path of the public finances ........56
4. Structural reforms...........................................................................................60
5. The quality and sustainability of public finances .........................................64
PRE-ACCESSION ECONOMIC PROGRAMME OF TURKEY......................67
Summary and conclusions ......................................................................................67
1. Introduction .....................................................................................................70
2. Macroeconomic developments........................................................................71
3. Budgetary targets and the medium-term path of the public finances ........75
4. Structural reforms...........................................................................................78
5. The quality and sustainability of public finances .........................................82
ANNEX: JOINT MINISTERIAL OPINIONS AND CONCLUSIONS .............85

- 2 -
INTRODUCTION
In this Enlargement Paper the Directorate General for Economic and Financial Affairs
publishes its overview and assessments of the 2005 Pre-accession Economic Programmes of
acceding counties (Bulgaria, Romania) and candidate countries (Croatia, Turkey).
One of the economic priorities of the 1999 and 2000 Accession Partnerships was the
establishment of an annual fiscal surveillance for the candidate countries. This gave birth to the
so-called Pre-Accession Fiscal Surveillance Procedure, which aims at preparing countries for
the participation in the multilateral surveillance and economic policy co-ordination procedures
currently in place in the EU as part of the Economic and Monetary Union. The Pre-Accession
Economic Programmes (PEPs) are part of this procedure.
The PEPs have two objectives. First, to outline the medium-term policy framework, including
public finance objectives and structural reform priorities needed for EU accession. Second, they
offer an opportunity to develop the institutional and analytical capacity necessary to participate
in EMU with a derogation from the adoption of the euro upon accession, particularly in the
areas of multilateral surveillance and co-ordination of economic policies. The development of
the institutional capacity to co-ordinate between the various ministries, government agencies
and the central bank is a particularly important aspect ensuring the success of the Pre-Accession
Fiscal Surveillance Procedure.
The PEPs were to be submitted between mid October and 1 December 2004, which all
countries complied with. They have been made public by the countries and can be found on the
web under following addresses:
http://www.aeaf.minfin.bg/cms/docs/en/operative/pi_progr/PEP2005EN.pdf Bulgaria
http://www.cnp.ro/site/pep+-+editia+2005.html?child=11&language=English Romania
http://www.mfin.hr/str/120/ Croatia
http://ekutup.dpt.gov.tr/ab/kep/pep2005.pdf Turkey
As the former Yugoslav Republic of Macedonia became candidate country only in December
2005, it will submit its first PEP only towards the end of 2006.
Overall, the submissions show that
- all PEPs are based on a fairly consistent macroeconomic and fiscal framework. In the light
of the recent very positive economic development in all countries, the PEPs are overall only
mildly optimistic. Growth rates in Bulgaria are foreseen at close to or above 6%, at 5% in
Turkey and between 3.5% and 4% in Croatia.
- The fiscal frameworks foresee a continued narrowing of deficits in Croatia and Turkey,
whereas in Bulgaria and Romania a slight loosening is foreseen, caused by, as the PEPs
argue the effects of EU accession.
- 3 -
Pre-accession Economic Programmes - The structural reform agendas, as
2005: key figurespresented in the PEPs, are vast and partly
ambitious. Often, however, the PEPs only
- Real GDP growth (% change)
describe ongoing activities, and the links to
2004 2005 2006 2007 2008
the macroeconomic and fiscal frameworks
5.6 5.7 5.7 5.9 5.9Bulgariawithin the PEPs are often less clear. The
8.3 5.7 6.0 6.3 6.5Romaniafour PEPs provide overall for consistent
3.8 3.9 4.0 4.1 4.3Croatiaand party ambitious policy frameworks for
8.9 5.0 5.0 5.0 5.0Turkeyeconomic stabilization, fiscal policy and
structural reform. Their methodology and
- General government balance (% of GDP)
presentation has improved vis-à-vis
2004 2005 2006 2007 2008
previous years.
2.2 1.8 0.0 -0.2 -0.7Bulgaria
-1.5 -0.4 -0.7 -1.0 -1.5Romania
On 5 May 2006, the Ministerial Meeting
-3.9 -3.1 -2.4 -2.2 -1.9Croatia
between the ECOFIN and their counterparts
-5.2 -1.3 0.2 -0.9 0.0Turkey
from acceding and candidate countries adopted
(a) for the two acceding countries “joint - Government gross debt (% of GDP)
opinions” on their respective PEPs and (b) for 2004 2005 2006 2007 2008
the two candidate countries within the 38.9 31.3 26.3 23.9 22.7Bulgaria
meeting’s “joint conclusions” conclusions on 18.1 17.1 15.1 14.6 14.6Romania
their PEPs. The texts of these documents are 44.8 45.1 42.7 42.1 41.5Croatia
contained in Annex 1.
74.8 70.0 65.6 61.4 56.7Turkey
- 4 -
PRE-ACCESSION ECONOMIC PROGRAMME OF BULGARIA
(2005 -2008)
- OVERVIEW AND ASSESSMENT -
1. INTRODUCTION
The Bulgarian authorities submitted the 2005 Pre-Accession Economic Programme (PEP) on 9
December 2005. The programme covers the period 2005 to 2008 and is the fifth PEP since the
ECOFIN Council of 26/27 November 2000 expressed its wish for a regular dialogue with
candidate and accession countries. The programme is broadly consistent with other key
strategic policy papers, such as the National Development Plan 2007-2013 which was adopted
by the Council of Ministers on 27 December 2005, the Ministry of Finance’s budget projection
for the period 2006-2008 from May 2005, or the latest Memorandum to the stand-by
arrangement with the International Monetary Fund (IMF).
The programme largely complies with the requirements of the consolidated outline in terms of
content, form and data. It provides a concise update of the latest economic developments and an
overall consistent and comprehensive macroeconomic framework. Both fiscal and structural
reform policies are explained in detail. The programme reflects the conclusions of the Joint
Ministerial Meeting of 12 July 2005, although information on additional measures to improve
the business environment and labour market flexibility