Macroeconomic Challenges with EU Accession in Southeastern Europe: An Overview
IMF Working Papers, February 1, 2006
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- Macroeconomic Challenges with EU Accession in Southeastern Europe: An Overview
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Bibliographic details
- Authors: Piritta Sorsa
- Published: February 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863000.001
Summary of purpose and scope
- Reviews key macroeconomic challenges associated with EU accession in Southeastern Europe (SEE).
- Emphasizes that most SEE countries are years away from EU accession and need substantial progress to meet key macroeconomic criteria: the establishment of a functioning market economy and macroeconomic stability.
- Notes increased importance of specific macroeconomic outcomes in the final accession stage, when countries face decisions to apply for entry into ERM2 and the Maastricht criteria (Bulgaria and Romania).
Major findings
- Establishing a functioning market economy requires further structural reforms across SEE countries.
- Macroeconomic stability is essential throughout the EU accession process, with particular focus in the final accession stage.
- Main challenges to macroeconomic stability in SEE (other than Bulgaria and Romania) include:
- Sustainability of monetary frameworks.
- Risks from rapid financial deepening.
- Need for further fiscal consolidation to support growth and stabilization.
- Most SEE countries have room to lower public spending and increase the share of pro-growth spending.
Policy implications and recommendations
- Advance structural reforms to establish and deepen functioning market economies.
- Strengthen and ensure sustainability of monetary frameworks to manage stability risks.
- Monitor and manage risks from rapid financial deepening to maintain financial stability.
- Pursue fiscal consolidation that supports growth and macroeconomic stabilization.
- Reallocate public spending to increase the share of pro-growth expenditures while lowering overall public spending where room exists.
Specific accession-stage considerations
- During the last stage of accession, countries must focus on outcomes relevant to ERM2 entry and Maastricht criteria compliance — a decision point already relevant for Bulgaria and Romania.
- Policy emphasis should shift toward meeting exchange-rate and inflation-related benchmarks as accession approaches.
Content in this bundle
- 4. SEE: Competitiveness Indicators, 2000-04