In Serbia we focus on:
Enhancing the role and competitiveness of the private sector. Serbia’s level of private sector engagement in the economy is modest even by regional standards. Small and medium sized enterprises (SMEs), which form the backbone of the Serbian private sector, face limited access to finance. The EBRD will thus work to increase private sector competitiveness, with an added focus on the agribusiness value chain. We will seek to assist SMEs in financing projects conducive to sustainable growth. Finally, we will further support pre-privatisation and privatisation alongside strategic investors.
Bolstering the banking sector and deepening the financial intermediation. While the financial sector has survived the crisis, its role as a driver of economic growth has been significantly diminished. Credit growth is weak, the share of non-performing loans is significant and the level of euroisation is high. In line with the Joint IFI Action Plan for Growth in Central and South-Eastern Europe, we will seek to help stabilise the financial sector. We will continue our policy dialogue, directly with the National Bank and through the Vienna Initiative 2.0, to encourage local currency lending and improve cross-border cooperation on banking sector issues and help in resolving the problem of NPLs.
Developing sustainable and efficient public utilities. Large transition gaps remain in the energy and infrastructure sectors. Other transition challenges include: adjusting tariffs to cost recovery levels, strengthening the regulators’ capacity, commercialising and restructuring public enterprises, and increasing private sector participation. The EBRD will focus its efforts on accelerating the implementation of its already financed projects and, given the limited fiscal space, will carefully select new investments. In the energy sector in particular, we will aim to continue to play a key role in promoting energy efficiency and renewable energy, while assisting with replacing the aging electricity generation capacity and bringing power generation into compliance with the EU environmental standards.
The EBRD latest Serbia Strategy was adopted on 11 April 2014
Current EBRD forecast for Serbia’s Real GDP Growth in 2015 0.3%
Current EBRD forecast for Serbia’s Real GDP Growth in 2015 1.8%
Economic conditions in Serbia
in 2014 were challenging, exacerbated by the severe floods, pushing the economy back into recession of an estimated 1.8 per cent, marginally better than expected. Vital sectors, including energy production and mining, were significantly affected, with a major negative contribution to growth. Front-loaded necessary fiscal adjustment under the new IMF programme has dragged down domestic demand also in 2015. The ongoing fiscal adjustment and eurozone quantitative easing together with sub-target inflation, reinforced by lower oil prices and subdued domestic demand, will allow monetary easing. This, together with the low base in 2014, will help revive growth, although credit growth may still be held back by high NPL ratios. We expect a modest recovery in 2015, with a growth of 0.3 per cent, accelerating to just below 2 per cent in 2016 with the successful implementation of the macroeconomic programme; further monetary easing; and improvements in the business environment. The construction of major infrastructure projects may also speed up.
Serbia in the EBRD’s 2014 Transition Report
Serbia in the latest BEEPS survey