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PRESS RELEASE

World Bank Vice President for Europe and Central Asia Sees Serbia’s Path to European Union through Economic Reforms

March 4, 2016


BELGRADE, March 4, 2016 — Cyril Muller, World Bank Vice President for Europe and Central Asia, today completed a three-day visit to Serbia.  The visit focused on enhancing the longstanding partnership between Serbia and the World Bank Group in support of growth and job creation.

The visit gave the Vice President insights into the deep structural reforms Serbia is pursuing with support from the World Bank and other development partners.

To accelerate Serbia’s accession to the European Union, the country must stay on the course of the current economic development strategy and continue building a stronger and more inclusive economy, said Cyril Muller. “Reforming the expensive core public sector will be one of the key elements, especially implementation of reforms in health, education and social protection, where Serbia does not compare well to countries at similar income levels. This is challenging, but also essential for Serbia’s long term competitiveness.”

The World Bank delegation commended the government in resolving issues related to over 140 socially owned enterprises (SOEs) that were in restructuring for more than a decade, and posed a major impediment to investors entering the country. However, concerns remain over the largest enterprises in this group that remain to be resolved.

The importance of making the next steps in the restructuring utilities, such as Srbijagas and EPS, and transport companies, like railways, was emphasized. It was pointed out that these companies also harbor the strongest vested interests opposed to reforms and the process will remain challenging.

“The effort to make utilities and transport companies financially sustainable is closely related to the resolution of the largest remaining commercial SOEs, because of the arrears the commercial SOEs have towards them,” said Cyril Muller. “Creating sustainable and well-performing public utilities and transport companies is not only a fiscal necessity, but also critical to Serbia’s objective of being a regional leader in fostering connectivity and economic integration. Hence, this process is pivotal for the Government’s chances of success in transforming the economy.”

The World Bank delegation reiterated that while implementing reforms in public sector it is important for Serbia to unleash the potential of the under-developed private sector by creating an attractive investment climate, fostering innovation, and encouraging employment.

Serbia has taken a number of positive steps to address fundamental business climate issues such as construction permitting, ease of paying taxes, and improved property registration,” noted Cyril Muller.Moving forward, a stronger focus on judicial processes, decision-making and enforcement will be necessary to increase Serbia’s attractiveness as an investment destination. Scaling up pilot efforts to promote innovation and technology transfer will also allow Serbia to capitalize on its strongest asset: capable and tech-savvy young workers.”

Referring to partnership with the Novak Djokovic Foundation on Early Childhood Development (ECD), Muller added: “Our global partnership with the Novak Djokovic Foundation in the area of early childhood development provides an opportunity for Serbia to serves as a role model of inclusive education skills development.”

During his visit Cyril Muller, accompanied by Ellen Goldstein, World Bank Country Director for South East Europe, met with Aleksandar Vucic, the Prime Minister of Serbia, a number of ministers, representatives of the private sector, Novak Djokovic Foundation, development partners, and political analysts.

The World Bank active lending portfolio in Serbia amounts to US$1.27 billion in the areas of transport, real estate management/business environment, competitiveness and jobs, health, flood recovery and flood protection, and financial sector reform, and resolution of remaining commercial socially owned enterprises. Lending operations to support core public sector reform and the restructuring and financial consolidation of public utilities and transport companies are currently under discussion.

Media Contacts
In Belgrade
Vesna Kostic
Tel : +381 11 3023 723
vkostic@worldbank.org
In Washington
Elena Karaban
Tel : +1-202-473-9277
ekaraban@worldbank.org

PRESS RELEASE NO:
2016/099/ECA

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