Serbia Opens Chapter 17 – Economic and Monetary Policy
At the Intergovernmental Conference held today in Brussels, Serbia opened two new chapters in its accession talks with the EU: Chapter 17 – Economic and monetary policy and Chapter 18 – Statistics. Sixteen chapters have now been opened for negotiations out of a total of 35, of which two chapters have already been provisionally closed.
As the lead institution for Chapter 17 – Economic and monetary policy, the NBS coordinated the work of the Negotiating Group 17 (comprising representatives of 12 institutions) in the process of screening and drafting of detailed plans for alignment, within the Negotiating Position of the Republic of Serbia.
Negotiations within Chapter 17 aim at harmonising national legislation in the area of economic and monetary policy with the EU acquis.
The opening of this Chapter should be regarded as Serbia’s preparation for efficient participation in the economic dialogue with the EU by way of coordinating national economic policies, joint planning of economic integration, encouraging economic growth, securing jobs and promoting competitiveness of the domestic economy.
Generally, the acquis in the area of economic policy requires member states to coordinate economic policies and to respect the rules relating to the stability of public finances and the excessive deficit procedure. Member states are expected to participate in the system of surveillance of economic and fiscal policies, which includes monitoring of specific indicators and trends, as well drafting of appropriate programmes such as the Economic Reform Programme, prepared by Serbia since 2014. The aim is to prepare the country, as a functional market economy, for integration in the EU market and to reinforce its capacities so that it can withstand competitive pressures in that market, while at the same time maintaining sound public finances and sustainable economic growth.
The acquis in the area of monetary policy contains specific rules requiring the independence of central banks (personal, functional, institutional and financial), prohibiting direct financing of the public sector by central banks and prohibiting privileged access of the public sector to financial institutions. These requirements should ensure the central bank’s efficiency in delivering its primary objective – price stability. Also, new member states are expected to strive towards complying with the criteria for the adoption of the euro, and until they do so, i.e. until they join the euro zone (member states with derogation), they are expected to treat their exchange rate policy as a matter of common, EU interest.
Domestic legislation in the area of economic and monetary policy is aligned with the acquis to the greatest extent possible at this point. To ensure full alignment, the Serbian Negotiating Position envisages adoption of amendments to the key laws governing this area, more specifically the Law on the National Bank of Serbia and Law on the Budget System, by no later than end-2021. Amendments to the Law on the National Bank of Serbia will provide for full harmonisation with the Statute of the European System of Central Banks and the European Central Bank, with some provisions being applicable after Serbia joins the EU and some after Serbia joins the euro zone, i.e. after the NBS becomes a part of the Eurosystem (provisions on the competence for implementing EU monetary policy and other). Amendments to the Law on the Budget System will also ensure full harmonisation with the EU acquis, particularly with the Council Directive 85/2011/EU, meaning that the country will run fiscal policy in accordance with the EU rules and principles, will report on its budget deficit and public debt, and participate in coordination of economic policies.
The benefit of opening Chapter 17 is reflected in the fact that with the help of modern legislation in the area of economic and monetary policy aligned with EU standards Serbia will continue to maintain macroeconomic stability and advance the competitiveness and growth of the domestic economy that rests on market principles and free competition. This will be achieved through maintained stability of prices, sound public finances, structural economic reforms and further improvements to the domestic business environment.
As so far, the NBS and its highly professional and committed staff will continue to actively contribute to Serbia’s progress in the process of EU accession, not only within this Chapter, but also within all other chapters it participates in.