EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.11.2008 
SEC(2008) 2698 
  
COMMISSION STAFF WORKING DOCUMENT 
 
SERBIA 2008 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2008-2009
 
{COM(2008) 674} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Serbia .......................................................................... 5 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 6 2.2. Human rights and the protection of minorities .......................................................... 13 2.3. Regional issues and international obligations............................................................ 20 3. Economic criteria ....................................................................................................... 23 3.1. The existence of a functioning market economy ....................................................... 23 3.2. The capacity to cope with competitive pre ssure and market forces within the Union29 
4. European standards .................................................................................................... 30 4.1. Internal market ........................................................................................................... 30 
4.1.1. Free movement of goods............................................................................................ 30 4.1.2. Movement of persons, services and right of establishment ....................................... 32 
4.1.3. Free movement of capital........................................................................................... 33 4.1.4. Customs and taxation ................................................................................................. 33 4.1.5. Competition............................................................................................................. ... 35 
4.1.6. Public procurement .................................................................................................... 36  
4.1.7. Intellectual property law ............................................................................................ 36 4.1.8. Employment and social policies ................................................................................ 37 4.1.9. Education and research .............................................................................................. 38 4.1.10. WTO issues ............................................................................................................. ... 39 
4.2. Sectoral policies ......................................................................................................... 39 
4.2.1. Industry and SMEs..................................................................................................... 39  
4.2.2. Agriculture and fisheries............................................................................................ 40 4.2.3. Environment............................................................................................................. .. 41 
4.2.6. Information society and media................................................................................... 45 4.2.7. Financial control ....................................................................................................... . 47 
EN 3   EN 4.2.8. Statistics .............................................................................................................. ....... 47 
4.3. Justice, freedom and security ..................................................................................... 48 4.3.1. Visa, border, control, asylum and migration.............................................................. 48 4.3.2. Money laundering ...................................................................................................... 49  
4.3.3. Drugs................................................................................................................... ....... 50 
4.3.4. Police.................................................................................................................. ........ 50 
4.3.5. Fighting organised crime and terrorism ..................................................................... 51 4.3.6. Protection of personal data......................................................................................... 52 STATISTICAL ANNEX 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
Serbia 2008 Progress Report 
1. I NTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported regularly to th e Council and the Parliament 
on progress made by the countries of the Western Balkans region. 
This progress report largely follows the same stru cture as in the previous years. The report: 
– briefly describes the relations between Serbia and the Union; 
– analyses the situation in Serbia in term s of the political criteria for membership; 
– analyses the situation in Serbia on the basi s of the economic criteria for membership; 
– reviews Serbia's capacity to implement European standards, that is, to gradually 
approximate its legislation a nd policies with those of the acquis , in line with the 
Stabilisation and Association Agreement a nd the European Partnership priorities. 
The period covered by this report is from  1 October 2007 to early October 2008. Kosovo1 is 
dealt with in a separate Progres s Report. Progress is measured on the basis of decisions taken, 
legislation adopted and measures implemented. As  a rule, legislation or measures which are 
under preparation or await parliamentary approva l have not been taken into account. This 
approach ensures equal treatment across all reports and permits an objective assessment. 
The report is based on information gathered  and analysed by the Commission. In addition, 
many sources have been used, including contri butions from the government of Serbia, the 
Member States, European Parliament reports2 and information from various international and 
non-governmental organisations. 
The Commission draws detailed co nclusions regarding Serbia in its separate communication 
on enlargement3 based on the technical analysis  contained in this report. 
1.2. Context 
Serbia is a potential candida te for EU membership. The Eu ropean Council of 14 December 
2007 stated that "it considered th at a stable and prosperous Serb ia fully integrated into the 
family of European nations is important for th e stability of the regi on. In this regard, it 
encouraged Serbia to meet the necessary condit ions to allow its Stabilisation and Association 
Agreement rapidly to be signed and, in the light  of Serbia's considerable institutional capacity, 
and recalling its conclusions of December 2006, reit erated its confidence that progress on the 
                                                 
1 Under UNSCR 1244/1999. 
2 The rapporteur for Serbia is Mr J. Kacin. 
3 Enlargement Strategy and Main Challenges 2008-2009. 
EN 5   EN road towards the EU, in cluding candidate status , can be accelerated." On 29 April 2008 Serbia 
signed a Stabilisation and Association Agreemen t and an Interim Agreement on trade related 
measures with the EU.  
1.3. Relations between the EU and Serbia 
Serbia is participating in the Stabilisation and Association Process  (SAP). The Stabilisation 
and Association Agreement (SAA) provides a fr amework of mutual commitments on a wide 
range of political, trade and economic issues . The SAA was initialled on 7 November 2007 
and signed, along with the Interim Agreemen t, on 29 April 2008. Recalling the relevant 
provisions of the SAA and the Interim Agreement, the Council stated that full cooperation 
with the International Criminal Tribunal fo r the former Yugoslavia (ICTY), including all 
possible efforts to arrest and transfer indictees,  is an essential element of these Agreements. 
EU ministers agreed to submit the SAA to their parliaments for ratification and the Community agreed to implement the Interim Ag reement as soon as the Council decides that 
Serbia is fully cooperating with the ICTY. The Serbian parliament ratified the SAA on 9 
September 2008. The Serbian government took a decision in October 2008 to implement the 
Interim Agreement by 1 January 2009 as a tangibl e sign of its commitment to advance rapidly 
towards European integration. 
Visa  facilitation and readmission agreements between the EU and Serbia entered into force in 
January 2008. Dialogue on visa liberalisation started in January 2008. In May 2008 the 
Commission presented a roadmap on visa liberalisation to Serb ia. In September 2008 Serbia 
presented the Commission with a detailed report of measures undertaken in the framework of 
visa liberalisation.  
Relations between the EU and Serbia have been  affected by the declaration of independence 
of Kosovo. In February 2008 a demonstration against the declaration of independence ended 
in violence with several protestors attack ing foreign diplomatic missions in Belgrade, 
including EU embassies. The EU condemned thes e attacks and urged th e Serbian authorities 
to do all in their powers to prevent further violence.  
Serbia has vowed to use only pea ceful means and has exercised restraint in its response to the 
declaration of independence by the Kos ovo assembly. The Serbian government has 
undertaken legal and diplomatic measures to contest the legality of the declaration of 
independence. Serbia withdrew serving ambass adors from countries that recognised the 
independence of Kosovo, including EU Member States. Following the formation of the new 
Serbian government in July 2008, ambassadors w ho had been withdrawn from EU Member 
States returned to their posts.  Serbia has opposed r econfiguration of the international civilian 
presence in Kosovo, including EULEX deploymen t, unless authorised by the UN Security 
Council. In October 2008, the UN General Assembly voted in fa vour of a resolution tabled by 
Serbia, seeking a non-binding advi sory opinion from the Internat ional Court of Justice (ICJ) 
on the legality of the Kosovo declaration of independence.  
The EU is providing guidance to the Serbian author ities on reform priorities as part of the 
European Partnership . The Serbian government has adopted a National Programme for 
European Integration that also covers the Eur opean Partnership prioriti es. Progress on reform 
priorities is encourag ed and monitored by the Enhanced Permanent Dialogue (EPD) 
process . Plenary EPD meetings were held in  November 2007 and April 2008. Several sub-
EPD meetings took place during the reporting period, covering sectors such as energy, 
EN 6   EN transport, the environment, the internal mark et, trade, justice, liberty and security and 
agriculture. A political dialogue meeting at ministerial level took place in January 2008. 
Serbia receives pre-accession financial assistance  from the Instrument for Pre-Accession 
Assistance (IPA). IPA assistance is bei ng implemented by the Commission Delegation in 
Belgrade, which has taken over responsibil ity for ongoing CARDS assistance from the 
European Agency for Reconstruction. Decentral ised management of aid is a medium-term 
objective for Serbia and still requires much pr eparatory work by the Serbian authorities. 
The Serbian national IPA allocation for 2008 totals €190.9 million. The Serbian government 
actively participat ed in preparation of the 2008 IPA programme. Financial assistance will 
focus on areas such as strengthening democra tic institutions, public administration reform, 
strengthening the rule of law,  the fight against corruption, human rights and protection of 
minorities. Serbia benefits from regional and horizontal programmes. Serbia will also participate in cross-border cooperation, where the priorities include infrastructure, flood 
prevention, environmental problems, cultural exch anges, research, job creation, security and 
crime prevention. A number of civil society  initiatives are being supported both under the 
national IPA programme and by thematic fina ncing instruments such as the European 
Initiative for Democratisation and Human Rights. Support to civil society under 2008 
programmes amounts to over €6 million. 
Concerning participation in  community programmes, Serbia signed Memoranda of 
Understanding with the Community for th e PROGRESS and Culture programmes in 
November 2007 and February 2008 respectively.  
2. P
OLITICAL CRITERIA  
This section examines progress made by Serb ia towards meeting the Copenhagen criteria, 
which require stability of institutions guarant eeing democracy, the rule of law, human rights 
and respect for and protection of minorities. It also monitors regional cooperation, good 
neighbourly relations with enlargement coun tries and Member States, and respect for 
international obligations, such as cooperation with the UN International Criminal Tribunal for 
the former Yugoslavia (ICTY). 
2.1. Democracy and the rule of law 
Constitution Following the adoption of the new constitutio n in 2006, the Law on the Constitutional Court 
was adopted in November 2007. Ten of the fift een judges of the Constitutional Court were 
appointed and sworn in, and the President of  the Court was elected. In December 2007 
parliament adopted a package of laws nece ssary for calling presidential, provincial 
(Vojvodina) and municipal elections, as requir ed by the Law for the implementation of the 
Constitution (Constitutional Law). The province of Vojvodina adopted a new statute in 
October 2008 in line with constitutional requirem ents. This new statute has to be approved by 
the national parliament. 
There has, however, been no follow-up to th e opinion of the Venice Commission of the 
Council of Europe concerning the constitutional provisions adj udged not to be fully in line 
with European standards. The major causes fo r concern are political party control over the 
mandates of members of parliament and the role  of parliament in judicial appointments. 
EN 7   EN Specific laws establishing clear and objective crit eria for the re-election of judges have not yet 
been adopted and the provisions in the Consti tutional Law lack clar ity and transparency. 
There was insufficient consultation prior to th e adoption of the laws necessary for holding 
provincial and municipal elections. 
Overall, there has been progres s on adopting legislation to imp lement the new constitutional 
framework. However, further reforms are needed to ensure that the constitutional provisions, notably on the judiciary, are im plemented in line with European standards. This is one of the 
key priorities of the European Partnership. 
Parliament 
Parliamentary activities were affected by deep  divisions between political parties on key 
policy issues which led to early  elections in the country.  
Presidential elections were he ld over two rounds in January and February 2008 during which 
relations with the EU and Kosovo dominate d the electoral campaign. The presidential 
elections were assessed by inte rnational observers as being in line with international 
standards. The incumbent President Boris Tadi c was re-elected on a pro-European platform. 
Parliamentary elections were held in May 2008 following the split in th e ruling coalition and 
the Prime Minister's decision to propose diss olution of parliament. The campaign was once 
again dominated by the status of Kosovo, relatio ns with the European Union and the possible 
signing of the SAA. International observation b odies qualified the electi ons as largely in line 
with international standards, but noted that  they were partly overshadowed by negative 
aspects of the campaign. The 'For a European Se rbia' bloc, led by the Democratic Party (DS) 
emerged as the largest group in the 250 seat parliament, followed by the Serbian Radical 
Party (SRS).  
The new parliament was constituted in June 200 8, ahead of the legal deadline, and a speaker 
and six deputy speakers were elected. Standi ng committees were constituted, including the 
Committee on European Integration.  Several committees are chaired by members of 
opposition parties. Ethnic minority lists continue  to be represented in the parliament.  
The new parliament ratified the SAA in September 2008 and has begun work on a legislative 
package intended to address ke y political priorities. In October 2008, the parliament 
appointed four deputy ombudsmen.  
However, legislative activity during the repo rting period has been li mited. Legislation on a 
single voter register, th e Law on the assembly and new rules of procedure have not yet been 
adopted. The existing rules of procedure ar e inadequate for efficient, streamlined 
parliamentary debates. Plenary sessions, which are broadcast live on th e public broadcasting 
service, have often been dominated by polit ical posturing and lengt hy debates on unrelated 
issues slowing up the adoption of  legislation. Parliament failed to abide by lega l deadlines for 
several appointments. Parliament and its committ ees still lack sufficient numbers of expert 
support staff. Committees remain largely reactive, with the majority of bills debated directly 
in plenary. The practice of law-making by urge nt procedure and without sufficient public 
debate has continued. Offensive and inflamma tory language against political opponents and 
human rights defenders recurred in parliament . The current parliament ary rules have been 
insufficient to prevent such behaviour. 
EN 8   EN Constitutional provisions giving parties control of  the mandates of me mbers of parliament 
remain an obstacle to reform of parliament and to its role as a genuine political forum. The electoral framework has not been revised and is not in line with European standards. Existing 
legislation continues to allow pa rties to appoint members of par liament arbitrarily from their 
electoral lists after th e elections instead of determining the order beforehand. This system 
lacks transparency and gives political parties fu ll control over the cand idates. Moreover, most 
parliamentary parties have conc luded individual agreements with  their members of parliament 
on blank resignations, which can be activated at  any moment by the party leadership. This 
practice builds on the constitutional provisions giving parties control of individual mandates of members of parliament.  
Overall, the work of parliament was affected by the prevailing political climate in the country, 
ongoing disputes between politic al parties, and the disr uption caused by elections.  The new 
parliament has begun work on an ambitious legi slative agenda and has adopted some legal 
acts. However there was little legislative out put during the reporting period. Parliamentary 
reform has been delayed and concerns regardi ng political party over the mandates of members 
of parliament have not been addressed. The capacity of the parliamentary committees remains limited and election legislation has not yet been revised. 
Government 
Government activities have been dominated by issues relating to Kosovo and relations with 
the EU.  
In January 2008, the former govern ment adopted an action plan setting out measures to be 
taken in response to the exp ected declaration of independe nce by the Kosovo Assembly. The 
Serbian government condemned attacks by protestors against foreign diplomatic missions in Belgrade in February 2008. However, some members of the former government condoned 
incidents that occurred immediately after th e declaration of independence of Kosovo. 
The former government was unable to overcome deep divisions betwee n coalition partners, 
the DS and the DSS over contractual relations wi th the EU. This culminated in the refusal by 
Prime Minister Vojislav  Koštunica to convene a government session to authorise the signing 
of an interim political agreement that had been proposed by the EU. In March 2008, disagreements regarding links be tween Kosovo and EU integration,  particularly in the context 
of the SAA, finally led to the fall of the gove rnment. These disputes and challenges continued 
after the SAA was signed in April 2008. 
Following parliamentary elections, a new co alition government took office in July 2008, 
composed of the 'For a European Serbia' bloc, led by the DS and a bloc led by the Socialist 
party of Serbia (SPS). The coalition also incl udes several minority representatives. On 7 July 
2008, the incoming Prime Minister Cvetkovi ć set out the key priorities for the new 
government's term of office namely: European  integration, a commitment "to undertake all 
legal and diplomatic measures so  as to preserve Kosovo and Meto hija as an inte gral part of 
Serbia", the economy, social accountability, th e fight against crime and corruption and 
observance of international law. The government  also prepared an ambitious legislative 
agenda covering key political priori ties related to EU integration. 
The new government has 27 members, including thre e deputies, one of whom  is in charge of 
European integration. There is a new post of Vi ce Prime Minister, held by the leader of the 
SPS, Ivica Daci ć, who will take over the functions of th e Prime Minister in his absence, with 
EN 9   EN the exception of the right to propose the election or dismissal of other government members. 
A new Ministry for Human and Minority Rights,  replacing the previous government agency, 
has also been established. 
On the institutional level, European integrat ion structures were strengthened through the 
formation of coordination bodi es, including a policy coordina tion body chaired by the Deputy 
Prime Minister and an expert working party co mprising 35 working groups  covering all areas 
of the acquis . The Serbian European Integration Office was also reinforced. Most ministries 
and agencies continued their efforts to draft legi slation in the area of Eu ropean integration and 
implementing existing legislation. Under the coor dination of the Serbian European Integration 
Office, the Serbian administration actively wo rked on drafting the National Programme for 
EU Integration which was adopted by the gov ernment in October 2008. A public consultation 
was launched in June 2008 . The European Commission was also consulted and provided 
comments on the draft NPI in July 2008.  
In November 2007 members of the Council for Eur opean Integration were  appointed. This is 
an expert advisory body to be presided over by the Prime Minister. The Council has, however, never been convened.  
The Law on Government was amended in November 2007, in accordance with the 
Constitution. The new provisions regulate issues such as the incompatibility of functions and conflicts of interest. 
Legislation on local self-government , territorial reorganisation, lo cal elections and the city of 
Belgrade was adopted in December 2007. New pr ogrammes were developed to enhance the 
performance and efficiency of local government , in particular in de aling with citizens' 
requests. The new legislation allows local gove rnment units to possess and manage their own 
property. The new Law on local el ections exempts minority parties from the legal threshold of 
5% normally required for political parties to en ter local assemblies. These provisions were 
applied in the May 2008 local elections. 
These changes are generally in accordance w ith the European Charter of Local Self-
Government. However, some shortcomings remai n. A specific law regula ting the transfer of 
property to municipalities, in  line with the Constitution, has not yet been adopted. 
The elections for the Provincial Assembly of Vo jvodina and municipal elections were held on 
in May 2008 in line with international standards. 
Overall, government activities during the reportin g period were dominat ed by issues relating 
to Kosovo and relations with the EU. The pr evious governing coalition was deeply divided 
over major policy issues and suffered from in-f ighting and lack of pol icy coordination. As a 
result little progress was made. Following the le gislative elections there has been increased 
stability in government and greater consensus on European integrati on. The new government 
has declared its intention to deepen EU-Serbi a relations, to improve overall efficiency and 
effectiveness, to advance the reform agenda, and to achieve full cooperation with the ICTY.  
Public administration 
In November 2007 the Law on public administrati on was revised in line with the Constitution. 
The changes introduced more preci se provisions on the role of the central administration in 
monitoring the legality of acts adopted by local  governments. The Code of Conduct of Public 
EN 10   EN Servants was adopted in February 2008. Th e Human Resources Management Agency 
continued to train civil servants. 
The legal deadline for completion of open competitions for recruitment of civil servants 
expired in May 2008 however, this  process was not completed. Serbia has still to adopt 
legislation on salaries of political appointees. 
The newly established Office of  the State Ombudsman was very  active. Between January and 
July 2008 the ombudsman received over 2 600 requests for assistance. The ombudsman proposed numerous amendments to draft le gislation, including laws on the army, the 
Constitutional Court, security services, children' s rights and the draft rules of procedure for 
the Serbian parliament. Good cooperation was es tablished between the State ombudsman, the 
ombudsman in Vojvodina and municipal ombudsmen. The ombudsman in Vojvodina reported that out of 382 eligib le cases in 2007, a tota l of 322 were resolved and 60 were ongoing. In 
October 2008, following a long delay, the f our deputy Ombudsmen were appointed by 
parliament. 
However, the Serbian authorities have not cr eated the technical conditions necessary for 
proper functioning of the Office of the State Om budsman. Temporary premises are inadequate 
and only 33 out of 64 posts have been filled. The Serbian administration lacks sufficient 
knowledge of the ombudsman institution and its ro le and has not paid sufficient attention to 
its recommendations. 
The commissioner for free access to information of  public interest intensified his activities 
during the reporting period. The work and activities  of the commissioner are made available 
to the public. A guidebook on the Law on free access to information was published in a 
number of minority languages. The government  has, however, not created the conditions 
necessary to enable the office of the commi ssioner to function fully, including provision of 
adequate premises. Insufficient enforcement capac ity and the failure of the Serbian authorities 
to ensure implementation of the commissioner's recommendations in se veral cases continued 
to hamper the work of the office of the commissioner. 
In May 2008 six independent St ate bodies (the Ombudsman, th e State Audit Institution, the 
Commissioner for Free Access to Public Inform ation, the Committee for the Suppression of 
Conflicts of Interest, the Public Procurement Commission and the Commission for the 
Protection of Bidders' Rights) e xpressed concerns about the difficulties they face in carrying 
out their duties. In particular , they complained about working conditions that undermine their 
independence and about insufficient follow-up to their recommendations. 
Capacity-building in the police forces continued. A new police training centre came into 
operation in November 2007. Action was taken in  the area of regional police cooperation, 
following ratification of the C onvention on South-East Europe  Police Cooperation. Serbia 
signed an agreement on strategic cooperation with Europol in September 2008. Work at 
operational level has continued, bu t key strategies – for fighti ng organised crime, terrorism 
and drug abuse and on community policing – have yet to be a dopted. There continues to be 
insufficient coordination between the Ministry  of Interior and other ministries and 
government agencies. 
Overall, Serbia continues to have good capac ity in the area of pub lic administration. 
However, there was a slowdown in public admi nistration reform durin g the reporting period. 
Further efforts need to be made to fully  implement the 2005 Law on Civil Servants to 
EN 11   EN improve the recruitment system and strength en professionalism and accountability throughout 
the civil service. Independent and regulator y bodies performed well under difficult conditions. 
Greater determination needs to be shown by th e Serbian authorities to empower regulatory 
and independent bodies and to ensure  that they operate effectively.  
Civilian oversight of the security forces 
The laws on defence, on the army and on basic or ganisation of security services were adopted 
in December 2007, in line with the Constitution, and entered into force in January 2008. The 
Ministry of Defence actively ensured prior consu ltation of the ombudsman on human rights 
aspects of the new legislation. Statutory provis ions on democratic oversight of the army and 
the security services are comprehensive and assign a primary role to parliament. The new 
Framework Law on security services replaced the earlier government decision regulating the 
National Security Council. Under the new law, the National Security Council is responsible 
for coordination and control of security agencies  and the parliamentary board for security and 
defence has been given enhanced powers. Meas ures were taken to improve the financial 
situation of military personnel, including army pensioners.  
The legislative framework has not been comp leted, however. A national security strategy, a 
defence strategy, a military doctrine, new le gislation on conscientious objectors and 
implementing laws on security agencies still need to be adopted. The Parliamentary Committee for Security and Defence was not ac tive during the reporting period. In February 
2008 parliament adopted a resolution in co nnection with Kosovo calling for military 
neutrality. Military re servists wearing uniforms and insi gnia were however involved in a 
number of violent incidents in  the aftermath of the Kosovo declaration of independence. 
Overall, there has been some pr ogress on civilian oversight of the security forces, with the 
adoption of a number of laws. Reform in this sector still has to be completed and the new parliament needs to ensure e ffective democratic oversight. 
Judicial system  
Progress in the judicial sector has been sl ow and largely confined to administrative 
improvements.  
The Constitutional Court, which had not been  operational since October 2006, resumed duties 
in December 2007, although only 10 of the 15 judg es have been appointed. The Constitutional 
Court faces a heavy backlog of cases. Premis es for the new appellat e and administrative 
courts have been provided. However, th ese courts are not yet in operation. 
The overall professionalism of judges and prosecutors is relativ ely high and has been further 
improved by training provided by the judi cial academy. Remuneration of judges and 
prosecutors has also improved. 
However, key legislation necessary for implem entation of the Constitu tion and the judicial 
reform strategy has not yet been adopted. This includes the laws on courts and on prosecutors. 
In the absence of new legisl ation, no new judges or prosecu tors are being appointed and 
vacant positions are not being filled. At the same  time, some 200 judges who fulfil the criteria 
for retirement are still in office, as parliament has not yet taken the decision necessary to 
relieve them from active servi ce. These factors severely unde rmine the efficiency of the 
judiciary. 
EN 12   EN To counterbalance the influence of parlia ment over appointing judges and prosecutors, 
objective selection criteria have  been developed including a pl an to introduce two years of 
initial training for all judges plus  a final exam. However, in th e absence of the new law on the 
judicial academy, these criteria have not been  applied. Furthermore, objective criteria have 
not yet been established for appointments to be made during the interim period between 
adoption and full implementation of the new law. No decision has been taken on proposals to re-appoint all practising judges and prosecutors. Concerns rema in that such a re-appointment 
exercise could be affected by undue political influence and di srupt the functioning of the 
judiciary.
 
There are continuing concerns th at the prosecution serv ice is not being ad equately prepared 
for its enhanced role in criminal investigat ions, as provided for by the new Criminal 
Procedure Code, the entry into force of which has been postponed until the first half of 2009. Insufficient financial resources , training and staff have been allocated for this purpose. 
As regards juvenile justice, the national da ta collection and monito ring mechanism have not 
yet been updated to reflect the provisions of  the new Juvenile Justice Law and related 
implementing laws. 
The significant backlog in civil, criminal a nd commercial cases remains a serious cause for 
concern, as are the delays in en forcement of court decisions. In  the absence of efficient court 
management systems and of legislation stream lining procedures, the Serbian judiciary has 
been unable to reduce the number of pending cas es or average length of proceedings. The 
efficiency of the court system is, moreover, hampered by the uneven workload of courts and 
judges. 
There has been some progress on domestic war crime cases. The war crimes prosecution 
service filed several indictment s during the reporting period and some judgements have been 
passed. However a number of cases are still pe nding. There is also a number of pending high-
profile cases in the area of organised crime.  
Overall, there has been little progr ess with the judicial reform process, which is a key priority 
of the European Partnership. The legislative framework to implement judicial reform, as 
provided for by the new Constitution, is still not in  place. Considerable efforts still need to be 
made by Serbia to ensure the independence, accountability and efficiency of the judicial 
system .  
Anti-corruption policy 
There was some progress duri ng the reporting period on fighti ng corruption and developing a 
fully comprehensive anti-corruption policy, which is a key priority of the European Partnership. 
Amendments to the law on financing political parties, and the law establishing an anti-
corruption agency, which also contains new rule s on conflict of intere st, were adopted in 
October 2008. The Civil Law Convention on Corrupt ion and the Additional Protocol to the 
Criminal Law Convention on Corruption were  ratified in November 2007. The compliance 
report was submitted to the Council of Europe's  Group of States against Corruption (GRECO) 
in December 2007. 
Specialised departments within the prosecution offi ces have been set up at district level to 
investigate corruption cases. A deputy prosecutor at nati onal level has been given a 
EN 13   EN coordination role on anti-corrup tion cases. The police directorate has specialised units dealing 
with corruption and financial investigations. Se veral high-profile corruption investigations are 
ongoing. Joint investigation teams of pros ecutors and police have been set up. 
However, practical results in fi ghting corruption have been lim ited. Under the previous law on 
financing political parties, enforcement procedures were weak. This resulted in most political parties not disclosing full details of their fina nces. Furthermore, the su pervisory authority did 
not have sufficient capacity and expertise to a ssess the accuracy of th e declarations provided. 
More than one third of State officials did not declare their assets in 2008. The former law on 
conflict of interest did not pr ovide for sufficient enforcement procedures and did not ensure 
an independent audit of the declarations subm itted. Officials in certain areas, such as the 
judiciary, were not required to provide asse t declarations. The Board for Resolution of 
Conflict of Interest has insufficient qualified staff and resources and does not have the powers 
to assess the validity of the inform ation provided in the declarations. 
The anti-corruption agency has not yet been estab lished. This is of particular concern in view 
of the new role assigned to it under new legisla tion in the areas of conflict of interest and 
financing of political parties. Serbia has to ensure that the new agency will have a sufficient level of independence, capacities and competencies  in order to effectively fulfil its tasks. The 
current role of the Anti-Corruption Council is  limited to advising the government. The Law 
on free access to information contains loopholes, such as criteria for the classification of 
information, which hamper implementation. The action plan for the fight against corruption 
lacks clear deadlines, specific action and the necessary resources for implementation and 
therefore needs to be revised. 
Public procurement and priva tisation procedures along with major budgetary expenditure are 
not efficiently monitored by independent bodies . The State Audit Institution is not fully 
operational with only two auditors' posts filled, and currently cannot provi de efficient auditing 
services. Other control bodies, su ch as the Commission for the Protection of Bidders in the 
area of public procurement, act only upon  specific requests and conduct no general 
monitoring of the procedures for lack of appropriate powers and financial resources. 
The capacities of the law enforcement bodies to  investigate corruption cases are limited. At 
the same time, courts are bound by highly co mplex procedural rules imposing strict 
conditions on the prosecution service. This resu lts in a low rate of c onvictions in corruption 
cases. 
Overall, corruption continues to be widespre ad and to pose a serious  problem in Serbia. 
Despite greater public awarene ss of the issue and newly adop ted legislation, major problems 
remain. These include the lack of sufficiently independent and efficien t oversight bodies in 
core areas such as party financ ing, conflict of interest, public procurement and privatisation. 
These problems will have to be addressed in the context of implementation of the newly 
adopted legislation. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law As regards  ratification of human rights instruments Serbia has ratified all major human 
rights instruments.  
EN 14   EN Serbia has largely met its obligations to re port to UN bodies. Serbia submitted the second 
periodic report on implementation of the C ouncil of Europe Framework Convention for the 
Protection of National Minorities in March 2008. However, the revised European Social 
Charter has not been ratified.  
The European Court of Human Rights (ECtHR) delivered 13 judgments during the 
reporting period finding that Serb ia had violated the European  Convention for the Protection 
of Human Rights and Fundament al Freedoms (ECHR). The largest number refers to 
violations of the right to fair trial. A total of 1,131 new appli cations to the ECtHR were made 
during the reporting period and 14 judgements were delivered. There are approximately 1,800 
pending cases against Serbia. 
As regards  promotion and enforcement of human rights the Judicial Training Centre has 
provided training on implementatio n of the ECHR. However, in practice, the Serbian courts 
still show reluctance to directly implement ratified international treaties that guarantee 
protection of human rights. Lawyers rarely in voke these standards. Constitutional appeals 
against human rights violations are legally possible. However, there have been no judgments 
since the Constitutional Court was established in 2007. 
The Serbian authorities finally implemen ted the 2005 decision of the UN Human Rights 
Committee concerning violation of freedom of e xpression in the case against a journalist 
sentenced for slander. 
Following the formation of the new government in July 2008, the former government human 
rights agency was replaced by a Minist ry for Human and Minority Rights.  
Overall, the legal and institutional framework for the observance of human rights is in place. 
However there has been insufficient progres s on implementing intern ational human rights 
law. Institutional structures for the implementa tion of human and minority rights have to be 
further reinforced. 
Civil and political rights  
With regard to prevention of torture and ill-trea tment and the fight against impunity,  
judicial control over respect for human rights in prisons has improved. Final judgments are 
made by the Supreme Court in the administrative disputes procedure. However, there has 
been no progress on investigating alleged serious vi olations of human right s relating to prison 
riots in 2006. Legal grounds for police interventi on and cooperation with prison authorities at 
the time have not been clarified. 
In a number of cases, alleged use of excessive fo rce by police in pre-tr ial proceedings has not 
been fully investigated. There are frequent a llegations of ill-treatment of suspects by police 
during questioning. The Serbian authorities shoul d ensure that thorough investigations are 
conducted into all allegations of  torture and ill-treatment.  
The latest monitoring exerci se by the Council of Europe Committee for the Prevention of 
Torture took place in November 2007. However,  the resultant recommendations were not 
made public by the Serbian authorities. 
As regards the fight against impunity, the capacity of the Serbian war crime prosecution 
service needs to be further strengthened. There ar e still obstacles to the transfer of cases and 
EN 15   EN extradition of suspects in case s of war crimes and crimes ag ainst humanity between Bosnia 
and Herzegovina, Croatia, Montenegro and Serbia.  
As regards access to justice,  Serbia has not yet put in place a comprehensive legal system for 
free aid. The right to mandatory defence in most  serious criminal cases is enshrined in the 
new Criminal Procedure Code but  there are still no specific pr ovisions on mandatory defence 
in cases of pre-trial detention. 
Reforms of the prison system continued, with the reconstruc tion of three of the largest 
prisons in Serbia. Training also continued, with efforts to include  broader categories of staff, 
such as court guards. Action was taken to ad dress the serious problem of drug abuse which 
affects almost half of the prison population. A new model for prisoners serving juvenile 
sentences, based on modern standards, is be ing implemented. In addition, community based 
alternative services such as day care centres should be deve loped to enable alternative 
sentencing for children. 
The prison administration is acting on complaints  by prisoners in a more professional manner. 
The department for the protection of prisoners' right s in the Ministry of Justice has also put in 
place a more effective system to deal with complaints from prisoners. 
A system of alternative sanctions, applicable to all conditional sentences and accounting for 
over 50% of all judgments, is at an early  stage of implementation and lacks proper 
monitoring. At present, 4 800 pr isoners are serving te rms of up to one year. A sharp increase 
in the number of prisoners (from 8 900 in December 2007 to 9 500 in May 2008) has put 
serious strains on the capacity of prison infras tructure. This remains the biggest challenge 
facing the prison service. Some 6 500 offender s are still in detention and awaiting final 
sentencing and transfer to prison to serve thei r sentences. The latest statistics on criminal 
offences indicate an increase in serious crim e, repeat offences and juvenile offenders. 
Prison security has improved slig htly and the level of violen ce has decreased. However, 
overcrowding, violence among prisoners and drug abuse remain serious problems in prisons 
in Serbia. 
The Constitution contains guarantees for freedom of expression  which are generally 
protected. However the conditions  for freedom of expression  in Serbia were affected during 
the period immediately following the Kosovo d eclaration of independence. There were 
numerous reports of incidents involving offensive language, hate  speech and viol ence against 
organisations and individuals, ma inly journalists and human ri ghts defenders. In March 2008, 
a number of media outlets and journalists' associa tions addressed a series  of concerns to the 
Serbian authorities. They compla ined, in particular, of repeated  verbal and physical abuse and 
of being accused of unpatriotic reporting. The law enforcement authorities arrested the 
suspected perpetrator of a violent attack on a journalist in July 2008. Authorities also took 
actions against extremist groups in October 2008. 
There were also cases of threats to journalist s from local officials and businessmen where, in 
some instances, recorded material was confiscated  from journalists in an attempt to prevent 
them from providing reporting on a range of issues. There was no progress in the 
investigations on murders of jour nalists dating back to the 1990s  and of an attempted murder 
of a journalist in April 2007. 
The law on media  concentration and new legislation on advertising have not yet been 
adopted. Legislation on local self-govern ment, adopted in December 2007, contains 
EN 16   EN provisions in contradiction with the laws on  broadcasting and public information and is 
undermining the privatisation of municipally ow ned media. Allocation of regional frequencies 
has been completed, but the process lacked transp arency in a number of cases. Distribution of 
municipal frequencies has not been completed. Th ere were breaches of the legislation on the 
protection of privacy and profe ssional standards and ethics by some sections of the media, 
notably in cases of sensationalist reporting. 
The Constitution guarantees freedom of assembly and these rights are generally protected. A 
number of  peaceful rallies and demonstrations took place following the Kosovo declaration of 
independence. However, there we re violent incidents when fore ign diplomatic missions were 
targeted and attacked by dem onstrators in Belgrade in Fe bruary 2008. These acts were 
condoned in some political quarter s and sections of the media,  while the immediate response 
from the law enforcement authorities was inadequate. 
There were reports of attacks against orga nisations and individua ls defending civil and 
political rights, fighting against impunity a nd defending the right to different sexual 
orientation. Some efforts were  made by the law enforcement authorities to follow up such 
incidents, however, in most instances the pe rpetrators have not b een brought to trial. 
The Constitution guarantees freedom of association , including political and trade union 
associations. Restrictions to th is right, including grounds and procedures for a possible ban on 
associations, assign a primary decision-making role to the Constitutional Court. Constitutional grounds for prohibition include violent breach es of constitutional order, violation of 
guaranteed human and minority rights and inciteme nt to racial, national or religious hatred. 
Under the new Law on ministries adopted in Ju ly 2008, registration of political and citizens' 
associations remains under the authority of the Ministry for Public Administration and Local Government, which set up a department for this purpose in 2007. Trade unions are under the 
authority of the Ministry of Labour and So cial Policy. Registration of minority national 
councils falls under the new Ministry  for Human and Minority Rights. 
Laws implementing the new Constitution in this  area have, however, not yet been adopted. 
New legislation on associations and on political  organisations has yet to be adopted. The 
existing legislation imposes restrictions which go beyond the constitutional provisions. 
Civil society organisations continue to play a major role in social, economic and political life 
in Serbia. However, longstanding legislative defici encies have not been adequately addressed. 
These concern the legal status of NGOs and their financing, includ ing restrictive and 
unfavourable fiscal conditions applied on an ad hoc and arbitrary basis. A number of NGOs, 
in particular human rights defenders, were subj ected to threats and verbal abuse for holding 
diverging views on issues such as  the situation in Kosovo. Such incidents have not been fully 
investigated.  
Freedom of religion is guaranteed by the Constitution and law in Serbia. However there are 
shortcomings resulting from the implementatio n of legislation from 2006 on churches and 
religious organisations. These concern registra tion of so-called "non-traditional" religious 
communities. There have been repeated reports  of arbitrary decisions in connection with 
registration of "non-traditional" religious commun ities, affecting their legal status and rights. 
There were several religiously motivated incide nts, including attacks, hate speech, vandalism 
and offensive graffiti against a number of reli gious communities. These incidents were not 
followed up sufficiently by the law enforcement au thorities, and inves tigations have been 
inconclusive. 
EN 17   EN Overall, civil and political in Serbia are ge nerally respected. However, these rights were 
affected by the political developm ents that led to early elections and by the unstable political 
climate prevailing during the reporting period. Le gislation needs to be further adjusted to 
European standards. Existing constitutional and le gal guarantees need to be fully enforced and 
violations properly investigated. 
Economic and social rights 
There are several legal a nd constitutional provisions  in place guaranteeing women's rights in 
Serbia. However, a specific law on gender equa lity and the national strategy for improvement 
of women's position and enhancement of gender  equality have not yet been adopted. The 
Directorate for Gender Equality in the Minist ry for Labour and Social Affairs was active 
during the reporting period in furthering women' s rights. Following the May 2008 legislative 
elections there are 53 women me mbers in the 250-seat parliament  and five women in the 27-
member government. However, violation of women's rights is frequent and often goes 
unreported. Domestic violence continues to be  a serious problem. Criminal penalties are 
insufficient. The State ombudsman and the prov incial ombudsman in Vojvodina highlighted 
continuing discrimination against women on the labour market. Women remain under-
represented in managerial positions. Discrimina tion particularly affects Roma women, women 
from national minorities and women with disabilities.  
The State ombudsman has been active in the area of children's rights  and has followed up a 
number of complaints. A reform of the child welfare system is in progress, with the aim of replacing several residential in stitutions with specialist fost ering. The number of children 
without parental care placed in institutions has decrease d from around 2,200 in 2005 to 1,700 
in 2007. Approximately one third of children wit hout parental care are placed in residential 
institutions while the other two thirds are placed in foster families. In May 2008 the 
government adopted a national youth strategy which was the result of an extensive and 
transparent consultation process. 
However, the conditions for many children in Se rbia remain poor. Children from socially 
vulnerable groups, in particular from minority  groups such as Roma, and children with 
disabilities, continue to suffer from widespr ead discrimination and exclusion from health, 
education and social welfare services. There ar e serious levels of violence against children, 
with only a limited number of cases reported and prosecuted. There is insufficient reliable 
data on child trafficking, child labour a nd on sexual exploitation of adolescents.  
In the case of socially vulnerable persons and/ or persons with disabilities , Serbia signed 
the Convention on Rights of Persons with Disabi lities and the Optional Protocol in December 
2007. This Convention has still to be ratified. The government also adopted a strategy on 
improving the situation of disabled persons in Se rbia in December 2007. This strategy defines 
a package of activities for the period 2007- 2015, including adoption of the two-year 
operational action plans. In October 2007, the go vernment established a Council for Disabled 
Persons, a 20-member advisory body with the task  of coordinating activities in this sector. 
However, the strategy for improving the conditions of persons with disabilities contains no 
plan or proposals to improve the conditions  for people placed in long-term residential 
institutions. The law on prof essional rehabilitation and employment of persons with 
disabilities has not yet been adopted. 
Serbia's preparations in the field of mental health are at an early stage. The government 
adopted a report in November 2007 on reside ntial institutions for mentally handicapped 
EN 18   EN children, adults and elderly. The report ackno wledged that there had been insufficient 
investment in several mental health institut ions. It also highlight ed the unsatisfactory 
implementation of the Law on the family, which requires that children  be protected in a 
family environment whenever possible. The government has started to implement some 
measures to improve the existing institutions and to facilitate de-institutionalisation. They include a ban on use of premises  which do not comply with mini mum standards, transfers of 
young children to foster families, development of community-based services and training for 
staff. Moreover, further anti-stigma campaigns  and educational activities were organised. 
However, amendments to the Law on social protection, which would better regulate the 
mental health sector, have not yet been adopt ed. Some institutions are still overcrowded. The 
de-institutionalisation pr ocess is not adequately develope d. There is insufficient support for 
foster families and much remains to be done  to develop community-based services. Inter-
ministerial cooperation needs to be strengthened. Local  services and the inspectorate of the 
Ministry of Labour, Employment and Social Po licy do not have sufficient qualified human 
resources.  
As regards labour rights and trade unions , in April 2008 a new general collective 
agreement was signed by the two representative  trade unions and employers' associations. 
This is a big step forward towards promoti ng social dialogue, as the previous general 
collective agreement had expired in Septem ber 2005. The agreement contains provisions on 
various rights of employees, such as remunera tion, fringe benefits, safety at work, absence 
and the right to establish trade unions. However,  social dialogue is still weak. The role and 
capacity of the Socio-Economic Council still need  to be fully devel oped. Councils at local 
level have been established in only a limited number of  municipalities. 
The constitution prohibits  direct and indirect discrimination on any grounds. A 
comprehensive anti-discrimination law has not ye t been adopted. In prac tice, there is still 
widespread discrimination, primarily against na tional minorities, Roma or women as well as 
lesbian, gay, bisexual and transgender (LGB T) people. The Stat e ombudsman’s 2007 annual 
report found that a number of people were exposed to hate speech and discrimination on the grounds of their sexual orientation and gender iden tity and that the authorities had failed to 
provide adequate protection against such treatment. 
With regard to property rights , legislation on restitution has not yet been adopted. This 
prevents proper launching of the restitution process. In the meantime, privatisation of some of the properties in question has continued. However,  this has been contested by the association 
of former owners which is concerned that this will de facto  prejudge future decisions on the 
return of property. 
Overall, the legal provisi ons for the protection of economic and social rights  are largely in 
place in Serbia. The legal framework however  needs to be developed and practical 
enforcement of the existing legislation improve d. Further efforts are needed to improve the 
social inclusion of children, persons with disa bilities and vulnerable groups, in particular 
access to health, including mental health, and a proper education.  
Minority rights, cultural right s and protection of minorities 
The European Commission against Racism and In tolerance of the Council of Europe issued 
its first report on Serbia in April 2008. It noted that various measures to combat racism and 
intolerance towards minorities  had been taken, but that a number of steps were still pending. 
EN 19   EN Affirmative action was applied in the 2008 legi slative, provincial an d municipal elections 
exempting minority parties from a threshold to enter parliament. New legislation extends the 
requirement for local administrations to use offi cial seals in minority languages, where those 
languages are in use. The budgetary allocation fo r minority national councils was increased in 
2008. The new Law on local self-government introdu ced more detailed provisions concerning 
the obligations of muni cipalities with an ethnically mixed population to establ ish inter-ethnic 
councils. 
However, the legislation on minority natio nal councils has not yet been adopted. The 
Republican Council for Minorities has not met. B ilateral agreements on protection of national 
minorities with Hungary, Croatia, Romania and the former Yugoslav Republic of Macedonia are not being fully implemented. The joint commissions required by the agreements have 
either not been established or are not fully operational. In April 2008, the Constitutional Court overruled an earlier decision by the central election commission reducing the number of 
signatures required by law for the submission of el ectoral lists for minorities from 10 000 to 
3 000. Coming just before the elections, the court ruling, while in line with existing 
legislation, raised concerns about the effects of  such a high threshold on the position of small 
ethnic groups. The 2007 annual report by th e State ombudsman found co nsiderable regional 
discrepancies, notably regarding the capacity of the administration to ensure respect of 
minority rights. One particular cause for con cern was the situation of Roma and Bosniak 
minorities. There is a disproportionately high level of unemployment among minorities.  
The political climate deteriorated in the pe riod immediately following the Kosovo declaration 
of independence, resulting in a nu mber of incidents in towns in Vojvodina,  in particular 
against the Albanian national minority. Inci dents involving extremist groups were also 
reported. The State and provincial ombudsmen conde mned the events and urged the relevant 
institutions to act. The 2007 annual report by the provincial ombudsman noted that 25 out of 
the 605 complaints were in conne ction with mino rity rights. 
The situation in Southern Serbia  has remained stable but tens e. The decision by the Serbian 
government to refuse to recognise diplomas fr om educational establishments in Kosovo has 
been criticised by the Albanian  community in Southern Serbia . The Albanian community 
expressed concern at the impact of this deci sion on the employment prospects of holders of 
Kosovo diplomas in Southern Serbia. Ethnic  Albanian parties re mained divided over 
participation in the general legi slative elections. In the end a co alition of Albanian parties took 
part and one Albanian member of parliame nt was elected. The regional office of the 
Coordinating Body for Southern Serbia wa s strengthened, increasing representation of 
persons of Albanian origin. This body was inst rumental in enhanci ng communication between 
the municipal authorities and central govern ment. The government allocated €3.8 million to 
co-finance infrastructure pr ojects in 2008. However, the Al banian minority continued to 
express concern at under-representation in public ad ministration and the lack  of political will 
by the central government activ ely to develop the region. 
The situation in Sandžak has continued to deteriorate. Divisions within the Muslim 
community have deepened and there have been  several outbreaks of violence. Municipal 
structures lack the capacity fully  to enforce minority rights in
 Sandžak. 
The number of refugees  from Croatia and Bosnia and Herzegovina has decreased in recent 
years, mainly due to natura lisation. According to the UN HCR, there are around 97 000 
refugees  and 206 000 internally displaced persons (IDPs)  in Serbia. The number of centres 
has been reduced. However, some 2 100 refug ees and 5 500 IDPs are still accommodated in 
EN 20   EN 60 centres and 99 specialised institutions. The conditions in those centres are very poor. The 
amendments to the Law on refugees and a nationa l strategy on refugees and IDPs have not yet 
been adopted. IDP groups, in particular th e Roma, continue to face serious difficulties 
obtaining identification papers and thus access to basic social services, including health care.  
In January 2008, the Re-admission Agreement betw een Serbia and the EU entered into force. 
The agency for human and minority rights published a handbook for returnees. However, the national strategy on returnees and re-int egration has not yet been adopted.  
In June 2008, Serbia took over the annual presidency of the 2005-2015 Decade of Roma  
Inclusion. The key priorities of  the Serbian chairmanship are housing and anti-discrimination 
measures in the field of education. In Marc h 2008, the Council for Implementation of the 
Roma Decade was established under the chairm anship of the Deputy Prime Minister and 
involving representatives of civil society. However, it has met only once. Roma health 
mediators have been employed in 15 primary he althcare centres. Funds have been earmarked 
in the national budget for the work of coordina tors for Roma issues in 40 municipal social 
work centres by 2008. Awareness-raising activiti es in cooperation with  the international 
partners have continued. Media training on Ro ma issues was organised for government press 
officers and journalists. There have been some  improvements in the number of Roma children 
attending secondary schools due to the affirma tive measures taken by Ministry of Education 
and the Ministry of Human and Minority Ri ghts. However the, generally, low school 
attendance by Roma children remains a serious  problem, in particular among Roma girls. 
In practice the Roma populati on continues to face extremel y difficult living conditions, 
exclusion and discrimination. One of the ma jor persistent problems facing the Roma 
community is access to personal documents. This has had grave consequences for the ability of large sections of the Roma  population to gain access to basi c social and economic rights. A 
significant proportion of the Ro ma population still lives in extreme poverty and illegal 
settlements. The Roma population, especia lly women, are subject  to widespread 
discrimination when it comes to access to the labour market. There are a disproportionately 
high number of Roma children in  special schools for children with learning difficulties. A 
climate of intolerance towa rds the Roma population conti nues to prevail in Serbia. 
Overall, the framework for the pr otection of minority rights in Se rbia is in place and minority 
rights are broadly respected. Ho wever there were some negative developments during the 
reporting period due, in large pa rt, to the unstable political climate following the declaration 
of independence of Kosovo. On the legal front,  legislation on national councils needs to be 
adopted and the electoral framework revised in  order to fully ensure affirmative action. 
Insufficient attention has been paid to reso lving the status of refugees and IDPs. The 
conditions of the Roma populat ion remain very difficult.  
2.3. Regional issues and international obligations 
There are no major outstanding issues in co nnection with Serbia's compliance with the 
Dayton/Paris peace agreement.  
Serbia continues to be covered by the monitoring  procedure of the Parliamentary Assembly of 
the Council of Europe  on fulfilment of obligations and commitments arising from its 
membership of the Council of Europe. 
Serbia has made significant progre ss on improving cooper ation with the  International 
Criminal Tribunal for the former Yugoslavia (ICTY). Full cooperation with the ICTY is 
EN 21   EN an international obligatio n and one of the key priorities of the European Partne rship. In June 
2008 Stojan Župljanin was arrested near Belgra de and transferred to The Hague. In July 2008, 
following the formation of a new government and staff changes in the intelligence services, 
ICTY fugitive Radovan Karadži ć was arrested in Belgrade and also transferred to The Hague. 
Serbia needs to build on these achievements and do all in its powers to a rrest and transfer of 
the two remaining fugitives, Ratko Mladi ć and Goran Hadzi ć. 
The status of the former State Union law on th e freezing of assets of ICTY fugitives has not 
been clarified. Assets are being frozen, but th e procedures are highly complex and the current 
legal framework leaves potential loopholes and shortcomings in enforcement. Amendments to 
the current legislation included special investigative measures  against support networks for 
war crime fugitives and a more efficient system for investigating and processing cases. 
To date, the War Crimes Chamber of the Belgra de District Court has tried 123 individuals 
suspected of involvement in war crimes on th e territory of the former Yugoslavia. The 
prosecution service has conducted proceedings ag ainst 111 persons, since it was established in 
2003 and has filed indictments against 57 pe rsons, representing over 2,000 victims of war 
crimes. 
Several cases were opened a nd judgments handed down in the different instances during the 
reporting period. Good regional cooperation c ontinued, allowing direct exchanges of 
evidence, documents and data relevant to inve stigations of war crimes cases. A memorandum 
of understanding was signed in October 2007 between the Serbian special prosecutors and the supreme State prosecutor of Montenegro. 
However, the work of specialised institutions is affected by the limited capacity to investigate 
and process a higher number of cases. There were continuing th reats against the war crimes 
prosecutor and the president of the war crimes chamber.  
Serbia's policy regarding the International Criminal Court  (ICC)  is aligned with the EU 
guiding principles and the EU common positions on the integrity of the Rome Statute. Serbia 
has concluded no bilateral agreements granting exceptions from ICC jurisdiction. 
Serbia opposed reconfiguration of the international civilian presence in Kosovo , including 
EULEX deployment, unless authorised by the UN Security Council. Serbia organised 
municipal elections in Kosovo in May 2008 in  spite of UNMIK opposition and strengthened 
its parallel institutions in Kosovo including the establis hment of an assembly of 
municipalities. In July 2008, the Serbian government adopted a conclusion endorsing the establishment of the assembly of municipalitie s as necessary to safe guard the interests of 
Serbs in Kosovo 
The Serbian government has used legal, diplomatic and peaceful means to contest the 
declaration of independence by the Kosovo assembly. In January  2008, the government 
adopted action plans providing measures in response to the expected declaration of 
independence. In February 2008, the Serbia n government adopted a decision, which was 
subsequently endorsed by parliament, on the annu lment of the declaration of independence.  
The Serbian authorities issued protest notes  to and recalled serving ambassadors from 
countries that recognised Kosovo's declarat ion of independence, including EU Member 
States. Following a decision by the new Se rbian government in July 2008, Serbian 
ambassadors who had been withdrawn from EU Memb er States subsequently returned to their 
EN 22   EN posts. Ambassadors from Montenegro and the former Yugoslav Repub lic of Macedonia to 
Serbia were in October 2008 declared persona non grata  following the recognition of Kosovo 
by Montenegro and the former Yugoslav Republic of Macedonia.  
In August 2008 Serbia submitted a draft resolution to the UN Ge neral Assembly, seeking an 
advisory opinion from the Interna tional Court of Justice on the le gality of the declaration of 
independence of Kosovo. In October 2008 the UN General Assembly voted, on the basis of 
the Serbian resolution, in favour of asking the International Cour t of Justice (ICJ) for a non-
binding advisory opinion. 
There have been no significant developmen ts regarding the implementation of the Sarajevo 
Declaration  which aimed at completing th e refugee return process.  
Regional cooperation  and good neighbourly relations form an essential part of the process of 
Serbia's moving towards the European Union. 
Serbia actively participated in regional initiati ves, including the transi tion from the Stability 
Pact to a more regionally owned framework with the South East European Cooperation 
Process (SEECP) and the Regiona l Cooperation Council (RCC). Se rbia has also contributed 
to ensuring effective implementation of th e Central European Free Trade Agreement 
(CEFTA). Serbia also actively participated  in the Energy Community Treaty. Serbia's 
participation in regional coopera tion has been affected by its a pproach towards participation 
of Kosovo in the regional  initiatives and other fora. It is important that Serbia demonstrates a 
constructive attitude towards Kosovo's participation in regional initiatives. 
Relations with enlargement countries and neighbouring EU Member States  have been 
intense, with frequent bila teral contacts and visits. 
Economic agreements continue to be  implemented between Serbia and Albania . However 
relations between the two countries have be en affected by Albania's recognition of the 
independence of Kosovo.  
Relations with Bosnia and Herzegovina  remain stable. By arresting an ICTY fugitive 
Radovan Karadži ć in July 2008, Serbia took an important  step towards complying with the 
February 2007 ruling of the Inte rnational Court of Justice c oncerning application of the 
Convention on the Prevention and Punishment of  the Crime of Genocide. In January 2008, the 
Serbian parliament and the parliament of Republ ika Srpska signed a Prot ocol on Cooperation. 
A number of Serbian politicians considered de cisions of the High Representative in Bosnia 
and Herzegovina concerning changes in the deci sion-making procedures in the Bosnia and 
Herzegovina Council of Minist ers and in the Parliamentary Assembly, a violation of the 
Dayton Agreement. This led to exchange of sharp statements between the Belgrade and 
Sarajevo authorities. A border agreement with  Bosnia and Herzegovina has not yet been 
signed. 
Relations with Croatia  are stable but have been affected  by Croatia's deci sion to recognise 
Kosovo. The provisional visa-free regime remains in force. There has been some progress in 
cooperation on missing persons and on war crimes  prosecutions. There has been no progress 
in delimiting the border. Other open matters include property related issues, in particular claims for compensation for lost occupancy and tenancy rights, refugee return, and Croatia’s 
genocide lawsuit before the Inte rnational Court of Justice, on  which hearings began in May 
2008. 
EN 23   EN Serbia's relations with the former Yugoslav Republic of Macedonia with were stable 
throughout much of the reporting period. Howeve r relations were adversely affected by  the 
decision of the former Yugoslav Republic of  Macedonia to recognise Kosovo's independence 
in October 2008 . Serbia has also protested against borde r demarcation activities by the former 
Yugoslav Republic of Macedonia which involved the Kosovo authorities. Unresolved issues 
concerning relations between the Orthodox C hurch in the two countries persist. 
Relations with Montenegro  advanced smoothly during much of  the reporting period, but were 
adversely affected by the decision of Mont enegro in October 2008 to recognise the 
independence of Kosovo. There has been prog ress on a number of b ilateral issues. An 
agreement on defence cooperation was signed in November 2007. An Agreement with Montenegro on social security en tered into force in January 2 008. On the basis of a bilateral 
agreement, Serbia continues to represent cer tain Montenegrin intere sts abroad, including 
issuing of visas. The issues regarding dual citizenship for members of the Serb community in Montenegro remained unresolved. Tensions  between the two or thodox churches have 
continued.  
Relations with Turkey  are generally good. There is a high le vel of support fo r intensifying 
bilateral cooperation. However, political relations were affected by Turkey's recognition of 
Kosovo independence. Serbia is currently nego tiating a free trade agreement with Turkey. 
Serbia continues to maintain good relations with Romania.  Relations with Bulgaria and 
Hungary  were affected after both of these countri es recognised the independence of Kosovo.  
Overall, Serbia has been active in regional coop eration initiatives. Howe ver, regional issues 
have been affected by Kosovo-related developm ents. Serbia has made  significant progress 
towards fully coopera ting with the ICTY. 
3. E
CONOMIC CRITERIA  
In examining the economic developments in Serbia, the Commission's approach was guided 
by the conclusions of the Eur opean Council in Copenhagen in June 1993, which stated that 
membership of the Union requires the existe nce of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials In December 2007, the government submitted to the European Commission an Economic and 
Fiscal Programme (EFP), covering the year s 2007-2010. It builds on the budget memorandum 
of April and the October 2007 update thereof and presents a generally coherent and ambitious 
macroeconomic and fiscal framework together with an ambitious agenda for structural 
reforms. The 2009 budget memorandum was adopted in May 2008 and was followed by an update on 2 October 2008. In early October, th e government approached the International 
Monetary Fund (IMF) on starting negotiating a new Stand-by Agreement, in an attempt to 
establish an external policy anchor. 
The government has cited the need for greater ownership 
of, and autonomy for, economic policy planning  and implementation. Overall, consensus on 
the fundamentals of a market economy has been maintained.  
EN 24   EN Macroeconomic stability 
In 2007, GDP growth accelerated to 7.5%, from 5.7% in 2006. Following a strong 
performance in the first half  of 2007, the Serbian economy slowed down somewhat during the 
second half of the year . Higher private consump tion as a consequence of  strongly rising real 
salaries slowed in the course of the year. Furthermore, the severe drought resulted in a 
significant drop in agricultural production. Indu strial output slowed to about 2.5% year-on-
year during the second half of the year, partly  due to an overhaul of the US Steel plant. 
During the second quarter of 2008, GDP growth slowed to 6.2% year-on-year, from 8.2% 
year-on-year during the first quarter. For the whole first half of 2008, GDP growth reached 
7.3% year-on-year. Growth of i ndustrial production accelerated to 6.0% year-on-year during 
the first quarter of 2008 compar ed with 0.7% during the fourth  quarter of 2007, driven by the 
resumption of production at US Steel. However i ndustrial output slowed to 2.3% year-on-year 
during the second quarter of 2008. Average per capita income incr eased to 35% of the EU-27 
average in purchasing power standards, from 33 % a year earlier. Overall, economic growth 
continued to be driven by the services sector, in  particular wholesale and retail trade, transport 
and telecommunications, along with  financial intermediation.  
In 2007, the current account deficit widene d to 12.4% of GDP compared with 9.4%4 a year 
earlier, driven by a growing deficit in the trad e balance and a decline in current transfers. 
Strong domestic demand fuelled by a significant  relaxation of fiscal  and wage policies, 
coupled with a drought-related export ban on some agricultural products and a drop in steel 
output, contributed to a deterior ation in external a ccounts. On the fina ncing side, capital 
inflows remained strong, but slowed during 2007 to 21% of GDP, from 30% in 2006. Foreign 
direct investment fell to 5.1% of  GDP from 13.8% a year earlier when the sale of the second 
mobile telephone operator yielde d substantial revenue. By cont rast, financing by medium- and 
long-term foreign borrowing grew to 10% of GDP, from 9% in  2006. During the first half of 
2008, the current account deficit widened to close to 20% of GDP and FDI rebounded below 
9% of GDP. At the end of 2007, the stock of fo reign exchange reserves  of the National Bank 
of Serbia (NBS) stood at EUR 9.6 billion or  8.3 months worth of imports of goods and 
services. As a result of the grow ing debt financing of the external  deficit, forei gn debt rose to 
about EUR 18.9 billion at the e nd of 2007, equivalent to 65% of  GDP, compared with 63% a 
year earlier. Private- and public-sector fo reign debt stood at 43% and 22% of GDP 
respectively. Debt servic e has increased to 8.5% of GDP and is projected to continue rising 
significantly in years ahead. Overall, external  imbalances have widened, the quality of 
financing has deteriorated, foreign indebt edness has grown and the degree of macro-
vulnerability of the economy has increased.  
By October 2008, the international financial crisis has had only a limited direct impact on the 
Serbian economy and its financial sector. Howe ver, a widening curren t account deficit and a 
growing level of external debt create important  external financing n eeds requiring significant 
capital inflows. To that ex tent, the external imbalan ces render the Serbian economy 
vulnerable to possible disruptions in capital flow s. The risks of a sudden stop or reversal of 
capital flows have recently grown and/ higher risk premiums and refinancing costs could put 
further pressure on the external side. In partic ular, a decline in cros s-border lending, which 
has become an important financing source fo r the domestic corporate sector, could be 
affected. . The Serbian authori ties have recently increased th e amount of guaranteed deposits, 
                                                 
4 This is revised downwards from 17.7% of GDP in 2007 and 13.8% in 2006, following a change of 
method by the National Bank of Serbia in early 2008. 
EN 25   EN lifted reserve requirement for banks' foreign borrowings and e liminated the tax on savings 
income. In 2007, labour market conditions improve d slightly. The employment rate rose to 
51.5% of the working-age population in Octobe r 2007, while the unemployment rate fell to 
18.8% compared with 21.6% a year earlier.  However, the transfer of about 90,000 
unemployed persons from the employment register to the health insurance register, following 
an amendment to the legislation, contributed to this apparent improvement in the labour 
market statistics. Nominal wages grew by 22.1%  year-on-year on average in 2007, compared 
with 24.4% a year earlier. Due to a decline in inflati on during the first half of 2007, real wage 
growth accelerated to about 20% year-on-year - substantially stronger than in 2006. However, 
a renewed rise in inflation starting in the second  half of 2007 resulted in a slowing of real 
wage growth. This trend continued in 2008. During the first half of 2008, nominal wage 
growth slowed to 19% year-on-years and, due to a higher inflation rate, real wages slowed to 
7.8% year-on-year. Overall, despite high economic growth rates in recent years 
unemployment is still a major challenge.  
The new monetary policy framework, introduc ed in September 2006, aims at a gradual 
transition towards inflation targeting with explicit  targets for annual core inflation rates. Core 
inflation declined slightly to 5.5% year-o n-year in December 2007, compared with 5.9% a 
year earlier. For the whole of 2007 core inflation remained w ithin the 4-8% target range, 
despite re-emerging inflationary pressure s stemming from rising aggregate demand, the 
drought-related increase in food pr ices and rising prices for cr ude oil and derivatives on world 
markets. However, core inflation re-accelera ted during the second half of 2007 and in the 
course of 2008, reaching 10.3% year-on-year in July  against a core inflation target range of 3-
6% for the whole of 2008. By comp arison, the headline rate  of retail price inflation, followed 
more closely by the public, slowed to an a nnual average of 6.8% in 2007, compared with 
12.7% a year earlier. Retail pr ice inflation bottomed out at 4.5% year-on-year in May 2007 
and then began to rise, ending on 10.1% yea r-on-year in December 2007. This upward trend 
continued in 2008 and retail price inflation reached 10.5% year-on-year in August 2008. To 
stem the rising inflationary pressures but also  to help support the local currency, which had 
come under pressure on the foreign exchange market in early 2008 due to growing political 
uncertainty, the NBS increased the repo rate by 625 base points to 15.75% between December 
2007 and May 2008. However, the expansion of m onetary aggregates remained strong during 
2007. The annual M3 growth rate , covering currency in circul ation plus demand, time and 
savings deposits, accelerated during the second half of 2007, reaching 43% year-on-year in 
December. This trend reversed in 2008 when M3 growth slowed to 34% year-on-year in June. 
Credit growth also decelerated during the same period and stood at 32% year-on-year in June 
2008, partially due to higher interest rates, also  affected by global financial crises. Overall, 
while the new monetary policy framework of  inflation targeting managed to tackle 
inflationary pressures, the real test of whethe r the set target can be achieved will come in 
2008, as inflationary pressures have resurfa ced and are contributi ng to a less stable 
environment for economic operators. 
As far as foreign exchange rate policy is concerned, the NBS tightened administrative 
measures aimed at discouraging use of the eu ro within the economy and, at the same time, 
making the dinar more attractive. The NBS has, in principle, limited its intervention in the 
inter-bank foreign exchange market to situatio ns of excessive daily fluctuations. However, 
during the second half of 2007 the NBS was prom pted to intervene in  support of the dinar 
which repeatedly came under depreciation pressu re. This continued in early 2008 and the 
NBS sold EUR 393 million to support the dinar duri ng the first four and a half months of the 
year. Following the formation of a pro-Euro pean government, the Serbian dinar (RSD) 
significantly regained strength. The EUR/RSD exchange rate fl uctuated between RSD 75 and 
EN 26   EN RSD 85 in 2007 and 2008. Overall, the volatility of the exchange rate increased, mainly 
because of political developments. 
Fiscal policy remained expansionary in 2007 and 2008 ahead of presidential and 
parliamentary elections. Following the inflow of substantial privatisatio n proceeds in 2006, an 
increase in expenditure was achieved without  significant new borrowing. According to the 
Government Finance Statistics (GFS) standard  of accounting, the general government balance 
declined to 1.9% of GDP in 2007, from 1.5% of  GDP a year earlier.  Total expenditure 
remained high at 44% of GDP in 2007, comp ared with 43.9% a year earlier. Capital 
expenditure related to implement ation of the National Investment  Plan increased to 4.8% of 
GDP in 2007 from 3.9% in 2006. During the same  period, current expend iture declined to 
38.5% of GDP, from 39.5%, indi cating some success on the part of fiscal policy in curbing 
constant pressures for higher current spending. However, labour costs and transfers continued 
to account for more than 60% of  total public sp ending. Following the reform of the tax system 
in previous years, total revenue has stab ilised at around 42% of GDP. 2007 saw a slight 
decline of revenue to 42.1% of GDP, from 42.4% in 2006. During the same period, public 
debt declined to 29.4% of GDP, from 36.2%, while net lending remained low, increasing 
marginally to 0.6%, from 0.5%. For 2008, a revised budget, which was adopted by the government in early October, foresees a defi cit of the consolidated  government budget to 
increase to 2.7% of GDP, compared to an initially planned deficit of 1.7%. This boosts 
expenditure to 45.4% of GDP, adding additional demand pressures on an economy showing already signs of overheating and growing macro economic imbalances. Overall, fiscal policy 
remained expansionary, ahead and after several rounds of elections, contributing to weakened 
macro-economic stability. The fiscal position remains vulnerable and fiscal policy would 
benefit from strong external anchors in the face of growi ng expenditures pressures and the 
ongoing financial crisis. 
Overall, the macroeconomic policy mix was unbalan ced, with insufficient fiscal restraint. The 
growing macroeconomic imbalances and external  and financial vulnerabilities require a more 
restrictive policy response. Monetary policy would normally  be expected to deliver 
adjustments which are unlikely to be attained  with the announced fi scal policy. However, 
largely due to the high degree of euroisation, Serb ia lacks an effective monetary transmission 
mechanism. This situation, coupled with the untested record of the central bank on its 
inflation targeting policy, may actually imply th at the government will not be able to match 
fiscal policy adequately to cont aining rising external imbalan ces. The onus within the policy 
mix is therefore expected to remain on fiscal policy to address these imbalances. Overall, a 
too lax fiscal policy ahead of and after various elections has contributed  to growing external 
imbalances and to inflationary pr essures induced by domestic demand. 
Interplay of market forces 
Finalising the process of priva tisation or, when appropriate, li quidation of socially- and State-
owned enterprises is one of the key prio rities of the European Partnership.  
Privatisation of socially-owned companies co ntinued in late 2007 and early 2008, in the form 
of both tenders and auctions. About 400 socia lly-owned companies were sold in 2007 (16 
tenders, 283 auctions and over 100 companies sold through the sale of State-owned stakes on 
the capital market). This was followed by about 40 privatisations in the first two months of 
2008, but the process slowed in March. The tota l number of companies privatised since the 
process started in 2002 had risen to over 2,200 by the end of February 2008. The number of 
firms that still need to be sold has conse quently declined to about 700. The deadline for 
EN 27   EN completing this process has been extended by one year until the e nd of 2008. A commission 
for the privatisation of public utilities has been set up and th e government plans to privatise 
two State-owned companies by the end of the year.  
Four large State-owned companies (the electr icity company EPS, Tele kom, Belgrade airport 
and the pharmaceutical company Galenika) are due to  be put up for sale in the form of initial 
public offerings. Selection of a privatisation ad visor has started. The first few companies are 
expected to be sold in 2008 and the whole proc ess to be completed by 2010. A tender for sale 
of national flag carrier JAT Airways failed due to lack of interest. The oil conglomerate NIS has been sold as part of a framework agreement for supply of gas and oil with Russia. Serbia has entered with Fiat into a joint venture to restructure local car manuf acturer Zastava into a 
modern production unit of the Fiat group. The question of priva tisation of about 500 utilities 
at the level of local communities also remain s open. Their restructuring and reorganisation 
have not yet begun and the plan for their privatisation remains undefined. 
In December 2007, the law on the free distribution of shares in six State-owned companies to 
all adult citizens who did not bene fit from earlier privatisations (15% of capital) and to ex-
employees of these companies (2-5% of capital) was adopted. Under this law about 4 to 4.5 million citizens are expected  to receive free shares in these large companies. 
The share of the private sector remains at be tween 55% and 60% of total output. The private 
sector employs over 60% of the total number of  employees. However, socially-owned, and in 
particular only partly restructured and non-priv atised State-owned, comp anies still generate a 
large part of Serbia's output. Private compan ies remain relatively weak and have a major 
share in trade, but less so in production. This  prevents development of competitive domestic 
products and burdens public fina nces. Overall, while there has been some progress with the 
privatisation of socially-owned companies, this  is not the case with State-owned companies. 
As a result, a competitive and dynamic private sector has not yet been fully established. 
Market entry and exit 
As regards market entry and exit, some progress was made during the reporting period. In 
2007, around 12,100 new companies and 48,700 new entr epreneurs were registered. In the 
first three months of 2008, an additional 3,100 new enterprises and 10,100 entrepreneurs were 
registered. However, the busine ss environment has not improved s ubstantially. With regard to 
market exit, implementation of the 2005 Bankrupt cy Law has continued. About 25% of cases 
were closed within one year and another 20% within two year s. However, the number of 
pending cases was still very high on 651 at th e end of 2007. In addition, the bankruptcy unit 
of the Privatisation Agency has more than 360  socially-owned enterprises in its portfolio. 
Most of the cases have now been pending for th ree years or more and some for even more 
than a decade (mainly related to bankrupt socially-owned enterprises). The business environment has deteriorated, particularly in the areas of starting a business and construction 
permits. On the other hand, registering property has been facilitated. Overall, amid some 
progress, excessive bureaucratic requirements a nd complex legislation continue to hamper the 
business environment. 
Legal system 
As regards the legal system, no significant pr ogress can be reported. Several reform-related 
laws have been held up and implementation of the existing laws is sometimes weak. The courts and administrative bodies lack the tec hnical capacity and personnel to perform their 
EN 28   EN activities properly and promptly. This has led to  inconsistent implementation and very lengthy 
procedures, which frequently exceed the deadlin es set by law. Widespread corruption as well 
as criminal activities affect th e business climate and impact ne gatively the qua lity of public 
services. Overall, the weaknesses of the judi ciary reduce legal predictability and undermine 
trust in the legal system among economic operators , in particular in effective enforcement of 
property rights.  
Financial sector development 
Lending activity of banks incr eased by 39%. Loans increased to  35% of GDP and 53% of the 
banking sector's total balance sheet. The share of total loans granted to the enterprise and 
household sectors stood at 58% and 40% respectively. Of the la tter, 13% were used for house-
building. Deposit activity of banks grew by 44%. The largest share of deposits was accounted 
for by the household sector (46% ), followed by the enterprise se ctor (33%) and bank deposits 
(12%). Foreign currency deposits made up 67.7 % of total deposits. Short-term time deposits 
(52%) predominated, followed by demand deposits (40%). Overall, financial intermediation 
continued to grow, but from a still relatively low level. However, the high degree of euroisation of assets and liabilities, combined with potential currency mismatches, could give 
rise to substantial balance-sheet risk s for banks, households and corporations. 
The number of majority State-owned banks remain ed unchanged at eight (out of a total of 34), 
while 20 banks are now majority-owned by fo reign shareholders. Six banks were under 
majority ownership of domestic natural persons or legal entities. The five largest banks in 
terms of assets accounted for 46.5% of the tota l banking sector. In May 2008, the NBS issued 
a new licence to a non-EU bank for a green-field  investment. Overall,  while competition 
between banks is well established, privatisati on of the State-owned banks has not advanced. 
At the end of March 2008, 28.3% of the banking sector's total asse ts were classified as risky. 
The share of total credits  in default in total outstanding de bt stood at 4.4%, while the foreign 
exchange risk ratio of banks stood at 13.8%. The average capital ad equacy ratio of the 
banking system stood at 27.7% and, conseque ntly, remained well above the required 
minimum of 12% of risk-weighted assets fo r each bank. The profitab ility of the banking 
sector improved and the return on equity increased to 12.7%. Ov erall, the banking sector is 
profitable and remains generally sound. However, the high share of risky assets may indicate 
substantial financia l vulnerabilities. 
Following strong gains by both indexes at the Be lgrade Stock Exchange during the first few 
months of 2007 (up by 88%), equity markets bega n to retreat and had lo st all their early-2007 
gains by August 2008.  
At the end of May 2008, 21 insurance companie s were operating in Serbia (including four 
green-field companies that r eceived operating licences in 200 7 and early 2008). The structure 
of the insurance sector is continuing to change  with the privatisation of the socially-owned 
insurance companies and the arrival of new foreign investments. In addition, the second-
biggest insurance company (DDOR of Novi Sad)  was successfully privatised in 2007, when it 
was sold to an EU-based insurance company. As  a result, foreign ownership of the insurance 
sector has increased strongly to 62.8% of to tal premium income in 2007 compared with 
26.4% a year earlier. In the four years from 2004 to 2007, th e premium income of non-life 
insurance almost doubled. In the ca se of life insurance it nearly tripled. At the same time, the 
insurance sector's share of capita l in the total financ ial sector has increased to 6.9%. Overall, 
significant progress has been made with develo pment of the non-banking financial sector.  
EN 29   EN 3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy Deteriorating macroeconomic stability, together with greater political uncertainty, contributed 
to creating a less stable a nd less predictable climate fo r decision-making by economic 
operators. The functioning of mark et mechanisms, which is required for efficient allocation of 
resources, was hampered by distortions, heav y State involvement in production of private 
goods and lack of competition. 
Human and physical capital  
Little progress can be reported on reform of the education sy stem. The growing gap between 
demand for and supply of skilled employees is one of the main obstacles to increasing direct 
foreign investment and devel oping new branches of the econo my. However, companies are 
responding to the growing shortages by becoming more proactive in offering 
personal/professional development and training incentives to new recr uits. In addition, the 
number of human resource consultants and re cruitment firms has increased. These not only 
provide support in locating people with the ri ght skills, but also offer services like 
organisational and personnel deve lopment. Public universities continue to be overburdened 
with bureaucracy and curricula are often outda ted. A number of private universities have 
emerged. Attitudes towards lifelong learning and mobility started to change only recently. Public education expenditure accounts for a relatively small 3.7% of GDP, well below EU 
levels. Overall, the economy has increasingly been suffering from a shortage of skilled 
employees, while supply has only gradually been building up in response. 
In 2007, the investment ratio fell to 18% of  GDP from 19.7% in 2006. Foreign direct 
investment fell sharply to EUR 1.6 billion or 5.1% of GDP from EUR 3.4 billion or 13.8% a 
year earlier. The sectors benef iting most from FDI were banking and the real estate business, 
followed by processing industry and wholesale and retail trade. Funds from the National 
Investment Plan (NIP) have been used for vari ous infrastructure projects (Belgrade ring road 
and motorways in Southern Serbia), but also to  stimulate foreign investment and job creation. 
The total budget for expenditure under the NIP stands at EUR 600 million for 2008. Overall, investment activity from domestic sources has been holding up well, wh ile foreign investors 
have become more hesitant, primarily due to growing political uncertainty. 
Sectoral and enterprise structure 
Progress in selling State-owned companies was hampered by the election cycle and political 
developments. Restructuring and privatisation ha ve been slow. The shift of economic activity 
towards the services sector is  continuing, with serv ices currently acco unting for 54.7% of 
GDP. Manufacturing and construction account for 16.3% of GDP, while agri culture's share of 
GDP declined to 9.2%. About 50% of all employees  are still working in State- and socially-
owned enterprises. The informal sector rema ins large. Overall, the pace of structural 
adjustment of the economy is bei ng held back by slow reforms. 
State influence on competitiveness 
Subsidies from the consolidated State budget accounted for 1.5% of GDP in 2007, down from 
2.4% a year earlier. Relevant legislation on Stat e aid control and the ap propriate monitoring 
mechanism and authority are still missing. State- controlled monopolistic st ructures remain in 
EN 30   EN place, such as the import ban on refined petrol eum products to protect the domestic refinery 
industry from foreign competition. Overall, St ate influence on competitiveness has declined, 
but remains substantial. 
Economic integration with the EU 
Exports and imports of goods and services gr ew to 28% and 50% of GDP respectively in 
2007, compared with 27% and 47% a year earlie r. As a result, trade openness increased to 
78% of GDP in 2007 from 74% in 2006. The EU re mained Serbia's main trading partner. 
Exports and imports of goods and services to a nd from the EU increased  to 56% and 54% of 
total exports and imports resp ectively, compared with 53% a nd 49% in 2006. Serbia's other 
main trading partners were Montenegro, Bosnia and Herzegovina, Russia and China. Overall, foreign trade has continued to gr ow and trade integration with th e EU remains at a high level. 
Net foreign direct investment from EU count ries in Serbia remains unchanged at about 
EUR 2.3 billion. However, the EU's share of tota l net foreign direct investment in Serbia 
almost doubled to 116% in 2007 from 61% a year  earlier. This large swing was caused by a 
strong inflow to Serbia from Norway in 2006, co mbined with a strong outflow from Serbia to 
Bosnia and Herzegovina in 2007, both of which distorted the figures for total net foreign 
direct investment in Serbia.  
Standard indicators suggest a continuing deteri oration in export price competitiveness. Real 
wages grew by 14.1%, i.e. by more than aver age labour productivity (estimated at 8.6%), 
implying a 5.4% increase in real unit labour cost s. The nominal effective exchange rate of the 
dinar appreciated by 3.3%. In real effectiv e terms, the dinar appreciated by 10.1%, as 
consumer prices grew faster on th e domestic market than abroad.  
4. E
UROPEAN STANDARDS  
This section examines Serbia’s capacity gradua lly to approximate its legislation and policies 
to the acquis  related to the internal market, sectoral policies and justice, freedom and security, 
in line with a Stabilisation and Associat ion Agreement and the European Partnership 
priorities. It also analyses Serbia’s admini strative capacity. In each sector, Commission's 
assessment covers progress achieved during the reporting period, and summarises the 
country's overall level of preparations.  
4.1. Internal market 
This section examines Serbia’s capacity gradua lly to approximate its legislation and policies 
to the acquis  related to the internal market, sectoral policies and justice, freedom and security, 
in line with a Stabilisation and Associat ion Agreement and the European Partnership 
priorities. It also analyses Serbia’s admini strative capacity. In each sector, Commission's 
assessment covers progress achieved during the reporting period, and summarises the 
country's overall level of preparations.  
4.1.1. Free movement of goods 
There has been some progress in the area of  free movement of goods. In the field of 
standardisation , progress can be reported following the approval of the statute of the 
Standardisation Institute. The appointment of  the managing board of the Standardisation 
Institute in December 2007 has allowed for th e development of activities, including the 
EN 31   EN adoption of annual financial plans and an  annual programme. In January 2008, the 
Standardisation Institute became an affilia te member of the European Committee for 
Standardisation (CEN). The Institute has been able to significantly increase the number of 
European standards (ENs) adopted annually. By September, 2,805 European Standards had 
been adopted as Serbian standards. However,  the new law on standardisation has not been 
adopted. Serbia still needs to intensify its e fforts to repeal mandatory standards and adopt 
European standards in order to achieve fu ll membership of the European standards 
organisations. The Ministry of Economy a nd Regional Developmen t was appointed in 
December 2007 as the enquiry point for technical regulations in Serbia. At the same time, the 
Standardisation Institute of Serb ia was appointed as the enquir y point for adopted or proposed 
standards in Serbia. The Standardisation Institu te also needs to strengthen human resources 
and improve training facilities.  
Progress can be reported in the area of conformity assessment . The number of accredited 
conformity assessment bodies has increased by 61 and currently stands at the level of 325. 
However, the law on technical requirements for products and conformity assessment has still 
to be adopted and a new designation procedure for conformity assessment bodies has not yet 
been established.  
Some progress can be re ported in the area of accreditation . Institutional capacities have been 
improved through the establishmen t of the accreditation council of  the Accreditation Body of 
Serbia in March 2008. The Accreditation Body has improved its IT capacity and the 
collection of fees. However,  its human resources and training facilities are limited. 
Furthermore, the new law on accreditation has not  been adopted. There is also a need to 
develop new accreditation schemes.  
Progress can be reported in the area of metrology , mainly on the upgrading of calibration 
laboratories. Serbia has also at tained associated membership in the European Cooperation in 
Legal Metrology. However, further efforts in the area of legal metrology are still needed. The 
new law on metrology has not yet been adopted. Th e institutional setup of the Directorate of 
Measures and Precious Metals has to be clar ified and the limited administrative capacities 
upgraded. 
There has been no progress in the area of market surveillance . Preparations for the 
establishment of an appropriate market surv eillance structure in line with Community 
legislation have not yet starte d. Coordination among the market su rveillance authorities is still 
lacking.  
Serbia continued to experience de lays in the transposition of sector specific  Community 
legislation.  
Progress has been made in the area of consumer protection . The establishment of advisory 
centres for consumer protection has begun, and tr aining activities for prof essional staff within 
the area of consumer protection have started. The National Bank of Serbia has worked to 
increase awareness of financial literacy and to create consumer confidence in using financial 
services. The budget of the Minist ry of Trade and Services within the consumer protection 
area has increased substantially. Also effort s to improve public awareness have been 
intensified. However, a new law on genera l product safety has no t yet been adopted.  The 
work of the national council of consumer protection is not effi cient enough. A new law on 
consumer protection, upon which the further deve lopment of advisory centres is contingent, 
has still to be adopted. The implementation of the national consumer pr otection programme is 
EN 32   EN weak, and no annual programme has been a dopted. The administrative capacity of the 
Ministry of Trade and Services remains weak, and there are no out-of-court dispute resolution 
bodies. Public awareness-raising activities are not sufficient, and the capacity of consumer 
organisations to contribute effectively in this respect is limited, especially when the 61 consumer organisations in Se rbia are fragmented and lack ing financial resources.  
Overall, preparations in the area of free movement of goods are moderately advanced. 
However, the legal framework, such as the law on technical requirements for products and 
conformity assessment or the legal framework for metrology, needs to be further developed. 
Serbia has not yet aligned national le gislation with the product-specific acquis, to clarify the 
institutional set-up and to strengthen the admi nistrative capacity. Nor has Serbia aligned 
national legislation with the acquis  for non-product related issues such as consumer contracts 
and marketing law. Cooperation between state in stitutions within the area is not sufficiently 
developed. Serbia needs to rais e general awareness of the importa nce of quality infrastructure 
among ministries as well as economic operato rs and needs to speed up implementation and 
the enforcement of legislation on consumer protection.  
4.1.2. Movement of persons, services  and right of establish ment 
Some progress was made in the area of movement of persons . The new law on foreigners has 
been adopted. . The administrative capacity of the Ministry of Ec onomy, which is in charge of 
movement of workers, is limited. There have  been no developments in the area of co-
ordination of social security.  
With regard to the right of establishment the Agency for Business Registers improved its 
procedural management by issuing the registra tion certificate for business entities within a 
maximum of 5 days. 
An electronic database on business entities and entrepreneurs is now fully operational. The 
Business Registry has still to be transformed in to a one-stop shop for all procedures related to 
business start-ups, including issu ance of a tax number, which is  currently provi ded by the Tax 
Administration. There are still delays due to certain requirements to issue accompanying 
licences at the municipal level. 
No progress was made on company law , and amendments to the Company Act and the 
Company Registration Act are still pending. The Law on accounti ng and auditing from June 
2006 is only partly harmonised with the acquis , while the adoption of th e new law that should 
be fully harmonised is still pending. The applic ation of the international financial reporting 
standards is obligatory. Nationa l Accounting Council, establishe d by the Ministry of Finance 
and Association of the Certifie d Auditors are both operational. However, the preparation of 
the Strategy and Action Plan on co rporate financial reporting by the former is still pending.   
As far as provision of services is concerned, in the area of financial services  the National 
Bank of Serbia is entrusted with the superv ision of the banking, insurance and voluntary 
pension funds sectors and is active in using its supervisory powers (on-site inspections, 
reporting, regulatory powers). The Securities Commission is in charge of supervising the 
capital market. The Securities Commission has recently been strengthene d, but it is still not 
sufficiently independent and lacks competencies  as defined by international standards.  
Serbia needs to make efforts to a lign its banking regulation with the acquis , especially 
focusing on the Capital Requirement Directive wh ich implements the Basel II framework in 
EU legislation. The supervisory cap acity needs to be further stre ngthened in order to be able 
EN 33   EN to cope with the requirements put in place wi th the Capital Requireme nts Directive and risk-
based supervision. 
Overall, the preparations in the areas of m ovement of persons, services and the right of 
establishment and company law are moderately advanced towards meeting SAA obligations.  
4.1.3. Free movement of capital 
In the area of free movement of capital there has been some progr ess during the reporting 
period.  
The National Bank of Serbia has adopted addition al implementing legisla tion with the aim of 
further liberalising capital flows. Furthermor e, the National Bank of Serbia amended the 
regulation on personal transfers of foreign cash to and from Serbia, raising the ceiling from 
€5,000 to €10,000 as of June 2008. This measure, which is in line with the acquis , should 
simplify customs procedures and significantly liberalise cross-border transfers of cash. In 
February 2008, the National Bank of Serb ia and the National Bank of Bosnia and 
Herzegovina began to implement the clearing arrangement that will include a number of 
banks from the two states. The National Bank  of Serbia also si gned the Memorandum on 
cooperation with the National Ba nk of former Yugoslav Republic  of Macedonia in the area of 
banking supervision.  
However, outward payment and current account transactions are not yet fully liberalised and 
restrictions on short-term credit and por tfolio investments are still in place.  
According to the Law on Foreign Exchange Operat ions, non-residents are free to make direct 
investments. There are restrictions in the arms sector and in areas defi ned as restricted zones 
by law, where foreign investors may only particip ate in joint ventures with domestic entities 
subject to the consent of the Ministry of Defe nce and without acquiring the majority rights to 
manage the enterprise.  
Foreign natural and legal persons can acquire property in Serbia only if there is a reciprocal 
agreement with their country of origin and if  they can demonstrate that they are conducting 
business activities in Serbia Legal entities wa nting to purchase property are required to be 
established in Serbia. During th e reporting period, there was si gnificant foreign investment in 
the banking and the trade sectors. 
Overall, preparations in the area of capital movements are moderately advanced. However, 
Serbia needs to further progress to timely res pond to the gradual liberal isation laid down in 
the SAA.  
4.1.4. Customs and taxation 
Serbia has made good progress in the area of customs . In terms of legislative activities, an 
implementing regulation was adopted which a llows full alignment of the customs tariff 
nomenclature with the EU 2008 Combined Nomenclature and the Harmonised System 
classification. However, further alignment with  the EU Customs Code is still required, in 
particular with regard to tran sit and security provisions. Moreover, in order to fully comply 
with the provisions of the SAA, Serbia needs to  abolish fees related to the normal application 
of customs procedures. 
EN 34   EN The customs administrati on was reorganised and administrative capacities  of the customs 
administration have been further strengthene d. A new Tariff Division was established and 
revenue collection increased, despite a reduction in the average level of the duties. The customs administration also established a Post -Clearance Department, with 20 staff members 
at national level and about 30 st aff at regional level. Furtherm ore, the customs administration 
intensified its anti-smuggling ac tivities in jo int actions with  the other state bodies and 
international partners. A Risk Management Strategy has been adopted . By using risk 
analysis, the customs administration achieved good results, especially in the seizure of 
narcotics and counterfeited goods . The new Code of Conduct ha s been implemented and as 
many as 70 employees have been dismissed. These changes helped the disclosure of cases of 
abuse of office and the prosecution of th ese individuals before the court..  
The activities relating to the implementation of  the integrated border management strategy 
and action plan have been pursued further. None theless, additional efforts are needed in order 
to achieve a more uniform and less discretionary application of customs procedures at various 
customs posts.  
Overall, Serbia is already well advanced in terms of meeting the SAA requirements and 
remains committed to reforms in the area of customs. There has been improved IT support for audit and risk analysis. The enforcement capaci ty of the Serbian cust oms administration has 
improved. However, Serbia's customs infrastr ucture, customs procedures and human capital 
need to be further strengthened. Audits, post cl earance controls and general management need 
to be based more on mid-term strategies and annual plans, in order to enhance performance 
and to ensure consistency in their application. 
In the area of taxation , some progress has been recorded. New ad valorem  and specific duties 
on cigarettes became applicable. This has bro ught the structure of the excise duties on 
cigarettes in line with the acquis .  
The Serbian tax administration intensified its efforts to improve tax collection. Tax revenues 
have been rising constantly since 2003, and th is trend continued in 2008. Both regular and 
enforced collections have improved. The tax administration also initiated a number of 
bankruptcy procedures against ta x debtors aiming at collecting unpaid taxes. Field audit has 
improved as the result of improved procedur es. As of March 2008, mandatory electronic 
filing of tax returns for the larg e tax payers has been introduced. 
The tax administration has also identified a large number of "phantom companies" thus 
stepping up the fight against tax fraud. The number of criminal charges for tax evasion has 
been constantly increasing, in particular on withholding tax and social contributions on 
salaries. The tax administration co ntinued to actively cooperate wi th the special prosecutor on 
organised crime. The audit department was restructured and stre ngthened, and was also 
supported by an IT system developed using ow n resources in the tax administration. Due to 
this new approach, field audits became more successful. 
In the area of training and education, the Serb ian tax administration intensified efforts to 
improve employee skills and administrative capacity . Training has been provided for new 
recruits as well as the majority of current employees.  
The Serbian tax administration improved in ternational cooperation with other tax 
administrations in the implementation of ratified bilateral agreements in particular on avoidance of double taxation, cooper ation and mutual assistance. 
EN 35   EN There was little progress on approxi mation of tax legislation to the acquis , particularly with 
regard to direct taxation. New business taxati on based on the principles of the Code of 
Conduct has still to be adopted. Certain new ta x arrangements are not compatible with the 
acquis , such as the reduced rate of VAT on computers or on the acquisition of a first 
apartment for residential purposes. 
Overall, Serbia is well advanced in meeti ng the requirements of the SAA in the area of 
taxation. In particular the new ad valorem  and specific duties on cigarettes became applicable 
in line with the SAA. Enforcement capacities of  the tax administration and tax collection have 
been strengthened, but there is st ill a sizeable informal sector, and the collection of registered 
tax debts has to be reinforced. Serbia's tax legislation remains partially aligned with the acquis  and certain provisions, most notably on excise duties and VAT, need further 
alignment. Serbia needs to follow up to ensure compliance of its tax legislation with the Code of Conduct for business taxatio n. In the area of direct ta xation, alignment with the acquis  is 
still at an early stage.  
4.1.5. Competition 
There has been some progress in  the area of implementation of anti-trust  legislation.  
The efficiency of the Commission for the Protec tion of Competition has been improved by the 
allocation of new premises and the employment  of new staff. In 2007, the Commission for the 
Protection of Competition dealt with twice as  many cases as in 2006, including some highly 
sensitive cases affecting the gene ral public. In particular the numb er of cases related to merger 
control increased. .  
The majority of the competition cases in 2007 (a round 85%) related therefor e to the control of 
mergers, while this trend continued during 2008 There is a need for a more adequate 
notification threshold for mergers, ensuring that the obligation to notify is restricted to those 
mergers that are liable to affect competition in Serbia.  
The existing anti-trust legislation is not yet fully aligned with the requirements of the SAA 
and Interim Agreement. The merger control pro cedures are not yet adequate to ensure the 
efficiency of the Competition Commission. The enforcement capacities of the Commission 
for the Protection of Competition are still weak, notably due to its inability to impose fines. It is essential that the operational independence of the competition authority is assured. The 
enforcement capacity of the judici ary is weak due to lack of specialised knowledge. Work has 
just begun on competition advocacy among government officials, regulators, judges, business community, and the general public. 
No progress has been made in the area of  state aid. In September 2008, the Serbian 
government adopted the report on the state aid inventory for 2006. However, Serbia has 
neither yet adopted a legislative framework fo r state aid nor estab lished an operationally 
independent state aid authority or a system of ex-ante  control of state aid measures which are 
required by the SAA. Monitoring of state aid continues to be  weak and administrative 
capacity is insufficient. 
Overall, Serbia is moderately advanced in the area of anti-trust, including mergers, but its 
legislative framework and enforcement capacities have still to be im proved. In the area of 
state aid, preparations are st ill at an early stage. Effort s are needed to meet the SAA 
requirements in competition. 
EN 36   EN 4.1.6. Public procurement 
Some progress has been made in the area of public procurement. Transparency of award 
procedures was improved by the establishment of  a web-based portal, which has also brought 
a reduction in expenses, increased competiti on and control, better communication among the 
stakeholders, more reliable statistics, greate r awareness and a bett er public procurement 
environment overall. 
However, gaps in the existing legal framework and amendments to public procurement 
legislation are still outstanding.  
The public procurement institutions, includin g the Public Procurement Office and the 
Commission for the protection of bidders' ri ghts have insufficient physical and human 
resources. Their operational independence has not improved. Further efforts are needed on 
training and the development of the public proc urement system. The Strategy for upgrading 
the public procurement system in Serbia , adopted in June 2006, has not yet been 
implemented.  
The implementation of a non-discriminatory a nd well functioning public procurement system 
in Serbia continues to be adversely affected by the weaknesses in the public administration's 
internal audit system, by the absence of a fu lly functioning supreme audit institution and by 
corruption.  
Overall, Serbia still lacks a consistent, eff ective and fully independent public procurement 
system with streamlined award procedures. Additional efforts are needed in terms of 
amending the legislative alignment, implementa tion of the public procurement strategy and 
strengthening the capacity to impl ement the requirements of the SAA 
4.1.7. Intellectual property law 
Some progress has been made in the area of intellectual property rights . The Intellectual 
Property Office was appointed coordinator for intellectual property rights within the 
government in October 2007. This has improved the cooperation between various state 
institutions. The IT capacity of the office has been strengthened. Th e IT capacity of the office 
has been strengthened and some additional staff has been recruited as well. However, the administrative capacity of the Intellectual Property Office is not sufficiently developed. The 
Office needs additional qua lified staff and continue d training activities.  The government has 
not yet appointed its Director. The financing of Intellectual Property Office fr om the state 
budget (currently under the responsib ility of the Ministry  of Finance) needs to be determined, 
in order for it to be transformed into a fina ncially autonomous agen cy, thus increasing its 
organisational efficiency.  
In relation to industrial property rights , the Intellectual Property Office has continued to 
strengthen its IT capacity, in particular by starting to develop a national industrial design 
database, in order to improve cooperation with  economic operators. In June 2008, Serbia was 
invited to accede to the European Patent Or ganisation. The process of granting patents has 
been streamlined in accordance with European standards. The law on optical discs has not yet 
been adopted.  
Some progress has been made in the field of en forcement. The tax authorities have started to 
take specific measures in order to protect in tellectual property rights.  Seizures by market 
inspection officers have improved slightly. The customs administration has continued to make 
EN 37   EN progress in enforcing intellectual property rights.  There is still inadequate storage space for 
counterfeited goods that infringe copyright and related rights . The market inspectorate has 
not made sufficient efforts to combat infringeme nts. There is a shortage  of judges specialized 
in this area. There have been some campai gns to raise public awareness on intellectual 
property rights, both for relevant stat e institutions and the general public. 
Overall, Serbia's preparations in the area of intellectual property rights are moderately 
advanced. Efforts need to be strengthened in order to improve alignment with the acquis  and 
administrative capacity and enforcement. Public awareness raising activities also need to be 
sustained in the fight agains t piracy and counterfeiting.  
4.1.8. Employment and social policies 
Little progress has been made in the area of employment policy . The employment strategy is 
in line with EU requirements, but its applic ation remains weak. Active policy measures aimed 
at boosting employment, in particular in the SME sector, have been prepared and 
implemented.  
Work continued on the development of re gional training centres under the national 
employment service. This has contributed to a limited reduction in the number of unemployed 
but the rate remains high with a large percen tage of unemployed women (53.8%). The reform 
of the education system, including vocationa l training, is lagging behind. Reforms in the 
employment services have also been delayed and although some progre ss has been registered, 
the effectiveness and administrative capacity of  the National Employment Service is not yet 
sufficient. 
In general, the record of implementing of employment measures and policies has improved, 
but coordination and harmonization with other policies is not sufficient in order to reduce 
unemployment. 
In the field of social policies , the labour law  of March 2005 remains unchanged, although 
certain implementing rules have been adopted.  
There has been no progress in the area of health and safety at work .  
A general Collective Agreement was signed in  April 2008 between the association of 
employers and two representative trade unions, for the first time without state mediation. 
However, social dialogue  continues to be weak. The functioning of the Socio-Economic 
Council needs to be improved.  
Concerning social inclusion , the Serbian poverty reduction strategy has contributed to 
reducing the number of people living in absolute poverty. This number was reduced from 
about one million in 2002 (14.4% of the population) to under 500,000 in 2007 (about 6.6% of 
the population). However, fighting poverty and soci al exclusion in particular of Roma and 
IDP remains a key challenge. Serbia signed th e Convention on the Rights of Persons with 
Disabilities in December 2007, but it has not yet been ratified. The 2007-2015 Disability 
Strategy has to be fully implemented. Th e implementation of the Law against the 
discrimination of people with  disabilities is weak. 
There is no comprehensive anti-discrimination law. Widespread discri mination, in particular 
against the Roma community, people with disa bilities, ethnic minor ities and people of 
EN 38   EN different sexual orientation, pr evails. Protection against discri mination on the labour market is 
weak. 
Serbia has begun the process of decentralising the system of social protection , although 
financial assistance remains highly centralize d. Strategic plans for the development of a 
network of social institutions at local level have been adopted. The process has begun with the 
adoption of simplified procedures  for local social assistance in stitutions. Due to a lack of 
resources, the implementation of strategies at  local level remains weak. The process of de-
institutionalisation has begun and needs to be further developed. As of 1 January 2008, three 
pension systems (for employed persons, the self-employed and farmers) have been 
consolidated into a single system. However, th is consolidation has not closed the financial 
gap in the pensions system, primarily because of the extremely low ratio of employed persons to pensioners.  
In the area of equal opportunities , the National Strategy for th e improvement of women's 
status and advancement of gender equali ty (2008–2014) was launched in January 2008. A 
Gender Equality Department has also been esta blished in the Ministry  of Labour and Social 
Policy. However, the Law on Gender equality is  still pending. Women continue to be over-
represented among the unemployed. 
Progress can be reported in the area of public health . The reform of the health insurance 
system is ongoing. The IT capacity of the health  insurance fund has b een strengthened. The 
implementation of the law on health insurance has continued, in particular with regard to the 
inclusion into the compulsory health insuran ce scheme of people who were not previously 
covered by this scheme. Awareness raising campaigns have been launched directed at the general public and aimed at improving communi cation between health professionals and 
patients. However, the administrative capacity a nd managerial skills as well as funding in the 
public health sector are not sufficiently deve loped. The administrative capacity within the 
Public Health Institute is also limited. Mo reover, a strategy on public health and a law on 
public health are outstanding. As regards ment al health, the government has taken some 
measures to improve existing institutions an d facilitate de-institutionalisation. However, 
community-based services are not suffici ently developed as an alternative to 
institutionalisation. 
Overall, Serbia has started to address its pr iorities in the area of  employment and social 
policies. The country's capacity to effectivel y implement employment policies has improved, 
but is still inadequate. With rega rd to social policies, legislati on still has to be adopted and the 
overall implementation needs to be further devel oped. Further efforts are n eeded in the area of 
public health in order to strengthen the admini strative capacity and to develop a more patient-
oriented system.  
4.1.9. Education and research 
Concerning European standards on education, there is  little progress to report.  
Changes to the curriculum have been introduced  in primary and secondary schools. Reforms, 
to adapt the higher education system to the Bologna requirements, have continued. A law 
amending the Law on Higher Educa tion was adopted in October 2008.  The process of 
accreditation of higher educa tion institutions has begun.  
However, sustained efforts are needed in order to ensure quality, mobility and links with the 
labour market. Links between university, vo cational education and training and other 
EN 39   EN education sectors are still weak, and mechanisms to ensure inter-sector mobility and to 
facilitate the enrolment in higher education institutions  and to improve recognition of prior 
learning are not in place. The development and adoption of a national qualification framework 
has not advanced. The vocational education traini ng system needs to be reorganised and adult 
training developed in order to ensure a broade r range of profiles and better adaptability to 
economic needs. Limited administrative cap acities and a lack of coordination among 
responsible institutions remain issues of concern. Financing for the education sector is still 
inadequate. It represents 3.7% of GDP and is affected by rigid allocation mechanisms, 
insufficient funding from local governments and a lack of involvement of  the business sector. 
In the area of culture, Serbia signed a Memorandum of Understanding in 2008 with the 
European Commission and began participa ting in the Culture programme. The UNESCO 
Convention on cultural diversity has not yet been ratified.  
Concerning science and research,  Serbia's association to the Seventh EC Research 
Framework Programme has provided a high rate of return in term s of successful projects. A 
consultative bureau for international projects ha s been established within the Ministry of 
Science, which assists and encourages research ers to participate in the Seventh Research 
Framework Programme. Serbia has expressed inte rest in becoming associ ated to the Seventh 
Euratom Research Framework Programme (2007-2011) . With respect to th e integration into 
the European Research Area, Serb ia has still to adopt  a national strategy aimed at increasing 
public and private investment in research and promoting scientific ca reers and mobility of 
researchers. Moreover, Serbia has not yet developed an integrated research policy. 
Overall, Serbia needs to continue its efforts to develop and adopt acti ons to facilitate its 
integration into the European Research Area. 
4.1.10. WTO issues 
Serbian preparations to join the WTO are rela tively advanced althoug h the process slowed 
down in the first half of 2008. However, if pr ogress continues as planned, Serbia could be 
well placed to meet its objective of joining the WTO in the near future. 
4.2. Sectoral Policies 
4.2.1. Industry and SMEs Serbia has made some progress in the SME  sector.  
A good institutional framework for SMEs had been  put in place, and its performance has 
improved during the reporting peri od. In particular, there has b een a substantial improvement 
in cooperation and coordination between the various actors – the Ministry of Economic 
Affairs, the SME agency, and other stakeh olders. The SME Council, which comprises 
representatives of various mini stries and entrepreneurs, meet s regularly and is functioning 
well. However, not all ministries have yet fu lly taken the SME Council into account in their 
preparation of strategies and documents. Furt her strengthening of busin ess advocacy is taking 
place through the reform of the Chambers of  Commerce. The Agency for SME development 
has developed a network of re gional agencies and local offices aimed at providing non-
financial support.  
Regarding the regulatory burde n on the business environment, the Council for Regulatory 
Reform has elaborated a Stra tegy for Regulatory Reform in the Republic of Serbia for 2008-
EN 40   EN 2011 together with an action plan with the aim of carrying out regulatory reform and reducing 
the administrative burden for SMEs 
Serbia continues to be fully committed to the process of the European  Charter for Small and 
Medium-sized Enterprises, to which it provide d high quality input. Inte rnal coordination is 
working well and there is active participati on by all relevant bodies  in the process.  
Based on the programme for the development of business incubators and clusters, five new 
incubators started operating in 2007 and one  in 2008, bringing the total number to 17. 20 
clusters are operating and 14 proj ects are financially supported  by the Ministry of Economy 
and Regional Development in the manufacturin g, food production, touris m and IT sectors. 
However, the 2009-2013 Strategy for Competitive and Innovative SMEs, and its Action Plan, 
drawn up after wide consultations  with representatives of the SME sector, has not yet been 
adopted. Serbia has not made progress in  developing and implementing a modern industrial 
policy .  
Overall, preparations in the area of industry and SMEs are advanced and fulfil the relevant 
SAA requirements  
4.2.2. Agriculture and fisheries 
Some progress has been made in the area of agriculture  and there have been some 
improvements to the administrative capacity  
In the area of rural development  the government adopted thr ee regulations defining the 
distribution and use of subsidie s in 2008 in the areas of rural tourism, support to internally 
displaced persons, and support to  the Roma community. However,  a strategic plan for rural 
development and a multi-annual rural developm ent programme have not been adopted. An 
inter-ministerial mechanism for coordination of policies related to rura l development has not 
been established. The rural development sector  is in need of qualified staff, and the 
framework legislation on rural development, wh ich is intended to serve as a basis for the 
establishment of a national agency for ru ral payments, has not yet been adopted.  
Concerning the wine sector, Serb ia has strengthened its administrative capacity in order to 
prepare for the establishment of a vineyard cadastre. However, a sustainable system for 
vineyard and wine inspections has still to be established. A new law on wine has not yet been 
adopted. A national system of oenology labor atories has not yet been established. 
The government has adopted four regulations  on organic production. These regulations 
support the development of the sector and accred it the first certification organisations. They 
represent important progress in terms of alignment with the acquis . 
In the area of food safety,  Serbia has still to adopt framew ork legislation which complies with 
the acquis . Some progress has been made in clar ifying the allocation of responsibilities 
between the relevant inspectorates. The full implementation of the new division of 
responsibilities and in particular cooperation between the Ministry of Agriculture and the 
Ministry of Health is subject to the a doption of this new framework legislation .  
No progress has been made with regard to th e upgrading of food establishments. Serbia has 
been listed as an "approved th ird country" in the milk sect or for treated milk products 
however, no establishment has yet been approved for export to the EU. 
EN 41   EN Serbia has made some progress in  the continued development of a veterinary information 
management system. Progress has been made  in extending animal identification and 
registration of their movements to a larger numbe r of animal species. Following the entry into 
force of the veterinary law, implementing legislation has been adopted. However, the 
Veterinary Directorate is in need of ongoing tr aining activities and its management capacity 
remains limited. Decentralisation measures and tr aining activities aimed at strengthening the 
field veterinary service have proved insufficien t. Furthermore, Serbia needs to amend the 
framework veterinary law to bring it into line with the acquis , and also to adopt a new law on 
animal welfare.  
Progress has continued in the upgrading of laboratories, notably in the food chain area. 
However, an administrative structure for the management of reference laboratories for food 
chain control has still to be established. A laboratory information management system for 
veterinary laboratories has not yet been integr ated with the veterinary information system. 
There is little progress to report in the phytosanitary  area. The main development was the 
adoption by the Ministry of Agriculture of an annual prog ramme on plant health for 2008. A 
plant health law and a law on plant protec tion products have not yet been adopted. A 
phytosanitary laboratory information manageme nt system has not yet been developed. 
In the  fisheries  sector there has been no progress in the areas of marketing standards for 
fisheries products or with regard to structural policy. 
Overall, Serbia is in a relatively advanced stage of preparation in the area of agriculture to 
fulfil SAA obligations. However, further efforts ar e needed in order to al low Serbia to better 
manage agricultural policy and to continue refo rms in the sector. An appropriate legislative 
framework needs to be adopted and further effo rts are necessary in order to strengthen the 
administrative capacity in the field of food safety, veterinary an d phytosanitary policy. 
Further efforts are needed in the fisheries area in  order to comply with th e relevant parts of the 
acquis  and prepare for the implementation of structural assistance.  
4.2.3. Environment 
There has been little progress in the area of environment. 
As regards horizontal legislation, there is a growing awareness of  the importance and role of 
Environmental Impact Assessment (EIA) and Strategic Environmental Assessment (SEA). 
However, enforcement of EIA and SEA is not fully ensured and the level of non-compliance 
remains high. Inter-ministerial coordination on project assessment and the issuing of permits 
needs to be improved. Some training has been provided by the Ministry of Environment, but 
responsible institutions at the local level st ill lack the necessary capacities, sufficient 
awareness and specific knowledge.  
The National Environmental Protection Strategy ha s not been adopted yet. The administrative 
structures to implement the Kyoto Protocol ar e not yet in place. Serbia has acceded to the 
Espoo Convention whereas the Aarhus Conve ntion has still to be ratified.  
There has been no progress in the area of air quality . 
No progress can be reported as regards waste management . The law on waste and the law on 
packaging and packaging waste have not yet be en adopted. Waste manage ment plans at both 
EN 42   EN national and local levels are still not deve loped. There has been no progress regarding 
hazardous waste management.  
There has been no progress in the field of water quality. A new law on water has not yet 
been adopted. The issues of financial sustainabi lity of the necessary i nvestments and a reform 
of tariffs have still to be addressed.  
There has been no progress in the area of nature protection .  
On industrial pollution control and risk management, a rulebook on a register of polluters 
has been issued and is maintained by the Environmental Protection Agency. The Ministry compiled a list of around 220 installations which will have to comply with requirements of 
the Industrial Pollution and Prevention Control (IPPC) Directive before the deadline of 2015, 
as set out in the relevant national law. Little progress has been made in enforcing legislation and in developing plans for the comp liance of existing installations.  
No progress can be reported on genetically modified organisms  (GMOs), chemicals and 
noise . 
Administrative capacity has improved following the creation of a separate Ministry for 
Environment Protection. The number of employees at the ministry has increased, in particular 
in the departments dealing with European in tegration and horizonta l legislation. Local 
environment development plans have been pr epared in a number of municipalities. 
Environment protection inspectora tes have been re-organised, allocated more resources and 
provided with specific traini ng. Training activities on environmental law have been provided 
for judges and prosecutors. 
However, institutional capacity and technical an d human resources at the local level are still 
insufficient, as is coordination with the central  level. Judicial enforcement of environment 
legislation still needs to be strengthened.  
The Water Directorate within the Ministry of Ag riculture, Forests and Water continues to be 
understaffed and its institutional capacity is inadequate. Coordination between the 
Environment and Agriculture mini stries needs to be improved. 
The Environmental Protection Agency is fulfilling its tasks in the areas of data collection and 
cooperation with the European Environment Ag ency. Its performance is improving, but the 
Agency still lacks the capacity to ensure proper implementation of the integrated monitoring strategy.  
Resources allocated to environmental protec tion from the budget have been increased, but 
they still remain low. The Fund for Environmental Protection is active in the co-financing of 
projects, especially in  the field of waste management, sa nitation and air quality monitoring. 
A National Sustainable Devel opment Strategy was adopted, following a wide consultation 
process. It is structured around three pillars: knowledge-based sustainability, socio-economic 
conditions and environment and natural resources.  It identifies priority  actions and includes a 
preliminary estimate of financial needs and priorities. 
Overall, Serbia is moderately advanced in the area of environment, including in some areas of 
horizontal legislation. However, some sector s are not sufficiently regulated. Legislation 
EN 43   EN enforcement at all levels has still to be en sured. There is still no legal or institutional 
framework for water quality.  
4.2.4. Transport policy Serbia has made some progre ss in the area of transport. 
A Strategy for the development of rail, road, water, air and inter-modal transport for the 
period 2008 to 2015 was adopted in December 2007, providing for the development of Corridors VII and X and of the core network. The Strategy also includes general principles of 
the acquis , in particular the concepts of sust ainable transport, inter-modality, and 
prioritisation of railways and waterways as alternatives to road transport. However, the 
strategy does not adequately address institutional re-organisation and fina ncial sustainability, 
and needs to be followed by more detailed action plans. 
There has been some progress in the area of trans-European transport networks . Serbia has 
continued to actively participate in the implementation of the 2004 Memorandum of 
Understanding for the development of the Core Regional Transport Network and in the South 
East Europe Transport Observatory (SEETO). It has approved a multi annual plan 2008-2012  
As regards road transport , the Serbian Road Company has good human and technical 
capacities. However, a number of laws amendi ng existing legislation, namely the Law on road 
haulage, the Law on transport of passengers, the Law on transport of dangerous goods and the 
Law on road safety, have still to be adopted . Once the Interim Agreem ent on trade and trade 
related matters enters into force, Serbia will be required to grant unrestricted Community transit traffic through Serbia.  
There has been little progress in the field of rail transport . In December 2007, Serbia signed 
the "Addendum to the Memorandum of Understa nding on the Development of the South East 
Europe Core Regional Transport Network for a South East European Railway Transport 
Area", aiming at the gradual mark et opening of the ra il transport market. Amendments to the 
railways law have not been adopted, delaying  a number of reforms, in particular the 
establishment of a regulatory agency, the definition of public service obligations and the 
conditions for market opening. Separation of in frastructure management and provisions of 
transport services has not yet developed be yond the separation of accounts and a system of 
access charges has only recently been launched. The sector remains in need of operational and 
financial rationalisation and substantial restructuring  
In the field of inland waterways , there is moderate progress to report. The Law on inland 
waterway transport has not yet b een adopted and Serbia still need s to ratify relevant European 
Agreements in this field. The development of infrastructure, namely the Danube and the Sava 
River, as well as the development of inland ports as intermodal terminals, requires specific focus and earmarked resources.  
There is little progress to report on combined transport and inter-modality. A limited 
liability company for combined transport has been created within the Railways Company. 
Some progress can be reported in the sector of air transport . The implementation of the first 
transitional phase of the Agreement on a European Common Aviation Area (ECAA) has 
continued and progress can be reported in securit y, safety and air traffic control. Nevertheless, 
the sector lacks the necessary legal framework, as the ECAA agreement is not ratified and the 
EN 44   EN Law on civil aviation has not been adopted. Prep arations for restructuring of the national 
carrier JAT are continuing.  
In terms of administrative capacity, the Ministry for Infrastructure needs to further reinforce 
its capacities and to strengthen the expertise of its personnel, especially as regards the 
alignment of the national legislation with the acquis . The operational structur es need to be re-
organised. The Civil Aviation Directorate is ope rational and has the necessary expertise but 
the distribution of responsibilit ies between the Ministry and the Civil Aviation Directorate 
needs to be clarified. 
Overall, Serbia is relatively adva nced in the area of transport, but needs to update and align its 
legislation to the acquis . The transport strategy needs to be followed up by a master plan and 
sectoral measures. Furthermore, the relevant  services are still to be reorganised and 
strengthened. 
4.2.5. Energy There has been some progress in the overall  energy field during the reporting period.  
There has been no progress regarding oil stocks . The level of availabl e stocks remains below 
European minimum quantities.  
As regards security of supply , some progress has been made in increasing gas reserves. 
Energy interconnection between Serbia and ot her countries of the region is progressing. 
However, the implementation of the Energy Sector Development Strategy remains limited, especially at local level. The su stainability of the sector and necessary investments are still to 
be ensured.  
Good progress has been made in the internal energy market . A grid code for electricity 
transmission was adopted in April 2008. A tari ff system for electricity transmission was 
adopted in December 2007 and has been in force since January 2008. A tariff system for 
electricity settlements for tariff buyers was a dopted in February 2008. The sector is moving 
towards separation and identification of transm ission costs. Transmission system operators 
have to a large extent become financially sust ainable. The formal opening-up of the electricity 
and gas markets to non-household consumers has been achieved. In February 2008, the 
Energy Agency lowered the eligibility threshol d to all non-household consumers – a measure 
which applied to 47% of the electricity ma rket and 90% of the gas market. The Energy 
Agency is endowed with the ne cessary capacities and expertise, and has continued to fulfil its 
tasks in an independent manner, in line with  the Energy Community Treaty requirements.  
However, amendments to the energy law, con cerning electricity distribution grid codes and 
electricity market rules, have  not yet been adopted. The separation between distribution and 
supply of electricity has still to be implemen ted, and the related deadlines of the Energy 
Treaty have not been respected. Unbundling and real market opening requires further 
substantial measures. The adoption of a sustaina ble tariff system that reflects costs remains 
has still to be adequately addressed.  
Serbia has signed a Memorandum of Understanding with Russia on energy which was ratified 
by the Serbian parliament in September 2008. Th is is a framework document for signing 
several deals in the energy field for which the terms are still to be negotiated. The agreement includes privatisation and modern isation of the Serbian Oil Company (NIS - Naftna Industrija 
Srbije), completion of the construction of an underground gas storage f acility and the passing 
EN 45   EN of the Northern branch of the South Stream pi peline through Serbia. In the implementation of 
Memorandum of Understanding, Serbia needs to ensure that the obligations of the Energy 
Community Treaty are respected.  
Little progress can be reported on energy efficiency  and renewable energy . Serbia is 
participating in the energy efficiency task force created within the Energy Community. The 
Energy Efficiency Agency has still to en sure its sufficient capacity and financial 
sustainability.  
In the area of nuclear safety  and radiation protection, Serbia has made some improvements. 
The dismantlement and removal of spent fuel from the Vin ča research reactor is progressing. 
Practical work has started on the characterisation of spent nuclear fuel elements from the RA 
nuclear research reactor. The c onstruction of a modern and safe storage facility for radioactive 
waste is well underway. However, further improve ments are still needed  to fully remediate 
the nuclear legacy of the past and to implement the Vin ča Institute Nuclear Decommissioning 
(VIND) programme adopted by the Serbian gov ernment in 2002. The technical capacity of 
the different Serbian organisati ons involved in nuclea r issues also needs to be enhanced.  
From the legislative and regulato ry point of view, Serbia has st ill to adopt a law on ionising 
radiation protection and nuclear safety and to set up the appropr iate regulatory agency. Serbia 
has still to accede to two additional interna tional Conventions, namely, the Convention on 
Nuclear Safety, and the Joint Convention on the Safety of Spent Fuel Management and on the 
Safety of Radioactive Waste Management. 
In terms of administrative capacity, the Mini stry for Energy and Mining has increased its 
personnel by about 10%, adding a specific unit on renewable en ergy. Municipalities have 
been provided with assistance. However, capaci ty needs to be further strengthened. Plans on 
management of sealed radioactive sources, en vironmental monitoring and radiation protection 
in the context of medical and industrial appl ications have to be further developed. An 
appropriate regulatory authority has still to be established.  
Serbia has not yet acceded to the Convention on Nuclear Safety and to the Joint Convention 
on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste 
Management 
Overall, Serbia is moderately advanced regard ing the energy sector, but progress is uneven. 
Substantial efforts are needed to comply w ith the Energy Community Treaty requirements 
and to address outstanding issues  in relation to nuclear safety  and radiation protection.  
4.2.6. Information society and media 
There has been little progress in the area of electronic communications and information 
technologies . The strategy for the development of tel ecommunications in Serbia from 2006 to 
2010 still lacks timelines for achievement of the defined objectives and fo r the introduction of 
liberalisation measures. 
Little progress can be reported on the harmonisa tion of the legislativ e framework with the 
acquis , in particular due to insufficient coor dination among responsible  bodies. Coordination 
between the Ministry for Telecommunications and Information Society and the regulatory 
authority (RATEL) has been affected by major disagreements, preventing the proper 
functioning of regulatory and legislative mechan isms. The Ministry, in June 2008, decided to 
temporarily take over RATEL's responsibilities.  The government subsequently repealed this 
EN 46   EN decision indicating that it was not in line with the Law on P ublic Administration. Relations 
between the Ministry and RATEL have since started to improve and a set of decisions on 
Voice over Internet Protocol (VoIP), international connectiv ity, licensing and operators and 
tariff rebalancing have been adopted. 
In July 2008, RATEL issued a decision granting St ate access to all inte rnet communications 
even without a specific police order. This decision, aimed at combating cyber crime and 
terrorism, was withdrawn by RATEL at the request of the Ombudsman and following 
criticism from the Commissioner for public in formation. Internet service providers, NGOs 
and citizens also expressed concern that the measure could be misused and constitute excessive control of and intr usion into citizens' privacy. 
The mobile telephony sector is form ally liberalised and consists of three operators. As regards 
the fixed telephony sector, the legislative and re gulatory framework remains to a large extent 
inadequate for the entrance of new operators in the market. Further regulation is needed in terms of competition safeguards, network access a nd infrastructure development. International 
connectivity poses a major problem for many opera tors. The regulation of internet service 
remains inadequate and makes the entry of new providers difficult. Inte rnet penetration rates 
are rising, but remain low, at about 16%. Tari ff rebalancing and the development of cost 
models are outstanding issues. A universal  service policy has still to be adopted. 
In the area of information society services, the authorities have identified a number of 
priorities. A working group on coordination of IT  activities has been es tablished within the 
Ministry of Telecommunications . Three technical regulations on electronic signature have 
been adopted. However, legislation is still lacking and the Strategy on Information Society 
has not been followed up by action plans and a full assessment of investment needs. Currently, the role of IT in the government's communication with and services to citizens (e-government) is limited. Capacity in this area n eeds to be strengthened , especially at local 
level.  
Serbia has not yet adopted the necessary legisl ation, in line with European standards, on e-
commerce and conditional access services. 
In terms of administrative capacity, the Minist ry, established in 2007, has not been provided 
with an updated organisational structure and sufficient human re sources, in particular in 
relation to the European integration pro cess. RATEL is operational and financially 
autonomous. However, this authority does not ha ve enough specific expe rtise to regulate an 
open telecommunications market. Its inde pendence needs to be strengthened. 
Little progress has been  made in the area of audiovisual policy . Progress was made in 
negotiations with the WTO on audiovisual serv ices, especially thro ugh the negotiation of 
exceptions to Most Favoured Nation rules. The Broadcasting Agency changed its binding 
directive to the Public Service Broadcaste r RTS on the broadcast of live parliamentary 
debates into a recommendation. Serbia has not yet signed the European Convention on 
Transfrontier Television. The Law on Media C oncentration has not yet been adopted and 
amendments to the Broadcasting law are awaited. 
Transparency in the allocation of regional a nd municipal frequencies remains insufficient. 
No progress can be reported with regard to th e institutional framework. The transparency and 
accountability of the Broadcasting Agency sti ll have to be strengt hened through proper 
regulations. The enforcement of judici al decisions needs to be ensured. 
EN 47   EN Preparations in the area of information society a nd media are at an early stage. The sector is 
adversely affected by the legal vacuum and inadequate institu tional and regulatory capacity. 
4.2.7. Financial control 
There has been little progress in  the area of financial control. There is still no comprehensive 
policy on Public Internal Financial Control  (PIFC). An adequate co-ordination and 
harmonisation function for PIFC implementation is also lacking. The Central Harmonisation 
Unit has not been established. In its absence, its role is partly covered by the Internal Audit 
Unit in the Ministry of Finance.  Internal Audit units have not been set up in all ministries. 
The State Audit  Institution is not yet fully operational. Although it has produced a rule book 
regulating its internal functioni ng, there have been delays in assigning appropriate premises 
for the office, which has delayed the recruitment of staff. So far only two auditors have been 
recruited.  
Overall, Serbia is at a very early stage of preparations for introducing PIFC and a modern 
system of external audit . It has not met the requirement s of the SAA and the European 
Partnership priorities.  
4.2.8. Statistics 
Serbia has made some progress in the ar ea of statistics during the reporting period. 
As regards statistical infrastructure , some progress can be reported in cooperation and 
coordination of the statistical  system between public statis tical producers in Serbia. The 
Serbian Statistical Office signed memoranda  of understanding with the Ministry of 
Agriculture covering the planne d agricultural census and with the Ministry of Finance 
covering data delivery to the statistical office.  The resource situation improved slightly and 
the 2008 budget for the Serbian Statistical Office has increa sed. However, the available 
funding is not yet sufficient to cover all planne d activities. The new law on statistics has not 
been adopted. 
There was some progress as regards classifications and the business register. The process of 
harmonisation with EU classifications for st atistical regions, occupations and economic 
activities and products has st arted. The 2008 Combined Nomenclature was implemented in 
external trade statistics. Development of the statistical business register is progressing. 
However, there are no operational statistical registers at the Serbian Statistical Office. 
As regards sectoral statistics, preparatory work has continued in a range of areas. Several pilot 
surveys were carried out and some results were published. For demographic and social 
statistics a labour cost pilot survey was conducted. The labour force survey methodology was 
revised. A pilot survey on innovation was conducte d. For business statistics the results of the 
surveys on structural business statistics were published. These results are an important source 
for the national accounts. As regards transport st atistics, a pilot survey  on transport of goods 
was conducted.  
Overall, Serbia is moderately advanced in fulfilling the requirements of the SAA and the 
European Partnership in the area of statisti cs. Increased efforts are needed as regards 
administrative capacity and priority setting. 
EN 48   EN 4.3. Justice, freedom and security 
4.3.1. Visa, border, control, asylum and migration Some progress has been achieved duri ng the reporting period in the area of visa policy . The 
visa facilitation agreement betw een Serbia and the European Community entered into force in 
January 2008. A visa liberalisation dialogue was initiated between the Commission and 
Serbia. The Commission handed over a roadmap on visa liberalisation in May 2008. Serbia 
provided a first report on its alignment with the roadmap benchmarks in September 2008. 
Serbia's diplomatic and consular representations  continue to provide visas for Montenegro by 
mutual agreement.  
However, the current visa regime is still no t fully in line with European standards. 
Amendments to the Law on citizenship introdu ced a broad concept of dual citizenship for 
applicants of Serbian origin. One of the most important criteria is registration in Serbia, which causes problems due to destr oyed or missing registry books. 
The replacement of old and unsafe travel docume nts has been further delayed. The issuing of 
new ID cards started in April 2008 ; new biometric passports have only started to be issued as 
from August 2008. The full replacement of all ol d passports, originally planned for end of 
December 2008, has been deferred to end 2009. 
The technical capacities of agenci es involved in the issuing of visas, including equipment and 
training to detect forged and falsified doc uments, have not improved significantly. Some 
border crossing points continue to be better eq uipped than consular re presentations, but their 
powers to issue visas are limite d. Access to the central visa da tabase in the Ministry of 
Interior is still not provided. 
Overall, Serbia is moderately adva nced in the area of visa policy. 
There has been some progress in the area of border control . A new Law on protection of the 
state borders was adopted in October 2008. Bila teral protocols on regular meetings of the 
heads of border services have  been concluded with Monten egro and the former Yugoslav 
Republic of Macedonia. Staffing, initial training and provision of equipment for border police 
continued. Currently the border police comprise 3,120 staff.  
However, implementation of the national inte grated border management strategy and the 
action plan has been slow.  
Inter-agency cooperation is based on informal arrangements, as multi- and bilateral 
agreements to cover the details of joint actio ns are not in place. There are considerable 
differences between the various border crossing points in terms of infr astructure and human 
and technical resources. Not all border crossi ng points have IT conne ctions and some lack 
even basic equipment, in particul ar on the border with Montenegro. 
Progress can be reported in the area of asylum . The new Law on asylum was adopted in 
November 2007 and implementation started in Ap ril 2008. As from that date, the Serbian 
authorities officially took over responsibility  for handling asylum cases from the UNHCR. 
The asylum centre in Banja Koviljaca became fully operational and was handed over by UNHCR in June 2008. It has a capacity of 83 pla ces, which is sufficient for current needs.  
EN 49   EN Asylum claims are assessed in the first instance by the new Asylum Office, which is located 
within the Ministry of the In terior. Appeals can be lodged at  the Asylum Commission, which 
consists of eight members and a chairman a ppointed by the government. In certain cases, a 
legal review by the Supr eme Court is possible. 
However, the new law shows some procedural wea knesses. In particular, there is no provision 
for a general appeal to an independent judi cial body. Implementing legislation has not been 
fully adopted. The capacities of the Asylum  Office and the Asylum Commission remain 
limited and training needs have not  been sufficiently fulfilled.  
Due to the lack of referral mechanisms and as ylum structures, asylum seekers who enter or 
remain illegally in Serbia continue to be s ubject to judicial and administrative detention. 
Overall, Serbia has started to address the main priorities in the area of asylum.  
There has been some progress in the area of migration . The Law on foreigners was adopted 
in October 2008. Implementation of the r eadmission agreement with the European 
Community started in January 2008. Betw een September 2007 and June 2008, 871 requests 
were filed under bilateral agreements and 100 under the EC readmission agreement. Serbia 
has agreed to 688 of these requests. In N ovember 2007, Serbia established a Council for 
returnee reintegration and an inter-agency worki ng group in charge of formulating a strategy 
and action plan in the area. 
However, Serbia's capacities for integrating returnees remain poor. The national strategy has 
not yet been adopted, nor has th e legal framework for reintegrat ion been developed to allocate 
the necessary resources for implementing a comprehensive reintegration policy.  
The handling of legal migration f aces difficulties. Applications can only be filed from within 
the country. There is no central da tabase of previous applicati ons. Capacities of the competent 
Department for foreigners are weak. Currentl y, there are 5,253 foreign citizens permanently 
residing in Serbia. 
Serbia has continued to strengthen the capacities of the border police in order to fight illegal 
migration. Sections for suppression of illegal migration and trafficking within the border 
police and the criminal police directorate con tinued to ensure good coordination with the 34 
police secretariats. Fr om September 2007 to June 2008, 506 illegal border crossings were 
recorded. In 2007, 952 overstay cases were reported.  
Overall, Serbia is moderately advanc ed in the area of migration policy. 
4.3.2. Money laundering 
There has been little progress in the fight ag ainst money laundering. Activities were mainly 
focused on capacity building within the ad ministration for the prevention of money 
laundering and the Financial Intelligence Unit . A national strategy for the prevention of 
money laundering and financing of terrorism was adopted by the government in September 
2008. A manual for practitioners was developed a nd the number of cases being handled has 
increased. 
However, new legislation for the prevention of  money laundering and financing of terrorism 
have not been adopted. Current legislation is not in line with the Council directive on 
EN 50   EN prevention of the use of the financial system for the pur pose of money laundering and 
financing terrorist financing.  
Criminal investigations in money laundering ca ses have had very limited success. Police and 
prosecution service lack the capacities and expe rtise to follow up properl y reports issued by 
the Financial Intelligence Unit concerning suspic ious transactions. This results in a low 
number of final convictions in such cases. Prop er management of seized assets is still not 
assured. Legal entities do not fully comply with  their reporting obligations and enforcement 
remains insufficient. Further efforts are needed in order to better cont rol the high number of 
cash transactions.  
Preparations in the ar ea of money laundering are still at  an early stage.  Money laundering 
continues to be a serious problem in Serbia. 
4.3.3. Drugs 
Some progress has been achieved in the fight ag ainst drugs. Serbia is on one of the major 
Balkan routes for transit of heroin, cocaine, marijuana and synthetic drugs, with organised 
groups originating from Serbia being an important part of the criminal network. 
Capacities of the border police have been streng thened and efforts have been made to improve 
regional and international cooperation. A number  of successful operati ons were carried out 
which resulted in the detection of organised crime groups and narcotic  drugs networks, as 
well as increased quantities of drugs seizures. From January to June 2008, Serbian authorities 
seized 350 kg of heroin, 15 kg of cocaine an d 1000 kg of marijuana. Over 4000 criminal 
charges have been filed in relation to  drug offences, compared to 5151 in 2007. 
The Ministry of Health has stepped up its effo rts to combat drug abuse in Serbia, mainly 
through awareness raising campaigns a nd support programmes for drug addicts. 
However, neither the national strategy on preventing drug abuse and reducing supply nor the 
action plan for its implementation has yet been  adopted. The same applies to the Law on 
production and trade of narcotic drugs. Coopera tion with internationa l bodies in the drug 
control field, such as the European Monitori ng Centre for Drugs and Drug Addiction and the 
United Nations Office on Drugs and Crime, need s to be improved. There is no exchange of 
operational data with UNMIK police. There is no databank on drug seizures. Drug abuse, in 
particular among young people, is increasing. 
Preparations in the area of the fight agai nst drugs are moderate ly advanced, but drug 
trafficking remains a serious concern. 
4.3.4. Police 
Progress in the area of police and policin g has been limited. A strategic cooperation 
agreement with Europol was signed in Sept ember 2008. Regional police cooperation has been 
improved, following ratification of the Conventi on on South-East Europe Police Cooperation. 
Additional training efforts have been undertaken in order to improve pr ofessional capacity. A 
new police training centre came into operation in November 2007. The technical equipment 
of centralised police forces is  of a relatively good standard, and includes modern forensic 
facilities. 
EN 51   EN Measures have been taken to improve polic e accountability. Four regional centres were 
established and the system for citizens' comp laints was improved by developing a new leaflet 
on complaints procedures. 
However, structural problems in the police for ces persist. In the absence of new legislation 
concerning the division of responsib ilities, there is a lack  of coordination in core areas such as 
corruption, organised crime and war crimes. Legisl ation on the reform of  the secret service 
has not been adopted.  Considerable differences in the capacities of departments and services 
as well as a lack of coherent approach to hum an resources and financial management within 
the Ministry of Interior pose serious challe nges for ongoing reform efforts. International 
cooperation needs to be furthe r improved. Although police equipm ent for secret surveillance 
measures has been upgraded, police still need some support from the Security Information 
Agency in order to carry out telephone surv eillance measures. Preparations for broader 
application of secret surveilla nce measures as foreseen under the new Criminal Procedure 
Code have not been sufficient. 
The internal control department has not been sufficiently effective owing to limited support 
within the police, staff shortages and a lack of  resources. Concerns remain over the level of 
transparency in police work and potential undue political influence. 
Private security is no t adequately regulated. Estimates suggest that up to 3,000 agencies, 
providing a wide range of security services, are operating in the absence of proper licensing 
and control. Small arms and light  weapons are widespread  and often subject of  illicit use. This 
is a serious problem regarding criminal ac tivity. Illicit arms possession among the general 
public remains very high. This still poses a si gnificant challenge to security in Serbia.  
Overall, Serbia is moderately advanced in the area of policing. 
4.3.5. Fighting organised crime and terrorism 
There has been little progr ess in the fight against organised crime . Organised criminal 
activities in the areas of drug trafficking and financial crime, including corruption and money 
laundering, remain a source of serious concern. 
Responsibility for the fight agai nst organised crime is shared between the department for the 
fight against organised crime w ithin the Ministry of Interior  and a number of specialised 
police departments. New laws on seizure of assets acquired through criminal acts and on 
criminal liability of legal persons were adopt ed in October 2008. Several high-level cases are 
ongoing, including the trial concerning the assassi nation of former PM Zoran Djindjic, for 
which the second instance procedure started in September 2008. Support for the witness 
protection system continued.  
However, the legal framework is still incomplete, due to the delayed entry into force of the 
new Criminal Procedure Code. This is hamperi ng the restructuring of police and prosecution 
services. The national strategy fo r fighting organised crime and the action plan have not been 
adopted. The shortness of the term of office of  the special prosecutor for organised crime and 
his deputies continues to hamper  the efficiency of work.  
International police cooperati on and the capacities of the sp ecialised police services to 
investigate financial crime remain insufficient. Owing to the large number of police departments involved in the fight against or ganised crime, internal coordination is a 
challenge. Final convictions in  organised crime cases are rare. A common database on 
EN 52   EN information related to organised crime has not been set up. Although some efforts have been 
undertaken to improve the witness protection syst em, its capacities remain very limited and it 
suffers from a lack of trust and cooperation. Ma nagement capacities for seized assets acquired 
through criminal acts are not in place and provisions on confiscation of the proceeds of crime 
are not sufficiently implemented. Preparations in the area of the fight against organised crime remain at an early stage, which is a matter of  concern and affects the rule of law and the 
business environment. 
There has been little progress in the fight against trafficking in human beings . As a general 
trend, the number of persons tr afficked through South Eastern Europe is decreasing. Serbia 
continues to be a source, tran sit and destination country, but the trend towards an increasing 
percentage of victims being Serbian continues. 
In the period from September 2007 to June 2008, out  of 41 identified victims of trafficking in 
human beings, 34 were Serbian citizens, five originated from Bosnia and Herzegovina, one 
from Romania and one from Ukraine. In the sa me period, police services filed 27 criminal 
charges of trafficking in human beings against 59 suspects. Fifty-three criminal charges were 
filed against 88 suspects of illegal state borde r crossing and the smuggling of 188 migrants. 
Criminal cases against police officers suspected of involvement in trafficking activities have 
been processed, but are not yet finalised. 
The Agency for the Coordination of Protection of  Victims, which is under the Ministry of 
Labour, Employment and Social Policy, has rece ived additional financ ial resources. It 
launched an awareness raising campaign on national television and provided shelter and re-
integration programmes for victims.  Eleven centres for social assistance were established at 
municipal level. Temporary residence permits  were issued for seven victims in 2007. 
However, the post of the national coordinator fo r combating trafficking in human beings has 
been vacant since January 2008. The growing number of under-age victims is a matter of concern. Further efforts are needed to increase  cooperation between stat e institutions and the 
NGO sector to a sufficiently high level. Comp ensation for victims has been very slow. The 
action plan for the implementation of the nationa l strategy for combating trafficking in human 
beings has not been adopted. 
Overall, Serbia is moderately advanced in th e fight against traffick ing in human beings.  
Progress in the fight against  terrorism  has been limited to improved protection of official 
buildings and training efforts. Ratification of key in ternational conventi ons is still pending. 
Specific legislation is not in place. A database on terrorism suspects has not been established. Cooperation between police and the security agen cy, as well as their ability to exchange 
information, need to be reinforced. Serbia remains at an early stage in developing a comprehensive approach to fighting terrorism. 
4.3.6. Protection of personal data 
There has been some progress in the area of pr otection of personal data. Serbia ratified the 
Additional Protocol to the Counc il of Europe Convention for the Protection of Individuals 
with regard to Automatic Processing of Pe rsonal Data. A new Law on data protection was 
adopted in October 2008.  
However, in the absence of an independent and efficient data protection supervisory authority, 
existing data protection rules have not been implemented. Preparations in the area of 
protection of personal data  are not well advanced. 
 
EN 53   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 29 September 2008)            
Serbia            
            
Basic data Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Population (thousand) 1) 7 583 7 553 7 528 7 505 7 502 7 491 7 470 7 456 7 425 7 382 
Total area of the country (km²)  77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 77 474 
            
National accounts Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross domestic product (GDP) (million national currency) 2) 169 517 210 232b 397 656 783 897 1 020 117 1 171 564 1 431 313 1 747 459 2 042 048p : 
GDP (million euro) 2) : 17 907b 8 006 13 186 16 812 18 009 19 724 21 077 24 255p : 
GDP (euro per capita) 2) : 2 371e b 1063e 1 757 2 242 2 407 2 643 2 833 3 273 : 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
SI: GDP (in PPS per capita, EU-25=100)  : : : : : : : : : : 
SI: Growth rate of GDP (national currency, at constant prices , % change on previous year) 2) : : 4.5 4.8 4.2 2.5 8.4 6.2 5.7 7. 5e 
SI: Employment growth (national accounts, % change on previ ous year) 2) : : : -0.2 -0.5 -4.0 1.2 -3.9 -1.0 : 
Labour productivity growth: GDP growth per person employed (% change on previous year) 2) : : : 5.1 4.7 6.7 7.2 10.5 6.8 : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture 2) 15.4 18.8b 19.8 19.8 14.8 13.1 13.7 11.9 11.2 : 
Industry 2) 22.6 23.2b 25.8 24.4 23.7 22.5 23.5 23.2 24.1 : 
Construction 2) 4.3 3.6b 3.6 3.2 3.4 4.2 4.8 4.5 4.7 : 
Services 2) 57.7 54.4b 50.8 52.6 58.1 60.2 58.0 60.4 60.0 : 
Final consumption expenditure, as  a share of GDP (%) 2) 98.5 96.3b 97.3 103.5 103.5 98.9 90.5 87.9 87.4p : 
Households and NPISH, as a share of GDP (%) 2) 78.2 78.0b 78.4 83.1 81.2 76.4 70.7 70.0 70.4p : 
General government, as a share of GDP (%) 2) 20.3 18.3b 18.9 20.4 22.3 22.5 19.8 17.9 17.0p : 
Gross fixed capital formation, as a share of GD P (%) 2) 9.8 10.8b 12.3 10.4 11.8 16.1 17.7 17.3 19.7p : 
Changes in inventories, as a share of GDP (%) 2) -0.6 -0.5b -3.8 5.7 5.5 6.6 18.6 14.9 12.9p : 
Exports of goods and services, relative to GDP (%) 2) 21.2 11.1b 10.5 21.7 19.9 20.6 23.8 27.7 30.7p : 
Imports of goods and services, relative to GDP (%) 2) 28.9 17.8b 16.3 41.3 40.7 42.2 50.8 47.8 50.8p : 
            
Industry Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Industrial production volume index (2000=100)  120.7 89.8 100.0 100.1 101.9 98.8 105.9 106.7 111.7 115.8 
            
Inflation rate Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Consumer price index (CPI), (tot al, % change on previous year)  29.9 43.5 79.6 93.3 16.6 9.9 11.4 16.2 11.7 7.0 
            
Balance of payments Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Balance of payments: current account total (million euro)  -419 -427 -166 -318 -1 319 -1 255 -2 306 -1 788 -3 157 -5 021 
Balance of payments current account: trade balance (million euro)  -1 283 -1 167 -1 713 -2 577 -3 414 -3 555 -5 201 -4 252 -4 9 92 -6 445 
Balance of payments current account: exports of goods (million euro)  2 585 1 452 1 781 2 033 2 339 2 934 3 282 3 995 5 128 6 4 63 
Balance of payments current account: imports of goods (million euro)  3 868 2 620 3 494 4 610 5 753 6 489 8 482 8 247 10 121 12  908 
Balance of payments current account: net services (million euro)  271 109 153 272 137 179 141 -5 -41 -13 
 
EN 54   EN Balance of payments current account: net income (million euro)  9 8 -1 7 -77 -120 -174 -260 -330 -503 
Balance of payments current account: net current transfe rs (million euro)  583 624 1 396 1 980 2 035 2 241 2 927 2 730 2 207 1 939 
of which government transfers (million euro)  0 0 293 660 525 421 382 264 186 202 
Foreign Direct Investment (FDI) in the reporting economy (million euro)  : : : : : : : : : : 
            
Public finance Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
General government deficit/surplus, relative to GDP (%)  : : : : : : : 0.8 -1.5 -1.9 
SI: General government debt, relative to GDP (%)  : : : 101.6 69.5 64.3 53.3 50.1 33.2 28.7e 
            
Financial indicators Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross foreign debt of the whole economy, relative to GDP (%)  : : : 94.2 64.0 60.3 52.5 62.0 61.4 59.5 
Gross foreign debt of the whole economy, relative to total exports (%)  : : : 455.0 344.0 282.0 231.8 246.3 213.4 206.8 
Money supply: M1 (banknotes, coins, overnight deposits,  million euro)  : 1 259 544 974 1 546 1 526 1 533 1 748 2 378 3 112 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  : 1 591 662 1 139 1 828 1 920 2 015 2 318 3 31 5 4 882 
Money supply: M3 (M2 plus marketable instruments, mill ion euro)  : 2 125 1 313 2 098 3 156 3 762 4 449 5 535 7 539 11 302 
Total credit by monetary financial institutions to resi dents (consolidated) (million euro)  : : : : : : : : : : 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%)  : : : : : : : : : : 
Deposit interest rate (one year), per annum (%)  : : : : : : : : : : 
euro exchange rates: average of period - 1 euro = … nati onal currency  : 11.740 49.670 59.770 60.680 65.060 72.570 82.910 84.16 0 79.980 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (incl uding gold) (million euro)  652 659 958 2 050 2 937 3 548 3 780 5 525 9 593 10 897 
            
External trade Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Trade balance: all goods, all partners (million euro) 3) -1 575 -1 423 -1 926 -2 862 -3 727 -4 147 -5 791b -4 867 -5 471 -7 296  
Value of exports: all goods, all partners (million euro) 3) 2 393 1 270 1 680 1 896 2 192 2 442 2 748b 3 572 4 992 6 205 
Value of imports: all goods, all partners (million euro) 3) 3 968 2 694 3 606 4 758 5 919 6 589 8 539b 8 439 10 463 13 501 
Terms of trade (export price index / import price index, % change to  the previous year)  3) 3.4 -7.5 8.3 2.9 -4.9 3.7 6.7b -9.2  6.2 -2.0 
Share of exports to EU-27 countries in value of total exports (%) 3) 48.9 50.5 54.3 58.2 59.5 53.9 56.6b 58.7 57.5 57.5 
Share of imports from EU-27 countries in value of total imports (%) 3) 56.7 59.9 61.6 57.6 59.6 58.4 58.2b 54.7 54.4 55.0 
            
Demography Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Natural growth rate: natural change (births minus deaths) (per 1000 i nhabitants) 1) -3.1 -3.9 -4.0 -2.7 -3.3 -3.3 -3.5 -4.6 -4. 3 -4.7 
Net migration rate: immigrants minus emigrant s (per 1000 inhabitants)  : : : : : : : : : : 
Infant mortality rate: deaths of children under one year of age per 1000 live births  11.9 11.1 10.6 10.2 10.1 9.1 8.1 8.0 7.4 7.1 
Life expectancy at birth: male (years)  69.7 69.7 69.7 69.6 69.7 69.9 69.9 70.0 70.6 : 
Life expectancy at birth: female (years)  74.7 74.8 74.8 74.8 75.0 75.1 75.4 75.4 75.9 : 
            
Labour market Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Economic activity rate (15-64): share of  population aged 15-64 that is economically active (%)  67.6 68.2 68.2 68.9 68.4 68.9 6 6.4 65.2 63.6 63.4 
SI: Employment rate (15-64): share of population aged 15-64 that  is in employment (%)  58.2 58.3 59.2 59.7 58.5 57.9 53.4 51.0 49.9 51.5 
Share of male population aged 15-64 that is in employment (%)  66.3 67.1 68.2 68.6 67.1 67.0 63.1 61.2 59.2 60.0 
Share of female population aged 15-64 that is in employment (%)  50.3 49.8 50.4 50.8 50.0 48.7 44.0 40.8 40.6 43.0 
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%)  40.5 42.3 43.3 42.1 42.0 44.3 37.3 35.4 32.6 33.5  
 
EN 55   EN Employment by main sectors (%)                      
Agriculture  : : : : : : 24.0 23.3 20.5 20.8 
Industry  : : : : : : 21.7 21.5 23.2 23.4 
Construction  : : : : : : 5.2 6.1 6.1 6.1 
Services  : : : : : : 49.1 49.1 50.2 49.7 
SI: Unemployment rate: share of labour force that is unemployed (%)  14.0 14.5 13.3 13.3 14.5 16.0 18.7 21.1 21.0 18.3 
Share of male labour force that is unemployed (%)  12.3 12.5 11.1 11.5 12.9 15.1 15.3 17.0 18.1 16.0 
Share of female labour force that is unemployed (%)  16.0 16.9 15.9 15.7 16.5 17.2 23.1 26.5 24.9 21.2 
Unemployment rate of persons < 25 years: shar e of labour force aged <25 that is unemployed 
(%)  50.6 53.2 50.2 46.4 45.3 44.8 48.1 47.7 47.8 43.7 
SI: Long-term unemployment rate: share of labour force that is  long-term unemployed (%)  10.0 10.5 9.9 9.0 9.9 11.0 14.5 16.7 1 7.0 14.8 
            
Social cohesion Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Average nominal monthly wages and salari es (national currency)  1 702.0 1 992.0 3 799.0 8 691.0 13 260.0 16 612.0 20 555.0 25 514. 0 31 745.0 38 744.0 
Index of real wages and salaries (index of nom inal wages and salaries divided by the CPI) 
(2000=100)  115.5 94.2 100.0 118.4 154.9 176.5 196.1 209.5 233.3 266.1 
SI: Early school-leavers: share of popul ation aged 18-24 having not completed upper 
secondary education and not currently in education or training (%)  : : : : : : 11.5 11.4 12.6 10.7 
            
Standard of living Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Number of passenger cars per 1000 population 4) 230.7 208.3 169.2 184.2 179.1 185.3 194.8 198.6 203.6 200.1 
Number of subscriptions to cellular mobile telephone se rvices per 1000 population  : : 155.1 251.1 322.5 399.3 578.8 700.4 894. 7e : 
            
Infrastructure Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Density of railway network (lines in operation, per 1000 km²)  49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 49.2 
Length of motorways (thousand km)  0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 
            
Innovation and research Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  3.3 2.7 2.5 2.5 3.0 3.8 3.5e : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : : 18.5 26.3 
            
Environment Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP)  : : : : : : : : : : 
SI: Share of renewable energy in electricity consum ption (%)  32.3 52.2 42.1 43.3 41.2 36.5 44.9 46.9 41.8 : 
SI: Road freight transport as a share of total in land freight transport (modal split of freight 
transport) (%)  38.8 49.8 : : : : : : : : 
            
Energy Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Primary production of all energy products (thousand TOE)  : : : : : : : : : : 
Primary production of crude oil (thousand TOE)  : : : : : : : : : : 
Primary production of hard coal and lignite (thousand TOE)  : : : : : : : 6 696 6 966 : 
Primary production of natural gas (thousand TOE)  : : : : : : : : : : 
Net imports of all energy products (thousand TOE)  : : : : : : : : : : 
Gross inland energy consumption (thousand TOE)  : : : : : : : : : : 
Electricity generation (thousand GWh)  38.0 31.0 32.0 31.0 31.0 32.0 34.0 36.0 36.0 37.0 
            
 
EN 56   EN  
SI: Structural Indicator  e: estimate  
f: forecast  
p: provisional  bbreak in series  
1. Source: Eurostat. 
2. From 1999 onwards, excluding Kosovo under UNSCR 1244. 3. From January 2004 onwards the Uniform Customs Do cument harmonised with EU  regulations has been used. 
4. Minister of Internal Affaires ex cluded the vehicles that were not regi stered before a given deadline (1 month). 
5. Since 2006, the reference date is 1 Decem ber (instead 15 January as it was before). 
6. In million liters, includes cows and sheep milk. 
7. Without triticale, buckwheat and millet, which are small; rice production does not exist in Serbia. Agriculture Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Agricultural production volume index of goods  and services (produc er prices, previous 
year=100)  99.0 100.0 87.0 118.0 97.0 93.0 120.0 95.0 100.0 92.0e 
Total utilised agricultural area (thousand hectare)  5 086 5 086 5 074 5 077 5 071 5 079 5 075 5 075 5 066 5 053 
Livestock: cattle (thousand heads, end of period) 5) 1 283 1 246 1 162 1 128 1 112 1 102 1 079 1 096 1 106 1 087 
Livestock: pigs (thousand heads, end of period) 5) 4 293 4 066 3 615 3 587 3 634 3 439 3 165 3 212 3 999 3 832 
Livestock: sheep and goats (thousand heads, end of period) 5) 1 868 1 794 1 670 1 612 1 685 1 741 1 728 1 748 1 718 1 756 
Production and utilisation of milk on the farm (total whol e milk, thousand tonnes) 6) 1 637 1 665 1 585 1 594 1 596 1 590 1 593  1 616 1 602 1 562 
Crop production: cereals (including ri ce) (thousand tonnes, harvested production) 7) 8 104 8 584 5 213 9 001 8 298 5 453 9 867 9 510 8 268 6 115 
Crop production: sugar beet (thousand tonnes, harvested produc tion)  1 972 2 428 1 070 1 806 2 098 1 738 2 814 3 101 3 189 3 20 6 
Crop production: vegetables (thousand t onnes, harvested production)  1 274 1 145 1 043 1 283 1 340 1 172 1 340 1 289 1 348 1 12 8