S&P says EU delay to accession talks with Albania and North Macedonia could weigh on reform momentum

By bne IntelliNews October 22, 2019

S&P Global Ratings said on October 21 that the European Council failure to set a date to launch EU accession negotiations with Albania and North Macedonia will probably have limited short-term economic consequences, but in the long-term it could potentially weigh on the two countries' reform commitments.

EU leaders failed to agree during their summit on October 17-18 to set a date for Skopje and Tirana to start EU accession talks despite previous promises. The rejection came primarily from French President Emmanuel Macron who insists on internal EU reforms in terms of adopting a new enlargement methodology prior to setting a date. 

The council will reconsider enlargement before the EU-Western Balkans summit in Zagreb in May 2020. The decision was a disappointment especially in Skopje, as EU leaders were expected to decide to open membership negotiations with North Macedonia in October this year, particularly after the country changed its name and resolved the name dispute with Greece.

“Accession talks typically act as a reform anchor with candidate countries implementing structural changes that could otherwise be difficult to deliver for domestic political reasons,” S&P said.

For Albania, for instance, judicial reforms were launched in 2016, as a key pre-condition for the progress on the EU accession path. This was one of the most important structural reforms in the country in the past 10 years, aimed at combatting corruption within the judiciary and ultimately improving the rule of law and business climate.

Aside from making the crucial deal with Greece, Skopje also took several important measures but without an achievable political goal in sight, reform momentum could fade, S&P said.

Due to the negative EU decision, North Macedonia decided to hold a snap election on April 12 next year.

“We currently don't expect this development to influence short-term economic dynamics, although risks remain, as highlighted by the past effect of political uncertainty on growth following the inconclusive general election at the end of 2016,” the rating agency said.

S&P maintained its 2019 economic growth forecast of 3% for North Macedonia and 3.5% for Albania.

Accordingly, there is no effect on S&P's sovereign ratings on North Macedonia (BB-/Stable/B) or Albania (B+/Stable/B).

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