COMMISSION STAFF WORKING DOCUMENT Serbia 2016 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2016 Communication on EU Enlargement Policy
Date: 2016-11-09
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Serbia, accession criteria, accession negotiations, pre-accession strategy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 361 final   COMMISSION STAFF WORKING DOCUMENT Serbia 2016 Report  Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}  
 
 
Table of Contents 

1.  

INTRODUCTION ....................................................................................................... 4 

1.1. Context .................................................................................................................. 4 
1.2. Summary of the report .......................................................................................... 4 

2. 

POLITICAL CRITERIA .............................................................................................. 6 

2.1. Democracy ............................................................................................................ 6 
2.2. Public administration reform................................................................................. 9 
2.3. Rule of law .......................................................................................................... 12 
2.4. Human rights and the protection of minorities ................................................... 19 
2.5. Regional issues and international obligations ..................................................... 21 

3.  

4.  

NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO ...... 23 

ECONOMIC CRITERIA ........................................................................................... 25 

4.1. The existence of a functioning market economy ................................................ 25 
4.2. The capacity to cope with competitive pressure and market forces within the 
Union .......................................................................................................................... 30 

5.  

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ...................... 33 

5.1. Chapter 1: Free movement of goods ................................................................... 33 
5.2. Chapter 2: Freedom of movement for workers ................................................... 35 
5.3. Chapter 3: Right of establishment and freedom to provide services .................. 35 
5.4. Chapter 4: Free movement of capital .................................................................. 35 
5.5. Chapter 5: Public procurement ............................................................................ 36 
5.6. Chapter 6: Company law ..................................................................................... 37 
5.7. Chapter 7: Intellectual property law .................................................................... 38 
5.8. Chapter 8: Competition policy ............................................................................ 38 
5.9. Chapter 9: Financial services .............................................................................. 40 
5.10. Chapter 10: Information society and media ...................................................... 41 
5.11. Chapter 11: Agriculture and rural development ................................................ 42 
5.12. Chapter 12: Food safety, veterinary and phytosanitary policy ......................... 43 
5.13. Chapter 13: Fisheries......................................................................................... 44 
5.14. Chapter 14: Transport policy ............................................................................ 44 
5.15. Chapter 15: Energy ........................................................................................... 46 
5.16. Chapter 16: Taxation ......................................................................................... 48 
5.17. Chapter 17: Economic and monetary policy ..................................................... 48 
5.18. Chapter 18: Statistics......................................................................................... 49 
5.19. Chapter 19: Social policy and employment ...................................................... 50 
5.20. Chapter 20: Enterprise and industrial policy ..................................................... 52 
5.21. Chapter 21: Trans-European networks .............................................................. 53 
5.22. Chapter 22: Regional policy and coordination of structural instruments ......... 53 
5.23. Chapter 23: Judiciary and fundamental rights .................................................. 54 
5.24. Chapter 24: Justice, freedom and security ........................................................ 65 
5.25. Chapter 25: Science and research ..................................................................... 74 
5.26. Chapter 26: Education and culture .................................................................... 75 
5.27. Chapter 27: Environment and climate change .................................................. 75 
5.28. Chapter 28: Consumer and health protection .................................................... 78 

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5.29. Chapter 29: Customs union ............................................................................... 79 
5.30. Chapter 30: External relations ........................................................................... 79 
5.31. Chapter 31: Foreign, security and defence policy ............................................. 80 
5.32. Chapter 32: Financial control ............................................................................ 81 
5.33. Chapter 33: Financial and budgetary provisions ............................................... 84 

Annex I – Relations between the EU and Serbia ..................................................................... 85 

Annex II - Statistical Annex ..................................................................................................... 87 

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1.  

INTRODUCTION

1 

1.1   Context  

The  European  Council  granted  Serbia  the  status  of  candidate  country  in  2012.  The 
Stabilisation and Association Agreement (SAA) between Serbia and the EU entered into force 
in  September  2013.  Accession  negotiations  were  launched  in  January  2014.  The  first  four 
negotiating  chapters  were  opened  during  the  reporting  period,  including  chapter  35  dealing 
with normalisation of relations between Serbia and Kosovo and the rule of law chapters 23 
and 24.  

Serbia remained committed to its strategic goal of EU  accession.  It continued to implement 
the  SAA,  although  a  certain  number  of  compliance  issues  remain.  It  is  implementing  an 
ambitious  political  and  economic  reform  agenda.  Serbia  played  a  constructive  role  in  the 
region.  It  remained  committed  to  the  normalisation  of  its  relations  with  Kosovo.  It  has  also 
played a very constructive role in managing mixed migration flows.  

1.2   Summary of the report 

As  regards  the  political  criteria,  the  early  national  elections,  held  in  April  together  with 
provincial  and  local  elections,  took  place  in  a  calm  atmosphere.  The  recommendations  of 
international  observers  need  to  be  followed  up,  including  those  on  ensuring  that  campaign 
financing  and  the  registration  process  are  transparent.  The  new  government  programme 
included  Serbia's  EU  accession  as  a  priority  goal.  Involvement  of  parliament  and 
stakeholders,  including  civil  society,  in  the  accession  process,  was  further  enhanced. 
However, the inclusiveness, transparency  and quality of law-making and effective oversight 
of  the  executive  need  to  be  further  enhanced,  and  the  use  of  urgent  procedures  limited. 
Constitutional  reforms  are  needed  for  alignment  with  EU  standards  in  some  areas.  There  is 
scope  for  improved  cooperation  between  the  executive  and  independent  regulatory 
institutions. 

Serbia is moderately prepared in the area of public administration reform. Good progress was 
achieved with the adoption of the public financial management reform programme, strategies 
on  e-government  and  on  regulatory  reform  and  policy-making,  and  of  new  laws  on 
administrative procedures, public salaries and local and provincial civil servants. Serbia needs 
to implement its reform targets, professionalise and depoliticise the administration and make 
recruitment  and  dismissal  procedures  more  transparent,  especially  for  senior  management 
positions.  

The judicial system has reached some level of preparation. Some steps were taken to promote 
a merit-based recruitment system, and harmonise the jurisprudence. Further steps are needed 
to tackle political influence. The quality and efficiency of the judiciary and access to justice 
remain  undermined  by  an  uneven  distribution  of  workload,  a  burdensome  case  backlog  and 
the lack of a free legal aid system.  

Serbia  has  some  level  of  preparation  in  preventing  and  fighting  corruption.  Corruption 
remains prevalent in many areas and continues to be a serious problem. The anti-corruption 
effort  has  yet  to  yield meaningful  results.  The  institutional  setup  is  not  yet  functioning  as  a 

1  This  report  covers  the  period  from  October  2015  to  September  2016.  It  is  based  on  input  from  a  variety  of 
sources,  including  contributions  from  the  government  of  Serbia,  the  EU  Member  States,  European  Parliament 
reports and information from various international and non-governmental organisations. As a rule, legislation or 
measures which are under preparation or awaiting parliamentary approval have not been taken into account. 
 This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ 
Opinion on the Kosovo declaration of independence. 

4 

 
 
 
 
 
 
                                                            
credible  deterrent  for  corruptive  practices.  A  track  record  of  effective  investigations, 
prosecutions and convictions in corruption cases is required, including at high level. 

Serbia has some level of preparation in the fight against organised crime. Some progress has 
been  made  in  adopting  a  new  police  law,  reorganising  the  Ministry  of  the  Interior  and  in 
adopting  the  first  serious  and  organised  crime  threat  assessment  (SOCTA)  using  Europol 
methodology.  A  credible  track  record  in  the  fight  against  organised  crime  still  needs  to  be 
established. 

The  legal  and  institutional  framework  for  the  respect  of  fundamental  rights  is  in  place. 
Consistent  implementation  across  the  country  needs  to  be  ensured,  including  as  regards 
protection of minorities. No progress was made to improve conditions for the full exercise of 
freedom of expression, where Serbia has achieved some level of preparation. Serbia was the 
first  enlargement  country  to  introduce  the  EU  Index  of  Gender  Equality.  Further  sustained 
efforts  are  needed  to  improve  the  situation  of  persons  belonging  to  the  most  discriminated 
groups  (Roma,  lesbian,  gay,  bisexual,  transgender  and  intersex  persons,  persons  with 
disabilities, persons with HIV/AIDS and other socially vulnerable groups). 

Serbia  participated  constructively  in  regional  initiatives  and  worked  to  improve  its  bilateral 
relations  in  a  spirit  of  reconciliation,  good  neighbourly  relations  and  establish  a  climate 
conducive  to  addressing  open  bilateral  issues  and  the  legacies  of  the  past.  The  signature  in 
June  of  a  joint  declaration  with  Croatia  tackling  certain  bilateral  issues  was  a  positive 
development. Such an approach is key for reconciliation, peace and cooperation in the region, 
and should be pursued consistently. 

Regarding  the  normalisation  of  relations  with  Kosovo,  Serbia  remained  committed  to  the 
implementation  of  the  agreements  reached  in  the  EU-  facilitated  dialogue.  Progress  was 
limited,  also  due  to  the  electoral  process  in  Serbia  and  the  domestic  situation  in  Kosovo. 
However,  momentum  was  regained  in  August  2016  with  the  start  of  the  work  on  the 
Mitrovica bridge and freedom of movement. Continued efforts are needed to implement the 
agreements already reached with Kosovo. The steps taken should have a positive and concrete 
impact on the everyday life of citizens in both Serbia and Kosovo.   

As regards the economic criteria, Serbia is moderately prepared in developing a functioning 
market  economy.  Good  progress  was  made  to  address  some  of  the  policy  weaknesses,  in 
particular  with  regard  to  the  budget  deficit  and  restructuring  of  publicly-owned  enterprises. 
Economic  reforms  have  brought  clear  results  in  terms  of  growth  prospects  and  reduction  of 
domestic  and  external  imbalances. In  view  of  the  still  high  level  of  government  debt,  fiscal 
consolidation needs to be sustained. The restructuring of large state-owned utilities is still to 
be completed. Credit activity is recovering but the high level of non-performing loans remains 
an  issue.  Unemployment  remains  high,  particularly  among  youth.  Further  expansion  of  the  
private sector is hampered by weaknesses in the rule of law.  

Serbia is moderately prepared to cope with competitive pressure and market forces within the 
Union.  Public  and  private  investments  increased,  though  the  level  of  investment  activity 
remains  below  the  economy's  needs.  The  quality,  equality  and  relevance  of  education  and 
training do not match societal needs. Some progress was made concerning support to SMEs 
and  entrepreneurship  but  SMEs  face  a  number  of  challenges,  including  an  unpredictable 
business  environment,  a  high  level  of  para-fiscal  charges,  and  difficult  and  costly  access  to 
finance. 

As  regards  its  ability  to  assume  the  obligations  of  membership,  Serbia  has  continued  to 
align  its  legislation  with  the  EU  acquis  across  the  board.  Adequate  financial  and  human 
resources and sound strategic frameworks will be crucial to maintaining the pace of reforms. 

5 

 
 
 
Serbia  has  a  good  level  of  preparation  in  areas  such  as  company  law,  intellectual  property, 
science  and  research,  education  and  culture  and  customs.  Serbia  needs  to  further  improve 
investment  planning  and  prioritisation  of  strategically  important  and  mature  infrastructure 
projects through  its  Single  Project Pipeline  and  National  Investment  Committee,  notably  on 
energy  and  transport.  In  the  areas  of  public  procurement,  statistics,  monetary  policy  or 
financial  control,  Serbia  is  moderately  prepared.  Serbia  will  need  to  align  its  foreign  and 
security policy progressively with the European Union's common foreign and security policy 
in the period up to accession. Serbia needs to address, as a matter of priority, issues of non-
compliance with the SAA, in particular on safeguard measures on some agricultural products, 
State aid control, and fiscal discrimination.  

Serbia continued to be affected by the migration crisis. This created a substantial burden on its 
asylum and migration system. Serbia continued to cooperate with neighbouring countries and 
Member  States,  ensured  the  effective  screening  of  refugees  and  migrants,  and  made 
substantial  efforts  to  provide  shelter  and  humanitarian  supplies,  with  EU  support  as  well  as 
the support of others. It is important that Serbia remains engaged. Serbia should also maintain 
its efforts to decrease the number of unfounded asylum applications lodged by its nationals in 
EU Member States.  

2. 

POLITICAL CRITERIA 

2.1.  Democracy 

Elections 

Serbia held elections at national, provincial and local levels on 24 April in a calm atmosphere. 
The assessment and recommendations of international electoral observers need to be followed 
up,  in  particular  those  on  ensuring  that  campaign  financing  and  the  registration  process  are 
transparent. 

Following a government decision, early parliamentary elections were held in April, together 
with provincial elections in Vojvodina and municipal elections. The turnout was 56 %. Seven 
lists  passed  the  5 %  threshold.  The  list  led  by  the  incumbent  Prime  Minister  maintained  a 
majority,  with  131  seats  out  of  250,  and  the  list  of  its  main  coalition  partner,  the  Socialist 
Party of Serbia (SPS), obtained 29 seats. The opposition is fragmented. The Democratic Party 
(DS)  has  16  seats.  The  ‘That’s  Enough’  party  (DJB)  of  former  Minister  of  Economy  Saša 
Radulović entered parliament for the first time, also with 16 seats. The coalition of the Social 
Democratic  Party  (SDS),  the  Liberal-Democratic  Party  (LDP)  and  the  League  of  Social 
Democrats of  Vojvodina  (LSV)  obtained  13 seats.  Parties opposing  Serbia’s  EU  integration 
re-entered parliament: the Serbian Radical Party was in third position, with 22 seats, and the 
Democratic  Party  of  Serbia  (DSS)  in  coalition  with  the  Dveri  movement  secured  13  seats. 
Five  parties  representing  national  minorities,  which  are  exempt  from  the  5 %  threshold, 
obtained 10 seats. Women continue to comprise a third of all MPs. The opposition chairs 2 
out of 20 standing committees, including the committee on European integration. 

International  observers  were  deployed  at  the  Serbian  authorities’  invitation.  The  OSCE’s 
Office  for  Democratic  Institutions  and  Human  Rights  (OSCE/ODIHR)  and  the  Council  of 
Europe Parliamentary Assembly found that the elections offered voters a variety of choices, 
were in general conducted in line with the law, and upheld fundamental freedoms. However, 
they  noted  biased  media  coverage,  undue  advantage  taken  by  incumbent  parties  at  official 
events during the electoral campaign, and a blurring of the distinction between state and party 

6 

 
 
 
 
 
 
 
activities.  A  number  of  previous  recommendations  of  the  OSCE/ODIHR  remained 
unaddressed,  in  particular  those  on  ensuring  that  campaign  financing  and  the  registration 
process  are  transparent.  OSCE/ODIHR  noted  further  shortcomings  in  the  legislation 
concerning  the  dispute  resolution  mechanism  and  the  processing  of  results.  Claims  of 
irregularities during elections should be properly investigated. 

Parliament 

Outside  the  electoral  period,  parliament’s  legislative  activity  was  intensive  and  reflected 
increased  involvement  in  the  accession  negotiation  process.  Consultation  and  transparency 
improved.  However,  the  inclusivity,  transparency  and  quality  of  law-making  and  effective 
oversight  of  the  executive  need  to  be  further  enhanced,  and  the  use  of  urgent  procedures 
limited. 

Due to early elections in April, parliament’s legislative activity was suspended from March. 
Outside this period, parliament’s legislative activity continued to be intensive. Further efforts 
were  made  to  improve  transparency  and  consultation  processes,  including  through  public 
hearings, the holding of the first ever parliament week in October 2015, the constitution of an 
Informal  Parliamentary  Group  for  an  Open  Parliament,  and  regular  meetings  and 
consultations with the National Convent on European Integration, which brings together civil 
society  organisations  involved  in  the  accession  process.  However,  frequent  use  of  urgent 
procedures, last-minute changes to the parliamentary agenda, limited support for independent 
regulatory bodies and a lack of pro-activeness in oversight of the executive, combined with a 
lack of genuine cross-party debate, undermines parliamentary effectiveness. The adoption of 
parliament’s code of conduct and annual work plan remains pending.  

Governance 

The new Serbian government programme included Serbia's EU accession as a priority goal. 
Involvement of parliament and other stakeholders, including civil society, increased further. 
Understanding  and  acknowledgement  of  the  remit  of  independent  bodies,  including  the 
Ombudsman’s Office, needs to be improved. The legal framework for local self-government 
still  needs  to  be  improved  and  further  implemented.  Constitutional  changes  are  needed  to 
address issues of importance for the accession negotiations. 

Following  the  early  parliamentary  elections,  the  new  government  of  Prime  Minister 
Aleksandar Vučić took office in August, renewing the coalition between the SNS, SPS, their 
respective  junior  partners,  and  the  Alliance  of  Vojvodina  Hungarians.  Some  other  minority 
parties voted in favour of the new government. The government has 20 members, including 
the Prime Minister and 3 ministers without portfolio, one of them being in charge of European 
Integration.  It  comprises  5  women  and  8  newcomers.  The  new  government  remained 
committed  to  reforms,  EU  integration  and  to  the  EU-facilitated  dialogue  with  Kosovo  and 
identified economic recovery and attraction of foreign investments as other key priorities. The 
core negotiating team and the Serbian administration continued to demonstrate a high level of 
preparedness and professionalism in the accession negotiations process. 

Involvement  of  parliament  and  civil  society  in  the  accession  process  was  further  improved. 
Greater  coordination  of  sectoral  policies  and  anticipation  of  their  financial  implications 
remain crucial in the negotiations. Further efforts are needed to communicate the benefits of 
joining the EU to Serbian citizens more effectively. 

Public  consultations  need  to  be  wider  and  deadlines  more  realistic  to  enable  all  interested 
parties to provide qualitative input. This is especially needed for draft legislation with major 
economic  and  social  impact.  More  effective  monitoring  of  the  implementation  of  enacted 

7 

 
 
 
legislation and strategic documents is needed. The welcome practice of regular meetings with 
the  Prime  Minister  needs  to  be  built  upon  with  a  view  to  improving  within  the  public 
administration  the  understanding  and  acknowledgement  of  the  essential  role  played  by  the 
Ombudsman's Office and other independent authorities and regulatory bodies in ensuring that 
the executive is accountable. It is important in this respect that all their recommendations, and 
in  particular  those  related  to  issues  of  significant  public  concern,  are  responded  to,  as 
appropriate. 

As regards local self-government, the law on Vojvodina’s resources still needs to be adopted 
as prescribed by the constitution. Implementation of the laws on local self-government and on 
municipal  finance  remains  limited.  A  positive  step  forward  was  the  adoption  of  the  law 
governing the civil service at provincial and local level. Local administrative capacity is weak 
and  significant  disparities  between  municipalities  persist.  Responsibilities  continue  to  be 
borne  at  local  level  without  proper  analysis  of  the  capacity  or  resources  required.  Transfers 
earmarked by line ministries need to be allocated in line with the law on municipal finance. 
Consultation  with  local  authorities  on  new  legislation  with  local  implications  has  improved 
but it remains a discretionary practice. 

The  constitution  has  yet  to  be  revised  to  reflect  fully  the  recommendations  of  the  Venice 
Commission, particularly on parliament’s role in judicial appointments, the political parties’ 
control over the mandate of Members of Parliament, the independence of key institutions and 
the protection of fundamental rights, including data protection. No outcome was reported on 
the work of the Parliamentary Action Team established in 2015 to address matters including 
changes to the constitution. 

Civil society 

Some progress was made towards establishing an enabling environment for the development 
and  financing  of  civil  society.  However,  further  efforts  are  needed  to  ensure  systematic 
inclusion of civil society in policy dialogue and help develop its full potential.  

An empowered civil society is a crucial component of any democratic system and should be 
recognised  and  treated  as  such  by  state  institutions.  Civil  society  organisations  (CSOs)  and 
human  rights  defenders,  who  play  a  key  role  in  raising  awareness  of  civil,  political  and 
socioeconomic rights, continued to operate in a public and media environment often hostile to 
criticism. 

A new Director of the Government Office for Cooperation with Civil Society was appointed 
in  March,  one  year  after  the  resignation  of  his  predecessor.  The  Office  continued  with 
initiatives  aimed  at  improving  cooperation  between  the  state  and  the  civil  sector  and  at 
enhancing  the  legal,  financial  and  institutional  framework  for  the  development  of  civil 
society.  It  published  the  first  study  of  the  status  of  civil  society  organisations,  based  on 
official  records  and  statistics,  providing  a  valuable  overview  of  their  operation  and 
functioning, together with data on the institutional and legal framework for cooperation with 
the public administration. 

Cooperation  between  civil  society  and  parliament  in  the  area  of  EU  negotiations  has 
improved, notably through the National Convent on European Integration, as evidenced in the 
public  consultations  on  chapters  23  and  24.  Guidelines  for  Cooperation  between  the  core 
negotiating team, representatives of civil society organisations, the National Convent and the 
Chamber  of  Commerce  were  adopted  in  April,  aiming  to  improve  the  level  of  inclusion  of 
civil  society  in  the  negotiations.  In  March,  local  civil  society  organisations  presented  the 
initiative  ‘Vojvodina  for  the  EU’,  with  the  aim  of  representing  the  interests  of  Vojvodina’s 

8 

 
 
 
citizens in the process of EU integration. However, civil society struggles to exert influence 
on policy-making and faces obstacles from parts of the public administration. At many levels, 
civil society participation in policy-making is still to a large extent ad hoc, which means that 
the full potential of the sector is not being realised. 

The  national  strategy  for  an  enabling  environment  for  development  of  CSOs  in  Serbia 
2015-2019  (produced  in  2015)  has  still  not  been  adopted  and  the  Council  for  Civil  Society 
Cooperation remains to be set up. 

Corporate donations to non-profit organisations that are licensed providers of social services 
are  now  exempt  from  VAT  (this  type  of  exemption  previously  applied  only  to  donations  to 
state-owned  service  providers).  The  legal  framework  for  volunteering  needs  to  further 
encourage voluntary work, including as part of co-financing projects. 

Civilian oversight of the security forces 

Parliament  needs  to  continue  to  perform  its  oversight  role.  The  remit  of  the  Ombudsman’s 
Office in this field needs to be better understood and defended. Serbia’s legislative framework 
needs to be strengthened. 

The parliamentary committee for oversight of the security forces met only occasionally to 
review  and  report  on  the  activities  of  the  Security-Information  Agency,  the  Military 
Intelligence  Services  and  the  Inspector  General  of  the  Ministry  of  Defence.  The 
Ombudsman’s  Office’s  recommendations  on  illegal  data  collection  by  the  Military 
Intelligence Agency on political parties’ activities need to be followed up. 

The potential for abuse of interception of communications needs to  be addressed. A law on 
access to state security communications still needs to be adopted.  

2.2.   Public administration reform 

Serbia is moderately prepared with the reform of its public administration. Good progress 
has  been  achieved  with  adoption  of  the  public  financial  management  reform  programme, 
e-government  strategy,  a  strategy  on  regulatory  reform  and  policy-making,  new  laws  on 
general  administrative  procedures,  public  salaries  and  civil  servants  at  provincial  and  local 
government level. However, implementation of the public administration reform action plan 
has been slow in some areas, and no progress was made with amending the legal framework 
for central government civil servants. In the coming year, Serbia should, in particular: 

→ align the National Plan for the Adoption of Acquis (NPAA) with the medium-term budget 
plan, provide costing for actions, and update it with a view to setting a legislative programme 
that promotes better regulation based on impact assessments and timely inter-institutional and 
public consultations; 

→ amend the civil service law through an inclusive and evidence-based process to guarantee 
the neutrality and continuity of the public administration and ensure merit-based recruitment, 
promotion  and  dismissal  procedures,  notably  by  eradicating  exceptions  and  transitional 
arrangements in appointments; 

 → ensure systematic coordination and monitoring and regularly report on the implementation 
of the public financial management reform programme 2016-20. 

Policy development and coordination 

The legal basis and the necessary institutions to ensure coherent policy-making are in place. 
Policy coordination continues to focus more on formal, procedural issues than on substance. 
The adoption of the strategy for regulatory reform and public policy management represents a 

9 

 
 
 
 
positive  step  forward.  However,  a  consolidated  policy  planning  and  monitoring  system  still 
needs to be put in place, streamlining the roles and responsibilities of leading institutions in 
charge  of  policy  making  and  coordination,  linking  policy  and  medium-term  fiscal  planning, 
clarifying sources of funding and streamlining overlapping strategies. 

As part of the policy-planning system, coordination structures for European integration have 
been  established.  The  National  Plan  for  the  Adoption  of  the  Acquis  (NPAA)  is  being 
implemented.  However,  there  is  a  consistent  backlog  in  implementing  the  NPAA 
commitments,  and  many  laws  are  adopted  by  urgent  procedure  without  appropriate  public 
consultations.  The  NPAA  needs  to  be  regularly  monitored  and  a  revision  for  2016-2018  is 
expected. 

The administration needs to further strengthen its capacity for inclusive and evidence-based 
policy  and  legislative  development,  including  on  the  acquis.  Public  and  inter-ministerial 
consultations  on  proposals  are  often  conducted  formalistically  and  at  too  late  a  stage  of  the 
process,  not  enabling  all  interested  parties  to  provide  qualitative  input.  Decision-makers  are 
not  systematically  informed  about  the  outcome  of  public  consultations.  More  effective 
monitoring  of  the  implementation  of  enacted  legislation  and  strategic  documents  is  needed. 
Regulatory impact assessments are usually carried out, but their quality varies considerably. 
The  Ministry  of  Finance  has  started  to  check  the  quality  of  compulsory  financial  impact 
assessments  for  all  legislation,  but  further  resources  need  to  be  devoted  to  this  to  ensure 
appropriate quality. 

The  government  publishes  annual  monitoring  reports  on  key  strategic  documents.  This 
enables  public  scrutiny  of  government  work.  However,  the  reports  do  not  measure 
achievements against objectives. Parliamentary scrutiny is conducted by specialist legislative 
committees,  but  their  assessment  of  the  implementation  of  laws  and  strategies  remains 
limited. 

Public financial management 

Serbia  made  progress  with  the  adoption  of  a  comprehensive  public  financial  management 
reform  programme  (PFM)  2016-2020  which  covers  all  the  relevant  PFM  sub-systems.  A 
monitoring framework has been set up, but its efficiency still needs to be assessed. The first 
implementation  report  due  in  July  2016  is  still  to  be  published.  Among  the  key  short-term 
reform  priorities  are  to  improve  macroeconomic  forecasting,  to  align  the  medium-term 
budgetary  framework  and  annual  budget  processes  with  strategic  planning,  to  enhance 
programme budgeting, to enhance tax collection and voluntary compliance, to improve debt 
management,  and  to  strengthen  public  investment  and  capital  project  planning.  The 
programme  envisages  stepping  up  practical  implementation  of  internal  control  (see  chapter 
32).  The  Ministry  of  Finance  is  implementing  a  functional  review,  which  will  support  the 
reorganisation of the ministry. 

As concerns ongoing  PFM reforms,  the tax administration is implementing  a programme to 
enhance  compliance  and  reduce  the  administrative  burden  of  the  tax  collection  process. 
Courts,  public  prosecutors  and  the  judiciary  are  included  in  the  financial  management 
information  system  for  budget  execution.  The  legal  framework  for  public  procurement  was 
developed  further.  External  audit  is  well  established  and  the  State  Audit  Institution  has 
continued to expand audit coverage. The Parliamentary Budgetary Office set up in November 
2015  provides  professional  support  to  the  Members  of  Parliament  on  formulation  and 
execution of budget policy. 

Serbia is committed to improving budget transparency. It has made the executive’s budget 
proposal  and  the  enacted  budget  more  informative.  Furthermore,  a  Citizens’  Budget,  a 

10 

 
 
 
pre-budget  statement,  and  a  mid-year  report  are  to  be  produced  and  published.  The 
executive’s  budget  proposal  and  the  year-end  report  should  be  made  more  comprehensive. 
Public  participation  in  the  budget  process  is  weak  and  budget  oversight  by  the  legislature 
needs to be improved. 

Public service and human resources management 

Serbia  made  limited  progress  with  enforcing  and  amending  the  current  civil  service 
framework  to  guarantee  the  neutrality  and  continuity  of  the  public  administration  and  to 
ensure  merit-based  recruitment,  promotion  and  dismissal  procedures  by  eradicating 
exceptions and transitional arrangements in appointments. The merit principle is undermined 
by the excessive discretion allowed for the political level to choose the final candidates and 
the  lack  of  clear  criteria  for  organisation  of  the  selection  tests  and  composition  of  selection 
committees.  Also,  exemptions  from  the  normal  recruitment  procedures  are  allowed  for 
temporary  staff,  which  makes  up  around  10 %  of  the  civil  service.  The  legal  separation  of 
political  and  public  service  positions  is  not  clearly  enforced.  Political  influence  plays  a  key 
role in filling senior management posts, and more than 60 % of senior civil servants are not 
appointed in line  with  legal provisions. Turnover of senior civil servants continues to be an 
area  of  particular  concern.  The  legal  framework  allows  room  for  abusive  practices  with 
dismissals.  Termination  is  allowed  legally  on  grounds  of  ‘serious  disturbance’,  but  without 
any  formal  definition  of  this  provision  as  well  as  following  the  abolishment  of  the 
management  post  during  an  internal  reorganisation.  A  positive  step  was  the  adoption  of  the 
law  on  provincial  and  local  government  employees  in  March  2016.  The  law  extends  the 
existing state civil service framework to the local level and introduces a system of merit-based 
human resources management.  

Human resources management is not well developed in the state administration; it focuses 
mainly  on  legal  compliance.  The  performance  appraisal  system  remains  inefficient,  with 
inflated  appraisal  grades.  The  Ministry  of  Public  Administration,  responsible  for  central 
coordination of human resources management, lacks capacity to coordinate and harmonise the 
work of human resources units. A separate agency, not directly accountable to the ministry, 
maintains the human resources management information system, which does not interact with 
other national databases such as the treasury payroll registry and is not regularly updated. 

On the civil service remuneration system, a positive step was the adoption of a new law on 
the salary system in February 2016 based on the principle of equal pay for equal work. The 
law covers all public sector employees and is expected to enter into force from 2017. 

Professional  development  is  neither  promoted  consistently  nor  monitored  properly  for  any 
category  of  civil  servants.  There  is  still  no  link  between  the  provision  of  training  and  the 
performance  appraisal  system.  No  progress  has  been  made  with  the  implementation  of  the 
national  strategy  for  professional  development  or  the  planned  establishment  of  a  national 
training institute for public servants. Integrity in public service is promoted by means of the 
2015 code of ethics for civil servants. Its impact remains to be assessed. 

Accountability of administration 

Rightsizing of the state administration is a key government priority. Since 2015 the number of 
public  employees  has  been  reduced  by  more  than  16,000.  The  structure  of  the  state 
administration is, however, a key outstanding issue that the country should address in order to 
maximise  the  impact  of  rightsizing  efforts.  Lines  of  accountability  between  agencies  and 
parent  institutions  are  blurred  within  the  current  organisation,  contributing  to  overlapping 
functions,  fragmentation  and  increased  politicisation.  The  political  commitment  to  improve 

11 

 
 
 
managerial  accountability  and  ensure  more  systematic  delegation  of  responsibilities  within 
institutions has not yet delivered results (see chapter 32 — Financial control). 

Citizens’ right to good administration  is protected through internal and external oversight 
mechanisms. The Ombudsman’s Office plays a key role, and public authorities are obliged to 
report  on  implementation  of  its  recommendations  (see  under  Governance).  The  right  to 
access public information is regulated in the law on access to public information, which is 
not  fully  in  line  with  European  standards.  Administrative  silence  is  a  major  issue,  as 
highlighted by the Commissioner for Free Access to Information of Public Importance, who 
oversees  implementation  of  the  law.  That  office  still  lacks  resources.  The  law  needs  to  be 
further strengthened to ensure enforcement of the Commissioner’s decisions. 

Progress has been made as regards the  right to administrative justice with the adoption in 
February 2016 of a new law on general administrative procedures, whose implementation will 
start in mid-2017. A continuing backlog of administrative disputes to be resolved by the court 
system undermines public confidence. The right to seek compensation is often not enforced, 
partly due to the lack of a specific law on public liability. 

Service delivery to citizens and businesses 

Creating a more user-oriented administration is a key government priority. Some progress 
has been made with the adoption of an e-government strategy and action plan and provision of 
a certain number of integrated e-services to  citizens and businesses through one-stop-shops. 
Citizen satisfaction with the delivery of public services is still not regularly measured.  

Even  though  an  important  step  towards  simplifying  administrative  procedures  was  taken 
with  the  adoption  of  the  law  on  general  administrative  procedures,  Serbia  will  still  need  to 
address  a  number  of  special  administrative  procedures,  regulated  in  different  pieces  of 
legislation, which hinder transparency and legal certainty. 

Strategic framework for public administration reform 

Serbia  is  implementing  its  public  administration  reform  strategy  (PAR)  and  the  related 
action plan for 2015-2017. Political support for PAR is ensured through regular meetings of 
the  PAR  Council,  chaired  by  the  Prime  Minister.  The  first  annual  monitoring  report  shows 
some  delays  with  implementation,  especially  in  the  area  of  public  service  and  human 
resources  management.  Some progress has  been  made  with  adoption  of the PAR  sub-sector 
strategies and three laws governing the civil service at provincial and local level, on general 
administrative procedures and on the public salaries system. Delays are partly caused due to 
insufficient resources  in the lead ministry.  The government needs to  better ensure  financial 
sustainability and allocate sufficient resources for implementation of the reform in the annual 
budget and the medium-term expenditure framework.  

2.3.  Rule of law 

Functioning of the judiciary 

Serbia’s  judicial  system  has  some  level  of  preparation.  Serbia  has  partially  fulfilled  last 
year’s recommendations. Some progress has been made in the last year by further promoting 
a  merit-based  recruitment  system  and  by  pursuing  the  national  programme  to  reduce  the 
backlog  of  court  cases.  Some  steps  were  also  taken  to  harmonise  jurisprudence.  However, 
judicial independence is not assured in practice.  

The legal framework is not yet in line with European standards thus leaving scope for political 
influence in the recruitment and appointment of judges and prosecutors. Public comments on 
investigations  and  ongoing  cases,  even  at  the  highest  political  levels,  continue  to  hamper 

12 

 
 
 
 
judges’ independence. Administration of justice remains slow. Serbia has still not adopted a 
new  law  on  free  legal  aid.  In  addressing  the  shortcomings  outlined  below  in  the  coming 
period, Serbia should in particular: 

  urgently  adopt  a  new  law  on  free  legal  aid  and  enable  its  efficient  implementation  in 
cooperation with the main stakeholders; 

  amend  the  constitutional  provisions  related  to  the  system  for  recruitment  and  career 
management  in  line  with  European  standards  related  to  the  independence  of  the  justice 
system; 

 further step up measures to reduce the backlog of cases and standardise court practice. 

Strategic documents 

The  strategic  framework  is  defined  by  the  national  judicial  reform  strategy  and  action  plan 
(2013-2018) which have been brought into line with the action plan for chapter 23.  

Management bodies 

The  High  Judicial  Council  (HJC)  and  the  State  Prosecutorial  Council  (SPC)  are 
responsible  for  judicial  appointments  and  dismissals  and,  in  part,  for  management  of  the 
judicial budget. They share responsibility for court and prosecution budgets with the Ministry 
of  Justice,  the  latter  being  responsible  for  court  staff,  expert  assistants,  infrastructure  and 
investments. This division hampers the efficiency of financial management and creates scope 
for additional political influence. The HJC and SPC need adequate support to prepare them to 
take  over  independent  management  of  the  justice  system  in  good  time.  This  is  critical  to 
secure  judicial  independence  and  improve  the  functioning  of  the  judiciary  in  line  with  the 
requirements and timeframe of the action plan for chapter 23. 

Independence and impartiality 

Despite  constitutional  guarantees  on  independence,  the  constitutional  and  legislative 
framework still leaves some room for undue political influence over the judiciary. Parliament 
appoints  and  dismisses  the  Supreme  Court  President  and  the  State  Prosecutor,  who  are  also 
ex officio presidents of the High Judicial and State Prosecutorial Councils, together with court 
presidents and prosecutors. The parliament was involved in the election process of key high 
prosecutors in December 2015. In addition, the broad discretionary powers of court presidents 
and heads of prosecution offices over the work of judges and deputy prosecutors respectively 
create  internal  pressure  which  can  have  a  negative  impact  on  their  independence.  External 
pressure is exerted on the judiciary by the many public comments made about investigations 
and  ongoing  cases,  some  of  them  at  the  highest  political  levels,  and  without  adequate 
protective measures being taken by the HJC and SPC. 

Court  rules  of  procedure  provide  for  random  assignment  of  cases,  but  in  practice  not  all 
courts  apply  this  procedure.  There  is  no  technology  for  allocating  files  randomly  in 
prosecution  offices.  Rules  generally  prohibiting  withdrawal  of  cases  from  judges  are  in 
place, but in practice the removal of judges can be circumvented by recourse to the extensive 
powers of court presidents to transfer judges internally or to reassign cases. 

Accountability 

Codes of ethics are in place for judges and prosecutors. Disciplinary procedures are in place 
and  operational  for  both  judges  and  prosecutors.  The  number  of  disciplinary  sanctions 
remained  relatively  small.  Disciplinary  reports  were,  however,  increasingly  filed  for 
inefficiency  or  missed  procedural  deadlines.  This  deserves  careful  consideration,  as  it  is 
connected  to  generally  uneven  (and  in  some  cases  excessive)  workload.  Judges  and 

13 

 
 
 
prosecutors  have  an  obligation  to  declare  their  assets  on  an  annual  basis  and  to  report 
possible conflicts of interest. 

Professionalism and competence 

Appointments, evaluation and dismissals are in the hands of the HJC and SPC. In the case 
of judges, appointments continued under the current rules. December  2015 elections for the 
State Prosecutor and general elections for heads of prosecution offices were organised under 
the new rules for selecting candidates adopted in 2015. However, shortcomings were noted in 
the selection process performed by the SPC. Rules for evaluating judicial assistants have been 
adopted. There is a need to clearly establish a systematic approach to judges’ and prosecutors’ 
careers based on performance criteria.  The same applies to regular individual  evaluation of 
judges and prosecutors. 

Quality of justice 

The Judicial Academy is the institution responsible for initial and continuous training of the 
judiciary. Further reform of the Academy is needed to improve its professional, financial and 
administrative capacity so it can become a proper independent and compulsory point of entry 
to  the  judicial  profession.  A  quality  review  mechanism  to  evaluate  the  effectiveness  of 
judicial training had yet to be established. 

In  the  reporting  period  the  total  budget  for  courts  was  EUR 23.12  per  inhabitant,  or 
EUR 164.5 million, representing 0.5 % of the Gross Domestic Product (GDP). Court fees fell 
further  as  a  number  of  services  have  been  delegated  to  notaries  and  enforcement  agents. 
Frequent  changes  in  legislation  and  insufficient  training  make  the  legal  environment 
challenging for the judiciary, which leads to inconsistency in court practice. There is a strong 
need  for practical in-service training for all categories of staff responsible  for the quality of 
justice. 

is 

limited; 

Serbian  courts  currently  use  three  non-interoperable  applications  for  electronic  case 
management  which  are  not  interoperable,  so  automated  information  exchange  across  the 
remains 
sector 
underdeveloped.  The  statistical  methods  used  need  to  be  reformed  for  better  analysis, 
management and policy decisions, to improve performance and the quality of justice. A case 
weighting system ensuring a more even distribution of cases must be put in place. There is 
no consistent or easily accessible body of case-law. 

information  and  communication 

technology 

(ICT) 

A  new  law  on  mediation  has  been  in  force  since  January  2015  but  has  had  little  impact. 
Awareness  of  mediation  and  alternative  dispute  resolution  is  limited.  A  formal  mediation 
programme  needs  to  be  introduced  in  all  courts,  in  order  to  create  incentives,  inform  the 
public and ensure intensive training among professionals. 

Efficiency 

A national backlog reduction programme is in place but has led to only limited results. The 
overall length of proceedings and the backlog of cases remain serious concerns. The law on 
enforcement  and  security,  which  came  into  force  in  July  2016,  introduces  new  procedures, 
gives public enforcement agents a broader range of responsibilities and has had initial positive 
impact  on  resolving  the  backlog.  The  main  challenges  relate  to  inter-institutional 
coordination,  the  effects  of  delayed  case  migration  (up  to  12 November  2015)  and  the 
shortage of judicial staff. In 2015, the total backlog of court cases increased, with an overall 
clearance rate, i.e. the ratio of solved cases to newly received cases, of 98 %, compared with 
102  %  in  2014.  As  regards  human  resources  policy,  the  planned  reduction  in  the  judicial 

14 

 
 
 
administration by 1 300 will need to be carefully handled so that it does not further challenge 
courts’ efficiency. 

The fight against corruption 

Serbia has some level of preparation in the fight against corruption. No progress was made 
on  meeting  last  year’s  recommendations.  Corruption  remains  prevalent  in  many  areas  and 
continues to be a serious problem. There have been limited results from the implementation of 
adopted legislation. Serbia has still not adopted the new law on the Anti-Corruption Agency 
nor  the  amendments  to  the  criminal  code  in  the  economic  crimes  sections.  The  government 
still  does  not  take  the  recommendations  of  its  own  advisory  body  -  the  Anti-Corruption 
Council  -  into  account.  No  progress  was  made  on  improving  Serbia’s  track  record  of 
convictions or stepping up the implementation of the national anti-corruption strategy. As in 
2015, in addressing the shortcomings outlined below in the coming period, Serbia should in 
particular: 

→  establish  an  initial  track  record  on  investigations,  indictments  and  final  convictions  as 
regards high-level corruption; 

→  step  up  the  implementation  of  the  national  anti-corruption  strategy  and  action  plan, 
including  by  providing  effective  coordination  and  ensuring  that  all  key  institutions  have 
adequate capacity and resources to fulfil their remits effectively; 

→ urgently amend and implement the economic and corruption crimes section of the criminal 
code  (in particular  Article 234 on abuse  of position  of a responsible person)  with a view to 
providing a credible and predictable criminal law framework; 

→  swiftly  adopt  a  new  law  on  the  Anti-Corruption  Agency  to  strengthen  its  role  as  a  key 
institution for a more effective fight against corruption. 

Track record 

There  is  a  track  record  of  successful  investigation,  prosecution  and  convictions  in 
corruption  cases.  There  are  still  very  few  final  convictions  for  high-level  corruption.  In 
order  to  secure  more  final  convictions,  law  enforcement  bodies  need  to  be  more  fully 
empowered  to  act  effectively  and  impartially  when  investigating  corruption  allegations. 
Public enterprises remain particularly vulnerable to corruption. Independent supervision and 
capacity  for  early  detection  of  wrongdoing  or  conflicts  of  interest  in  the  management  of 
state-owned companies, in privatisation procedures, public-private partnerships and in relation 
to  strategic  investment  partnerships  are  underdeveloped.  Internal  control  departments  lack 
equipment, resources and competent staff. 

Financial  investigations  are  not  being  launched  systematically  in  cases  of  corruption  and 
organised crime. Only in a few corruption cases have assets been effectively confiscated. 

Political influence on the police, judges and prosecutors is illustrated by frequent comments 
by  politicians  on  ongoing  corruption  investigations  and  court  rulings.  Repeated  leaks  to  the 
media about ongoing investigations, in breach of the presumption of innocence, continue to be 
an issue of serious concern. A number of high-profile cases, including some where evidence 
of  alleged  wrongdoing  has  been  presented  by  the  media,  have  still  not  been  seriously 
investigated. 

The Anti-Corruption Agency continued to monitor the funding of political activities, and to 
report  on  oversight  financing  of  political  organisations.  It  continued  to  file  requests  for 
misdemeanour  proceedings  relating  to  the  funding  of  political  activities  and  to  asset 

15 

 
 
 
 
declarations and conflicts of interest. There is some track record of judicial follow-up to the 
Anti-Corruption Agency’s work. 

As regards free access to information, the legislation has not yet been amended to improve 
the effectiveness of the work of the Commissioner for Free Access to Information of Public 
Importance  and  Personal  Data  Protection.  Analysis  of  requests  refused  for  access  to 
information shows that they mainly concern issues that have an impact on the budget. 

Institutional framework 

On the prevention side, the Anti-Corruption Agency enjoys a large degree of independence 
in  carrying  out  its  mandate,  including  control  of  asset  and  income  declarations,  conflicts  of 
interest,  political  party  financing  and  electoral  campaigns.  However,  the  Agency  faces 
obstacles to playing its role effectively, in the form of imprecise and unclear provisions of the 
law on the Anti-Corruption Agency and the lack of legal access to databases and records of 
other  state  bodies.  The  Anti-Corruption  Council  continued  to  analyse  cases  of  systemic 
corruption  and  to  provide  the  government  with  policy  advice.  The  Council  remains 
under-resourced  and  the  government  does  not  follow  up  and  act  on  its  recommendations 
systematically. Laws on access to information are in place, but they still do not ensure that the 
decisions  of  the  Commissioner  for  Free  Access  to  Information  of  Public  Importance  and 
Personal Data Protection are followed up. The Commissioner does not have the legal power to 
monitor outcomes. 

As  regards  law  enforcement,  police  and  prosecutors  are  conducting  more  proactive 
investigations  but  continue  to  lack  specialised  tools  and  training.  There  is  still  no  safe  and 
secure  platform  for  exchanging  sensitive  information  between  them,  which  hampers 
investigations.  Capacity  to  carry  out  financial  investigations  and  confiscate  assets  in 
corruption cases remains limited. 

Legal framework 

The  legal  framework  for  the  fight  against  corruption  is  broadly  in  place.  The  excessive 
recourse  to  the  provision  on  abuse  of  office  in  the  private  sector  in  the  criminal  code  is 
harmful to the business climate and legal certainty. Amendments to the criminal code are still 
under consideration to provide for a sustainable legal solution in order to prosecute criminal 
economic offences effectively. There has been a significant delay in amending the law on the 
Anti-Corruption Agency to enhance its role as a key institution in the fight against corruption. 

Serbia has ratified all major international instruments against corruption but more evidence is 
needed to demonstrate their effective implementation. Procedures for investigating corruption 
cases,  especially  cases  of  high-level  corruption,  remain  lengthy  due  to  an  inadequate  legal 
framework for financial investigations and asset recovery.  

The law on access to information does not ensure adequate enforcement of the decisions of 
the  Commissioner  for  Free  Access  to  Information  of  Public  Importance  and  Personal  Data 
Protection. Lobbying is not regulated. Laws on conflicts of interest need to be amended. 

Strategic framework 

Serbia is  implementing  an  anti-corruption strategy  and action plan  for  2013-2018 but  its 
effects  are  so  far  limited  and  a  number  of  measures  have  been  delayed.  There  is  limited 
institutional  capacity  to  steer  the  coordination  of  activities.  Serbia  has  adopted  a  financial 
investigation  strategy,  but  it  still  lacks  an  action  plan  and  credible  financial  resources  to 
effectively implement it. It has not yet achieved results. The fight against corruption in Serbia 
lacks both a long-term strategic vision and the political will to boost reforms. 

16 

 
 
 
Fight against organised crime 

Serbia  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Serbia  has 
partially fulfilled last year’s recommendations. Some progress has been made in adopting a 
new  police  law,  reorganising  the  Ministry  of  Interior  and  in  adopting  the  first  serious  and 
organised  crime  threat  assessment  (SOCTA)  using  Europol  methodology.  However,  the 
number of final convictions remains low. Efforts to investigate wider criminal networks and 
to  process  money  laundering  cases  still  need  to  be  stepped  up.  Financial  investigations  and 
the concept of intelligence-led policing remain underused. Precautionary freezing of assets is 
rarely  applied  and  the  level  of  assets  confiscated  is  low.  Independent  and  transparent 
oversight of the police is not yet in place. In addressing the shortcomings outlined below in 
the coming period, Serbia should in particular: 

 → based on the SOCTA, continue stepping up intelligence-led investigations with a view to 
developing a sustainable track record of final convictions and dismantling networks involved 
in organised crime, money laundering, people smuggling and trafficking in human beings; 

→  establish  a  secure  platform  to  exchange  intelligence  between  law  enforcement  agencies, 
devoting more attention to sharing data on cases with prosecutors and with the asset recovery 
directorate; 

→ ensure coherence between the new law on the organisation of the police and the criminal 
procedure code; 

→ reinforce the functions and independence of the internal control sector of the police. 

Track record 

The number of final convictions for organised crime remains low compared to the estimated 
value of the criminal market in the region. Criminal investigations are often narrow in scope 
and companies or organisations are very rarely investigated. In many cases, though, there has 
been no serious effort to investigate wider criminal networks. There was a substantial fall in 
the  number  of  identified  victims  of  trafficking  in  human  beings  in  2015  compared  with 
2014. There is a need to establish a proactive approach to identifying victims, including those 
among migrants, asylum seekers and unaccompanied foreign minors.  

There is no policy of systematically running serious financial investigations. The concept of 
financial investigation does not go beyond the seizure and confiscation of criminal assets of 
individuals and rarely focuses on tracing money flows. Serbia is not yet in a position to run 
complex  financial  (including  money 
investigations  alongside  criminal 
investigations. This was confirmed by the Council of Europe’s Moneyval evaluation report on 
Serbia  adopted  in  April  2016.  Precautionary  freezing  of  assets  is  rarely  applied  in 
investigations. So assets often disappear, which results in a poor track record of confiscating 
criminal assets on final conviction. Sanctions applied by judges are not sufficiently deterrent. 
There are frequent leaks to the press, violating the secrecy of the investigation.  

laundering) 

Serbia continued good international and regional cooperation in the fight against drugs. As 
regards  the  fight  against  money  laundering,  some  progress  can  be  noted  in  terms  of  the 
Administration  for  Prevention  of  Money  Laundering  detecting  and  acting  upon  suspicious 
transactions, despite its inadequate resources. 

Institutional and operational capacity 

17 

 
 
 
 
 
Serbia  has  31 951  police  officers,  or  445  per  100 000  inhabitants.  The  Ministry  of  Interior 
reformed  human  resources  and  created  a  centralised  service,  but  its  capacity  needs  to  be 
reinforced. There is no progress in applying clear and transparent criteria in staff recruitment, 
promotions,  dismissal,  career  paths  and  evaluation  in  the  police;  they  remain  vulnerable  to 
politically motivated decisions. Serbia needs to take additional steps to exclude any political 
influence  in  police  work.  Command  structures  continue  to  be  complex,  with  overlapping 
responsibilities.  

Specialised  units  are  in  place  to  combat  terrorism,  trafficking  in  human  beings,  synthetic 
drugs, and cybercrime and to conduct financial investigations. All these units are in need of 
further  staffing  and  specialised  training.  A  specialised  department  in  the  Criminal 
Investigations Directorate to prevent and fight domestic violence has been created, but needs 
to be reinforced. The general level of equipment varies across the ministry. 

There  was  no  progress  in  establishing  independent  and  transparent  oversight  of  the  police. 
The  new  law  on  the  police  does  not  represent  sufficient  progress  to  meet  this  goal.  The 
internal  control  section  of  the  police  is  not  independent  nor  is  it  able  to  take  special 
investigative action without recourse to the intelligence agencies. 

The operational capacity of prosecutors and the police is weakened by the lack of a secure 
platform for storing and exchanging information. Effective cooperation on operations between 
the  various  law  enforcement  agencies,  such  as  the  police  and  the  tax  and  customs 
administrations, is hampered by a lack of smooth data exchange. An operational agreement 
with Europol is in place but there is no progress in appointing a liaison officer to The Hague. 
International  cooperation  is  well  established.  The  witness  protection  unit  in  the  ministry 
lacks adequate staff, equipment and premises. The level of cooperation between the Serbian 
Witness Protection Unit and prosecutors needs to be improved. As regards crime statistics, a 
DNA database and profiling capacity are in place. There was no progress towards adopting a 
comprehensive,  multidisciplinary  and  victim-oriented  approach  to  the  fight  against  human 
trafficking. Capacity for anti-money laundering action is weak. The lack of proactive financial 
investigations increases the risk of assets being taken out of the country. The Directorate for 
the Management of Seized Assets in the Ministry of Justice is under-equipped to carry out its 
remit  to  seize  and  confiscate  property.  The  Serbian  police’s  secure  database  does  not  allow 
cases  to  be  classified  as  international  or  domestic.  It  does  not  provide  information  received 
through asset recovery activities. 

Legal framework 

The  February  2016  law  on  the  police  provides  for  better  separation  of  tasks  between  the 
police and Ministry of Interior. Clear guidance on the implementation of this new law needs 
to  be provided.  The law on the confiscation  of criminal  assets  needs to be aligned with  EU 
rules,  notably  as  regards  third-party  confiscation,  extended  confiscation  and  precautionary 
freezing of assets. Alignment is still required with various EU police cooperation and criminal 
law instruments. A number of shortcomings in the investigation phase need to be addressed 
through  amendments  to  the  criminal  procedure  code,  notably  as  regards  the  timeframe  and 
arrangements  for  using  special  investigative  measures.  The  police’s  dependence  on  the 
security  and  intelligence  agencies  to  carry  out  certain  special  investigative  measures  in 
criminal  investigations  are  not  in  line  with  good  practice.  Legal  amendments  are  needed  to 
broaden the investigative powers of the border police and customs. 

Strategic framework 

Serbia has national strategies for anti-money laundering activities, financial investigation and 
combating  the  financing of terrorism. Serbia adopted  its first national serious and organised 

18 

 
 
 
crime threat assessment (SOCTA) and should now start using it to set security priorities and 
roll  out  the  concept  of  intelligence-led  policing,  based  on  a  well-developed  risk  and  threat 
assessment  capacity,  which  still  needs  to  be  developed.  Serbia  needs  to  adopt  strategies  on 
cybercrime and trafficking in human beings. 

The fight against terrorism 

Serbia criminalised, already in 2014, the activity of foreign terrorist fighters in line with UN 
Security Council resolution 2178 (2014). The national strategy to prevent and fight terrorism 
was finalised in March 2016; its adoption is pending. It is in line with the ‘prevent, pursue and 
respond’ model of the 2010 EU counter-terrorism strategy. The role of local authorities and 
civil society organisations in identifying and preventing extremism and radicalisation should 
be emphasised. The protection of critical infrastructure needs to be addressed. 

Serbia is actively involved in international and regional police and judicial cooperation. The 
phenomenon of foreign terrorist fighters requires a tailor-made approach from the intelligence 
and law enforcement community. 

For developments in these areas, see chapter 24 — Justice, freedom and security. 

2.4.  Human rights and the protection of minorities  

The legislative and institutional framework for observance of international human rights law 
is in place. Generally, the legal framework to uphold and protect minority and cultural rights 
is  also  in  place.  However,  consistent  implementation  across  the  whole  country  is  needed. 
Shortcomings particularly affect the following areas: 

→  conditions  for  the  full  exercise  of  freedom  of  expression  continue  to  be  lacking.  More 
consistent efforts are needed to ensure full implementation of the media laws; 

→ strong and visible political support is needed to protect the rights of the groups facing most 
discrimination,  including  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons, 
people  with  disabilities,  people  with  HIV/AIDS  and  other  vulnerable  groups.  Investigation, 
prosecution and penalties for hate-motivated crimes need to be stepped up; 

→ a comprehensive approach to the integration of national minorities is needed through full 
implementation of the action plan on national minorities across the country; 

→  full implementation  of the new strategy for Roma inclusion needs to be ensured and the 
action plan needs to be adopted promptly. 

A  detailed  analysis  of  freedom  of  expression  as  a  pilot  area  follows  below.  For  a  detailed 
analysis of developments on other human rights and the protection of minorities, see chapter 
23 — Judiciary and fundamental rights. For developments in the areas of trade union rights, 
anti-discrimination  policy  and  equal  opportunities,  see  also chapter  19  —  Social  policy  and 
employment. 

Freedom of expression 

Serbia has achieved some level of preparation concerning freedom of expression. However, 
no progress has been made in the last year. The overall environment is not conducive to the 
full exercise of this right. The legislative package in the media sector still needs to be fully 
implemented.  Privatisation  of  state  media  outlets  has  not  led  to  greater  transparency  of 
ownership  or  funding  sources,  including  state  funding.  Co-financing  of  media  content  to 
meet  public  interest  obligations  needs  to  be  implemented  in  line  with  the  legislative 
framework,  using  transparent  and  fair  procedures,  and  without  interference  by  the  state 

19 

 
 
 
 
administration, especially at local level. Threats, violence and intimidation against journalists 
remain  an  issue  of  concern.  Information  leaks  to  media  outlets,  e.g.  about  ongoing 
investigations,  threaten  the  personal  safety  of  journalists  and  are  an  invasion  of  personal 
privacy. Investigations and final convictions for attacks on and intimidation of journalists are 
rare. 

In  addressing  the  shortcomings  outlined  here,  in  the  coming  period  Serbia  should  in 
particular: 

→ create an enabling environment in which freedom of expression can be exercised without 
hindrance,  while  threats,  physical  assaults,  instigation  to  violence  and  cases  of  invasion  of 
privacy against journalists and bloggers are properly followed up by the judicial authorities 
and publicly condemned; 

→  ensure  the  full  implementation  of  media  laws,  and  make  the  Regulatory  Body  for 
Electronic Media fully operational in order to support editorial independence in the media; 

→  ensure  adequate  funding  of  public  broadcasting  services,  and  editorial  independence,  to 
support them in serving the public interest; 

→ bring funding from state resources under co-funding for media content serving the public 
interest into line with the current legislation to ensure transparency and equal opportunities. 

Intimidation of journalists 

The  number  of  recorded  cases  of  threats,  intimidation  and  violence  against  journalists 
remains a concern. Some criminal charges have been filed but final convictions are still rare. 
Prolonged police protection of several journalists and social media activists continues, with no 
tangible  action  taken  to  remove  the  reasons  for  these  security  measures,  which  seriously 
hamper the exercise of their profession. The commission tasked to look into unresolved cases 
of murdered journalists from 1999 and 2001 has not made further progress with investigating 
two murders, while the trial for the murder of one media publisher is in progress. Publication 
of personal data and assumptions that are detrimental to the presumption of innocence remain 
frequent.  There  has  been  no  progress  in  investigating  a  series  of  cases  of  actions  against 
websites  that  occurred  from  2014  on.  Serious  efforts  are  needed  to  identify  and  prosecute 
those suspected of violating internet freedoms. 

Legislative environment 

Media legislation in place since 2014 has not yet been fully implemented. The privatisation of 
the  State-owned  media  is  not  yet  fully  completed,  and  has  not  ensured  transparency  of 
ownership or an increase in the variety of information available to the public. Co-financing of 
media  content  in  the  public  interest  should  be  made  more  transparent,  at  national  and  local 
level. Defamation ceased to be a criminal offence in December 2012. As regards  access to 
information of public interest from state bodies, state services often resort to paying fines 
rather than disclosing the information requested. 

Implementation of legislation/institutions 

The Regulatory Body for Electronic Media (REM) is incomplete since not all members of 
its  council  have  been  appointed.  The  appointment  procedure  for  REM  council  members 
should  be  free  from  political  influence.  REM’s  assessment  of  media  compliance  with 
legislative provisions during the election campaign in April 2016 is still awaited. The  Press 
Council has stepped up its efforts to record and impose penalties for breaches of professional 
standards  in  the  print  media  and  has  recorded  a  growing  number  of  breaches  of  the 
Journalistic Code, primarily relating to the truthfulness of published information.  

20 

 
 
 
Public service broadcasters 

The two public service broadcasters, Radio Television of Serbia (RTS) and Radio Television 
of Vojvodina (RTV), started being partially financed through a subscription fee in line with 
the law. Additional funds from the state budget will need to be allocated, according to clear 
criteria. Public broadcasters are entitled to  commercial income,  with  less airtime devoted to 
advertising  than  that  allowed  for  commercial  broadcasters  by  law.  The  funds  available  for 
public broadcasters are insufficient to meet their legal obligations and the temporary nature of 
their  funding  model  leaves  them  vulnerable  to  political  influence.  Public  broadcasting 
services in minority languages need to be strengthened, especially as regards RTS. The way 
that widespread staff changes were made at RTV in May gave rise to concerns about ensuring 
the station’s commitment to editorial independence. 

Economic factors 

Unclear  ownership  structures  and  financing  from  state  resources,  especially  at  local  level, 
continue to be a feature of the media environment since the privatisation of the state media. 
Political and economic influence over the media continues to  be a source of concern, while 
informal pressure on editorial policy is exerted through the distribution of advertising funds. 

Professional organisation / professional conditions 

There  are  three  main  professional  associations  in  Serbia.  Journalists  have  little  job  security 
and  the  editorial  environment,  which  favours  ‘tabloidisation’  and  the  publication  of 
unconfirmed and unchecked (or even completely fabricated) information, is not conducive to 
improving  journalistic  standards.  Low  salaries  and  a  lack  of  job  security  continue  to  make 
media  professionals  vulnerable  to  pressure  and  influence.  The  overall  media  environment 
encourages  self-censorship.  Journalists’  job  security  should  be  enhanced  and  press 
associations need to strengthen their role in trade union and employment matters. 

2.5.  Regional issues and international obligations 

There  are  no  outstanding  issues  concerning  Serbia’s  respect  for  the  Dayton  /  Paris  Peace 
Agreement. Serbia continues to support the sovereignty and territorial integrity of Bosnia and 
Herzegovina, while  preserving  special relations  with  Republika Srpska, as envisaged by the 
Dayton  Agreement.  Serbia  also  supports  Bosnia  and  Herzegovina’s  path  to  joining  the  EU. 
(Analysis  on  cooperation  and  on  the  domestic  handling  of  war  crime  cases  can  be  found 
under the relevant heading in chapter 23 – Judiciary and fundamental rights) 

Serbia’s  policy  on  the  International  Criminal  Court  is  in  line  with  the  EU’s  guiding 
principles  and  EU  common  positions  on  the  integrity  of  the  Rome  Statute.  Serbia  does  not 
have any bilateral immunity agreements.  

Along  with  Bosnia  and  Herzegovina,  Croatia  and  Montenegro,  Serbia  has  continued  to 
cooperate  closely  under  the  Sarajevo  Declaration  Process,  which  aims  to  find  sustainable 
solutions for some 74 000 people who became refugees or displaced persons as a result of the 
armed conflicts in former Yugoslavia in the 1990s. In Serbia, little progress has been made on 
implementing  the  upgraded  plan  for  4 725  housing  units  worth  EUR  78  million;  only  129 
have  been  delivered.  The  issue  of  refugees’  pensions  between  Croatia  and  Serbia  is  still 
unresolved. 

The  unresolved  fate  of  missing  persons  who  disappeared  in  the  conflicts  of  the  1990s 
remains  a  humanitarian  concern  in  the  Western  Balkans.  In  July  2016,  according  to  the 
figures of the International Committee of the Red Cross (ICRC), close to 11 000 people were 

21 

 
 
 
 
 
still missing as a result of the conflicts in the region. Of these, some 6 900 cases are related to 
the conflict in Bosnia and Herzegovina, 2 100 to the conflict in Croatia and over 1 600 to the 
conflict  in  Kosovo.  The  lack  of  information  on  gravesites  and  difficulties  in  identifying  the 
human remains exhumed up to now continue to be the key obstacles to solving the remaining 
cases  of  missing  persons  in  the  region.  After  a  temporary  standstill,  three  sessions  of  the 
ICRC-chaired Working Group on Missing Persons in Kosovo have been held since November 
2015.  This  is  a  welcome  development,  particularly  in  view  of  the  fact  that  the  four  cases 
solved  in  2015  represented  the  lowest  number  since  the  end  of  the  conflict.  The  Serbian 
authorities  gave  an  additional  impetus  to  the  process  by  beginning  excavation  at  a  hitherto 
unknown  potential  gravesite  at  Kiževak  mine,  in  the  municipality  of  Raška,  in  November 
2015.  A  protocol  on  cooperation  in  tracing  missing  persons  was  signed  with  Bosnia  and 
Herzegovina. As regards missing persons related to the conflict in Croatia, in October 2015 
the  Serbian  and  Croatian  State  Commissions  updated  the  Book  of  Missing  Persons  on  the 
Territory  of  the  Republic  of  Croatia  in  line  with  the  June  2015  agreement.  Efforts  must 
continue  to  find  information  on  potential  gravesites  and  clarify  the  fate  and  whereabouts  of 
those still unaccounted for. 

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of  Serbia’s 
European  integration  process  and  contribute  to  stability,  reconciliation  and  a  climate 
conducive to addressing open bilateral issues and the legacies of the past. Serbia has shown 
increasingly  constructive  engagement  in  regional  cooperation  initiatives  such  as  the 
South-East  Europe  Cooperation  Process,  the  Regional  Cooperation  Council,  the  Central 
European Free Trade Agreement, the Adriatic-Ionian Initiative, the Brdo process, the Western 
Balkan  Six  initiative  and  the  Berlin  process.  In  June,  Serbia  took  the  annual  chair  of  the 
Migration, Asylum and Refugees Regional Initiative, and in July the six-month  chair of the 
Organisation  of  the  Black  Sea  Economic  Cooperation.  It  continued  to  actively  support  the 
Coalition for Reconciliation Commission and Igman initiatives on regional reconciliation. 

The impetus given through the Berlin process and the Western Balkan Six initiative, notably 
regarding  the  connectivity  agenda,  has  continued  to  foster  increased  regional  cooperation. 
Building on the results of previous summits, the June 2016 Paris summit saw further advances 
on  the  connectivity  agenda  but  also  opened  cooperation  in  new  areas,  notably  through  the 
establishment  of  the  Regional  Youth  Cooperation  Office  to  be  established  in  Tirana.  Serbia 
has  participated  actively.  Serbia  needs  to  implement  the  connectivity  reform  measures 
associated with the connectivity agenda such as aligning technical standards, formalising and 
simplifying border crossing procedures, strengthening road safety and maintenance schemes. 
The implementation of these connectivity reform measures remains crucial for the functioning 
of integrated transport and energy networks. 

Serbia  remained  constructively  committed  to  bilateral  relations  with  other  enlargement 
countries  and  neighbouring  EU  Member  States.  Serbia  needs  to  conclude  bilateral 
conventions  on  regional  cooperation  under  Article  15  of  the  Stabilisation  and  Association 
Agreement  (SAA)  with  other  partners  with  an  SAA  in  force.  It  has  concluded  one  with 
Montenegro  and  took  steps  to  conclude  similar  conventions  with  Albania  and  Bosnia  and 
Herzegovina.  The  demarcation  of  borders  with  Bosnia  and  Herzegovina,  Montenegro  and 
Croatia remains pending. 

Relations  with  Albania,  which  had  improved  overall  in  the  previous  year,  remained  stable. 
The  Serbian  and  Albanian  Ministers  of  Foreign  Affairs  took  part  in  two  trilateral  meetings 
with  their  Italian  counterpart.  The  Serbian  and  Albanian  Prime  Ministers  opened  together  a 
business forum in Niš in October 2016. Bilateral ties were also strengthened in the framework 
of the Berlin process and the common connectivity agenda. 

22 

 
 
 
Relations  with  Bosnia  and  Herzegovina  remained  overall  good.  The  first  joint  session  of 
Serbian  and  Bosnia  and  Herzegovina  governments  in  November  2015  was  a  major  step 
forward, followed by the signature of bilateral agreements, including agreements on missing 
persons, the environment and telecommunications. The Serbian Prime Minister took part in an 
investment  forum  in  Srebrenica  in  November  2015.  A  Bosnia  and  Herzegovina  Presidency 
member and the Minister of Foreign Affairs visited Belgrade at the end of 2015. In July, the 
Serbian Speaker paid her first visit to Sarajevo after her re-election.  

Relations with the former Yugoslav Republic of Macedonia remained good and continued to 
deepen.  The  Minister  of  Foreign  Affairs  of  the  former  Yugoslav  Republic  of  Macedonia 
visited Belgrade in November 2015. 

Relations  with  Montenegro  remained  good.  A  programme  of  scientific  cooperation  was 
signed  in  September  2015.  Cooperation  in  the  defence  sector  also  continued,  with  the 
signature  in  April  of  an  agreement  on  cession  of  submarines.  The  Montenegrin  President 
visited Belgrade in July. There were no developments on issues related to citizenship rights in 
the two countries. 

Relations with Turkey remained stable overall. The Turkish Prime Minister visited Serbia in 
December  2015.  The  two  countries  agreed  to  establish  a  High  Council  for  Strategic 
Cooperation.  

Relations  with  Bulgaria,  Hungary  and  Romania  continued  to  be  good.  The  Serbian  and 
Bulgarian Ministers of Defence met in March. The Speaker of the Serbian parliament visited 
Bulgaria in February and Hungary in November 2015. The Hungarian Prime Minister visited 
Serbia  in  April  and  September.  The  Romanian  Minister  for  the  Diaspora  visited  Serbia  in 
December 2015. Serbian, Bulgarian and Romanian Prime Ministers, on one side, and Foreign 
Affairs parliamentary committees, on the other side, met in October 2015 in Sofia. 

Relations with Croatia regained momentum with the signature in June of a joint declaration 
tackling certain bilateral issues, but continued to be mixed. 

3.   NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO  

Work  under  the  EU-facilitated  dialogue  has  continued  throughout  the  reporting  period. 
Overall progress in the implementation of the 25 August 2015 agreement has been slow. This 
is partly due to respective internal circumstances, with parliamentary elections followed by a 
lengthy government formation process in Serbia and domestic situation in Kosovo. During the 
last high-level dialogue in January 2016, both sides had asked for political space to operate in, 
address these domestic challenges and consolidate government and governance. EU frequent 
bilateral contacts and discussions with both sides helped maintain the political engagement at 
highest  level,  and  re-engage  both  sides  to  resume  work  on  the  implementation  of  past 
agreements.  

Since the formation of the Serbian government in August, both sides engaged in acceleration 
of the implementation of the 25 August 2015 Agreements. Implementation of the agreement 
on  the  Mitrovica  Bridge  commenced  in  August  and  works  on  and  around  the  bridge, 
including  turning  the  North  Mitrovica  municipality's  main  street  (King  Petar  Street)  into  a 
pedestrian zone, are to be completed by January 2017. Progress has been made when it comes 
to  bridging  different  views  on  the  arrangement  on  telecoms,  while  final  implementation  is 
still  outstanding.  Little  progress  has  been  made  on  the  Association  /Community  of  Serb 
majority municipalities in Kosovo. After the official appointment of the management team, 

23 

 
 
 
 
 
 
the 
a  mandate  needs 
Association/Community.  Serbia  needs  to  register  and  license  the  two  Serbian  energy 
companies to be established in Kosovo to allow progress in the field of Energy.     

it  by  Kosovo 

the  statute  of 

to  be  given 

to  draft 

to 

Further progress has been made on the implementation of the April 2013 ‘First agreement of 
principles  governing  the  normalisation  of  relations’.  Kosovo  Serb  police  and  civil 
protection personnel are now fully integrated into the Kosovo system. The dismantling of the 
Serbian structures on justice continues as scheduled and all former Serbian judicial personnel 
are  expected  to  be  into  the  Kosovo  system  by  autumn  2016.  In  the  context  of  the  liaison 
arrangements,  official  visits  are  directly  arranged  by  Liaison  Officers  in  line  with  the 
relevant agreement. 

Most  agreements  from  the  Technical  Dialogue  (2011-2012)  are  now  implemented  and 
functioning.  In  the  field  of  cadastre,  the  scanning  of  documents  pertaining  to  Kosovo  was 
completed in June, as scheduled but the documents have not been delivered to the EU Special 
representative in Kosovo, in line with the agreement on cadastre. Both sides agreed on new 
modalities  for  the  implementation  of  the  University  Diploma  agreement  in  April.  An 
agreement  was  reached  in  September  on  the  implementation  of  the  licence  plate  related 
remaining elements of the agreement on freedom of movement. Requests for  Mutual Legal 
Assistance  are  being  processed.  Serbia  needs  to  remain  committed  to  the  continued 
implementation  of  the  agreement  on  representation  and  participation  of  Kosovo  in  regional 
forums. Serbian official statements have at times interfered with the judicial process led by 
EULEX.  Serbia  has  yet  to  address  the  issue  of  re-located  Serbian  administrative  customs 
structures  with  Kosovo  denomination  that  operate  from  within  Serbia,  and  to  cease  the 
issuance  of  documentation  or  affixing  of  stamps  with  denomination  that  contravenes  to  the 
related agreement. On IBM, while the interim crossing points are fully operational, there has 
been no progress in establishing the three permanent crossing points to be hosted by Serbia. 
Illegal crossing roads/ by-passes, in particular in the north of Kosovo, continue to be regularly 
used  to  smuggle  substantial  amounts  of  goods.  Additional  measures  need  to  be  taken  by 
Serbia to close illegal crossings.  

Overall, Serbia has remained engaged in the dialogue and committed to the implementation of 
the agreements reached. However, Serbia needs to make further efforts and contribute to the 
establishment  of  circumstances  conducive  to  the  normalisation  of  relations  with  Kosovo. 
Further progress in this area remains essential for advancing the European future of Serbia.  

24 

 
 
 
4.   ECONOMIC CRITERIA  

Key economic figures 

Gross  domestic  product  per  capita  (%  of  EU28  in 
PPS) 

GDP growth (%) 

2014 

37 

-1.8 

2015 

36 

0.8 

Unemployment rate (female; male) (%) 

19.2 (20.3; 18.3)  17.7 (18.8; 16.8) 

Economic  activity  rate  for  persons  aged  20–64: 
proportion  of  the  population  aged  20–64  that  is 
economically active (female; male) (%) 

Current account balance (% of GDP) 

Net Foreign direct investment (FDI) (% of GDP) 

68.0 

-6.0 

3.7 

Source: Eurostat 

68.1 

-4.7 

5.4 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The  monitoring  of  these  economic  criteria  should  be  seen  in  the  context  of  the  central 
importance  of  economic  governance  in  the  enlargement  process.  Each  enlargement  country 
prepares  an  Economic  Reform  Programme  (ERP)  annually,  which  sets  out  a  medium-term 
macro-fiscal  policy  framework  and  a  structural  reform  agenda  aimed  at  ensuring 
competitiveness  and  inclusive  growth.  The  ERPs  are  the  basis  for  country-specific  policy 
guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial level 
in May each year. 

4.1.   The existence of a functioning market economy 

Serbia is moderately prepared in developing a functioning market economy. Good progress 
was made to address some of the policy weaknesses, in particular with regard to the budget 
deficit. Growth prospects have improved and domestic and external imbalances were reduced. 
Price  stability  has  been  preserved.  The  restructuring  of  publicly-owned  enterprises  has 
advanced. 

However, government debt is still very high. Credit activity is recovering but the high level of 
non-performing  loans  remains  an  issue.  Unemployment  is  very  high,  particularly  among 
youth. The private sector is underdeveloped and hampered by weaknesses in the rule of law. 

In  line  with  the  ERP  recommendations  and  in  order  to  support  long-term  growth,  in  the 
coming years Serbia should pay particular attention to: 

→ further lowering the budget deficit and reducing the high public debt level; 

→ continuing the restructuring and privatisation of state-owned enterprises and addressing the 
non-performing loans (NPLs); 

→ improving revenue collection in a systematic and business-friendly way by implementing 
the tax administration transformation programme and fighting the informal economy. 

Economic governance 

The  government  remained  committed  to  creating  a  functioning  market  economy.  It 
continued  implementing  the  Stand-By  Arrangement  with  the  International  Monetary  Fund 

25 

 
 
 
 
 
(IMF). However, the Economic Reform Programme policy guidance has only been partially 
implemented. Strong fiscal consolidation measures led to a significant reduction of the very 
high budget deficit and provided room to lower interest rates. The restructuring and resolution 
of state-owned enterprises and the public administration reform advanced. Financial stability 
was preserved and the business environment improved. 

Macroeconomic stability 

P
D
G

f
o
%

Figure 1 Serbia GDP growth 

7,0
6,0
5,0
4,0
3,0
2,0
1,0
0,0
-1,0
-2,0
-3,0
-4,0

Growth fundamentals and prospects 
have 
improved.  The  rebound  of 
economic  activity  was  supported  by 
base  effects, 
low  oil  prices,  and 
increased  confidence  as  a  result  of 
implemented reforms and strong fiscal 
consolidation.  GDP  growth  was 
modest  in  2015  before  accelerating 
strongly  to  2.9 %  in  the  first  half  of 
2016.  Although  the  economy  is  still 
close  to  its  pre-crisis  level,  there  is  a 
new  growth  momentum  based  on 
sounder fundamentals. It is driven by a 
robust  and  broad-based  expansion  of 
exports and investment. The new investment cycle that started last year should further support 
the rebalancing of the economy. The income gap with the EU remained broadly unchanged: in 
2015, per capita GDP in purchasing power standards stood at 36 % of the EU average. 

GDP per capita in purchasing power standards, EU28=100 (RHS)
GDP growth (LHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

60
55
50
45
40
35
30
25
20
15
10
5
0

Surging  exports  have  reduced  external  imbalances.  Serbia's  solid  export  performance 
continued  unabated  and  import  coverage  of  goods  and  services  increased  from  around 
two-thirds  5  years  ago  to  close  to  90 %  in  early  2016.  As  a  result,  the  trade  and  current 
account deficits were markedly reduced. In the four quarters to June 2016, the current account 
deficit fell to around 4 % of GDP, compared with an average of close to 8 % over the last 5 
years, and was fully covered by net Foreign Direct Investment (FDI). Moreover, FDI inflows, 
which picked up already last year, have been broad-based, with a significant share going into 
manufacturing  and  tradable  sectors.  The  level  of  external  debt  remains  high  and  makes  the 
economy vulnerable to external shocks. The debt ratio has crept up to around 80 % of GDP 
but, in view of shrinking external imbalances and a favourable term structure, does not raise 
immediate  concerns.  Over  the  last  5  years,  the  official  foreign  exchange  reserves  remained 
relatively high. 

Figure 2 Serbia fiscal developments 

Monetary policy supported growth. Inflation has been persistently below the central bank 
target of 4 % ±1.5 percentage points since February 2014. Price stability has been facilitated 
by  a  long  period  of  low  inflation  in  major  trading  partners  and,  in  particular,  by  declining 
commodity  prices,  weak  domestic  demand,  and  a  policy  of  maintaining  a  generally  stable 
exchange  rate.  The  low  inflationary  pressure  and  strong  fiscal  consolidation  helped  reduce 
inflation  expectations  and  supported  further 
reductions in the key policy rate of the central 
bank  from  5 %  in  September  2015  to  4 %  in 
July  2016.  In  an  effort  to  improve  lending 
conditions  and  spur  credit  growth,  the  central 
bank  also  gradually  cut  the  foreign  currency 
reserve requirement ratio. 

7,0

8,0

5,0

6,0

70

80

60

P
D
G

50
P
D
G
40
f
o
%
30

20

10

0

2010

2011

2012
Public debt (LHS)

4,0

f
o
%

26 

3,0

2,0

1,0

0,0

2013

2014
Budget deficit (RHS)

2015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
policy 

excess 

guidance: 

Fiscal consolidation has been very strong. After years of very high budget imbalances, the 
budget deficit fell from 6.6 % of GDP in 2014 to 
3.7 % of GDP in 2015. Public wage and pension 
cuts,  implemented  at  the  end  of  2014,  and 
better-than-expected  collection  of  tax  revenue 
contributed to a significant structural adjustment. 
In  addition,  the  deficit  reduction  was  also 
supported  by  one-off  revenue.  The  good  budget 
performance  allowed  for  a  partial  reversal  of 
wage  and  pension  cuts  as  well  as  unplanned 
one-off payments by the end of last year. The strong revenue growth continued in 2016 and 
led  to  a  small  budget  surplus  by  the  end  of  August,  despite  a  36 %  increase  in  capital 
expenditure. In view of this, the restrained spending on wages and pensions, and some one-off 
receipts,  the  2016  budget  deficit  is,  therefore,  likely  to  be  significantly  lower  than  the 
originally planned 4 % of GDP. 

ERP 
Further 
strengthen  fiscal  consolidation  by  using 
current 
revenue 
any 
expenditure  savings,  and  take  additional 
measures, if needed, in order to achieve a 
primary  surplus  in  2016  and  reduce 
overall  budget  deficits  in  the  following 
years. 

and 

Fiscal  consolidation  needs  to  be  sustained.  Despite  an  impressive  deficit  reduction,  fiscal 
imbalances  and  risks  remain  high  and  fiscally  important  structural  reforms  have  been  only 
partially  implemented.  Interest  payments  are  significant  and  the  share  of  mandatory 
expenditure  is  still  too  large  to  allow  for  a  sizeable  shift  towards  a  more  growth-enhancing 
pattern of spending. In order to put public finances on a sound footing, the consolidation drive 
has  to  be  supported  by  maintaining  strict  control  over  current  expenditure  and  by  further 
advancing public finance reforms and the restructuring of state-owned enterprises. 

fiscal 

framework 

resolution  of 

guidance:  Support 
taking  steps 
the 

There  are  ongoing  efforts  to  strengthen 
the 
and 
budgetary 
consolidation 
governance.  As 
advances,  the  importance  of  addressing 
institutional deficiencies is growing. In late 
2015,  the  government  adopted  a  Public 
Finance  Management  reform  programme 
and  action  plan,  which  should  now  be 
implemented.  The  public  administration 
reform has advanced. Dedicated efforts are 
also  being  made  to  strengthen  the  tax 
administration  and  reform  local  government  finance.  The  Fiscal  Council  remained  a 
prominent  institution,  supporting  domestic  debates  on  fiscal  policy.  However,  the  fiscal 
responsibility framework and, in particular the system of fiscal rules, is weak and needs to be 
strengthened. 

fiscal 
ERP  policy 
to  find  a 
consolidation  by 
remaining 
sustainable 
state-owned  enterprises  and  continuing  the 
organisational  and  financial  restructuring  of 
large utility companies. Advance the reform of 
the public administration as envisaged. Further 
improve revenue collection in a systematic and 
business-friendly way by implementing the tax 
administration transformation programme. 

The  macroeconomic  policy  mix  has  been  appropriate.  The  economy  is  still  facing 
significant  challenges  but  the  authorities’  reform-oriented  policy  stance  has  begun  to  bear 
fruit  through  improved  growth  prospects,  a  better  sovereign  credit  rating  and  an  improved 
business  environment.  The  combination  of  restrictive  fiscal  policy  and  accommodative 
monetary policy stance has proven successful. Macroeconomic stability improved as a result 
and the economy returned to growth earlier than expected. 

 Functioning of product markets 

Business environment 

Steps  were  taken  to  further  facilitate  market  entry  procedures.  The  procedure  of 
registering  business  entities  was  improved,  including  by  making  it  possible  to  apply  for 

27 

 
 
 
incorporation  and  VAT  registration  at  the  same  time.  Following  the  simplification  of  the 
process of issuing construction permits last year, a new electronic permitting system became  

operational at the beginning of 2016.  

The system allows for faster processing  of 
applications for construction — in the first 
half  of  2016  the  number  of  building 
permits issued increased by 12.2 % and the 
anticipated  value  of  works  is  50 %  higher 
in  comparison  with  the  same  period  the 
year before. 

ERP  policy  guidance:  Improve  the  business 
environment  and  promote  private  investment 
by  developing  a  more  transparent  and  less 
burdensome  system  of  para-fiscal  charges, 
putting  in  place  a  guarantee  scheme  for  loans 
to  SMEs  and  re-launching  the  ‘regulatory 
guillotine’. 

The institutional and regulatory environment remains  weak. Important  laws continue to 
be adopted by emergency procedure, without proper consultations with interested parties, and 
there  are  delays  in  the  adoption  of  secondary  legislation.  Courts  are  burdened  with  a 
substantial number of unresolved cases. Property restitution progressed, with about half of all 
claims  being  resolved.  The  informal  economy  is  estimated  at  around  20-30 %  of  GDP  and 
leads to losses of budget revenue, a lack of labour protection and, along with corruption, is a 
major  obstacle  to  fair  competition.  In  December  2015,  the  government  adopted  a  national 
programme  for  countering  the  shadow  economy.  The  high  number  of  loosely  regulated 
non-tax fiscal and para-fiscal charges, both at state and local government level, represents a 
costly burden on businesses. 

State influence on product markets 

The  State  presence  in  the  economy  and  the  level  of  state  aid  are  high.  The  share  of 
administered prices remains broadly unchanged at around 19 % of the consumer price index 
basket. The State has not issued new guarantees for liquidity support to SOEs or guarantees to 
companies  from  the  portfolio  of  the  Privatisation  Agency.  The  government  also  committed 
itself  not  to  give  implicit  guarantees  in  the  future.  However,  in  the  context  of  restructuring 
SOEs,  it  continued  taking  over  debt  of  some  of  these  enterprises  that  were  already 
beneficiaries of previous guarantees. The administrative capacity to manage subsidies at local 
and  central  level  remains  weak.  In  many  cases,  State  aid  continues  to  be  granted  to 
unprofitable public companies or in a non-transparent manner. Investment aid, in particular, is 
not granted on the basis of predictable criteria in line with the EU and SAA state aid rules. 
State support should be redirected towards horizontal objectives, such as support to SMEs and 
research and development. 

Privatisation and restructuring 

Bankruptcy  and  privatisation  challenges  persist.  Following  amendments  to  the  law  on 
privatisation,  the  Privatisation  Agency  ceased  to  exist  in  February  2016.  Its  activities  were 
transferred to other institutions. By September 2016, the status of most of the companies in 
the  portfolio  of  the  Privatisation  Agency  has  been  solved  through  sale  or  bankruptcy 
procedures. The  protection  of  companies  of  strategic importance  from  forcible  collection  of 
debts and bankruptcy was lifted in the beginning of June. With a few exceptions, like the sale 
of assets of the Smederevo steel mill, the resolution of these companies remains a challenge. 

The  restructuring  of  large  public  utilities  has  advanced.  In  view  of  the  significant 
economic and fiscal impact, improving their operational and financial performance remains a 
priority.  In  February,  the  government  adopted  a  financial  consolidation  plan  of  Srbijagas. 
Although  the  payment  discipline  of  the  company’s  major  clients  has  improved  recently, 
obligations  from  past  arrears  are  high  and  financial  restructuring  is  still  due.  First  steps  to 
reorganise Elektroprivreda Srbije, the state-owned power utility, were taken in 2015. Further 

28 

 
 
 
measures,  envisaged  in  its  financial  restructuring  plan,  to  reduce  costs,  including  staff 
reduction,  and  increase  revenue  have  been  implemented  or  are  in  the  pipeline.  In  October 
2015,  the  government  adopted  a comprehensive  restructuring  plan  for the  Serbian Railways 
until  2020,  focusing  on  assets,  network  and  staff  reorganisation.  Major  steps  were  taken 
towards implementing this plan. 

Functioning of the financial market 

Financial stability 

Reducing the high level of non-performing loans remains an important challenge.  

The  banking  sector  maintained  a  strong  liquidity  position  and  capital  adequacy  ratio.  The 
special  diagnostic  study  conducted  by  the  central  bank  last  year  did  not  identify  capital 
shortfalls  for  any  of 
representing 88 % of total banking system assets.  

the  participating  banks, 

However, despite declining in the first half of 2016, 
non-performing loans (NPLs) stood high, at close to 
20 %,  and  remain  a  significant  burden  for  banks. 
Therefore,  a  continuous  implementation  of  the  NPL 
resolution strategy, adopted in 2015, is much needed. 
The  profitability  of  the  banking  sector  improved, 
although  some  of  the  small  banks  recorded  losses. 
Despite  increased  dinarisation  of  household  loans, 
the overall deposit and loan euroisation is widespread 
and  represents  a  key  financial  stability  risk.  A 
privatisation  advisor  was  selected  for  the  second 
including  also 
largest  bank.  Further  measures, 
actions  on  the  remaining  small  state-owned  banks 
and  the  restructuring  of  other  financial  institutions, 
are needed in order to reduce risks. 

Access to finance 

adopted, 

reinforcing 

the 
strategy’) 
and 

ERP  policy  guidance:  Continue  to 
address risks to financial stability and 
the real economy by following-up on 
the  NPL  action  plans  which  have 
been 
the 
strategy  already  in  place  to  promote 
local  currency 
the  use  of 
in 
(‘dinarisation 
the 
financial 
shedding 
increased light on the asset quality of 
smaller  banks  that  were  not  covered 
by  the  special  diagnostic  studies. 
Throughout  this  process,  the  central 
bank’s  monetary  policy  stance  may 
remain  accommodative  insofar  as 
both  inflation  expectations  remain 
anchored  and  a  favourable  fiscal 
consolidation path is maintained. 

system 

Lending  activity  is  picking  up  but  needs  to  be 
managed  carefully.  The  financial  system  is  dominated  by  commercial  banks,  mostly 
foreign-owned, holding more than 90 % of all assets. State control of key entities in both the 
banking  and  insurance  sectors  remained  unchanged.  Commercial  bank  loans  were  broadly 
stagnant over the last few years at around 47 % of GDP but started to expand noticeably in 
2016.  Reduced  interest  rates  and  accelerating  economic  activity  have  been  instrumental  in 
reviving  lending  activity.  Credit  to  households  expanded  steadily  in  the  last  few  years  and 
accelerated further in 2016. After a prolonged period of decline, lending to companies gained 
momentum  as  well.  However,  the  credit  expansion  would  need  to  be  managed  carefully  in 
order to avoid excesses and accumulation of new vulnerabilities. 

Functioning of the labour market 

Labour  market  conditions  improved  but  unemployment  remains  very  high.  The 
employment  rate  increased  only  marginally  in  2015.  Registered  private  sector  jobs  rose 
strongly by close to 10 % due to stricter labour inspection, while the public sector shed some 
34,000  jobs.  The  unemployment  rate  fell  to  17.7 %.  Labour  market  indicators  improved 
further  in  2016,  to  a  large  extent  driven  by  rising  informal,  in  particular  agricultural, 
employment.  Although  in  decline,  unemployment  is  still  particularly  high  among  young 
people  —  around  40 %  of  youth  has  no  job  and  close  to  one  in  four  is  not  in  employment, 

29 

 
 
 
education  or  training.  Women’s  position  in  the  labour  market  did  not  change  and  is 
characterised by significantly lower activity and employment rates compared to men. 

Figure 3 Unemployment in Serbia   
(% of Active population) 

Figure 4 Participation rates in Serbia  
(% of Labour Force) 

60,0

50,0

40,0

30,0

20,0

10,0

0,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate

Youth unemployment rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

the 

high 

relatively 

Job creation continued to be impeded by weak labour demand and structural obstacles. 
Labour  demand,  although  on  the  rise,  is  far  below  its  pre-crisis  levels.  Amendments  to  the 
labour  law,  adopted  two  years  ago,  increased 
labour market flexibility.  
However, 
social 
contribution  burden,  in  particular  on  low 
incomes,  impedes  job  creation  and  fuels 
labour  market  duality.  More  than  85 %  of  all 
unemployed  have  a  medium  or  high  level  of 
to  considerable  gaps 
education,  pointing 
between  acquired  skills  and  labour  market 
demand.  Brain  drain 
remains  a  major 
challenge.  The  National  employment  service 
is being strengthened and the budget for active labour market policies was increased, with a 
special focus on young people, redundant workers and the long-term unemployed. 

ERP policy guidance: Step up the provision of 
targeted  active 
to 
facilitate  in  particular  the  reintegration  of 
workers  made  redundant  in  the  resolution  of 
public 
enterprises 
state-owned 
administration 
the 
rightsizing. 
capacity of the National Employment Services 
to roll out such measures to larger numbers of 
beneficiaries. 

labour  market  policies 

and 
Increase 

4.2.   The capacity to cope with competitive pressure and market forces within 
the Union 

Serbia is moderately prepared to cope with competitive pressure and market forces within 
the  Union.  Some  progress  was  made  concerning  support  to  SMEs  and  entrepreneurship. 
Public and private investments increased. 

However,  the  quality,  equality,  and  relevance  of  education  and  training  do  not  fully  match 
societal needs. The level of investment activity is still below the economy’s needs. SMEs face 
a  number  of  challenges,  including  an  unpredictable  business  environment,  a  high  level  of 
para-fiscal charges, and difficult and costly access to finance. 

In  line  with  the  ERP  recommendations  and  in  order  to  support  long-term  growth,  in  the 
coming year Serbia should pay particular attention to: 

→ improving the quality of the education system; 

30 

 
 
 
 
 
 
 
 
→  stimulating  private  investments  and  improving  prioritisation  and  management  of  public 
infrastructure projects; 

→ better regulating and reducing the scope of para-fiscal charges, in particular for SMEs. 

Education and innovation 

The worsening demographic situation and weak education outcomes demand increased 
focus  on  human  capital  policies.  Serbia’s  population  is  ageing  and  shrinking  by  around 
0.5 %  per  year.  Public  spending  on  education  is  comparable  to  that  of  EU  countries,  but 
outcomes  in  terms  of  skills  and  key  competences  are  weaker.  This  is  manifested  by 
below-average  PISA2  test  scores  showing  that  around  one-third  of  the  population  is 
functionally  illiterate.  Serbia  ranked  below  all  EU  Member  States  in  the  2016  World 
Economic Forum human capital index, with particularly weak results in the 15-24 age group. 
Although the country has a relatively good scientific base, the level of investment in research 
is less than 1 % of GDP and cooperation between the public and private sector is weak and 
not systematically supported. 

The  quality,  equality,  and  relevance  of  education  and  training  have  to  be  improved  in 
order  to  better  match  societal  needs.  Both  employers  and  graduates  believe  that  the 
education  institutions  do  not  equip  students  with  key  soft  skills,  such  as  problem  solving, 
organisational,  decision-making.  The  national  strategy  and  action  plan  for  education 
development  aims  to  address  the  outdated  curricula  and  obsolete  teaching  methods.  On  the 
basis of existing qualification frameworks for vocational and higher education, an integrated 
national  qualification  framework  for  lifelong  learning  has  been  developed  and  is  under 
consultation  with  relevant  national  bodies.  It  should  be  linked  with  steps  for  a  progressive 
reform of  the education system at all  levels, improving the level of basic skills  acquired by 
students.  Pre-primary  education  enrolment  is  below  the  EU  average  at  around  60 %  for 
children aged 3 and above and just 17 % for children aged below 3. 

Physical capital and quality of infrastructure 

Investments increased but are still below the economy’s needs. Years of underinvestment 
have  taken  their  toll  and,  despite  a  strong  pick-up  in  both  public  and  private  investment 
activity that started last year, the share of total investment stood at just 18 % of GDP in 2015. 
Work on major transport corridors intensified but, in view of the poor state of infrastructure,  

there  is  a  clear  need  to  further  increase  government  investment.  Importantly,  foreign  direct 
investment rose markedly to 5.4 % of GDP 
in  2015  and  was  largely  channelled  into 
tradable  sectors  like  manufacturing,  thus 
improving  competitiveness  and  increasing 
the  production  and  export  base.  However, 
there is still significant room to attract new 
FDI as Serbia lags behind peer countries in 
terms of cumulative FDI per capita. 

ERP 
the 
under-execution  of  public  capital  expenditure 
and 
by 
management;  as  a  priority,  make  significant 
progress in the preparation  of the construction 
interconnector 
of 
project and finish road works on Corridor X by 
end of 2017. 

the  Bulgaria-Serbia  gas 

guidance:  Address 

prioritisation 

improving 

policy 

its 

to 

is  an  untapped  potential 

There 
facilitate  investment  via  connectivity  reform  measures  in  the  energy  and  transport 
sector.  Project  planning,  preparation  and  coordination  needs  to  be  improved,  building  upon 
existing  structures  like  the  National  Investment  Committee  and  the  Single  Project  Pipeline. 
Given  limited  fiscal  space,  careful  consideration  should  be  given  to  prioritising  and 
implementing  projects  with  clear  economic  returns.  All  investment  could  benefit  from 

2 OCED's Programme for International Student Assessment 

31 

 
 
 
                                                            
improving  the  legal  and  regulatory  framework.  The  transport  and  energy  sectors  require 
improvements in traffic management, energy efficiency and diversification, maintenance, and 
road safety.  

The  information  and  communication  technology  infrastructure  has  expanded  over 
recent years. Almost two-thirds of households have internet access at home. Public services 
offered  via  e-government  are  slowly  expanding.  The  number  of  their  active  users  also 
continued increasing. 

Sectoral and enterprise structure 

The  structure  of  the  economy  remained  broadly  unchanged.  Services  still  play  a  major 
role with a share close to 50 % of GDP. In 2015, industry and mining have increased slightly 
their weight, recovering from the floods the year before, and are firmly above 20 % of GDP. 
In line with the strong investment growth, the construction sector is booming, approaching its 
pre-crisis levels. Agriculture is the only sector which has seen its share in GDP more or less 
steadily  decline  over  the  last  few  years.  This  decline  was  accompanied  by  a  drop  in 
employment in 2015. Nevertheless, almost one out of every five employed people is still in 
agriculture.  Employment  in  industry  and  construction  remained  broadly  stable,  while 
employment in services increased markedly, likely due to better recording and measures taken 
to reduce the informal economy. 

Small and medium enterprises are the backbone of the economy. SMEs contribute about 
half  of  the  value  added  and  account  for  around  70 %  of  employment  in  the  ‘non-financial 
business  economy’.  Their  role  is  particularly  prominent  in  services  like  construction,  retail 
and  tourism.  Although  SMEs’  share  in  manufacturing  has  been  above  40 %  in  the  last  few 
years, they have not been able to recover to their pre-crisis positions. SMEs face a number of 
challenges,  including  an  unpredictable  business  environment,  a  high  level  of  para-fiscal 
charges, and difficult and costly access to finance, especially when compared with large and 
state-owned  enterprises.  The  government  recently  adopted  the  ‘Year  of  Entrepreneurship 
2016’ programme with the aim to provide financial and non-financial support to businesses. 

Economic integration with the EU and price competitiveness 

140

120

100

60,0

80,0

40,0

70,0

50,0

is 

to 

national 

is  a  potential 

Figure 5 Serbia trade integration with the EU 

There 
further 
increase  economic  integration  with 
the  EU  market.  Trade  openness 
increased,  surpassing  100 %  of  GDP, 
but  is  still  below  the  level  of  peer 
economies.  The 
quality 
infrastructure still does not fully support 
trading  operators.  The  EU 
the 
country’s  main  trading  partner  by  far, 
accounting  for  63.6  %  of  total  exports 
and  62.3  %  of  total  imports  of  goods. 
Serbia’s  trade  with  CEFTA  followed 
with  an  11.5 %  share  in  overall  trade 
but  was  much  stronger  on  the  export 
side,  which  is  three  times  the  size  of  imports.  The  EU  continued  to  be  the  main  source  of 
foreign investment too, with a share in net FDI of 82 % in 2015 and more than three-quarters 
of 
the 
internationalisation  of  companies,  in  particular  SMEs,  and  bring  domestic  and  foreign 
companies together. 

the  cumulative  FDI  stock.  Better  services  could  be  offered 

Share of Imports from EU
Share of exports to EU
Trade with the EU (2008=100) (RHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

to  support 

10,0

20,0

30,0

0,0

0

80

60

40

20

32 

 
 
 
 
After  depreciating  slightly  in  2014,  the  dinar  real  effective  exchange  rate  remained  broadly 
stable. Serbia’s non-price competitiveness, however, improved significantly due to reforms to 
improve the business environment and a marked increase in FDI in the last few years. 

5.   ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP   

5.1.  Chapter 1: Free movement of goods 

The free movement of goods ensures that many products can be traded freely across the EU 
based on common rules and procedures. Where products are governed by national rules the 
principle of the free movement of goods prevents these creating unjustified barriers to trade. 

Serbia is moderately prepared for the free movement of goods. Some progress was made, 
mainly in terms of quality infrastructure and transposition of New Approach legislation. In the 
coming period, Serbia should in particular: 

→  further  align  sectoral  legislation  and  ensure  better  implementation  of  technical 
requirements and standards; 

→ reinforce its administrative capacity to perform market surveillance;  

→  ensure  adequate  administrative  and  surveillance  capacities  in  order  to  implement  the 
European Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals 
(REACH) and the Classification, Labelling and Packaging of substances and mixtures. 

General principles 

The general principles of Serbia’s framework for the free movement of goods are partly in 
line with Articles 34-36 of the Treaty on the Functioning of the EU (TFEU). Serbia has not 
yet  adopted  an  action  plan  for  compliance  with  Articles  34-36  to  identify  (1)  outdated 
technical or other product requirements that are not in line with the acquis and (2) individual 
regulations  that  lack  mutual  recognition  clauses.  Nor  does  it  have  a  specific  strategy  and 
action  plan  for  implementing  the  acquis  on  this  chapter.  Administrative  structures  and  the 
legal  bases  for  technical  regulations,  standards,  accreditation,  metrology,  conformity 
assessment, and market surveillance, have  been put  in  place with  the aim of aligning to  the 
acquis. 

Non-harmonised area 

A strategy and action plan for compliance with Articles 34-36 of the TFEU still need to be 
adopted.  The  December  2015  Regulation  on  the  manner  of  providing  information  and 
notification  of  technical  regulations,  Conformity  Assessment  and  Standards  regulates 
mandatory notification towards the Ministry of Economy from the authorities / bodies in the 
process  of  producing  technical  regulations  and  their  obligation  to  notify  any  technical 
regulations  at  the  draft  stage  according  to  EU  regulation  and  international  agreements  on 
technical barriers to trade. 

Harmonised area: quality infrastructure 

In  October  2015,  Serbia  adopted  a  strategy  for  development  of  quality  infrastructure  for 
2015-2020.  The  strategy  is  in  line  with  the  acquis  on  technical  regulations,  standards, 
accreditation, metrology and market surveillance. The conformity assessment legisaltion is in 
place, along with the relevant administrative structures. The Institute for Standardisation of 
Serbia (ISS) is an independent body able to implement European and international standards. 
In the reporting period, the number of full-time ISS employees is 60. In the reporting period 
the  ISS  has  adopted  approximately  1650  of  European  Standards,  out  of  which  158  were 

33 

 
 
 
 
 
adopted  with  full  translation  and  the  remaining  1492  were  adopted  by  the  'cover  page' 
translation  method.  The  ISS  is  an  affiliate  member  of  the  European  Committee  for 
Standardisation  (CEN),  the  European  Committee  for  Electrotechnical  Standardisation 
(CENELEC) and the European Telecommunication Standards Institute (ETSI). In May 2016, 
the ISS submitted an application for full membership in CEN and CENELEC. 

There  are  533  conformity  assessment  bodies  in  Serbia.  Of  these,  54  have  been  designated 
and  registered  with  the  Ministry  of  Economy.  The  Accreditation  Body  of  Serbia  is  the  sole 
institution  performing  accreditation  in  compliance  with  the  law  on  accreditation.  The 
Directorate for Measures and Precious Metals, supervised by the Ministry of Economy, is the 
official metrology body. A new law on metrology was adopted in February 2016. There are 
currently  78  bodies  authorised  to  verify  measuring  instruments  (for  more  than  24  types  of 
measuring instruments in the area of legal metrology). 

In  market  surveillance,  the  law  on  general  product  safety  remains  to  be  adopted. 
Administrative  and  financial  capacity  for  market  inspection  remains  insufficient.  A  national 
strategy  on  market  inspection  exists  within  the  frame  of  the  2015-2020  Strategy  for 
Development  of  quality  infrastructure  along  with  its  Action  Plan.  A  total  of  2570  product 
safety inspections have been performed in the reporting period. 321 dangerous products types 
were identified and permanently taken off the market. 

Harmonised area: sectoral legislation 

As regards the ‘New and Global Approach’,  a number of pieces of secondary legislation were 
adopted  in  the  reporting  period,  aiming  to  align  on  the  EU  acquis  on  machinery  safety  for 
pesticides,  electromagnetic  compatibility  and  on  electrical  equipment.  Further  alignment  is 
needed on lifts, cableways, civil explosives, pyrotechnic articles, eco-design, energy labelling, 
measuring instruments, medical devices, toy safety and aerosol dispensers. 

Although  construction  is  one  the  largest  business  sectors  in  Serbia,  alignment  with  the 
Construction  Products  Directive  has  yet  to  be  achieved.  Businesses  in  the  civil  explosives 
sector register their transactions with the Ministry of Interior. Measures are in place to detect 
smuggled explosives. 

No progress was made  in  aligning  ‘Old Approach’  product  legislation  with  the  acquis on 
motor vehicles or emissions of pollutants from non-road engines. Further efforts are needed to 
complete  alignment  on  classification,  labelling  and  packaging  of  substances  and  mixtures 
(CLP)  and  to  ensure  effective  implementation.  The  adoption  of  secondary  legislation  and 
adequate  implementing  capacities  are  also  still  needed  for  effective  implementation  of  the 
Regulation  on  Registration,  Evaluation,  Authorisation  and  Restriction  of  Chemicals 
(REACH).  

There  is  a  specific  licensing  and  regulation  system  for  businesses  dealing  with  drug 
precursors.  There  is  an  obligation  for  businesses  to  report  relevant  suspicious  orders  or 
transactions.  Mechanisms  are  in  place  to  detect  smuggling.  Good  laboratory  practices 
legislation is aligned. 

On  procedural  measures,  in  March,  Serbia  adopted  and  fully  implemented  the  national 
control  list  on  dual-use  goods  in  line  with  the  EU  and  international  export  control  regime. 
Legislation on the internal production and transfer of arms and military equipment has yet to 
be adopted. Serbian legislation on pricing of medicinal products and on the return of cultural 
objects unlawfully removed from the territory of an EU Member State is not yet aligned with 
the acquis. 

34 

 
 
 
5.2.  Chapter 2: Freedom of movement for workers 

Citizens of one Member State have the right to work in  another Member  State and must be 
given the same working and social conditions as other workers. 

Serbia  is  moderately  prepared  in  the  area  of  freedom  of  movement  for  workers.  Some 
progress was made in this chapter, notably by regulating access to the labour market. In the 
coming period, Serbia should in particular: 

→ make further efforts to strengthen its social security institutions. 

As regards access to the labour market, a rulebook on implementation of the 2014 law on 
employment  of  foreigners  was  adopted  in  November  2015.  The  aim  is  to  further  regulate 
procedures for issuance of work permits. The implementation of the new law led to more than 
6 000  permits  being  issued  in  2015,  compared  with  around  3 000  in  2014,  and  a  reduced 
number of complaints.   

There has been no progress on EURES, the European jobs network.  

As regards coordination of social security systems, the preparation of new agreements with 
the  Russian  Federation  and  Australia  is  well  advanced.  Although  finalised,  the  agreement 
with  Romania  has  not  yet  been  signed.  Electronic  exchange  of  social  security  data  is 
operational with all countries in the region, except Bosnia and Herzegovina. The capacity of 
social  security  institutions  needs  further  strengthening  to  sufficiently  address  issues  of 
adequacy, targeting and coverage. 

5.3.  Chapter 3: Right of establishment and freedom to provide services 

EU natural and legal persons have the right to establish themselves in any Member State and 
to provide cross-border services. For certain regulated professions, there are rules on mutual 
recognition of qualifications. Postal services are gradually being opened up to competition. 

Serbia  is  moderately  prepared  in  these  fields.  There  was  no  progress  in  this  area.  In  the 
coming period, Serbia should in particular: 

→  adopt  an  umbrella  law  on  services,  as  a  first  step  towards  alignment  with  the  Services 
Directive; 

→ adopt a strategy for alignment with the professional qualifications acquis; 

→ reinforce the capacity and independence of the postal services inspectors and regulator. 

There  were  no  developments  on  the  right  of  establishment.  On  freedom  to  provide 
cross-border  services,  an  umbrella  law  aligning  Serbian  legislation  with  the  Services 
Directive is still needed. A strategy on services, detailing the steps to align all sectoral laws 
with the umbrella law and the Services Directive, has yet to be adopted. The strategy and law 
on mutual recognition of professional qualifications remains to be adopted.   

Concerning postal services, the legislation further aligning Serbia with the second and third 
Postal Directives remains to be adopted. The capacity of the postal regulator, whose staff was 
reduced from 16 to 6, and of the inspection of postal services remains inadequate. The public 
postal operator has yet to be turned into a corporate company. 

5.4.  Chapter 4: Free movement of capital 

In  the  EU,  capital  and  investments  must  be  able  to  move  without  restriction  and  there  are 
common rules for cross-border payments. Banks and other economic operators apply certain 
rules to support the fight against money laundering and terrorist financing. 

35 

 
 
 
 
 
 
Serbia  is  moderately  prepared  in  the  area  of  free  movement  of  capital.  There  was  no 
progress in this area. In the coming period, Serbia should in particular: 

→ further liberalise short-term capital movements; 

→ upgrade its legislation on anti-money laundering, reinforce supervision and strengthen the 
Administration for the Prevention of Money Laundering. 

There were no developments on capital movements and payments as regards restrictions on 
short-term capital transactions. Acquisition of real estate, especially agricultural land, is still 
restricted. There were no developments on payment systems as Serbia’s legal framework is 
mostly aligned with the acquis. 

Regarding the fight against money laundering and terrorism financing, legislation remains 
to be aligned with the new EU anti-money laundering Directive. The Administration for the 
Prevention  of  Money  Laundering  is  still  understaffed  and  its  capacity  needs  to  be 
strengthened.  Cooperation  between  the  various  bodies  dealing  with  anti-money  laundering 
needs  to  improve.  The  April  Moneyval  evaluation  report  on  Serbia  confirmed  that  Serbia 
needs to further reinforce preventative measures, strengthen supervision and establish a track 
record of investigation of and conviction in money laundering cases. 

5.5.  Chapter 5: Public procurement 

EU  rules  ensure  that  the  public  procurement  of  goods,  services  and  works  in  any  Member 
State  is  transparent  and  open  to  all  EU  companies  on  the  basis  of  non-discrimination  and 
equal treatment.  

Serbia  is  moderately  prepared  in  this  area,  which  is  particularly  vulnerable  to 
corruption.  Further  efforts  are  needed  to  prevent  corruption  from  occurring  during  the 
procurement cycle. Some progress has been made in the past year, notably through the 
adoption  of  secondary  legislation  and  a  further  increase  in  competition  in  tender 
procedures.  Significant  efforts  are  needed  across  the  board  to  further  improve 
competition,  efficiency  and  transparency  in  public  tenders.  In  the  coming  period,  as  in 
2015, Serbia should in particular: 

→ strengthen the capacity of the Public Procurement Office, the Republic Commission 
for the Protection of Rights in Public Procedures and administrative courts; 

→  swiftly  implement  the  public  procurement  strategy  in  particular  on  ensuring  further 
alignment with the EU Directive on concessions. 

Institutional set-up and legal alignment 

The  legal  framework  is  broadly  in  line  with  the  acquis.  The  law  on  public  procurement  is 
largely aligned with the  acquis on classical and utilities procurement. Several implementing 
by-laws  were  adopted.  The  legislation  on  defence  and  security  procurement  still  contains 
more  exemptions  than  the  EU  Directive.  Serbia  is  yet  to  ensure  that  bilateral  agreements 
concluded with non-EU countries do not unduly restrict competition and are fully consistent 
with the EU acquis. The law on public-private partnership was amended in February 2016 to 
give the Ministry of Finance a greater role in selecting public-private partnership projects. It 
needs to be aligned with the new Directive on concessions. 

In  December  2015,  the  government  adopted  an  action  plan  to  implement  the  public 
procurement  strategy  in  2016.  It  includes  measures  to  further  strengthen  the  capacity  of 
different  public  procurement  stakeholders  to  fight  corruption,  to  reduce  the  number  of 
irregularities  and  to  encourage  the  use  of  the  ‘most  economically  advantageous  tender’ 
selection criterion. 

36 

 
 
 
 
The Public Procurement Office (PPO) supervises the implementation of the law on public 
procurement. 

Implementation and enforcement capacity 

Serbia’s public procurement market further increased as a percentage of GDP to 8.9 % in 
2015, from 7.7 % in 2014 and 6.8 % in 2013. The average number of bids per tender rose to 
2.9 in 2015, from 2.6 in 2014, which suggests increased competition. 

Monitoring of the award and implementation of contracts continued to improve. The value of 
negotiated procedures further fell to 4 % of the total value of public tenders in 2015, from 5 % 
in 2014 and 17 % in 2013. The share of irregularities in tenders inspected by the State Audit 
Institution fell from 45.8 % in 2014 to 27.9 % in 2015, which displays a positive tendency in 
tender implementation.  

The  capacity to  manage  public procurement processes  was  further improved through the 
certification  of  an  additional  958  public  procurement  officials  in  2015.  However,  the  PPO 
continues  to  lack  significant  administrative  capacity.  Since  January  2016,  the  contracting 
authorities have been obliged to publish their annual procurement plans, which contributes to 
increased transparency. 

As  regards  the  framework  for  integrity  and  handling  conflicts  of  interest  in  November 
2015,  the  PPO  updated  its  model  internal  plan  for  preventing  corruption  in  public 
procurement  procedures.  High-volume  contracting  authorities  have  been  gradually  adopting 
plans for curbing corruption based on this model. So far, 96 % have done so. 

Efficient remedy system 

The legislation on the right to legal remedy is broadly in line with the acquis and is enforced 
by the Republic Commission for the Protection of Rights in Public Procedures (the Republic 
Commission), an independent state body. 

The  Republic  Commission  took  a  total  of  2 728  decisions  in  2015  compared  with  2 702  in 
2014. Public procurement procedures were partially or fully annulled in 1 193 cases, which is 
10.7 % less than in 2014. In 2015, the Republic Commission reviewed the implementation of 
1 151 of its decisions, a significant increase compared with the 266 decision reviews in 2014. 
In 24 cases, it concluded that its decisions had not been properly implemented. 

The  overall  implementation  capacity  of  the  Republic  Commission  remains  stable.  The 
capacity  of  the  administrative  courts  to  deal  with  more  complex  and  numerous  public 
procurement cases needs to be strengthened. 

5.6.  Chapter 6: Company law 

The  EU  has  common  rules  on  the  formation,  registration,  and  disclosure  requirements  of  a 
company,  with  complementary  rules  for  accounting  and  financial  reporting,  and  statutory 
audit. 

Serbia  has  a  good  level  of  preparation  in  company  law.  There  was  some  progress  in  this 
area. 

On  company  law,  mandatory  electronic  submission  of  financial  statements  and  simpler 
accounting  in  financial  statements  for  small  companies  (micro-entities)  were  introduced. 
Serbia  needs  to  align  with  the  EU  Directive  on  cross-border  mergers  of  limited  liability 
companies. Serbia is continuing to develop e-registration for companies to make it easier to 
do business; the process is not yet fully operational.      

37 

 
 
 
 
Legislation  on  corporate  accounting  and  auditing  needs  to  be  aligned  with  the  latest  EU 
accounting and auditing acquis. With regard to statutory audit, the first disciplinary measures 
have been taken, revoking audit firms’ and auditors’ licences. 

5.7.   Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPRs), as 
well  as  rules  for  the  legal  protection  of  copyright  and  related  rights.  Rules  for  the  legal 
protection  of  IPRs  cover,  for  instance,  patents  and  trademarks,  designs,  biotechnological 
inventions and pharmaceuticals. Rules for the legal protection of copyright and related rights 
cover, for instance, books, films, computer programmes and broadcasting. 

Serbia has a good level of preparation as concerns alignment of intellectual property rights 
with the acquis. No progress was made. In the coming period, just as in 2015, Serbia should 
in particular: 

→ further  align  its  law  on  copyright,  topographies  of  semiconductor  products,  patents  and 
trademarks with the acquis, including with the IPR Enforcement Directive;  

→ further strengthen formal coordination of different stakeholders on enforcement. 

On copyright and neighbouring rights, the law on copyright and related rights and the law 
on the protection of topographies of semiconductor products remains to be fully aligned with 
the acquis. 

On  industrial  property  rights,  the  laws  on  patent  and  trademarks  still  need  to  be  further 
aligned with the acquis. 

On  enforcement,  the  number  of  counterfeit  and  pirated  goods  confiscated  by  the  Customs 
Administration  and  Market  Inspectorate  in  2015  was  almost  half  the  number  in  2014.  The 
number of software legality checks performed by the  tax administration decreased slightly 
but the share of illegally used software  was stable. The number of criminal charges brought 
by the Ministry of Interior increased slightly, from 90 in 2014 to 105 in 2015. 

The  IPR  legislation  still  needs  to  be  aligned  with  the  Directive  on  the  Enforcement  of 
Intellectual  Property  Rights.  The  permanent  coordination  body  for  the  enforcement  of  IPR 
became largely operational. A revised IPR strategic framework is needed. 

5.8.   Chapter 8: Competition policy 

EU rules protect free competition. They include anti-trust rules against restrictive agreements 
between companies and abuse of dominant position. EU rules also prevent governments from 
granting State aid which distorts competition. 

Serbia has  some level of preparation  / is moderately prepared in the area of competition 
policy.  No  progress  was  made.  Serbia  is  relatively  advanced  as  regards  the  alignment  with 
the  rules  on  antitrust  and  mergers,  and  their  enforcement.  However,  substantial  efforts  are 
needed  to  improve  legislative  alignment  and  enforcement  of  State  aid  rules.  In  the  coming 
period, as in 2015, Serbia should in particular: 

→ make significant progress in the alignment of its legislation and existing state aid schemes 
with the acquis, in line with the obligations of the Stabilisation and Association Agreement; 

→ take steps to make the Commission for State Aid Control more independent and effective; 

→ ensure that the aid received by the steel mill Smederevo is compatible with the SAA. 

Antitrust and merger 

38 

 
 
 
 
 
The legislative framework is broadly in line with the acquis and with the SAA. The law on 
protection  of  competition  is  largely  aligned  with  Articles  101  on  restrictive  agreements  and 
Article 102 of the TFEU on abuses of dominant position. It also provides for ex ante control 
of  the  effects  on  competition  of  mergers  above  certain  turnover  thresholds,  in  line  with  the 
Merger Regulation. Secondary legislation providing further substantive rules and guidance on 
how  competition  rules  should  be  applied  is  largely  in  place  and  in  line  with  the  relevant 
regulations and Commission guidelines. 

As  regards  the  institutional  framework,  the  Commission  for  Protection  of  Competition 
(CPC) is responsible for implementation of the legal framework. The CPC is an operationally 
independent  authority  governed  by  a  President  and  four  Council  members  selected  by 
parliament among legal and economic experts.  

The powers of the CPC are broadly comparable to those of the European Commission. It may 
act upon a complaint, a notification (e.g. for mergers) or on its own initiative. When carrying 
out  an  investigation,  it  may  issue  requests  for  information  and  carry  out  unannounced 
inspections  at  firms’  premises.  It  may  impose  fines  and  remedies  if  competition  rules  are 
breached. Serbia has a ‘leniency policy’ for companies that provide information about cartel 
cases.  The  CPC  may  authorise  mergers,  with  or  without  conditions,  or  prohibit  them.  The 
CPC may also provide opinions, on its own initiative or upon consultation, on draft pieces of 
legislation  that  may  affect  competition.  It  can  also  conduct  sector  analyses.  The  CPC’s 
decisions may be appealed before the Administrative Court. 

Regarding  enforcement  capacity,  with  39  staff  members,  including  25  case  handlers,  the 
number of CPC staff is adequate but its expertise, in particular in economics, remains to be 
demonstrated  further.  Implementation  of  the  legislative  framework  is  improving.  The 
number of antitrust cases remains stable, with two decisions on restrictive agreements in 2013 
and  2015  and  three  on  abuses  of  dominance  in  2014.  On-site  inspections  are  increasingly 
used. However, the overall number and level of fines remains modest (a total EUR 1 600 000 
over the period 2013-2015). In the period 2013-2015, the CPC only imposed remedies in four 
merger cases; it has never prohibited a merger. The CPC needs to strengthen its enforcement 
record, in particular by imposing more dissuasive fines and promoting its leniency programme 
more  intensively.  The  CPC’s  decisions  are  increasingly  upheld  by  the  appeal  courts,  whose 
capacity to handle complex competition cases must nonetheless be significantly strengthened. 
Finally,  competition  advocacy  activities  were  intensified  and  in  2015  the  CPC  issued  an 
increased  number  of  opinions  concerning  draft  legislation  affecting  competition.  It  should 
actively follow up on these opinions and ensure that they are adequately followed up. 

State aid 

As  regards  the  legislative  framework,  the  law  on  state  aid  control  is  largely  aligned  with 
Articles 107 and 108 of the TFEU. State aid is in principle incompatible with the law unless it 
is found to be compatible under a certain number of general grounds in line with those listed 
in Article 107(3) of the TFEU. However, the legislative framework is only partially aligned 
with the EU secondary legislation on certain forms of aid, including sectoral and  horizontal 
aid.  The  exemption  from  state  aid  rules  for  companies  in  the  process  of  restructuring  and 
privatisation has not yet been repealed. Serbia still has to draw up a regional aid map. 

Concerning the institutional framework, the Commission for State  Aid Control (CSAC) is 
responsible for implementing the law on state aid control. The five members of the CSAC are 
mostly appointed by aid-granting ministries and its secretariat is administratively part of the 
Ministry of Finance. It is not considered an operationally independent authority, contrary to 
SAA requirements. 

39 

 
 
 
The  law  on  State  Aid  Control  provides  that  all  new  state  aid  measures,  including  draft 
legislation  constituting  grounds  for  granting  state  aid,  must  be  notified  to  the  CSAC  before 
being put in place. The CSAC can take a negative decision or authorise aid, with or without 
conditions.  If  an  aid  measure  is  not  notified,  the  CSAC  can  investigate  it  after  the  event, 
whether or not a complaint is made, and order its recovery if it is incompatible with the law. 
The CSAC’s decisions may be appealed before the Administrative Court. 

The enforcement capacity of the CSAC is largely insufficient, with only six full-time staff 
members in its secretariat; it needs to be significantly strengthened. The effectiveness of the 
implementation of the law remains to be demonstrated. In the period 2013-2015, the CSAC 
took  53  decisions  in  ex  post  cases,  against  53  decisions  in  ex  ante  cases,  which  may 
demonstrate  proactivity.  However,  the  CSAC  has  not  yet  taken  a  decision  prohibiting  state 
aid,  nor  imposing  remedies  or  recovery.  There  is  some  indication  that  not  all  aid  measures 
granted  at  central  or  local  level,  in  particular  to  large  companies,  are  notified  to  and 
investigated by the CSAC. Greater monitoring of cumulative aid is needed. It is not yet clear 
that the aid granted to the Smederevo steel mill is compatible with protocol 5 of the SAA. In 
September, the Serbian authorities provided information to the Commission in the context of 
its  investigation  on  this  case.  Not  all  existing  aid  schemes,  particularly  the  fiscal  schemes, 
have been fully aligned with the acquis, although the SAA deadline for their alignment was 
1 February 2014. Awareness of State aid rules among stakeholders remains low, as indicated 
by the very low level of complaints received by the CSAC, and advocacy must be stepped up. 
The CSAC’s decisions have rarely been appealed before the courts. 

Liberalisation 

The law on protection of competition and the law on state aid control are applicable to public 
undertakings  and  undertakings  with  special  or  exclusive  rights,  except  where  this  would 
prevent them from carrying out the particular tasks assigned to them for providing services of 
general  economic  interest,  in  line  with  Article  106  of  the  TFEU  and  with  the  SAA.  In 
particular,  the  rules  on  the  financing  of  services  of  general  economic  interest  are  largely 
aligned  with  the  State  aid  acquis.  In  2016,  the  CPC  required  the  railway  infrastructure 
operator to open access to its network. However, more evidence of the effective enforcement 
of competition rules on public companies is needed. There are no monopolies of a commercial 
character within the meaning of Article 37 of the TFEU. 

5.9.   Chapter 9: Financial services   

EU  rules  aim  to  ensure  fair  competition  between  and  the  stability  of  financial  institutions, 
namely  banking,  insurance,  supplementary  pensions,  investment  services  and  securities 
markets.  They  include  rules  on  the  authorisation,  operation  and  supervision  of  these 
institutions. 

Serbia is moderately prepared in the area of financial services. There was some progress in 
this area. In the coming period, Serbia should in particular: 

→  take additional  steps to  align  Serbia’s rules with  Basel  III  standards  and  the  Solvency  II 
Directive. 

On banks and financial conglomerates, the National Bank of Serbia (NBS) adopted a plan 
for the implementation of Basel III standards by 2017. The implementation of the strategy and 
action plan for resolving non-performing loans has been delayed. The administrative capacity 
of  the  Banking  Supervision  Department  of  the  NBS  was  strengthened.  Legislation  on 
financial conglomerates remains to be adopted. 

40 

 
 
 
 
On insurance and occupational pensions, the accounting rules applicable to insurance were 
amended in December. Full alignment with Solvency II and the Directive on Institutions for 
Occupational Retirement Provision remains to be achieved. The NBS adopted the strategy for 
implementation  of  Solvency  II  in  July.  There  were  no  developments  on  financial  market 
infrastructure.    

On  the  securities  market  and  investment  services,  the  Securities  Commission  adopted  a 
rulebook on liquidity requirements for broker dealers in April, and a rule book on supervision 
of  financial  market  participants  in  June.  The  administrative  capacity  of  the  Securities 
Commission was increased but remains insufficient. 

5.10.  Chapter 10: Information society and media 

The EU supports the good functioning of the internal market for electronic communications, 
electronic  commerce  and  audio-visual  services.  The  rules  protect  consumers  and  support 
universal availability of modern services. 

Serbia is  moderately prepared  in these  fields.  Some  progress was made,  notably with the 
adoption of the law on information security. In the coming period, Serbia should in particular: 

→ ensure the operational independence of the regulatory body for electronic communications 
and  postal  services,  RATEL,  and  strengthen  the  administrative  and  inspectorate  capacity  of 
the line ministry; 

→ ensure comprehensive regulation of advertising. 

On  electronic  communications  and  information  technology,  the  law  on  electronic 
communications  is  yet  to  be  adopted  in  line  with  the  2009  EU  regulatory  framework. 
Competitive  safeguards  have  not  yet  been  fully  implemented.  The  draft  law  on  emergency 
services,  introducing  permanent  financing  of  the  emergency  number  112  remains  to  be 
adopted.  Serbia  auctioned  the  800 MHz  radio-frequency  band  in  November  2015,  granting 
individual  licences  to  three  mobile  operators  in  Serbia.  RATEL’s  operational  and  financial 
independence  remains  to  be  ensured,  and  its  administrative  capacity  strengthened.  The 
administrative  and  inspection  capacity  of  the  line  ministry  remains  weak.  The  prices  for 
regional  roaming  services  further  decreased  on  1 July  2016  following  the  2014  agreement 
with Bosnia and Herzegovina, Montenegro and the former Yugoslav Republic of Macedonia. 

In  the  field  of  information  society  the  law  on  information  security,  establishing  competent 
authorities  for  information  security  and  a  national  cyber  emergency  response  team,  was 
adopted  in  January,  as  was  an  e-government  strategy  tasking  the  Ministry  of  Public 
Administration and Local Self Government with coordination of various ministries and other 
institutions at central and local government level in this area. 

On audiovisual  policy, amendments to  the law on public service media and the law on the 
temporary regulation of the collection of the fee for the public service media were adopted in 
December  2015.  The  amendments  extended  partial  funding  from  the  State  budget  to  2016 
together  with  a  monthly  subscription  fee,  to  be  collected  through  electricity  bills.  This 
temporary  solution  causes  uncertainty  about  the  editorial  independence  and  stable  financing 
of  RTS  and  RTV.  Public  service  media  introduced  separate  bookkeeping  of  accounts  for 
public  and  commercial  activities  and  prepared  consolidated  records  of  licence  fee  payers  in 
line with the law. The law on public information and media, the law on electronic media and 
the law on public service media have not yet been fully implemented. The legal situation of 
the  news  agency  Tanjug  and  its  financing  need  to  be  clarified  and  brought  in  line  with  the 
existing legislation.  

41 

 
 
 
 
The Council of the Regulatory Body for Electronic Media, REM, operates with only six out of 
nine members. Parliament needs to approve its new statutes in line with the law on electronic 
media.  The  regulator  continued  to  lack  independence  in  monitoring  broadcasters  to  ensure 
they meet their programming  obligations.  Frequent interruption  of retransmitted audiovisual 
media  content  by  local  advertisements  prevents  broadcasting  from  meeting  the  Audiovisual 
Media  Services  Directive  requirements.  This  affects  overall  media  advertising  revenues  and 
creates distortions in the media services market. The media continue to depend primarily on 
public advertising. 

5.11.  Chapter 11: Agriculture and rural development 

The  common  agricultural  policy  (CAP)  supports  farmers  and  rural  development.  This 
requires  strong  management  and  control  systems.  There  are  also  common  EU  rules  for 
quality policy and organic farming. 

Serbia has some level of preparation in agriculture and rural development. Some progress 
was  made  towards  aligning  national  legislation  with  the  CAP  and  the  development  of  an 
action  plan  on  acquis  alignment  has  advanced.  In  the  coming  period,  Serbia  should  in 
particular: 

→  take  all  necessary  steps  to  fulfil  the  requirement  in  order  to  be  entrusted  with  budget 
implementation tasks  for the IPARD II programme, including allocating adequate resources 
and  strengthening  the  capacity  of  all  IPARD  bodies  and  improving  implementation 
procedures; 

→  adopt  and  proceed  with  implementation  of  the  action  plan  for  acquis  alignment  in 
agriculture and rural development. 

As regards horizontal issues, the action plan for alignment with the acquis in agriculture and 
rural development and the national programmes for agriculture and rural development for the 
period  2016-2020  remain  to  be  adopted.  The  national  programme  of  measures  and 
classification of expenditure has been further aligned with the two-pillar concept of the CAP. 
Further  alignment  with  EU  policies  requires  further  harmonisation  of  direct  payments.  A 
working  group  on  the  Farm  Accountancy  Data  Network  (FADN)  has  been  established,  but 
Serbia  has  yet  to  designate  formal  institutional  responsibilities  for  the  FADN  and  adopt  a 
rulebook in line with the FADN legislation. Serbia still needs to start developing an Integrated 
Administration  and  Control  System  (IACS)  to  prepare  for  the  management  and  control  of 
agricultural  payments.  Work  should  centre  on  establishing  the  legal  base,  clarifying 
stakeholders’  responsibilities  and  developing  the  Land  Parcel  Identification  System  (LPIS) 
and the farm register. 

In the common market organisation, in the wine sector, the registration of vineyards stands 
at 25 % of the national vineyard. By-laws transposing EU standards for oenological practices 
and  procedures  and  methods  for  organoleptic  testing  of  wine  have  been  adopted.  Serbia 
should  continue  alignment  in  the  sector,  in  particular  by  strengthening  market  controls  on 
movements of wine products and boosting administrative capacity. A law on spirit drinks was 
adopted  in  November  2015;  however,  an  issue  concerning  a  definition  remains  to  be  fully 
aligned.     

On  rural  development,  the  request  for  entrustment  of  budget  implementation  tasks  for  the 
IPARD  programme  2014-2020  was  submitted  in  December  2015.  However,  several  key 
issues,  including  staffing,  remain  to  be  addressed  before  entrustment  can  proceed.  Serbia 
urgently  needs  to  address  outstanding  issues  so  as  to  be  in  a  position  to  move  ahead  with 
implementation of the IPARD II programme.   

42 

 
 
 
 
Progress  is  slow  in  the  area  of  quality  policy.  As  regards  organic  farming,  the  national 
action plan for the development of the organic sector has yet to be adopted. The area under 
organic  production  increased  and  stands  at  present  at  15,000  ha  equivalent  to  0.4  %  of  the 
utilised agricultural area. 

5.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

EU  hygiene  rules  for  foodstuff  production  ensure  a  high  level  of  food  safety.  Animal  health 
and welfare and the safety of food of animal origin are safeguarded together with quality of 
seeds, plant protection material, protection against harmful organisms and animal nutrition. 

Serbia  is  moderately  prepared  in  the  area  of  food  safety,  veterinary  and  phytosanitary 
policy. There has been no progress in the past year. In the coming period, Serbia should in 
particular: 

→  develop  a  comprehensive  strategy  for  transposition,  implementation  and  enforcement  of 
the acquis for the food safety, veterinary and phytosanitary policy; 

→  review  the  capacity  of  the  veterinary,  phytosanitary  and  national  reference  laboratories 
directorates and adopt an action plan to strengthen them. 

In  the  area  of  general  food  safety,  Serbia  has  yet  to  define  a  legal  approach  for  full 
transposition  of  the  acquis.  The  public  consultation  process  for  drafting  laws  should  be 
improved. Implementation of current food hygiene legislation should be checked more strictly 
at the same time that it is being aligned with the  acquis. On food safety rules and specific 
rules for feed, the permitted level of aflatoxins in milk has been increased fivefold and is no 
longer  aligned  with  the  acquis.  The  milk  testing  laboratory  in  the  National  Reference 
Laboratories Directorate has yet to be put into operation and fully staffed. 

On  veterinary  policy,  annual  programmes  of  animal  health  protection  measures  and 
monitoring of pharmacologically active substances for 2016 were  adopted or  notified to  the 
European Commission. No new cases of classical swine fever were reported. Vaccination of 
the  national  cattle  herd  in  response  to  the  lumpy  skin  disease  outbreak  is  underway.  
Implementation  of  the  multiannual  programme  to  eradicate  rabies  in  wildlife  continued  and 
the number of confirmed cases of rabies in animals is at a historic low. The use of TRACES 
system  increased.  The  veterinary  directorate  is  seriously  understaffed,  with  many  staff 
members approaching retirement age. Enforcement of national legislation on animal welfare, 
in particularly on slaughter, needs to be stepped up. 

In relation to the placing of food, feed and animal by-products on the market, Serbia has 
not yet adopted a programme for upgrading agri-food establishments. Implementation of the 
legislation  on  animal  by-products  management  needs  to  be  substantially  improved,  and  a 
national strategy for management of animal by-products should be adopted and implemented. 
A national monitoring and control programme for food and feed safety is still to be adopted. 
Clearer procedures should be developed for risk-based control of imported consignments. 

In the area of phytosanitary policy annual programmes of plant health measures and residue 
monitoring were adopted. A legal framework for the sustainable use of pesticides should be 
adopted,  as  should  the  national  action  plan  to  reduce  the  risks  and  impact  of  pesticide  use. 
There  was  no  progress  on  aligning  the  law  on  genetically  modified  organisms  with  the 
acquis,  which  is  a  prerequisite  for  Serbia’s  accession  to  the  World  Trade  Organisation 
(WTO). 

43 

 
 
 
 
5.13.  Chapter 13: Fisheries 

The  common  fisheries  policy  lays  down  rules  for  management  of  fisheries,  protects  living 
resources  of  the  sea  and  limits  the  environmental  impact  of  fisheries.  This  includes  setting 
catch quotas, managing fleet capacity, rules for markets and aquaculture as well as support 
for fisheries and coastal communities. 

Serbia  is  moderately  prepared  in  the  area  of  fisheries.  Some  progress  was  made  through 
adoption of changes to the law on animal husbandry, establishing the legal base for a national 
catch certification scheme. In the coming period, Serbia should in particular: 

→  establish  an  operational  national  catch  certification  scheme  and  a  system  for  collecting 
market data. 

Serbia  does  not  have  any  structural  actions  in  place  for  small-scale  fisheries  or  inland 
fisheries.  As  regards  market  policy,  the  capacity  of  the  administration  managing  and 
controlling imports and exports of fisheries products needs to be upgraded and brought into 
line  with  the  acquis.  The  law  on  animal  husbandry  was  amended,  requiring  catch 
certifications for imports and exports of fishery products. 

5.14.  Chapter 14: Transport policy 

The EU has common rules for technical and safety standards, security, social standards, State 
aid  and  market  liberalisation  in  road  transport,  railways,  inland  waterways,  combined 
transport, aviation and maritime transport. 

Serbia  is  moderately  prepared/has  a  good  level  of  preparation  in  transport  policy.  Good 
progress was made on aligning with the acquis on road, rail and inland waterways, notably 
on  social  legislation  for  commercial  road  transport,  opening  of  the  rail  market,  mercantile 
shipping and transport accident investigation. Serbia addressed last years' recommendations in 
rail transport. In the coming period, Serbia should in particular: 

→ further improve road safety by taking measures to reduce fatalities and adopt legislation on 
Intelligent Transport Systems; 

→ continue its focus on reforming the railways. 

As regards the general transport acquis, key strategic documents for the transport sector are 
in  place  and  are  being  updated,  with  air  and  road  strategies  yet  to  complete  the  strategic 
framework. Serbia’s legislation is fully aligned with the acquis on summertime arrangements, 
while further efforts are needed to complete alignment on public service obligations. Overall 
administrative capacity should be reinforced through streamlined organisational structures and 
greater  staff  competencies.  The  law  on  air,  railway  and  waterborne  transport  accident 
investigations  is  in  place,  with  relevant  by-laws  having  been  adopted  in  2016.  A  single 
independent accident investigation body covering air, rail and waterborne transport has been 
established. It needs increased resources and staffing to become fully operational. 

On  road  transport,  the  legal  framework  has  achieved  a  reasonable  level  of  alignment. 
Legislation  on  transport  of  dangerous  goods  has  been  in  place  since  2010  but  further 
alignment with the acquis is needed. The legal entities responsible for conformity assessment 
of  existing  equipment  under  the  law  on  carriage  of  dangerous  goods  have  been  appointed. 
Laws on road freight and passenger traffic are in place, allowing market access for goods and 
passenger  transport  for  both  national  and  international  operations.  Further  harmonisation, 
including on issuing transport licences, is needed. 

44 

 
 
 
 
 
There has been progress in social legislation and road safety, including through the adoption 
of  a  law  on  working  times  for  vehicle  crews  and  tachographs  in  November  2015.  Further 
progress is needed regarding driver licensing, professional drivers’ training and qualification 
and  infrastructure  safety  management.  The  trend  of  falling  numbers  of  fatal  road  traffic 
accidents  is  reversing.  Reinforced  efforts  are,  therefore,  needed  to  reduce  traffic  fatalities, 
notably  regarding  implementation  and  enforcement  of  legislation,  awareness-raising  and 
measures to make roads, vehicles and road users safer. Regarding the enforcement of social 
legislation, improvements need  to continue on roadside  checks and enforcement capacity of 
inspection  officers.  Legislation on clean and  energy-efficient road transport vehicles, on the 
deployment of infrastructure for alternative fuel and on intelligent transport systems needs to 
be developed. Open issues regarding road charges need to be clarified. 

Regarding the rail transport acquis, Serbia has restructured its state railways into a holding 
company with infrastructure management, passenger and freight operations assigned to three 
separate  daughter  companies.  The  rail  regulatory  body  operates  independently  and  is 
increasingly  handling  complaints  and  issuing  decisions.  In  2015  Serbia  empowered  the 
regulatory  body  to  impose  penalties  to  enforce  its  decisions.  In  2016,  for  the  first  time,  the 
infrastructure  manager  published  a  network  statement  setting  out  track  access  charges  and 
access conditions to  the network. A track access contract was  signed with a private railway 
undertaking  in  June  2016.  Serbia  should  now  ensure  timely  publication  of  yearly  network 
statements,  including  information  on  railway  facilities.  Public  service  obligation  contracts 
were signed. 

Railway safety legislation has been adopted but further alignment is needed, particularly with 
a  view  to  improving  training  capacity,  examination  methods  and  licensing  procedures. 
Legislation  on  interoperability  is  in  place  but  needs  to  be  further  improved  to  avoid 
unnecessary  barriers  to  access  for  rolling  stock.  Serbia  transposed  a  first  set  of  technical 
specifications but publication of the remaining  ones  is needed to allow full implementation. 
There  has  been  significant  progress  in  the  implementation  of  the  railway  border  crossing 
agreement between Serbia and the former Yugoslav Republic of Macedonia.   

In maritime transport, Serbia has achieved a good level of alignment with the acquis but has 
yet to develop adequate implementation capacity. Its law on maritime navigation is compliant 
with the relevant directives for landlocked countries related to the  Community vessel traffic 
monitoring and information system. In the area of satellite navigation, Serbian participation 
in the Galileo programme has yet to start. 

In the area of inland waterway transport, Serbia has reached a high level of alignment with 
the relevant acquis, in particular with the adoption of the merchant shipping law in November 
2015.  The  river  information  services  system  is  operational  and  highly  interoperable  with 
systems in EU countries. An authority responsible for inland waterways has been set up in the 
line  ministry.  Serbia  actively  participates  in  the  EU  strategy  for  the  development  of  the 
Danube  Region  (EUSDR)  and  has  signed  the  main  international  agreements  on  inland 
waterways  and  bilateral  agreements  with  neighbouring  countries,  including  Romania, 
Hungary,  Croatia  and  Bosnia  and  Herzegovina.  Administrative  capacity  for  international 
cooperation and other relevant matters needs to be strengthened. 

Serbia  has  achieved  a  good  level  of  alignment  with  the  acquis  on  aviation  and  has  made 
considerable progress with implementing the first transitional phase of the European Common 
Aviation  Agreement  (ECAA).  On  Single  European  Sky  (SES)  legislation  for  airspace 
coordination, Serbia has completed transposition and local implementation of SES I and SES 
II on air traffic. Serbia’s legislation is aligned with EU legislation on aviation safety as listed 
in Annex 1 of the ECAA. In August 2015, Serbia adopted the law on accident investigation. 

45 

 
 
 
Working  arrangements  with  the  European  Aviation  Safety  Agency  cover  all  aspects  of  the 
acquis  in  civil  aviation  safety  and  environmental  protection  of  products,  organisations  and 
personnel.  The  suspension  of  articles  on  licensing  of  air  carriers  and  access  to  air  routes 
should be lifted before the entry into force of the second transitional period of the ECAA. 

As regards combined transport, specific legislation has yet to be fully developed. This mode 
is  covered  in  the  existing  general  transport  master  plan  and  transport  strategy.  The 
construction of the first modern intermodal terminal in Belgrade has yet to start. 

5.15.  Chapter 15: Energy 

EU  energy  policy  covers  energy  supply,  infrastructure,  the  internal  energy  market, 
consumers,  renewable  energy,  energy  efficiency,  nuclear  energy  and  nuclear  safety  and 
radiation protection. 

Serbia  is  moderately  prepared  in  the  field  of  energy.  Some  progress  was  made  in  the 
internal energy market and security of supply. No progress has been made in addressing most 
of last year's recommendations. In the coming period, Serbia should therefore in particular: 

 take measures to fully unbundle Srbijagas and develop competition in the gas market; 

 fully implement the connectivity reform measures in the energy sector as agreed; 

 improve alignment with the acquis, strengthen capacity and promote investment in energy 
efficiency and renewable energy as well as achieve cost-reflective electricity tariffs. 

Serbia  has  achieved  a  high  level  of  alignment  on  security  of  supply.  The  December  2015 
energy sector development strategy focuses on security of supply. The legal framework for oil 
stocks is in place and secondary legislation was further strengthened in October 2015. Serbia 
has  established  a  central  stockholding  body.  Serbia  has  drafted  an  action  plan  for 
implementing  the  Directive  on  minimum  oil  stocks.  Oil  stocks  currently  correspond  to  14 
days of consumption. Security of electricity supply was re-established after the 2014 floods: 
coal production has recovered to its previous level following significant investment. Serbia is 
developing  a  new  electricity  interconnector  with  Romania,  Montenegro  and  Bosnia  and 
Herzegovina  as  part  of  the  Trans-Balkan  corridor.  Preparations  for  building  a  gas 
interconnector between Serbia and Bulgaria have started but need to accelerate. 

Serbia  has  shown  some  progress  in  implementing  the  connectivity  reform  measures  in  the 
energy  sector.  To  develop  a  power  market  with  its  neighbours,  Serbia  set  up  the  South 
Eastern European Power Exchange in February 2016. This is a step forward in the creation of 
a  regional  power  trading  platform  for  south-eastern  Europe.  However,  Serbia  has  still  to 
implement  the  Framework  and  Inter-TSO  Agreement  between  its  transmission  system 
operator  EMS  and  the  Kosovan  operator  KOSTT,  and  ensure  EMS’s  participation  in  the 
region’s Coordinated Auction Office in Podgorica. 

As  regards  the  internal  energy  market,  Serbia’s  primary  legislation  is  compliant  with  the 
EU’s third energy package but secondary legislation in the gas sector has yet to be completed 
and implemented. Serbia’s state-owned public power utility EPS is unbundled from the TSO 
in  line  with  the  third  energy  package  as  is  the  distribution  system  operator  from  EPS,  but 
managerial  separation  has  yet  to  be  completed.  Serbia  has  legally  unbundled  its  gas  utility 
Srbijagas but this separation is not yet operational, in breach of Serbia’s obligations under the 
Energy Community Treaty. The transfer of staff and assets has not started. Both the electricity 
and natural gas markets are open in Serbia, with all customers having the right to choose their 
suppliers.  39.65 %  of  total  end-user  electricity  consumption  in  Serbia  was  delivered  to  the 
non-regulated market in 2015. In both sectors, households and small customers have the right 

46 

 
 
 
 
to be supplied under regulated prices, in line with the acquis. Increased efforts are needed to 
move  towards  cost-reflective  electricity  tariffs  including  all  externalities.  The  rules  on 
third-party access to gas pipelines are not in conformity with the acquis. 

The  Serbian  Energy  Agency  is  legally  distinct and  functionally  independent  from  any  other 
public  entity.  However,  restrictive  employment  and  salary  policies  for  the  public  sector 
reduce its capacity, which is insufficient to take on all the regulatory tasks set under the third 
energy package. Staff levels should gradually increase from the current 36 staff members to 
56 over the next three years. 

In  hydrocarbons,  Serbia  has  not  aligned  its  law  with  the  hydrocarbon  licensing  Directive, 
especially  regarding  conditions  for  granting  and  using  authorisations  for  prospection, 
exploration and production. 

Serbia’s  law  on  energy  is  in  line  with  the  renewable  energy  Directive  but  further  by-laws 
need to be passed to allow full implementation. Serbia’s national renewables target for 2020 is 
set at 27 % of gross final consumption of energy. In 2014 Serbia achieved a 23.1 % share of 
energy  from  renewable  sources.  There  are  no  major  investment  projects  in  the  renewable 
energy  sector;  large  scale  investment  has  so  far  been  hampered  by  difficulties  in  obtaining 
bankable power purchase agreements. In June 2016, Serbia adopted a new model for power 
purchase agreements to address the issue, together with a new feed-in tariff system valid until 
2018  and  legislation  on  the  procedure  for  acquiring  privileged  producer  status  and  on 
incentives  for  renewable  energy  production.  The  main  contribution  from  renewables  under 
feed-in  tariffs comes  from small  hydropower plants with approximately 60 MW of installed 
power.  Any  further  development  of  hydropower  should  be  in  line  with  EU  environmental 
legislation. 

Serbia  needed  to  adopt  its  third  energy  efficiency  action  plan  by  June  2016;  however, 
adoption  is  still  pending.  The  headline  target  is  to  save  9 %  in  final  energy  consumption  in 
2018. The current law on efficient use of energy and legislation on the energy performance of 
buildings  is  partly  in  line  with  the  energy  efficiency  and  energy  performance  of  buildings 
Directives. Serbia continued to implement the energy efficiency acquis. Capacity needs to be 
considerably  strengthened,  in  particular  in  the  Ministry  of  Mining’s  department  for  energy 
efficiency  and  in  the  building  inspectorate.  An  energy  efficiency  fund  has  been  set  up  as  a 
Ministry budget line; its current endowment of around EUR 1.2 million for 2016 is seriously 
insufficient to meet demands. 

On  nuclear  energy,  nuclear  security  and  radiation  protection,  Serbia’s  legislation  is 
partially  in  line  with  the  acquis.  Further  alignment  is  needed  on  radioactive  waste 
management, radiation protection, spent fuel, nuclear safety and security. Serbia is a signatory 
of  a  number  of  key  conventions,  treaties  and  agreements  including  on  non-proliferation, 
protection  of  nuclear  material  and  notification  of  nuclear  accidents.  Serbia  made  some 
progress  in  taking  on  board  amendments  to  the  Convention  on  the  Physical  Protection  of 
Nuclear  Material,  which entered into force in  March 2016. Serbia  has one nuclear site with 
two  research  nuclear  reactors  (of  which  one  is  still  in  operation)  and  radioactive  waste 
storage, plus one abandoned uranium mine. None of the facilities are licensed except for one 
newly  built  radioactive  waste  storage.  An  action  plan  has  yet  to  be  drafted  for 
decommissioning research reactor A at the Vinca site. The radiological and security situation 
at the Vinca site and the abandoned Kalna uranium mine need to be improved. The Radiation 
Protection  and  Nuclear  Safety  Agency  is  insufficiently  staffed  to  perform  its  duties.  In 
December 2015, the number of permanent staff posts was reduced from 35 to 24. Inspection 
functions have not yet been transferred to the Agency. The Agency’s budget is insufficient to 
ensure its proper functioning and operational independence.  

47 

 
 
 
5.16.  Chapter 16: Taxation 

EU rules on taxation cover value added tax and excise duties as well as aspects of corporate 
taxation.  They  also  deal  with  cooperation  between  tax  administrations,  including  the 
exchange of information to prevent tax evasion. 

Serbia is moderately prepared in the area of taxation. Some progress was made in aligning 
legislation with  the  acquis  and  in  implementing  the reform  of  the  tax  administration.  In  the 
coming period, Serbia should in particular: 

→ remove discrimination in the application of excise duties on imported spirits and coffee; 

→  continue  to  implement  the  programme  to  transform  the  tax  administration,  especially  by 
simplifying  tax  procedures  and  allocating  sufficient  human  and  IT  resources,  in  order  to 
improve tax collection and fight the informal economy.  

On  indirect  taxation,  limited  steps  were  taken  in  aligning  the  law  on  Value  Added  Tax 
(VAT)  and  the  law  on  excise  tax  with  the  acquis.  The  discriminatory  application  of  excise 
stamps on imported alcohol was removed. However, excise duty continues to be applied in a 
discriminatory  manner  to  imported  spirits  and  coffee.  With  regard  to  direct  taxation,  a 
withholding tax was introduced on income from services provided by non-residents in Serbia. 

There was no progress on administrative cooperation and mutual assistance. 

On operational capacity and computerisation of the tax administration, electronic filing has 
been further extended and now covers 95 % of total tax revenues. A strategy for reducing the 
informal  economy  was  adopted  in  December.  The  tax  administration  adopted  programmes 
and  new  tools  to  stimulate  better  tax  compliance,  notably  on  VAT.  There  were  sustained 
efforts  to  fight  tax  evasion,  notably  on  VAT  and  excise  duties.  Further  progress  in 
implementing  the  programme  to  transform  the  tax  administration  is  needed.  It  is  still 
understaffed, and suffers from its inability to compete with salaries from the private sector. Its 
IT division needs strengthening. Further efforts to improve the predictability of tax decisions 
and services to tax payers are needed. 

5.17.  Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them from directly financing 
the public sector. Member States coordinate their economic policies and are subject to fiscal, 
economic and financial surveillance.   

Serbia is moderately prepared in the area of economic and monetary policy. Good progress 
was  made  as  regards  alignment  with  the  acquis,  notably  through  better  preparation  of  the 
economic reform programme. In the coming period, Serbia should in particular: 

→ improve capacity for economic planning, coordination and implementation of the existing 
reform agenda;  

→ consider strengthening the system of fiscal rules, while making them more binding; 

→  submit  fiscal  notifications  and  the  economic  reform  programme  (ERP)  by  the  set 
deadlines. 

On monetary policy, alignment of the legal framework is well advanced. Further alignment is 
needed  to  ensure  the  central  bank’s  functional  and  institutional  independence.  As  regards 
economic  policy,  further  alignment  with  the  Directive  on  requirements  for  budgetary 
frameworks is needed. Some initial steps were taken to start aligning fiscal reporting with the 
European System of National and Regional Accounts. However, Serbia’s budget system law 
is  not  yet  aligned  with  the  Directive  and  budget  calendars  are  not  followed.  Programme 

48 

 
 
 
 
 
budgeting  has  to  be  strengthened,  and  administrative  and  IT  capacity  reinforced.  Further 
efforts are needed to ensure that fiscal planning, fiscal rules and forecasts are comprehensive 
in  coverage  across  sub-sectors  of  general  government  as  required.  The  fiscal  rules  are  not 
adhered  to  and  there  are  no  sanctions  in  place  for  non-compliance.  The  Fiscal  Council 
remained a prominent institution, supporting domestic debates on fiscal policy. The statistical 
coverage and definition of the general government sector should be improved.  

Further  efforts  are  needed  on  inter-ministerial  policy  coordination  in  order  to  improve 
preparation and implementation of structural  reforms. Serbia submitted its economic reform 
programme  (ERP)  2016-2018  to  the  European  Commission  with  a  slight  delay.  The 
identification of obstacles to growth could be improved. 

5.18.  Chapter 18: Statistics  

EU  rules  require  that  Member  States  are  able  to  produce  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency,  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information. 

Serbia  is  moderately  prepared  in  statistics.  Good  progress  was  made  in  the  past  year, 
notably in further aligning sectoral statistics with the EU acquis. In the coming period, Serbia 
should in particular: 

→  improve  macroeconomic  statistics  in  line  with  the  European  System  of  Accounts  (ESA) 
2010; 

→  continue  to  improve  coordination  of  producers  of  official  statistics  in  the  area  of 
macroeconomics (Statistical Office, Ministry of Finance, National Bank); 

→  align  its  legislative  framework  on  territorial  units  for  statistics  (NUTS)  with  the  NUTS 
regulation, in line with its SAA obligations.     

On  statistical  infrastructure,  the  legal  framework  is  largely  in  line  with  the  European 
statistics Code of Practice, while the upcoming revision of the law on statistics is expected to 
increase  the  professional  independence  of  the  Statistical  Office  of  the  Republic  of  Serbia 
(SORS).  The  capacity  of  the  Statistical  Office  needs  to  be  further  strengthened  in  terms  of 
human  resources,  notably  by 
the 
implementation  of  the  five-year  Programme  of  Official  Statistics.  .  Cooperation  with  the 
administrative data owners is established, and SORS is further broadening and developing it. 
A  system of  regular data transmission  to  Eurostat  has  been put in  place, but  data coverage 
needs to be increased. 

their  qualifications  for 

its  staff  and 

increasing 

Serbia  has  so  far  failed  to  notify  its  classification  of  territorial  units  in  line  with  the  EU 
regulation on a nomenclature of territorial units for statistics (NUTS), which is an obligation 
of  the  SAA  due  since  2014.  The  absence  of  an  agreed  nomenclature  prevents  deeper 
cooperation with the Commission across many policy areas. 

Regarding macroeconomic statistics, SORS continued to compile quarterly and annual GDP 
in  current  and  constant  prices.  Quarterly  sector  accounts  have  not  yet  been  compiled. 
Supply-use and input-output tables are not compiled. SORS transmits monthly data on trade 
in  goods  in the required breakdown by mandatory  partner country and in  good quality. The 
National  Bank  of  Serbia  compiles  monthly  balance  of  payments  (BOP),  quarterly  BOP  and 
quarterly IIP data (International Investment Position) in compliance with the BPM6 (Balance 
of  Payments  and  International  Investment  Position  Manual)  and  transmits  annual  data  on 
Trade in Services in accordance with the BoP Vademecum. SORS provided, for the first time 
in  2016,  the  notification  tables  for  the  Excessive  Deficit  Procedure  (EDP)  to  Eurostat. 

49 

 
 
 
 
Continued  efforts  are  needed  to  produce  all  data  required  by  the  ESA  2010  transmission 
programme. 

With  regard  to  structural  business  statistics  data  coverage  is  not  yet  in  line  with  the  EU 
acquis as a number of data are not collected. Harmonization with the EU acquis on short term 
statistics  is  progressing.  Data  on  national  tourism  are  not  collected.  For  transport,  road, 
railway,  inland  waterways  and  air  transport  data  are  collected  but  need  to  be  further 
harmonised with the EU acquis. In the area of statistics on research and development (R&D), 
SORS  has  made  significant  progress,  including  the  transmission  of  government  budget 
appropriations  or  outlays  for  R&D  data  for  2014  and  2015.  The  Community  innovation 
survey  is  conducted  every  two  years  and  data  are  sent  to  Eurostat.  Biennial  surveys  on 
information  and  communication  technology  (ICT)  in  compliance  with  EU  standards  are 
carried  out  regularly.  The  last  survey  in  2015  covered  the  period  2012-2014  and  data  were 
sent to Eurostat in March 2016.  

On  social  statistics,  Serbia  is  partially  in  line  with  the  EU  acquis.  SORS  carries  out  the 
Survey  on  Income  and  Living  Conditions  regularly,  and  data  for  2013  and  2014  were 
published.  Data  from  the  2015  survey  are  under  preparation.  The  European  System  of 
Integrated  Social  Protection  Statistics  is  implemented  in  line  with  the  EU  acquis.  Labour 
market statistics are produced broadly in line with the EU acquis. However, statistics on the 
structure  of  earnings  and  job  vacancies  still  need  to  be  produced.  The  labour  cost  data  and 
labour cost index are produced in line with the EU acquis. Public health statistics in line with 
the EU acquis are not yet available. Statistics on external migration and asylum are collected 
by  the  Ministry  of  Interior  and  are  only  partly  harmonised  with  the  relevant  EU  statistics. 
Crime statistics are collected but need to be aligned with EU standards.                   

Regarding  agriculture  statistics,  vineyards  and  orchard  surveys  need  to  be  introduced. 
Supply  balance  sheets  are  produced  for  certain  agriculture  products  as  well  as  agricultural 
price statistics but are only partially harmonised with the EU acquis. A Farm Structure Survey 
is planned for 2017/2018. The revision of economic agricultural accounts data for the period 
2007-2014 was completed and results were presented in the Study “Economic Accounts for 
Agriculture in the Republic of Serbia 2007-2014” published in December 2015.  

Regarding  energy  statistics,  annual  energy  statistics  are  produced  for  all  relevant  energy 
sources and are submitted to Eurostat. Short-term energy data are not produced. Waste and 
water statistics are collected  but  need to  be extended.  Environment statistics  are partially 
produced. 

5.19.  Chapter 19: Social policy and employment   

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and non-discrimination. They also promote social dialogue at European level. 

Serbia is moderately prepared in social policy and employment. Some progress was made 
on employment policy, Roma inclusion, non-discrimination and equality between women and 
men. The adoption of Serbia’s first employment and social reform programme has marked an 
important  step  in  addressing  policy  challenges  in  the  employment  and  social  areas,  which 
continue  to  be  affected  by  scarce  public  finances  and  limited  institutional  capacity.  In  the 
coming period, Serbia should in particular: 

→  ensure  financial  and  institutional  resources  for  employment  and  social  policies  to  more 
systematically target young and long-term unemployed persons; 

→ increase the efficiency of social benefits for people below the poverty threshold; 

50 

 
 
 
 
→  significantly  strengthen  bipartite  and  tripartite  social  dialogue  at  all  levels,  including 
consultations on draft legislation.   

In the field of labour law, the law on conditions of posting of employees abroad was adopted 
in November 2015 and entered into force in January 2016. This law, however, does not fully 
transpose  Directive  96/71/EC  on  Posting  of  Workers  and  labour  law  more  generally  is  not 
fully  aligned  with  the  acquis.  The  November  2015  amendments  to  the  law  on  health  and 
safety  at  work,  and  the  adoption  in  December  of  eight  by-laws  and  a  rulebook  on 
electromagnetic radiation, contribute to further alignment with the acquis. Labour inspection 
activities  have  been  intensified  especially  in  relation  to  combating  undeclared  work  and 
shown  first  positive  results.  The  Labour  Inspectorate’s  administrative  capacity  needs  to  be 
further  strengthened,  in  order  to  support  the  implementation  of  the  national  programme  for 
fighting  the  grey  economy.  Root  causes  of  informal  employment  should  however  be 
addressed in a more comprehensive approach.  

to  be  promoted  further 

In  social  dialogue,  bipartite  dialogue  has  remained  weak,  new  collective  agreements  have 
been concluded almost exclusively in the public sector, and those which expired following the 
introduction  of  the  new  labour  law  have  not  been  renewed  except  for  some  in  the  public 
sector  (health,  social  protection,  culture,  police,  and  in  state-owned  enterprises).  Collective 
legal  framework 
bargaining  needs 
(representativeness  of  social  partners  and  extension  of  agreements)  and  strengthening  the 
capacity of social partners. Tripartite dialogue has shown some progress with more frequent 
meetings  of  the  Economic  and  Social  Council  at  national  level;  however  the  Council  is  not 
systematically  consulted  on  all  relevant  draft  legislation.  There  are  29  local  economic  and 
social  councils  operational  across  the  country;  their  sustainability  is  hampered  by  a  lack  of 
capacity and funding. Social partners reached a common agreement on the adaptation of the 
minimum hourly wage in the second half of 2016.  

through  adapting 

the 

In  employment  policy,  the  overall  labour  market  performance  in  2015  improved  slightly 
compared  to  2014.  The  employment  rate  for  the  15-64  years  old  increased  from  50.7  %  to 
52 %.  Unemployment  went  down  from  19.2  %  to  17.7  %.  Specific  pressure  on  the  labour 
market  results  from  fiscal  consolidation  measures  and  the  restructuring  of  state-owned 
enterprises. Labour market integration of workers who have become redundant and the long-
term unemployed remains a key challenge, as well as of young people whose unemployment 
rate  is  still  very  high  (43.2  %  in  2015).  Allocations  for  active  labour  market  policies  have 
remained  at  the  same  level  in  2016  as  in  2015.  While  all  regions  showed  improvements  in 
labour  market  indicators,  regional  imbalances  continue  to  persist.  Roma,  especially  women, 
are  the  most  discriminated  against  on  the  labour  market;  other  vulnerable  groups  include 
persons with disabilities, and people with low qualifications who are long-term unemployed. 
The  adoption  of  the  employment  and  social  reform  programme  in  June  constitutes  a 
significant step forward in terms of evidence-based policy development. The revision of the 
national  employment  strategy  2010-2020  is  being  completed.  While  authorised  private 
employment agencies are already active in the labour market, it is important to advance with 
the development of a specific legislative framework in line with the EU acquis in this area.     

There  were  no  developments  as  regards  preparations  for  the  European  Social  Fund. 
Administrative capacity is under pressure as a result of a high turnover of staff within the unit 
responsible  in  the  Ministry  of  Labour,  Employment,  Veterans  and  Social  Affairs.  (See  also 
chapter 22 — Regional policy and coordination of structural instruments) 

In  the  area  of  social  inclusion  and  protection,  the  adoption  of  amendments  to  the  social 
welfare law, the family law and the draft law on financial support for families with children 

51 

 
 
 
are  still  pending.  In  2015,  only  18.5 %  of  registered  unemployed  Roma  were  included  in 
active labour market measures. 

The Survey on Income and Living Conditions was conducted for the third time in 2015. The 
at-risk-of-poverty  rate  in  Serbia  decreased  slightly  to  25.4 %  with  the  highest  rates  among 
young people aged 18-24 and those under 18, unemployed persons, and households with two 
adults and three or more dependent children. The current system of social benefits does not 
effectively help to reduce poverty. The pension system continues to show a high deficit. The 
ratio of insured persons to pensioners is low and undermines the long-term sustainability of 
the system.  

The system of social services, including those for elderly and socially disadvantaged persons, 
is  still  largely  institutionalised.  The  findings  of  the  ongoing  mapping  exercise  of  social 
services  at  the  local  level  undertaken  by  the  Social  Inclusion  and  Poverty  Reduction  Unit 
(SIPRU) in cooperation with the Republic Institute for Social Protection should contribute to 
developing  non-institutional  forms  of  care,  developing  a  range  of  service  providers  and 
integrated social services, and improving service accessibility, efficiency and quality.  

In the field of non-discrimination in employment and social policy, women are particularly 
exposed  to  discrimination  on  the  labour  market,  while  the  Roma  population  is  exposed  to 
discrimination in almost all areas of life. The majority of complaints (36.3 %) filed with the 
Commissioner  for  Protection  of  Equality  pertain  to  discrimination  in  the  area  of  labour  and 
employment. (See also chapter 23 — Judiciary and fundamental rights) 

In  the  area  of  equality  between  women  and  men  in  employment  and  social  policy,  the 
employment  rate  of  men  is  14 %  higher  and  their  activity  rate  is  16 %  higher  compared  to 
women. In 2016, SIPRU and the Statistical Office introduced the Index of Gender Equality, in 
line with EU methodology. 

5.20.  Chapter 20: Enterprise and industrial policy 

EU  enterprise  and  industrial  policy  enhances  competitiveness,  facilitates  structural  change 
and  encourages  an  enterprise-friendly  environment  that  stimulates  small  and  medium-sized 
enterprises (SMEs). 

Serbia is moderately prepared in enterprise and industrial policy. Some progress was made 
with  government  programmes  to  improve  financing  of  SMEs.  In  the  coming  period,  Serbia 
should in particular: 

→ make efforts to improve the predictability of the business environment and SME support 
schemes, with emphasis on reducing the cost of access to finance.   

On  enterprise  and  industrial  policy,  the  strategy  to  support  the  development  of  SMEs, 
entrepreneurship and competitiveness for 2015-2020 is being implemented and 2016 has been 
declared the year of entrepreneurship in Serbia. The Serbian Development Agency has been 
set up, replacing the National Agency for Regional Development and the Serbian Investment 
and Export Promotion Agency. Serbia joined the EU’s competitiveness and SME programme 
(COSME)  in  January  2016.  A  new  law  on  investment,  aimed  at  improving  the  institutional 
framework  for  investment  promotion  and  support,  was  adopted  in  October  2015.  It  sets 
criteria for State support to investors, but contains a number of exemption clauses. The Small 
Business  Act  assessment  for  Serbia  recognises  that  improvements  have  been  made  in  the 
environment for SMEs; however, it calls for a monitoring system for SME instruments which 
would  track  the  measures  taken.  In  particular,  the  decline  in  research  output  and  financial 
support  for  innovation  needs  to  be  taken  into  account,  as  this  negatively  impacts 
competitiveness of the private sector.    

52 

 
 
 
 
On  enterprise  and  industrial  instruments,  the  government  increased  budget  financing  in 
2016 to 33 different assistance programmes for SMEs. . However, access to finance remains 
problematic and is a key obstacle to development of the sector. Parafiscal charges continue to 
put a heavy burden on SMEs’ operations. The process of reviewing and simplifying existing 
laws — ‘the regulatory guillotine’ — has stalled. Predictability and overall control of charges 
at different government levels could be strengthened. 

In sectoral policies, the strategy for industrial development 2011-2020 should be reviewed to 
establish proper sectoral prioritisation, with appropriate supporting instruments. 

5.21.  Chapter 21: Trans-European networks 

The EU promotes trans-European networks in the areas of transport, telecommunications and 
energy to strengthen the internal market and contribute to growth and employment. 

Serbia  is  moderately  prepared  for  trans-European  networks.  Some  progress  was  made 
regarding last year's recommendation and on the extension of Orient East-Med corridor both 
for road and rail. In the coming period, Serbia should in particular: 

 → continue and accelerate its preparatory work for the gas interconnector with Bulgaria. 

On  transport  networks,  Serbia  played  an  active  role in  the  Western  Balkan  6  connectivity 
agenda, including achieving good progress on the connectivity reform measures for transport 
agreed  at  the  Vienna  summit  in  August  2015.  In  2015,  together  with  Austria,  Bulgaria, 
Croatia  and  Slovenia,  Serbia  initiated  the  founding  of  the  Alpine-Western  Balkans  freight 
corridor  which  will  extend  from  Salzburg  to  the  Bulgarian-Turkish  border.  In  November 
2015, Serbia further aligned its legislation on interoperability. Serbia should ensure alignment 
with  the  TEN-T  Regulation  in  the  implementation  of  planned  transport  network  projects 
including  the  Budapest-Belgrade  railway.  An  action  plan  for  achieving  "good  navigation 
status" in all relevant Serbian waterways should be envisaged. 

On the road infrastructure for the Orient East-Med corridor South and East branches, the parts 
Grabovnice to Grdelice and Vladičin Han to Donji Neradovac were completed, as was Crvena 
Reka  to  Čiflik-Staničenje.  Some  parts  of  the  Belgrade  bypass  were  completed,  including 
Batajnica  to  Dobanovci  and  Orlovača  to  Avalski.  Work  on  the  railway  for  the  Orient 
East-Med core corridor is ongoing. 

On  trans-European  energy  networks,  Serbia  actively  participated  in  the  Central  and  South 
Eastern  Europe  Gas  Connectivity  initiative.  Preparations  for  building  a  gas  interconnector 
between Serbia and Bulgaria need to continue and accelerate to enable timely implementation. 
Construction of the Resita-Pancevo electricity interconnection between Romania and Serbia is 
advancing,  and  it  is  planned  to  be  operational  by  the  end  of  2017.  Project  pipelines  for 
transport and energy were updated in 2016 and investment preparations continue. 

5.22.  Chapter 22: Regional policy and coordination of structural instruments 

Regional  policy  is  the  EU’s  main  investment  policy  for  sustainable  and  inclusive  economic 
growth.  Member  States  bear  responsibility  for  its  implementation,  which  requires  adequate 
administrative capacity and sound financial management of project design and execution. 

Serbia is moderately prepared in regional policy and coordination of structural instruments. 
Some  progress  was  made  in  gaining  experience  in  managing  EU  funds  under  indirect 
management. In the coming period, Serbia should in particular: 

→ adopt and start implementing an action plan setting out clear objectives and timeframes in 
order to meet requirements deriving from EU cohesion policy; 

53 

 
 
 
 
 
→ ensure adequate administrative and financial capacity to implement decentralised/indirect 
management programmes. 

The legislative framework supporting the implementation of regional policy is not yet fully 
in line with the acquis. The ability of the budgetary system and resources to provide adequate 
financing capacity at aggregate level remains to be tested. On the  institutional framework, 
Serbia  is  partly  managing  EU  funds  under  decentralised  /  indirect  management.  Work 
continued  to  align  the  structures  for  programming  and  implementing  national  development 
policy and strategic planning with those of EU regional policy, so that Serbia can increase its 
ability to absorb EU funds and co-finance EU-funded programmes. Regarding administrative 
capacity, persistent weaknesses in the key institutions managing EU funds have been partially 
addressed in 2016 through improvements in the staffing situation. However, a staff retention 
policy still needs to be developed and implemented. 

Progress has been made in  programming, with the introduction of a sector approach under 
the Instrument for Pre-accession Assistance (IPA). The ‘single project pipeline’ was updated 
and  revised  in  March  2016  by  the  national  investment  committee,  enabling  selection  of 
strategically important and mature infrastructure projects. 

On monitoring and evaluation, the monitoring committees under indirect management meet 
regularly.  The  evaluation  plan  for  decentralised  IPA  funds  was  prepared.  However,  a 
management  and  information  system  for  monitoring  and  evaluation  under  IPA  needs  to  be 
developed. 

On  financial  management,  control  and  audit,  Serbia’s  financial  management  and  control 
systems were further developed to comply with the requirements for indirect management of 
IPA  funds.  The  recruitment  of  a  Head  of  the  Audit  Authority  with  the  appropriate 
competence, knowledge and the experience in the field of audit remains an issue of concern 
which needs to be addressed immediately. 

5.23.  Chapter 23: Judiciary and fundamental rights 

The EU’s founding  values  include the  rule of law and respect for  human rights.  A properly    
functioning  judicial  system  and  effective  fight  against  corruption  are  of  paramount 
importance, as is respect for fundamental rights in law and in practice. 

Serbia has achieved some level of preparation for the acquis and European standards in this 
area. Some progress was made by partially addressing last year’s recommendations, and in 
particular  in  standardising  court  practice.  Elections  for  new  members  of  the  High  Judicial 
Council (HJC) and the State Prosecutorial Council (SPC) in December 2015 were a positive 
step  towards  improving  their  credibility.  However,  developments  over  the  reporting  period 
underlined  the  need  for  further  implementation  and  consolidation  of  reforms  in  this  area. 
There  is  still  scope  for  political  influence  over  judicial  appointments.  This  remains  to  be 
addressed.  

The  national  anti-corruption  strategy  has  so  far  not  yielded the  expected  results.  Corruption 
remains prevalent in many areas and continues to be a serious problem. Conditions for the full 
exercise  of  freedom  of  expression  are  still  not  in  place.  Anti-discrimination  legislation  and 
legislation  to  protect  minorities  is  in  place  but  needs  to  be  consistently  implemented. 
Activities  to  promote  equality  and  ensure  integration  of  persons  belonging  to  the  most 
discriminated groups (Roma, LGBTI, persons with disabilities, persons with HIV/AIDS and 
other socially vulnerable groups) need to be effectively carried out.  

In the coming year, Serbia should in particular: 

54 

 
 
 
 
  implement  and  consolidate  the  ongoing  justice  reform  process,  tackling  issues  related  to 
the independence, accountability and effectiveness of the judicial system; 

  establish  an  initial  track  record  of  investigation,  prosecution  and  final  convictions  in 
corruption cases, particularly in high-level ones; 

 ensure conditions for the full exercise of freedom of expression. 

As part of the ‘new approach’ to the rule of law, and in line with the negotiating framework, 
this chapter was opened in July 2016 after Serbia adopted a detailed action plan. 

Functioning of the judiciary 

Strategic documents 

The  national  judicial  reform  strategy  was  revised  and  brought  into  line  with  the  chapter 
23 action  plan.  The  Commission  overseeing  its  implementation  met  regularly,  but  did  not 
manage  to  ensure  correct  and  timely  implementation  of  all  activities.  It  failed  to  solve 
problems  in  the  judiciary  and  to  address  over-ambitious  deadlines  for  activities  that  were 
delayed in 2015. The action plan required to open chapter 23 was adopted by the government 
in April 2016 and implementation started.  

Management bodies 

The election of new members to the HJC and SPC has created a new opportunity to improve 
their  legitimacy  and  reputation.  In  December  2015  the  laws  on  the  HJC  and  SPC  were 
amended  to  make  their  work  more  transparent.  They  should  become  more  visible  and 
proactive  in  protecting  the  independence  of  judges  and  prosecutors.  The  transfer  of  full 
responsibility  for  the  judicial  budget  to  the  Councils  has  been  delayed  to  January  2017. 
Intensive  preparation  is  needed  for  the  transfer,  which  is  important  for  the  independence  of 
the  judiciary.  Further  efforts  are  needed  for  the  Councils to  implement  a  fully  coherent  and 
efficient judicial administration. 

Independence and impartiality 

In the selection process for prosecutors in autumn 2015, the SPC selected only 55 candidates 
for 85 posts. The candidates’ ranking did not reflect their professional merits. The government 
submitted the list of candidate prosecutors to the National Assembly for appointment. Under 
Article 156 of the constitution, the prosecution service is an independent body. Selection and 
promotion of judges and prosecutors should therefore be independent of the executive and the 
legislature,  and  should  be  based  on  pre-established,  objective,  merit-based,  and  uniform 
criteria. The SPC’s role as appointing authority should therefore be respected. The role of the 
National  Assembly  in  high-level  judicial  appointments  should  be  eliminated  from  the 
constitution.  

Political comments on ongoing investigations and cases continue to call judicial independence 
into question. Court rules of procedure provide for random allocation of cases, but this is not 
applied in all courts, especially smaller courts outside the bigger cities. This leaves scope for 
interference by court staff and court presidents. There is no mechanism for random allocation 
in prosecution offices. 

Accountability 

In  2015, 18 disciplinary proceedings were  brought  before the Disciplinary Commission; the 
HJC took decisions in 13 appeal cases (seven were won and six were lost) and one dismissal 
procedure was started against a judge. That year, 250 disciplinary reports were filed with the 
Disciplinary Prosecutor. However, they led to only eight disciplinary proceedings.  

55 

 
 
 
Professionalism and competence 

The HJC tested its criteria and guidelines for evaluating the work of judges in several courts. 
Overall implementation started in July 2016. Thorough judicial education is needed across the 
board. Serbia needs to amend the constitutional provisions on the system for recruitment and 
career  management  in  line  with  European  standards  for  the  independence  of  the  justice 
system. All these points would contribute to a more transparent and predictable judicial career 
system and a more consistent approach to judges’ and prosecutors’ career development. 

Quality of justice 

In  December  2015,  the  law  on  the  Judicial  Academy  was  amended  to  include  training  of 
public  notaries  and  public  enforcement  agents.  Laws  on  judges  and  the  public  prosecution 
service provided for the HJC and SPC respectively to hold examinations for first-time election 
to  judicial  functions.  Judicial  Academy  graduates  will  be  exempt  from  the  examination  and 
evaluated on the grade they receive from the Academy. The expertise of the Judicial Academy 
needs  to  be  reinforced.  Training  programmes  should  follow  a  curriculum  owned  by  the 
HJC/SPC to address students’ needs. The first comprehensive in-service training programme 
covering substantive topics and practical skills has yet to be fully implemented.  

Some  steps,  such  as  regular  meetings  between  courts  of  same  instances,  were  taken  to 
standardise court practice. However, poor quality legislation continues to lead to contradictory 
rulings. The Supreme Court of Cassation worked more closely with all four courts of appeal, 
but  there  is  still  no  effective  mechanism  for  this.  Judges  need  access  to  a  consolidated 
database of key court decisions. 

There are still significant differences in workload across the country. Judges and prosecutors 
are appointed to specific offices and cannot transfer voluntarily to tackle peaks in workload. 
This  may  hinder  better  management  of  workload.  Significant  differences  in  workload  and 
working  conditions  need  to  be  addressed.  The  lowest-level  basic  courts  and  prosecution 
offices continued to be overburdened, especially in Belgrade, where the courts deal with the 
vast majority of all court cases. Courts there still lack IT equipment and space. 

The HJC’s budget proposal reflected falling revenue due to lower collection of court fees at 
all levels. The SPC’s budget also fell. Specific resource challenges for the prosecution service 
stemming  from  a  new  prosecutor-led  investigation  model  have  not  been  solved.  Further 
efforts  are  needed  to  ensure  that  budget  planning  and  resource  allocation  match  service 
delivery needs. 

The national association of mediators actively promoted alternative dispute resolution (ADR) 
but  without  significantly  reducing  civil  cases.  In  April  2016,  there  were  324  registered 
mediators. There is a need to actively promote ADR and to put in place an effective system 
for transferring court cases. In-service training of all stakeholders is needed for mediation to 
become a useful tool. 

Efficiency 

In  2015,  there  were  1.1  million  pending  cases,  compared  to  about  900  000  in  2014.  This 
increase in the number of pending cases in 2015 results in part from an increased inflow of 
new cases. The overall clearance rate, i.e. ratio of solved cases to newly received cases, was 
98 %  in  2015,  compared  with  102 %  in  2014.  The  overall  length  of  proceedings  and  the 
recorded backlog of old cases remain a serious concern. A law on the right to be tried within a 
reasonable time entered into force in January 2016. The new law on enforcement and security 
entered  into  force  in  July  2016,  giving  creditors  a  deadline  to  pursue  enforcement  of  final 
court  decisions  and  a  choice  of  enforcement  mechanism  (and  the  option  to  appeal).  It  is 

56 

 
 
 
essential  to  adopt  all  relevant  by-laws  promptly  and  to  ensure  the  law  is  successfully 
implemented.  Court  staff  should  be  given  access  to  the  relevant  electronic  database  and 
trained  as  a  matter  of  priority.  Enforcement  agents  need  adequate  resources  and  their 
Chamber should exercise appropriate supervision over the quality of service and  the legality 
of their action. 

Under the adversarial system introduced in the criminal procedure, the options of cancelling 
criminal  prosecution  and  plea  bargaining  have  significantly  reduced  the  volume  of  criminal 
cases  reaching  the  courts.  However,  the  application  of  the  system  is  uneven.  The  roles  of 
preliminary and trial judges need to be further clarified and streamlined. Appropriate training 
and  awareness-raising  on  the  prosecution-led method  of  investigation  among  police  officers 
and prosecutors is crucial. 

Automated information exchange on court practice and access to services needs to be further 
developed. The judiciary relies on a variety of unlinked ICT systems to process and manage 
cases and documents. The system’s performance is difficult to measure as data are scattered 
and based on manual collection. There is neither centralised strategic planning nor any regular 
needs analysis. Case-law and consolidated legislation should be easily accessible online. 

Domestic handling of war crime cases 

The International Criminal Tribunal for the former Yugoslavia (ICTY) Prosecutor reported in 
June that while Serbia’s technical cooperation on requests for assistance remains satisfactory, 
Serbia had turned away from the path of full cooperation with the ICTY; this is an issue of 
serious  concern.  It  relates  in  particular  to  Serbia’s  non-handover  of  three  Serbian  nationals 
charged  with  contempt  of  court.  Serbia  needs  to  implement  ICTY’s  rulings  and  decisions 
fully.  Serbia’s  commitment  to  working  towards  regional  cooperation  and  reconciliation 
should  include  preparedness  to  face  its  recent  past  and  to  do  all  it  can  to  establish  an 
atmosphere conducive to deal with all war crimes.  

The adoption in February 2016 of a national strategy for the investigation and prosecution of 
war crimes, following broad consultations, is an important step forward. Serbia needs now to 
step up implementation of this strategy and adopt an operational prosecutorial strategy. 

In  line  with  the  bilateral  agreements  between  the  prosecutors’  offices,  the  War  Crime 
Prosecutor's Office has continued its cooperation with other countries in the region as showed 
by the steady increase of items of evidence and information exchanged. The most significant 
developments  concern  the  number  of  cases  referred  to  prosecution  services  in  Bosnia  and 
Herzegovina (16 cases) and Croatia (44 cases). The Office did not however participate in the 
Brijuni  regional  conference  of  war  crime  prosecutors  held  in  September  2016.  A  liaison 
officer  programme  is  operational  with  Bosnia  and  Herzegovina,  but  remains  pending  with 
Croatia. A more precise database needs to be established to improve the timely exchange of 
information.  It  is  important  that  these  regional  cooperation  efforts  continue  to  be 
strengthened.  Only  two  new  indictments  were  filed  in  2015  and  there  was  no  progress  on 
investigating high-profile cases. 

The  mandate  of  the  former  War  Crimes  Prosecutor  expired  in  December  2015  and  his 
successor has yet to be appointed; this is a matter of serious concern. To maintain the quality 
of  trials,  measures  should  be  put  in  place  to  preserve  the  extensive  judicial  experience 
acquired in processing these complex cases. The War Crimes Prosecutor’s Office needs to be 
sufficiently trained, staffed and supported to continue performing its tasks professionally. 

Only  a  few  victims  of  war  crimes  have  access  to  effective  compensation  under  the  current 
legal framework. No concrete steps have been taken to address the serious weaknesses in the 
witness protection system. It is of the utmost  importance that Serbia’s domestic handling of 

57 

 
 
 
war crimes is in line with international standards and ICTY case-law, with a view to ensuring 
efficient, deterrent and impartial treatment of war crimes. 

Anti-corruption policy 

Track record 

Serbia’s initial track record of investigation, prosecution and convictions  in  cases  which 
are  not  considered  ‘high-level’  corruption  has  been  sustained.  The  basic  and  higher 
prosecutor’s offices and the specialist prosecution office for organised crime and corruption 
received 8 460 crime reports of corruption-related offences during 2015. There were decisions 
to investigate 816 persons in 2015. Public prosecutor’s offices brought charges against 1 546 
people  (1 044  in  2014)  and  there  were  1 246  convictions.  Investigations  -  particularly  into 
high-level corruption - often take a long time because prosecutors' offices lack capacity. Also, 
shortcomings in the legal framework prevent effective and systematic financial investigations 
and asset confiscation. While the criminal code provides for sentences of between 6 months 
and 12 years, in reality, sanctions continue to be more lenient. Appeal courts in Belgrade in 
charge of high-level and severe corruption cases pronounced first-instance judgments against 
87 persons for corruption-related offences in 2015.  

Leaks  to  the  media  about  ongoing  investigations  continued  to  occur  frequently.  Such 
practices  hamper  investigations  and  are  a  breach  of  the  presumption  of  innocence. 
Investigations  in  such  cases  should  be  prioritised,  the  source  of  the  leaks  identified  and 
deterrent sanctions imposed on perpetrators. 

There is some track record of judicial follow-up to official requests from the Anti-Corruption 
Agency for in-depth checks of party funding, conflicts of interest and asset declarations. 
The Agency filed only 22 requests for misdemeanour proceedings in 2015 (compared with 68 
in 2014 and 58 in 2013). The Agency received fewer requests related to conflicts of interest 
in 2015 (1 358, compared with 1 481 in 2014). This resulted in 30 first-instance judgments, 
most of which were reprimands and fines (compared with 43 in 2014). 39 appeals by public 
officials against the decisions of the Agency Board on conflict of interest cases were made to 
the  Administrative  Court,  which  issued  12  judgments,  ten  of  which  confirmed  the  Board’s 
decision. 

The  Agency  submitted  fewer  requests  for  misdemeanour  proceedings  relating  to  asset 
declarations  in  2015  (123,  as  against  168  in  2014).  121  cases  were  for  failure  to  submit 
reports on time. Based on the Agency’s work in previous years, misdemeanour courts issued 
94 convictions in 2015 (compared with 85 in 2014). The Agency filed 15 criminal charges in 
2015  based  on  a  reasonable  suspicion  that  a  public  official  had  not  reported  assets  or  had 
given false information about assets with the intention of concealing the facts (compared with 
14  in  2014).  Based  on  this  work,  one  final  judgment  convicting  one  public  official  to  six 
months’ imprisonment (or one year probation) was issued. Proceedings are under way in 26 
cases; in seven cases the criminal charge was dismissed and there was one acquittal. 

The  Agency  has  stepped  up  its  checks  on  the  funding  of  political  activities  and  elections, 
and  submitted  217  requests  for  misdemeanour  proceedings  for  breaches  of  the  law  on 
financing  political  activities  in  2015  (compared  with  33  in  2014).  The  largest  number  of 
proceedings  were  initiated  due  to  the  lack  of  transmission  of  annual  financial  reports  by 
political  entities  (115  cases  or  53 %  of  the  total  number  of  requests  of  proceedings)  and 
expenditure  reports  in  connection  with  electoral  campaigns  (73  cases  of  34 %  of  the  total). 
The  Agency  faces  difficulties  in  this  field  because  of  a  lack  of  harmonisation  between 
different  laws,  difficulties  in  collecting  data.  In  2015  the  Agency  published  27  decisions 

58 

 
 
 
denying  political  entities  the  right  to  use  public  funds  for  their  regular  work  in  2016 
(compared with 31 in 2014). 

Institutional framework 

Prevention measures 

Serbia’s  institutions  for  preventing  corruption  broadly  meet  international  standards  and 
continue  to  show  good  potential.  However,  human  resources  capacity  and  the  level  of 
inter-agency cooperation need to be stepped up. A revised law enabling the Anti-Corruption 
Agency  to  expand  its  role  as  the leading  institution  in  the  fight  against  corruption  has  been 
pending  for  many  months  and  needs  to  be  adopted  urgently.  The  Agency  continued  to 
perform its mandate, despite limited resources and both legal and institutional obstacles. The 
Agency  needs  to  increase  its  ability  to  collect  and  analyse  data  and  its  access  to  relevant 
databases.  Overall,  it  must  receive  and  maintain  the  capacity,  tools  and  financial  resources 
needed  to  carry  out  its  mandate.  The  law  on  public  procurement  and  the  national 
anti-corruption  strategy  and  action  plan  have  yet  to  be  fully  implemented.  Healthcare, 
education,  construction  and  spatial  planning,  infrastructure  projects  and  the  privatisation  of 
public enterprises still remain particularly vulnerable to corruption. Independent supervision 
and  capacity  for  early  detection  of  wrongdoing  and  conflicts  of  interest  need  to  be  further 
developed  and  the  legislation  in  force  needs  to  be  implemented.  There  should  be  greater 
accountability and transparency in the management of public enterprises. Attention needs to 
be  given  to  the  implementation  of  codes  of  ethics  and  follow-up  to  integrity  plans  in  the 
judiciary and in the public administration. 

The Anti-Corruption Council remained active in exposing and analysing cases of systemic 
corruption,  in  its  advisory  role  to  the  government.  However,  the  government  still  does  not 
follow up on its recommendations. The Council remains under-resourced and the appointment 
of new Council members has been pending since 2013. 

The  institutional  capacity  of  the  Commissioner  for  Free  Access to  Information  of  Public 
Importance and Personal Data Protection needs to be increased further to ensure effective 
monitoring and adequate follow-up to the increasing number of requests for access to public 
information.  Requests  for  access  to  information  that  were  refused  mainly  concerned 
procedures which have an impact on the budget. 

Law enforcement 

Judges,  prosecutors  and  investigators  specialised  in  financial  crime,  including  corruption, 
have  received  further  training,  but  a  more  sustainable  approach  to  specialist  training  at  all 
levels  is  needed.  The  specialist  prosecution  service  for  organised  crime  and  corruption 
has continued to initiate investigations and raise indictments in cases of high-level corruption. 
Appropriate training and awareness-raising about the prosecution-led method of investigation 
among police officers and prosecutors is crucial. 

Inter-institutional cooperation, between law enforcement agencies and with the prosecution 
service, has improved to a certain extent but requires further strengthening. The new financial 
investigation  strategy  includes  plans  to  reorganise  the  law  enforcement  authorities,  increase 
their level of specialisation, and recruit forensic accountants. However, an action plan with a 
credible budget has yet to be adopted. 

There  is  no  secure  platform  for  electronic  data  exchange  or  communication  between  the 
prosecution  service,  the  police,  tax  and  other  authorities.  There  is  still  no  system  allowing 
statistical monitoring of criminal proceedings. Internal control departments continue to lack 
equipment,  resources  and  human  capacity.  Reform  of  the  inspection  services  was  begun 

59 

 
 
 
with the aim of increasing their accountability. Effective supervision and deterrent sanctions 
in  cases  of  wrongdoing  need  to  be  applied.  The  independence  and  accountability  of  all 
investigative  and  judicial  bodies  dealing  with  corruption  need  to  be  strengthened  to  ensure 
efficiency. 

The human resources policy in the public administration requires reform to ensure that calls 
recruitment and promotion are based on merit and professional skills. Attention needs to be 
given to the implementation of codes of ethics and follow-up of integrity plans in the judiciary 
and in the public administration. Preventing corruption in local administration requires more 
attention. 

Legal framework 

The legal framework for the fight against corruption is broadly in place but shortcomings in 
the criminal code remain an issue. The continued excessive recourse to the provision on abuse 
of position of a responsible person in the private sector (Article 234 of the criminal code) is 
harmful  to  the  business  climate  and  legal  certainty.  The  law  on  civil  servants  includes 
provisions on a code of conduct for civil servants and monitoring mechanisms. Preventing 
corruption in local government requires greater attention. The provisions in the current law on 
the Anti-Corruption Agency on preventing conflicts of interest and declaring and checking 
on the assets of public officials should be amended to ensure its enforcement and to provide 
for  deterrent  sanctions  in  cases  of  proven  infringements.  A  law  on  financing  political 
activities is in place. OSCE/ODIHR recommendations on financing electoral campaigns have 
not yet been addressed. Implementation of the law on whistle-blower protection started and 
a training programme for the judiciary was introduced. 

Strategic framework 

The  action  plan  required  for  to  open  the  rule  of  law  chapter  23  was  adopted  by  the 
government  in  April  2016  and  implementation  started.  Several  important  measures  in  the 
anti-corruption strategy and action plan for 2013-2018 are behind schedule, e.g. setting up 
efficient  coordination  and  monitoring  mechanisms.  Both  documents  have  been  aligned  with 
deadlines  and  actions  in  the  national  action  plan.  The  latter  was  not  subject  to  any 
consultation process. Adequate resources and human capacity to implement the strategy and 
action plan have not yet been allocated. The inter-ministerial coordination group chaired by 
the Prime Minister met only once in 2015. There is an urgent need to ensure better working 
arrangements  between  the  Ministry  of  Justice  and  other  institutions  and  bodies  involved  in 
combating corruption. The strategy for financial investigations has yet to produce results in 
investigating the ‘money trail’ of crime alongside criminal investigations. Adequate resources 
have yet to be allocated and no action plan has been adopted. The action plan for the public 
administration  reform  strategy 
increase  accountability  and 
includes  measures 
transparency in the public sector with a view to combating corruption, but the reform process 
needs to be implemented. 

to 

Fundamental rights 

Serbia has ratified all of the main international human rights instruments. However, their 
implementation needs to be improved and made more consistent. 

Since September 2015, the European Court of Human Rights (ECtHR) has found at least 
one violation of the European Convention on Human Rights (ECHR) in seventeen judgments 
relating  mainly  to  the  right  to  a  fair  trial  and  protection  of  property.  A  total  of  1362  new 
applications  were  allocated  to  a  decision-making  body,  bringing  the  number  of  pending 
applications to 1226. Lack of proper execution of ECtHR judgments continues to be of great 
concern.  

60 

 
 
 
In  relation  to  the  promotion  and  enforcement  of  human  rights,  relevant  state  bodies, 
parliamentary  committees,  the  Ombudsman  and  civil  society  organisations  have  carried  out 
awareness-raising  activities  on  human  rights, 
tolerance  and  non-discrimination  and 
enforcement  mechanisms.  Implementation  of  the  action  plan  for  the  anti-discrimination 
strategy has started. The Equality Protection Commissioner’s Office has established an annual 
media award for the best media report promoting tolerance and equality. 

As regards the prevention of torture and ill-treatment, staffing of the Ombudsman’s Office, 
which acts as the national preventive mechanism, was increased. Implementing legislation on 
the treatment of persons detained in police custody is still lacking. Penalties for ill-treatment 
and torture remain inadequate. Proper legal safeguards to prevent torture and abuse in social 
institutions have yet to be adopted. A large number of people with mental and psychosocial 
disabilities, including elderly people, are involuntarily confined in psychiatric institutions and 
no progress has been made towards de-institutionalisation. There are concerns about reports 
of  the  use  of  coercive  treatment.  Overcrowding,  poor  living  conditions,  difficult  access  to 
specialist  treatment  programmes  and  inadequate  access  to  healthcare  in  prisons  are  still  a 
matter  of  concern.  An  effective  internal  non-judicial  mechanism  for  reviewing  detainees’ 
complaints has yet to be set up. Allegations of ill-treatment should be promptly and properly 
investigated. Poor conditions in  some police facilities, especially in  smaller towns and rural 
areas, remain problematic.  

Concerning the prison system, a system of judicial protection and supervision of prisoners’ 
and detainees’ exercise of their rights is in place. Pilot projects on cooperation with local self-
governments and civil society on alternative sanctions and reintegration continued and proved 
successful.  As  regard  the  probation  service,  secondary  legislation  has  been  adopted  and  the 
number of executed alternative sanctions and measures increased in 2015.  

A  new  law  on  personal  data  protection  in  line  with  EU  standards  needs  to  be  adopted 
urgently.  Processing  and  protection  of  sensitive  personal  data,  biometrics  and  video 
surveillance,  security  of  data  on  the  internet  and  direct  marketing  remain  inadequately 
regulated, leaving significant scope for abuse. There is a need to strengthen the capacity and 
secure adequate resources for the Office of the Commissioner for Free Access to Information 
of Public Importance and Personal Data Protection. 

Freedom of thought, conscience and religion is guaranteed by the constitution and generally 
respected.  The  decrease  in  religiously  motivated  incidents  has  continued.  Lack  of 
transparency and consistency in the registration process continues to be one of the obstacles 
preventing some religious groups from exercising their rights. The rights of persons belonging 
to a national minority to establish and register religious institutions, build and use places of 
worship need to be fully guaranteed in practice, and there are difficulties in access to worship 
in some minority languages.  

As  regards  freedom  of  expression,  the  situation  has  not  improved.  There  is  a  need  to 
maintain and foster space for political dialogue, critical discussion and debate and expression 
of  differing  opinions  both  in  mainstream  media  and  in  social  networks.  In  relation  to  the 
election campaign, biased  media coverage,  undue advantage taken by the incumbent parties 
and  a  blurring  of  the  distinction  between  state  and  party  activities  caused  distortions  in  the 
reporting of the campaign. Political control over the media sector resulted in widespread self-
censorship, while an effective mechanism for monitoring media conduct during the campaign 
was lacking.  

Hate speech is often tolerated in the media and is rarely tackled by regulatory authorities or 
prosecutors.  Statements  by  state  officials  in  relation  to  the  investigative  work  of  journalists 
have not been conducive to creating an environment in which freedom of expression can be 

61 

 
 
 
exercised  without  hindrance.  The  commission  tasked  with  looking  into  unresolved  cases  of 
murdered journalists from 1999 and 2001 has not made progress in the investigation of these 
two cases. 

The  independence  of  the  Regulatory  Body  for  Electronic  Media  (REM)  needs  to  be 
strengthened  to  help  it  to  react  appropriately  to  programme  changes  eroding  the  editorial 
content and programme composition as foreseen in the frequency licence. The self-regulating 
Press  Council  has  been  more  active  and  recorded  an  increase  in  breaches  of  professional 
journalistic  standards  and  the  Journalistic  Code.  Media  reporting  based  on  anonymous  or 
leaked sources, giving details of investigations or announcing arrests, continue to undermine 
trust  in  judicial  institutions,  breach  personal  data  protection  standards  and  challenge  the 
presumption  of  innocence.  More  generally,  media  owners  and  top  editorial  staff  should  pay 
more attention to respecting professional standards, with support from the Press Council. 

Online,  freedom  of  expression  is  also  exposed  to  threats,  especially  in  view  of  increased 
pressure  and  attacks  against  online  journalists  and  bloggers.  There  has  been  no  substantial 
progress in investigations into hacking attacks against websites which occurred in 2014 and 
since.  More  efforts  are  needed  to  identify  and  prosecute  those  suspected  of  breaches  of 
internet freedoms, including cases that have been filed with the Prosecution for Cyber Crime.   

Freedom  of  assembly  and  association  is  generally  respected.  A  new  law  on  public 
gatherings was adopted in  January 2016 to  fill the legal vacuum after  the previous law was 
declared  unconstitutional,  introducing  some  improvements  (legal  remedies)  and  aiming  to 
align  with  the  Serbian  constitution.  However,  the  first  cases  of  application  of  the  law 
indicated that shortcomings still exist. By-laws necessary for full implementation of the law 
have not yet been adopted. 

Property rights continued to be broadly respected. On restitution, the Agency for Restitution 
continued to fulfil its mandate by adopting about 39 300 opinions and first-instance decisions 
on return of confiscated properties (out of about 76 000 claims) by the end of June. The vast 
majority  of  decisions  were  thereafter  approved  by  the  Ministry  of  Finance  as  the  second-
instance  decision  body.  In  February  2016,  parliament  adopted  a  law  on  restitution  of  the 
properties of Jews with no heirs. 

Serbia’s  non-discrimination  legislation  is  generally  in  line  with  European  standards, 
nevertheless amendments to bring it fully in line with the  acquis remain to be adopted. The 
Commissioner  for  Protection  of  Equality  worked  on  1 040  cases,  which  represents  a  20 % 
increase compared to 2014. The Office continued its awareness-raising activities. In order to 
improve  its  work  and  clearly  define  priorities,  the  Commissioner  has  adopted  a  new 
development strategy for the Office. The capacity of the Office has been increased with the 
hiring of 12 new staff. The coordination body for monitoring the implementation of the action 
plan  for  the  anti-discrimination  strategy  regularly  reports  on  developments.  Roma,  LGBTI 
persons,  persons  with  disabilities  and  persons  with  HIV/AIDS  remain  the  groups  most 
discriminated  against.  Inciting  national,  racial  and  religious  hatred  and  intolerance  is 
prohibited  in  the  criminal  code.  It  remains  essential  to  set  up  a  data  collection  system  and 
properly investigate, prosecute and sanction all hate-motivated offences.  

Concerning equality between women and men, the new national strategy for gender equality 
2016-2020  and  an  action  plan  for  2016-2018  were  adopted  in  January.  A  sustainable 
institutional set-up for promoting gender equality (with adequate resources) is needed. Serbia 
is the first country outside the European Union to introduce the EU Index of Gender Equality. 
Budgetary reform includes gender equality considerations and the budget system law adopted 
in 2015 introduced gender-responsive budgeting as mandatory for all budget users at national, 
provincial and local level, to be introduced gradually by 2020. Cases of women killed by their 

62 

 
 
 
partners  are  a  serious  concern.  The  Council  of  Europe  Istanbul  Convention  needs  to  be 
properly implemented and national legislation harmonised. Emergency protection orders are 
not issued promptly, the number of shelters is insufficient and there is no state-run centre for 
victims of sexual violence or national helpline. The protection of women against all forms of 
violence needs to be strengthened and mechanisms for coordinating the collection and sharing 
of data between all relevant actors in the system enhanced. 

On rights of the child, the national plan of action for children expired in 2015. The National 
Council on the Rights of the Child remained inactive. Ensuring more effective coordination of 
the  child  protection  system  should  be  prioritised  and  efforts  made  to  ensure  uniform 
implementation of policy. Administrative data are still not disaggregated to enable monitoring 
of  vulnerable  groups,  particularly  Roma  and  children  with  disabilities.  There  is  a  need  to 
organise assistance to children living and/or working on the street on a local level. Violence 
against children remains a serious concern. A new national strategy for the prevention of and 
protection of children from violence still need to be developed. There is a need to align the 
legal  framework  and  statistics  with  international  standards  on  child  abuse.  Children  with 
disabilities  in  large  institutions  face  particular  difficulties  as  regards  access  to  education. 
Additional mechanisms need to be put in place to secure full implementation of the legislation 
regulating  juvenile  offenders  and  child  victims  in  criminal  proceedings.  Prevention 
programmes and programmes for reintegrating juvenile offenders into the community are only 
available in large cities and are funded on a project basis. Better protection for child victims 
who testify in criminal proceedings should be ensured through the provision of units for child 
victim protection.   

Concerning  the  rights  of  persons  with  disabilities,  the  situation  remains  very  difficult,  in 
particular  as  regards  access  to  services.  The  law  on  prevention  of  discrimination  against 
persons  with  disabilities  was  amended  in  February  2016  to  guarantee  the  right  of  blind  or 
visually  impaired  persons  to  use  personal  facsimile  stamps  to  sign  legal  documents.  Efforts 
are  needed  to  increase  the  participation  of  persons  with  disabilities  in  education,  and  to 
implement a comprehensive plan on access to  facilities for persons  with disabilities, elderly 
people and social vulnerable people. Placement and treatment in social institutions of people 
with  psychosocial  and  intellectual  disabilities  is  still  not  regulated  in  accordance  with 
international  standards.  Procedures  for  depriving  people  of  their  legal  capacity  and  for 
assigning guardianship should be aligned with international standards. (see also chapter 19 — 
Social policy and employment) 

Some  activities  have  been  conducted  with  the  aim  of  promoting  the  rights  of  lesbian,  gay, 
bisexual, transgender and intersex (LGBTI) persons. The new government includes for the 
first  time  a  Minister  who  is  openly  homosexual.  Premises  for  the  first  ‘drop  in’  centre  for 
LGBTI  persons  who  are  seeking  support  have  been  provided  by  the  City  of  Belgrade 
authorities.  The  Pride  Parade  took  place  on  18  September  without  incidents.  Despite  these 
developments,  the  situation  has  not  progressed  much  and  LGBTI  persons  and  activists 
continue to be subjected to hate speech, threats and sometimes even physical violence. There 
is no centralised official data record on the number of crimes motivated by homophobia and 
transphobia. Serbia has no procedures for legal gender recognition in place, even in cases of 
gender  reassignment.  School  textbooks  containing  discriminatory  content  still  need  to  be 
revised. Stronger political commitment is needed to promote a culture of respect for LGBTI 
persons  and  to  ensure  non-discrimination  at  work,  in  the  health  sector  and  the  education 
system. The level of public prejudice against the LGBTI population is still relatively high and 
needs to be addressed. 

Issues of labour and trade union rights are covered in chapter 19.  

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No  progress  can  be  reported  on  procedural  rights.  The  support  and  protection  offered  to 
victims of crime is  not in line with the EU  acquis, and effective mechanisms for protecting 
victims’  rights  are  lacking.  The  law  on  free  legal  aid  has  still  not  been  adopted  and  the 
implementation  of  procedural  safeguards  has  not  been  fully  assessed  to  ensure  an  effective 
protection  system,  supported  by  adequate  staff,  training  and  infrastructure.  The  system  for 
compensatory  damages  through  civil  proceedings  does  not  work.  The  performance  of  ex 
officio  lawyers  assigned  to  detained  persons  is  a  matter  of  concern.  As  regards  access  to 
justice,  the  law  on  notaries  and  related  laws  were  amended  in  December  2015  to  address 
practical challenges. There are currently 157 notaries, overseen by the Chamber of Notaries, 
while the planned number is 370 (1 per 25 000 inhabitants). Serious disparities in workload at 
courts and prosecution offices, the long average duration of proceedings, the sizeable backlog, 
the  lack  of  an  efficient  free  legal  aid  system,  poor  enforcement  of  final  judgments  and 
indemnity claims all hinder access to justice. Access to justice in minority languages and for 
persons  with  disabilities  is  not  fully  ensured  in  practice.  There  is  not  yet  a  comprehensive 
national  crime  victim  and  witness  support  system.  No  changes  were  made  to  the  legislative 
framework  with  a  view  to  improving  the  procedural  safeguards  for  the  most  socially 
vulnerable groups of people. 

The legal framework for respect for and protection of minorities and cultural rights is in place 
and  generally  upheld,  in  line  with  the  Framework  Convention  on  National  Minorities,  to 
which  Serbia  is  party.  Nonetheless,  there  is  scope  for  further  improvements  in  its 
implementation  throughout  Serbia,  applying  it  more  consistently  and  tackling  regional 
differences,  particularly  in  education,  the  use  of  languages,  access  to  media  and  religious 
services in minority languages. 

A  specific  action  plan  for  the realisation  of  the rights  of  national  minorities  was  adopted  in 
March.  This  forms  an  integral  part  of  the  Action  Plan  on  chapter  23  and  addresses  issues 
relevant to the promotion and protection of minority rights in a number of areas.  It needs to 
be  implemented  in  an  inclusive  way.  A  decree  establishing  a  Fund  for  National  Minorities 
was adopted in March 2016. It aims to support projects on culture, education, information and 
official use of languages of national minorities. 

Changes  are  still  pending  to  the  law  on  National  Minority  Councils  to  align  it  with  the 
Constitutional  Court  decision  and  should  be  swiftly  finalised  and  adopted  to  avoid  legal 
uncertainties and harmonise the law with sectoral laws on media, culture and education. The 
re-established  Republican  National  Minority  Council  and  local  councils  for  inter-ethnic 
relations  will  need  to  play  an  active  role  in  implementing  and  monitoring  policy.  A 
comprehensive  approach  to  integration  and  fostering  inter-ethnic  relations  is  needed. 
Agreements on printing textbooks in minority languages were reached with representatives of 
eight  national  minorities  (Bosniak,  Bulgarian,  Croatian,  Hungarian,  Romanian,  Ruthenian, 
Slovak and Albanian). The procedure for approving textbooks in minority languages should 
be  facilitated  and  the  teaching  of  Serbian  as  a  non-mother  tongue  better  developed.  The 
financial viability of media content in minority languages needs to be guaranteed and the role 
of public service broadcasters in this area increased. Representation of national minorities in 
the public administration needs to be further improved. 

The  Autonomous  Province  of  Vojvodina  maintained  a  high  degree  of  protection  for 
minorities  and  the  inter-ethnic  situation  remained  good.  Representatives  of  the  Provincial 
Administration  were  involved  in  drafting  the  action  plan  on  National  Minorities,  under 
chapter 23. Regular provincial elections were held peacefully.  

Municipal elections in Presevo, Bujanovac and Medvedja were held in a calm atmosphere. 
The  government’s  coordinating  body  worked  efficiently  and  increased  funding  for 

64 

 
 
 
infrastructure development. For the first time, an ethnic Albanian was appointed police chief 
in Bujanovac. The political dialogue between the central authorities and local ethnic Albanian 
leaders  on  a  comprehensive  programme  of  integration  and  economic  recovery  has  still  not 
resumed. The region remains underdeveloped and the ethnic Albanian population continues to 
be underrepresented in public administration. 

The situation in the Sandzak area was mostly stable and municipal elections peaceful. Court 
interpreters for the Bosnian language were  appointed.  The Bosniak  community continues to 
be underrepresented in  the local administration and  the police. The area remains among the 
most underdeveloped with a high unemployment rate. 

The  new  Roma  social  inclusion  strategy  2016-2025  adopted  in  March  covers  education, 
health,  housing  and  employment.  Its  action  plan  has  yet  to  be  adopted.  Rules  of  procedure 
have  been  amended  to  detail  the  use  of  affirmative  measures  in  education  for  Roma.  The 
Office for Human and Minority Rights ran training courses for local authorities to monitor the 
use of the affirmative measures. Legislative changes led to a significant drop in the number of 
Roma at risk of statelessness. New guidelines on immediate registration at birth of children 
whose parents lack personal documents were adopted. 

The government adopted the first report of the Council for the implementation of the action 
plan for chapter 23 containing operational conclusions from the Roma inclusion seminar held 
in  June  2015.  Nevertheless,  separate  reporting  on  operational  conclusions  with  detailed 
information and level of implementation is still pending.  

Health mediators are not systematically used in the Ministry of Health. Roma continue to face 
difficult  living  conditions  and  face  discrimination  in  access  to  social  protection,  health, 
employment  and  adequate  housing.  Most  Roma,  especially  those  living  in  informal 
settlements,  lack  adequate  access  to  fresh  water  and  electricity.  Problems  with  forced 
evictions  continued.  Serbia  has  yet  to  develop  guidelines  on  evictions  in  line  with 
international  standards,  and  to  train  local  and  national  institutions  on  procedures  to  be 
followed before, during and after evictions. School drop-out rates for Roma children remain 
high  and  they  remain  over-represented  in  care  institutions.  Roma  women  and  children  are 
frequently subjected to violence in the family, which often remains unreported.  

According  to  the  UNHCR,  there  are  35 295  refugees  and  203 140  internally  displaced 
persons  (IDPs)  in  Serbia.  The  nine  collective  centres  are  gradually  being  closed  down 
(hosting 185 refugees and 375 IDPs). The programme to support municipalities adopting local 
action  plans  to  improve  the  situation  of  refugees  and  IDPs  has  continued,  and  the  housing 
situation  for  displaced  persons  has  improved  slightly.  Local  Councils  for  Migration 
Management  and  Durable  Solutions  have  been  set  up  and  local  action  plans  have  been 
adopted.  Living  conditions  for  many  refugees  and  IDPs  are  still  difficult.  The  law  on 
permanent  and  temporary  residence,  which  allows  IDPs  to  apply  for  residence  at  social 
welfare  centres,  needs  to  be  implemented  more  consistently.  The  Serbian  government  has 
adopted  a  strategy  for  the  resolution  of  the  problems  of  refugees  and  IDPs.  A  significant 
number  of  Roma  IDPs  living  in  informal  settlements  cannot  register  their  current  place  of 
residence,  as  they  have  a  registered address in  their  place  of  origin  (Kosovo),  limiting  their 
access  to  basic  rights.  Serbia  is  engaged  in  regional  dialogue  on  durable  solutions  for 
displaced  persons  from  Kosovo  (the  ‘Skopje  process’)  with  representatives  of  Kosovo, 
Montenegro and the former Yugoslav Republic of Macedonia. 

5.24.  Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation entails the lifting of border controls inside the EU. There is also cooperation in 

65 

 
 
 
 
the  fight  against  organised  crime  and  terrorism,  and  judicial,  police  and  customs 
cooperation. 

Serbia has made some level of preparation to implement the acquis on justice, freedom and 
security. Some progress was made in areas such as reform of the police, border controls and 
organised crime with the adoption in December 2015 of the first serious and organised crime 
threat  assessment  (SOCTA)  in  line  with  Europol  requirements.  Serbia  has  been  affected  by 
the  refugee  and  migration  crisis,  during  which  it  has  played  an  active  and  constructive  role 
and  cooperated  with  neighbouring  countries  and  Member  States  while  managing  mixed 
migration flows. Serbia has been actively involved in international and regional police as well 
as in judicial cooperation.  

In the coming period, Serbia should in particular: 

  establish  an  initial  track  record  of  investigation,  prosecution,  final  conviction  as  well  as 
seizure  and  confiscation  in  organised  crime  cases,  including  money  laundering,  human 
trafficking and human/migrant smuggling; 

 adopt the integrated border management strategy and implementing action plan, including 
databases throughout the country;  

 adopt and implement the new asylum law, with a specific focus on vulnerable groups and 
integration measures for people in need of international protection;  

    further  address  the  phenomenon  of  unfounded  asylum  applications  lodged  by  Serbia’s 
nationals  in  EU  Member  States  by  sustaining  the  decreasing  trend  of  asylum  seekers  from 
Serbia to the EU. 

(See also specific recommendations on the fight against organised crime in section 2.3). 

As part of the ‘new approach’ to the rule of law, and in line with the negotiating framework, 
this chapter was opened in July 2016 after Serbia adopted a detailed action plan. 

Legal and irregular migration 

Institutional set-up and legal alignment 

Serbia’s legal framework is partially in line with the acquis. To reduce irregular migration, 
Serbia still has to amend its law on foreigners and the criminal code and to align the law on 
employment  of  foreigners  with  minimum  standards  for  sanctions  and  measures  against 
employers of illegal third country nationals. Legislation on the return of unsuccessful asylum 
seekers and apprehended irregular migrants, transposing the Return Directive, remains to be 
adopted.  Serbia  has  partially  aligned  the  legal  framework  on  family  reunification  and  the 
status  of  third  country  nationals  migrating  for  studies,  research  and  seasonal  work.  The 
national  legislation  is  not  yet  in  line  with  the  acquis  on  the  blue  card  or  on  the  single 
residence and work permit. 

A new  strategy and action plan to counter irregular migration for 2016-2020 remains to be 
adopted.  A  robust  return  mechanism,  in  line  with  EU  requirements,  still  needs  to  be  put  in 
place.  While  being  faced  with  increased  mixed  migratory  flows  and  large  but  volatile 
numbers of stranded migrants, Serbia continued to make substantial efforts to ensure that third 
country  nationals  receive  shelter  and  humanitarian  supplies  with  EU  and  international 
support.  Building  on  this  experience,  Serbia  should  adopt  a  comprehensive  early  warning, 
preparedness and crisis management strategy. 

Responsibilities  for  migration  management  are  divided  between  various  state  authorities: 
Ministry  of  the  Interior,  the  Commissariat  for  Refugees  and  Migration,  the  Ministry  of 

66 

 
 
 
Foreign Affairs, the Ministry of Justice and the Ministry of Labour, Employment, Veteran and 
Social  Policy.  A  specialised  unit  composed  of  35  officers  in  the  Border  Police  Directorate 
deals  with  the  fight  against  irregular  migration.  In  the  Criminal  Police  Directorate,  a 
specialised section — composed of nine officers — deals with smuggling of migrants under 
the  Department  for  General  Organised  Crime.  Better  coordination  of  all  the  institutions 
involved  in  tackling  irregular  migration  is  needed.  Overall  institutional  structures  and 
infrastructure require substantial strengthening. 

Implementation and enforcement capacity 

The overall staffing situation in the area of migration remains critical, in particular against the 
background of the migration crisis.  

Serbia has 144 places to accommodate  irregular migrants in the only permanent reception 
centre  of  Padinska  Skela  where  basic  facilities  are  in  place  (with  35  police  officers). 
Additional  facilities  for irregular migrants  need to  be maintained or  extended in  accordance 
with the needs. Further equipment and refurbishment are needed to accommodate vulnerable 
categories,  such  as  women  with  children  and  unaccompanied  minors.  The  adequacy  of 
accommodation capacity needs to be monitored through flexible mechanisms to anticipate and 
cope with sudden increases in the number of migrants. Sufficient and adequately trained staff 
is  needed  to  operate  the  centre.  Better  coordination  of  all  institutions  involved  in  tackling 
irregular migration is needed. In 2015, 36 598 persons were intercepted at the borders and 759 
criminal  charges  were  filed  for  human  smuggling  against  1 127  perpetrators  who  tried  to 
smuggle  8 068  persons.  In  the  first  half  of  2016,  the  number  of  people  intercepted  at  the 
border fell; 112 criminal charges were filed against 132 perpetrators trying to smuggle 1 309 
persons. At the end of August 2016, 4550 migrants were estimated to be stranded in Serbia. 
Around 80 % of them were hosted in accommodation centres. 

The  number  of  people  effectively  returned  to  their  country  of  origin  remains  low  so  far, 
though  Serbia  benefits  from  a  programme  for  Assisted  Voluntary  Returns  run  by  the 
International  Organisation  for  Migration.  40  people  had  agreed  to  return  voluntarily  by  the 
end of August 2016. Serbia needs to set up a robust return mechanism for people who have 
received a final decision rejecting their asylum application. 

The  readmission agreement with the  EU is being  implemented satisfactorily. There are 19 
implementing protocols signed with the EU. The procedure to conclude the protocol between 
Serbia  and  Croatia  has  begun.  Bilateral  readmission  agreements  have  been  signed  with  13 
countries. However, Serbia still needs to conclude readmission agreements with a number of 
source  countries  for  irregular  migration,  such  as  Morocco,  Bangladesh  and  Pakistan. 
Negotiations to conclude a readmission agreement with Turkey and Ukraine are under way. 
According to the country's statistics, 4 869 Serbian nationals and 4 726 third country nationals 
returned  to  Serbia  under  readmission  agreements  in  2015;  up  to  the  end  of  May  2016, 
2 633 Serbian  nationals  and  13  third  country  nationals  had  returned  to  Serbia  under 
readmission agreements.  

Asylum 

Institutional set-up and legal alignment 

Serbia is party to the Geneva Refugee Convention. Asylum law is being amended to align the 
legal framework with the acquis. The new law should foresee effective access to the asylum 
procedure, independent of the applicant's nationality, through correct and timely treatment of 
asylum  applications.  The  criteria  for  designating  countries  as  safe  countries  of  origin  or  as 
safe third countries and the procedure for the review of such designations have yet to be fully 

67 

 
 
 
aligned with the  acquis.  In September 2015 Serbia adopted an emergency response plan to 
cope with a sudden large influx of migrants which was revised in July 2016. 

Serbia  has  the  necessary  institutions  to  handle  asylum  applications.  The  Asylum  Office,  a 
separate  unit  in  the  Border  Police  Directorate  of  the  Ministry  of  the  Interior,  is  an  asylum 
determining  authority.  Appeals  against  its  decisions  can  be  submitted  to  the  Asylum 
Commission  and,  following  this,  to  the  Administrative  Court  of  Appeal.  The  appeal  system 
has yet to be aligned with the acquis, especially with regard to the composition of the board of 
the Asylum Commission and the suspensive effect of appeals. 

Implementation and enforcement capacity 

The  Asylum  Office  is  only  partially  staffed  (17  persons  out  of  planned  29).  New  case 
handlers in the Asylum Office need to receive further training. 

In the asylum procedure, capacity to assess the merits of applications is still weak, and more 
training  is  needed,  notably  on  countries  of  origin  and  interviewing  techniques.  There  is  an 
urgent need for short-term measures to improve the processing of applications, including the 
establishment  of  a  protective-sensitive  screening  within  the  asylum  procedure  (aimed  at 
distinguishing between persons in need of international protection and others). Interpretation 
capacity is insufficient. Efforts to integrate beneficiaries of international protection need to be 
backed up by a credible budget. Serbia needs to continue close cooperation with EU Member 
States  and  neighbouring  countries  with  a  view  of  ensuring  effective  access  to  international 
protection while discouraging the irregular movement of migrants. 

In 2014 Serbia set up an electronic biometric database with fingerprints and photos operated 
by the Asylum Office. However, border crossing points are not connected to the system, and 
asylum seekers have to be accompanied to the Asylum Office to apply. 

In  2015,  579 518  people  expressed an  intention  to  seek  asylum,  but  only  one  in  1 000  (586 
persons) lodged an application: 16 received refugee status, 14 received subsidiary protection, 
and there were 40 negative decisions. In most cases the procedure was suspended because the 
applicant  was  no  longer  available.  From  January  to  August  2016,  538  people  applied  for 
asylum, 11 received refugee status, 13 received subsidiary protection and 63 people received a 
negative  decision,  while  in  most  cases  (205  cases  representing  356  persons)  the  procedure 
was suspended because the applicant disappeared before it ended. There are five permanent 
reception  centres  with  an  overall  capacity  of  1 000  beds  with  a  possibility  to  extend  the 
capacity  of  temporary  accommodation  facilities,  in  peak  periods,  to  5  340  beds.  There  are 
three centres hosting unaccompanied minors with a capacity of 30 beds. All reception centres 
are  open  facilities,  susceptible  to  infiltration  by  people  smugglers  and  other  criminal 
activities. The Minister of the Interior began a formal exchange of letters with the European 
Asylum  support  Office  (EASO)  to  set  out  the  broader  framework  for  cooperation  and 
EASO’s support to Serbia. 

Visa policy 

The  visa  regime  is  partially  in  line  with  the  EU  positive  list  and  the  negative  list  of  third 
countries. The visa issuing system is partially in line with the Visa Code. Interconnection of 
the integrated Serbian Visa Information System with all diplomatic and consular missions and 
other relevant databases is not complete. Efforts to further reduce the number of visas issued 
at borders continued. 

To implement the visa-free regime with the EU, Serbia continued to take measures to address 
the  phenomenon  of  unfounded  asylum  applications  lodged  by  Serbian  nationals  in  EU 
Member  States  and  Schengen  associated  countries.  The  total  figure  for  those  from  Serbia 

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seeking asylum in the EU was around 12 200 for July-December 2015, 38 % fewer than in the 
same period in 2014. The numbers continued to fall in the first five months of 2016. In June 
2016, Serbian nationals accounted for 14 %  of all  return  decisions issued. The capacity  and 
resources to allow returnees to reintegrate remain limited. 

Border controls and surveillance continued and 19 criminal charges were brought against 23 
people for facilitating the abuse of the right to asylum in a foreign country in 2015, while 4 
charges  against  4  people  were  filed  between  January  and  May  2016.  Serbia  continues  to 
cooperate  in  enacting  measures  to  reduce  the  number  of  unfounded  asylum  claims,  both 
through awareness-raising campaigns and checks on tourist agencies and transport companies 
(as  well  as  border  control  and  surveillance  and  intensive  operational  cooperation  with 
Member  States).  Efforts  to  improve  the  socioeconomic  situation  of  people  most  likely  to 
migrate,  in particular  Roma,  so  far had  limited impact  and need  to  be stepped  up  and  more 
systematically funded. 

Schengen and external borders 

Institutional set-up and legal alignment 

Serbia’s  legislative  framework  for  the  management  of  external  borders  is  in  line  with  the 
acquis  since  the  finalisation  of  a  revised  integrated  border  management  (IBM)  strategy 
reflecting the 2006 EU plan for IBM. Both the strategy and a dedicated action plan remain to 
be adopted. With a view to adopting a Schengen action plan, Serbia needs to assess the legal, 
technical, infrastructural and human resource requirements for this. 

The border police is a specialised civilian body under the Ministry of the Interior. It has eight 
regional centres (one for each bordering country except Romania, which  has two due to the 
length of the state border) and 47 local stations responsible for border surveillance as well as 
40 stations for border control at the 94 border crossing points.  Serbia should create a single 
coordination centre for the exchange of police information, with a view to preparing at a later 
stage  to  set  up  a  SIRENE  office  (for  accession  to  the  Schengen  area).  The  border  police 
concluded a cooperation agreement with the customs and phytosanitary control authorities. 

Implementation and enforcement capacity 

The  border  police  has  a  total  of  3 500  staff.  As  part  of  the  overall  reorganisation  of  the 
Ministry of the Interior, the border police has been supported by a new risk analysis unit since 
2015. The unit is currently fully staffed. The development of a national risk analysis model in 
compliance with CIRAM v2.0 has been postponed. Staff received basic and some specialised 
training  as  well  as  through  an  agreement  concluded  with  Frontex.  This  now  needs  to  be 
accompanied by training tailored for the border police, through a unified ‘train the trainers’ 
system. 

The  integrated  border  management  strategy,  in  line  with  the  EU  concept,  has  yet  to  be 
adopted as well as its implementing action plan. Cooperation between border police, customs 
and  veterinary/phytosanitary  authorities  needs  to  be  improved.  Border  crossing  procedures, 
investment in consulates, measures in cooperation with Serbia’s neighbours and measures at 
borders,  including  ongoing  substantial  modernisation  of  smaller  border  crossing  points 
(BCPs), need to be ensured. Serbia is a transit country for irregular migration and smuggling 
of drugs, weapons and other commodities. All major BCPs are technically equipped (passport 
scanners, licence plates cameras, video surveillance and fingerprint scanners) but need further 
modernisation of equipment, connection to the Interpol database and more training of staff. 

Substantial investments in border surveillance and infrastructure have been made in the past 
three years along the green (land) border, at the major border posts and at some smaller border 

69 

 
 
 
posts. However, more resources need to be devoted to modernising border infrastructure and 
to  surveillance  of  the  green  border.  Further  investments  in  border  management  are  to  be 
reflected  in  the  Schengen  action  plan.  There  should  be  a  special  focus  on  prioritising  those 
parts of green borders and border posts most exposed to irregular migration flows. 

Inter-agency cooperation between border police, customs and Ministry of the Interior bodies 
needs to be improved, including mutual access to databases throughout the country. This is a 
particular problem for smaller BCPs. Detection of false or fraudulent documents needs to be 
improved. The border police can make arrests. However, it has yet to establish a track record 
of  detection,  investigation  and  prosecution  of  cross-border  crime  in  coordination  with  other 
law  enforcement  authorities.  Detection  of  more  complex  crimes  such  as  human  smuggling 
and  trafficking  and  weapons  and  drug  trafficking  would  benefit  from  greater  investigative 
powers for the border police.  

Cooperation with the country’s neighbours continues to be good, particularly at technical 
level.  Serbia  concluded  border  agreements  on  conducting  joint  patrols  with  Montenegro, 
Bulgaria,  the  former  Yugoslav  Republic  of  Macedonia  and  Bosnia  and  Herzegovina. 
Agreements with Romania and Croatia are being finalised. In December 2015 an initiative on 
opening a Joint Contact Centre at the border with Romania was launched, based on a protocol 
signed earlier. Border police officers are regularly seconded to a joint trilateral contact centre 
(Serbia, Bosnia and Herzegovina and Montenegro) in Trebinje. The establishment of a joint 
working group for unauthorised border crossing points (with border sections with Bosnia and 
Herzegovina  and  Montenegro)  is  a  good  step  forward  in  mapping  alternative  roads  and 
locations which need to be blocked. However, no agreement on blocking such border crossing 
points  has  been  reached  yet.  Bilateral  cooperation  with  Croatia  and  the  Former  Yugoslav 
Republic  of  Macedonia  has  been  constructive,  in  spite  of  the  sharp  increase  in  the  flow  of 
migrants.  The  working  arrangement  with  Frontex  is  being  implemented  smoothly.  Joint 
operations  organised  by  Frontex  took  place  at  Serbian-Croatian  and  Serbian-Hungarian 
borders. 

Interim IBM crossing points with Kosovo continue to be fully operational. However, there has 
been  no  progress  in  establishing  the  permanent  IBM  crossing  points  with  Kosovo,  and  in 
establishing the additional interim common crossing points in Kapi and Izvor. 

Serbia  has  adopted  measures  to  detect  corruption  at  the  borders,  including  rotation  of 
border  officers  between  border  posts,  green  border  checks  and  surveillance.  A  case  of 
corruption  involving  28  officers  was  uncovered  and  charges  brought  against  those 
responsible. There is a need to extend the video surveillance system in real time to all BCPs. 
In  the  past  three  years,  nearly  1 000  border  police  officers  have  received  ethics  training.  In 
November 2015 a risk assessment on corrupt behaviour by the staff of institutions involved in 
the  integrated  border  management  system  was  completed.  An  interdepartmental  working 
group  is  being  set  up  with  the  task  of  approving  special  reports  on  corrupt  behaviour  risk 
assessment made by each of the relevant institutions involved in IBM. 

Judicial cooperation in civil and criminal matters 

Serbia  needs  to  step  up  measures  to  allow  direct  cooperation  between  Serbian  and  foreign 
courts  and  centralise  receipt  of  requests  to  courts  for  international  judicial  cooperation.  The 
necessary infrastructure and database should be put in place for replying promptly to requests 
for  mutual  legal  assistance  and  ensuring  better  statistics  on  their  monitoring,  as  well  as 
applying the mutual recognition principle. In order to improve efficiency, greater capacity and 
expertise are needed, including language skills. An impact assessment (normative part) on the 
alignment with the acquis on criminal matters was finalised. As regards judicial cooperation 

70 

 
 
 
in  civil  and  criminal  matters,  Serbia  acceded  to  the  1996  Hague  Convention  on  Child 
Protection in January 2016 on civil matters.  

As  regards cooperation with  Eurojust  on criminal  matters,  Serbia  was  involved  in  86  cases. 
The  main  crime  types  were  swindling  and  fraud,  followed  by  involvement  in  an  organised 
crime  group  and  crimes  against  life,  limb  and  personal  freedom.  Serbia  was  involved  in  11 
coordination  meetings  and  four  joint  investigation  teams.  Serbia  has  not  yet  concluded  an 
operational  agreement  with  Eurojust  because  it  needs  first  to  update  its  legal  framework  on 
data protection. 

Fight against organised crime 

Institutional set-up and legal alignment 

The  legal  framework  for  police  cooperation  needs  to  be  further  aligned  with  the  acquis. 
Consistency between the criminal procedure code and the law on police should be ensured to 
allow the Public Prosecutor to lead both pre-investigation and investigation effectively. This 
also applies to arrangements for using special investigative measures.  

In December 2015 Serbia adopted its first strategic analysis of the organised crime situation 
on  its  territory  based  on  Europol’s  methodology  for  serious  and  organised  crime  threat 
assessment  (SOCTA).  Intelligence-led  policing  based  on  SOCTA  crime  mapping  and 
systematic use of threat assessment needs to be developed. The SOCTA needs to go deeper 
into the importance of corruption and the extent to which it is conducive to organised crime. 
A working arrangement with the European Police College (CEPOL) is under preparation. 

The Ministry of the Interior has continued to reform its human resources system, setting up a 
department for human resources. This should help limit the exposure of police to politically 
motivated decisions on recruitment, careers and promotion. A new head of the police remains 
to be appointed. In February 2016 the new law on the police entered into force. It also sets out 
the principle of operational independence. Clear guidance on implementing this law is needed 
to ensure consistency with implementation of the criminal procedure code. This would ensure 
that  prosecutors  lead  criminal  investigations  effectively  and  provide  for  a  clear  distinction 
between  police  powers  with  regard  to  crime  prevention  and  crime-fighting.  Sufficient 
resources  and  overall  political  support  from  government,  parliament  and  police  leadership 
should be ensured throughout the implementation of the new law.  

The effective implementation of Serbia's financial investigation strategy for the period 2015 – 
2016  remains  subject  to  the  adoption  of  the  draft  law  on  organization  and  authority   of 
government   bodies  in  combating  organized  crime,  corruption  and  other  particularly  grave 
criminal offences. Serbia has no long-term strategy on how to address cybercrime. The draft 
anti-trafficking  strategy  and  action  plan  are  still  pending  adoption.  While  Serbia  has  a 
coordinator for operational cooperation in the Ministry of the Interior, it has yet to appoint a 
national rapporteur or equivalent mechanism on combating human trafficking in line with the 
acquis.  

Implementation and enforcement capacity 

The  police’s  dependence  on  the  security  and  intelligence  agencies  to  carry  out  certain 
special investigative measures in criminal investigations continued to be a matter of serious 
concern.  The  investigative  powers  of  the  border  police  and  customs  administration  remain 
limited. 

Operational  cooperation  at  bilateral  and  regional  level  continued.  Operational  and 
administrative  capacity  for  police  cooperation  needs  strengthening.  Three  specialised  units 
(for crime analysis; terrorism and extremism; and drug prevention, addiction and repression) 

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need  to  be  adequately  staffed,  trained  and  equipped.  Some  progress  has  been  made  in  the 
reorganisation of the Ministry of the Interior. However, further efforts are needed, especially 
to  modernise  human  resource  management  of  the  police,  in  particular  by  fostering  a  merit-
based recruitment and career path.  

The  level  of  inter-agency  cooperation,  information  flow  and  exchange  between  law 
enforcement  agencies  needs  to  be  further  improved.  A  central  criminal  intelligence  system 
and  harmonised  statistics  have  yet  to  be  set  up.  Cooperation  between  the  police  and  the 
Special  Prosecutor’s  Office  for  Cybercrime  is  improving.  However,  the  High-Tech  Crime 
Unit is still understaffed, especially considering the wide range of complex criminal activity it 
is expected to investigate. 

Very  few  cases  of  trafficking  in  human  beings  have  been  successfully  investigated, 
although Serbia is a source, transit and destination country for trafficked people and is facing 
increased migratory pressure. There is a need to further enhance identification, protection and 
support for victims of trafficking and to avoid re-victimisation during any investigation and 
trial.  The  Centre  for  Protection  of  Victims  of  Human  Trafficking  needs  to  strengthen  its 
capacity. No state-run emergency shelter is available for the victims of trafficking and there is 
no appropriate centre for child victims. Adequate funding needs to be earmarked for assisting 
victims  of  human  trafficking.  A  comprehensive,  multidisciplinary  and  victim-oriented 
approach  to  human  trafficking  has  yet  to  be  developed.  Victims  of  trafficking  should  be 
offered  all  forms  of  necessary  protection,  in  line  with  the  acquis.  It  is  essential  to  foster  a 
more  proactive  attitude  on  the  part  of  investigative  authorities  so  as  to  avoid  that  they 
primarily rely on victim statements for starting investigations. 

On money laundering, Serbia’s anti-money laundering system was evaluated in April 2016 
by  Moneyval,  the  Council  of  Europe  committee  of  experts.  Its  capacity  to  run  complex 
financial  investigations  alongside  criminal  investigations  needs  to  be  stepped  up  in  order  to 
trace  money  flows  and  lead  to  the  seizure  and  confiscation  of  criminal  assets.  Serbia  also 
needs  to  further  reinforce  preventive  measures  and  strengthen  supervision  as  well  as 
cooperation  and  coordination  between  the  Administration  for  Prevention  of  Money 
Laundering,  police,  prosecutors,  reporting  entities  and  supervisory  authorities.  Law 
enforcement  agencies  and  prosecution  services  do  not  have  access  to  relevant  databases  in 
line  with  data  protection  rules  and  inter-agency  cooperation;  this  makes  the  handling  of 
financial  crime  involving  money  laundering  less  effective.  The  directorate  which  manages 
seized assets lacks staff and capacity, including storage capacity. A new law on asset seizure 
has not been adopted. An asset recovery office still needs to be set up in line with the acquis. 
The law on confiscation of criminal assets needs to be aligned with the acquis. 

No  progress  has  been  made  on  precautionary  freezing  of  assets  at  an  early  stage  of  an 
investigation.  As  a  result,  assets  often  disappear,  which  leads  to  a  poor  track  record  for 
confiscating  criminal  assets  at  the  time  of  final  conviction.  While  there  were  several 
operations  leading  to  arrests  on  charges  of  financial  crime  and  corruption,  the  outcome  in 
terms  of  indictments  and  final  convictions  remains  to  be  seen.  The  number  of  final 
convictions for organised crime activities remains low compared to the estimated scale of the 
regional  and  domestic  criminal  market.  This  hampers  the  dismantling  of  criminal 
organisations. A track record of proactive investigation has yet to be established. There is a 
need to clarify the role of the intelligence services in criminal investigation procedures and to 
put  in  place  robust  oversight  to  prevent  abuse  and  political  influence.  Fighting  organised 
crime and corruption remains fundamental to countering criminal infiltration of the political, 
legal and economic systems. 

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Fight against terrorism 

Institutional set-up and legal alignment 

Serbia’s legal framework is largely in line with the acquis and international instruments on 
anti-terrorism. The criminal code was amended twice: in 2012 to criminalise a broader range 
of  terrorist  activities,  including  recruitment  and  training  of  future  terrorists,  and  in  2014  to 
criminalise  the  activity  of  foreign  terrorist  fighters  in  line  with  UN  Security  Council 
resolution 2178(2014). 

The  national  strategy  and  action  plan  to  prevent  and  fight  terrorism  remain  to  be  adopted. 
There  is  a  need  to  step  up  preparedness  and  response  capacity  for  dealing  with  chemical, 
biological, radiological and nuclear threats. The February 2016 law on international restrictive 
measures further contributes to preventing terrorism. 

The  main  institutions  involved  in  combating  terrorism  are  the  Ministry  of  the  Interior,  the 
intelligence services, the Ministry of Justice, the Ministry of Foreign Affairs and the Ministry 
of Defence. Serbia does not yet have a national body to coordinate implementation of the anti-
terrorist strategy. 

Implementation and enforcement capacity 

Cooperation  between  the  special  police  service  for  combating  terrorism  and  extremism  and 
Europol has intensified for the purpose of preventing and combating criminal offences related 
to the terrorist activities of individuals, groups, networks and organisations who justify their 
activities on religious grounds and exchanging information on the movement of terrorists.  

More  work  is  needed  to  expand  prevention  and  anti-radicalisation  activities  involving  local 
religious  leaders,  local  authorities  and  civil  society.  In  December  2014,  Serbia  conducted  a 
national  terrorism  financing  risk  assessment.  Serbia  should  focus  on  expanding  capacity  to 
detect  and  interrupt  financial  flows  supporting  terrorism,  including  through  specialised 
training for the Financial Intelligence Unit.   

In February 2016 the Prosecutor’s Office for Organised Crime charged two people with the 
criminal  offence  of  terrorist  association  in  respect  of  crimes  of  terrorism,  recruitment  and 
training  for  the  commission  of  terrorist  acts  and  financing  of  terrorism.  A  single  national 
database,  more  efficient  procedures  for  data  exchange  and  better  operational  inter-agency 
cooperation are still needed. 

Serbia has been affected to some extent by the phenomenon of foreign terrorist fighters and 
radicalisation. The authorities have evidence of around 40 Serbian nationals fighting in Syria 
since the beginning of the conflict, of whom 11 have reportedly died in the past three years. 
The number of returnees is also very low.  

Cooperation in the fight against drugs  

The  December  2015 SOCTA  identifies  the  production  and  trafficking  of  controlled 
psychoactive  substances  in  Serbia  as  the  most  dominant  and  profitable  form  of  organised 
crime.      Good  international  and  regional  cooperation  continued  on  drugs,  in  particular  with 
the dismantling of an international drug smuggling chain which led to the seizure of 16 kilos 
of heroin at the border with Bulgaria in December. 

In March 2016, the national focal point for cooperation with the European Monitoring Centre 
for Drugs and Drug Addiction was moved from the Institute of Public Health to the Ministry 
of Health. It is important to also ensure adequate transfer of know-how. An inter-ministerial 
coordination office for drugs was set up and its director appointed. However, the office is not 
yet fully operational. As part of the national drugs strategy, a clear definition is needed of the 

73 

 
 
 
responsibilities and powers of the various institutions involved in inter-agency cooperation.  

The establishment of an early warning system is pending. Proper staffing (including training), 
sufficient funding and quality management as well as smooth exchange of data between the 
various bodies and departments active in this area, including at local level, need to be ensured. 
The lack of secure storage of seized drugs and precursors prior to destruction remains an issue 
of  concern.  An  appropriate  process  for  the  destruction  of  precursors  has  yet  to  be  set  up. 
Overall,  the  policy  towards  reducing  drugs  supply  and  demand  would  benefit  from  a  more 
pro-active and holistic approach.  

Customs cooperation 

Regional  and  international  customs  cooperation  continued,  including  through  joint  actions 
(see  also  chapter  29  —  Customs  union).  Serbia  needs  to  ensure  that  the  IT  strategy  for  the 
customs  administration  is  fully  aligned  with  EU  legislation  on  the  use  of  technology  for 
customs  purposes  and  smoother  information  exchange  at  the  borders.  The  investigative 
powers of customs officers and their ability to exchange data with other agencies at the border 
need  to  be  broadened  and  customs  posts  fully  staffed.  Training  is  needed  on  the 
implementation  of  the  Naples  II  Convention,  in  particular  on  hot  pursuit,  cross-border 
surveillance and controlled delivery. 

For measures against counterfeiting of the euro, see chapter 32 — Financial control. 

5.25.  Chapter 25: Science and research 

The  EU  provides  significant  support  for  research  and  innovation.  All  Member  States  can 
benefit from the EU’s research programmes, especially where there is specific excellence and 
solid investment in research. 

Serbia has a good level of preparation in the area of science and research. Some progress 
was made with the adoption of the strategy for scientific and technological development. 

 In the coming period, Serbia should in particular: 

→ adopt the action plan to implement the strategy, and the science and research infrastructure 
road-map; 

→ foster cooperation between industry and academia and increase the level of investment in 
research. 

The main priorities of the European Research Area roadmap were incorporated in the new 
strategy  for  scientific  and  technological  development  in  March  2016.  At  the  same  time, 
several amendments were adopted to the law on scientific research, enabling a more targeted 
approach  to  public  funding  of  research  institutions.  So  far,  the  strategy  has  not  yet  been 
actively implemented.  

Serbia continues to be active in the European Research Area Committee and in the EUREKA, 
COST  and  NATO  Science  and  Peace  for  Security  programmes.  The  level  of  investment  in 
research remains below 1 % of GDP. Since the start of participation in Horizon 2020, 1309 
applicants from Serbia have taken part in 1 006 projects and 91 of them have been selected for 
financing. 

Concerning measures for the Innovation Union, the Serbian Innovation Fund continues to be 
active,  with  additional  budget  contributions  from  the  Ministry  pledged  for  co-financing  the 
EU-funded projects. 

74 

 
 
 
 
5.26.  Chapter 26: Education and culture 

The  EU  supports  cooperation  in  education  and  culture  through  funding  programmes  and 
through  the  open  method  of  coordination.  Member  States  must  also  prevent  discrimination 
and facilitate the education of children of EU migrant workers. 

Serbia is at a good level of preparation in the area of education and culture. Some progress 
was made in curriculum development. In the coming period, Serbia should in particular: 

→ continue implementing the action plan of education reforms according to schedule; 

→ establish the national Erasmus+ agency. 

In  education,  training  and  youth,  the  implementation  of  the  education  action  plan  is 
progressing,  however  with  delays.  Additional  investment  in  education  is  most  needed  at 
pre-school  and  basic  education  levels.  Only  about  52 %  of  children  under  6  years  receive 
preschool  education,  whereas  the  EU  target  for  2020  is  95 %.  Reforms  for  the  training  of 
primary and secondary school teachers are planned and should focus on improving basic and 
transversal skills of pupils. 

There  has  been  progress  in  curriculum  development  in  vocational  education  and  training  to 
better  meet  the  needs  of  the  labour  market.    The  plans  for  reducing  VET  enrolment  should 
continue.  The  national  qualifications  framework  needs  to  be  finalised  and  cross-referenced 
with the European Qualifications Framework; the relevant law is being drafted. 

The ongoing reform of higher education needs to put particular emphasis on the relevance of 
its study programmes. The unemployment rate for graduates with tertiary education (up to 24 
years of age) stood at 43.5 % in 2015. Emigration by young, skilled people remains high. An 
Office  for  the  Recognition  of  Foreign  Diplomas  was  opened  in  October  2015.  So  far,  500 
foreign  diplomas  were  recognised,  contributing  to  graduates’  employment  opportunities.  
Education remains a high risk sector for corruption, especially in higher education. 

Serbia  continues  to  successfully  participate  in  the  international  dimension  of  the  Erasmus+ 
programme.  In March, a government decision was adopted to nominate the existing Tempus 
Foundation  as  the  national  agency  in  charge  of  fully  participating  in  Erasmus+,  on  equal 
footing with Member States.    

On  culture,  Serbia  adopted  a  new  set  of  laws  on  cultural  heritage.  As  of  December2015, 
Serbia  started  participating  in  the  Media  sub-programme  of  Creative  Europe.  Serbia  also 
participated  in  the  evaluation  of  the  impact  of  the  UNESCO  2005  Convention  on  the 
Protection and Promotion of the Diversity of Cultural Expressions. 

5.27.  Chapter 27: Environment and climate change   

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection. 

Serbia has achieved some level of preparation in this area. Some progress has been made in 
further aligning policies and legislation with the acquis, including in waste, nature protection 
and climate change. Serbia improved its strategic planning and set up a Green Fund, both key 
recommendations in 2015. In the coming period, Serbia should in particular: 

→  enhance  administrative  and  financial  capacity  by  strengthening  the  environmental 
protection  agency's  monitoring  and  reporting,  adequately  resourcing  the  new  environmental 

75 

 
 
 
 
 
finance  facility  (Green  Fund)  and  improving  inter-institutional  coordination  at  both  central 
and local level; 

→  intensify  efforts  regarding  implementation  and  enforcement  including  closing  non-
compliant  landfills,  investing  in  waste  separation  and  recycling,  reinforcing  air  quality 
monitoring and advancing on river basin management; 

→  ratify  the  Paris  Agreement  and  start  implementing  it,  including  by  developing  a 
comprehensive strategy for climate change that is consistent with the EU 2030 framework for 
climate and energy policies and well integrated in all relevant sectors. 

Environment 

In the area of horizontal legislation, Serbia adopted a transposition and implementation plan 
in 2015. In March 2016, Serbia set up a new financing facility (Green Fund) in the ministry 
which  should  become  operational  on  1  January  2017.  Serbia  has  achieved  a  high  level  of 
alignment  with  the  acquis.  Further  progress  has  been  made  in  transposing  EU  directives  on 
public  access  to  environmental  information  and  public  participation  in  environmental 
decision-making. Amongst others, Serbia has opened a fifth Aarhus centre in December 2015 
in  Belgrade.  Additional  efforts  are  required  to  further  increase  the  effectiveness  of  public 
consultations. The environmental impact assessment process has improved but needs further 
strengthening  especially  for  projects  in  the  hydropower  and  mining  sectors,  partly  through 
capacity-building  at  all  levels.  Strategic  environmental  assessments  need  to  be  expanded  to 
cover  all  relevant  plans  and  programmes.  Further  progress  is  needed  on  transposing  and 
implementing the remaining horizontal components of environmental directives. 

In the field of air quality, Serbia has a good level of alignment with the acquis. Serbia needs 
to adopt a national air protection strategy. Serbia has two air quality plans, one for Bor (2013) 
and  one  for  Belgrade  (2016).  Air  quality  plans  for  other  areas  where  the  level  of  pollutants 
exceeds  limit  values  remain  to  be  adopted.  The  national  air  quality  monitoring  network 
requires  considerable  reinforcement.  Further  work  is  needed  to  finish  transposing  and  to 
implement  EU  directive  on  volatile  organic  compound  emissions  and  to  comply  with  EU 
requirements on sulphur content in liquid fuels. 

Regarding  waste  management,  there  is  a  good  level  of  alignment  with  the  EU’s  principal 
waste  directives,  with  recent  progress  made  regarding  the  waste  framework,  landfill  and 
industrial emissions directives. Implementation remains at an early stage, with some progress 
noted  in  increased  rates  of  municipal  waste  collection  and  sanitary  landfilling.  The  national 
waste  management  strategy  and  municipal  waste  management  plans  need  to  be  updated  to 
reflect  the  new  legal  provisions  on  e.g.  waste  minimisation  and  waste  separation  at  source, 
and  to  include  quantitative  targets  for  waste  recovery  and  recycling.  Increased  efforts  are 
needed to close Serbia’s non-compliant landfills more quickly and invest in waste separation 
and  recycling.  A  national  integrated  waste  management  plan  and  additional  economic 
instruments for special waste streams need to be developed. 

On water quality, the level of alignment is moderate. A national strategy and action plan on 
water  protection  have  yet  to  be  adopted.  Untreated  sewage  remains  the  main  source  of 
pollution.  Monitoring  of  surface  water  and  ground  water  has  improved  but  needs  further 
strengthening. Preparatory work on river basin management plans is ongoing. Some progress 
has been made towards adopting a water management strategy and a water management plan 
for  the  Danube  river  basin.  Serbia  needs  to  make  significant  efforts  to  further  align  its 
legislation  with  the  acquis,  to  implement  it  and  to  strengthen  administrative  capacity,  in 
particular for enforcement and inter-institutional coordination. The code of good agricultural 
practice needs to be adopted and implemented. 

76 

 
 
 
Alignment  with  the  acquis  in  the  field  of  nature  protection,  in  particular  the  Habitats  and 
Birds Directive, is moderate. Gaps in transposition include allowing hunting of non-huntable 
birds. Systematic assessment and collection of data for the designation of future Natura 2000 
sites  has  started.  The  institutional  framework  for  Natura  2000  needs  to  be  streamlined  and 
adequately resourced. EU standards on prohibited means of capturing and killing wild animals 
have  been  included  in  amendments  to  the  law  on  nature  protection  but  need  to  be  cross-
referenced  in  legislation  on  hunting  to  be  effective.  Implementation  of  the  Convention  on 
International  Trade  in  Endangered  Species  of  Wild  Fauna  and  Flora  (CITES)  improved  as 
responsibilities  of  competent  bodies  in  the  area  of  wildlife  trade  control  were  clarified. 
Overall, national and local administrative capacity needs to be substantially strengthened, in 
particular with a view to enforcement. Investments in hydropower need to comply with nature 
protection obligations. 

As regards  industrial pollution and risk management, alignment with most EU directives 
and regulations is at an early stage. Capacity constraints hamper progress in implementation 
across the sector. Serbia needs to address the acquis requirement for either a fully integrated 
permitting process covering all areas or formal consultation between permitting authorities. 

Serbia  has  achieved  a  high  level  of  alignment  with  the  acquis  on  chemicals;  it  has  an 
implementation and control structure in place. Additional work is required regarding REACH 
and  CLP  and  alignment  is  pending  for  the  legislation  on  animal  experiments,  asbestos  and 
biocides. Serbia needs to enhance administrative capacity for implementation in these areas, 
and ensure proper monitoring of POPs. 

As regards noise, Serbia has achieved a good level of alignment but implementation is at an 
early stage. Serbia needs to build administrative capacity for drafting strategic noise maps and 
action plans. 

Serbia  is  moderately  prepared  as  regards  civil  protection.  A  strategic  framework  for  civil 
protection  remains  to  be  developed.  As  an  active  member  in  the  EU  Civil  Protection 
Mechanism,  Serbia  now  needs  to  build  up  capacity  for  disaster  prevention,  disaster  risk 
reduction and disaster management and to connect with the mechanism’s common emergency 
communication  and  information  system  CECIS.  Serbia  needs  to  ensure  that  the  Niš 
Humanitarian Centre does not duplicate the role of the EU Civil Protection Mechanism in the 
region. Capacity at all levels needs to be enhanced to put effective flood risk management in 
place. 

Climate change 

Serbia has achieved some level of preparation but implementation is at a very early stage. A 
national strategy on climate change, consistent with the EU 2030 framework on climate and 
energy  policies,  remains  to  be  developed.  A  National  Climate  Change  Committee  has  been 
established  but  should  do  more  to  integrate  climate  action  into  other  sectors.  In  February 
2016, Serbia submitted its First Biennial Update Report on greenhouse gases to the UNFCCC 
and preparations for the second report have started. The process for ratification  of the Paris 
Agreement has already started. Serbia's environmental protection agency continues improving 
greenhouse gas inventories, but needs to reinforce its administrative and technical capability 
to  fully  align  with  the  Monitoring  Mechanism  Regulation.  Legislation  on  greenhouse  gas 
emissions  monitoring,  reporting  and verification for  aligning  with  the  EU  emissions  trading 
system  has  been  drafted.  During  the  reporting  period,  Serbia  advanced  on  implementing  a 
number of acquis provisions on ozone depleting substances, fluorinated greenhouse gases and 
fuel  quality.  Considerable  strengthening  of  administrative  capacity  is  needed,  together  with 
awareness raising activities. 

77 

 
 
 
 5.28.  

Chapter 28: Consumer and health protection 

EU rules protect consumers in relation to product safety, dangerous imitations and liability 
for  defective  products.  The  EU  also  ensures  high  common  standards  for  tobacco  control, 
blood, tissues, cells and organs, patients’ rights and communicable diseases. 

Serbia  is  moderately  prepared  in  consumer  and  health  protection.  Some  progress  was 
made, notably with the adoption of the laws on advertising and on communicable diseases. In 
the coming period, Serbia should in particular: 

→ strengthen the administrative capacity of relevant authorities for consumer protection;  

→ strengthen the overall financial sustainability of the public health system, and in particular 
the public health insurance fund.   

On  consumer  protection,  the  Consumer  Council  only  meets  sporadically  and  the  national 
consumer complaint register  is  still not  publicly accessible. The number of complaints  filed 
by  consumers  has  increased  but  only  a  limited  number  has  been  resolved.  Cooperation 
between the line ministries and consumer organisations needs to improve, as does cooperation 
between consumer protection organisations. The administrative capacity of the authorities for 
consumer protection and market surveillance needs to be further strengthened. 

On  product  safety-related  issues,  the  law  on  safety  items  of  general  use  needs  to  be 
amended.  The  Product  Safety  Council  was  re-established  and  the  first  meeting  held  in 
February  2016.  The  Strategy  of  Development  of  Quality  Infrastructure  2015-2020,  notably 
covering  Market Surveillance, was adopted in October 2015. On non-safety-related issues, 
the  new law  on  advertising,  which aims  to  further  alignment  with  the  acquis  on  misleading 
and comparative advertising, was adopted in January 2016 and entered into force in May.    

In  the area of  public  health, the  e-Health  Unit in  the Ministry  of Health is  not  operational 
and  the  EU-funded  centralised  electronic  health  record  system  is  not  integrated.  Sector 
sustainability  is  endangered  by  the  poor  financial  situation  of  the  public  health  fund,  which 
was aggravated by lowering the health insurance contribution in 2014 (check if more recent 
figure).  Shortages  of  medical  staff  in  primary  healthcare  remain  problematic.  Greater 
organisational  capacity  is  needed  and  the  national  plan  for  human  resources  in  the  health 
sector  needs  to  be  implemented.  New  programmes  for  specialisation  and  professional 
development should be developed. No progress has been made  towards the preparation of a 
new strategy on tobacco control. 

On communicable diseases, surveillance and response capacity remains limited and requires 
modernisation. A new law to protect the population from communicable diseases was adopted 
in March 2016, ensuring further alignment with the acquis. A centralised health information 
and  communication  system  remains  to  be  developed.  More  attention  needs  to  be  given  to 
effective,  sustainable  financing  of  disease-specific  strategies,  including  the  national 
HIV/AIDS  strategy  and  awareness-raising,  notably  on  the  importance  of  child  vaccination. 
Additional  work  is  needed  on  surveillance  of  antimicrobial  resistance  and  inter-sectoral 
cooperation. 

No  progress  was  made  in  aligning  with  the  acquis  on  blood,  tissues,  cells  and  organs. 
Formal  strengthening  of  the  overall  administrative  and  technical  capacity  of  the  Directorate 
for  Biomedicine  to  perform  oversight  of  the  sector  remains  to  be  completed.  Overall,  EU-
level quality, safety standards and inspection services for the sector need to be developed. 

On  drug  abuse  prevention,  the  monitoring  centre  for  drugs  and  drug  addiction  was 
established in March 2016.  

78 

 
 
 
 
5.29.  Chapter 29: Customs union 

All Member States are part of the EU customs union and follow the same customs rules and 
procedures.  This  requires  legislative  alignment,  adequate  implementing  and  enforcement 
capacity, and access to the common computerised customs systems. 

Serbia is  at a  good level  of  preparation in  the  area  of  customs union. Good  progress  was 
made  on  transit,  which  included  launching  common  transit  operations  with  support  of  the 
New Computerised Transit System (NCTS). In the coming period, as in 2015, Serbia should 
in particular: 

→ upgrade the customs declaration processing system and integrate risk management; 

→ further improve and modernise management of the customs administration. 

As  regards  customs  legislation,  the  customs  tariff  nomenclature  has  been  aligned  with  the 
2016  EU  Combined  Nomenclature.  Legislation  on  cash  controls  and  cultural  goods  still 
needs  to  be  aligned  with  the  acquis.  Legislation  on  customs  administration  and  customs-
related security initiatives have yet to be implemented. 

The  customs  administration  continued  to  strengthen  its  administrative  and  operational 
capacity.  In  2014,  a  4.5 %  increase  in  customs  duty  collection  was  achieved.  Serbia 
acceded  to  the  Convention  on  the  Simplification  of  Formalities  in  Trade  in  Goods  and  the 
Convention  on  a  Common  Transit  Procedure  in  February  2016.  After  the  successful 
introduction  of  the  national  NCTS,  Serbia  launched  common  transit  operations  in  February 
2016.  A  contract  for  outsourced  NCTS  maintenance  support  has  been  concluded.  A  new 
centralised  system  for  the  management  of  bank  guarantees  is  operational.  The  law  on  the 
customs  administration  has  not  yet  been  adopted  and  the  business  strategy  of  the  customs 
administration needs to be renewed. Strategic and modern management techniques, including 
quality  assurance  and  change  management,  are  lacking,  and  the  IT  strategy  needs  to  be 
updated.  Work  on  setting  up  a  functional,  interconnected  IT  system  progressed,  but  the  IT 
division  continues  to  lose  competent  staff.  The  risk  management  system  needs  to  be 
strengthened. The customs laboratory needs to be further equipped.  

5.30.  Chapter 30: External relations 

The  EU  has  a  common  trade  and  commercial  policy  towards  third  countries,  based  on 
multilateral and bilateral agreements and autonomous measures. There are also EU rules in 
the field of humanitarian aid and development policy. 

Serbia is moderately prepared in the area of external relations. Some progress was made by 
activating the EU civil protection mechanism in order to help with the influx of refugees and 
migrants. In the coming period, Serbia should in particular: 

→ stop applying safeguards on selected agriculture products, which are not justified under the 
Stabilisation  and  Association  Agreement  and  which  point  to  weaknesses  in  administrative 
capacity to implement trade policy; 

→ strengthen implementing capacity for export controls on dual-use goods. 

On  the  common  commercial  policy,  no  progress  was  made  on  Serbia’s  accession  to  the 
World Trade Organisation (WTO). WTO membership remains dependent on the adoption of a 
WTO and EU acquis-compliant law on genetically modified organisms and on the completion 
of market access negotiations with a number of WTO members. 

Since 2015, Serbia has applied safeguard measures on imports of EU milk, cheese, butter and 
pork.  Consultations  with  the  authorities  on  the  justification  for  these  measures  were  not 

79 

 
 
 
 
 
supported with relevant data and thus  inconclusive. Serbia should discontinue the safeguard 
measures  without  delay  and  avoid  applying  such  measures  unless  fully  justified.  The 
administrative  capacity  of  relevant  government  services  to  collect  market  statistics  and 
consult stakeholders remains weak. 

Serbia aligned its national control list of dual-use goods with the latest EU regime of exports, 
transfer, brokering and transit of dual-use items in March. Serbia needs to continue its efforts 
to  join  the  Wassenaar  Arrangement,  which  could  facilitate  preparations  to  implement  the 
acquis for export controls on dual-use items. 

As concerns bilateral agreements with non-EU countries, Serbia is still negotiating a free 
trade agreement with Ukraine. 

Some  progress  has  been  made  on  development  policy  and  humanitarian  aid.  Serbia 
activated the EU civil protection mechanism in order to help with the influx of refugees and 
migrants in the country. 

5.31.  Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  in  the  framework  of  the  foreign, 
security and defence policy, to  align with  EU  statements, to take part in  EU  actions and to 
apply agreed sanctions and restrictive measures. 

Serbia is  moderately prepared  in foreign,  security and  defence policy. Serbia has partially 
fulfilled last year’s recommendations. Some progress was made as Serbia adopted a law on 
restrictive  measures  and  continued  to  participate  in  civil  and  military  crisis  management 
missions. In the coming period, Serbia should in particular: 

→ review its national security and defence strategies so that Serbia’s EU orientation in these 
areas is fully reflected; 

→  implement  its  law  for  the  implementation  of  international  sanctions,  including  EU 
restrictive measures; 

→ improve alignment with EU declarations and Council decisions. 

Regular  political  dialogue  between  the  EU  and  Serbia  on  foreign  and  security  policy 
continued. 

On the common foreign and security policy (CFSP), in February Serbia adopted a law for 
the implementation of international sanctions, including EU restrictive measures.  

In  line  with  Serbia's  consistent  practice  over  the  last  years,  Serbia  continued  to  support  the 
territorial  integrity  and  sovereignty  of  Ukraine,  including  Crimea.  Serbia  did  not  align  with 
Council  Decisions  including  EU  restrictive  measures  related  to  Russia  or  issues  where 
Russia's  interests  are  at  stake,  as  well  as  Council  decisions  on  China,  Bosnia  and 
Herzegovina, Moldova and Zimbabwe. As a result, Serbia aligned itself, when invited, with 
24 out of 41 EU declarations and Council decisions, representing an alignment rate of around 
59 %. In September and October 2016, Serbia also aligned itself with EU decisions on South 
Sudan, Syria and Burundi. 

High-level contacts with Russia continued with regular bilateral visits. Four Serbian political 
parties, among them the Serbian Prime Minister’s SNS, signed a declaration on cooperation 
with  the  United  Russia  party  at  the  latter’s  June  congress  in  Moscow.  Military  technical 
cooperation between Serbia and Russia continued, with the signing of a new annual plan for 
bilateral  military  cooperation  in  April  and  a  visit  to  Serbia  by  the  General  Secretary  of  the 
Collective Security Treaty Organisation. 

80 

 
 
 
 
Bilateral  relations  with  the  US  continued  to  be  good,  with  a  number  of  high-level  visits, 
including the one of the US Vice-President to Serbia in August.  

Serbia  also  further  strengthened  its  economic  relations  with  China.  In  June,  the  Chinese 
President paid a three-day visit to Serbia, during which agreements on business infrastructure, 
health,  culture  and  education  were  signed.  Serbia  needs  to  ensure that  those  agreements  are 
compatible  with  the  EU  standards  on  matters  including  State  aid,  public  procurement,  rail 
safety and interoperability.  

As  regards  non-proliferation,  Serbia  ratified  the  Amendment  to  the  Convention  on  the 
Physical Protection of Nuclear Material in March. The process for collecting and destroying 
illegally possessed weapons and ammunition needs to be finalised and the new strategy on the 
control  of  small  arms  and  light  weapons  adopted.  Serbia’s  ratification  of  the  Additional 
Protocol to the Nuclear Non-Proliferation Treaty is still pending. Serbia’s 2008 application to 
join the Wassenaar Arrangement continues to be dependent on the adoption of a new law on 
the production and transfer of arms and military equipment. 

Serbia’s national security and defence strategies, dating from 2009, need to be reviewed in 
order  to  update  Serbia’s  risk  assessment  of  regional  security  threats  and  to  determine 
consistent  implementation  of  its  strategic  EU  orientation  in  the  conduct  of  the  country’s 
foreign, security and defence policy. Given Serbia’s strategic objective of joining the EU, the 
country  needs  to  clarify  its  national  strategies  in  the  area  of  foreign,  security  and  defence 
policy, and so move towards a policy in this area based on the EU’s common foreign, security 
and defence policy.   

Serbia continued to actively engage in cooperation with international organisations. Serbia 
concluded its chair of the Organisation for Security and Cooperation in Europe in December 
2015. Cooperation with NATO continued, with the first visit of the NATO Secretary-General 
to Serbia in November 2015 and the ratification of technical agreements on logistical support 
cooperation in January. 

Serbia  continued  to  participate  in  civil  and  military  crisis  management  missions  under  the 
common  security  and  defence  policy  (CSDP),  in  particular  in  the  EU  NAVFOR-Atalanta 
operation,  EUTM  Somalia  operation,  EUTM  Mali  operation  and  EUMAM  RCA  operation. 
Serbia is actively preparing for its participation in the EU Battle Group concept. 

5.32.  Chapter 32: Financial control   

Based  on  international  standards,  the  EU  promotes  the  reform  of  national  governance 
systems  to  enhance  managerial  accountability  and  sound  financial  management  of  income 
and  expenditure.  The  financial  control  rules  further  protect  the  EU’s  financial  interests 
against fraud in the management of EU funds and the euro against counterfeiting. 

Serbia is moderately prepared in this chapter. Some progress was made in external audit, 
protection  of  the  EU’s  financial  interests  and  protection  of  the  euro  against  counterfeiting. 
With  regard  to  Public  Internal  Financial  Control  (PIFC),  neither  the  Commission’s 
recommendations  in  the  2015  report,  nor  the  PIFC  measures  in  the  public  administration 
reform  action  plan  have  been  implemented.  The  State  Audit  Institution’s  audit  findings 
confirm continued weaknesses in internal control throughout the public administration. This 
also  has  an impact  on  external  audit,  which  focuses  mainly  on  compliance  and  detection  of 
irregularities.  Significant  efforts  are  needed  to  implement  managerial  accountability  and 
internal  control  at  all  levels  of  the  administration  and  in  state-owned  enterprises.  In  the 
coming year, Serbia should in particular: 

81 

 
 
 
 
→  adopt  and  start  implementing  the  overdue  PIFC  strategy  and  set  up  a  formal 
coordination, monitoring and reporting mechanism for the strategy; 

→  refocus  activities  of  the  Central  Harmonisation  Unit  (CHU)  so  that  it  becomes  more 
proactive  in  providing  methodological  guidance  and  reviewing  the  quality  of  PIFC 
implementation; 

→  ensure  that  the  overall  findings  of  the  State  Audit  Institution  are  reflected  in  the  annual 
report  on  implementation  of  PIFC  and  systematically  ensure  implementation  of  the 
government’s recommendations from this report. 

Public internal financial control 

Serbia has not had a formal strategy and action plan in place to guide PIFC implementation 
since the previous action plan ended at the end of 2014. The new strategy is under preparation 
and it needs to be coordinated and sequenced with other related reforms especially the public 
financial  management  programme  and  the  action  plan  for  public  administration  reform.  A 
mechanism should be established for effective coordination, monitoring and reporting of the 
implementation of these related reforms. 

The  Central  Harmonisation  Unit  (CHU)  is  still  not  acting  as  a  strategic  driver  for  PIFC 
reforms.  Due  to  focus  on  training  activities  the  CHU  has  not  been  proactive  in  providing 
methodological guidance to public sector organisations on implementation of PIFC. So far the 
CHU  annual  report  on  the  state  of  implementation  of  PIFC  has  neither  analysed  systemic 
weaknesses nor proposed corrective measures. Future reporting would benefit from a regular 
assessment  of  implementation  of  the  proposed  new  PIFC  strategy  and  the  State  Audit 
Institution’s findings, which reveal that internal control implementation is not progressing as 
well  as  suggested  by  the  institutions'  replies  to  the  self-assessment  questionnaires.  In 
February, a new head of the CHU was appointed. 

The  legal  framework  for  financial  management  and  control  is  regulated  in  line  with  the 
internal control framework of the Committee of Sponsoring Organisations and the guidelines 
the  International  Organisation  of  Supreme  Audit  Institutions  (INTOSAI).  The 
of 
implementing  legislation  still  needs  to  be  strengthened  with  regard  to  managerial 
accountability and the management of irregularities. The extent of implementation of internal 
control  varies  but  most  institutions  focus  only  on  the  legality  and  regularity  of  financial 
transactions  and  do  not  address  economy,  efficiency  and  effectiveness  of  their  operations. 
Decision-making  powers  and  budgets  are  not  delegated  to  operational  managers.  Risk 
management is not applied systematically and needs to be further developed. The centralised 
financial inspection function still needs to be regulated, taking account of compatibility with 
PIFC requirements. 

Internal audit in the public sector is still being developed as a profession. Further efforts are 
required  to  ensure  that  senior  management  understands  and  actively  supports  internal  audit. 
The situation across the public sector is diverse in terms of staffing, functional independence, 
audit  planning,  management  acceptance  and  types  of  engagement  undertaken.  Most  of  the 
central institutions have an audit charter and they perform audit activity according to strategic 
and  annual  audit  plans.  Many  auditors  are  still  asked  to  perform  additional  and  non-audit 
duties that therefore jeopardise their professional independence. The lack of fully developed 
managerial  accountability  and  internal  control  systems  in  organisations  limits  the  type  and 
scope  of  internal  audit  engagements  that  can  be  performed.  The  CHU  should  develop 
methodological guidance on internal audit quality assurance. 

82 

 
 
 
External audit 

The  constitutional  and  legal  framework  is  in  line  with  INTOSAI  standards.  The 
independence of the State Audit Institution (SAI) is anchored in the constitution. The SAI law 
provides  for  a  comprehensive  audit  remit  and  guarantees  its  functional,  organisational  and 
financial independence. 

On  institutional  capacity,  the  SAI  is  governed  by  a  Council,  which  has  five  members 
nominated  by  parliament.  The  SAI  has  been  allocated  431  posts.  Currently  272  posts  are 
filled,  of  which  233  are  audit  staff.  An  upgrade  of  the  SAI’s  premises  in  2016  will  enable 
further  recruitment.  The  SAI  continues  to  detect  errors  and  file  misdemeanour,  economic 
offence  and  criminal  charges  against  individuals  with  the  competent  authorities.  This 
requirement under the SAI law continues to constrain the SAI’s limited audit resources. The 
SAI is implementing its 2016-2020 strategic development plan. The SAI has an internal audit 
unit with one internal auditor. 

To improve the quality of audit work, the SAI has trained all auditors in the use of financial 
and  performance  audit  manuals  adopted  in  2015.  Performance  audit  work  is  gradually 
expanding. The sector for audit methodology and quality control has been strengthened. 

In  order  to  increase  the  impact  of  audit  work,  the  SAI  has  set  up  internal  procedures  to 
ensure  systematic  follow-up  to  audit  recommendations.  Parliamentary  follow-up  is  still 
limited, although the SAI’s annual audit report is discussed in the Committee for Finance, the 
Budget  and  Control  of  Public  Funds.  Parliament’s  capacity  to  ensure  effective  scrutiny  and 
follow-up  to  SAI  reports  and  audit  findings  needs  to  be  improved.  The  SAI  continued  to 
proactively  improve  its  cooperation  with  stakeholders  and  increase  its  communication  with 
the media. 

Protection of the EU’s financial interests 

As  regards  acquis  alignment,  national  legislation  incorporates  the  main  components  of  the 
Convention on the Protection of the EU’s Financial Interests and its three protocols, and lays 
down  the  obligation  to  safeguard  evidence.  The  national  anti-fraud  coordination  service 
(AFCOS)  is  an  independent  unit  under  the  Minister  of  Finance,  with  a  legal  basis  in  the 
budget  system  law  and  the  Ministry  of  Finance  Systematisation  Act.  An  AFCOS  network, 
involving other relevant institutions, was set up in September 2015 and it meets bi-monthly. 
Although  AFCOS  has  no  investigative  powers,  it  ensures  efficient  coordination  and 
cooperation  with  those  entities  that  have  investigative  powers.  In  2015  AFCOS  actively 
assisted  the  Commission  during  an  investigative  activity.  A  national  anti-fraud  strategy  is 
currently under preparation. To ensure cooperation with the European Commission, Serbia 
has  set  up  basic  procedures  for  reporting  of  irregularities  and  suspected  fraud  cases.  Online 
reporting has also been established through the Irregularity Management System and 11 cases 
of irregularities have been reported through the system since 2012, including 5 cases over the 
past year.  A solid track record on investigations and reporting still needs to be established. 

Protection of the euro against counterfeiting 

The national legislation is aligned with the acquis, except for authentication of euro coins and 
the  handling  of  euro  coins  unfit  for  circulation.  Serbia  ratified  the  1929  International 
Convention for the Suppression of Counterfeiting Currency in April 2016. Technical analysis 
of counterfeit money, including euro banknotes and coins, is performed by the National Bank, 
which  has  a  dedicated  department  with  13  staff.  Employees  are  regularly  trained.  The 
National Bank concluded formal cooperation agreements with the European Commission on 
coins  in  2013  and  with  the  European  Central  Bank  on  banknotes  in  2014.  Cooperation  has 
started  with  neighbouring  countries.  At  national  level,  there  is  official  cooperation  between 

83 

 
 
 
the  National  Bank  and  the  Ministry  of  Interior  on  transfer  of  suspected  counterfeit  money. 
Serbia participates in the Pericles 2020 programme and the regional Balkan Network for Euro 
Protection initiative. 

5.33.  Chapter 33: Financial and budgetary provisions 

Rules  for  funding  the  EU  budget  provide  for  contributions  from  custom  duties  and 
value added tax, together with a contribution based on gross national income.   

Serbia is at an early stage of preparation with regard to financial and budgetary provisions. 
Some  progress  was  made  across  the  board  as  regards  the  underlying policy  areas  effecting 
the good function on the OR system. In the coming year, Serbia should in particular: 

→ take further steps to boost administrative capacity and establish the institutional body that 
will coordinate various institutions involved in the own resources system. 

There  was  some  progress  in  the  underlying  policy  areas  affecting  indirectly  the  own 
resources system (for progress in underlying areas, see: chapter 16 — Taxation, chapter 18 
— Statistics, chapter 29 — Customs Union, chapter 32 — Financial control). There is little 
progress in to meet the specific OR administrative conditions in the OR legislation (traditional 
own resources, the value added tax-based resource and gross national income-base resource).    

Regarding  traditional  own  resources,  improvement  in  the  functioning  of  the  customs 
administration has led to higher collection of customs duties. As regards the value added tax-
based resource, the reform of the tax administration has led to increased collection of VAT. 
As  regards  gross  national  income-based  resource,  national  accounts  have  improved. The 
country  will  need  to  make  considerable  efforts  to  ensure  the  exhaustiveness  of  the  national 
accounts and GNI calculations by also taking into account the informal economy. Instruments 
to  fight  and  reduce  tax  evasion,  fraud  and  the  informal  economy  need  to  be  further 
strengthened. 

Regarding  administrative  infrastructure,  the  capacity  of  the  institutions  in  charge  in  the 
relevant  policy  areas  needs  to  be  further  strengthened  and  developed.  Additional  training  is 
needed for the institutions, including customs and tax administrations. A coordinating agency 
tasked with ensuring correct calculation, accounting, forecasting, collection, payment, control 
and reporting to the EU on the implementation of the EU’s own resources rules still needs to 
be set up (although some first steps have been made to start recruiting staff dealing with this 
task). 

84 

 
 
 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND SERBIA 

Within the framework of the accession negotiations, four chapters had been opened (chapters 
32  on  financial  control  and  35  on  other  issues  –  "normalisation  of  relations  between  Serbia 
and  Kosovo"  in  December  2015  and  chapters  23  and  24  on  the  rule  of  law  in  July).  Serbia 
tabled  its  negotiating  positions  on  chapter  5  and  in  addition  to  chapters  13,  20,  25  and  26. 
Serbia was also invited to table its negotiating positions on chapters 2, 4, 6, 7, 9, 14, 17, 21, 
29, 30 and 33. 

Serbia is participating in the Stabilisation and Association Process. Serbia has continued to 
build  a  track  record  in  implementing  the  obligations  of  the  Stabilisation  and  Association 
Agreement  (SAA).  A  number  of  issues  of  compliance  with  the  SAA  remain.  In  late  July, 
Serbia  informed  of  their  decision  to  extend  the  duration  of  safeguard  measures  on  imports 
from  the  EU  of  dairy  and  pig-meat  products  by  a  further  6  months  until  end  2016. 
Consultations  with  the  Serbian  authorities  on  the  justification  for  such  measures  were 
inconclusive.  Serbia  should  discontinue  the  safeguard  measures  as  soon  as  possible  and 
should  avoid  applying  safeguards  unless  the  circumstances  can  be  fully  justified.  Further 
efforts  are  needed  in  particular  in  the  area  of  state  aid,  especially  to  ensure  the  operational 
independence  of  the  Serbian  Commission  for  State  Aid  Control,  to  repeal  the  exemption  of 
enterprises  under  privatisation  from  state  aid  rules,  to  align  existing  aid  schemes  with  the 
acquis and to demonstrate the compatibility of the aid given to the steel mill Smederevo with 
Protocol 5 of the SAA. Other issues of compliance with the SAA include the discriminatory 
application of excise duties on alcohol and coffee should be removed.  Regular political and 
economic dialogue between the EU and Serbia has continued. A meeting of the Stabilisation 
and  Association  (SA)  Committee  took  place  in  April.  Sub-committee  meetings  were  held, 
together  with  a  meeting  of  a  special  group  on  public  administration  reform.  The  SA 
Parliamentary Committee met in September. Serbia continues to participate in the multilateral 
economic dialogue with the Commission and EU Member States to prepare for participation 
in  multilateral  surveillance  and  EU  economic  policy  coordination.  As  part  of  the  new 
approach  to  economic  governance,  Serbia  adopted  its  second  economic  reform  programme 
and has taken important steps to start implementing reforms recommended by the Economic 
and Financial Affairs Council. 

Visa  liberalisation  for  citizens  of  Serbia  travelling  to  the  Schengen  area  has  been  in  force 
since December 2009. As part of the monitoring mechanism in place since visa liberalisation, 
the  Commission  has  been  regularly  assessing  the  progress  made  by  the  country  in 
implementing  reforms  introduced  under  the  visa  roadmap.  The  monitoring  mechanism  also 
includes an alert mechanism to prevent abuses, coordinated by Frontex. The Commission has 
regularly submitted its post-visa liberalisation monitoring reports to the European Parliament 
and  the  Council.  A  readmission  agreement  between  the  European  Union  and  Serbia  has 
been in force since 2008. 

Under  IPA  II,  Serbia  continues  to  benefit  from  pre-accession  assistance  with  a  total 
indicative  allocation  of  EUR  1.5  billion  for  the  period  2014-2020.  The  IPA  National 
Programme 2015 amounts to EUR 216  million overall, with most of the funding supporting 
public  administration  reform,  justice  and  home  affairs,  competitiveness,  education  and 
energy. Following the increase flow of migrants crossing the country as of July 2015, Serbia 
received ad hoc support, in addition to the assistance already implemented and programmed 
though IPA since 2007 in the area of borders/migration (EUR 45.6 million). In addition to the 
Commission's  October  2015  special  measure  of  an  amount  of  EUR  10  million,  focusing 
primarily  on  Serbia  and  the  former  Yugoslav  Republic  of  Macedonia,  an  action  has  been 
approved  by  the  Board  of  the  EU  Trust  Fund  in  March  in  response  to  the  Syria  Crisis  to 

85 

 
 
 
 
support  Serbia  in  responding  to  the  needs  of  the  migrants  present  in  Serbia,  covering  in 
particular  costs  incurred  in  the  running  of  accommodation  centres  and  related  services,  and 
voluntary  return  scheme.  In  August  2016,  EUR  1  million  was  allocated  to  improve  border 
management, by supporting accommodation and running costs of 50 guest border guards and 
increasing  Serbian  capacity.  In  addition,  Serbia  is  benefiting  from  the  European  Instrument 
for Democracy and Human Rights (EIDHR). 

Serbia continues to actively participate in EU programmes, including Horizon 2020; COSME; 
Customs  and  Fiscalis  2020;  Erasmus+  and  Creative  Europe;  Employment  and  Social 
Innovation. 

86 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX II - STATISTICAL ANNEX 

STATISTICAL DATA (as of 5.10.2016) 
Serbia 

Basic data 
Population (thousand) 
Total area of the country (km²) 

Note 
1) 

2003 
7 491 
77 474 

2011 
7 254be 
77 474 

2012 
7 219e 
77 474 

2013 
7 184e 
77 474 

2014 
7 149e 
77 474 

2015 
7 114 
77 474 

National accounts 
Gross domestic product (GDP) (million national 
currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita), relative to the EU average (EU-28 = 100) 
Real GDP growth rate: change on previous year of 
GDP volume (%) 
Employment growth (national accounts data), relative 
to the previous year (%) 
Labour productivity growth: growth in GDP (constant 
prices) per person employed, relative to the previous 
year (%) 
Unit labour cost growth, relative to the previous year 
(%) 
**3 year change (T/T-3) in the nominal unit labour 
cost growth index (2005 = 100) 
Labour productivity per person employed: GDP (in 
PPS) per person employed relative to EU average 
(EU-27 = 100) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final consumption expenditure, as a share of GDP 
(%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 
Gross fixed capital formation by the general 
government sector, as a percentage of GDP (%) 

Business 
Industrial production volume index (2010 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all persons 
employed (within the non-financial business 
economy) (%) 
Value added by SMEs (in the non-financial business 
economy) (EUR million) 
Total value added (in the non-financial business 
economy) (EUR million) 

Note 

2003 
1220 160 

2011 
3 407 563 

2012 
3 584 236 

2013 
3 876 403 

2014 
3 908 470 

2015 
4 043 468 

18 738 
2 500 
: 

33 424 
4 600 
9 500 

: 

4.4 

-4.4 

7.1 

: 

: 

: 

13.4 
26.1 
5.7 
54.8 
95.5 

18.3 
3.8 
22.0 
39.6 
: 

2003 
95.8 
: 
8.4 

36 

1.4 

: 

: 

: 

: 

: 

10.7 
23.5 
6.0 
59.8 
95.3 

18.4 
1.7 
34.0 
49.4 
: 

2011 
102.5 
: 
9.3b 

5.7 

10.3b 

: 

: 

: 

: 

: 

: 

31 683 
4 400 
9 800 

37 

-1.0 

34 263 
4 800 
10 100 

38 

2.6 

33 319 
4 700 
10 200 

37 

-1.8 

33 491 
4 700 
10 300 

36 

0.8 

: 

: 

: 

: 

: 

9.0 
24.9 
5.4 
60.7 
95.7 

21.2 
-0.2 
36.9 
53.6 
: 

2012 
100.2 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

9.4 
26.6 
5.1 
58.9 
93.1 

17.2 
0.4 
41.2 
51.9 
: 

2013 
105.6 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

9.3 
25.1 
5.1 
60.5 
93.4 

16.7 
0.8 
43.4 
54.2 
: 

2014 
98.8 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

8.2 
25.9 
5.5 
60.4 
90.9 

17.7 
1.2 
46.7 
56.4 
: 

2015 
107.1 
: 
: 

: 

: 

: 

: 

Note 
2) 

3) 

3) 

87 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4) 

4) 

4) 

4) 

4) 
4) 

4) 

4) 

4) 
4) 

4) 

4) 

4) 

4) 

Inflation rate and house prices 
Consumer price index (CPI), change relative to the 
previous year (%) 
**Annual change in the deflated house price index 
(2010 = 100) 

Balance of payments 
Balance of payments: current account total (million 
euro) 
Balance of payments current account: trade balance 
(million euro) 
Balance of payments current account: net services 
(million euro) 
Balance of payments current account: net income 
(million euro) 
Balance of payments current account: net current 
transfers (million euro) 
of which government transfers (million euro) 
**3 year backward moving average of the current 
account balance relative to GDP (%) 
**Five year change in share of world exports of 
goods and services (%) 
Net inward foreign direct investment (FDI) (million 
euro) 
Foreign direct investment (FDI) abroad (million euro) 
of which FDI of the reporting economy in the EU-28 
countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of which FDI of the EU-28 countries in the reporting 
economy (million euro) 
**Net international investment position, relative to 
GDP (%) 
Year on year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

Public finance 
***General government deficit / surplus, relative to 
GDP (%) 
***General government gross debt relative to GDP 
(%) 
Total government revenues, as a percentage of GDP 
(%) 
Total government expenditure, as a percentage of 
GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to 
GDP (%) 
Gross foreign debt of the whole economy, relative to 
total exports (%) 
Money supply: M1 (banknotes, coins, overnight 
deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up 
to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, 
million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
**Annual change in financial sector liabilities (%) 

Note 

2003 
9.9 

2011 
11.0 

2012 
7.8 

2013 
7.8 

2014 
2.9 

2015 
1.9 

: 

: 

: 

: 

: 

: 

Note 
4) 

2003 
-1 345 

2011 
-2 870 

2012 
-3 176 

2013 
-1 585 

2014 
-1 985 

2015 
-1 577 

-3 538 

-5 318 

-5 480 

-3 978 

-4 111 

-3 993 

179 

163 

156 

334 

465 

725 

-119 

-758 

-799 

-1 095 

-1 343 

-1 658 

2 131 

3 043 

2 947 

3 153 

3 003 

3 349 

423 
-3.0 

206 
-7.1 

-12.1 

21.3 

151 
-8.3 

-2.4 

131 
-7.7 

9.2 

89 
-6.9 

161 
-5.1 

14.6 

22.5 

1 194.4 

1 826.9 

241.9 

768.5 

1 236.3 

1 803.8 

105.4 
1.3 

122.0 
100.2 

42.3 
22.3 

10.0 
19.8 

264.2 
35.4 

310.4 
49.7 

1 299.8 

1 948.9 

284.1 

778.5 

1 500.4 

2 114.2 

861.2 

1 710.3 

96.4 

575.9 

1 109.3 

1 530.1 

: 

: 

81.3 

95.1 

-13.0 

-6.0 

Note 

2003 
: 

2011 
-4.8 

63.8 

47.0 

: 

: 

40.0 

44.8 

Note 

2003 
53.3 

2011 
72.2e 

2012 
-6.8 

58.1 

41.1 

47.9 

2012 
80.9 

89.9 

11.0 

2013 
-5.5 

61.1 

39.7 

45.1 

2013 
74.8 

98.4 

105.3 

-8.8 

9.7 

2014 
-6.7 

72.4 

41.8 

48.4 

2014 
77.1 

2015 
-3.8 

76.4 

42.7 

46.4 

2015 
80.1 

5) 

6) 

7) 

259.4 

216.5 

223.6 

184.0 

177.7 

168.7 

1 454 

2 807 

2 715 

3 387 

3 543 

4 148 

1 828 

4 663 

4 227 

4 776 

5 047 

5 776 

3 583 

14 339 

14 438 

14 976 

15 196 

16 193 

3 949 

18 995 

19 783 

19 261 

19 708 

20 719 

8) 

: 

: 

: 

0.2 

1.8 

4.1 

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
**Private credit flow, consolidated, relative to GDP 
(%) 
**Private debt, consolidated, relative to GDP (%) 
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 = … 
national currency) 
Trade-weighted effective exchange rate index (2005 
= 100) 
**3 year change (T/T-3) in the trade-weighted 
effective exchange rate index, 42 countries (2005 = 
100) 
Value of reserve assets (including gold) (million euro) 

: 

: 

: 

: 

: 

: 

: 
: 
14.40 
3.15 
65.117 

: 
8.46 
12.25 
7.25 
101.950 

: 
9.81 
13.75 
8.75 
113.128 

: 
7.04 
12.00 
7.00 
113.137 

: 
9.45 
10.50 
5.50 
117.306 

: 
2.61 
6.50 
2.50 
120.733 

9) 

10) 

100.9 

127.1 

118.3 

126.4 

123.7 

117.3 

: 

: 

: 

: 

: 

: 

2 836 

12 058 

10 915 

11 189 

9 907 

10 378 

Note 

External trade in goods 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price 
index * 100) (number) 
Share of exports to EU-28 countries in value of total 
exports (%) 
Share of imports from EU-28 countries in value of 
total imports (%) 

2003 
: 
: 
: 
103 

: 

: 

2011 
13 706 
8 058 
-5 648 
119 

62.9 

55.9 

Demography 
Crude rate of natural change of population (natural 
growth rate): number of births minus deaths (per 
thousand inhabitants) 
Infant mortality rate deaths of children under one 
year of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that are in 
employment (%) 
Male employment rate for persons aged 20–64 (%) 
Female employment rate for persons aged 20–64 
(%) 
Employment rate for persons aged 55–64: proportion 
of the population aged 55–64 that are in employment 
(%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share of 
total employment, persons aged 20–64 (%) 
People employed in the private sector as a share of 
total employment, persons aged 20–64 (%) 
Unemployment rate: proportion of the labour force 
that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 

Note 

2003 
-3.3 

2011 
-5.2b 

9.0 

6.3 

Note 

69.9 
75.1 

2003 
: 

: 

: 
: 

72.0b 
77.2b 

2011 
64.1 

56.9 
41.7 

44.3 

31.4 

: 
: 
: 
: 
: 

: 

21.2 
21.5 
5.3 
51.9 
31.5 

68.5 

16.0 

22.9 

15.1 
17.2 

22.3 
23.7 

89 

2012 
13 522 
8 251 
-5 271 
122 

2013 
13 345 
10 413 
-2 933 
122 

62.5 

58.5 

2012 
-4.9 

6.2 

72.3 
77.5 

2012 
64.5 

63.8 

55.7 

2013 
-4.8 

6.3 

72.6 
77.9 

2013 
66.1 

2014 
13 512 
10 562 
-2 950 
122 

65.7 

57.1 

2015 
14 430 
11 446 
-2 985 
125 

67.0 

57.3 

2014 
-4.9 

2015 
-5.4 

5.7 

72.8 
78.0 

2014 
68.0b 

: 

: 
: 

2015 
68.1 

56.9 
41.2 

31.6 

21.0 
21.3 
5.2 
52.5 
32.6 

67.4 

23.9 

23.2 
24.9 

59.6 
43.2 

62.5b 
47.2b 

63.7 
48.3 

34.3 

36.7b 

37.3 

21.3 
21.1 
4.7 
52.8 
32.7 

19.9b 
20.2b 
4.5b 
55.4b 
31.4b 

19.4 
19.9 
4.5 
56.1 
29.7 

67.3 

68.6b 

70.3 

22.1 

19.2b 

17.6 

20.9 
23.7 

18.3b 
20.3b 

16.8 
18.7 

49.3 

49.0 

51.3 

54.8b 

56.0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Youth unemployment rate: proportion of the labour 
force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the 
labour force that has been unemployed for 12 
months or more (%) 
Unemployment rate for persons (aged 25–64) having 
completed at most lower secondary education 
(ISCED 0–2) (%) 
Unemployment rate for persons (aged 25–64) having 
completed tertiary education (ISCED 5 & 6) (%) 

Social cohesion 
Average nominal monthly wages and salaries 
(national currency) 
Index of real wages and salaries (index of nominal 
wages and salaries divided by the inflation index) 
(2000 = 100) 
GINI coefficient 
Poverty gap (%) 
*Early leavers from education and training: 
proportion of the population aged 18–24 with at most 
lower secondary education who are not in further 
education or training (%) 

Standard of living 
Number of passenger cars relative to population size 
(number per thousand population) 
Number of mobile phone subscriptions relative to 
population size (number per thousand population) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

Infrastructure 
Density of railway network (lines in operation per 
thousand km²) 
Length of motorways (kilometres) 

44.8 

50.7 

11.0 

16.9 

51.2 

18.7 

49.4 

47.4b 

43.2 

16.8 

12.8b 

11.3 

: 

: 

21.6 

23.3 

21.2 

18.6b 

15.8 

14.9 

15.9 

17.2 

14.5b 

14.4 

Note 
11) 

2003 
16 612 

2011 
52 733b 

2012 
57 430 

2013 
60 708 

2014 
61 426 

2015 
61 145 

11) 

176.5 

277.9b 

280.4 

275.0 

271.0 

264.2 

: 
: 
: 

: 
: 
8.5 

: 
: 
8.1 

38.0 
36.6 
8.9 

38.7 
40.3 
8.5 

38.2 
37.6 
7.5 

Note 

2003 
185.3 

2011 
231.3 

2012 
239.2 

2013 
246.4 

2014 
251.4 

2015 
257.7 

399.3 

1 399.4 

1 261.9 

1 280.9 

1 307.6 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 

: 
: 

Note 

2003 
49.2 

2011 
49.3 

2012 
49.3 

2013 
49.3 

2014 
49.3 

2015 
48.6s 

370 

595 

607 

607 

607 

693 

Innovation and research 
Public expenditure on education relative to GDP (%) 
*Gross domestic expenditure on R&D relative to 
GDP (%) 
Government budget appropriations or outlays on 
R&D (GBAORD), as a percentage of GDP (%) 
Percentage of households who have internet access 
at home (%) 

Note 

2003 
4.3 
0.34 

: 

: 

2011 
4.5 
0.72 

0.45 

41.2 

2012 
4.5 
0.91 

0.45 

47.5 

2012 
73.0 

2013 
4.3 
0.73 

0.42 

55.8 

2013 
74.9 

2014 
4.2 
0.78 

0.43 

62.8 

2014 
: 

Environment 
*Index of greenhouse gas emissions,  CO2 
equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2010 constant prices) 
Electricity generated from renewable sources relative 
to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

Energy 
Primary production of all energy products (thousand 
TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand 
TOE) 

Note 

2003 
: 

2011 
81.4 

723.8 

536.6 

486.9 

487.4 

441.9 

: 

22.6 

11.7 

30.5 

24.8 

44.8 

32.1 

43.1 

Note 

2003 
11 885 

2011 
10 504 

2012 
10 105 

2013 
11 447 

726 
9 114 

1 111 
7 822 

1 224 
7 276 

1 263 
7 668 

36.2 

44.1 

2014 
9 534 

1 208 
5 711 

90 

2015 
: 
: 

: 

63.8 

2015 
: 

: 

: 

42.0 

2015 
: 

: 
: 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

Agriculture 
Agricultural production volume index of goods and 
services (at producer prices) (previous year = 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals (thousand 
heads, end of period) 
Livestock numbers: live swine (thousand heads, end 
of period) 
Livestock numbers: live sheep and live goats 
(thousand heads, end of period) 
Production and utilisation of milk on the farm (total 
whole milk) (thousand tonnes) 
Harvested crop production: cereals (including rice) 
(thousand tonnes) 
Harvested crop production: sugar beet (thousand 
tonnes) 
Harvested crop production: vegetables (thousand 
tonnes) 

295 
5 104 
16 414 
35.4 

2003 
93.0 

5 079 
1 102 

449 
5 048 
15 749 
38.6 

2011 
96.4 

3 528b 
937b 

472 
4 179 
13 997 
36.8 

2012 
80.5 

3 462 
921e 

470 
3 760 
15 172 
39.9 

2013 
121.8 

3 491 
913 

493 
3 846 
13 574 
34.1 

2014 
102.1 

3 507 
920 

Note 

13) 
14) 

: 
: 
: 
: 

2015 
92.4 

3 469 
916 

14) 

3 439 

3 287b 

3 139e 

3 144 

3 236 

3 284 

15) 

1 741 

1 699b 

1 867e 

1 841 

1 967 

1 992 

16) 

1 638 

1 547b 

1 554e 

1 548 

1 596 

1 611 

17) 
18) 
18) 

5 453 

9 538b 

6 355 

9 091 

10 840 

8 429 

1 738 

3 004b 

2 483 

3 180 

3 507 

2 183 

18) 

1 172 

1 024b 

936 

1 062 

965 

1 108 

: = not available 
b = break in series 
e = estimate 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

Footnotes 

1)  Break due to the introduction of a new estimation method. 
2)  Gross index. 
3)  2003: includes all entities in administrative registers (legal units). 
4)  2014 and 2015: based on balance of payments manual edition 6 (BPM6). 
5)  The money supply M1 consists of currency in circulation and funds in giro, current and other accounts belonging to the 

owners of money balances in banks' liabilities, including money balances in the accounts of local government bodies, i.e. 
accounts from which payments can be made without any restrictions. 

6)  The money supply M2, in addition to M1, includes other dinar deposits, both short-and long-term. 
7)  The money supply M3, in addition to M2, includes short-and long term foreign currency deposits (without the so-called frozen 

foreign currency savings). 

8)  The total financial sector liabilities are the sum of all liabilities of the following sectors: Central Bank, Banks, Other financial 

intermediaries' which include leasing companies, factoring/forfeiting companies. Insurance companies include insurance 
companies, agency for deposits insurance and national mortgage insurance corporations. 

9)  Arithmetic mean of official middle exchange rates of the dinar against the euro on working days. 

10) 

Index of nominal effective exchange rate adjusted for the ratio of domestic consumer price index to the weighted sum of 
indices of consumer prices in the euro area and the United States. Calculation based on a geometric average. 
11)  2003: wages and salaries paid to employees of legal entities. 2011–15: wages and salaries paid to employees of legal 

entities and of unincorporated enterprises. 

12)  Based on GDP at 2010 constant prices. 
13) 

In 2014, a new method of data collection including sample surveys was set up. Time series have been revised back to 2007. 

14)  Break in series caused by change of reference date from 15 January to 1 December. 
15)  Break in series caused by change of reference date from 15 January to 1 December and by revision of time series of data on 

number of goats (back to 2006) on the basis of the 2012 agricultural census. 

16)  2003: excluding milk from goats. 
17)  2003: excluding triticale. 
18)  Break in series caused by a change in source. 

91