In Serbia, state-owned enterprises (“SOEs”) continue to play a critical role in the economy. According to data of the International Monetary Fund (“IMF”), Serbia’s SOE sector is larger than most other countries in the Central and South-Eastern Europe in terms of both employment and output, with SOEs operating in all sectors of the economy. Serbian SOEs also show weaker performance than private sector peers and potential enhancement of their resource allocation can significantly (by close to 2 per cent) increase GDP.
The restructuring of SOEs and the improvement of their governance is therefore a key area of reform which the Serbian Government agreed to undertake as part of the IMF-agreed reform Policy Coordination Instrument and which will include adoption of “an ownership policy document to provide a strategic vision to state ownership, covering ownership objectives (including criteria for divestment), financial and public policy targets, reporting and monitoring guidelines and procedural guidelines for boards of directors”.
The roles and responsibilities of various ministries in the Serbian Government in respect of all state-owned enterprises (i.e. both public enterprises and joint-stock and limited liability companies owned by the State) are defined by the Law on Ministries, the Law on Public Enterprises and the Government’s Decision on the division of responsibilities of competent ministries. According to these acts, the Ministry of Economy is, inter alia, in charge of the setting of strategic goals of state-owned enterprises and for preparing draft decisions on appointments and dismissals of supervisory board members of state-owned enterprises (or members of assemblies in the case of joint stock companies).
EBRD has first-hand experience with improving corporate governance of SOEs in Serbia and has participated in a significant number of transactions which included governance improvement efforts. Against this background, the Ministry of Economy has requested EBRD’s assistance in developing the State Ownership Policy for SOEs, which should provide the basis for the enhancement of their efficiency, governance and transparency. The State Ownership Policy should include, inter alia, the rationales for state ownership, public policy objectives under which SOEs are expected to operate, principles behind the State’s role in corporate governance of SOEs as well as high level objectives and expectations for SOEs.
It is proposed to initiate a technical assistance project (the “Project”) with the aim of strengthening the Serbian corporate governance regulatory framework by assisting the Ministry of Economy (and more broadly the Government) in developing a State Ownership Policy and strengthening corporate governance of SOEs, in line with international standards and best practices.
In order to achieve the Project objectives, the EBRD will assist the Ministry of Economy with, inter alia, the following tasks:
(i) Identification of ownership rationales and high-level objectives of the State’s ownership and advising on the overarching objectives that the State aims to achieve with its ownership and what should be the specific objectives in particular industries or SOEs;
(ii) Developing criteria for classification and categorisation of SOEs (e.g. SOEs of strategic significance, commercial SOEs etc.), based on an analysis of mandates, missions and purposes of all SOEs and their link to the State’s ownership rationales;
(iii) Designing the framework for setting objectives and targets for SOEs and for monitoring their achievement, upon having reviewed the State’s approach to setting performance targets and (financial, technical and non-commercial) Key Performance Indicators (“KPIs”) for SOEs as well as relevant reporting requirements and by creating links to the SOEs’ corporate strategies;
(iv) Analysing the Serbian legal and institutional frameworks concerning corporate governance of SOEs and the exercise of the State’s ownership function and benchmarking them against best international practices and practices of selected jurisdictions (preferably OECD members or candidates) whose economies and institutional frameworks are comparable to that of Serbia;
(v) Outlining the key principles and features of the future State Ownership Policy in a Concept Note and working with the Ministry, EBRD, IMF and other ministries as well as other stakeholders from the Serbian Government and SOEs on building consensus for the Concept Note;
(vi) Drafting the State Ownership Policy and developing a Roadmap for its implementation which shall operationalise and assign responsibilities for implementation of high-level principles and activities endorsed in the State Ownership Policy; and
(vii) Assisting with the consultation and adoption processes for the above mentioned documents.
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