Serbia has set the legal basis for economic reforms, and “now the main challenge will be to implement” new regulations so that country could take a step toward improving the economic situation and meeting the economic criteria required for EU accession, said Freek Janmaat Head of the European Integration Section of the EU Delegation to Serbia.
Presenting the economic part of the Annual Progress Report for Serbia, Janmaat said that the adoption of Laws on Privatisation, Bankruptcy and Pensions were positive examples, adding that amendments to the Law on Labour were “a step in the right direction.”
“Legal basis is here… now the main challenge will be to implement it,” Janmaat told reporters.
The EU noted that economic situation in Serbia worsened over the past year, partly due to May floods, Janmaat said, but he also listed a number of negative marks and recommendations given to Serbian authorities.
“We noted that in the first half of this year, the level of subsidies slightly increased,” Janmaat said, calling on Government to intensify its efforts in order to reduce this kind of state aid. According to him, in 2013, state aid in Serbia amounted 2,6 percent of GDP, compared to some 0,8 percent in the EU.
He pointed to state monopolies in the area of energy, transport, and postal services, stressing that it is up to Serbian Government to decide whether it will resolve this issue through privatisation or restructuring, but that either way, it should make these sectors more efficient and profitable.
According to the EU, implementation of the new Law on Public Enterprises did not produce sufficient improvements, leaving these enterprises with great number of employees and no efficiency.
EU welcomed Serbian Government’s decision to undertake measures aimed at fiscal consolidation and tackling the issues of public debt and budget deficit, stressing this is a necessary step toward making public finances sustainable.
This year, budget deficit could rise up to seven or eight percent of GDP, whereas the public debt is approaching 70 percent, he said.
“We are waiting to see next year’s draft budget and forthcoming fiscal strategy for the next three years”, Janmat said.
On the positive side, the Report notes a decrease in inflation and encouraging export data, begginning of the process of restitution, as well as the work on amending the legislation that would ensure accelerated issuance of construction permits, all of which will contribute to an improved investment environment.
European Union support the idea of modernising the energy and transport infrastructure and connecting the countries within Western Balkans to European Union, the process partly to be financed via EU loans and grants, Janmaat said.
EU welcomes the 23 October conference in Belgrade on the improvement of energy and transport links within the Western Balkans and with surrounding regions. The conference of foreign and economy ministers from the Balkans would also be attended by European Commissioner for Enlargement Stefan Fule and Commissioner for Economic and Monetary Affairs Jyrki Katainen.
Janmaat said that the construction of South Stream gas pipeline was both technical and legal issue, whereas the European Commission considered that the gas pipeline can be built provided that the inter-state contract between Russia and Serbia was brought in line with the EU acquis and Energy Community Treaty, of which Serbia is a member.
