Changes from plenary report to adopted text

Removed(12) Activities under the Facility should comply with the highest climate and environmental standards and support progress towards the Sustainable Development Goals, and contribute to the achievement of national contributions under the Paris Agreement and the United Nations Framework Convention on Climate Change in line with commitments made in National Climate and Energy Plans, the United Nations Convention on Biological Diversity and the United Nations Convention to Combat Desertification and should not contribute to environmental degradation or cause harm to the environment or climate. In particular, funding under the Facility should be consistent with the long-term goals on decreasing the global average temperature and with the objective to increase the ability for mitigation action and the ability to adapt to adverse effects of climate change, foster climate resilience and support biodiversity, conservation, circular economy, sustainable water management and zero-pollution. Measures funded under the Facility should be in line with the Beneficiaries’ National Energy and Climate Plans, their Nationally Determined Contribution and ambition to reach climate neutrality by 2050. The Facility should contribute to the mitigation action and to the ability to adapt to the adverse effects of climate change, and foster climate resilience.

Removed(13) The implementation of this Regulation should be guided by the principles of equality, inclusiveness, fairness, and and non-discrimination, as elaborated in the Union of Equality strategies, as well as the UNESCO’s Declaration on Cultural Diversity, European Commission against Racism and Intolerance (ECRI) reports. It should promote and advance gender equality and mainstreaming, ensure meaningful participation of women in decision-making processes, and the empowerment of women and girls, and seek to protect and promote women’s and girls’ rights, as well as prevent and combat violence against women and domestic violence, in line with the EU Gender Action Plans and relevant Council conclusions and international conventions. Furthermore, the Regulation should be implemented in full respect of the European Pillar of Social Rights, including in regards to the child protection and care system and labour rights. The implementation of the Facility should be in line with the United Nations Convention on the Rights of Persons with Disabilities and its protocol, ratified by the EU and its Member States and ensure accessibility in its investments and technical assistance, in line with Directive (EU) 2019/882, in areas such as housing, transportation, and public spaces, including public infrastructure in both urban and rural areas. Measures should support the rights of persons with disabilities to live independently and be included, accelerating the transition from residential institutions to community-based support and independent living.

Removed(14) This Regulation should contribute to the implementation of the Green Agenda for the Western Balkans▌ by reinforcing environmental protection, including nature and environmental restoration contributing to the mitigation of climate change and increasing resilience to climate change, and accelerating the shift towards a low-carbon economy.

Removed(14a) This Regulation should promote the European code of conduct on partnership and the multi-level governance principle in order to prepare the Beneficiaries for the future implementation of the European Structural and Investment Funds.

Removed(15) Reflecting the European Green Deal as Europe’s sustainable growth strategy and the importance of tackling climate and biodiversity objectives in line with the commitments of the Interinstitutional Agreement, the Facility should contribute to the achievement of the overall target of 30% of Union budget expenditure supporting climate objectives and 7.5% in 2024 and 10% in 2026 and 2027 to biodiversity objectives. At least 37% of the non-repayable financial support channelled through the WBIF should account to climate objectives. The Facility should support activities that fully respect the climate and environmental standards and priorities of the Union and the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852.

Removed(16) The Commission, in cooperation with the Member States and the Beneficiaries, should ensure the compliance, coherence, consistency and complementarity, increased transparency and strong and continued accountability during and after the delivery of assistance, including by implementing appropriate internal control systems and anti-fraud policies with enhanced levels of transparency and continuous evaluation by the Commission in order to protect the financial interest of the Union. The support under the Facility should be made available under the preconditions that each of the Beneficiaries respects and upholds and improves effective democratic mechanisms and institutions, including a functioning, democratic multi-party parliamentary system, media freedom, independence and pluralism and fight against disinformation, foreign information manipulation and interference, and the rule of law, including an independent judiciary and the fight against corruption, and guarantees respect for human rights and cultural diversity, including the rights of persons belonging to all minorities and communities, including ethnic and religious minorities, the LGBTI community, and people belonging to other vulnerable groups. Another pre-condition should be the alignment with the Union’s common foreign and security policy, including adoption of restrictive measures against Russia, as well as with EU visa requirements for third countries. Another pre-condition should be that Serbia and Kosovo engage constructively with clearly measureable progress and tangible results in the normalisation of their relations in order to fully implementing all their respective obligations stemming from the Agreement on the Path to Normalisation and its Implementation Annex as well as all past Dialogue Agreements and engage in negotiations on the Comprehensive Agreement on normalisation of relations.

Removed(17) The overall maximum amount for the Union support through the Facility should be EUR 6 billion in current prices for the period from 2024 to 2027, of which up to EUR 2 billion in non-repayable support and EUR 4 billion in concessional financial-assistance loans provided by the Union and provisioned from the EUR 2 billion. At least half of the total amount should be allocated through the Western Balkans Investment Framework (WBIF), including the entire amount of the non-repayable support, less than 1.5% of technical assistance and the amounts necessary for provisioning of the loans.

Removed(18) This Regulation lays down a financial envelope for the entire duration of this Instrument, which is to constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources, for the European Parliament and the Council during the annual budgetary procedure.

Removed(19) The financial liability from loans under this Facility should not be supported by the External Action Guarantee, by way of derogation from Article 31(3), second sentence of Regulation (EU) 2021/947. Loans type of support under this Facility should constitute financial assistance within the meaning of Article 220(1) of Regulation (EU, Euratom) 2018/1046. An indicative amount of financing for each Beneficiary should be calculated based on the formula laid down in Annex I, combining the population share of a Beneficiary over the overall population of the Western Balkans region and the average GDP per capita for the Western Balkans region over the GDP per capita of the respective Beneficiary, weighing the two factors with 60% and 40% respectively. If the payment conditions for the release of funds are not met, the Commission may redistribute part of or the entire amount to other Beneficiaries, while preserving a geographical balance when allocating funds from the Facility and consider uneven local administrative capacities.

Removed(20) Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 TFEU should apply to this Regulation. Those rules are laid down in Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council and determine in particular the procedure for establishing and implementing the budget through grants, procurement, indirect management, financial assistance, blending operations and the reimbursement of external experts, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

Removed▌

Removed(22) In order to ensure an efficient implementation of the Facility, including the facilitation of the Western Balkans Beneficiaries’ integration in European value chains, all supplies and materials financed and procured under this Facility should originate from Member States, Beneficiaries, contracting parties to the Agreement on the European Economic Area and countries covered by Annex I to Regulation (EU) 2021/947 of the European Parliament and of the Council and Annex I to Regulation (EU) 2021/1529 and countries for which reciprocal access to external assistance in Beneficiaries is established by the Commission, unless the supplies and materials cannot be sourced at reasonable conditions in any of those countries, in which case the procurement should be in line with the applicable EU regulations on due diligence in supply chains.

Removed(23) While respecting the principle that the Union budget is set annually, the possibility to apply the flexibilities in accordance with Regulation (EU, Euratom) 2018/1046 for other policies should be ensured, including for carry overs and re-commitments of funds, to ensure efficient use of the Union funds, thus maximising the Union funds available under the Facility.

Removed(23a) Facilities are instruments responding to exceptional situations, their financing and governance arrangements should therefore ensure full accountability and scrutiny to the budgetary authority.

Removed(24) The implementation of the Facility for Western Balkans should be underpinned by a coherent, clear, and prioritised set of targeted reforms and investment priorities in each Western Balkans Beneficiary (a Reform Agenda) in the form of measurable milestones and targets, providing a framework for boosting inclusive sustainable socio-economic growth, clearly articulated and aligned with Union accession requirements. The Reform Agenda will serve as an overarching framework to achieve the objectives of this Facility. The Reform Agenda should be prepared in close consultation with relevant stakeholders, including national parliaments, regional and local representative bodies and authorities, social partners and civil society organisations and experts via consultations with sufficient timeframes and transparency, and clear follow-up procedures to input given. The Reform agenda should be submitted to the European Parliament.

Removed(25) Disbursement of Union support should be conditional on no persistent stagnation, compliance with the clear and predetermined payment conditions and on measurable progress with corresponding milestones and targets in the implementation of reforms set out in the Reform Agendas assessed and formally approved by the Commission on the basis of internal guidance for assessing the satisfactory fulfilment of the payment conditions. The release of funds should be structured accordingly, reflecting the objectives of the Facility.

Removed(26) The Reform Agendas should include targeted reform measures and priority investment areas, along with payment conditions in the form of measurable qualitative and quantitative steps as well as corresponding milestones and targets indicating satisfactory progress or completion of those measures, and an indicative timetable for the implementation of those measures. The Reform Agendas should also include and indicative ex-ante costing of reforms and investments. Those steps should be planned for no later than 31 August 2027, although the overall completion of the measures to which such steps refer may extend beyond 2027 but not later than 31 December 2028.

Removed(27) The Reform Agendas should include an explanation of the Beneficiary’s system to effectively prevent, detect and correct irregularities, any type of corruption, including high-level corruption as well as any kind of nepotism or favouritism, fraud and conflicts of interests, when using the funds provided under the Facility, and the arrangements ▌to avoid double funding from the Facility and other Union programmes as well as other donors, ensuring the integrity and optimal use of allocated resources. After the release of funds a continued financial assessment through the established management and control system under the IPA III framework is sufficient in order to avoid overlapping.

Removed(27a) The Reform Agendas should include detailed explanations on how they contribute to the just and digital transition in the region and explain how the beneficiaries ensure the application of EU environmental law and standards and, in particular, the application of the ‘Do No Significant Harm’ principle. The Reform Agendas should also include explanations on how they ensure a meaningful participation and consultation of regional and local authorities as well as civil society organisations in the design and implementation of the reform agendas. The Reform Agendas should further explain how they assist in improving the public access to information and public participation including access to environmental information.

Removed(28) Measures under the Reform Agendas should▌ contribute to improving an efficient public finance management and control system, fight against any type of corruption as well as any kind of nepotism of favouritism, money laundering, tax avoidance, tax evasion,, fraud and organised crime and conflicts of interest, and to an effective system of State aid control, aiming at ensuring fair conditions for all undertakings. Such measures should be implemented by the Beneficiary by an indicative date which could be set, appropriate for each measure, in the early stage of implementation of the Facility.

Removed(29) The Commission should publish the Reform Agendas when received. The Commission should assess each Reform Agenda based on the clear and impartial list of criteria set out in this Regulation, after consulting the European Parliament on the submitted plan. In order to supplement this Regulation, ▌the Commission should be empowered to adopt a delegated act. ▌The Commission will duly take into account Council decision 2010/427/EU and the role of the EEAS where appropriate, and in particular when monitoring the fulfilment of the precondition for Union support.

Removed(30) The delegated act referred to in this Regulation should at the same time constitute a work programme within the meaning of Article 110(2) of the Financial Regulation in respect of the amount of non-repayable financial support under this Regulation.

Removed(31) Given the need for flexibility in the implementation of the Facility, it should be possible for a Beneficiary to make a reasoned request to the Commission to amend the delegated act, where the Reform Agenda, including relevant payment conditions, is no longer achievable, either partially or totally, because of objective circumstances. A Beneficiary should be able to make a reasoned request to amend the Reform Agenda, including by proposing addenda where relevant.

Removed(32) The Commission should be able to propose to amend the delegated act, in particular to take into account a change of the amounts available.

Removed(33) In case of redistribution of support under this Facility, based on clear and impartial criteria which would lead to additional support to a Beneficiary, this Beneficiary should submit a revised Reform Agenda with additional measures to be achieved to the Commission, which shall transmit it to the Parliament.

Removed(34) A Framework Agreement should be concluded with each Beneficiary to set up the principles of the financial cooperation between the Union and the Beneficiary, and to specify the necessary mechanisms related to control, supervision, monitoring, evaluation, reporting and audit of Union funding under the Facility, rules on taxes, duties and charges and measures to prevent, detect, investigate and correct irregularities, fraud, any forms of corruption, including high level corruption, any types of nepotism or favouritism and conflicts of interest. Consequently, a loan agreement should also be concluded with each Beneficiary setting out specific provisions for the management and implementation of funding provided in the forms of loans. Both the Framework Agreement and the Loan Agreement shall be shared with the European Parliament.

Removed(34a) The Framework Agreement should provide the obligation for beneficiaries to ensure the collection of, and access to data in compliance with EU data protection principles and with applicable data protection rules, adequate data on persons and entities receiving funding, including beneficial ownership information, for the implementation of Reform Agendas.

Removed(35) Financial support for the Reform Agendas should be possible in the form of a loan. In the context of Western Balkans financing needs, it is appropriate to organise the financial assistance under the diversified funding strategy provided for in Article 220a of Regulation (EU, Euratom) 2018/1046 and established as a single funding method therein, which is expected to enhance the liquidity of Union bonds and the attractiveness and cost-effectiveness of Union issuance.

Removed(36) It is appropriate to provide loans to the Beneficiaries on highly concessional terms with a maximum duration of 40 years and to not start the repayment of the principal before 2034. It is also appropriate to derogate from Article 220(4), of Regulation (EU, Euratom) 2018/1046.

Removed(37) Considering that the financial risks associated with the support to the Beneficiaries in the form of loans under this Instrument is comparable to the financial risks associated with lending operations under Regulation (EU) 2021/947, provisioning for the financial liability from loans under this Regulation should be constituted at the rate of 9%, in line with Article 211 of Regulation (EU, Euratom) 2018/1046 and the funding of the provisioning should be sourced from EUR 2 billion envelope under this facility.

Removed(38) In order to ensure that the provisioning rate remains adequate to the financial risks, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending the provisioning rate. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, as well as with the relevant Committees of the European Parliament. Those consultations should be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation and transparency in the preparation of the delegated acts, the European Parliament and the Council shall receive all documents from the Commission at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

Removed(39) In order to maximise the leverage of of Union financial support to attract additional investment, and to ensure EU control over the expenditure, the infrastructure investments supporting the Reform Agendas should be implemented through the WBIF. Individual projects or programmes should be submitted to the WBIF Operational Board for its opinion only upon completion of relevant payment conditions defined in the Reform Agendas. In case of non-fulfilment of relevant payment conditions for investments within one year, the Commission may redistribute the investment funding under the WBIF among the remaining Beneficiaries.

Removed(40) In order to ensure that the Beneficiaries dispose of start-up funding for the implementation of the first reforms, each Beneficiary should have access to up to 7% of the total amount foreseen under this Facility financial assistance in the form of a pre-financing, subject to availability of funding and to the respect of the preconditions for the support under the Facility.

Removed(41) It is important to guarantee both flexibility and programmability in providing Union support to the Western Balkans Beneficiaries. For that purpose, funds under the Facility should be released according to a fixed semi-annual schedule, subject to availability of funding, based on a request for the release of funds submitted by the Beneficiaries and following verification by the Commission of the satisfactory fulfilment of both the general conditions related to macro-financial stability, sound public financial management, transparency and oversight of the budget and the relevant payment conditions, that is the implementation of the relevant measures. Where a payment condition is not fulfilled or the relevant measures are not implemented in accordance with the indicative timeline set in the decision approving the Reform Agenda, the Commission could withhold part or whole of the funds corresponding to that condition. The disbursement of the corresponding withheld funds could take place during the next window for the release of funds and up to twelve months after the original deadline set out in the indicative timeline, provided the payment conditions have been fulfilled or the relevant measures have been implemented. In the first year of implementation, this deadline should be extended to 24 months from the initial negative assessment.

Removed(41a) To support the appropriate level of transparency that benefits the protection of the EU financial interests, the final recipient for support from the Facility shall be the natural person or entity that de facto receives the EU funding, being the contractor or sub-contractor in the case of contracting authority. Government ministries, agencies, or bodies that oversee, regulate, or administer the funds should only be considered final recipients when they are themselves involved in the execution and direct application of the work or service and bear the associated costs.

Removed(42) By way of derogation from Article 116(2) and (5) of Regulation (EU, Euratom) 2018/1046, it is appropriate to set the payment deadline for contributions to state budgets starting from the date of the communication of the decision authorising the disbursement to the Beneficiary and to exclude the payment of default interest by the Commission to the Beneficiary.

Removed(43) In the framework of the Union’s restrictive measures, adopted on the basis of Article 29 of the Treaty on European Union (TEU) and 215(2) of the Treaty on the Functioning of the European Union (TFEU), no funds or economic resources may be made available, directly or indirectly, to or for the benefit of designated legal persons, entities or bodies, or to third-country operators facilitating circumvention of EU sanctions. Such designated entities, and entities owned or controlled by them, therefore cannot be supported by the Facility.

Removed(44) In accordance with Regulation (EU, Euratom) 2018/1046, Regulation (EU, Euratom) 883/2013 of the European Parliament and of the Council and Council Regulations (EC, Euratom) No 2988/95, (Euratom, EC) No 2185/96 and (EU) 2017/1939, the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, fraud, all types of corruption including high-level corruption, all types of nepotism or favoritism, conflict of interest, double funding, to the recovery of funds lost, wrongly paid or incorrectly used, and where appropriate, to the imposition of administrative penalties.

Removed(45) In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) should be in a position to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union during the implementation of the assistance.

Removed(45a) The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. To this end, an independent Audit Board should be set up to provide the Commission with information on possible mismanagement of funds and guarantee that a declaration of assurance is obtained through an independent external audit. The Audit Board should be subject to the reporting obligations to European Public Prosecutor's Office (EPPO) , in accordance with Article 24(1) of Regulation (EU) 2017/1939. Such information should be made available to OLAF and EPPO, when applicable, and where appropriate to the relevant Western Balkans Beneficiary authorities. The Commission, with the assistance of the Union delegations, should be entitled to perform checks on how the Western Balkans Beneficiary implement funds along the whole project life cycle. The Commission should be provided with sufficient funding and human resources to perform the audit and checks. The Audit Board should ensure regular dialogue and cooperation with the European Court of Auditors.

Removed(46) In accordance with Article 129 of Regulation (EU, Euratom) 2018/1046, the necessary rights and access should be granted to the Commission OLAF, the European Court of Auditors and, where applicable the EPPO, including by third parties involved in the implementation of Union funds. The European Parliament shall also be granted with the necessary rights and access. The Western Balkans should also use the Early Detection and Exclusion System and report irregularities in relation to the use of the funds to the Commission.

Removed(47) The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. At the same time, given the long track record of financial assistance provided to the Western Balkans Beneficiaries also under indirect management and taking into account their gradual alignment with the Unions internal control standards and practices, the Commission may rely to a great extent on the operation of the national internal control and fraud prevention systems. In particular, the Commission and OLAF should be informed of all suspected cases of irregularities, fraud, corruption and conflict of interests affecting the implementation of funds under the Facility without delay, including by national Member States authorities in possession of sufficient and reliable data from credible and official sources. The Commission and OLAF should provide an evaluation of said fraud prevention systems and offer recommendations for upgrades or fixes to the Beneficiaries in line with the EU acquis in case of deficiencies. The Commission should also receive the information on beneficial owners of legal entities benefiting from the Facility and publish a list of persons and legal entities receiving more than 50 000 euros cumulatively from the Facility.

Removed(48) Furthermore, the beneficiaries should report the irregularities including fraud which have been the subject of a primary administrative or judicial finding, without delay, to Audit Board and the Commission and keep them informed of the progress of administrative and legal proceedings. With the objective of alignment to good practices in Member States, this reporting should be done by electronic means, using the Irregularity Management System, established by the Commission.

Removed(48a) In order to measure progress on the objectives of the Facility, the Commission and the Beneficiary should establish a clear correlation between the amounts paid made available to the Beneficiary, in non-repayable financial support and loans and the costs incurred for the achievement of indicators.

Removed(49) Each Beneficiary should establish a monitoring system feeding into an semi-annual report of fulfilment of its Agenda’s payment conditions accompanying the semi-annual request for the release of funds. Beneficiaries should collect and provide access to data and information allowing the prevention, detection and correction of irregularities, fraud, any types of corruption including high-level corruption, any types of nepotism and favoritism, and conflicts of interests, in relation to the measures supported by the Facility.

Removed(50) The Commission should ensure that clear monitoring and impartial evaluation mechanisms are in place in order to provide effective accountability and transparency in implementing the Union budget, and to ensure effective assessment of progress towards the achievement of this Regulation’s objectives.

Removed(51) The Commission should provide an annual report on the progress with the implementation of the Regulation and the Facility to the European Parliament and to the Committee referred to in this Regulation. The annual report should include a detailed assessment of the added value and additionality of this Facility, of synergies and complementarities between support covered under this Facility and Regulation (EU) 2021/1529, as well as a description of the arrangements and measures taken by the Commission to avoid double funding, with a view to protecting the Union budget. A regular dialogue with the European Parliament and its relevant committees should be established.

Removed(51a) As a measure of public accountability, the Beneficiary governments, including the relevant ministers, should inform the Beneficiary Parliaments regularly on the implementation of the respective Reform Agendas. Provision of all relevant information in time to the Beneficiary Parliaments, allowing for an interactive inter-institutional dialogue at least every three months with relevant cabinet members is key to enable transparency. Reporting enabling oversight should also be provided as part of the yearly approval of the budget of the Beneficiary.

Removed(52) The Commission should carry out an evaluation of the Facility upon its completion and present its results in the responsible committees in the European Parliament.

Removed(53) Beneficiaries should support free pluralistic media that enhance and promote the understanding of Union values and the benefits and obligations of potential Union membership, while addressing disinformation, foreign information manipulation and interference. Visibility of the Union funding needs to be ensured, including through effective communication campaigns by the European Commission and the EU Delegations on the ground in order to promote benefits of Union assistance in the Beneficiary.

Removed(54) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States but can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

Removed(55) ▌This Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union,

RemovedHAVE ADOPTED THIS REGULATION:

RemovedGeneral provisions

Removed1. This Regulation establishes the Reform and Growth Facility for the Western Balkans (the ‘Facility’).

RemovedIt lays down the objectives of the Facility, its financing, the budget for the period 2024-2027, the forms of Union funding under it and the rules for providing such funding.

Removed2. The Facility shall complement Regulation (EU) 2021/1529 to provide assistance to the Western Balkans for the delivery of inclusive and sustainable socio-economic reforms aligned with Union values and investments to implement their respective Reform Agendas, as set out in Chapter III. The Facility shall also contribute to fighting poverty and tackling unemployment and lead to quality job creation.

RemovedFor the purposes of this Regulation, the following definitions apply:

Removed1. ‘Beneficiary’ means any of the following: Albania, Bosnia and Herzegovina, Kosovo ▌, Montenegro, North Macedonia and Serbia.

Removed2. ‘Enlargement Package’ means the annual Communication on EU Enlargement policy and accompanying staff working documents.