Information about Europe Europa
Journal Issue
Share
Article

Serbia and Montenegro: Poverty Reduction Strategy Paper—Progress Reports

Author(s):
International Monetary Fund
Published Date:
April 2006
Share
  • ShareShare
Information about Europe Europa
Show Summary Details

1. INTRODUCTION

1.1 Background

1.1.1. This document is the first annual report on the implementation of the Poverty Reduction Strategy paper for Serbia (PRSp), one of the two main pillars in the Republic’s medium-term development framework, submitted by the Government of the Republic of Serbia to the citizens of Serbia and its international development partners, covering the period 2004 until the middle of 2005.

1.1.2. The Government of the Republic of Serbia adopted the Poverty Reduction Strategy paper for Serbia (PRSp) in October 2003, just prior to the call for parliamentary elections in Serbia, which were held on December 28, 2003. The new Government was formed in March 2004. In mid-2004, following an agreement with the Prime Minister, the Deputy Prime Minister of the Government of the Republic of Serbia assumed the responsibility for coordinating and monitoring the activities of the Government institutions with respect to PRS implementation1. The Deputy Prime Minister’s PRS Implementation Focal Point was established and consolidated in the course of autumn 2004.

1.1.3. The PRSp was prepared by means of a new approach—through a wide consultative process ensuring the inclusion of all stakeholders to which the PRSp refers. Bringing together these participants in the process of preparing the PRS gave the Strategy legitimacy, resulting in the adoption of the document by the newly elected Government of the Republic of Serbia, which overtook the responsibility for its implementation.

1.1.4. The PRS is a multi-sector strategy that serves as a basis for developing and integrating new and existing programmatic documents within different social sectors, i.e. the fields of work of the line ministries and other government institutions. The areas of employment, education, health care and social welfare have been identified as key priorities of the PRS implementation in 2004 and 2005.

1.1.5. The Poverty Reduction Strategy Paper for Serbia and its implementation complement the efforts of the Republic of Serbia in the European Union integration process. Both processes are complex and relate to all social and economic sectors. The European Commission’s Multi-Annual Indicative Program for 2005–2006 emphasized the complementarity of the goals defined in the European Partnership and the PRSp. The recently adopted National Strategy of the Republic of Serbia for the accession of Serbia and Montenegro to the EU draws on the content and recommendations defined in the PRSp.

1.1.6. The challenging reforms facing Serbia are twofold: the post-socialist transition to a market economy and harmonization with the European Union. The previous period of international isolation and regional conflicts deepened these challenges, which from the outset have been complex and far-reaching. Both challenges bring considerable negative short-term effects—a transitional shock for most citizens of Serbia. The PRS thus enables Serbia, as well as other Western Balkan countries that have developed their respective Poverty Reduction Strategies, to alleviate the short-term negative effects of the transition and changes necessary for accession to the European Union. In this way, the Poverty Reduction Strategy contributes to the building of long-term support for the reform process in Serbia.

1.1.7. The United Nations Millenium Development Goals are integrated into the Poverty Reduction Strategy paper for Serbia and the Government of Serbia will use the MDGs as benchmarks of development. The coming period plans a closer link between the methods of monitoring social and poverty-related statistics and the European Agenda on Social Inclusion2.

1.1.8. The PRSp also includes a focus on the need to reform the public administration with the goal of increasing the efficiency and transparency of policy coordination and governance in implementing the programmatic documents of the Republic of Serbia as well as in improving the way of governing the overall and public sector policies. The work of public administration will be based on the concept of “open Government.” The Republic of Serbia still lacks the capacity for the efficient coordination of policies at the central level as well as the operational knowledge that would ensure the “translation” of the goals defined in programmatic documents into concrete measures and activities. Establishing links between planning and budgetary processes as well as between the planning process and the resources available from international assistance will be of key importance in the forthcoming period. This process shall be facilitated by the introduction of a programmatic budget3, on the one hand, and the efficient implementation of a sector approach in the allocation of international development assistance, on the other. Only this qualitative change in the way in which the public administration operates would ensure a fully transparent and efficient policy implementation, including that of the PRSp.

1.1.9. As the Poverty Reduction Strategy Paper for Serbia was adopted in October 2003, it could not influence the planning or allocation of budget resources for 2004. Although the Strategy was included in the Memorandum on the Budget and Fiscal and Economic Policy for 2005 (adopted in May 2004), the activities of public administration institutions in different sectors were not budgeted to directly match the priorities as defined in the Strategy. This was primarily a consequence of the political situation, the elections for the new assembly and the establishment of the new government in March 2004, which resulted in a situation where the national budget for 2005 was rushed through the Government and Parliament as soon as possible after they had been established.

1.2. About the Poverty Reduction Strategy Paper for Serbia

1.2.1. The Poverty Reduction Strategy Paper for Serbia is the first multi-sector programmatic policy document created by the Government of the Republic of Serbia, with the participation and contribution from many different—governmental and non-governmental—organizations and institutions. The process of Strategy preparation was marked by an extensive consultative process that strengthened the national ownership of the developed policy. As a result, the current Government is fully committed to the implementation of the PRSp even though it was developed under the auspices of the previous Government. Although this process was financed by international funds, the PRSp is a result of the work of national experts, representatives of government agencies and the national and international organizations and institutions that took part in its elaboration4. Consequently, the PRS has support from the public and incites the interest of Serbian citizens—primarily because it recognizes that poverty in Serbia is a problem.

1.2.2. The Poverty Reduction Strategy represents a medium-term development framework directed at reducing the key aspects of poverty by means of creating material and other preconditions and providing opportunities to all citizens to ensure better lives for themselves and their families. The PRS is in line with the National Strategy of the Republic of Serbia for the accession of Serbia and Montenegro to the EU and contains an action plan for achieving the UN Millenium Development Goals (MDGs).

1.2.3. The PRS is founded on the premise that poverty is a multi-dimensional phenomenon which, apart from representing insufficient income to cover basic subsistence, also entails the inability to exercise human rights such as the rights to employment, adequate housing and access to social welfare, health, education and communal services. These aspects are particularly relevant to vulnerable and socially marginalized groups. Other key aspects relate to the barriers in exercising the right to a healthy environment and natural resources, primarily clean water and air.5

Poverty, especially its extreme forms, was not significantly present in Serbia until the early 1990s. Serbia, as an integral part of the former Socialist Federal Republic of Yugoslavia (SFRY), had a GDP per capita of over USD 3,000, with the majority of its citizens enjoying access to education, health care, social welfare and other services. In the economic and social crash of the 1990s, GDP declined dramatically (by approximately 50%), unemployment rates soared, and wages, pensions and other sources of personal income fell considerably.

The situation improved in the period 2001–2003, primarily due to the successful initiation of reforms and international support, which resulted in a significant growth of GDP, wages, pensions and other sources of personal income. However, this period was too short to compensate for the gap created during the previous decade.

1.2.5. The Poverty Reduction Strategy aims to cut poverty in Serbia almost by half by the year 2010. The main recommendations/strategic directions towards this aim are as follows:

  • a. Dynamic economic growth and development with an emphasis on job creation within the private sector;
  • b. Preventing the emergence of new categories of the poor, i.e. “new poverty” as a consequence of economic restructuring and rationalization of the public administration;
  • c. Efficient implementation and preparation of existing and new programs, measures and activities directly targeting the poorest and most vulnerable social groups (children, the elderly, the disabled, refugees and internally displaced persons, Roma, poor rural populations and the uneducated), particularly in the least developed regions of Serbia.

1.2.6. The Poverty Reduction Strategy Paper for Serbia is implemented in line with the following principles:

  • Mainstream poverty reduction efforts, i.e. become an integral part of the regular work of the Government (line ministries, central government institutions and bodies, local self-governments) and its partners according to their respective mandates and responsibilities.
  • Build strong ownership of the PRS through an inclusive participatory process, emphasizing the active involvement of civil society, private and public sectors, and representatives of vulnerable groups in implementation, monitoring and evaluation.
  • Ensure the effective integration and consolidation of European integration and the PRS implementation process, as the main pillars of Serbia’s overall reform framework together with relevant sector strategies.
  • Change the way the Government “does business” by achieving transparency through a well-defined planning process (including more efficient coordination and prioritization).
  • Engage local-level PRS implementation through the participation and cooperation of representatives of local self-governments, the NGO and private sectors and donors as one of the preconditions for the successful implementation of the PRS in accordance with public administration reform and the decentralization process.
  • Support partnership building in the PRS implementation with the aim of improving coordination and information sharing, in order to ensure the synergic effects of activities directed at poverty reduction.

1.3. About the Content of the Report

1.3.1. This report presents the results of PRS implementation since 2004 to the middle of 2005, as well as the available data on poverty trends in Serbia. A full PRS policy update can be expected by the end of 2006/ beginning of 2007.

1.3.2. The analysis of poverty trends is based on data from the 2002 and 2003 Survey on Living Standard of the Population (SLSP)6 conducted in the period before the PRS implementation. The most recent poverty assessment for Serbia is based on the Household Budget Survey of the Serbian national statistical office, the Republic Statistical Office of the Republic of Serbia. The analysis in this report is a result of the work of the Working Group for Poverty Measurement established by the Government of the Republic of Serbia in February 2005.

1.3.3. Results of the PRS implementation are presented through reports of the participating government institutions, which are organized in such a manner that they follow the structure of the PRSp. An overview of economic trends in the previous period is given in the parts of report that refer to macroeconomic indicators, fiscal policy and measures related to the transition to a market economy. The priority areas of the previous period—employment, social welfare, health care and education—are represented in the segments of report bearing these titles. The report takes into account the regional, rural and urban aspects of poverty, as well as the impact of the environment on the quality of life. An analysis of the allocation of budgetary resources as well as an overview of international assistance is given in order to evaluate the amount of funds directed towards poverty reduction.

1.3.4. Several factors have contributed to the somewhat limited impact analysis of the activities presented in this report. The poverty reduction efforts of the Government of Serbia cut across a number of different sectors; both the complexity of the task and the lack of an established monitoring system contribute to the difficulty of fully assessing the scope of the achieved results. In addition, the existing statistical system is predominantly focused on collecting quantitative rather than qualitative data, while a poverty-related monitoring system will be developed only in the upcoming period.

2. POVERTY STATISTICS7

2.1. Activities Related to Poverty Measurement

2.1.1. One of the Government of Serbia’s goals is the creation of a solid statistical base for continuous and reliable poverty measurement as well as the engagement of the expert resources in poverty diagnostics. Monitoring yearly poverty rates gives policy-makers powerful synthetic information about the trends in the standard of living and social inequality, while detailed poverty profiles provide key input for programs and policy measures aimed at both reducing specific forms of poverty as well as facilitating the social inclusion of the most vulnerable groups.

2.1.2. Since 2002 there have been two phases in the development of poverty statistics. The first phase was marked by two consecutive Surveys of the Living Standard of the Population (SLSP) in 2002 and 2003, conducted at the request of the Government of Serbia and supported by the World Bank’s expertise. Creating the PRSp in 2002–3 would not been possible without the critical and timely input from the SLSP surveys.

2.1.3. The second phase is characterized by a 2004 strategic decision to base poverty statistics on data collected by the Household Budget Survey (HBS), conducted (unlike SLSP, which was produced by a private survey firm) on a permanent basis by the Republican Statistical Office. HBS data collection will secure full national ownership and much-needed long-term continuity in poverty statistics, as well as assist with capacity building within the RSO.

2.1.4. In order to facilitate this process, in February 2005 the Government tasked the Deputy Prime Minister with establishing the Working Group on Poverty Measurement. This group consists of RSO professionals as well as leading national experts who had also been engaged in the production and analysis of the SLSP surveys. The Group’s task was to comprehensively analyze the methodological and empirical features of the SLSP and HBS and to suggest methodological solutions for creating poverty indicators based on the HBS. The Group should also facilitate wider discussion on the poverty line or subsistence minimum, suggesting the standard for monitoring the RSO, promote training in poverty analysis and encourage a wider research community.

2.1.5. Among the above-mentioned surveys there is a number of important methodological differences that are dealt with by the WGPM, RSO and the World Bank experts. The first set of differences derives from the way in which the SLSP and HBS gathered data on consumption: The HBS collected data throughout the year, while the SLSP took a measurement for a single month (June). The surveys also differ in the scope of food consumption modules. HBS followed a standard approach recommended by Eurostat, collecting detailed data on consumption based on the diaries filled out by respondents themselves. The SLSP used a shorter form but allowed the interviewers more active control over the data provided. The two surveys thus captured very different patterns of food consumption. The minimum food basket developed from the SLSP data must therefore be revised to account for the much more detailed set of items collected in the HBS.

2.1.6. The second set of issues arises from measuring the flow of services from owner-occupied housing. The SLSP relied on a special survey of the real estate market to impute the value of housing rents and arbitrarily set the interest rate to estimate the annual rents. The HBS collected data from households according to the owners’ own assessment of the rental value of their housing. This data contained a number of outliers and problematic entries because the housing market remains very thin in many areas of the country, and respondents were not able to estimate the rental value of their homes. However, this implicit rent information can potentially be used in conjunction with other data to periodically assess on the value of housing in Serbia and the welfare of households. Such ongoing will result in a more realistic assessment of the poverty situation.

2.1.7. The third set of issues comes with the development of a non-food component in the subsistence minimum. The method selected for the SLSP used the well-known Engel law, which relates non-food consumption to the overall welfare of the household. Using the regularity of the relationship between the consumption level and poverty, the parametric analysis helped establish a level of total consumption that is required to meet basic food and non-food needs. Although there are advantages to the non-parametric approach, which relies entirely on capturing the poor’s actual consumption patterns, the use of the parametric approach currently ensures a much needed robustness with respect to data problems. In any case, re-estimation of the non-food component is necessary as the nature of HBS data differs from that of the SLSP.

2.1.8. The forth and final set of issues comes from cleaning the data from outliers and inconsistent entries. The RSO, with the assistance of the WGPM and the World Bank, is developing procedures that have not yet been completed. The on-going work will result in the final dataset that will be used for poverty assessment.

2.2. 2003 SLSP Poverty Trends

As a part of efforts to better understand poverty and to create a comprehensive poverty profile for Serbia, the Government of Serbia and its then Ministry for Social Affairs conducted the Living Standard Measurement Survey for the two consecutive years of 2002 and 2003 the. The 2002 sample size included 6,380 households with 19,725 members, while the 2003 survey was conducted using a sub-sample of 2,548 households (8,027 individuals) which were all surveyed in 2002. Methodological solutions as well as timing (May15–June 15) were kept the same, in order to achieve full comparability. A panel feature in the 2003 survey was instrumental in following changes within the same households between the two surveys.

Main poverty indicators in Serbia in the period 2002–2003

2.2.1. The percentage of the poor and extremely poor remained unchanged irrespective of the significant economic growth recorded in the period 2002–2003.

2.2.2. In 2003 one in 10 citizens in Serbia (10.5%) was poor, with a consumption per adult equivalent below CSD 4,970/month on average. (Table 2.2.a.). Similar to the previous year, extreme poverty was negligible, with only less than one percent of the population recording an average consumption below CSD 2,097/month per adult equivalent—the amount of the minimum food basket.

Table 2.2.a.Poverty indicators in Serbia, 2002–2003 (in %)
The poorPoverty indexPoverty GapSeverity of poverty
200210.62.20.8
200310.52.00.6
Note: In 2002 the poverty line equaled CSD 4,489 per month per adult equivalent, while in 2003, it was CSD 4,970. Source: SLSP for 2002 and 2003.
Note: In 2002 the poverty line equaled CSD 4,489 per month per adult equivalent, while in 2003, it was CSD 4,970. Source: SLSP for 2002 and 2003.

2.2.3. Compared to other countries in the region and using a poverty line of USD 2.15 /day PPP and the comparable consumption aggregate, the percentage of the poor in Serbia was similar to the rate of Romania, lower than in Albania and higher than in Bulgaria and Poland (ECAPOV II, World Bank, 2005).

2.2.4. In comparison to 2002, in 2003 the depth (gap) and severity of poverty declined slightly, although the percentage of the poor remained unchanged. The poverty gap in 2003 equaled 2%, indicating that if the country could mobilize resources amounting to 2% of the poverty line for each person (poor and not poor) and direct these resources towards the poor, poverty would, theoretically, be eliminated, provided that such assistance was perfectly targeted. The severity of poverty—the indicator which takes into account that some of the poor slide deeper into poverty, i.e. further than others below the poverty line and gives them greater weight—reached 0.6%.

Economic mobility of the population in Serbia 2002–2003

2.2.5. Though the percentage of the poor remained unchanged between 2002 and 2003 (4,5%), there was significant population mobility given the numbers that either moved out of or fell into poverty (Table 2.2.b.)8. Slightly over one half of the poor recorded in 2002 improved their economic status and moved out of poverty one year later. However, approximately the same number of persons became poor in 2003, with the “new” poor comprising slightly over one half of the poor in 2003.

Table 2.2.b.Economic mobility of the population in Serbia, 2002–2003 (in %)
Not poor in 2003Poor in 2003Total
Not poor in 200283.36.189.4
Poor in 20026.24.510.6
Total89.510.5100.0
Source: SLSP for 2002 and 2003.
Source: SLSP for 2002 and 2003.

2.2.6. The considerable population mobility towards/out of poverty results from a large growth in consumption of those who moved out of poverty (approximately twice, on average) and a large decline in consumption among those who became poor (43%). Growing consumption was also recorded among persons whose status remained the same (9.5% among persons who were not poor and 10.8% among those who remained poor).

2.2.7. The significant economic mobility may be explained, inter alia, by the considerable mobility of the labor force. The percentages on the diagonal in Table 2.2.c. suggest a significant reallocation of the work force within a one-year period, especially in the case of the unemployed. One half of the unemployed in 2002 found employment in 2003, though one half of those jobs were in the gray economy. The informal sector has thus significantly improved the mobility of the labor force.

Table 2.2.c.Mobility of the labor force in Serbia, 2002–2003 Status in 2002=100 (in %)
Employed in

2003
Unemployed in

2003
Inactive in

2003
Employed in 200281.83.314.9
Unemployed in 200247.725.426.9
Inactive in 200215.13.081.9
Source: SLSP 2002 and 2003.
Source: SLSP 2002 and 2003.

Poverty by regions in Serbia over 2002–2003

2.2.8. In Serbia, poverty is still a predominantly rural phenomenon (Graph 2.2.d.), like in most countries in transition (ECAPOV II, World Bank, 2005); in 2003, poverty in rural areas was twice as high (14.9%) as that in the urban areas (7.1%). The difference in poverty between urban and rural areas was slightly higher in 2003 as compared to 2002 (14.2% rural to 7.8% urban). This may be explained by the fact that the growth in employees’ earnings and pensions in real terms in 2003 relative to 2002 - the dominant source of income among the urban population—was relatively higher compared to the growth in other sources of income.

Graph 2.2.d.Percentage of the poor by type of region in Serbia, 2002–2003

Source: SLSP for 2002 and 2003.

2.2.9. The largest share of the poor in 2003 was in Southeast Serbia (23.5%), while the lowest share was recorded in Belgrade (4.2%). In comparison to 2002, the highest growth of poverty was recorded in Southeast Serbia (41.6%), while the largest decline was registered in Belgrade, where the percentage of the poor was almost halved (Graph 2.2.e.). The data indicate widening regional differences in poverty: the ratio of the poverty index in Southeast Serbia and Belgrade equaled 5.6 in 2003, while only one year earlier it amounted to 2.1. The share of the poor in the total population declined slightly in the autonomous province of Vojvodina, Šumadija and Pomoravlje, as well as in western Serbia, while it increased slightly in eastern Serbia.

Graph 2.2.e.Percentage of the poor by region in Serbia, 2002–2003

Source: SLSP for 2002 and 2003.

In spite of considerable impoverishment over the last 15 years, Serbia is still within the category of medium developed countries, although on a lower level when compared to the beginning of the crisis in the 1990s.

Serbia and the region. When compared to other countries in Eastern Europe, poverty in Serbia is almost at the same level as in Romania, lower than in Albania and higher than in Bulgaria or Poland9. When it comes to the Western Balkans, poverty is lowest in Croatia (8,4%) and highest in Albania (over 25%), as well as in Kosovo, where half of the population lives below the official poverty line10.

Objective and subjective poverty. The image of subjective poverty somewhat differs from the image suggested by the poverty line. The subjective perception of poverty in the Western Balkans is much higher—in Serbia, at least half the population is dissatisfied or mostly dissatisfied with their financial situation11. Comparison with historically higher living standards has largely contributed to such a perception, as has high expectations concerning a faster overall economic revival after the democratic political change.

Preliminary Poverty Data Based on the Household Budget Survey (2003–2004)12

2.2.10. The SLSP data provided important insights on the situation, extent and profile of poverty in Serbia in 2002–2003. However, the SLSP was never intended to become a regular source of official statistical information on living standards and poverty. The improved design of the household budget surveys conducted by the RSO since 2003 has offered an excellent opportunity to use the HBS as the main permanent official source of information on poverty, providing both a wealth of data for research and crucial indicators for policy creation in this area. It is important to note that HBS data are not straightforwardly comparable to the SLSP.

2.2.11. Preliminary results based on the HBS indicate that there are no significant changes in the poverty level between 2003 and 2004. The data presented here are only indicative, with their main purpose to provide insight into the current trends.

2.2.12. Table 2.2.f. below shows a range of estimates obtained using several different, standard methodological approaches to estimate absolute poverty with the HBS data. The ranges are relatively wide, indicating a high concentration of the population around the poverty line. This is further supported by the preliminary results for the Gini co-efficient, which comparatively are quite low at slightly below 0.30 in both 2003 and 2004. The poverty rate ranges obtained from the HBS correspond with the ranges obtained by applying alternative methodologies to the SLSP data in 2002 and 2003.

Table 2.2.f.Upper Ranges for Preliminary Poverty Estimates, based on the 2003–2004 HBS
Poverty rates ranges for different methodologies, Serbian Scale (%)
Region/Location20032004
Belgrade2 – 72 – 5
AP Vojvodina13 – 1916 – 24
Central Serbia12 – 2716 – 26
Rural15 – 2820 – 31
Urban8 – 147 – 13
Serbia11 – 2013 – 20
Note: Adjusted for inflation; the period March-December of each year is used for comparability.
Note: Adjusted for inflation; the period March-December of each year is used for comparability.

2.2.13. Table 2.2.f. lists upper poverty rate ranges based on HBS data that have not undergone final consistency checking; final estimates will gravitate towards lower ranges. Although perhaps the exact level of poverty may still remain uncertain, the emerging poverty profile will not significantly differ from the final set of data.

2.2.14. Preliminary data reported in Table 2.2.f. show that pronounced regional differences in the living standards as revealed by the SLSP persist in the HBS as well. As noted in the analysis of the SLSP, despite an overall stable poverty level between 2002 and 2003 significant differences emerged. The gap between urban and rural areas has widened, and as well as between poor and rich regions, especially between Belgrade, which benefited the most from new economic opportunities and growth, and the rest of the country.

2.2.15. Fully in line with the SLSP results, the 2003 and 2004 HBS revealed that Belgrade’s poverty incidence remains far below the national average, while rural areas clearly suffer from an elevated poverty risk. Over time, Belgrade’s position compared to the rest of the country has continued to improve, while rural areas clearly lag behind. The persistency of rural poverty and the limited reduction in urban poverty suggest that the opportunities generated by substantial economic growth are not available to all citizens equally.

2.2.16. Compared to the SLSP, the preliminary HBS data implies that the relative position of the autonomous province of Vojvodina is significantly worse, counterintuitive to most observers. Such an indication may be a statistical artifact that may be resolved by further methodological and measurement refinements. However, the tentative results may also reflect some real problems in the region, ranging from a faster pace of transition and restructuring that temporarily brings greater inequality and higher unemployment rates, to an unfavorable demographic situation, reflected e.g. in a high number of elderly rural households and lower rental prices.

2.2.17. A more informative picture of regional differences requires analysis at a somewhat lower level of regional aggregation. The approach chosen in the SLSP, which divides central Serbia into three distinctive regions with different poverty rates and profiles, should be built into the future sampling design of the HBS.

2.2.18. The final data, once available, will be used to monitor the effects of the reform process as well as to guide policy making in order to address issues of rural poverty, lagging regions and socially excluded groups. Preliminary results for 2003–2004, based on the HBS, confirm that the insights provided by the SLSP could still be used to develop policies and programs aimed at poverty reduction.

3. PRS IMPLEMENTATION: REPORTS OF THE GOVERNMENT INSTITUTIONS ON POVERTY REDUCTION RELATED ACTIVITIES

Despite a number of initial challenges and barriers, the implementation of the Poverty Reduction Strategy Paper for Serbia witnessed significant progress in 2004. This section of the report illustrates the results achieved through activities undertaken by government institutions and represents a synthesis of their individual reports.

The ministries and other state institutions do not possess mechanisms at this point that would ensure the systematic monitoring of PRS implementation or activities directed at implementing its programmatic goals and priorities. Therefore it is the Government’s priority to develop and set up an effective and transparent monitoring and evaluation system during the coming period.

In order to most adequately report on the implementation of the measures and activities recommended by the PRSp, governmental institutions prepared their reports on the basis of a tailored set of questions stipulated in the PRSp13 and related to the work of each institution. Thus this part of the report observes the structure of the Poverty Reduction Strategy paper for Serbia and offers an overview of the implementation of measures and activities across 12 segments, as structured in the Strategy.

Although the measures and activities directed at improving the status of vulnerable groups (refugees and the internally displaced, the disabled, youth, children, Roma and women) in the PRSp are also presented in a separate chapter14, reporting on the progress in the implementation of planned measures is an integral part of the report’s 12 segments.

The first steps for creating a system for monitoring activities according to the programmatic goals are being taken through a pilot project entitled “Joint Project: towards a more efficient implementation of reforms,” implemented by the Government of the Republic of Serbia15.

3.1. Macroeconomic Framework and Factors of Sustainable Economic Growth16

Macroeconomic stability was established in 2001–2002, along with the initiation of the main structural reforms, representing a solid basis for continuing reforms and medium-term growth—the key prerequisite for poverty reduction. The macroeconomic policy was directed at removing the main imbalances and creating the conditions for medium-term sustainable macroeconomic stability.

The previous period was marked by continuous GDP growth (reaching 8.6% in 2004), a rise in FDI, a reduced foreign debt to GDP ratio and satisfactory progress in reform of the Serbian banking system. The current account deficit and the speed of structural reforms remain challenges for the future, which have already been addressed by various measures that should improve the competitiveness of the Serbian economy.

Notwithstanding significant progress in many areas of transition, deep structural weaknesses remain. The key determinants of the potential for growth, such as exports, investments and national savings, are still at a very low level. Macroeconomic imbalances and the burden of debts continue to render the economy sensitive to shocks.

3.1.1. The real growth rate of Gross Domestic Product (GDP), following a modest growth of 2.4% in 2003, is estimated to have reached 8.6% in 2004, much higher than expected. A lower rate of real GDP growth (4.6%) is projected in 2005 as a result of planned measures directed at slowing the rise of prices and improving the trade balance. Over a medium-term period (2004–2006) average annual GDP growth rates of approximately 5.9% are expected. In the period between 2006 and 2008, a GDP growth of 5.7% is expected, while inflation should be brought down to 4.5% by the end of the same period.

3.1.2. The current account deficit in 2004 equaled USD 2.8 billion i.e. USD 3.447 billion17, excluding official international assistance, which is an increase of 43.8% when compared to 2003. Consequently, the share of the current account deficit (without official support) in GDP increased from 11.7% in 2003 to 15.6% in 2004. The major cause for the higher current account deficit is the increase in the trade deficit. At the same time, the rise in imports related primarily to production materials and equipment, giving 2004’s higher current account deficit a predominantly developmental character. Although exports increased from USD 2 million in 2002 to almost USD 4 million in 2004, the imports registered a higher increase—from USD 5.6 million in 2002 to almost USD 11 million in 2004. The reserves of goods imported in late 2004 satisfied local demand for imports resulting in a significant reduction in the first months of 2005. The exports recorded considerable increase in early 2005 thanks, inter alia, to the introduction of a value-added tax (VAT).

3.1.3. 2003 was a record year for the influx of foreign direct investments, which reached USD 1.36 billion. Due to a slow-down in the privatization process in the first half of 2004, FDI fell to USD 966 million. The projected FDI in 2005 is a minimum USD 1 billion. The Serbia Investment and Export Promotion Agency (SIEPA) initiated a project18 worth EUR 4.5 million that will enable Serbia to develop investment locations and launch new investment projects.

3.1.4. The share of investments in GDP recorded a more modest increase than the one projected. Total investments grew from 13.6% in 2001 to 16.4% of GDP in 2004. The Strategy provides that the share of investments in GDP should reach approximately 25% by 2010.

3.1.5. Following a drop in the rate of inflation from 14.8% in 2002 to 7.8% in 2003, the increase of prices in 2004 equaled 13.7%. In the first nine months of 2005, the growth of retail prices amounted to 11.8%19, and it is expected that by the end of the year inflation will not exceed the previous year.

3.1.6. Following agreements with the Paris and London clubs of creditors, the share of external debt in GDP was reduced from 78.6% in late 2002 to 63.8 % in late 2004. The external debt amounted to approximately USD 14.1 billion in late 2004. It is expected that the Paris Club of Creditors will write off over USD 700 million in debt by the end of 2005, after the satisfactory conclusion of the agreement with the IMF.

Table 3.1.a.:Macroeconomic indicators20
200220032004
GDP real growth (%)4.52.48.6
Core inflation (NBS)6.05.411.5
Retail prices (end of period)14.87.813.7
Foreign direct investment (millions of USD)4751,360966
Donations (millions of USD)559360456
Trade deficit (%GDP)24.824.732.8
Current account deficit (%GDP)13.511.715.6
Public revenues44.343.145.2
Public expenditures47.744.344.6
Fiscal deficit/ surplus-3.4-1.10.6
Note: The data for 2005 will be comprised in the revised Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.
Note: The data for 2005 will be comprised in the revised Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.

3.1.7. The reform of the banking sector is entering its final phase following several years of restructuring and consolidation through the liquidation of insolvent and illiquid banks, the entry of foreign banks, strengthened competition among financial institutions, improved legal framework for bank supervision and the enhanced transparency of business operations and bank ownership structure. Reform of the banking sector shall be completed upon full implementation of the initiated process of privatization of state share in banks and full harmonization of laws and bylaws with the relevant directives of the European Union and the Basel Principles.

3.1.8. The promotion and increase of exports have made significant progress due to regional free-trade agreements, favorable terms for exports to the EU, privatization and restructuring of formerly socially owned enterprises, easier access of new private companies to foreign markets, etc.

3.1.9. Forthcoming challenges:

  • Increasing exports will require continued efforts towards improving the business climate, reduced costs for doing business and the creation of flexible and competitive market structures, which should lead to an increase in FDIs and consequently an increase in exports.
  • Increasing the ratio of private investments to GDP. In the short term, attracting foreign direct investments should be the major policy for increasing the level of new private investments. So far, most private investments have been through privatization. The key challenge will be the creation of a business environment conducive to private greenfield investments.
  • Raising the credibility of the banking sector, and thus creating incentives to encourage the long-term savings of citizens.

3.2. Fiscal Limitations in PRS Implementation21

The reform of public finances, which began in Serbia in 2001–2003, has achieved significant progress in transforming the fiscal system into a more transparent, simple structure aligned with European standards. Such reform has strengthened the ability of public finances in achieving the main goals of macroeconomic stability and sustainable economic growth.

Due to significant tax policy reform, a consolidated fiscal surplus is envisaged for 2005 and onwards. The continuing tax reforms aim to reduce taxes, broadening the tax base, raise the share of expenses in GDP related to investment, capital expenditures and education and lower the share of expenses related to defense, police, health and social welfare (social insurance funds).

The policy of the Government in the forthcoming medium-term period is to preserve fiscal stability while continuing to reduce public expenditures and taxes, make better use of fiscal resources and ensure greater mobilization of public revenues, including tax incentives and other reform measures aimed at raising the level of business activities.

3.2.1. Thus far the most important tax policy reforms were made in the course of 2004, signaling the third phase of earlier taxation regime changes and completing the planned modernization of the taxation system. The Republic Budget has reached fiscal surplus through tax policy reform measures directed at relieving the burden on the economy and the citizens, i.e. reducing taxes and increasing taxation capacity (introducing fiscal cash registers, enforcing the more efficient control of tax collection, etc.). These measures are expected to result in a decreased share of total expenditures in GDP, with greater allocations for investment and capital expenditures.

3.2.2. The most significant changes22 in tax policy in 2004 include the Law on VAT, the Law on Income Tax, amendments to the Law on Corporate Income Tax, the Law on Excise Tax, the Law on Property Tax, Amendments to the Law on Using, Holding and Carrying Goods, the abolishment of the Income Fund Tax and the Financial Transaction Tax.

3.2.3. The new Law on Value-Added Tax (VAT), which came into effect on January 1, 2005, stipulates a general VAT rate of 18%, with a special 8% rate applicable to, inter alia, the trade or import of certain basic foodstuffs; medications paid from health insurance funds; certain medical supplies, text books and teaching materials; daily newspapers; communal services, etc. VAT is not imposed on services provided by health institutions, including the accommodation, care and meals of hospitalized patients; services provided by medical doctors, dentists, and similar professionals; social welfare and care services, including child and youth protection, social protection services; accommodation and meals for students in hostels and similar institutions; and education and professional retraining. These measures, therefore, include some of the most significant categories of interest to the Poverty Reduction Strategy paper for Serbia.

3.2.4. The first results of introducing VAT (combined with the introduction of fiscal registers) suggest significantly rising fiscal revenues and a declining gray economy. Local self-governments recorded a surplus of approximately CSD 4 billion23. Judging by initial analyses, the introduction of VAT should have a neutral effect on rising prices: the calculated average tax rate decreased and conditions were created for a drop in prices of up to approximately 1.7%. Further to the decreased average tax rate influencing the slow-down of inflation, the initial period of VAT saw a slight rise in inflation due to other factors related to its introduction24. Thus, the expert analyses25 show a certain increase in the tax burden on the poor. To address this problem, in July 2005 the Government adopted changes to the Law on VAT by which additional categories of goods and services (medications, basic foodstuffs, new apartments, livestock, etc.) are taxed by a lower VAT rate of 8%. In addition, humanitarian aid and foreign donations are exempted from paying VAT.

3.2.5. In the forthcoming period, further harmonization with EU legislation will be implemented (including tax exemptions in the Law on Value-Added Tax, as mentioned above). A combined system of taxing personal income might be replaced by the synthetic income tax in effect in most EU countries; the system of taxing the yield on capital shall also be reformed to avoid double taxation.

3.2.6. One new measure that has already proved effective is the reduction of the corporate income tax from 20% to 14% (2003), and subsequently from 14% to 10% (2004). This represents one of the lowest corporate income rates in the region and has already rendered an over 60% increase in the collection of taxes.

3.2.7. Another priority of the medium-term period 2006–2008 shall be adjusting the customs policy to the dynamics of development and economic integration with the mandatory harmonization with WTO requirements. Customs policy measures will gradually reduce the level of customs protection, a condition for accession to the EU and membership in the WTO.

3.2.8. In 2003 payment operations were transferred to the banks and the Treasury of the Republic Budget was established.

3.2.9. The Tax Administration has been modernized, a continuing process that will improve the quality of the service and supervision of tax administrators, ensure strict implementation of tax legislation and improve the organizational structure and capacity of the administration. The introduction of an IT system in the Tax Administration, Customs Administration and UJP (“Uprava za javna plaćanja”) seeks a more efficient tax collection as well.

3.2.10. Reform of the tax system with regard to public revenues will be followed by reform of the public expenditure system at all levels. The reform will target budget expenditures as well as expenditures of the compulsory social insurance institutions. The reform of public expenditures requires gradual reform of the public administration system and public services as well as the careful evaluation of expenditures allocated for the main administrative services of the country (such as administration and defense), in line with the action plan for implementing public administration reform.

3.2.11. The current level of public expenditure remains too high and unsustainable—with the largest share used to subsidize pension funds (13.6% in 2004)—and may represent an obstacle to faster economic growth. Efforts to correct the pension insurance system have been insufficient, and further reform of the system is needed.

Table 3.2.a.:Consolidated public revenues, expenditures and deficit in % GDP
% of GDP200220032004
Public revenues44.343.145.5
Public expenditures47.744.344.6
Fiscal deficit/surplus-3.4%-1.1%0.6%
Note: Data for 2005 will be contained in the revised Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.
Note: Data for 2005 will be contained in the revised Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.

3.2.12. The structure of public expenditures according to the functional classification will change in the future period. Expenditures for public services (public administration) should be decreased as well as those for defense and national security (in line with their reform).

3.2.13. The share of expenditures for social welfare will be decreased but not significantly since this category will include social programs that will complement the restructuring of the economy. At the same time, education, economic affairs and construction and infrastructure will receive a greater share.

Table 3.3.b.:Consolidated public expenditures in % GDP26
2005200620072008
Total expenditures45.744.643.542.5
1. General public services5.15.04.94.8
2. Defense2.82.62.32.0
3. National security2.22.01.71.4
4. Economic affairs3.94.04.04.1
5. Environmental protection0.30.40.40.4
6. Building and communal services2.02.02.12.2
7. Health6.66.56.46.3
8. Recreation, culture and religion0.60.60.60.6
9. Education3.94.04.24.3
10. Social welfare2718.417.517.016.5

3.2.14. With the privatization and restructuring of socially and state-owned enterprises comes a gradual reduction in the subsidies granted to them. The share of subsidies-based expenditures in GDP in 2002 equaled 7.6% only to fall to 5.9% in 2004 with a tendency to further decrease over the following period. 2005 and the following years envisage a consolidated fiscal surplus so that the privatization gains shall not be used to cover the fiscal deficit.

3.2.15. Forthcoming challenges:

  • Further decreasing the share of public expenditure in GDP. The major challenge in the long run will be to reduce subsidies to the pension funds and, in the short run, to socially and state-owned enterprises. While subsidies to companies will be reduced as privatization progresses, reduction of subsidies to pension funds will be the major challenge for the future. The population of Serbia is relatively old and aging and the political pressure to maintain or even improve its standard of living remains strong.
  • Reforming property taxes and local public finances in general. Currently, property taxes do not represent an important source of government revenues. The creation of an efficient and equitable system of property taxation will require political consensus as well as a current lacking in expertise, both at the local level and in the Tax Administration.
  • Reforming the budgetary process and introducing the programmatic budget. Although the fiscal system has seen fast and decisive reforms in the past four years, the system of budget preparation is still relatively unreformed. Due to the lack of capacity, the introduction of a programmatic approach to budget formulation is running late, although it represents a necessary step for further improving the use of budgetary resources, as well as monitoring and evaluating the government’s performance.

3.3. Transition to a Market Economy: Establishing Conditions for Private Sector Development28

According to the recent WB Country Policy and Institutional Assessment (CPIA) and Doing Business 2005, Serbia has made significant progress in tackling structural problems and in establishing a more conducive environment for private sector driven economic growth and in this respect ranked first in the effectiveness of reforms in 2004.

Despite recent improvements, the 2004 World Economic Forum’s Index of Business Competitiveness indicates there are considerable potential for improving the business environment in Serbia to pave the way for building an efficient and competitive economy. The key role in this process should be played by the successful privatization and restructuring of companies, the development of entrepreneurship and the SME sector and the overall improvement of the investment and business climate.

In order to ensure an adequate legal and institutional framework conducive to private sector development, 50 new economic and system laws were adopted. A total of 1,631 companies were privatized by the end of August 2005, and it is expected that the share of private ownership in the total economy will reach 75% by the end of 2006.

Despite the growing private sector and improved access to the market, foreign trade remains un-restructured for the most part, with a very low reorientation towards the EU and an unchanged structure of goods29.

3.3.1. A transparent legal and institutional framework is indispensable for attracting private investments. Fifty systemic laws in the economic sphere were adopted in 2004 and a number of new laws has been developed by the Government and passed by the Parliament during 2005. Once implemented, they are expected to create a favorable business environment for increasing the number of business activities and the efficiency of the economy. For instance, the Law on Registration of Economic Entities and the Law on the Agency for Registration of Economic Entities simplified registration procedures. In addition, poor functioning of the courts represents a grave problem—the average time needed for debt collection is almost three years—bearing negatively on the investment climate.

3.3.2. In 2004 the Government of the Republic of Serbia formed the Guarantee Fund30 in order to create conditions for stimulating the development of business operations of small and medium-sized enterprises, entrepreneurs and farmers. Its mandate is to issue guarantees to banks amounting to 50–80% of their requisitions for loans granted to small and medium-sized enterprises which have growing potential but do not fulfill all conditions required to obtain loans from commercial banks. The Fund approved 950 requests and issued guarantees totaling EUR 7.5 million as of July 2004. For its 2005 activities the budget of the Republic of Serbia allocated an additional CSD 1.5 billion to the Fund.

3.3.3. In order to eliminate administrative and bureaucratic barriers to private sector development, a Council for Regulatory Reform was established at the beginning of 2004 as an inter-ministerial body that monitors development of private entrepreneurship, discusses legislative changes and drafts new laws conducive to private sector development. The activities of the council has resulted in better co-ordination and more effective regulatory reforms within the economic field and has also enable the Government to react more promptly on problems liked to implementation of adopted legislation.

3.3.4. Privatization activities focus on changing the economy’s ownership structure, achieving more efficient companies and consequently improving the competitiveness of the overall economy. Following a slow down during mid-2004, privatization accelerated. In the process equal importance has been paid to the size of investments, social programs and sale prices. From 2002 until the end of August 2005, 50 companies were sold in tendering procedures, 1,191 in auction sales and 390 as minority packages of companies on the capital market. Consequently, 1,631 of the 2,027 companies offered in tender procedures were sold, with a sales success rate of 80%. The privatization proceeds equal EUR 1.68 billion, contracted investments amount to almost EUR 850 million and the proceeds of social programs amount to EUR 270 million. A considerable number of companies are currently preparing for privatization in order to successfully implement the 2005 privatization plan to put up for sale 318 companies and share packages for a minimum 200 others, with expected earnings of EUR 262.2 million. In 2005, 19 companies shall embark upon restructuring.

3.3.5. 2005 has seen a 65% share of private ownership in the total economy. Reaching the planned goal of 75% may be expected by the end of 2005 by completing 18 tendering and 300 auction privatizations, through the separation of non-core activities from the public companies portfolios and by establishing new special companies to be privatized through the implementation of the recently adopted Law on Bankruptcy Proceedings. Thus far 73 companies have been identified as needing restructuring prior to sale; if dependent companies31 were to be included, then the number of companies currently undergoing the restructuring process would equal 600. These companies employ 200,000 workers.

3.3.6. In early 2004, the European Bank for Reconstruction and Development in agreement with the Government of Serbia embarked upon a EUR 1.5 million Turn Around Management Programme (TAM), which supports the restructuring of 25 potentially viable SMEs as well as capacity building in management during a two-year period. The project seeks to select companies that have been privatized and assist them in adjusting to market economy conditions, develop three-year planning, define clear competition policy, etc. The program’s special benefits include the direct cooperation of experienced managers from the EU with the management of local companies.

3.3.7. The process of bank privatization as part of banking sector reform entered its final phase. The number and relative importance of banks with majority or significant state ownership is decreasing due to their closure (Borska Bank), merger with other banks (Pirot Bank, the Serbian Regional Bank) or privatization (Jubanka). In 2005 three banks with state ownership have been sold, with proceeds equaling EUR 273.8 million, and three banks have just begun privatization.

3.3.8. The National Anti-corruption Strategy in Serbia was presented to the National Assembly of the Republic of Serbia, with special attention to anti-corruption efforts in the political system, state administration and public services, judiciary, economy and public finance systems. Consistent implementation of enacted laws and an independent judiciary is meant to secure a favorable investment climate and ensure fair play among international business partners.

3.3.9. The Law on Protection of Competition, submitted to the National Assembly, provides for establishing a Committee for the Protection of Competition that should ensure equal competitive conditions for all economic agents on the national market. The National Parliament is also in the process of adopting the Proposal of the Law on Consumer Protection that will positively affect the standard of living, similar to the Proposed Law on Trade and the Proposed Law on Prices.

3.3.10. Forthcoming challenges:

  • Restructuring and privatizing large socially owned and state-owned public companies represents the most important economic challenge for the next medium term period, outside of pension fund financing. Organizational restructuring (horizontal and vertical separation), reduction in the number of employees and eventual privatization are preconditions for a sustainable fiscal policy, as well as for improving the business climate.
  • Creating institutional capacity for the efficient protection of competition. The privatization of either natural or administrative monopolies requires strong and independent competition and regulatory institutions, without which the current status of Serbia’s infrastructure cannot be improved nor its business climate enhanced.
  • Removing administrative and legal obstacles for private sector development at the republic and local level. Although many legal and administrative barriers have been removed, some of them, such as the constitutional provision that urban construction land cannot be privately owned, still remain.
  • Increasing the involvement of local self-governments in developing the environment—both at the local and regional level—conducive to economic growth taking into account competitive advantages, as well as social and environmental limitations and challenges. This includes fostering co-operation between local self-governments in developing strategic frameworks (socioeconomic plans/local PRSs/ local sustainable development strategies building on Agenda 21), and support structures for employment generation and balanced socio-economic development.

3.4. Transition to a Market Economy: Building Strong Public Institutions32

Public administration reform in Serbia has primarily focused on the transition from an authoritarian, administrative decision-making process to citizen services accessible to all. Efforts towards decentralization have given municipalities a more significant role in improving living standards and reducing poverty.

The Public Administration Reform Strategy, adopted in late 2004, aims to build a democratic state and a citizen-focused state administration. The new laws, regulations and solutions recognize the principles of decentralization, depolitization, capacity building, rationalization and modernization of public institutions.

3.4.1. The Public Administration Reform Strategy identified two general and inter-connected aims: building a democratic state founded on the rule of law, responsibility, transparency, cost-effectiveness and efficiency and building a citizens-centered state administration, capable of providing reasonably priced, high-quality services to citizens and the private sector alike. The main principles in the implementation of the reforms are decentralization, depolitization, capacity building (human resources development, establishment of a unified training center and permanent process of professional improvement), rationalization (avoiding duplicated jobs and realistically evaluating the required number of staff for each job), modernization and the principle of “open” government as a control mechanism of state administration (such as adoption of the Law on Ombudsman). The solutions provided in the new Constitution of the Republic of Serbia shall define the levels of sub-central government and stand as a foundation for the devolution of authority from the central to the lower levels.

3.4.2. The Public Administration Reform Strategy governs the responsibility of civil servants and introduces salary reform within the public administration. Establishment of an incentive-based system for salaries was necessary in acknowledgement that the salary system in practice does not adequately motivate employees to take more responsibility. New salary levels for public administration employees were introduced as of April 2005, pursuant to the type of job, level of responsibility involved and the complexity of tasks. A review of the systematization of posts in all public administration agencies has been finalized. The staff requirements were evaluated to raise the efficiency of the entire public administration, which resulted in the rationalization of public administration up to 10%. At the same time a system for monitoring and evaluating the work of civil servants was introduced, which will be used as a basis for rewarding employees in the public administration.

3.4.3. Human resources management units33 have been established to improve human resources management. The central unit has been established in the Ministry for Public Administration and Local Self-Government. Training members of these units is ongoing. A unified center for training and promoting professional improvement in public administration and local self-government agencies should be established by the end of 2006.

3.4.4. Modernizing the public administration in the Republic of Serbia aims to update the technical and technological capacity of the state administration and introduce the so-called e-government that would contribute to the efficiency and cost-effectiveness of public administration institutions.

3.4.5. In order to accelerate the reform process a pilot project entitled Joint Project: Towards a More Efficient Implementation of Reforms was launched with the aim of capacity building in operational planning, monitoring and reporting in public administration. The project seeks to integrate all relevant strategic priorities into the operational plans of public institutions and ensure better resource reallocation by introducing programmatic budgeting and the more efficient programming of international assistance. A unified information system will be introduced to ensure timely reporting on the reform progress for governmental institutions and the public alike. Nine state institutions are taking part in the pilot phase of this project, which shall last until October 200534.

3.4.6. The process of decentralization is tightly linked to the process of fiscal decentralization, which seeks to provide funds to local communities for financing devolved functions thus ensuring independence and funds for adequately responding to the needs of citizens in local communities. The Standing Conference of Towns and Municipalities (SCTM)35 is actively involved36 in the preparation of regulations that define municipal property and a new approach to financing local communities, which entails fiscal decentralization. Municipal authorities deem the absence of fiscal decentralization to be the main obstacle to the economic and social development of cities and municipalities.

3.4.7. Cooperation and information exchange between municipal authorities and other stakeholders at the local level, particularly NGOs, exists in municipalities where international donor projects have been implemented. Among other goals, these projects sought to improve the operation of municipal administrations and enhance information dissemination to citizens as well as establish local partnerships in various spheres. Once in place, these mechanisms proved their worth and continued to be utilized in local communities. To date 17 municipalities have founded citizen assistance centers that seek to raise the quality of the services municipal administrations provide to citizens and improve the flow of relevant information to the public.

3.4.8. The Law on Local Elections was adopted in 2002, providing that mandatory 30% of candidates be from the less represented sex and ensuring their equal distribution on electoral lists. This measure, however, has not yet contributed to an increased representation of women at the local level.

3.4.9. The regulations most relevant to avoiding situations that could lead to violations of impartiality and ethical conduct in management positions in public administration are the Law on Prevention of Conflict of Interest in Execution of Public Functions and the Law on Free Access to Information of Public Interest. In addition, a citizens’ rights guardian (Ombudsman) is currently being instituted; furthermore, an Anti-corruption Council was established and the Government presented with the National Anti-corruption Strategy. The overall aim of these measures is to reduce corruption and promote an anti-corruption culture in Serbia in line with international standards. The National Anti-corruption Strategy seeks to advance regulations relevant to preventing conflicts of interest in the execution of public duties, establish an efficient system of control and responsibility of public and civil servants, enact a code of conduct for public and civil servants (already adopted by the SCTM for local authorities), establish mechanisms for reporting illegal and unethical official conduct, link the information system of public agencies (Tax Administration, Customs Administration, Ministry of Interior, Directorate for Public Procurement, etc), introduce the rotation of civil servants on posts susceptible to corruption, etc. The Strategy proposes concrete measures with timeframes, and the Anti-corruption Action Plan should be adopted by the end of 2005.

3.4.10. In order to ensure access to justice for the poor, several laws were amended to provide that defendants, depending on their financial status, shall not bear the costs of defense if it would endanger their subsistence or the subsistence of their dependants. The Law on Legal Assistance is being drafted.

3.4.11. The Law on Civil Proceedings and the Law on Executive Proceedings have been harmonized with EU legislation and relevant standards of the Council of Europe. Novelties introduced by these laws (e.g. direct review, procedures for resolving disputable legal issues, an accelerated executive procedure, etc.) increase the efficiency, speed and cost-effectiveness of civil and executive proceedings. Reforming the executive procedure sought to ensure that its efficiency and speed do not endanger the protection of either debtors or creditors (separate procedure in commercial cases). A Judicial Center for Training and Professional Improvement was established to further improve the capacity, efficiency and material and technical conditions of the judiciary.

3.4.12. The project Employment of Roma Coordinators in Local Self-Governments began in line with the recommendations from the draft Strategy for Integration and Empowerment of Roma37. It encompasses 12 municipalities in its first phase, aiming to employ Roma representatives in all 120 Serbian municipalities where Roma live.

3.4.13. Serbia lags behind other countries in the region in establishing mechanisms for gender equality as well as in the legislation that would govern this sphere. Work on the Law on Gender Equality and the National Action Plan has begun. The progress report on the Implementation of the Convention on the Elimination of Discrimination against Women (CEDAW report) has been prepared. The Government recently established Serbia’s Council for Gender Equality and a body for gender equality exists in the National Assembly. In the autonomous province of Vojvodina, there is a Secretariat for Labor, Employment and Gender Equality, achieving excellent results and the institution of an Ombudsman has been established. Initiated by the OSCE in 2002, 54 gender focal points have been established so far in local administrations across Serbia.

3.4.14. Forthcoming challenges:

  • Introducing regulatory impact assessments. Legally, the submission of comprehensive regulatory impact analysis is not required in the process of drafting and adopting new legislation. In addition, the public administration lacks the capacity to perform this kind of task.
  • Continuing judiciary reform, since an efficient judicial system and the protection of property rights are preconditions for a well-functioning market economy. The fight against corruption and the improved transparency of judicial decision-making, on one side, and reforms in courts financing, on the other, will provide a basis for maintaining the delicate balance between independence of the judiciary and responsibility to the public.
  • Reforming the system of public and national security and defense. From a fiscal standpoint, downsizing the public and national security systems as well as the army will be one of the key political challenges in the next period.
  • Improving overall policy coordination at the central government level as well as the institutional capacity for programmatic planning processes in the line ministries, with the goal to improve the process of policy making and link government priorities with both available budget funds and international assistance.

3.5. Transition to a Market Economy: Global and Regional Integration38

The process of EU accession is one of Serbia’s priorities and strategic orientations, relying on wide political and social consensus. On April 25, 2005, Serbia and Montenegro received a positive Feasibility Study for the initiation of negotiations on the Stabilization and Association Agreement from the European Union.

Membership of the Republic of Serbia in the World Trade Organization may be expected in the course of 2008. In December 2004 the World Bank approved a new three-year Country Assistance Strategy for SAM fully taking into account the Stabilization and Association process (SAp), and the implementation of the goals set in the PRS papers of both Serbia and Montenegro.

3.5.1. The process of EU accession and PRS implementation are closely connected. The results of PRS implementation relating to the level of economic development and social exclusion are a direct response to the challenges facing Serbia in the process of EU accession.

3.5.2. Serbia was granted asymmetrical trade preferentials and access to significant assistance that has a positive effect on poverty reduction through EU support to the Stabilization and Association process. The European Commission’s Multi-Annual Indicative Program 2005–2006, which forms the basis for EU assistance to Serbia, underlines the complementarity of the priorities laid out in the country’s Poverty Reduction Strategy and its European integration agenda.

3.5.3. The June 2003 EU-Western Balkans Summit in Thessaloniki included the so-called Thessaloniki Agenda, which, among other things, offered the countries of the region a European Partnership as an instrument of the EU’s pre-accession, recognizing that the SEE countries are potential candidates for EU membership. This instrument exclusively governs relations between the EU and the State Union of Serbia and Montenegro until the signing of the Stabilization and Association Agreement (SAA). The Council of the EU adopted the decision on the principles, priorities and conditions contained in the European Partnership on June 14, 2004, based on which the Serbian Government prepared and on November 4, 2004, adopted the Action Plan for its implementation.

3.5.4. In October 2004, the EU adopted a “twin-track” approach to this process, which transferred the entire sphere of economy and trade to the member states of the State Union, i.e. Serbia and Montenegro separately. Thereafter, on April 25, 2005, the EU adopted a positive Feasibility Study for initiating negotiations on the Stabilization and Association Agreement for Serbia and Montenegro39.

3.5.5. The Serbian National Strategy for Serbia-Montenegro EU Accession was adopted by the Government of Serbia in June 2005 and the Serbian Parliament Committee for European Integration in July 2005. The National Strategy represents a basis for the adoption of national programs for the harmonization of national legislation with EU regulations, following the conclusion of the SAA. The SAA’s key goal is to promote economic and trade relations, with the future prospects of establishing the free trade area and regulating the free movement of labor, freedom of establishment, operation in the service sector and free movement of capital.

3.5.6. Aiming to forward the process of legal harmonization with the EU and following the results of the Action Plan for the Harmonization of National Draft Laws with EU legislation for 2004, in March 2005 the Government of the Republic of Serbia adopted the Action Plan for the Harmonization of National Draft Laws with EU legislation for 2005. This plan encompasses 41 laws, 11 of which the Government adopted by August 15, 2005, with six adopted by the Parliament. An Action Plan for the Implementation of Priorities of European Partnership was also adopted in 2004. The realization of both action plans is monitored by the SEIO through a screening report and monitoring tool for the partnership.

3.5.7. In order to prevent and eliminate obstacles to the free movement of persons, goods, services and capital, the Law on the Action Plan on the Harmonization of Economic Systems of the Member States of Serbia and Montenegro was adopted in June 200340. However, in line with the “twin-track” approach, the Law was amended in February 2005 to omit provisions relating to tariff rates, the foreign trade system, taxation, the WTO (joint accession) and the Joint Competition Commission 41. Additionally, the agreement to liberalize the trade of textiles was signed with the EU in the beginning of 2005.

3.5.8. Customs system reform will include the gradual reduction of the level of customs protection, one of the conditions for accession to the EU and membership in the WTO. The Law on Customs Tariffs was adopted in July 200542.

3.5.9. Signing the agreement on free trade under the auspices of the Stability Pact for South East Europe included trade liberalization with seven countries in the region. By 2008 a regional free trade zone should be created that will include liberalization in the service sector.

3.5.10. Neighborhood programs are a new EU vehicle that seeks to promote and support regional cross-border cooperation with the new external borders of the European Union. The programs seek to reduce the existing differences in regional development, advance contacts between local communities and strengthen cultural, social and economic cooperation. Serbia is cooperating with Hungary within the framework of this program and will establish cooperation with Bulgaria and Romania shortly.

3.5.11. Resolving the problems of refugees and internally displaced persons is an indispensable step on the road to regional integration. These issues shall be resolved through the local integration of refugees (granting of SAM citizenship), agreements on the two-way return of refugees that SAM has signed with the Republic of Croatia and Bosnia and Herzegovina and local integration or return of IDPs to Kosovo.

3.5.12. The extended financing arrangement signed with the IMF in 2002—totaling approximately SDR43 650 million—aims to attain sustainable economic growth, improve living standards, lower the rate of inflation and stimulate the continuous growth of foreign exchange reserves. By the end of July 2005 USD 587.5 million (approximately USD 860 million) has been spent, with the remaining sum to be spent by December 31, 2005.

3.5.13. The membership of the Republic of Serbia in the WTO, which is expected to take place in the course of 2008, shall have a positive effect on economic growth, lower the prices of certain products, further the liberalization of foreign exports and secure the preferential status of Serbia and Montenegro.

3.5.14. Forthcoming challenges:

  • Dampening the effects of foreign trade liberalization on the poor living in rural regions, related to both the WTO and the EU accession process. Develop a coordinated government approach, which will consider the impact of the pace of liberalization on the living conditions of rural populations, especially the poor.
  • Responding to the requirements of the European integration process, in particular:
    • Initial negotiations on the Stabilization and Association Agreement, expected in the fall of 2005.
    • Harmonizing SAM’s legislation with the EU acquis, particularly in the key areas of the Union’s internal market, pursuant to the SAA.
    • Speeding up the pace of SAM’s negotiation progress, depending on the pace of the adoption of European regulations and standards, and the country’s ability to create the capacities for implementation of the Agreement provisions.
    • Preventing the risk of interrupting the SAA negotiations in case of the delayed implementation of key EU requests.
    • Ensuring full cooperation with the Hague Tribunal.
    • Addressing the lack line ministry capacity to adequately link allocated budget funds and international assistance with the implementation of specific priorities in the European Partnership.
    • Building the capacity of the public administration for the future use of the new Instrument for Pre-Accession of the EU.

3.6. Increased Employment Opportunities44

The unemployed face the greatest risks from poverty and the highest and most severe poverty gap compared to other categories on the labor market. The principal aim of economic reform in Serbia is the establishment of a modern, export-oriented market economy grounded in the private sector and capable of generating dynamic economic growth and new employment.

Compared to the previous year, employment increased by 0.5% in 2004, whereas over the first seven months of 2005 the average number of the employed increased by 0.1% in comparison to 2004. Slightly increased employment opportunities are considered to be the result of economic reforms, active employment measures, favorable loans to private SMEs, the stimulation of foreign direct investments, investments in the development of the private agricultural sector and other similar measures. The 2005–2010 National Employment Strategy was adopted in April 2005.

The organizational, human resources and information system reform within the National Employment Service is under way.

3.6.1. During 2001–2003 a declining trend in overall employment was recorded as a result of company privatization and restructuring. In 2004 a 0.5% growth in employment was recorded in comparison to the previous year. In the first seven months of 2005 the average number of employed increased by 0.1% in comparison to 2004. A significant 16.5% real growth in net earnings was achieved in 2001, followed by 29.9% in 2002, 13.6% in 2003 and 10.1% in 2004.

3.6.2. The National Employment Strategy was adopted in April 2005. It aims to increase employment, investment in human capital, labor quality and productivity; reduce differences between regional labor markets; support gender equality and fight against discrimination in employment. The National Employment Action Plan for 2006–2008 is being drafted with EAR support. The table below presents the target values to be reached by 2010:

Table 3.6.a.:Target employment values
INDICATORCurrent

STATUS
Current EU

STATUS
YEAR 2010
Employment rate4558%65%67%
Unemployment rate4614.6%6–8%10.5%
Participation rate68%69%72%
Youth employment rate15%40%20%
Women employment rate48%56%90% of men’s employment

rate
Reduced regional disparities in NES

unemployment rates
1:3-10% difference
Reduced regional disparities in

average wage
1:3-20% difference

3.6.3. Fulfilling these aims requires a wide range of harmonized policies, measures and activities to reduce the existing unemployment rate and prevent the long-term unemployment of the redundant labor force.

3.6.4. The number of persons involved in active job-search programs doubled in the period 2002–2004 (22,740 persons in 2002 and 50,586 in 2004).

Table 3.6.b.:Number of persons in active employment programs
TYPE OF ACTIVITYTOTAL PERSONS
2002200320042005*
Job clubs--1201,586
Training for active job searching6,23812,36214,4717,126
Job fairs4,0868,20713,3246,710
Job centers692-15,50820,000
Training for business start-ups---1,200
Stimulation of new employment1,861-98250
Self-employment programs1,305-2,6462,500

Planned number of persons

Planned number of persons

3.6.5. Of the total 2004 allocation of CSD 900 million, CSD 410 million were spent on active employment programs and almost CSD 250 million were undertaken for additional training and education. The 2005 budget of the Republic of Serbia has allocated CSD 750 million for these purposes. The ratio of funds spent on active and passive measures is unfavorable (10% to 90%), but the picture is far better when considering funds invested into active employment programs and general employment promotion by the Development Fund of the Republic of Serbia as well as international donors.

3.6.6. The Development Fund of the Republic of Serbia approved CSD 4 billion in loans to small and medium-sized enterprises and entrepreneurs in 2004. These programs are expected to create 5,000 new jobs. The 2005 plan provides CSD 3.9 billion for SME development, CSD 220 million for individual small shops and CSD 600 million in loans to would-be entrepreneurs that are registered as unemployed with the National Employment Service. Currently, these micro-loans offer the most favorable conditions on the financial market, facilitating the approval of loans to businesses from underdeveloped regions, with lower interest rates and a higher share of Fund financing to projects.

3.6.7. In 2004 CSD 12.5 billion were paid in compensation and temporary compensation to employees from the territory of the Autonomous Province of Kosovo and Metohija and another CSD 410 million were allocated to active employment policy. This means that the share of financial compensation in total expenditures reached 86.54%. This ratio is expected to change shortly.

3.6.8. An employment support program, totaling EUR 9 million, is being implemented in Belgrade, Bor and Pirot with the aim of reducing unemployment and promoting social cohesion through a more effective labor-market policy. A project on employment promotion47 is being piloted in the municipalities of Lazarevac, Pančevo, Kraljevo and Niš aiming at the more rapid and efficient employment of redundant workers, new (young) entrants into the workforce, the older unemployed, the disabled and minorities. The total value of the project is USD 4.75 million.

3.6.9. In order to improve the quality of the labor force, vocational training and additional education programs were organized involving 7,792 participants in 2002 and 7,007 participants in 2004. The network of regional agencies led by the Republican Agency for the Development of Small and Medium-Sized Enterprises and Entrepreneurship (SMEEs), providing expert services (consulting, training, seminars, promotions, etc.) to potential and existing SMEEs, is active throughout the Republic of Serbia.

3.6.10. The privatization of companies and the entry of foreign strategic investors will have a positive impact on the technological modernization of companies and the rise of production, exports and employment. The sustainable development of the private agricultural sector is a key contributing factor to the reduction of rural poverty in the short- to mid-run. Thus far CSD 350 million has been allocated towards this end, with the total investment expected to exceed CSD 750 million by the end of July 2005.

3.6.11. Participation in the gray economy remains one of the main means of survival for the poorest groups in Serbia but also an avenue for increasing profits through tax evasion. In order to reduce gray economy, preventive measures (such as awareness raising and education on the necessity legalizing businesses), stimulation measures (towards the legal operation of entrepreneurship and entrepreneurs) and penal measures have been put in place. In the course of 2002, labor market inspectors found 18,564 persons working but not registered as employed, which led to the formal employment of 12,695 persons. In the course of 2004, labor market inspectors found 46,635 persons working but not registered as employed, which led to the formal employment of 30,754 employees.

3.6.12. The 2005 Labor Code introduced new forms of flexible employment (contracts for representation or mediation, additional work, professional education and development), which do not constitute employment contracts but which lead to poverty reduction through an established right to award, i.e. financial compensation and other rights based on work. Furthermore, this Labor Law improves the position of employees in cases of bankruptcy, change of employer and termination of employment.

3.6.13. Measures targeting the employment of vulnerable groups are implemented through programs such as public works, micro-businesses and employer subsidies. The EU-funded project Beautiful Serbia trained a total of 185 persons, 122 of whom have found employment with 37 others currently in the process of concluding employment contracts. The project targeted individuals with lower levels of education and provided the opportunity to acquire professional qualifications and experience. The 2005–2006 project supports public works in the Banat, Šumadija, Pčinj and Jablanica districts.

3.6.14. A social program targeting redundant workers is being implemented vigorously. The 2002–2004 programs involved 92,996 workers who lost employment due to restructuring and privatization and financed an additional 7,684 workers over the first three months of 2005.

3.6.15. Creating conditions for including the disabled in the labor market is implemented through efforts to generate employment (55 persons in 2004), provide equipment (55 persons in 2004) and assist with wage financing (111 persons in 2004). Financing 50 persons through self-employment programs and 100 persons through new employment programs is planned in 2005. As an additional incentive to employers, the law stipulates48 tax exemptions on salaries for the disabled, as well as for their training and employment. The European Agency for Reconstruction will finance an income generation project targeting 290 refugee and IDP families.

3.6.16. The Law on Income Tax has introduced employment promotion measures in which entrepreneurs are entitled to tax exemptions when permanently employing new employees. Two-year subsidies and exemptions from paying contributions on employing workers over 45 and 50 have also been introduced.

3.6.17. The permanent training of National Employment Service (NES) employees seeks to improve the NES’s quality of work and build its capacity. Employees are being trained in three pilot municipalities (Sombor, Valjevo and Novi Beograd) to promote more efficient service provision49.

Table 3.6.c.:NES Work Program for 2005
TYPE OF ACTIVITYNumber of

people
Allocated Funds

(EUR)
Active job search8,91263,898
Employment fairs6,71069,700
Additional education and training program8,2604,540,812
Developing entrepreneurship and employment

incentives
25,6504,672,500
Center for professional information and counseling28,081
TOTAL FUNDS FOR ACTIVE LABOR MARKET

PROGRAMS
49,5329,374,992

3.6.18. The Decision on Establishing the Republic Employment Council came into effect in 2004. Local Employment Councils are in the establishment phase.

3.6.19. A 900,000 EUR Labor Market Institutional Building project50 is currently being implemented in Belgrade, Novi Sad and Šabac. The project seeks to improve the functioning of the labor market and promote employment through establishing an efficient public employment service and improving organization, planning, operations, human resources and work conditions in the National Employment Service.

3.6.20. Forthcoming challenges:

  • Developing efficient programs for employing redundant employees in the process of privatizing socially owned enterprises and restructuring public enterprises in the period 2005–2007 (emphasis on active measures instead of passive measures).
  • Developing more efficient programs for employing the most affected and vulnerable groups, including the long-term unemployed, youth, the under-qualified and older workers, as well as persons with disabilities, Roma, refugees and IDPs.
  • Establishing regional and local employment councils (coalitions) targeted towards efficient local development and employment strategies based on the analysis of risks and potentials, especially in the least developed regions.
  • Continuing reform of the National Employment Service, especially towards a full client-centered approach, including contacts with employers and efficient, active job searches based on a unified information system, as well as the establishment of monitoring and evaluation systems.

3.7. More Efficient Social Protection51

The 2004 introduction of a minimum social security level for all of Serbia improved access to social allowances, raised its amount and increased the number of recipients in the poorest municipalities. The budget approved additional funds for such assistance through larger transfer amounts and better coverage of the most vulnerable groups.

More efficient social welfare mechanisms, the implementation of the Poverty Reduction Strategy, the revival of economic activity and an increased employment rate are expected to slow the growth of overall social benefits in relation to GDP.

Funds directed towards the Social Innovation Fund (FIS), a program of the Ministry of Labor, Employment and Social Affairs, are financing projects at the local level that are developing and testing innovative and more effective forms of social welfare services through cooperation between the Government, non-government and private sectors, public institutions and local self-governments.

3.7.1. The adoption of Amendments and Additions to the Law on Social Welfare and the Social Security of Citizens has changed the mechanisms for the social welfare index and introduced a minimum social security level as a criterion for receiving assistance from the Family Financial Support system (known as MOP52). These changes have improved access to MOP in the poorest municipalities53 and increased the number of families who are MOP beneficiaries: from 48,000 in 2004 to around 52,000 families in 2005. A unified level has been introduced and the amount of social allowance for “care and assistance from another person” for persons who require assistance and care in order to perform activities for gratifying basic living needs has increased (from around 2,600 dinars to over 4,500 dinars for a total of around 20,000 beneficiaries). Mechanisms that determine the index according to living costs (rather than the previous practice that tied it to average salaries) have ensured the real value of social allowances and continuous access to social rights.

3.7.2. In response, the budget has approved additional funds for expanding assistance through larger transfer amounts and the inclusion of the most vulnerable groups. In that sense, MOP has included a number of families from the poorest municipalities, qualifying refugees who have acquired citizenship, internally displaced persons who fulfill the conditions prescribed by the Law on Social Welfare and Roma families who are offered assistance in gathering the necessary documentation.

Table 3.7.a.:Number of MOP beneficiaries and level of social transfers (CSD)
YearAverage number ofTotal
FamiliesBeneficiaries
200239,43090,336921,296,000
200445,254108,7931,709,951,000
200552,000127,0002,800,000,000
Table 3.7.b.:Number of beneficiaries receiving children’s allowances and the level of social transfers (CSD)
20022004
Number of families receiving children’s

allowances
324,650262,693
Number of children573,187489,803
Total amount of children’s allowances6,598,308,4826,567,688,714
Budget214,801,643,633308,798,239,522
Share of children’s allowances in the budget3.07%2.13%

3.7.3. In 2004, a program for including displaced persons in the social welfare system54 was carried out. During the life of the program, 4,551 families turned to social work centers for assistance, out of which 1,961 families submitted applications, while 919 families were included in MOP. Most rejected applications were from applicants whose income was above the minimal level of social security.

3.7.4. Over 140 centers for social work in Serbia represent the basis for the state’s engagement in providing welfare services at the local level. With the continuing reform of the social welfare system, the centers for social work (CSW) will increasingly take over activities aimed at assisting social groups that face the risk of social exclusion. Despite the high education level of CSW employees, further training is necessary in implementing the new policies and approaches defined in the PRS. The quality of social welfare services also depends on developing social standards across the CSWs, which are being continually improved through a project entitled Improvement of the Organization and Professional Work at CSWs as well as through numerous professional gatherings, seminars and other educational efforts.

3.7.5. In order to stimulate the role of local communities in providing social welfare services, the social welfare rights for which local self-government is responsible were monitored. With the Amendments and Additions to the Law on Social Welfare and the Social Security of Citizens, certain competencies were transferred to municipalities, such as reception centers and stations.

3.7.6. The Social Innovation Fund (SIF) program enables projects at the local level to develop and test innovative and more effective forms of social welfare, which are financed and implemented through the cooperation of public and nongovernmental institutions and organizations (NGOs, centers for social work and local authorities). In 2003, 88 projects were approved (for which EUR 1.2 million were allocated from a donation by the Government of the Kingdom of Norway and 44 million dinars from the budget of the Republic of Serbia). Out of this number, 39 continuing projects were approved in 2004 (through a EUR 150,000 donation by the Government of the Kingdom of Norway and an allocation of 24 million dinars from the budget of the Republic of Serbia). Among other activities, this project supported a number of programs aimed at improving the position a variety of populations, including the Roma, victims of abuse and neglect, children with and at risk of developmental problems, the elderly, children without parental care, etc. A new call for applications was announced in April 2005, and a total of EUR 900,000 from an EAR donation and CSD 32 million from the budget of the Republic of Serbia were allocated. The priorities of the 2005 call for applications were in full compliance with the PRS recommendations.

3.7.7. The third competition for projects by organizations representing persons with disabilities was announced in August 200455, through which 84 projects in the total amount of 34 million dinars were approved. This initiative respects similar principles and selection criteria as the SIF.

3.7.8. One of the benefits for socially vulnerable categories (MOP beneficiaries, families with low income) is the 30% discount on electricity costs. When the price of electricity increased in July 2004, a new program providing relief in electricity payments for vulnerable populations ensured subsidies for 142,000 families.

3.7.9. The new role of the state in the reformed social welfare system should focus on the definition of the legal framework, including the supervision and provision of basic forms of social security and assistance, as defined by the strategy for reforming the social welfare system. In that sense, work has continued on drafting new laws and regulations aimed at reforming the system.

3.7.10. The Ministry of Labor, Employment and Social Affairs produced a Strategy for the Reform of the Social Care and Protection System, which defines the main components of social policy reform: the de-institutionalization, decentralization and democratization of social care and protection services—including local community involvement in the provision of social services and partnerships with civil society. The Strategy is guided by the following principles: addressing the needs of individuals within the context of family and community; emphasizing the participation of beneficiaries in the design and provision of social services; providing service diversity and choices to beneficiaries; maximizing community-based services over institutional services; and encouraging the plurality of service providers.

3.7.11. The two most important fields in the process of transforming institutions and developing alternative social welfare services are the improvement of family accommodation and protected social accommodation. Out of 4,471 assisted children without parental care, 2,705 are with foster families and 1,766 in orphanages. A system for educating and monitoring foster families has been ensured, programs for preparing and training candidates for foster parents as well as monitoring and supporting children and foster families have been prepared, and a database on family accommodation is being created. Around 1,500 foster family candidates have been prepared and trained, around 900 of which fulfill conditions of general eligibility for foster parentage.

3.7.12. Accommodation in protected conditions—a form of accommodation for the elderly, refugees, internally displaced and disabled persons, as well as others who have difficulty managing on their own—is realized through cooperation between the local self-government; the Ministry of Labor, Employment and Social Affairs; the Republic Commissariat for Refugees and donors. In 18 municipalities, buildings were constructed for roughly 900 elderly refugees and IDPs, as well as a certain number of the local population, who will provide assistance to residents. Some apartments have been provided for formerly institutionalized persons with disabilities, offering protected housing with organized support services.

3.7.13. In 2004, living conditions at institutions for the elderly, refugees and mentally disabled persons continued to improve, including living conditions in all 37 homes for elderly persons (expanded capacities, basic maintenance, rehabilitation, reconstruction and new equipment). All 15 homes for persons with developmental disorders have benefited from less crowded facilities, improved living conditions and new equipment.

3.7.14. For the first time, the Criminal Code of the Republic of Serbia (2002) treats domestic violence as a criminal offense, while the new Family Law (2005) treats violence against women as a social rather than personal problem and defines protective measures for family members against the perpetrators of violence. This law also introduces new legal provisions such as the emancipation of minors over the age of 15, mediation in marital relations, joint execution of parental rights, marriage contracts, a deed of gift, and the like; it also grants the centers for social work additional responsibilities in family protection.

3.7.15. In January 2004, the government adopted a decision on protective measures for economically vulnerable households in the process of building individual residential facilities and the legalization of illegally constructed buildings. The decision defines the right to subsidies for constructing individual housing facilities, as well as the issuing of permits for facilities constructed without a building permit. The realization of a program for the housing and permanent integration of refugees started in seven municipalities/towns in Serbia, through which 670 housing units for refugees and socially and economically vulnerable populations will be constructed.

3.7.16. Forthcoming challenges:

  • Providing access to the social protection system to persons without identification documents, especially Roma living in slums or displaced from Kosovo.
  • Creating space to better target MOP social transfers as the best form of targeted social allowance, as well as a reconsideration of the existing model, which is highly unfavorable for multi-member households.
  • Continuing reform projects and further improving the SIF as the single most important mechanism for implementing reforms in this area, including efforts to mainstream lessons learned into government policies. Formulating other models that will stimulate local authorities to develop alternative social welfare services within their mandate.
  • Developing control mechanisms that will prevent misuse and whose absence represents an obstacle for further decentralization.
  • Building links between different sectors both on the central and the local level (employment, education, health, social protection) to ensure an integrated social welfare approach with an emphasis on active social policy measures.

3.8. Improved Status of Pensioners and the Elderly56

Most elderly people in Serbia receive pensions, since pension insurance is mandatory for the largest part of the economically active population. The main goals of the state policy towards the elderly include an improved standard of living, the reduced number and share of the poor and the depth of poverty and strengthened institutional and non-institutional services for the most vulnerable as well as elderly persons.

In the previous period, considerable progress was achieved in the regularity of pension payments with pensioners receiving 12 payments in 2004. According to the most recent draft law on debt reprogramming, a remaining delay in pension payments will be solved in the next three to five years for different categories of pensioners.

3.8.1. The Amendments to the Law on Pension and Invalid Insurance increased the lowest pension protective level and offered the legislative framework for the consolidation of the three pension and disability insurance funds (Fund of the Employed, Fund of the Self-employed and Fund of Farmers).

3.8.2. Consolidation of the pension and disability insurance funds is expected to contribute to the sustainability of the overall pension system. Even though pensions are paid regularly, payments in the Fund of the Employed have been delayed 1.5 months and 20 months for the Fund of Farmers. Around EUR 215 million are necessary for paying farmers’ pension arrears (20.5 pensions). The mechanism for addressing this problem is outlined in the new legislation,57 which envisions reprogramming the debt in pension payments in the next three to five years, as well as beginning regular and timely pension payments starting with November 2005. In addition, consolidation of pension funds is needed because contributions are insufficient for financing pension payments. The budget subsidizes around 40% (and for the Fund of Farmers, even more58) of the pension fund’s income (the deficit of all three pension funds in 2004 was 5.12% GDP). The consolidation is expected to raise the number of the insured as well as improve the collection of contributions to the Fund of Farmers59. This, in turn, is expected to create a basis for the regular payment of pensions in the long run. At the end of May 2005, the World Bank granted USD 25 million to support a project related to this problem.

Table 3.8.a.:Basic Fund indicators in 2004
FUNDCATEGORY
Number of

persons
Average

pension
Subsidies from the budget
Fund of the Employed1,241,0829,578 dinars62.67 billion dinars (34.14% of

total Fund incomes)
Fund of the Self-

Employed
43,9389,360 dinars-
Fund of Farmers215,0862,780 dinars*5.66 billion dinars (60.28% of

Total Fund incomes)

Pensions paid in the period April 2002–April 2003

Pensions paid in the period April 2002–April 2003

3.8.3. The National Action Plan for the Provision of Social Security and the Humanization of Living Costs of the Elderly—currently under preparation—will define how services and assistance will be offered to elderly persons.

3.8.4. The draft law on voluntary pension funds and plans, in its final stage, is expected to be adopted in the course of 2005, to be followed by the adoption of by-laws related to its implementation. The introduction of this third pillar, i.e. voluntary private pension insurance, will create conditions for additional income for the elderly in the future. The working group for the implementation of voluntary private pension insurance is established within the council for the reform of the pension insurance system.

3.8.5. The programs concerning support to elderly citizens include de-institutionalization (transformation of institutions where elderly people live), with the piloting of alternative services (family accommodation, home care and assistance, etc.) for elderly persons at the local level. Housing under protected conditions60 encompasses around 900 elderly persons, refugees and displaced persons in a total of 18 municipalities: the pilot project of integrated home care includes 100 (elderly) families in Knić, Kragujevac and Knjaževac. Home care services are still developed within institutions for the elderly, with a trend towards the increasing participation of non-governmental organizations in the development of these services. Home assistance is provided for 2,500 beneficiaries, clubs for the elderly rally around 20,000 users and provide meals for around 6,000 people and two-day centers for the elderly serve citizens in Kragujevac and Novi Sad.

3.8.6. With the decentralization of the social welfare system, a large number of competencies will be transferred to local self-governments, which will have to ensure that services provided in cooperation with the not-for-profit and private sector are in accordance with the recognized needs of the citizens.

3.8.7. The quality of living conditions in all institutions for the elderly, refugees and mentally disabled persons has improved through building investments, expanded capacities, basic maintenance and investment, rehabilitation and reconstruction, as well as equipment, totaling around CSD 280 million in 2004. At the same time, with the help of donor funds, six collective centers for refugees have been transformed into homes for elderly persons. The conversion of yet another collective center with capacity for 100 is currently being completed. Larger and better quality institutions can also be achieved through including the private sector in providing accommodation services for elderly persons. The Ministry of Labor, Employment and Social Affairs has issued the first three licenses for private homes for the elderly, while a fourth decision is being prepared.

3.8.8. Forthcoming challenges:

  • Further reforming the pension and disability insurance system in order to decrease the burden both on the overall economy and on the republic budget, while preventing the impoverishment of the elderly whose living standards depend exclusively on pensions.
  • Consolidating the pension funds along with improving the information system and reorganizing the register of the insured61 (data collection, registration of insured and data management).
  • Further improving control of contribution payments and discouraging contribution evasion.
  • Further developing alternative forms of social protection for the elderly at the local level, especially home care and assistance.

3.9. Health Care towards Poverty Reduction62

Changing the model of financing primary health care and introducing a new model of payment by the end of 2006 is a precondition for the essential reform of the primary health care system in the Republic of Serbia. Access to basic health services of an appropriate quality without financial barriers for the whole population, particularly vulnerable populations, i.e. refugees, IDPs, Roma, poor people and others, is a key to health care reform. Such access should be achieved through numerous national health programs and strategies for specific sectors, including restructuring health care institutions, introducing a health benefit package, changing the way providers charge payment, introducing a reduction or exemption of out-of-pocket expenditures for vulnerable groups with regard to social protection costs and establishing a public/private mix in the health care system.

3.9.1. Providing fair and equal access to health care to all citizens of the Republic of Serbia represents one of the basic principles of its health care policy. The Draft Health Care Law seeks to better define the health rights of citizens and patients, strengthen the gate-keeping function of general practitioners, better specify the general (public) interest in the health care sector—including vulnerable groups—decentralize management and increase the productivity and quality of care. The Draft Health Care Law contains a list of vulnerable groups and describes the possibilities for protecting their health rights.

3.9.2. The adoption of the health policy document Vision of Health Care System Development, Strategy of Health Care Reform—together with the National HIV/AIDS Strategy, Tobacco Control Strategy, Public Health Strategy, Food Safety Strategy, National Blood Safety Strategy, National Mental Health Program and National TB Control Program—will improve the availability of health care, particularly for vulnerable groups, and reduce inequality in access. The Ministry of Health has been participating actively in the preparation of multi-sector government documents such as the National Action Plan for Children, the Action Plan for Women’s Health and the National Action Plan for Improving the Status of the Roma Population. Other measures for protecting vulnerable groups include introducing a new positive drug list financed by the Health Insurance Fund, strengthening the protection of patient health rights, improving inspection control in cases of detrimental health consequences and establishing better cooperation with NGOs as well as providing financial and other support to projects promoting health and healthy lifestyles.

3.9.3. Through the project Development of the Health Care System in Serbia, the World Bank is financially and technically supporting the Serbian health care system, with a loan of USD 23.5 million until 2008. It is planned that the largest share of resources will be spent on restructuring health care centers including new information and communication technologies, changes in methods of hospital payments and the introduction of accreditation and licensing.

3.9.4. To enhance efficiency and effectiveness in the use of resources, evidence based clinical practice guidelines based on the National Burden of Disease Study were developed and are being implemented. New standards for health personnel, performance and hospital provisions were proposed and an action plan for capacity building for the Ministry of Health and health professionals is in the preparation phase. A national plan for training health care professionals and associates in health management, continuous quality improvement and development of an information system for public health is consistently implemented in accordance with the needs of the system.

3.9.5. The health information system should also increase efficiency in the health care sector. A pilot project of basic health services in the Kraljevo municipality, which resulted in a software solution for supporting the work of a team in primary health care, will be implemented in Belgrade municipalities and a cluster of other municipalities in Serbia through a new EAR project. An existing EAR project, focusing on the development of a health information system for basic health and pharmaceutical services, will improve the Kraljevo software package and help develop an electronic health record as well as a national clearinghouse.

3.9.6. The pilot project of basic health services in Dom Zdravlja Kraljevo was completed in June 2005. In 2006 results and experiences from this project will help develop a capitation formula that will be used to finance service providers in primary health care as a pilot of a new model of payment.

3.9.7. The development of the basic health benefit package is in progress, and has been included in the Draft Law on Health Insurance. In addition, the Draft Law introduces new methods for financing service providers, better management of financial resources, the decentralization of the Health Insurance Fund, as well as voluntary and private health insurance. Strengthening health promotion and preventive health services aimed at the prevention of communicable and non-communicable diseases and the promotion of healthy lifestyles takes place through the concrete activities of an EAR project implemented in 25 health centers and public health institutes. Tobacco control activities are particularly developed within the National Strategy for Tobacco Control, still to be ratified, and intensive anti-smoking campaigns.

3.9.8. Developing a private/public mix is progressing only gradually due to financial constraints. The Health Insurance Fund, however, is now recognizing the prescriptions of private practitioners and contracts between private practice providers and the Republic Health Institute Fund are now possible for certain health care services that are not available in the public sector.

3.9.9. Activities for developing a process for licensing medical personnel and accrediting health care institutions and programs have intensified.

3.9.10. An expert group for youth is closely cooperating with UNICEF to improve the functioning of health care institutions working with young people by improving the quality of existing youth counseling centers and initiating the establishment of new ones that would operate in accordance with the recommended methodology. The Strategy for Improving the Health of Young People has been prepared and implemented, as have been the Mental Health Strategy and a law for its implementation. These activities will be initiated after adoption of the Health Care Law, which represents a precondition for the adoption of regulations in the field of mental health. The HIV/AIDS and TB Control Program in Serbia is supported by a donation from the Global Fund and realized according to the planned dynamic.

3.9.11. Forthcoming challenges:

  • Health care financing reform including health insurance reform and development of a new model of provider payment in primary, secondary and tertiary care.
  • Rationalization of health workers, starting from administrative and technical staff to nurses and medical doctors and dentists with the implementation of new standards of provision and performance.
  • Searching for options and possibilities for privatizing the health care sector, particularly dental services, rehabilitating spa centers and increasing mixed public/private solutions in the health care sector.
  • Restructuring clinical centers through EIB credit.
  • Establishing and developing independent national bodies for licensing, health technology assessment, accreditation and continuous quality improvement in the health care sector.

3.10. Education and Poverty63

The importance of education for poverty reduction was convincingly demonstrated by the results of the 2002 SLSP: 69% of poor people in Serbia had only elementary or incomplete secondary education, while only 2% had university degrees.

The gradual increase in the share of education expenditure in GDP continues: 3.9% in 2005 and set to rise to 4% in 2007. Reforms currently in process include the streamlining and reorganization of the educational institution network at all levels, implementation of teacher training and additional training programs and the review of school programs. The start of a nine-year compulsory education program is scheduled for the 2006–7 school year. Increased adult education, learning programs and projects, as well as the development of distance education programs, are planned as well.

3.10.1. The start of a nine-year compulsory education program is scheduled for the 2006–7 school year, with the introduction of a compulsory, free-of-charge preparatory grade for children 6 to 7 years of age. Also planned is the development of alternative half-day programs for children 5–7 years of age, particularly from vulnerable and marginalized groups. The coverage of pre-school education is increasing each year, and the assessment of existing facilities, programs and services in preschool institutions and the creation of a database are currently under way. Training64 for the creation of development plans in pre-school institutions is planned until the end of 2007.

3.10.2. A joint effort of the Ministry of Education and Sport and the World Bank, the Republic of Serbia Education Improvement Project and its school grant component, enables schools to create development plans and projects and receive grants. Selection ensures that schools from the poorest regions with high percentages of children from IDP and Roma families receive preference in acquiring the assistance that will improve their living and working conditions.

3.10.3. For the purpose of revising the primary education methodology and curriculum, the curricula for elementary school grades I, II, III and IV and teaching programs for grades I, II and III have been revised, while the programs for grade IV are under preparation. The programs have retrained teachers to teach foreign languages and civic education in lower grades. Training programs for teachers to teach bilingual classes are under way and seminars have been conducted for first-grade teachers in applying descriptive grading, as well as for history teachers to introduce a European approach to teaching history.

3.10.4. Preparatory activities have begun for projects that seek to develop the capacities of schools and teachers in the areas of the democratization of education, prevention of trafficking, protection of child rights (child ombudsman), and prevention of delinquent behavior in schools. School teams are also being trained to create safe and stimulating school environments within the UNICEF project Schools without Violence. These projects, as well as ongoing ones, have and contribute to the revision of the methodology of working with students that will be modernized, contemporized and made more topical in 2005–6, in line with the real needs of students and schools.

3.10.5. The Secondary Vocational Education Strategy draft is in the phase of public debate. During the process of reorganizing the vocational education system in accordance with the needs of the economy, 40 profiles were abolished and 27 new profiles introduced in pilot schools, along with the training of 650 teachers and a new modular principle in the program structuring. There are plans to determine the levels, character and duration of vocational education and training in Serbia in accordance with the 1997 ISCED65. Since 2003, a pilot project named the Secondary Vocational Education Reform Program has operated in 55 secondary vocational schools66.

3.10.6. By signing the Bologna Declaration, Serbia joined the group of European countries that are coordinating their policies in the field of higher education, in order to establish the European Higher Education Zone by 2010, which seeks to preserve the specific cultural, linguistic and national characteristics of each member country. A draft Law on Higher Education, prepared in accordance with the principles of the Bologna Declaration, will soon be adopted and will represent the basis of accelerated higher education reform in Serbia.

3.10.7. Providing a systemic possibility for adults to obtain qualifications is in the phase of public debate. Other plans include increasing the number of adults in education and learning programs and projects, establishing a wide network of various institutions and organizations for adult education (including five regional training centers that have been organized in five secondary schools in Belgrade, Zrenjanin, Niš, Bor and Kragujevac) and developing distance education programs.

3.10.8. Compared to the earlier period, the number of student loans remained the same during the 2004–5 school year (with 240 allocated for occupations that are in short supply); the number of scholarships was reduced to 10,793 and the number of student loans increased (about 18,000). The aim is to further increase the amount of loans and scholarships as well as to increase the number of beneficiaries.

3.10.9. Reallocation of budgetary resources towards poorer regions and municipalities is gradually being implemented, with completion planned for 2010. The Decision on Criteria for the Definition of a Kindergarten and Primary School Network has also been adopted, which should lead to the more rational use and reallocation of savings into building repairs, material needs and school equipment, with local self-government being responsible for the implementation. In addition, the program of continuous professional education of teachers for the 2004–5 and 2005–6 school years allocates the highest budgetary resources towards the poorest regions (territories of regional school administration offices in Leskovac, Vranje, Kraljevo, Niš and Požarevac).

3.10.10. Teacher training is conducted through public and social institutions, as well as non-governmental organizations. This goal is realized through projects for quality assurance, school development planning and decentralization; seminars for descriptive grading, student safety, civic education, religious instructors and school principals; activities of the center for the professional development of employees and professional associations of teachers and expert associates in educational institutions. In addition, the Education Promotion Institute and the Education Quality Assessment Institute have been established.

3.10.11. For the purpose of implementing teacher training/additional training programs on the basis of current sector needs, foreign language teachers in lower grades of primary school have received training, as have all first-grade teachers and expert associates in the area of descriptive grading (220 seminars were organized in 2003 with the attendance of 8,300 teachers, and 280 seminars were organized in 2004 with the attendance of 4,000 teachers). Social inclusion sensitivity seminars were also conducted for 1,200 education employees, parents and representatives of social work centers, in addition to seminars that trained several thousand civic education teachers and employees in preschool institutions. Other seminars addressed the introduction of the teaching program in the first grade of primary school (with 800 seminars organized in the previous two years, attended by 1,600 teachers and expert associates). The plan in 2005 is to train about 2,000 teachers for religious instruction, about 1,200 teachers for the optional “From Toy to Computer” subject and 600 teachers to work with children with special needs. Seminars will also be organized to train teachers in areas such as civic education and the prevention of delinquent behavior.

3.10.12. In order to increase the inclusion and participation of marginalized groups in the educational system, free-of-charge textbooks were provided for about 6,000 pupils in primary schools in 2002–3 school year and for 5,886 pupils in primary schools in 2003–4 school year. For poor Roma children, 74 school projects relating to the improvement of Roma education for 6,500 children were supported financially on the basis of the 2002–3 tender, as well as about 70 projects in 2003–4 school year. In the same school year, affirmative action67 led to the enrollment of 42 Roma pupils in secondary schools and 51 students in two-year colleges and universities. Seventy pupils were enrolled during the 2004–5 school year, while 89 students were enrolled in two-year colleges and universities. An action plan for promoting Roma education in Serbia68 was adopted in January 2005. An education program has been prepared for Roma community members who are expected to enroll their children in elementary school as well as provide them with the support necessary to complete it.

3.10.13. Special support for Roma teachers has been ensured by their inclusion in the system of professional training and by promoting teaching colleges, the department of Romonology and the optional subject of Romany language with elements of national culture (introduced into 29 schools), in addition to a series of seminars for members of ethnic minorities named Challenges of Education in Minority Languages. Unfortunately, activities planned in the Strategy for Roma Education have not been fully implemented, primarily the introduction of Roma assistants as well as a Roma coordinator for cooperation with families, which have been delayed by laws and bylaws that fail to prescribe these positions in schools. Activities that will pilot new solutions are currently being developed. Nevertheless, positive discrimination measures for Roma students have been applied to enrollment procedures for secondary and high schools and faculties.

3.10.14. The preparation of an Education Strategy for Persons with Special Needs is underway (following an analysis of the current situation), as well as a three-year OECD/CERI project for disabled pupils and pupils at risk. Two pilot projects are being implemented, including an inclusive model at the preschool education level and a model for partial inclusion and new special schools. Vocational education for pupils with special needs, based on their functional capabilities, is regulated by the Law on Education System Fundamentals, through which schools have been allowed to organize an adapted school program for disabled pupils69.

3.10.15. Forthcoming challenges:

  • Improving the quality of education through the rationalization of programs, by introducing quality standards in specific scientific and educational areas, training teachers in primary and secondary schools and approving new school books in cooperation with the Ministry and professional institutions such as the Institute for the Improvement of Education and Upbringing and the Institute for Quality Control in Education.
  • Reforming vocational education, to be carried out primarily by the Center for Strategic Planning (within the Institute for the Improvement of Education and Upbringing) and the Union of Gymnasiums and Vocational Education Schools. Pilot programs that will introduce new profiles in vocational schools and their application in a larger number of schools will be evaluated. Developing optional subjects in gymnasiums will introduce changes into the regular school curricula.
  • Including marginalized groups and persons with special needs into the regular education system based on affirmative action measures proposed by expert teams, including the simultaneous implementation of seminars for teachers who will work with children with special needs.

3.11. Regional, Rural and Urban Aspects of Poverty70

Regional discrepancies in Serbia’s development are the most pronounced in Europe and continue to increase from one year to the next. Apart from the traditionally undeveloped south of Serbia and Old Raška, the newly impoverished areas are east Serbia, parts of central Serbia and the regional centers of the mining and traditional industry, which have experienced further demographic outflow from rural and underdeveloped regions.

The network of regional agencies for SME and entrepreneurship development continues to expand. At the end of 2004 the network covered over 80% of the territory of the Republic of Serbia. The Development Fund of the Republic of Serbia also stimulates the development of entrepreneurship and employment with a special focus on underdeveloped areas.

Ensuring support to sustainable rural development, as well as to farmers who have been affected the most by economic reforms and further liberalization in the agricultural sector, are among the key goals of the Draft Strategy for Agricultural Development. The Strategy seeks to increase the competitiveness of Serbian agriculture by means of resource reallocation from price support to investment and structural support.

The Strategy of Local Sustainable Development, delivered for adoption to local self-governments in May 2005, is aligned with the PRS and presents a basis for local community development planning.

3.11.1. The adoption of the Law on Balanced Regional Development, in the final drafting stage, will create an institutional framework for establishing the National Agency for Regional Development and a special financial institution for promoting regional development, which would be in charge of implementing the goals and tasks defined in the Poverty Reduction Strategy for Serbia. Implementation would be ensured through a network of regional agencies and offices for regional development. In May 2004 the Ordinance on the Criteria and Indicators for Determining the Devastated Areas of the Republic of Serbia and the Decision on the Determination of Devastated Areas (Municipalities) of the Republic of Serbia were adopted. The Law on Underdeveloped Areas (UDA) has been proposed for the period until 2010,

3.11.2. One of the basic goals of the Development Fund of the Republic of Serbia is a more balanced regional development through the granting of soft loans to SMEs and entrepreneurs. Short-term export and liquidity loans are granted, with a repayment period of six months and an annual interest rate of 5%. During 2004, 1.38 billion dinars were extended, with another 520 million in short-term export loans planned for 2005. Long-term loans are granted with a repayment period of five years and a one-year grace period and interest rate depending on the development level of the municipality, based on the GDP average (Table 3.11.a.). During 2004, 7.86 billion dinars were extended, with 4.72 billion dinars to be extended in 2005. Apart from long-term loans from the Fund capital, long-term commission loans for promoting primary agricultural production were also extended. A total of 164 loans were granted for these purposes, in the total amount of 1.74 billion dinars. The Fund aimed to distribute the loans equally in the various regions and areas of the Republic.

Table 3.11.a:Lending terms of the Development Fund of the Republic of Serbia
Development level of

municipalities based on GDP
% share of the Fund’s loan in the

estimated value of investment
Annual interest rate
< 33%up to 80%1%
33% – 50%up to 60%3%
50% – 70%up to 50%4%
> 70%up to 40%5%

3.11.3. The Regional Development Agency of Šumadija and Pomoravlje was established in Kragujevac, with others in progress for Banat in Zrenjanin and Southern Serbia in Leskovac, and another in development for east and west Serbia.

3.11.4. Expansion of the network of regional agencies for SMEs and entrepreneurship development continues. Since 2004 regional agencies in Leskovac and Vranje have been established, as well as the offices of regional centers in Apatin and Odžaci. The process of opening an office in Bujanovac is currently under way, with plans to establish an office in Medveđa as well. At the end of 2004 the Republic network covered over 80% of the territory of the Republic of Serbia (without Kosovo and Metohia), with a goal to cover the entire territory of the Republic. The Republic Agency for SME Development and the Republic Network of Regional Agencies provide, inter alia, legal and financial consulting to potential and existing SMEEs (Table 3.11.b.), organize seminars in the area of entrepreneurship (including 67 seminars attended by over 2,000 participants in 2004), promote expert and financial support to SMEEs (including 13 promotions attended by roughly 1,000 entrepreneurs in 2004), implement projects (e.g. Scanning of Innovation Capacity in the Šumadija and Pomoravlje Region) and participate in international cooperation programs.

Table 3.11.b.:Work of the Republic Agency for SMEE Development and Republic Network
Help lineConsulting

(financial and

legal)
Business plan

(assistance and

preparation)
E-mail

responses
Training
No. of

seminars
No. of

participants
7,6194,2831902,5092785,837

3.11.5. In 2003, the three-year, EU-financed Regional Socio-Economic Development Programme was launched in three regions in Serbia—Banat, central Serbia (Šumadija and Pomoravlje districts) and South Serbia—to promote a partnership approach to economic and social development. Thus far three Socio-Economic Development Plans have been drafted; the Regional Socio-Economic Development Fund (RSEDF) provides financial support of EUR 1.4 million to noncommercial projects developed from regional plans.

3.11.6. Stimulation of economic growth and development, and in particular export-oriented foreign direct investment, requires the implementation of new ideas, such as clusters, business incubators, industrial zones, technological parks, etc. The Ministry of Economy and the Ministry of International Economic Relations defined a pilot project for supporting the process of developing clusters in Serbia. Autoklaster Srbije, which gathers car-part producers, has been established. Moreover, a new concept of regional development should be implemented, with the active approach of all government levels. Proper results can be expected only based on the coordinated action of players from the national to the local level. In 2005, business incubators—seen as one method for successfully resolving part of the problem of the surplus labor caused by large system restructuring—will open in Knjaževac, Niš, Bor, Subotica and Smederevska Palanka. Business incubators are thought to be one of the successful ways to partly solve the problem of workers who became redundant due to the restructuring of large companies.

3.11.7. An important pilot project named ENTRANS71 was launched in October 2004. The project seeks to establish a business incubator in Niš, prepare a business incubator establishment manual, design business start-up training, support the development of the Regional Agency for SMEE Development in Niš and serve as a resource center for incubators and training at the Republic Agency for SMEE Development.

3.11.8. The Serbian Investment and Export Promotion Agency (SIEPA) organized the training of local self-government bodies in over 90 municipalities. Common databases are being established, and the level and quality of communication between municipalities and investors as well as the level of cooperation between municipalities and the Agency is rising. On several occasions these measures enabled the faster realization of planned investment, better municipal communication with potential investors and the updating of databases of available land and plants, which are of great importance for attracting and swiftly realizing investment.

3.11.9. The Draft Strategy for Agricultural Development recognizes the economic, social, environmental and political goals of the agricultural sector, including building sustainable, efficient and competitive agriculture; ensuring food quality and safety standards; supporting agricultural producers affected by economic reform; encouraging sustainable rural development; protecting the environment from the effects of agricultural production; preparing the agriculture sector for EU integration and adjusting trade policies to WTO rules.

3.11.10. Implementation of these goals began through two previous budget cycles and the agrarian budget increased from 8 to 21 billion dinars. Such agrarian policy seeks to build competitiveness through decreased price support and increased investment and structural support. Budget resources directed to price support were significantly decreased (from 80% of the budget of the Ministry of Agriculture in 2003 to 40% in 2005), which in the short term decreases the number of budget beneficiaries, and in the long run creates preconditions for economic growth and a healthier economic environment.

Table 3.11.c.:Total investment in the period March 2004–August 200572
MeasureNo. of

beneficiaries
Amount

(in 000 of dinars)
Average

amount
Credit support
Short-term credits51,4673,187,33761,929
Long-term credits2,9573,455,8751,168,709
Rural development measures
Grants for young agricultural

producers, cooperatives and local

communities
578949,3551,642,482
Other rural development measures*1,240,000

Various types of rural development measures such as grants for investments, introducing standards and rural infrastructure, support to elderly households, improving soil quality, etc.

Various types of rural development measures such as grants for investments, introducing standards and rural infrastructure, support to elderly households, improving soil quality, etc.

3.11.11. Short-term negative effects of the transition to a market economy will be addressed through increased social transfers to farmers who are not competitive on the market due to their small production capacity or unfavorable geographic locations, i.e. areas less favorable for agricultural production. Success of these measures will depend on the introduction of an adequate monitoring and evaluation policy that will enable identification of the most vulnerable groups living in rural regions. The registry of agricultural households is established to provide more complete information on the situation in rural areas and to define less favorable areas.

3.11.12. The Agency for Rural Development, in the establishment stage, should assist in developing activities that can be conducted regionally, with a special focus on assisting citizens in analyzing potential markets, planning production, diversifying the economy and providing financial support. Until the Agency is established, the ordinances on fostering agricultural production development and rural development in 2005 are implemented.

3.11.13. The Rulebook on the Distribution of Partial Funds from Special-Purpose Revenues of the Republic Budget Collected from the Organization of Games of Chance, and Used for Local Self-Government Financing seeks to create possibilities for providing assistance to the most vulnerable and poorest local self-governments, including those hit by natural or other large-scale disasters, as well as technical and other assistance to modernize local self-government bodies.

3.11.14. By mid-2005 the Housing Sector Study will be completed73, which will present an analysis of the overall housing sector with recommendations that will form the basis of the future national housing policy. The Draft Law on Social Housing seeks to improve the legal framework for regulating the social housing sector and is currently undergoing a process of harmonization with other ministries in the Government of the Republic of Serbia.

3.11.15. Forthcoming challenges:

  • Creating conditions for attracting investment to underdeveloped regions. The current legal environment provides local self-governments with insufficient space to independently create the fiscal and other incentives for potential investors that would increase their competitiveness. Although the Government has introduced measures for helping the development of these regions, their poor public infrastructure often represents a key obstacle.
  • Even regional development will require both political commitment and a coordinated approach that should include all levels of government, based on the best EU practices and serving to prepare for the future use of EU structural and regional funds.
  • Sharing authority and responsibility with the local level. Decentralization of power, followed by fiscal decentralization, which will improve government responsiveness and accountability, will require substantive changes of the overall legal and constitutional framework. Among other things, the Law on Assets Owned by the Republic needs to be changed to allow local self-governments to own and manage public property on their territory.
  • Developing a payment system in accordance with EU regulation that will ensure support to rural development.

3.12. Environmental Aspects of Poverty Reduction74

The link between the state of the environment and poverty is reflected, primarily, in the impact on the health and quality of living of Serbia’s population, whereby the poorest population is disproportionally affected by environmental degradation. The general tendency is to work simultaneously on minimizing the consequences of environmental degradation and promoting activities aimed at its prevention, with an ultimate goal of ensuring environmental sustainability in the long run.

Investments in water supply facilities, wastewater treatment plants and environmental hotspot clean-up programs have had a direct impact on poverty reduction. Indirectly, such activities have also contributed to the employment of a number of semi-qualified, poorer workers.

3.12.1. Current problems include continued unsatisfactory water quality in some regions, unprotected potable water sources, summer water shortages and excessive groundwater extraction in the Autonomous Province of Vojvodina. During the previous period, attempts to solve these problems were co-financed75 in the total of CSD 237 million by the continued construction of three dams and reservoirs and the construction of water supply facilities in 23 municipalities. Investments in these infrastructure facilities are labor intensive and have stimulated the employment of semi-qualified, poorer workers in particular. Improved access and quality services in water management have contributed to lower prices and increased efficiency in the economic activities of affected locations. Investment in water management contributes to the overall development of an area, and therefore to poverty reduction. When it comes to special water management incentives, during 2005 the Government will finance the development of documentation for preparing investments, in case of projects where documentation exists.

3.12.2. The collection and disposal of municipal and industrial wastewater is less developed than the water supply. Out of a total of 152 existing wastewater treatment plants, it is estimated that currently less than 15% are operating with satisfactory results. In 2003, the investments were co-financed in the area of wastewater treatment and the construction of collector canals for supplying water to the wastewater treatment plants in 11 municipalities. In 2004, in order to ensure wastewater treatment capacities, activities were implemented in the total value of CSD 85 million. Facilities for water protection were financed in five municipalities.

3.12.3. In 2003, activities for the reconstruction and rehabilitation of flood control facilitates were financed on 13 rivers. In 2004, similar activities were also financed in a considerable number of locations. The natural disaster in April 2005, in the central Banat region, underscored the need for higher investments in the maintenance of the existing flood control systems, and most importantly, dams and retaining walls.

3.12.4. In order to clean up environmental hotspots (thermal power plants, locations destroyed during the NATO bombing or areas where ammunition containing depleted uranium was used), the remediation of the contaminated soil was completed in Pljačkovica near Vranje, as well as in Bratoselce near Bujanovac. The clean up of Borovac near Bujanovac was planned during 2005, as well as Reljan near Preševo during 2006. The plan76 envisages the development of a radioactive waste management program, the completed decontamination of soil contaminated with depleted uranium by 2008 and the establishment of a depleted uranium environmental impact monitoring and assessment in the municipalities of Bujanovac, Preševo and Vranje. Remediation projects in Kragujevac (4) and in Novi Sad (6) were completed. The feasibility study Serbian Thermal Power Plant Emission Reduction was finished, and financing provided for solving top-priority problems in the Nikola Tesla B Thermal Power Plant, as well as in the Thermal Power Plants Kostolac A and B.

3.12.5. In order to improve waste management, CSD 61 million was allocated77 in 2004 to co-finance 30 projects in 61 municipalities, including the development of project documentation for the rehabilitation and remediation of municipal landfills and the construction of regional landfills. In addition, solutions to waste management problems in the municipalities of Zubin Potok, Zvečan and Leposavić were supported. The Public Invitation for Co-financing Waste Management Projects for 2005 was also completed, and inception of the World Bank project Serbian Danube River Enterprise Pollution Reduction, in the total value of approximately USD 20 million, was agreed and planned for September 2005.

3.12.6. In addition to specific measures and activities, the relevant ministries have also achieved considerable results in adopting environmental legislation: the Feasibility Study for Hazardous Waste in Serbia, including medical waste, which was prepared with the support of the European Agency for Reconstruction. The EAR also supported the first phase in construction of the Hazardous Waste Treatment Center. Furthermore, all preparatory activities for implementing a project to equip mobile ecotoxicological units were completed. In December 2003, the Agency for Environmental Protection was established, taking over some of the activities of the Directorate for Environmental Protection. The Sustainable Development Council of the Government of the Republic of Serbia was also established, as well as the Fund for Environmental Protection, as of the beginning of 2005.

3.12.7. Drafts or final versions of Local Environmental Action Plans (LEAPs), which should support local authorities in performing their duties and responsibilities in the field of environmental protection, have been finalized in 13 Serbian municipalities. LEAP is being developed in six municipalities with financial support from the Ministry of Science and Environmental Protection, as well as in another twenty municipalities with own financial resources and donor support. Numerous seminars have also been organized to help raise public awareness in the Republic of Serbia about environmental protection and sustainable development. The campaign Clean and Green Serbia is also under preparation.

3.12.8. Supported by the EAR, the Draft National Environmental Action Plan (NEAP), which presents the basic document for planning, managing and integrating environmental protection over the next 10 years, has been prepared and will be submitted by the end of the year to the Serbian Parliament for adoption.

3.12.9. The preparation of a number of action plans are expected by December 2006, including spatial planning and development, soil protection, water protection, air and atmosphere protection, forest protection, ecosystem protection, protected areas, chemical management, protection against ionizing and non-ionizing radiation, protection against accidents, protection against noise and vibrations, sustainable energy management, information system development, development of scientific research, education and training, and the development and implementation of economic instruments.

3.12.10. Forthcoming challenges include:

  • Setting up an independent Agency for Environmental Protection, as an obligation outlined in the EU Feasibility Study, to serve as an inter-sector service in the area of environmental protection.
  • Effectively implementing a series of new pieces of legislation in the area of environmental protection as well as of a number of the already existing action plans.
  • Building the capacity of local-level administrations for implementation of new obligations in the area of environmental protection, as stipulated by a set of new laws adopted in December 2004.

4. ANALYSIS OF BUDGET AND INTERNATIONAL ASSISTANCE RESOURCES

The absence of a model for systematic monitoring of the allocation of resources available to the Republic of Serbia based on programmatic goals represents a main obstacle for assessing the overall amount of resources allocated for poverty reduction activities, either domestic or foreign. Overcoming this problem, common to all institutions of the Republic of Serbia, poses the main challenge in the forthcoming period.

4.1. Analysis of budget resources allocated to poverty reduction-related programs

4.1.1. For the purpose of this report, an effort has been made to estimate the level of funds from the 2004 and 2005 Budgets of the Republic of Serbia that were allocated for the implementation of activities in public administration institutions, which are directly or indirectly aimed at poverty reduction.

4.1.2. Several reasons do not allow for any explicit conclusions relating to the resources allocated for achieving goals identified in the Poverty Reduction Strategy for Serbia.

4.1.3. The first reason relates to the dynamics of the budget process itself. As the Poverty Reduction Strategy in Serbia was adopted in October 2003, at the end of the budget preparation process for the following year, it was unable to affect the planning of the allocation of these resources for the year 2004. On the other hand, although the PRS was included in the Budget Memorandum for 2005 (adopted in May 2004), the activities of the public administration institutions, i.e. activities in individual sectors, were not directly linked to the priorities defined in the Strategy—which is not an exception when compared to other programmatic documents.

4.1.4. Another obstacle in conducting the analysis is the character of the budget of the Republic of Serbia, a so-called line type of budget, which does not provide insight into the link between identified programmatic priorities and the allocation of budgetary resources. This kind of budget is characterized by the distribution of funds according to budget beneficiaries78 (organizational classification) and the type of expenditure79. The presentation of the distribution of budgetary funds in such a manner does not allow for the possibility to clearly establish the link between certain expenditures and their effect.

4.1.5. These reasons prevent the precise identification of the category of expenditures directed at poverty reduction, or an estimation of the amount of allocations directed at the implementation of the Poverty Reduction Strategy for Serbia.

4.1.6. The line type budget offers the possibility of an indirect analysis under the assumption that certain state functions80 contribute entirely to poverty reduction (for instance social welfare, education, health care, etc.). Taking this into account, and in the absence of higher-quality data sources, a special methodology was developed in order to identify the level of funds directed at the state functions whose activities can indirectly influence poverty reduction81.

4.1.7. The state functions that were included in the analysis as those that directly or indirectly contribute to poverty reduction are economy, labor and employment; social welfare and insurance; health and education.

4.1.8. Overall allocations directed at these state functions compared to total public spending accounted for 67.7% in 2003, 70.3% in 2004 and 71.0% in 2005. These proportions not only represent the allocations for activities that directly aim at poverty reduction, but also include a multitude of other expenditures linked to other activities of Government institutions which cannot be shown separately.

Table 4.1.a.Spent budget funds according to state functions (share in total public spending)
State functionsBudget funds
200320042005
Economy, labor and employment9.59.29.3
General economic and commercial affairs and jobs related to the issue of labor2.62.02.2
Agriculture, forestry, hunting and fishery1.52.52.2
Transport3.42.22.2
Community development0.10.10.1
National employment service1.92.42.6
Social welfare and insurance36.739.038.9
Illness and disability1.31.41,5
Family and children2.72.42,5
Social welfare for vulnerable populations1.11.11.4
Social welfare not classified elsewhere1.31.21.2
Pension and disability pension funds (PIO)30.332.832.3
PIO for the employed28.230.229.7
PIO for farmers0.91.51.6
PIO for self-employed1.11.11.1
Health care13.514.514.4
Health care not classified elsewhere0.60.80.8
RHIU12.913.813.6
Education7.97.58.3
Pre-school and primary education3.93.84.2
Secondary school education2.01.82.1
Two-year post-secondary school and university

education
1.21.21.3
Auxiliary services in education0.70.60.6
Education not classified elsewhere0.10.10.1
TOTAL67.670.269.9
Source: The Treasury System on budget execution for the previous period, i.e. data on the planned budgetary resources for the current fiscal year.
Source: The Treasury System on budget execution for the previous period, i.e. data on the planned budgetary resources for the current fiscal year.

4.1.9. The large share of public spending in the field of social welfare and insurance (39%) and health care (14,5%) in 2004, compared to the economy and education, speaks in favor of the social rather than developmental character of public spending during the first years of transition in the Republic of Serbia.

4.1.10. Changes in the structure of public spending are planned for the next medium-term period (2006–2008). Instead of social welfare and health care, economy and education should become the leading strategic fields. These two fields play a crucial role in the long-term development of preconditions for preventing the creation of new poverty, but also in reducing the existing level of poverty in Serbia82.

4.1.11. The adoption of the programmatic budget will enable the possibility to define in detail the implementation and monitoring of programs and projects within PRS strategic fields, enabling as well the precise presentation of planned and allocated budgetary resources directed at the achieving goals defined in the PRS.

4.2. Realization of international assistance to the Republic of Serbia

4.2.1. While many of bilateral and multilateral donors as well as international nongovernmental organizations present in Serbia support programs and projects in line with the PRS objectives, the Republic of Serbia does not have the data that would provide for an accurate report on international assistance allocated for poverty reduction83. This applies both to the funding received for public administration activities as well as non-governmental organizations in Serbia. Therefore, this summary report refers to the overall international assistance received by the Republic of Serbia.

4.2.2. In the last three years, external financing contributed significantly to the economic growth rate; without it, the problems in some sectors (energy, health, social sector, refugee and IDP assistance) would have been considerably worse. Efficient use of donor assistance was achieved through continuous consultations between the donor community and the institutions of the Republic of Serbia.

4.2.3. For the period 2000–2005, a total of EUR 5.3 billion in donor assistance was allocated to Serbia. Out of that amount, approximately EUR 3.1 billion was used during 2000–2004. In the course of 2005, the allocation of an additional EUR 620 million is planned. The outstanding funds in the total of approximately EUR 1.6 billion will be used within the programs that are currently in various stages of implementation.

4.2.4. 2004 marked the transition from a humanitarian to a development phase of financing in international assistance and a complete withdrawal of humanitarian support is expected by 2006.

4.2.5. The overall amount of international assistance is gradually decreasing, with a steady decrease in the share of grants in relation to the assistance approved in the form of concessional credits.

Table 4.2.a.:Ratio of received grants and concessional credits (in EUR million)
Grants%Concessional

Credits
%Total
2000187.21100%-0%187.21
2001592.8669%269.8031%862.66
2002554.2768%261.2832%815.55
2003354.1255%287.6945%641.81
2004124.6022%431.2678%555.86
200572.9412%551.9888%624.92
TOTAL1,886.0051%1,802.0149%3,688.01
Source: MIER
Source: MIER

4.2.6. One weakness in the previous period was the unsatisfactory coordination of international assistance, equally on the part of donors as well as on the part of the Republic of Serbia.

In the forthcoming period, the following will be of greatest importance:

a) Coordination and harmonization of international assistance directly allocated for achieving goals defined in the PRS.

b) Harmonization of resources intended for the implementation of the PRS using EU resources allocated for the Republic of Serbia.

c) Further efforts linked to the harmonization of international assistance resources with the budgetary resources allocated for the PRS implementation.

4.2.7. In cooperation with the Development and Aid Coordination Unit84 under the Ministry of International Economic Relations, the development of an international assistance classification system has been planned to monitor expenditures related to the implementation of the PRS objectives, within the existing reporting system (ISDACON)85.

5. CONSULTATIVE PROCESS—ACTIVITIES OF THE POVERTY REDUCTION ADVISORY COMMITTEES

The Poverty Reduction Strategy Paper preparation process represented the first time that governmental, non-governmental and business institutions and organizations in Serbia, both on the national and local level, participated in a joint process of preparing a national strategic document of the Republic of Serbia. What made the PRSp preparation process unique was also the number of institutions involved. In order to make the consultation process as comprehensive as possible, seven representative Advisory Committees were established: the Parliamentary Committee for Poverty Reduction in Serbia, the Civil Society Advisory Committee, the Local Self-Governments Advisory Committee, the International Development Partners Advisory Committee, the Trade Unions Advisory Committee, the Business Advisory Committee and the Inter-Ministerial Operational Advisory Committee.

The cooperation of a large number of partners participating in the preparation of the PRSp resulted in wide support for the PRS, and its recognition as a genuine national document.

When the PRS implementation process was initiated, it was necessary to reconstitute these Committees with the aim of monitoring the PRS implementation. In order to achieve this, the Deputy Prime Minister’s Poverty Reduction Strategy Implementation Focal Point (DPM PRS IFP) has initiated the reconstitution of cooperation with the Parliament Committee for Poverty Reduction, the Civil Society Advisory Committee, the Local Self-Governments Advisory Committee and the International Development Partners Advisory Committee. In the ensuing period the DPM PRS IFP will support the reconstitution of the Trade Unions Advisory Committee, Business Advisory Committee and Inter-Ministerial Operational Advisory Committee.

Parliamentary Committee for Poverty Reduction in Serbia

5.1.1. The Parliamentary Committee for Poverty Reduction in Serbia was established on May 30, 2003, and became active on April 8, 2004. The Committee comprises 15 members from six parties represented in the Parliament: 3 members—Democratic Party of Serbia; 1 member—Serb Renewal Movement; 2 members—Serbian Socialist Party; 5 members—Serbian Radical Party; 2 members—G17 Plus and 2 members—Democratic Party.

5.1.2. The Committee defines the participation of the Parliament of Serbia in the PRS implementation process; reviews drafts of laws, other regulations and general documents from the aspect of PRS implementation; monitors the budget preparation and allocation process as related to the PRS implementation; provides comments and assessments regarding the PRS implementation and works on the institutionalization and participation of citizen representatives in the PRS decision-making process.

5.1.3. By June 2005, the Committee had 13 sessions, promoted the PRS among MPs in the Parliament of Serbia and participated in numerous meetings with institutions and organizations that are taking part in the PRS implementation process. In cooperation with the Organization for Security and Cooperation in Europe, the Committee is implementing a project on new legislative solutions with the purpose of reducing poverty among children in Serbia.

5.1.4. In the past period the Committee established good cooperation with the United Nations Development Programme (UNDP), with whose support the Committee organized a seminar on the implementation of Poverty Reduction Strategy for Serbia in November 2004. In June 2005 they organized a study visit to the Parliament of Israel.

5.1.5. Following the initiative of the DPM PRS IFP and the Parliamentary Committee for Poverty Reduction in Serbia, UNDP will provide financial support for an expert who will assist Serbian municipalities flooded in April 2005 with drafting project proposals for the economic development of flooded areas.

5.1.6. In the ensuing period the Committee is planning to monitor and analyze the effects of adopted laws and new legislative solutions from the aspect of poverty reduction and prevention, expand cooperation with other committees within the Parliament of Serbia, become acquainted with the experiences of parliamentary committees in other countries and organize a regional conference on the means for fighting poverty.

Civil Society Advisory Committee

5.1.7. Representatives of 11 NGOs, nominated by the three largest networks of non-governmental organizations in Serbia (Civic Initiatives, the Center for the Development of the Non-Profit Sector and Network Serbia Without Poverty), participated in the PRSp preparation process through the work of the Civil Society Advisory Committee. The main goal of this Committee is to improve the dialogue between the government and non-governmental sector and to enable the participation of the civil sector in the development and implementation of strategic documents related to poverty reduction. The Committee was established in autumn 2002 and has facilitated the involvement of around 250 non-government organizations in Serbia in the PRSp preparation process. During 2003, the Civil Society Advisory Committee was also active in local PRS initiatives, which worked toward establishing national ownership of the Poverty Reduction Strategy.

5.1.8. One of the main qualities of this Committee is that its members represent poor and vulnerable social groups, and that they are regionally distributed throughout the whole of Serbia.

5.1.9. During 2004 the Civil Society Advisory Committee continued to actively promote the PRS as a national development document. In January 2005 it organized nine round tables86 on the territory of Serbia to promote the PRS and mobilize all actors toward an active approach in solving the problem of poverty, using the PRS as a basis for their activities. As a result of these round tables, the Civil Society Advisory Committee published a brochure on opportunities for the participation of civil society in poverty reduction in Serbia.

Local Self-governments Advisory Committee

5.1.10. The Local Self-Governments Advisory Committee coordinates between the Government of the Republic of Serbia and representatives of towns and municipalities in the process of PRS preparation and implementation. This Advisory Committee was established with the support of the Committee on Social Policy of the Standing Conference of Towns and Municipalities (SCTM)87. Through the work of the Local Self-Governments Advisory Committee, towns and municipalities in Serbia have been given the opportunity to raise relevant questions or influence changes in the attitudes of the central government towards key issues in the daily activities of local self-governments.

5.1.11. In January 2005, the SCTM88 published a brochure entitled “Poverty Reduction Strategy—challenges and opportunities at the local level.” This brochure points to the most important elements of the national PRS document and proposes activities that can be included in strategies at the local level. Within the Program for Environmental Protection and Sustainable Development in Serbian Towns and Municipalities, the SCTM has prepared the Strategy on Local Sustainable Development. This document was introduced to the representatives of towns and municipalities of Serbia at the National Conference on Local Sustainable Development on May 26, 2005. The recommendations have been integrated into this document.

International Development Partners Advisory Committee

5.1.12. The International Development Partners Advisory Committee, which gathers multilateral and bilateral donors as well as international NGOs, participated actively in the PRSp preparation process. After the adoption of the document, donor organizations supported the integration of measures envisaged by the PRS into their respective plans, as well as the coordination of their activities targeting poverty reduction with the Deputy Prime Minister’s PRS Implementation Focal Point and the Ministry of International Economic Relations. International NGOs started to coordinate their poverty reduction activities with the efforts of the Government of the Republic of Serbia. Towards this end, international NGOs in Serbia have created a database on their current and planned programs, which contains PRS-related programs of different international NGOs together with their regional distribution in Serbia. By ascertaining this information, better targeting of support to sectors and regions in Serbia where needs are the most considerable is enabled.

6. ANNEXES

6.1. Analysis of budgetary allocations: absolute amounts of expenditures directed at the priority PRS- related areas

The budget of the Republic of Serbia and other levels of authority (the provincial and local level), represent a line type of budget according to the manner in which they show the allocation of funds. It is characterized by the distribution of funds according to budget beneficiaries89 (organizational classification) and the type of expense90 (economic classification). Reviewing the distribution of funds is united by the functional classification, which is identical for different budget beneficiaries whose activities, by their nature, belong to the same state function91 (functional classification). For each budget beneficiary it shows the expenditures according to the type of expenses (salaries, material costs, the purchase of fixed assets and so on), i.e. expenditures presented according to the economic classification.

The tables below represent expenditures according to the functional classification from different type of sources - budgetary resources and other sources of financing (budget beneficiaries’ own incomes, donations and borrowings).

Table 6.1.a.:Expenditures according to priority functions—budget resources
Budget resources (Currency USD)
200320042005
FunctionEconomy, Labor and Employment853.520.125,50960.833.323,661.037.232.325,02
410General Economic and Commercial

Affairs and Labor Affairs
233.409.045,47213.369.096,35250.869.090,91
420Agriculture, Forestry, Fishing and Hunting131.170.256,80264.059.441,16241.048.189,86
450Transport306.123.666,54227.355.242,90242.565.953,34
620Community Development13.369.335,896.722.718,9910.320.884,96
National Employment Service169.447.820,80249.326.824,25292.428.205,95
Social Protection3.299.302.625,624.065.670.311,514.338.761.078,04
010Illness and Disability113.008.095,80148.921.130,62164.958.165,73
040Family and Children246.257.687,39253.393.897,16278.443.121,48
070Social Welfare for Most Vulnerable

Groups
98.488.770,75116.025.386,22155.833.081,26
090Social Welfare Unclassified Elsewhere119.568.435,30125.971.544,93137.174.658,09
Pension and Disability Insurance

Funds
2.721.979.636,383.421.358.352,593.602.352.051,49
Of employees2.539.823.927,773.150.017.300,453.307.092.067,58
Of agricultural producers83.517.439,02161.028.153,75177.205.229,28
Of the self-employed98.638.269,60110.312.898,39118.054.754,63
Health Care1.211.860.331,561.513.974.290,661.605.274.432,82
760Health Care Unclassified Elsewhere54.696.708,2978.796.633,5083.694.384,55
Republic Health Insurance Institute1.157.163.623,271.435.177.657,161.521.580.048,27
Education712.227.791,74785.128.677,91930.297.940,47
910Preschool and Primary Education353.724.277,94393.483.115,84468.082.783,59
920Secondary Education178.382.899,79191.946.697,10229.630.136,77
940Higher and University Education112.046.413,37128.161.072,92150.076.958,97
960Additional Services to Education59.364.368,3265.633.260,2371.989.557,52
980Education unclassified elsewhere8.709.832,325.904.531,8310.518.503,62
Environment9.090.244,406.624.618,559.757.827,84
510Waste Management397.781,61263.738,77457.988,74
560Environmental Protection unclassified

elsewhere
8.692.462,796.360.879,789.299.839,10
Total6.086.001.118,827.332.231.222,297.921.323.604,18
Table 6.1.b.:Expenditures according to priority functions -other sources (own income, donations, domestic and foreign borrowing; in USD)
Other sources
200320042005
FunctionEconomy, Labor and Employment793.024.948,92272.454.854,47377.398.364,18
410General Economic and Commercial

Affairs and Labor Affairs
255.714.304,208.227.277,194.798.558,44
420Agriculture, Forestry, Fishing and

Hunting
134.667.250,636.231.625,986.148.833,47
450Transport389.014.004,63257.476.146,92365.804.150,07
620Community Development13.629.389,46519.804,37646.822,20
National Employment Service000
Social Protection580.277.633,938.695.905,3510.157.181,22
010Illness and Disability113.008.095,8000
040Family and Children246.257.687,3972.156,31160.901,05
070Social Welfare for Most Vulnerable

Groups
99.728.008,687.913.941,254.411.131,34
090Social Welfare Unclassified

Elsewhere
121.283.842,06709.807,805.585.148,83
Pension and Disability Insurance

Funds
000
Of employees000
Of agricultural producers000
Of the self-employed000
Health Care56.547.832,364.503.287,5154.002.221,24
760Health Care Unclassified Elsewhere56.547.832,364.503.287,5154.002.221,24
Republic Health Insurance Institute
Education712.227.791,742.771.995,58209.612.967,53
910Preschool and Primary Education353.724.277,94287.853,2566.394.078,84
920Secondary Education178.382.899,7928.871,9334.845.100,56
940Higher and University Education112.046.413,37083.843.732,90
960Additional Services to Education59.364.368,32020.822.622,69
980Education unclassified elsewhere8.709.832,322.455.270,403.707.432,53
Environment9.090.244,401.151.706,553.055.195,09
510Waste Management397.781,6100
560Environmental Protection unclassified

elsewhere
8.692.462,791.151.706,553.055.195,09
Total2.151.168.451,35289.577.749,46654.225.929,26
Table 6.1.c.:Expenditures according to priority functions - Own incomes
Own incomes of budgetary recipients (Currency

USD)
200320042005
FunctionEconomy, Labor and Employment86.776.332,70187.459.456,21182.455.349,96
410General Economic and Commercial

Affairs and Labor Affairs
128.947,210707.964,60
420Agriculture, Forestry, Fishing and

Hunting
3.496.993,836.231.625,986.148.833,47
450Transport82.890.338,09180.708.025,86174.951.729,69
620Community Development260.053,57519.804,37646.822,20
National Employment Service000
Social Protection2.947.632,562.927.263,026.752.019,31
010Illness and Disability000
040Family and Children072.156,31160.901,05
070Social Protection for Most Vulnerable

Groups
1.232.225,802.145.298,911.005.969,43
090Social Protection Unclassified

Elsewhere
1.715.406,75709.807,805.585.148,83
Pension and Disability Insurance

Funds
000
Of employees000
Of agricultural producers000
Of the self-employed000
Health Care1.851.124,072.573.673,471.541.230,49
760Health Care Unclassified Elsewhere1.851.124,072.573.673,471.541.230,49
Republic Health Insurance Institute000
Education00102.410.876,91
910Preschool and Primary Education006.518.938,05
920Secondary Education007.125.374,09
940Higher and University Education0071.137.827,84
960Additional Services to Education0017.604.601,77
980Education unclassified elsewhere0024.135,16
Environment01.097.619,55314.457,32
510Waste Management000
560Environmental Protection unclassified

elsewhere
01.097.619,55314.457,32
Total91.575.089,33194.058.012,26293.473.933,99
Table 6.1.d.:Expenditures according to priority functions - Donations
Donation resources (Currency USD)
200320042005
FunctionEconomy, Labor and Employment22.176.311,527.829.138,684.090.593,84
410General Economic and Commercial

Affairs and Labor Affairs
22.176.311,527.720.564,824.090.593,84
420Agriculture, Forestry, Fishing and

Hunting
000
450Transport0108.573,860
620Community Development000
National Employment Service000
Social Protection7.012,135.768.642,333.405.161,91
010Illness and Disability000
040Family and Children000
070Social Protection for Most Vulnerable

Groups
7.012,135.768.642,333.405.161,91
090Social Protection Unclassified

Elsewhere
000
Pension and Disability Insurance

Funds
000
Of employees000
Of agricultural producers00
Of the self-employed000
Health Care01.068.287,79356.002,82
760Health Care Unclassified Elsewhere01.068.287,79356.002,82
Republic Health Insurance Institute000
Education01.224.296,0299.028.237,04
910Preschool and Primary Education0057.776.991,15
920Secondary Education0027.381.834,27
940Higher and University Education0012.554.384,55
960Additional Services to Education000
980Education unclassified elsewhere01.224.296,021.315.027,06
Environment054.087,002.740.737,77
510Waste Management000
560Environmental Protection unclassified

elsewhere
054.087,002.740.737,77
Total22.183.323,6515.944.451,83109.620.733,38
Table 6.1.e.:Expenditures according to priority functions - Borrowing
Domestic and foreign borrowing (Currency USD)
200320042005
FunctionEconomy, Labor and Employment684.072.304,7077.166.259,57190.852.420,38
410General Economic and

Commercial Affairs and Labor

Affairs
233.409.045,47506.712,370
420Agriculture, Forestry, Fishing and

Hunting
131.170.256,8000
450Transport306.123.666,5476.659.547,20190.852.420,38
620Community Development13.369.335,8900
National Employment Service000
Social Protection577.322.989,2500
010Illness and Disability113.008.095,8000
040Family and Children246.257.687,3900
070Social Welfare for Most

Vulnerable Groups
98.488.770,7500
090Social Welfare Unclassified

Elsewhere
119.568.435,3000
Pension and Disability Insurance

Funds
000
Of employees000
Of agricultural producers000
Of the self-employed000
Health Care54.696.708,29861.326,2552.104.987,93
760Health Care Unclassified

Elsewhere
54.696.708,29861.326,2552.104.987,93
Republic Health Insurance

Institute
000
Education712.227.791,741.547.699,568.173.853,58
910Preschool and Primary Education353.724.277,94287.853,252.098.149,64
920Secondary Education178.382.899,7928.871,93337.892,20
940Higher and University Education112.046.413,370151.520,51
960Additional Services to Education59.364.368,3203.218.020,92
980Education unclassified elsewhere8.709.832,321.230.974,382.368.270,31
Environment9.090.244,4000
510Waste Management397.781,6100
560Environmental Protection

unclassified elsewhere
8.692.462,7900
Total2.037.410.038,3779.575.285,38251.131.261,89

6.2 ANALYSIS OF THE STATUS OF PRS RELATED LAWS92

Table 6.2.a.:Adopted laws, envisaged by the Poverty Reduction Strategy in Serbia
LawRelevant MinistryDate of enforcement
Law on Mandatory Social Insurance Contributions (PRS envisages the Law on Mandatory Social Insurance Contribution Bases and RatesMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 84/04 and 61/05
Law on Free Access to Public InformationMinistry of CultureOfficial Gazette of the Republic of Serbia No. 120/04
Law on Drugs and Medical ItemsMinistry of HealthOfficial Gazette of the Republic of Serbia No. 84/04
Bankruptcy LawMinistry of EconomyOfficial Gazette of the Republic of Serbia No. 84/04
Law on Registration of Commercial EntititiesSerbian Agency for the Development of Small and Medium Sized Entreprises and EntrepreneurshipOfficial Gazette of the Republic of Serbia No. 55/04 and 61/05
Law on Value Added TaxMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 84/04, 86/04 and 61/05
Law on TourismMinistry of Trade, Tourism and ServicesOfficial Gazette of the Republic of Serbia No. 45/05
Law on EnergyMinistry of Mining and EnergyOfficial Gazette of the Republic of Serbia No. 84/04
Law on National Housing Credit CorporationMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 55/04
Law on Business and Enterpreneurship RegistrationMinistry of EconomyOfficial Gazette of the Republic of Serbia No. 55/04
Law on Electronic Signature (envisaged as the Law on Electronic Business Transactions and Digital Signature + bylaws)Ministry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04
Law on the Amendments to the Law on the National Bank of SerbiaMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 55/04
Law on the Republic of Serbia’s Budget for 2004Ministry of FinanceOfficial Gazette of the Republic of Serbia No. 33/04 and 115/04
Law on the Level of Funding and the Shares in Payroll Tax and Sales Tax by Municipalities and Towns and the City of Belgrade for 2004Ministry of FinanceOfficial Gazette of the Republic of Serbia No. 33/04
Law on InsuranceMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 55/04, 70/04 and 61/05
Law on the Amendments and Additions to the Law on Payment SystemMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 43/04
Law on the Amendments and Additions to the Law on ExciseMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 43/04, 55/04, 135/04 and 46/05
Law on the Amendments and Additions to the Law on the Rights of Veterans, Military Invalids, Civilian War Victims and their SurvivorsMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 137/04
Law on the Amendments to the Law on Publications (PRSp envisages the Law on Publishing)Ministry of CultureOfficial Gazette of the Republic of Serbia No. 135/04
Law on the Prevention of the Conflict of Interest in Performance of Public FunctionsMinistry of Finance and Economy was envisaged in PRSpOfficial Gazette of the Republic of Serbia No. 43/04
Law on Forest Trees Reproductive MaterialMinistry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04 and 8/05
Law on the Amendments to the Law on Health InsuranceMinistry of HealthOfficial Gazette of the Republic of Serbia No. 45/05
Law on Postal ServicesMinistry of Capital InvestmentOfficial Gazette of the Republic of Serbia No. 18/05
Serbian Investment and Export Promotion Agency of the Republic of Serbia was founded by the Law on Ministries as a separate organization (PRS envisages the Law on Serbian Investment and Export Promotion Agency-SIEPA)Ministry of International Economic RelationsOfficial Gazette of the Republic of Serbia No. 84/04
Law on the Annulment of the Law on the Foundation of Public Air Transport CompanyMinistry of Capital InvestmentOfficial Gazette of the Republic of Serbia No. 18/05
Law on RailMinistry of Capital InvestmentOfficial Gazette of the Republic of Serbia No. 18/05
Family LawMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 18/05
Law on Economic SocietiesOfficial Gazette of the Republic of Serbia No. 125/04
Law on the Amendments to the Law on Social Protection and Provision of Citizens’ Social SecurityMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 84/04
Law on PricesMinistry of Trade, Tourism and ServicesOfficial Gazette of the Republic of Serbia No. 79/05
Law on Tertiary EducationMinistry of Education and SportOfficial Gazette of the Republic of Serbia No. 76/05
Law on Consumer ProtectionMinistry of Trade, Tourism and ServicesOfficial Gazette of the Republic of Serbia No. 79/05
Law on AdvertisingMinistry of Trade, Tourism and ServicesOfficial Gazette of the Republic of Serbia No. 79/05
Law on Bank Rehabilitation AgencyMinistry of FinanceOfficial Gazette No. 61/05
Law on Bankruptcy and Liquidation of Banks and Insurance SocietiesMinistry of FinanceOfficial Gazette No. 61/05
Law on the Amendments and Additions to the Law on Banks and Other Financial InstitutionsMinistry of FinanceOfficial Gazette No. 61/05
Law on Public DebtMinistry of FinanceOfficial Gazette No. 61/05
Law on Amendments and Additions to the Law on Passenger Road TransferOfficial Gazette of the Republic of Serbia No. 61/05
Law on Amendments and Additions to the Law on Pledge on Registered MovablesOfficial Gazette of the Republic of Serbia No. 61/05
Law on the Protection of Competition (Antimonopoly Law)Ministry of Trade, Tourism and ServicesOfficial Gazette of the Republic of Serbia No. 79/05
Law on Amendments and Additions on the Law on Financial LeasingNational Bank of SerbiaOfficial Gazette of the Republic of Serbia No. 61/05
Law on the Strategic Environmental Impact AssessmentMinistry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04
Law on Reporting and Keeping Record of Confiscated Property (PRS envisages the Law on Confiscated Land and Restitution and Compensation)Ministry of FinanceOfficial Gazette of the Republic of Serbia No.45/05
Law on Political Parties FinancingMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 72/03
Local Self-Governance Infrastructure Development Agency was established as a separate organization in the Law on Ministries (PRS envisages the Law on Local Self-Governance Infrastructure Development Agency)Official Gazette of the Republic of Serbia No.19/04 and 84/04
Law on Public AdministrationRepublic Secretariat for LegislationOfficial Gazette of the Republic of Serbia No. 79/05
Law on Civil ServantsRepublic Secretariat for LegislationOfficial Gazette of the Republic of Serbia No. 79/05
Law on OmbudsmanMinistry of Public Administration and Local Self-GovernmentOfficial Gazette of the Republic of Serbia No. 79/05
Table 6.2.b.:PRS related draft laws that are in the Parliamentary procedure
LawRelevant MinistryDate of the beginning of the Parliament procedure
Law on Health and Safety Regulations at WorkMinistry of Labor, Employment and Social AffairsDraft Law in the Parliament procedure since December 24, 2004
Law on Health ProtectionMinistry of HealthDraft Law in the Parliament procedure since May 20, 2005 (adoption envisaged for the second half 2003)
Law on Public Skiing VenuesMinistry of Trade, Tourism and ServicesDraft Law in the Parliament procedure since January 11, 2005 (adoption envisaged for the middle of 2003)
Law on RoadsMinistry of Transport and TelecommunicationDraft Law in the Parliament procedure since February 18, 2005 (adoption envisaged for the middle of 2003)
Anti Money Laundering LawMinistry of FinanceDraft Law in the Parliament procedure since November 29, 2004 (adoption envisaged for September 2003)
Law on Amendments and Additions to the Customs LawMinistry of FinanceDraft Law in the Parliament procedure since June 2, 2005
Law on Prevention of Doping in SportMinistry of Education and SportDraft Law in the Parliament procedure since November 19, 2005
Law on the Amendments and Additions to the Law on Artistic and Other Activities in the Area of CultureMinistry of CultureDraft Law in the Parliament procedure since March, 24, 2005 (Draft Law was submitted to the Parliament on November 15, 2002)
Law on the Amendments to the Law on Misdemeanour PenaltiesMinistry of JusticeDraft Law in the Parliament procedure since January 31, 2005 (planned for the second half of 2003)
Draft Law on Amendments and Additions to the Law on the Registration of Commercial EntitiesDraft Law in the Parliament procedure since February 16, 2005
Draft Law on Medial Workers’ ChambersDraft Law in the Parliament procedure since May 20, 2005
Draft Law on Substances that are used in Illegal Production of Narcotics and Psychotropic SubstancesDraft Law in the Parliament procedure since May 20, 2005
Law on Goods and Services Market InspectionMinistry of Trade, Tourism and ServicesDraft Law in the Parliament procedure since July 22, 2005
Law on Veterinary MedicineMinistry of Agriculture, Forestry and Water ManagementDraft Law in the Parliament procedure since July 22, 2005
Law on the Amendments and Additions to the Law on Employment and Unemployment InsuranceMinistry of Labor, Employment and Social AffairsDraft Law in the Parliament procedure since July 22, 2005
Table 6.2.c.:Laws envisaged by the PRS that are in the preparation process
LawRelevant ministryLaw status
Law on Foreign TradeMinistry of International Economic RelationsIn the preparation phase
Law on Special Anticorruption InstitutionMinistry of Justice (instead of the envisaged Ministry of Finance and Economy)In the preparation phase
Law on TradeMinistry of Trade, Tourism and ServicesOn a public debate (planned for the end of 2003)
Law on SportsMinistry of Education and SportDraft has been prepared
Law on Waste ManagementMinistry of Science and Environmental ProtectionDraft has been prepared
Law on Professional Associations (Chambers)Ministry of HealthIn the preparation phase
Law on Protection against Non-Ionic RadiationMinistry of Science and Environmental ProtectionIn the preparation phase
Law on FisheriesMinistry of Science and Environmental ProtectionDraft has been prepared
Geology LawMinistry of Science and Environmental ProtectionIn the preparation phase
Law on Preprimary EducationMinistry of Education and SportIn the preparation phase (envisaged for mid 2003)
Law on Student AssociationsMinistry of Education and SportIn the preparation phase (envisaged for mid 2003)
Law on Voluntary Pension and Disability InsuranceMinistry of Social AffairsIn the preparation phase (adoption envisaged until the end of 2003)
Table 6.2.d.:Other laws envisaged by the PRS
LawRelevant ministryEnvisaged adoption period
Law on Administrative ProceedingsMinistry of Public Administration and Local Self-Government
Law on Administrative ProcedureMinistry of Public Administration and Local Self-Government
Law on Citizen AssociationsMinistry of Public Administration and Local Self-Government
Law on Public Defence
Law on Judicial Budget
Law on Non-Governmental OrganizationsDraft Law has been prepared. On a public debate.
Law on Conditions for Employing a Foreign Citizen
Law on Trade Societies
Law on Contributions
Law on Underdeveloped Regions
Law on Resources for Stimulating the Development of Underdeveloped Regions
Law on Gender EqualityIn Parliamentary procedure in September 2005
Anti Discrimination LawOn a public debate
Law on MortgageMinistry of International Economic RelationsAdoption envisaged by the end of 2003
Law on Passenger Road TransportMinistry of Transport and TelecommunicationsAdoption envisaged by the end of 2003
Law on International Trade ArbitrationMinistry of International Economic RelationsAdoption envisaged by the end of 2003
Law on Transport and Road SafetyMinistry of Transport and TelecommunicationsAdoption envisaged by the end of 2003
Law on Cargo Road TransportMinistry of Transport and TelecommunicationsAdoption envisaged by the end of 2003
Law on Hazardous Substances TransportMinistry of Transport and TelecommunicationsAdoption envisaged by the end of 2003
Law on Internal NavigationMinistry of Transport and TelecommunicationsAdoption envisaged by the end of 2003
Law on Physical and Technical SecurityMinistry of Internal AffairsAdoption envisaged by the end of 2003 (in the Parliament procedure)
Law on Amendments and Additions to the Law on MiningMinistry of Mining and EnergyAdoption envisaged by the end of 2003
Law on Sanitary InspectionMinistry of Health
Law on the RS AviationMinistry of Transport and TelecommunicationsPreparation being finalized during September 2003
Law on AgricultureMinistry of Agriculture, Forestry and Water Management
Law on Amendments and Additions to the Law on Primary EducationMinistry of Education and Sport
Law on Amendments and Additions to the Law on Secondary EducationMinistry of Education and Sport
Law on Privatization in Sport IndustryMinistry of Education and SportAdoption envisaged by the end of 2003
Law on PoliceMinistry of Internal AffairsBeing prepared during 2003
Law on Police Education InstitutionsMinistry of Internal AffairsPreparation being finalized during September 2003
Law on Social Protection SystemMinistry for the Protection of Natural Resources and EnvironmentGovernment of the Republic of Serbia adopted the Draft Law on May 15, 2002
Law on Academic ResearchMinistry of Science, Technology and DevelopmentAdoption envisaged by the end of 2003
Law on Innovation SystemMinistry of Science, Technology and DevelopmentAdoption envisaged by the end of 2003
Law on Amendments and Additions to the Law on Foreign Currency TransactionsMinistry of Finance and EconomyProposal submitted to the Parliament in September 2003
Law on Biomedical Artificial InseminationMinistry of HealthDraft Law submitted to the Government of the Republic of Serbia at the end of 2003
Law on Harvesting and Transplatation of Human OrgansMinistry of HealthDraft Law submitted to the Government of the Republic of Serbia at the end of 2003
Law on Health Safety of Food Products and General GoodsMinistry of Health
Law on Records, Development and Maintenance of Memorial Cities and Serbian Veteran Cemeteries in the Country and Abroad and Foreign Soldiers Cemetaries in the Territory of the Republic of SerbiaMinistry of Labour, Employment and Social Affairs
Law on the Protection of the Family Members of the Military Service ConscriptsMinistry of Labour, Employment and Social Affairs
Law on Cultural HeritageMinistry of Culture and Public InformationDraft Law developed during 2003
Law on Cinematography/ Law on Cinematography FundMinistry of Culture and Public InformationAdoption envisaged by the end of 2003
Law on LibrariesMinistry of Culture and Public Information
Law on Inspection Supervision and Administrative InspectionMinistry of Public Administration and Local Self-Government
Law on SpasMinistry of Trade, Tourism and ServicesAdoption envisaged by the end of 2003
Law on Amendments and Additions to the Law on Terms and Conditions of Approving Rights and Restituting Land Transferred in Social Ownership on the Basis of Agricultural Land Fund and Confiscated on the Basis of Unfulfilled Obligations of Mandatory Buyout of Agricultural ProductionMinistry of Finance and EconomyDraft Law developed during 2003
Law on Agency for Rural DevelopmentMinistry of Agriculture, Forestry and Water Management
Law on Agency for Serbian Academic Computer NetworkMinistry of Science, Technology and DevelopmentAdoption envisaged by the end of 2003
Law on Rehabilitation of Political Convicts and PrisonersMinistry of JusticeAdoption envisaged by the end of 2003
Law on Terms and Conditions for Performance of Court ExpertiseMinistry of JusticeAdoption envisaged by the end of 2003
Law on Narcotic PrecursorsMinistry of HealthAdoption envisaged by the end of 2003
Law on the Production and Trading of NarcoticsMinistry of HealthAdoption envisaged by the end of 2003
Table 6.2.e.:Laws that are not envisaged by the PRS, but have been recognized by the line ministries of the Republic of Serbia as relevant for the PRS
LawRelevant MinistryStatus of the Law
Law on Environmental ProtectionMinistry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04
Law on the Strategic Environmental Impact AssessmentMinistry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04
Law on Integrated Pollution, Prevention and ControlMinistry of Science and Environmental ProtectionOfficial Gazette of the Republic of Serbia No. 135/04
Law on Amendments to the Law on Local Self-GovernmentOfficial Gazette of the Republic of Serbia No. 33/04
Law on the Amendments and Additions to the Law on Local Self-GovernmentOfficial Gazette of the Republic of Serbia No. 135/04
Law on Amendments and Additions to the Law on Public Income and ExpendituresOfficial Gazette of the Republic of Serbia No. 33/04
Law on Regulating Duties of the Republic of Serbia regarding the Borrowings for Economic DevelopmentOfficial Gazette of the Republic of Serbia No. 43/04
Law on Amendments and Additions to the Law on Guarantee FundOfficial Gazette of the Republic of Serbia No. 43/04 and 61/05
Law on Amendments to the Law on Taxes for Using, Keeping and Carrying GoodsOfficial Gazette of the Republic of Serbia No. 43/04 and 132/04
Law on Addition to the Law on Securities and Other Financial Instruments MarketsOfficial Gazette of the Republic of Serbia No. 55/04 and 45/05
Law on Amendments and Additions to the Law on Public ProcurementOfficial Gazette of the Republic of Serbia No. 55/04
Law on Amendments and Additions to the Law on Tax Procedure and Tax AdministrationOfficial Gazette of the Republic of Serbia No. 55/04 and 61/05
Law on the Serbian Business Registration AgencyOfficial Gazette of the Republic of Serbia No. 55/04
Law on Amendments and Additions to the Law on Sales TaxOfficial Gazette of the Republic of Serbia No. 84/04
Law on Amendments and Additions to the Law on Corporate Income TaxOfficial Gazette of the Republic of Serbia No. 84/04
Law on Games of ChanceOfficial Gazette of the Republic of Serbia No. 84/04
Law on Amendments and Additions to the Law onOfficial Gazette of the Republic of Serbia No. 42/02 H 97/04
Broadcasting
Law on Mediation in Labour-Related DisputesMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 125/04
Law on the Budget of the Republic of Serbia for 2005Official Gazette of the Republic of Serbia No. 127/04
Law on the Citizenship of the Republic of SerbiaOfficial Gazette of the Republic of Serbia No. 135/04
Law on Amendments and Additions to the Law on Income TaxOfficial Gazette of the Republic of Serbia No. 135/04
Law on Amendments and Additions to the Law on Property TaxOfficial Gazette of the Republic of Serbia No. 135/04
Law on Fiscal Cash RegistersOfficial Gazette of the Republic of Serbia No. 135/04
Law on Fulfilling the Duties of the Republic of Serbia towards the National BankOfficial Gazette of the Republic of Serbia No. 135/04
Law on Non-life Insurance Premium TaxOfficial Gazette of the Republic of Serbia No. 135/04
Law on the Distribution of Transfer Resources from the Budget of the RS and the Sharec of Towns and the City of Belgrade in the Payroll Tax in 2005Official Gazette of the Republic of Serbia No. 135/04
Law on Amendments to the Law on the Privatization AgencyOfficial Gazette of the Republic of Serbia No. 135/04
Framework Law on Education SystemOfficial Gazette of the Republic of Serbia No. 62/03
Law on Amendments and Additions to the Framework Law on Education SystemOfficial Gazette of the Republic of Serbia No. 58/04
Law on Amendments and Additions to the Law on Criminal ProcedureMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 58/04
Law on Civil ProceedingsMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 125/04
Law on Extra-Judicial ProceedingOfficial Gazette of the Republic of Serbia No. 18/05
Law on MediationMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 18/05
Law on Executive ProcedureMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 125/04
Law on Agency for Licencing of Bancruptcy TrusteesMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 84/04
Law on Prosecutor’s OfficeMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 51/04
Court Organisation BillMinistry of JusticeOfficial Gazette of the Republic of Serbia No. 29/04
Law on Public AgenciesSerbian Agency for the Development of Small and Medium Sized Entreprises and EntrepreneurshipOfficial Gazette of the Republic of Serbia No. 18/05
Law on Amendments and Additions to the Law on Financial Transactions TaxMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 43/04
Law on the Cessation of the Law on Income Fund TaxMinistry of FinanceOfficial Gazette of the Republic of Serbia No. 33/04
Law on the Amendments to the Law on the Action Plan of Serbia and Montenegro for the Harmonization of Economic Systems of Member States in order to Prevent and Remove Obstacles to Unimpeded Flow of People, Merchandise, Services and CapitalMinistry of International Economic RelationsOfficial Gazette of the Republic of Serbia No. 18/05
Law on Amendments and Additions to the Law on PrivatizationPrivatization AgencyOfficial Gazette of the Republic of Serbia No. 45/05
Labour LawMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 24/05 and 61/05
Law on Socio-Economic CouncilMinistry of Labor, Employment and Social AffairsOfficial Gazette of the Republic of Serbia No. 125/04
Competitiveness LawMinistry of International Economic RelationsLaw Proposal in the Parliamentary procedure since May 30, 2005
Law on Red CrossMinistry of HealthLaw Proposal in the Parliamentary procedure since May 6, 2005
Law on PrecursorsMinistry of HealthLaw Proposal prepared
Law on Insufficiently Developed RegionsRepublic Development BureauDraft prepared
Law on Protection against Non-ionic Radiation and Nuclear SafetyMinistry of Science and Environmental ProtectionDraft prepared
Law on ChemicalsMinistry of Science and Environmental ProtectionDraft prepared
Law on Legal AssistanceMinistry of JusticeIn the preparation phase
Law on Public NotariesMinistry of JusticeIn the Parliament procedure
Social Residence LawMinistry of Capital InvestmentIn the preparation phase
Law on Amendments and Additions to the Planning and Constructing LawMinistry of Capital InvestmentIn the preparation phase
Arbitration LawMinistry of International Economic RelationsIn the preparation phase
Law on Industrial ParksMinistry of International Economic RelationsIn the preparation phase
Law on Even Regional DevelopmentRepublic Development BureauIn the preparation phase
Refugees LawComissariat for Refugees of the Republic of SerbiaIn the preparation phase
Strike LawMinistry of Labor, Employment and Social AffairsIn the preparation phase
Law on the Protection of Citizens of the Republic of Serbia Working AbroadMinistry of Labor, Employment and Social AffairsIn the preparation phase
Law on Employing Disabled PersonsMinistry of Labor, Employment and Social AffairsIn the preparation phase
Law on Record Keeping within the Field of Labor and EmploymentMinistry of Labor, Employment and Social AffairsIn the preparation phase
Antidiscrimination Law against Disabled PersonsMinistry of Labor, Employment and Social AffairsIn the preparation phase
Law on Package and Package Waste MaterialMinistry of Science and Environmental ProtectionIn the preparation phase
Law on Nature ProtectionMinistry of Science and Environmental ProtectionIn the preparation phase
Law on Air ProtectionMinistry of Science and Environmental ProtectionIn the preparation phase
Law on Schoolbooks and Other Teaching Equipment and MethodologyMinistry of Education and SportIn the preparation phase
Law on Pupil and Student StandardMinistry of Education and SportIn the preparation phase
Law on Financing Water ManagementMinistry of Agriculture, Forestry and Water ManagementIn the preparation phase
Standardization LawMinistry of Trade, Tourism and Services
Law on Unions and Employers SocietyMinistry of Labor, Employment and Social AffairsIn the preparation phase

6.3. GOVERNMENT INSTITUTIONS WHOSE REPORTS HAVE BEEN INTEGRATED INTO THE POVERTY REDUCTION STRATEGY IMPLEMENTATION PROGRESS REPORT

  • Ministry of Education and Sport, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Science and Environmental Protection, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Labor, Employment and Social Affairs, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Health, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Agriculture, Forestry and Water Management, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Trade, Tourism and Services, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Capital Investment, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of International Economic Relations, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Finance, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Public Administration and Local Self-Government, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Ministry of Justice, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • National Bank of Serbia, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Serbian Agency for the Development of Small and Medium-sized Enterprises and Entrepreneurship, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Privatization Agency, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Serbian Investment and Export Promotion Agency, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Republic Development Bureau, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Commissariat for Refugees of the Republic of Serbia, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Serbian European Integration Office, Poverty Reduction Strategy Implementation Report, Belgrade 2005
  • Standing Conference on Towns and Municipalities, Poverty Reduction Strategy Implementation Report, Belgrade 2005

6.4. BIBLIOGRAPHY

    Poverty Reduction Strategy in Serbia the Government of the Republic of Serbia2003

    Memorandum on the Budget and Fiscal and Economic Policy for 2005Ministry of Finance,Belgrade2004

    Economic Growth and Employment ProgrammeReport No. 29258-YU,World Bank,December62004

    Country Assistance Strategy for Serbia and MontenegroWorld Bank,Report No. 30426-YU,November192004

    Interpretation of draft Labor Law of the Republic of Serbia Branko A. Lubarda PhD UNDP(2005)

    Labor Market Performance and Job Creation Programs in SerbiaConference on Labor Markets, Growth and Poverty Reduction Strategies,May27–282005.

    • Search Google Scholar
    • Export Citation

    Report on the work of the Development Fund of the Republic of Serbia for the period January 1 through December 31 2004Development Fund of the Republic of Serbia,February2005

    • Search Google Scholar
    • Export Citation

    Development Fund of the Republic of Serbia Program for 2005Development Fund of the Republic of Serbia

    Website presentation of the Ministry of Finance:www.mfin.sr.gov.yu

    Decade of Roma Inclusion Programme2005–2015Ministry of Human and Minority Rights,Secretariat for Roma National Strategy

    National Strategy of the Republic of Serbia for SCG’s EU AccessionSerbian European Integration Office,June2005

    MatkovicGordana2005Overview of Poverty and Social Exclusion in the Western Balkans, A paper prepared for the Western Balkan Forum on Social Inclusion and Millennium Development Goals,23–24JuneTirana, Albania

    • Search Google Scholar
    • Export Citation
1This duty was made official in February 2005 by a special decision of the Government of the Republic of Serbia.
2The Government of the Republic of Serbia adopted the Review of the Implementation of the Millenium Development Goals in Serbia in May 2005.
3The Ministry of Finance plans to introduce the programmatic budget as of 2007.
4The preparation of the Poverty Reduction Strategy paper for Serbia was financed by the World Bank-administered Poverty Reduction Strategy Trust Fund (Japanese and Dutch funds), the UK Department for International Development (DfID) and donations from the Danish and Norwegian Governments.
5Poverty Reduction Strategy paper for Serbia, Government of Serbia, 2003.
6Survey on the Living Standard of the Population (SLSP) is based on the World Bank’s Living Standard Measurement Survey (LSMS) methodology.
7Prepared by the Working Group for Poverty Measurement, established in February 2005 by a special act of the Government of Serbia.
8Based on panel data (SLSP 2002 and 2003), ensuring monitoring trends in living standards of the same persons over a one-year period (May–June 2002 and May–June 2003).
9World Bank, 2005, ECA POV II.
10Matkovic, Gordana, 2005, Overview of Poverty and Social Exclusion in the Western Balkans, a paper prepared for the Western Balkan Forum on Social Inclusion and Millennium Development Goals, 23–24 June, Tirana, Albania.
11Ibid.
12The Poverty Reduction and Economic Management Unit for Europe and Central Asia Region participated in the preparation of preliminary poverty data as expert and technical support to the Working Group for Poverty Measurement.
13The questions were formulated on the basis of measures and activities stipulated in the PRSp, in the chapter “Resume and Activity Matrices.”
14PRSp chapter: “Cross-Cutting Issues in the Poverty Reduction Strategy.”
15For details on the project, see the chapter “Transition to market economy - Building more efficient state institutions.”
16The institutions that bear greatest responsibility for implementing PRS aims with respect to macroeconomic policy are the Ministry of Finance, the National Bank of Serbia and the Serbia Investment and Export Promotion Agency.
17EUR: USD: CSD= 1:1,2:69,99 (average in the period January-June 2004.), EUR: USD: CSD= 1:1.26:75.14 (average in the period July-December 2004.), EUR: USD: CSD= 1:1.30:80.75 (average in the period January–May 2005).
18Implemented with an EU donation, through the CARDS program.
19The Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008. At the time this report was prepared there were indications that the rate of inflation would exceed the projected level.
20The Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.
21The institutions that bear greatest responsibility for implementation of PRS objectives with respect to fiscal restrictions are the Ministry of Finance and the National Bank of Serbia.
22For comprehensive list of financial legislation, see Annex 6.2
23Source: Ministry of Finance.
24Since VAT moves the time of tax payment from the sale of goods/services to the moment of input procurement, one can expect that economic agents run into problems related to the decline of solvency and compensation accompanied by certain price increases. In addition, enhanced coverage of the gray economy may have led to a slight price increase in the prices of goods/services that have now become legal (with calculated and paid taxes).
25Supported by DFID.
26The Memorandum on Budget and Economic and Fiscal Policy for 2006 with projections for 2007 and 2008.
27Functional budget classification that calculates funds for mandatory pension and disabled insurance as social welfare expenditures.
28The institutions that bear greatest responsibility for implementing PRS goals with respect to conditions for private sector development are the Ministry of Finance, the National Bank of Serbia, the Ministry of Economy, the Privatization Agency, the Ministry of Justice, the Ministry of Capital Investments and the Ministry of Trade, Tourism and Services.
29Export structure is characterised by too many different products, which is a sign of low specialization and low representation of more processed products with higher added value.
30Since July 2004 the Fund approved 950 requests and issued guarantees totaling EUR 7.5 million. For its activities in 2005 the Budget of the Republic of Serbia envisages the allocation of an additional CSD 1.5 billion for the capital increase of the Guarantee Fund. See www.gf.co.yu.
31Some of the 73 companies are very complex and own dependent (daughter) companies that have to be restructured as well
32The institutions that bear greatest responsibility for implementation in this field are the Ministry of Public Administration and Local Self-Government, the Ministry of Justice, the Ministry of Economy and the Ministry of Finance.
33With the assistance and consultation of the Government of the Kingdom of Norway and the Swedish Institute for Public Administration (SIPU).
34The project is financed by the Ministry of Foreign Affairs of the Kingdom of Norway. The participants in the project’s pilot phase are the General Secretariat of the Government of the Republic of Serbia; the DPM’s PRS Implementation Focal Point; the Ministry of Finance; the Serbian European Integration Office; the Ministry of International Economic Relations; the Ministry of Health; the Ministry of Labor, Employment and Social Affairs; the Ministry of Trade, Tourism and Services, the Ministry of Public Administration and Local Self-Government and the Ministry of Economy.
35The Standing Conference of Towns and Municipalities (SCTM) is a national association of local authorities in Serbia. The Committee on Social Issues (one of the SCTM’s 10 line committees) deals with issues of social policy and employment at the local government level.
36In cooperation with the Palgo Center and the Serbia Local Government Reform Program (SLGRP) supported by the United States Agency for International Development (USAID).
37Ministry for Human and Minority Rights with the support of EAR.
38The institutions that bear greatest responsibility for implementation with respect to regional and international integration are the Ministry for International Economic Relations, the Serbian European Integration Office (SEIO), the Ministry of Finance and the Republic Commissariat for Refugees.
39The European Integration Office is the youngest institution of the Government of the Republic of Serbia, established in March 2004 with a role to coordinate and monitor horizontally the EU-related workload in the line ministries. The work of the SEIO greatly contributed to Serbia obtaining the positive Feasibility Study.
40Official Gazette RS no. 67/03.
41Official Gazette RS no. 18/05.
42Official Gazette RS no. 62/05.
43Special Drawing Rights (SDR) represent an international reserve asset, created by the IMF in order to regulate international liquidity, which IMF uses as a unit of account in all dealings and transactions with member countries. SDR are allocated to member countries in proportion to their IMF quotas. Their value is based on the currency basket comprising USD, EUR, JPY and GBP.
44The institutions with the greatest responsibility for fulfilling the objectives of increased employment opportunities are the Ministry of Labor, Employment and Social Policy; the Ministry of Economy; the Agency for SME Development and the National Employment Service.
45Labor Force Survey (2003)
46Ibid.
47Funded by the World Bank (IDA) and DFID.
48The Law on Income Tax (from the report of the Ministry of Finance).
49In cooperation with the Federal Employment Bureau of Germany.
50Funded by the Swedish International Development Agency (SIDA).
51The institution with the greatest responsibility for achieving more efficient social welfare is the Ministry of Labor, Employment and Social Policy (MoLESP).
52The right to receive Family Financial Support (MOP) is restricted to a period of nine months for households with able-bodied members with the goal of stimulating their employment (MOP does not apply to families with a majority of disabled members).
53A number of poor families living in low-income municipalities were once ineligible to receive MOP because of an earlier decentralized eligibility criteria, which were based on a locally rather than centrally defined minimum social security level. In other words, the minimum level of security was not unified in the Republic of Serbia.
54In cooperation with the International Committee of the Red Cross and local centers for social work.
55The competition was opened by the Ministry of Labor, Employment and Social Affairs.
56The institution with the greatest responsibility for more efficient social welfare is the Ministry of Labor, Employment and Social Affairs.
57Draft Law on the Overtaking of Obligations of the Republic Fund for Pension and Disability Insurance of the Employed, Created by the Delay in Payments of Pensions and Allowances, and a similar draft law for the pension fund for farmers.
58Income into the Fund of Farmers includes transfers from the budget of the Republic of Serbia (60.28%), plus the obligations of the Republic of Serbia for solidarity veteran’s service (26.09%), a total of 86.37% of the Fund’s income.
59It is expected that timely payments to all beneficiaries will restore the confidence of farmers and increase the rate of their contributions.
60Residence with a family that, as a host, assists tenants and/or provides housing with support for disabled persons.
61Maticna evidencija osiguranika.
62The institution with the greatest responsibility for health care goals is the Ministry of Health.
63The institution with the greatest responsibility for realizing the goals of education with respect to poverty reduction is the Ministry of Education and Sport.
64The trainings are supported and implemented by the Ministry of Education and Sport with the engagement of school development consultants.
65International Standard Classification of Education ISCED 1997.
66The program has been supported through CARDS.
67The Ministry of Human and Minority Rights in cooperation with the Ministry of Education and Sports and the National Council of the Roma Ethnic Minority.
68Serbia and Montenegro is included in the Roma Inclusion Decade 2005–2015, launched by the World Bank and the Open Society Institute.
69Two schools have realized such programs thus far, with the help of donations from the Norwegian government and the City Education Secretariat.
70The institutions with the greatest responsibility for reducing the regional, rural and urban aspects of poverty are the Ministry of Public Administration and Local Self-Government; the Ministry of Finance; the Ministry of Capital Investment; the Ministry of Agriculture, Forestry and Water Management and the Republic Development Fund.
71Funded by the Government of Norway.
72Budgetary resources of the Ministry of Agriculture, Forestry and Water Management.
73In cooperation with the UN European Economic Commission.
74The institutions with the greatest responsibility for implementing the environmental aspects of the PRS are the Ministry of Agriculture, Forestry and Water Management; the Ministry of Science and Environmental Protection; the Ministry of Health and the Ministry of Public Administration and Local Self-Government.
75The Ministry of Agriculture, Forestry and Water Management; the Directorate for Water Management.
76Short-term objectives of the Directorate for Environmental Protection.
77Ministry of Science and Environmental Protection, Directorate for Environmental Protection.
78The distribution of funds according to budget beneficiaries represents the organizational budget classification.
79The distribution of funds according to the type of expenditure represents the economic classification.
80The IMF’s functional classification of state functions according to the type of service that a Government institution provides for citizens (economic affairs, public services, social welfare, health care, public order and security, etc.).
81See Annex 6.1
82Memorandum on the Budget and Fiscal and Economic Policy of the Government of the Republic of Serbia for 2006, with projections for 2007 and 2008.
83The preparation of the PRSp in Serbia was financed by several donors through the Fund for Poverty Reduction Strategies administered by the World Bank (Japanese and Dutch government grants). The preparation was also supported by the UK Department of International Development (DFID) and the Danish and Norwegian governments.
84The Development and Aid Coordination Unit (DACU) was established in November 2000 under the Serbian Ministry of International Economic Relations to promote national priorities through close cooperation with donors and development partners.
85ISDACON — Inter-sectoral Development Assistance Coordination Network.
86In cooperation with the Deputy Prime Minister’s PRS Implementation Focal Point and with financial support from DFID.
87The Standing Conference of Towns and Municipalities (SCTM) is a national association of local authorities in Serbia. The Committee on Social Issues (one of the SCTM’s 10 line committees) deals with issues of social policy and employment at the local government level.
88In cooperation with the Deputy Prime Minister’s PRS Implementation Focal Point and with financial support from DFID.
89The distribution of funds according to budget beneficiaries represents the organizational classification of budget.
90The distribution of funds according to the type of expenditure represents the economic classification.
91The IMF’s functional classification of state functions according to the type of service which a Government institution provides for the citizens (economic affairs, public services, social welfare, health care, public order and security, etc.).
92The Annex was prepared in cooperation with the Parliamentary Committee for Poverty Reduction

Other Resources Citing This Publication