Proposed solutions in the Draft Law on Regional Development, if adopted in their current form, are unlikely to significantly reduce the deeply entrenched regional gap, particularly in preventing the severe decline of the northern region, according to Action for Social Justice (ASP).
The NGO has prepared comments on the draft law, which was open for public debate over the past 20 days. One of the key innovations in the draft law is the introduction of an obligation for the government to adopt an annual regional development incentive program, with funding from the state ranging from one to two percent of the current annual budget.
“Although the legal changes for the annual incentive program would only apply starting next year, if adopted, the budget proposal for this year, which projects a current budget of 1.5 billion EUR, would result in an annual incentive program of between 15 and 30 million EUR. This seems insufficient to significantly contribute to the development of the particularly vulnerable northern region, which is facing large migration flows and a serious risk of poverty,” the ASP stated.
The organization recommended that this amount be set at a higher percentage than proposed and urged the elimination of the “from – to” formula, as this leaves room for the allocation of the lowest amounts in practice, which would not serve the purpose of reducing the regional gap in the country.
The draft law on regional development now groups municipalities into three categories based on the level of development: up to 85% of the average development index for underdeveloped municipalities, up to 100% for medium-developed municipalities, and over 100% for developed municipalities.
The current law defines six groups: the first up to 30% of the average development index, the second up to 50%, the third up to 75% (representing less developed municipalities), the fourth up to 100%, the fifth up to 125%, and the sixth over 125% of the development index. Since most municipalities fall into the underdeveloped category, ASP recommended that the law stipulate that the largest incentives be allocated to municipalities with the lowest development index, expressed as a percentage. This would ensure that those who need the most assistance receive the most, which could help reduce the regional gap in the country.
The Law on Regional Development recognizes the northern, central, and coastal regions, with incentives including subsidies, interest rate subsidies on loans, favorable loans, guarantees, and fiscal reliefs.
Additionally, the draft law recommends that development indices be determined every two years, instead of three, and that the regional development strategy be adopted for a four-year period, rather than the previous seven-year period. ASP believes this is a more appropriate solution, given the development disparities in different regions, which requires strategic actions in shorter time frames.
On the other hand, ASP pointed out that it is unclear why the provision that regional development policy should, among other things, be based on encouraging employment has been removed, with the new version stating that it will be based on “utilizing its own development potentials.”
“Recent census results revealed alarming figures about the situation in the northern region, which is literally decaying and disappearing, unlike the central and southern parts of the country, where the situation is somewhat more favorable. ASP believes that this situation can only be changed through decisive government commitment, which must be reflected in legal frameworks. The most vulnerable local governments must receive the largest financial support, moving beyond declarative statements to concrete actions,” the statement concludes.
