COMMISSION STAFF WORKING DOCUMENT Serbia 2018 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 2018 Communication on EU Enlargement Policy
Date: 2018-04-17
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Serbia, accession criteria, accession negotiations, pre-accession strategy

EN 

  EN 

   EUROPEAN COMMISSION  Strasbourg, 17.4.2018 SWD(2018) 152 final  COMMISSION STAFF WORKING DOCUMENT Serbia 2018 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  2018 Communication on EU Enlargement Policy {COM(2018) 450 final}  
 
 
Table of Contents 
1. INTRODUCTION ........................................................................................................................ 3 

1.1   Context ......................................................................................................................... 3 

1.2   Summary of the report ................................................................................................. 3 

2. FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS ..................... 5 

2.1.  Functioning of democratic institutions and Public Administration Reform ................ 5 

2.1.1   Democracy ........................................................................................................... 5 

2.1.2.   Public administration reform ................................................................................ 8 

2.2. Rule of law and fundamental rights ............................................................................... 12 

2.2.1. Chapter 23: Judiciary and fundamental rights ........................................................ 12 

2.2.2. Chapter 24: Justice, freedom and security .............................................................. 30 

3. FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS ............................. 40 

3.1 The existence of a functioning market economy ............................................................ 41 

3.2 The capacity to cope with competitive pressure and market forces within the EU ........ 46 

4. REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS .......................................................... 48 

5. NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO ......................................... 51 

6. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ....................................................... 52 

6.1. Chapter 1: Free movement of goods .............................................................................. 52 

6.2. Chapter 2: Freedom of movement for workers ............................................................. 54 

6.3. Chapter 3: Right of establishment and freedom to provide services ............................. 54 

6.4. Chapter 4: Free movement of capital ............................................................................ 55 

6.5. Chapter 5: Public procurement ...................................................................................... 56 

6.6. Chapter 6: Company law ............................................................................................... 58 

6.7. Chapter 7: Intellectual property law .............................................................................. 58 

6.8. Chapter 8: Competition policy ...................................................................................... 59 

6.9. Chapter 9: Financial services ......................................................................................... 61 

6.10. Chapter 10: Information society and media ................................................................ 62 

6.11. Chapter 11: Agriculture and rural development .......................................................... 63 

6.12. Chapter 12: Food safety, veterinary and phytosanitary policy .................................... 64 

6.13. Chapter 13: Fisheries ................................................................................................... 65 

6.14. Chapter 14: Transport .................................................................................................. 65 

6.15. Chapter 15: Energy ...................................................................................................... 67 

6.16. Chapter 16:  Taxation .................................................................................................. 69 

6.17. Chapter 17: Economic and monetary policy ............................................................... 69 

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6.18. Chapter 18: Statistics ................................................................................................... 70 

6.19. Chapter 19: Social Policy and employment ................................................................ 72 

6.20. Chapter 20: Enterprise and industrial policy ............................................................... 74 

6.21 Chapter 21: Trans-European networks ......................................................................... 74 

6.22. Chapter 22:  Regional policy and coordination of structural instruments ................... 75 

6.25. Chapter 25: Science and research ................................................................................ 76 

6.26. Chapter 26: Education and culture .............................................................................. 77 

6.27. Chapter 27: Environment and climate change ............................................................. 78 

6.28. Chapter 28: Consumer and health protection .............................................................. 81 

6.29. Chapter 29: Customs union ......................................................................................... 82 

6.30. Chapter 30: External relations ..................................................................................... 83 

6.31. Chapter 31: Foreign, security and defence policy ....................................................... 84 

6.32. Chapter 32: Financial control ...................................................................................... 86 

6.33. Chapter 33: Financial and budgetary provisions ......................................................... 88 

ANNEX I – RELATIONS BETWEEN THE EU AND SERBIA ............................................................. 90 

ANNEX II – STATISTICAL ANNEX ............................................................................................... 92 

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1. INTRODUCTION 

1.1  

Context  

Since the opening of Serbia’s accession negotiations in January 2014, 12 out of 35 chapters 
have  been  opened,  two of  which  provisionally closed.  The overall  pace  of  negotiations  will 
continue to depend on Serbia’s progress in reforms and in particular on a more intense pace of 
reforms on rule of law and in the normalisation of its relations with Kosovo. 

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.  Serbia  continued  to  implement  the  SAA,  although  a  number  of  new 
compliance issues have emerged over the last year.  

1.2  

Summary of the report1 

As  regards  the  political  criteria,  Serbia  held  presidential  elections  in  April  2017. 
International  observers  found  that  the  elections  provided  voters  with  a  genuine  choice  of 
contestants, but that the playing field was tilted by several factors. The recommendations of 
international observers need to be fully addressed, including those related to the transparency 
and integrity of the election process during the electoral campaign.   

Following  the  resignation  of  Prime  Minister  Vučić  after  his  election  as  President,  the  new 
government, headed by Ana Brnabić, took  office in  June  2017. For the first time, a  woman 
was elected Prime Minister. The parliament still does not exercise effective oversight of the 
executive. Transparency, inclusiveness, and quality of law making need to be enhanced and 
cross-party  dialogue  improved.  The  use  of  urgent  procedures  should  be  reduced.  Actions 
which  limit  the  ability  of  the  parliament  for  an  effective  scrutiny  of  legislation  must  be 
avoided.  The  role  of  independent  regulatory  bodies  needs  to  be  fully  acknowledged. 
Constitutional reforms are needed for alignment with EU standards in some areas. 

Serbia is moderately  prepared in the area of  public administration reform. Some progress 
was achieved in the area of service delivery and with the adoption of several new laws. Serbia 
needs  to  implement  its  reform  targets,  professionalise  and  depoliticise  the  administration, 
especially  regarding  senior  management  positions,  and  ensure  systematic  coordination  and 
monitoring of the public financial management reform programme 2016-20. Serbia’s ability 
to attract and retain qualified staff in the administration dealing with EU issues will be crucial. 

Serbia’s judicial system has some level of preparation. Some progress was made, notably by 
reducing  the  backlog  of  old  enforcement  cases  and  putting  in  place  measures  to  harmonise 
court  practice.  Improved  rules  for  evaluating  professional  performance  of  judges  and 
prosecutors  were  adopted.  The  scope  for  political  influence  over  the  judiciary  remains  a 
concern. A new draft of amendments to the Constitution in the domain of the judiciary was 
published in January 2018 and was put forward for public discussion before being sent to the 
Venice Commission for its opinion.  

Serbia has some level of preparation in the fight against corruption. Some progress has been 
achieved,  especially  in  adopting  amendments  to  the  Criminal  Code  in  the  economic  crimes 
section;  to  the  law  on  the  organisation  of  state  authorities  in  the  field  of  fight  against 
corruption,  organised  crime  and  terrorism;  and  to  the  law  on  seizure  and  confiscation  of 

1  This  report  covers  the  period  from  October  2016  to  February  2018.  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.  
 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. 

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proceeds  of  crime.  However,  there  is  a  serious  delay  in  adopting  the  new  law  on  the 
Anti-Corruption Agency. Corruption remains prevalent in many areas and continues  to be a 
serious  problem.  Operational  capacity  of  relevant  institutions  remains  uneven.  Law 
enforcement  and  judicial  authorities  still  need  to  prove  that  they  can  investigate,  prosecute 
and try all high level corruption cases in an unbiased and operationally independent manner.  

Serbia  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Some  progress 
was made in areas such as human resource management in the Ministry of the Interior and the 
police. The operational capacity in both the Prosecutor’s Office for Organised Crime and the 
Prosecutor’s Office for Cybercrime was improved. A new strategy and action plan to prevent 
and  fight  trafficking  in  human  beings  were  adopted,  a  National  Coordinator  for  Combating 
Trafficking  in  Human  Beings  was  appointed,  and  a  new  Law  on  the  Prevention  of  Money 
Laundering  and  Terrorist  Financing  was  adopted.  However,  Serbia  has  yet  to  establish  an 
initial  track  record  of  effective  financial  investigations,  as  well  as  of  investigations, 
prosecutions and final convictions in money laundering cases. The number of convictions for 
organised crime remains low. Serbia needs to focus on the implementation of the action plan 
agreed with the Financial Action Task Force (FATF). 

The legal  and institutional framework  for the respect  of  fundamental rights is  in place. Its 
consistent  implementation  across  the  country  needs  to  be  ensured,  including  as  regards 
protection of minorities. While Serbia has some level of preparation, no progress was made 
on  freedom  of  expression,  a  matter  of  increasing  concern.  Further  sustained  efforts  are 
needed  to  improve  the  situation  of  persons  belonging  to  the  most  discriminated  groups 
(Roma2, LGBTI persons, persons with disabilities, persons with HIV/AIDS and other socially 
vulnerable groups). A gender equality law needs to be adopted. 

Serbia overall remained constructively committed to bilateral relations with other enlargement 
countries  and  neighbouring  EU  Member  States  and  an  active  participant  in  regional 
cooperation.   

Regarding the normalisation of relations with Kosovo, Serbia has remained engaged in the 
dialogue. However, Serbia needs to make further substantial efforts on the implementation of 
existing agreements and contribute to the establishment of circumstances conducive to the full 
normalisation of relations with Kosovo, to be defined in a legally binding agreement.  

As regards the economic criteria, Serbia has made good progress and is moderately prepared 
in  developing  a  functioning  market  economy.  Some  of  the  policy  weaknesses,  in  particular 
with  regard  to  the  budget  deficit,  were  addressed.  Growth  fundamentals  are  sound  and 
macroeconomic  stability  was  preserved.  Inflation  was  contained  and  monetary  policy 
supported growth. Labour market conditions improved further. However, government debt is 
still  high  and  the  budgetary  framework  and  its  governance  need  to  be  strengthened.  Major 
structural reforms of the public administration, the tax authority, and state-owned enterprises 
remain  incomplete.  Informal  employment,  unemployment  and  economic  inactivity  remain 
still  very  high,  particularly  among  women  and  youth.  The  private  sector  is  underdeveloped 
and hampered by weaknesses in the rule of law and the enforcement of fair competition.  

Serbia is moderately prepared to cope with competitive pressure and market forces within the 
Union.  Some  progress  was  made  to  increase  competitiveness.  However,  the  level  of 
investment  activity  is  still  below  the  economy’s  needs.  Despite  some  improvements, 
companies face a number of challenges, including an unpredictable business environment, a 
high level of para-fiscal charges, and difficult and costly access to finance. 

2 All these groups are considered under the wider "Roma" umbrella term under the EU Framework for National 
Roma Integration Strategies. 

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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. 
Serbia  has  a  good  level  of  preparation  in  areas  such  as  company  law,  intellectual  property, 
science  and  research,  education  and  culture,  and  customs.  Serbia  improved  linking  its 
investment  planning  to  budget  execution  but  has  yet  to  develop  a  single  mechanism  for 
prioritising  all  investments  regardless  of  the  source  of  funding  in  accordance  with  the 
government's  public  finance  management  reform  programme.  In  areas  such  as  public 
procurement, statistics, monetary policy and financial control, Serbia is moderately prepared. 
Serbia needs to progressively align its foreign and security policy 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,  regarding  in  particular 
restrictions  on  capital  movements,  state  aid  regulation,  fiscal  discrimination  on  imported 
spirits and restrictions on waste exports.  

Serbia continued to manage the effects of the migration and refugee crisis. Serbia is in the 
process  of  negotiating  with  the  EU the  status  agreement  on actions  to  be  carried  out  by the 
European  Border  and  Coast  Guard  Agency  in  Serbia.  Serbia  adopted  a  new  law  on  asylum 
and temporary protection, a law on foreigners, and a law on border control. A strategy and an 
action plan for 2017-2020 to counter irregular migration needs to be adopted. In this context, 
Serbia needs to put in place a robust return mechanism for irregular migrants, which is in line 
with the EU acquis, as well as to align its visa policy progressively with the EU’s. Stronger 
coordination among the various state authorities involved in migration management has to be 
ensured.  Serbia  continued  to  cooperate  with  neighbouring  countries  and  Member  States,  in 
particular at technical level, and made substantial efforts to provide shelter and humanitarian 
supplies, primarily with EU support. Serbia needs to increase its capacity to address special 
reception needs of unaccompanied minors.  

2. FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS 

2.1. 

Functioning of democratic institutions and Public Administration Reform  

2.1.1   Democracy  

Elections 

Serbia held presidential elections in April 2017. The Office for Democratic Institutions and 
Human Rights of the Organisation for Security and Cooperation in Europe (OSCE/ODIHR) 
found  that  the  elections  provided  voters  with  a  genuine  choice  of  contestants,  but  that  the 
playing  field  was  tilted  by  several  factors.  Most  of  the  recommendations  of  the 
OSCE/ODIHR are yet to be fully addressed, including those related to the transparency and 
integrity of the election process during the electoral campaign.   

Presidential elections were held on 2 April 2017. The president is elected by popular vote for 
a five-year term. The turnout was 54 %. Eleven candidates took part; there were no women 
candidates. The candidate of the ruling coalition, the then Prime Minister Aleksandar Vučić, 
won in  the first round with  55 %  of the votes.  Former Ombudsman Sasa Janković obtained 
16 %,  while  newcomer  candidate  Luka  Maksimović  received  9  %,  and  former  Minister  of 
Foreign Affairs Vuk Jeremić 5 %. The remaining candidates received less than 5 % each.  

5 

 
 
 
The  elections  were  observed  by  the  OSCE/ODIHR  Election  Assessment  Mission  at  the 
Serbian  authorities’  invitation.  The  OSCE/ODIHR  found  that  the  elections  provided  voters 
with a genuine choice of contestants, who were able to campaign freely. Opening, voting and 
counting were overall efficient and orderly. Some improvements have been made, including 
in areas related to secrecy of the voting, training members of polling boards, representation of 
national minorities, and participation of persons with disabilities.  

However, the OSCE/ODIHR noted that the campaign was dominated by the candidate from 
the ruling coalition, who benefited from the effectively blurred distinction between campaign 
and  official  activities  and  unbalanced  media  coverage.  The  OSCE/ODIHR  also  reported 
credible  allegations  of  pressure  on  voters  and  employees  of  state-affiliated  structures,  a 
misuse  of  administrative  resources,  and  ineffective  use  of  regulatory  and  oversight 
mechanisms to safeguard the fairness of competition. 

In  line  with  the  OSCE/ODIHR  recommendations,  a  comprehensive  and  inclusive  review  of 
the legal framework on elections is needed to regulate all essential aspects and address gaps 
and loopholes. Persistent shortcomings should be addressed, such as the transparency of party 
and  campaign  financing,  the  need  for  strict  separation  of  party  and  state  activities,  and  the 
need  for  independent  regulatory  bodies  to  exercise  their  monitoring  and  oversight  role 
proactively and effectively. 

Belgrade city elections were held on 4 March 2018. Domestic observers reported irregularities 
and assessed that these have not fundamentally affected the results.  

Parliament  

Transparency,  inclusiveness,  the  quality  of  law  making  and  effective  oversight  of  the 
executive need to be enhanced and cross-party dialogue improved. The role of independent 
regulatory  bodies  needs  to  be  fully  acknowledged  and  supported.  The  use  of  the  urgent 
procedure to adopt legislation decreased, but is still high. The effectiveness of the parliament 
in scrutinising legislation has on certain occasions been limited by deliberate actions by the 
ruling coalition. 

Parliament’s  legislative  activity  was  suspended  between  March  and  April  2017  during  the 
presidential elections’ campaign. Efforts continued to improve transparency and consultation. 
These  included  debates  on  Serbia’s  negotiating  positions  for  EU  accession  chapters  and 
exchanges with the core negotiating team and with the National Convention on the European 
Union  (which  brings  together  civil society  organisations  involved  in  the  accession process). 
However, the former Head of the EU Delegation was for the first time ever prevented from 
presenting the country report on Serbia following obstruction in the parliament. 

The parliament needs to be able to properly exercise its core function to scrutinise legislation. 
Although  the  use  of  urgent  legislative  procedures  decreased  from  65  %  in  2016  to  44  %  in 
2017, it is still high. Genuine cross-party debate and political dialogue remain weak and risk 
undermining  parliamentary  effectiveness  and  the  quality  of  legislation.  No  draft  legislative 
proposals tabled by the opposition were discussed.   

The  parliament  does  not  exercise  effective  oversight  of  the  executive,  as  illustrated  by  the 
lack  of  holding  regular  question  and  answer  sessions  with  the  executive,  very  limited 
discussion  and  follow  up  to  the  State  Audit  Institution’s  audit  reports  and  a  lack  of 
parliamentary  discussion  on  the  implementation  of  major  laws  and  policies.  Support  for 
independent  regulatory  bodies  did  not  improve.  For  three  consecutive  years,  the  parliament 
has  not  discussed  any  annual  reports  by  independent  bodies  in  plenary  sessions.  The 

6 

 
 
 
parliament has not adopted its annual work plans for 2016 and 2017 and has yet to adopt its 
code of conduct. 

The  Law  on  Financing  Political  Activities  provides  for  political  parties’  regular  work  and 
election campaign costs to be financed from public and private sources. The Anti-Corruption 
Agency monitors political party financing by means of annual financial reports and election 
campaign reports. 

Governance 

The  new  Serbian  government,  which  took  office  in  June  2017,  reaffirmed  EU  accession  as 
Serbia’s  strategic  goal.  Inclusiveness  and  transparency  needs  to  be  further  strengthened. 
Constitutional  changes  are  still  needed  to  address  issues  of  relevance  to  the  accession 
negotiations. 

Further to the resignation of the Prime Minister following his election as President, the new 
government  took  office  on  29  June  2017.  For  the  first  time,  a  woman  was  elected  Prime 
Minister. Out of 21 ministers, four are women. The government comprises two new ministries 
– for environment and for European integration. The latter took over the responsibilities of the 
Serbian  European  Integration  Office.  The  new  government  remained  committed  to  EU 
integration, as illustrated by the new Prime Minister’s first visit abroad to the EU institutions. 
It also identified reforms, economic growth, education and digitalisation as key priorities.  

The Serbian administration and negotiating team continued to demonstrate preparedness and 
professionalism in the accession negotiations process; however, adequate human and financial 
resources  will  need  to  be  allocated  to  meet  Serbia’s  ambitious  objectives  on  EU  accession 
negotiations.  

Consultations  with  relevant  stakeholders,  including  civil  society  organisations  through  the 
National Convention on the EU, continued. However,  the inclusiveness and transparency of 
the  reform  process,  in  particular  on  EU  accession-related  issues,  need  to  be  further 
strengthened.  

The  role  of  independent  regulatory  bodies  needs  to  be  fully  acknowledged  and  supported. 
Monitoring  of  the  implementation  and  impact  of  the  reform  processes  needs  to  be  further 
improved.  The  administration  acknowledges  the  importance  of  better  communicating  the 
benefits and obligations of EU membership to Serbian citizens, but further efforts are needed 
to promote European values in Serbian public debate and in education, including readiness for 
reconciliation. 

Regarding local self-government, the law on Vojvodina’s financing resources still needs to be 
adopted as provided for under the Constitution. Local administrative capacity remains weak 
and  significant  disparities  between  municipalities  persist.  Responsibilities  continue  to  be 
borne  at  local  level  without  proper  analysis  of  the  capacity  and  human/financial  resources 
required.  Consultation  with  local  authorities  on  new  legislative  proposals  with  local 
implications improved, but remains discretionary.   

Constitutional  changes  for  alignment  with  European  standards  and  recommendations  of  the 
Venice  Commission  have  still  not  been  adopted  in  areas  of  relevance  to  the  accession 
negotiations  such  as  on  the  independence  of  judiciary,  the  parliament’s  role  in  judicial 
appointments, the political parties’ control of parliamentary office, the independence of key 
institutions, and the protection of human rights and freedoms including protection of right to 
privacy and personal data protection.  

7 

 
 
 
 
 
Civil society 

No  progress  was  made  towards  establishing  an  enabling  environment  for  the  development 
and  financing  of  civil  society.  A  national  strategy  for  an  enabling  environment  for  civil 
society organisations (CSOs) and its accompanying action plan has not been adopted. Further 
efforts  are  needed  to  ensure  systematic  cooperation  between  the  government  and  civil 
society. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by state institutions. CSOs and human rights defenders play a 
key role in raising awareness about civil and political rights in a climate not open to criticism, 
with  negative  statements  made  by  government  officials  and  echoed  by  the  media  on  civil 
society in general and on funding of certain associations in particular. Human rights defenders 
have been the subject of harsh criticism from tabloid newspapers. 

The  National  Convention  on  the  EU  (made  up  of  representatives  of  governmental  bodies, 
political  parties,  non-governmental  organisations,  experts,  syndicates,  private  sector  and 
representatives of professional organisations aiming to support a structured debate on Serbia’s 
accession to the EU) continued to monitor and assess the progress of accession negotiations. 
Their expertise should be used more systematically by the authorities, in order to benefit from 
the Convention’s full potential. 

The  relationship  between  the  government  and  CSOs  is  still  marked  by  fragmented 
cooperation  and  a  selective  approach  towards  individual  CSOs.  The  adoption  of  laws  using 
the  urgent  procedure  limits  democratic  debate,  as  well  as  the  effective  inclusion  of  civil 
society in the process. A national strategy for an enabling environment for civil society and its 
action plan are still not adopted. A council for civil society cooperation still needs to be set 
up.  

Following  CSO  consultations  organised  by  the  Office  for  Cooperation  with  Civil  Society, 
amendments to the regulation on public funding to CSOs were adopted, aiming to harmonise 
the  internal legal  acts  regulating  public  CSO  funding  and increase  transparency,  monitoring 
and evaluation of the overall process. Most Serbian CSOs lack stable funding, and especially 
at local level, criteria for public financial support need to be better defined to ensure overall 
transparency.  The  lack  of  financial  sustainability  of  CSOs  affects  the  potential  of  social 
entrepreneurship to address local community needs and stimulate employment and economic 
growth.  

Civilian oversight of the security forces  

Parliament continues to be responsible for oversight of the security forces. The parliamentary 
committee  for  oversight  of  the  security  forces  continued  to  review  the  activities  of  the 
security-information,  military  intelligence  and  defence  services.  A  law  on  access  to  state 
security files still needs to be adopted. 

2.1.2.   Public administration reform  

Serbia is moderately prepared with the reform of its public administration. Some progress 
has been achieved in the area of service delivery and with the adoption of several new laws on 
public  service  salaries  and  employment  relations,  on  local  government  and  autonomous 
province  salaries,  and  on  the  national  training  academy.  However,  the  Commission 
recommendations from 2016 have not been fully addressed. In particular, political influence 
on  senior  managerial  appointments  remains  an  issue  of  concern,  with  an  estimated  60 %  of 
senior  managers  in  acting  positions,  many  for  an  extended  period  of  time.  Also,  the 
implementation of the public administration reform action plan has experienced delays.  

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In the coming year, Serbia should in particular:  

→ align the National plan for the adoption of the acquis (NPAA) with the government annual 
work programme, 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  human 
resources management; 

 →  monitor  and  report  on  the  implementation  of  the  public  financial  management  reform 
programme in line with the reporting established for the PAR strategy. 

Policy development and coordination  

While  the  institutions  are  in  place  to  ensure  a  central  government  policy-making  system, 
policy  coordination  faces  challenges  in  practice  due  to  a  focus  on  formal  and  procedural 
issues rather than on substance. Quality of strategic planning continues to be weak. There are 
no established rules for the development of sector strategies, which are  often not costed and 
which are not sufficiently linked to the medium-term fiscal planning.  

The  newly  created  Ministry  for  European  Integration,  incorporating  the  structures  of  the 
former  Serbian  European  Integration  Office,  has  continued  to  provide  political  guidance  to 
coordination structures  for European integration. The third  revision of the  National plan for 
the adoption of the acquis (NPAA) for the period 2018-2021 is completed. The NPAA should 
be aligned with the government annual work programme, it should be properly costed, and its 
implementation should be regularly monitored and reports published. Serbia’s ability to retain 
qualified staff to develop and manage sector policies related to the EU is of great importance.   

The  public  administration  needs  to  further  strengthen  its  capacity  for  inclusive  and 
evidence-based  policy  and  legislative  development,  including  on  the  acquis.  Public 
consultations on proposals are often conducted formalistically and too late in the process, not 
enabling all interested parties to provide timely and qualitative input. Line ministries have yet 
to  develop  internal  rules  on  policy  development  and  legal  drafting,  and  improve  acquis 
transposition costing. With regard to inter-ministerial consultations, high-level civil servants 
remain uninvolved in the process, and possible conflicts between services have to be resolved 
at the ministerial level. Regulatory impact assessments vary in  quality and the Public Policy 
Secretariat  does  not  have  a  mandate  to  return  them  for  revision.  Regulatory  impact 
assessments are not submitted to the parliament together with legislative proposals. There are 
discrepancies  between  the  financial  impact  assessments,  which  the  Ministry  of  Finance 
coordinates,  and  financial  information  in  the  regulatory  impact  assessments,  so  better 
coordination is needed between the Ministry of Finance and the Public Policy Secretariat. 

Public scrutiny of government work is affected by the fact that government agendas are not 
systematically  available  to  the  public,  and  that  many  reports,  such  as  the  implementation 
reports of the annual government work plans or reports on the implementation of the NPAA, 
have  not  been  regularly  published.  The  government  monitoring  reports  and  ministries’ 
strategy monitoring reports should start to increasingly measure achievements against stated 
objectives rather than report on implemented activities. 

Public financial management  

Serbia continued to implement its comprehensive 2016-2020 public financial management 
reform programme which covers all the relevant sub-systems. A monitoring framework has 
been set up, but its efficiency and link with the PAR strategy monitoring need to be improved. 

9 

 
 
 
Implementation reports, which are regularly prepared and published, need to become a useful 
management tool. Implementation  has  suffered from limited human and financial resources, 
aggravated by fiscal consolidation measures. The planned revision of the reform programme 
in 2018 needs to be based on more realistic planning and costing, better sequencing, clearer 
emphasis on key reforms, and improved indicators.  

Improvements  have  been  made  in  the  quality  of  macroeconomic  forecasts,  medium-term 
planning of budget beneficiaries, coverage of budget execution and quality of fiscal reports. 
Capital  expenditure  execution  remains  hampered  by  weaknesses  in  budgeting,  planning  and 
contract oversight. Serbia adopted in June 2017 a decree on capital investment management. 
It  aims  at  linking  investment  planning  to  the  budgetary  process.  However,  EU  funded 
investment  projects  are  not  covered  by  the  decree.  Rather,  they  are  channelled  through  the 
National Investment Committee and the Single Project Pipeline. Serbia therefore still needs to 
develop  a  single  mechanism  for  prioritising  all  investments  regardless  of  the  source  of 
financing, as foreseen in the public financial management reform programme adopted by the 
government.  Revenue  projections  have  been  more  conservative  and  expenditures  more 
realistically planned. In-year financial reporting has provided wider information and has been 
more  readily  available.  The  coverage  of  the  financial  management  information  system  has 
been enlarged by inclusion of cultural organisations and prisons as of January 2018.  

The budget calendar set up in the Budget System Law is still not fully respected, resulting in 
insufficient time allocated to proper preparation, assessment and debate among stakeholders. 
Although the budget is now structured by programmes, the link with strategic plans and the 
government’s  priorities  remains  weak.  Procedures  to  ensure  integration  of  capital  projects 
planning and appraisal in the budget process are yet to be developed.  

As regards budget transparency, a simplified citizens’ budget is prepared and published. A 
transparency roadmap, a pre-budget statement, and a mid-year report have been planned but 
are still not published. The Ministry of Finance does not publish the annual budget execution 
profile,  preventing  an  analysis  of  deviations  from  targets.  Budget  execution  reports  contain 
only  basic  elements,  and  do  not  break  down  expenditure  figures  for  individual  budget 
organisations. Budget oversight by the legislature needs to be improved. The 2018 budget was 
adopted by the parliament without substantive debate.   

Public service and human resources management  

The current civil service framework defines merit-based recruitment, promotion and dismissal 
procedures, but exemptions and transitional arrangements need to be addressed. Merit-based 
recruitment  is  still  undermined  by excessive  discretion allowed  to  the political  level in  the 
choice  of  final  candidates.  Also,  there  are  no  clear  criteria  for  organisation  of  the  selection 
tests  and  composition  of  selection  committees.  Exemptions  from  the  normal  recruitment 
procedures are allowed for temporary staff, that continues to make up around 10 % of the civil 
service.  The  legal  separation  of  political  and  public  service  positions  is  still  not  clearly 
enforced.  

Political influence  continues  to  play  a  key  role in  filling  senior  management  posts.  60 %  of 
senior  civil  servants  are  not  appointed  in  line  with  the  legal  provisions,  but  they  serve  in 
‘acting’ positions, many for a number of years. High turnover among senior civil servants and 
the  consequent  loss  of  institutional  memory  continue  to  be  of  particular  concern.  The 
weaknesses in the legal framework create the risk of abusive use of dismissals at both expert 
and  management  level,  as  dismissal  is  allowed  after  one  negative  appraisal  followed  by  a 
confirmation of such appraisal through an additional evaluation after 30 days.  

10 

 
 
 
Human  resources  management  continues  to  focus  mainly  on  legal  compliance.  The 
performance  appraisal  system,  with  inflated  appraisal  grades,  remains  ineffective.  The 
Ministry  of  Public  Administration  and  Local  Self-Government  is  responsible  for  central 
coordination  of  human  resources  management,  but  it  lacks  capacity  to  coordinate  and 
harmonise the work of human resources units. The human resources management information 
system  still  does  not  interact  with  other  national  databases  such  as  the  treasury  payroll 
registry,  and  it  is  not  regularly  updated.  Regarding  the  civil  service  remuneration  system, 
new  laws  on  public  service  salaries  and  employment  relations  and  on  salaries  of  local 
government and autonomous province were adopted in December 2017.  

With  regard  to  professional  development,  Serbia  adopted  the  Law  on  National  Training 
Academy  for  public  servants.  The  Academy  will  provide  trainings  for  all  public  officials, 
including  at  the  local  level.  Specific  training  modules  targeting  senior  managers  are  an 
integral  part  of  the  national  training  curriculum.  Implementation  of  the  strategy  for 
professional  development  of  local  government  employees  continued  with  accreditation  of 
training  programmes  and  the  introduction  of  accreditation  for  the  training  providers. 
However, professional development is not yet consistently promoted and it is not linked with 
the performance appraisal system.  

Integrity  in  public  service  is  promoted  by  the  2015  code  of  ethics  for  civil  servants. 
Attention needs to be given to the implementation of the second round of integrity plans in the 
judiciary  and  in  the  public  administration.  Efforts  are  needed  to  address  prevention  of 
corruption in local administration through adoption of local action plans.  

Accountability of administration  

"Rightsizing"  of the state administration remains a key government priority. Since 2015 the 
number  of  public  employees  has  been  reduced  by  more  than  29  175.  The  structure  of  the 
public  administration  is  a  key  outstanding  issue  that  needs  to  be  addressed  in  order  to 
maximise the impact of rightsizing.  

Lines of accountability between agencies and their parent institutions continue to be blurred 
within  the  current  organisation  of  the  administration,  contributing  to  overlapping  functions, 
fragmentation  and  increased  politicisation.  Similar  types  of  institutions  may  report  to 
ministries,  to  the  council  of  ministers  or  to  the  parliament.  The  political  commitment  to 
improve managerial accountability and more systematic delegation of responsibilities within 
institutions  has  still  not  delivered  results.  Institutions  continue  to  have  a  bureaucratic  and 
process-oriented approach to planning, budgeting and reporting of their activities. There has 
been no progress towards results-based management. (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).  For  the  last  two 
years  the  government  has  not  issued  a  report  on  the  implementation  of  the  Ombudsman’s 
recommendations.  Citizens’  right  to  access  public  information  is  regulated  in  the  law  on 
access  to  public  information,  which  is  still  not  fully  aligned  with  EU  standards. 
Administrative  silence,  whereby  public  authorities  fail  to  properly  act  on  the  citizens’ 
information requests, continues to be a major issue. The law on access to public information 
still has not been strengthened to ensure enforcement of decisions taken by the Commissioner 
for free access to information of public importance.  

With  regard  to  citizens’  right  to  administrative  justice,  the  limited  efficiency  of  the 
Administrative  Court  system  risks  undermining  public  confidence.  An  adequate  regulatory 
framework  for  legal  aid  in  administrative  cases  is  not  in  place.  The  right  to  seek 

11 

 
 
 
compensation  is  regulated  by  law,  but  the  lack  of  statistical  data  makes  it  impossible  to 
monitor its implementation. 

Service delivery to citizens and businesses  

Creating  a  more  user-oriented  administration  remains  a  key  government  priority.  The 
government established a new Office for Information Technologies and e-government directly 
accountable to the Prime Minister. The e-government strategy is being implemented, and an 
action plan is under preparation. There is an increase in the provision of integrated e-services 
to  citizens  and  businesses  through  one-stop-shops.  However,  mechanisms  and  resources  to 
measure citizen satisfaction with the delivery of public services are not in place.  

The  legal  framework  for  simplification  of  administrative  procedures  is  in  place  with  the 
law  on  general  administrative  procedures.  However,  the  Ministry  of  Public  Administration 
and Local Self-Government lacks the resources for efficient oversight of its implementation. 
Serbia still needs to harmonise a significant number of sector laws with special administrative 
procedures  with  the  general  law.  Regulatory  impact  assessments  can  help  to  prevent  and 
reduce administrative burdens, so their quality needs to be improved. 

Strategic framework for public administration reform  

Serbia is implementing its umbrella public administration reform strategy, which is further 
supported by additional strategic planning documents in public finance, anti-corruption, open 
government, e-government, professional development of civil servants and regulatory reform 
and  public  policy  management.  A  new  action  plan  for  2018-2020  is  being  finalised,  with 
increased  focus  on  the  key  reform  actions.  While  the  lead  ministry  has  improved  the 
monitoring  and  reporting  system  for  the  strategy,  there  have  been  serious  delays  in 
implementation,  due  to  a  lack  of  resources  and  weak  planning  and  managerial  capacity. 
Monitoring and reporting on the public financial management reform programme needs to be 
harmonised with monitoring and reporting on the PAR strategy.  

Political support for public administration reform continues to be ensured through the Public 
Administration Reform Council, chaired by the Prime Minister. The financial sustainability 
is  a  concern,  due  to  inconsistencies  between  planned  allocations  and  actual  appropriations. 
Financing  relies  heavily  on  external  donor  funding.  The  government  needs  to  allocate 
sufficient resources in the annual budget and the medium-term expenditure framework. 

2.2. Rule of law and fundamental rights 

2.2.1. 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  an  effective  fight  against  corruption  are  of  paramount 
importance, as is respect for fundamental rights in law and in practice. 

Serbia  has  some  level  of  preparation  to  apply  the  acquis  and  European  standards  in  this 
area. Serbia presented in January 2018 the long awaited draft of the constitutional reform for 
the  judiciary  that  was  put  forward  for  public  discussion  before  being  sent  to  the  Venice 
Commission for its opinion. Some progress was made, notably by reducing the backlog of 
old  enforcement  cases  and  putting  in  place  measures  to  harmonise  court  practice,  while 
preparations for amending the constitutional and legislative framework to further improve the 
independence  of  the  judiciary  are  still  ongoing.  Corruption  is  widespread  and  remains  an 
issue of concern. The legal framework on fundamental rights is mostly in place but remains 
incomplete and its implementation inconsistent. Freedom of expression has seen no progress. 
Independent and regulatory bodies need to be strengthened, including as regards budget and 

12 

 
 
 
skilled staff, and their functional independence must be guaranteed in practice. 

In the coming year, Serbia should in particular: 

  strengthen  the  independence,  accountability,  impartiality,  professionalism  and  overall 
efficiency of the judicial system;  

  ensure  an  effective  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;  

  improve  the  situation  as  regards  creating  an  enabling  environment  for  freedom  of 
expression and media freedom.  

Serbia is implementing a detailed action plan which was adopted prior to the opening of the 
accession  negotiations  on  this  chapter  in  July  2016  and  the  country  is  in  the  process  of 
revising its action plan with more realistic deadlines. 

Functioning of the judiciary  

Serbia’s judicial system has some level of preparation. Serbia has partially fulfilled the 2016 
recommendations.  Some  progress  was  made,  notably  by  reducing  the  backlog  of  old 
enforcement cases and putting in place measures to harmonise court practice. Improved rules 
for evaluating professional performance of judges and prosecutors were adopted. The scope 
for political influence over the judiciary remains a concern.  

In the coming year, Serbia should in particular:   

  make  significant  progress  on  strengthening  the  independence  of  the  judiciary  and  the 
autonomy of the prosecution through amendments to constitutional and legislative provisions 
related  to  appointment,  career  management  and  disciplinary  proceedings  of  judges  and 
prosecutors; 

  ensure  that  the  High  Judicial  Council  and  the  State  Prosecutorial  Council  can  fully 
assume  their  role  and  achieve  a  coherent  and  efficient  judicial  administration  in  line  with 
European standards, including regarding the management of the judicial budget; 

  adopt  and  implement  a  human  resources  strategy  for  the  entire  judiciary  including  the 
establishment  of  a  uniform  and  functioning  case  management  system,  which  will  in 
combination lead to a measurable improvement in efficiency and effectiveness of the justice 
system. 

Strategic documents  

The commission overseeing the implementation of the national judicial reform strategy and 
its  action  plan  (2013-2018)  met  infrequently  in  2017,  and  the  impact  of  the  strategy’s 
implementation  is  limited.  The  national  judicial  reform  strategy  and  the  action  plan  for 
Chapter  23  are  broadly  aligned  but  need  to  be  revised  taking  into  account  Serbia’s  new 
objectives  and  deadlines  for  the  completion  of  accession  negotiations  and  the  resources 
available. Their monitoring should be improved to include a more precise assessment of the 
activities’ results and impacts.  

Management bodies 

The High Judicial  Council (HJC) and the State Prosecutorial  Council (SPC)  are  responsible 
for independently managing the justice system, including judicial appointments, transfers and 
dismissals, and for helping to make judicial administration coherent and efficient.  The 2018 

13 

 
 
 
budget  of  the  Judicial  Council  is  EUR  2.95  million  (EUR  4.88  million  in  2017).  The  2018 
budget of the Prosecutorial Council is EUR 1.02 million (2017: EUR 0.99 million).  

While  the  Councils  continued  to  build  their  capacity,  they  have  not  yet  fully  assumed  their 
role  due  to  legislative  and  administrative  delays.  In  particular,  the  transfer  of  full 
responsibility  for  the  judicial  budget  from  the  Ministry  of  Justice  to  the  Councils  has  been 
delayed for the third time by one more year to January 2019. Both Councils need to improve 
their  capacity  for  strategic,  budget  and  human  resources  planning,  as  well  as  their  public 
communication. Both Councils also need to improve the transparency of their work, including 
by giving full reasons for and publishing decisions on promotions and appointments. 

Independence and impartiality  

The  current  constitutional  and  legislative  framework  still  leaves  room  for  undue  political 
influence over the  judiciary. Little progress has been  made  in  establishing a fully objective, 
transparent and merit-based system for the appointment of judges and prosecutors. Any future 
constitutional or legislative changes in this regard should be designed and implemented on the 
basis  of  European  standards,  and  the  current  two-track  system  of  access  to  the  judicial 
professions  should  be  gradually  streamlined.  In  addition,  the  broad  discretionary  powers  of 
court  presidents  and  heads  of  prosecution  offices  over  the  work  of  individual  judges  and 
deputy prosecutors, respectively could affect their independence and impartiality.  

The constitutional reform process on judicial independence was launched in May 2017 with a 
call  for  submission  of  amendments  to  the  Constitution  by  civil  society  organisations.  The 
subsequent  organisation  of  a  number  of  roundtables  was  envisaged  as  a  first  phase  of  a 
consultative  process.  A  number  of  professional  associations  and  civil  society  organisations 
left this process, citing the lack of an official government-sponsored draft constitutional text; 
they  contested  the  arrangements  for  and  legitimacy  of  the  consultations.  A  new  draft  of 
amendments to the Constitution in the domain of the judiciary was published in January 2018 
and  was  put  forward  for  public  discussion.  A  number  of  stakeholders  withdrew  from  the 
consultative  process  criticising  its  format  and  atmosphere,  and  claiming  a  lack  of  genuine 
debate.  They  sent  an  open  letter  to  parliament,  government  and  the  Ministry  of  Justice 
highlighting  their  concerns.  The  Serbian  authorities  and  stakeholders  need  to  enter  into  a 
broad,  inclusive  and  meaningful  public  debate  conducted  in  a  constructive  manner.  This 
should raise awareness of the constitutional reform process in the country and its outcome of 
which should be reflected in the draft to be sent for the Venice Commission’s opinion.  

Other planned interim measures to improve the institutional independence of the Councils are 
still  pending.  These  include  the  transfer  of  authority,  from  the  Ministry  of  Justice  to  the 
Councils,  over  the  entire  judicial  budget  and  the  judicial  administration,  supervision  of  the 
courts,  the  collection  of  statistical  data,  and  the  adoption  of  the  rules  of  procedure.  In 
particular, no progress was made in amending the Law on Public Prosecution in this regard.   

Pressure  on  the  judiciary  (including  from  authorities  within  the  judiciary)  remains  high. 
Public  comments  by  government  officials,  some  at  the  highest  level,  on  investigations  and 
ongoing court proceedings continue and are perceived  as pressure on judicial independence. 
Some  progress  was  made  in  this  respect:  the  High  Judicial  Council  amended  its  procedural 
rules to react more efficiently in cases of alleged political interference in the judiciary upon 
requests filed by the judges. The amended rules do not foresee a mechanism for a regular HJC 
reaction.  The  procedure  has  only  been  used  in  a  very  limited  number  of  cases.  A  more 
elaborate mechanism has been put in place by the State Prosecutorial Council for both ad hoc 
and  regular  reactions  in  cases  of  alleged  political  interference.  The  SPC’s  newly  appointed 
Commissioner for Autonomy has a mandate to take action on individual complaints by deputy 
prosecutors and has already processed several cases.  

14 

 
 
 
Accountability 

Track records in the enforcement of disciplinary accountability and of the codes of ethics for 
judges and prosecutors are still very limited. While the State Prosecutorial Council’s Ethics 
Committee reviewed the code  in  the light  of European standards, the High Judicial Council 
has yet to do this. Disciplinary procedures are in place for both judges and prosecutors. An 
analysis  of  the  legal  framework  and  practice  regarding  disciplinary  matters  is  ongoing.  In 
2017, 588 disciplinary reports were filed with the Disciplinary Prosecutor and 15 disciplinary 
cases  were  processed  by  the  2nd  instance  Disciplinary  Commission  of  the  High  Judicial 
Council, resulting in public warnings (3) and salary reductions (9). One judge was dismissed 
in March 2017, after he was sentenced for a criminal offence. During 2017, 179 disciplinary 
reports  were  filed  with  the  Disciplinary  Prosecutor  for  the  State  Prosecutorial  Council,  four 
cases  were processed  by  the  2nd instance  Disciplinary  Commission,  resulting  in  disciplinary 
penalties  in  three  cases  (public  warning,  salary  reductions).  There  were  no  dismissals  of 
public prosecutors. Judges and prosecutors have an obligation to  declare their assets on an 
annual basis and to report possible conflicts of interest.                                   

Mechanisms to detect breaches of integrity rules and to enforce disciplinary penalties need to 
become  effective.  Public  awareness  of  existing  complaint  mechanisms  should  be  further 
raised and it should be made possible to challenge the dismissal of complaints before the two 
Councils.  Relevant  decisions  by  Councils  need  to  be  justified  better,  and  a  case-law 
developed. 

Professionalism and competence  

Some progress was made with the adoption, in November 2016, and initial implementation of 
rulebooks  using  merit-based  and  transparent  selection  criteria  and  evaluation  standards  for 
first  time  appointments  of  judges  and  deputy  prosecutors.  Through  a  two-stage  process, 
candidates  were  ranked  and  the  lists  proposed  by  the  Councils  to  the  parliament  for 
appointment. However,  the process for first-time deputy  prosecutors was challenged in  July 
2017  and  the  Constitutional  Court  deferred  further  appointments.  The  State  Prosecutorial 
Council published in 2017 competitions for election of 17 public prosecutors and 89 deputy 
prosecutors,  in  line  with  the  Council’s  workload  needs  analysis  from  2016.  Following  the 
decision of the Constitutional Court from July 2017 to assess the existing State Prosecutorial 
Council  rulebook  on  criteria  for  evaluation  of  candidates,  the  Council  followed  the 
Constitutional  Court’s  arguments  and  adopted  a  new  rulebook  whereby  the  oral  exam  no 
longer has any bearing on the candidate’s ranking. This weakens the merit-based aspects of 
the selection process and the crucial role of the Council in selection. Elections for 57 positions 
in the prosecution service are underway. A system allowing effective and systemic evaluation 
of  judges  and  prosecutors  based  on  clear  criteria,  with  the  results  feeding  into  their  career 
paths, has yet to be fully implemented. 

Delays  in  the  appointment  process  for  deputy  prosecutors  have  reduced  efficiency  of  the 
criminal  prosecution,  in  particular  since  the  adversarial  model  was  introduced  into  the 
criminal  procedure  in  2013,  increasing  the  responsibilities  of  the  prosecution  without  being 
accompanied by the necessary staff increase.  

Quality of justice  

Judicial education needs to play a more prominent role in the evaluation process. The initial 
and  continuous  training  programmes  provided  by  the  Judicial  Academy  need  to  be 
improved in terms of quality, and better respond to training needs by, for example, focusing 
on judicial skills. A rulebook on assessing training needs was adopted, while a quality review 
to  evaluate  the  effectiveness  and  adequacy  of  judicial  training  has  yet  to  be  set  up.  The 

15 

 
 
 
academy’s  expertise  and  administrative  capacity  to  carry  out  such  reviews  needs  to  be 
strengthened. The Judicial Academy has 45 envisaged job positions, 37 are filled. There is a 
need  to  ensure  the  academy’s  capacity  to  become  a  proper  entry  point  to  the  judicial 
profession. 

Harmonisation  of  court  practice  continued,  in  line  with  the  national  programme.  Quarterly 
meetings between judges at higher and appeal levels and the judges of the Supreme Court of 
Cassation continued, these are recognised by the European Court of Human Rights as a good 
instrument  for  more  consistent  interpretation  of  the  law.  Instructions  for  improving 
consistency  in  the  interpretation  of  the  law  are  in  place  in  all  four  appellate  courts.  A  new 
electronic  case-law  database  is  being  improved  and  filled.  It  should  be  up  running  for  all 
courts, starting with the highest courts. In the medium term, this tool will also help to make 
case-law more consistent. The Supreme Court of Cassation also produced a new rulebook on 
anonymising court decisions to bring practice into line with European standards.    

The 2018 budget for the judiciary is EUR 254.7 million (0.73 % of GDP), which is more than 
the 2017 budget (EUR 234.6 million and 0.67 % of GDP). Given that the bulk of the budget is 
spent on salaries, funding remains insufficient, in particular to cover investment needs and to 
improve the generally poor judicial infrastructure.  

In 2017, the total budget for the courts was EUR 25.16 per inhabitant (2016: EUR 24.14) and 
the total budget for prosecution offices was EUR 5.37 per inhabitant (2016: EUR 5.28). 

According to the annual report on the work of the courts published by the Serbian Supreme 
Court  of Cassation, there  were  2 586 full-time judges effectively  working in  courts in  2017 
(2016: 2,569), i.e. 37 judges per 100 000 inhabitants (2016: 37). According to the annual 2017 
report  of  the  State  Prosecutors  Council,  in  2017,  there  were  628  deputy  prosecutors 
effectively working at all levels in 2017 (2016: 691), i.e. 9 per 100 000 inhabitants (2016: 10). 
The  European  Commission  for  the  Efficiency  of  Justice  puts  the  European  average  at  21 
judges and 11 prosecutors per 100 000 inhabitants.  

The judiciary continues to rely on unlinked information and communication technology (ICT) 
systems to process and manage cases and documents. Serbia is therefore not yet in a position 
to produce comprehensive statistical data which would facilitate measurement of the system’s 
performance  and  help  improve  management  and  policy  decisions.  An  automatic  case 
allocation  system,  based  on  objective  and  pre-determined  criteria  and  with  proper 
technological  support,  is  not  yet  in  place  for  all  courts.  This  is  an  essential  tool  to  support 
judicial independence and impartiality, and for the efficient administration of justice. The ICT 
Council  adopted  general  guidelines  and  a  decision  on  the  strategic  orientation  for  the 
development  of  a  case  management  system  for  the  prosecution  service  and  the  prison 
administration. A roadmap of how to link the different systems was drafted. A better overall 
strategic vision and plan for ICT solutions in the judicial and prosecution networks is needed.  

There  are  174  public  notaries  in  Serbia,  but  these  do  not  yet  cover  the  entire  country,  so 
citizens’ access to justice is unequal. The Chamber of Notaries adopted its code of ethics and 
a disciplinary rulebook, and appointed two disciplinary prosecutors.  

Little progress was made in introducing alternative dispute resolution mechanisms such as 
mediation.  Awareness  raising  and  promotion,  including  by  relevant  national  associations, 
increased.  

In  June  2017,  the  Supreme  Court  of  Cassation,  High  Judicial  Council  and  the  Ministry  of 
Justice  passed  guidelines  for  enhancing  mediation  in  Serbia.  The  use  of  mediation  for 
alternative  dispute  resolution  is  still  not  satisfactory  due  to  lack  of  systemic  measures  and 
support by all relevant institutions. 

16 

 
 
 
To  become  an  effective  alternative  to  court  proceedings,  a  more  efficient  system  for 
transferring  court  cases  to  mediation  is  needed,  together  with  a  much  broader  and 
comprehensive  promotion  campaign.  Use  of  ICT  tools,  up-to-date  case management  system 
and  exchange  of  information  between  the  courts  and  mediators  are  needed  to  improve 
statistics and reporting on mediation. 

Efficiency  

Implementation  of  the  national  backlog  reduction  programme  continued  under  the 
supervision of the Supreme Court of Cassation. Its impact on the courts’ efficiency is being 
felt, as the backlog of old enforcement cases shrinks. The number of enforcement cases was 
reduced by 811 322 cases in 2016 while in 2017 number of enforcement cases decreased by 
143  519  cases.  However,  the  overall  age  of  the  pending  cases  still  remains  a  concern.  The 
structure  of  pending  backlog  cases  (at  the  national  level),  observed  by  types  of  courts, 
indicates  that  the  largest  number  of  backlog  cases  are  in  basic  courts,  which  also  have  the 
largest number of cases dating back 10 years or more. 

Significant differences in workload across the country continue to burden the judicial system. 
Lengthy proceedings, the lack of a free legal aid system, and failure in processing indemnity 
claims  continue  to  hamper  the  quality  of  justice  and  citizens’  access  to  justice  (see  also 
Procedural rights).  

The amended  Law on Enforcement and Security from July  2016 gave courts more scope to 
administratively  close  many  enforcement  cases,  by  extending  the  authority  of  enforcement 
agents.  This  law  mainly  affected  the  so-called  ‘utility  bill’  enforcement  cases  (for  water, 
electricity,  telecommunications,  etc.),  which  accounted  for  the  most  of  the  pending  cases  in 
the Serbian judicial system. There is a need to further revise the legislation in order to resolve 
the issues of small claims cases. 

With  significant  EU  assistance,  the  total  backlog  of  all  cases  was  cut  sharply  in  2016  as 
1 068 063  cases  were  solved:  895  184  enforcement  cases,  most  of  these  were  basic  courts 
cases  –  878  576.  However,  in  2017,  in  the  absence  of  follow-up  systematic  measures 
significantly  less  old  cases  were  solved  –  495  708  out  of  which  310  990  were  enforcement 
cases.  

At  the  end  of  2017,  the  number  of  all  pending  court  cases  in  Serbia  was  1  911  086,  out  of 
which  1  118  201  were  regular  cases  and  792  885  enforcement  cases,  mostly  under  the 
jurisdiction of Belgrade’s basic and misdemeanour courts. During 2017, all courts in Serbia 
disposed 2 335 760 cases, while 2 586 judges actually worked. In comparison with 2016, the 
total number of cases disposed in 2017 dropped. 

Although  the overall clearance rate in 2017 dropped to  106.04 %  compared to  139.87 %  in 
2016  the  judicial  system  was  still  able  to  resolve  more  cases  then  received,  even  with  less 
judges working in 2017.   

There  is  a  delay  in  adopting  a  comprehensive  human  resources  management  strategy. 
Together  with  the  ban  on  hiring  in  the  public  sector,  these  are  serious  constraints  on 
improving the justice system. The number of permanent court staff has fallen over the past 10 
years from over 13 000 to 10 420.  

Domestic handling of war crime cases  

According to the Prosecutor of the International Criminal Tribunal for the former Yugoslavia 
(ICTY),  Serbia’s  technical  cooperation  on  requests  for  assistance  remained  satisfactory. 
However, Serbia is in a state of non-cooperation in relation to the arrest of people indicted for 
contempt  of  court.  This  is  an  issue  of  serious  concern:  Serbia  needs  to  return  to  full 

17 

 
 
 
cooperation  with  the  current  Mechanism  for  International  Criminal  Tribunals.  In  addition, 
statements  from  senior  politicians  have  on  occasion  called  into  question  the  rulings  of  the 
ICTY. Such comments are not helpful for the broader respect of the rule of law, for Serbia’s 
international  obligations  or  for  creating  an  environment  in  which  war  crimes  cases  can  be 
processed calmly and effectively.  

The implementation of the 2016 national strategy for the processing of war crimes is delayed 
and needs to be taken forward more decisively.  

The war crimes prosecutorial strategy has been severely delayed. A draft has been published 
in March 2018. The strategy should be in line with Serbia’s national strategy on war crimes 
prosecution as well as international standards to ensure the efficiency and effectiveness of war 
crimes  prosecution.  The  action  plan  for  Chapter  23  lists  a  number  of  key  elements  for  the 
prosecutorial  strategy,  including  investigating  and  prosecuting  the  perpetrators  most 
responsible  for  the  crimes  irrespective  of  their  rank,  a  victims-focused  approach,  particular 
attention  being  paid  to  the  protection  of  witnesses,  and  a  strengthened  cooperation  among 
various  stakeholders.  Bearing  in  mind  the  impact  of  the  passing  of  time,  clear  criteria  for 
prioritising cases and timelines for their investigation and prosecution need to be established.  

One  retired  deputy  prosecutor  was  replaced  in  March  2018  but  no  additional  deputy 
prosecutors  have  been  appointed;  yet  according  to  the  action  plan  for  Chapter  23,  five 
additional deputy prosecutors should have been appointed by the end of 2017.  

From January 2016 to May 2017, Serbia had no formally appointed War Crimes Prosecutor. 
A new War Crimes Prosecutor was appointed in May 2017. Responsibility for prosecutions 
fell  to  one  deputy  prosecutor  who  lacked  the  formal  competencies  to  be  the  ‘acting’  War 
Crimes  Prosecutor.  This  has  been  used  by  defence  counsels  to  contest  the  validity  of 
prosecution  tasks  carried  out  during  this  period.  In  seven  cases  the  indictments  were 
dismissed  requiring  that  one  indictment  had  to  be  re-submitted  and  in  six  cases  the 
prosecution  had  to  file  a  request  to  resume  proceedings  all  but  one  of  which  were  granted. 
These issues further delay already protracted war crimes trials. 

Only  three  new  indictments  were  filed  in  2017  all  of  which  were  transferred  cases  from 
Bosnia and Herzegovina. So far, there have been no indictments against senior level military 
or  senior  level  police  officials  for  war  crimes.  There  are  currently  15  ongoing  cases,  the 
majority  of  which  involve  low-ranking  military  or  police  defendants.  Many  court  hearings 
have been delayed, partially due to medical conditions of defendants and based on ill-health 
certificates  issued  by  a  military  hospital.  Serbia  also  has  926  cases  at  the  pre-investigation 
stage,  jurisdiction  over  which  was  transferred  from  the  prosecution  offices  of  general 
jurisdiction to the War Crimes Prosecutor’s Office in 2015 and 2016.  

A  prosecution  database  on  war  crimes  cases  has  yet  to  be  created.  A  mechanism  to  retain 
specialist judges with extensive experience in processing complex war crimes cases is needed. 
The Judicial Academy needs to provide adequate training on war crimes.   

Serbia continues to co-operate on war crimes cases at the regional level. Stronger efforts are 
required  by  all  parties  to  ensure  that  regional  co-operation  effectively  supports  the  fight 
against impunity.   

In  2017,  some  positive  steps  were  taken  to  improve  regional  institutional  cooperation  in 
search  for  the  missing  persons,  accounting  for  10  332.  A  prosecution  liaison  officer 
programme is operational with Bosnia and Herzegovina, but remains pending with Croatia. 

Witness  protection  has  improved  following  the  signature  in  July  2017  of  a  protocol  of 
cooperation  between  the  Ministry  of  the  Interior’s  Witness  Protection  Unit  (WPU)  and  the 

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War  Crimes  Prosecutor’s  Office.  The  protocol  sets  out  arrangements  for  cooperation  on 
urgent  measures  in  relation  to  a  person  under  protection  during  a  criminal  procedure.  The 
analysis carried out in February 2016 was not followed up as to working conditions, lack of 
specialised  staff  including  psychologists,  and  legislative  changes  needed  for  a  proactive 
change of identity. No changes were made to the legal framework granting social benefits to a 
restricted  number  of  war  crimes  victims.  The  UN  Human  Rights  Committee  and  the 
Commissioner  for  Human  Rights  of  the  Council  of  Europe  expressed  concerns  as  to  the 
discriminatory  nature  of  this  law.  Sexual  violence  in  conflict  has  not  been  adequately 
addressed and further efforts are required in this area. 

Overall,  Serbia  needs  to  demonstrate  firmer  commitment  at  all  levels  in  this  area,  fostering 
mutual trust and reconciliation, to establish an atmosphere conducive to meaningful regional 
cooperation and to effectively address all war-crimes related issues. Statements made by, in 
particular, high-level officials and the actions of state bodies have a significant impact on the 
creation of such an atmosphere. 

Fight against corruption 

Serbia has some level of preparation in the fight against corruption. Some progress has been 
achieved,  especially  in  adopting  the  amendments  to  the  Criminal  Code  in  the  economic 
crimes section, to the Law on the Organisation and Jurisdiction of Government Authorities in 
Suppression of Organised Crime, Terrorism and Corruption, and amendments to the Law on 
Seizure and Confiscation of Proceeds of Crime. However, there has been a serious delay in 
adopting  the  new  law  on  the  Anti-Corruption  Agency.  The  operational  capacity  of  relevant 
institutions  remains  uneven  and  law  enforcement  and  judicial  authorities  still  need  to  prove 
that they can pro-actively investigate, prosecute and try all high-level corruption cases in an 
unbiased and operationally independent manner. There is as yet no measurable impact of anti-
corruption reforms.  

In the coming year, Serbia should in particular: 

→  further  improve  its  track  record  on  investigations,  indictments  and  final  convictions  in 
high-level corruption cases, including seizure and confiscation of criminal assets; 

→  urgently  improve  the  operational  capacity  of  the  institutions,  allowing  them  to  correctly 
implement the new legislation in this area; 

→ urgently adopt the new law on the Anti-Corruption Agency to strengthen its role as a key 
institution in a more effective fight against corruption; 

→  ensure  a  measurable  impact  through  the  effective  implementation  of  the  national 
anti-corruption  strategy  and  action  plan,  including  by  providing  effective  coordination  and 
sufficient resources. 

Track record 

As  regards  Serbia’s  track  record  of  investigating,  prosecuting  and  trying  corruption  cases, 
there were 2 140 first instance convictions in 2017. In 2017, there were 50 final convictions 
(41 based on plea agreements) for persons in relation to high level corruption offences, and 26 
acquittals. In relation to public officials, in 2017 a total of 5 persons were convicted of high 
corruption (a judge and a president of a municipal court; a misdemeanour judge, the director 
of the labour inspectorate and the director of a public company).  

The  use  of  plea  bargaining  agreements  needs  to  be  carefully  balanced  against  the  public 
expectation  that  corruption-related  crimes  will  be  duly  punished  in  accordance  with  the 

19 

 
 
 
penalties laid down in law, particularly if they concern politically exposed persons. The track 
record on the final confiscation of assets needs considerable improvement. 

To  improve  results  in  detecting  and  prosecuting  corruption  crimes,  human  resources  and 
technical  expertise  are  needed  together  with  better  coordination  and  data  exchange  between 
all institutions involved. Serbia also needs to apply the concept of financial investigations in 
line with Financial Action Task Force (FATF) standards. 

The  Anti-Corruption  Agency  received  41  requests  related  to  conflicts  of  interest  in  2017 
(2016:  1  761)  and  filed  20  requests  for  misdemeanour  proceedings  (2016:  8).  The  Agency 
initiated 203 procedures (37 based on complaints and 166 ex officio) (220 for 2016: 100 based 
on  complaints  and  120  ex  officio)  based  on  suspicion  of  accumulation  of  functions  without 
prior  approval  of  the  Agency  and  170  procedures  for  other  situations  related  to  conflict  of 
interest  or  nepotism  (101  based  on  complaints  and  69  ex  officio)  (2016:  125  based  on 
complaints  and  38  ex  officio).  In  2017  the  Agency  received  11  first  instance  judgments  of 
misdemeanour courts, issued upon requests for initiation of misdemeanour proceedings filed 
in 2016 and 2017, with mostly fines (2016: 29 first instance misdemeanour judgments).   

The  Agency  submitted  86  asset  declarations’  requests  for  misdemeanour  proceedings  in 
2017 (2016: 80) of which all cases were related to failure to submit asset declarations on time 
(2016:  79).  Based  on  the  work  of  the Agency  in  the  previous  years,  misdemeanour  courts 
issued  63  convictions  in  2017  (2016:  123). The Agency  filed  15  criminal  charges  in  2017 
(2016:  17)  due  to  reasonable  suspicion  that  a  public  official  had  not  reported  assets  or  had 
given false information about assets with the intention of concealing the facts. Based on the 
Agency’s previous work, 8 final judgements were  issued, convicting  8 public officials, who 
were sentenced to imprisonment or probation, compared with 3 final judgements convicting 3 
public officials to imprisonment or probation in 2016. Proceedings are under way in 16 cases; 
5 acquittals have been issued, in 17 cases the criminal charge was dismissed, whereas in 12 
cases deferring of a criminal prosecution was applied. 

The  Agency  performs  checks  on  the  funding  of  political  activities  and  elections,  and 
submitted 273 requests for misdemeanour proceedings for violations of the Law on Political 
Party Financing in 2017 (against 407 in 2016). Based on final sentences, in 2017, the Agency 
published  four  decisions  on  the  loss  of  the  right  of  political  entities  to  use  public  funds  for 
their regular work during 2018 (against 22 in 2016). The Agency issued a report in November 
2017 on monitoring the financing of the 2017 presidential election campaign, based on reports 
from  all  11  political  parties  that  participated  in  the  campaign.  The  Agency  noted  a 
considerable increase (540 %) in the number of citizens directly contributing to the campaign: 
whereas in the 2012 campaign only 102 citizens directly provided donations, 7 591 did so in 
2017, of whom 6 940 donated to one presidential candidate. The Agency concluded that the 
source  and  structure  of  the  funding,  in  particular  concerning  citizen  donations,  needs  to  be 
further assessed.  

Institutional framework 

Prevention measures 

Serbia’s  institutions  for  preventing  corruption  broadly  meet  international  standards  and 
continue  to  show  good  potential.  However,  its  human  resources  situation,  the  way  other 
institutions share information and the consideration given by the political level to the ACAs 
work require further improvement.  

A new law enabling the Anti-Corruption Agency (ACA) to better assume its role as the key 
institution  in  this  area  needs  to  be  adopted  urgently.  The  former  director  of  the  Agency 
resigned in September 2017 and a new director was appointed in January 2018. The Agency 

20 

 
 
 
continued to perform in some areas of its remit, despite limited resources and both legal and 
institutional  obstacles,  in  particular  the  lack  of  human  resources.  Currently  the  Agency  is 
operating with 86 personal. Its equipment is outdated. Efforts are needed to allow the Agency 
to increase its ability to collect and analyse data and its access to relevant databases. It must 
receive  and  maintain  the  required  human  resources,  tools  and  financial  resources  needed  to 
carry out its mandate in an independent manner. Serbia’s institutions need to cooperate with 
and respond to the Agency’s reports and instructions as provided for under the law.  

The  implementation  of  the  law  on  Public  Procurement  and  the  national  anti-corruption 
strategy and action plan needs to be stepped up. In the public procurement legislation, largely 
in line with the acquis, inconsistencies remain regarding technical details, requiring a revision 
of the law. The public procurement office still lacks staff and technical capacity. The office 
needs  to  increase  its  supervision  of  other  institutions  and  improve  its  monitoring,  partly  by 
setting up a centralised database. Inter-agency coordination needs to be strengthened.   

Infrastructure  projects,  healthcare,  education,  construction  and  spatial  planning,  and 
privatisation  of  public  enterprises  remain  particularly  vulnerable  to  corruption.  Controls 
and procedural transparency are inadequate and need to be increased. In the education sector, 
an anti-corruption action plan focusing on higher education and covering the period to 2020 
was adopted. The Ministry of Health established a dedicated anti-corruption body. Tangible 
results from both initiatives have yet to be seen and their work should be monitored closely.  

In  December  2017,  the  Law  on  Employees  in  Public  Services  was  adopted,  including 
provisions  related  to  conflicts  of  interest  for  this  category  of  public  employees.  Integrity 
plans  were adopted  by 1 118 public sector  institutions  (out of 4 285)  based on institutional 
corruption risk  assessments. In  order  to  better  prevent  and  address  corruption  at  local level, 
the  Anti-Corruption  Agency  developed  and  provided  local  authorities  with  a  model  anti-
corruption action plan, including guidelines for adoption, implementation and monitoring. But 
only  22  out  of  145  have  adopted  their  plan  as  required  under  the  Anti-Corruption  Agency 
guidelines. Only four set up a body to monitor its implementation. Provisions on conflicts of 
interest  in  public  administration  need  to  be  further  improved  and  disciplinary  procedures 
added through amendments to the Law on Civil Servants. 

The  Anti-Corruption  Council,  in  its  advisory  role  to  the  government,  remained  active  in 
exposing and analysing cases of systemic corruption. However, the government does still not 
systematically follow up on its recommendations, and the Council is yet to be systematically 
included in procedures for the adoption of legislation with relevance to corruption, in order, 
for example, to improve the quality of legal drafting. In July 2017, the government appointed 
two new members of the Anti-Corruption Council without consulting it as provided for under 
the  Council’s  rules  of  procedure.  The  Serbian  authorities  urgently  need  to  establish  a  more 
constructive relationship with the Council. 

Serbia so far did not implement in a satisfactory manner any of the thirteen recommendations 
provided  by  the  Council  of  Europe  Group  of  States  against  Corruption  (GRECO)  in  its  last 
evaluation round on preventing corruption among parliamentarians, judges and prosecutors. 

Law enforcement 

The new Law on Organisation and Jurisdiction of Government Authorities in Suppression of 
Organised  Crime,  Terrorism  and  Corruption,  which  entered  into  force  in  March  2018, 
provides  for  specialised  authorities  for  investigating  and  prosecuting  corruption  cases.  It 
decentralises the prosecutor’s offices in charge of corruption offences, which will be located 
in  Kraljevo,  Niš,  Novi  Sad  and  Belgrade.  Special  departments  for  fight  against  corruption 
have  been  formed  in  the  higher  courts  in  these  four  cities.  A  set  of  trainings  on  the 

21 

 
 
 
implementation  of  the  law  have  been  organised  for  the  members  of  the  judiciary.  Financial 
forensic expertise is to be located in the special prosecution offices. The latter have yet to be 
set  up,  along  with  designated  liaison  officers  in  local  police  directorates.  The  law  also 
provides scope for using task forces to investigate corruption cases.  

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 initiated 
to  increase  accountability.  Effective  supervision  and  deterrent  penalties  in  cases  of 
wrongdoing  need 
independence  and 
to  be  applied  consistently.  The  (operational) 
accountability  of  all  investigative  and  judicial  bodies  dealing  with  corruption  need  to  be 
strengthened.  There  is  a  delay  in  introducing  a  team  of  economic  forensic  experts  in  the 
Public Prosecutor’s Office and in other authorities as necessary. 

Legal framework 

The  legal  framework  for  the  fight  against  corruption  is  broadly  in  place.  In  November 
2016, amendments to the economic crimes section of the Criminal Code were adopted.  The 
provision  on  ‘abuse  of  position  by  a  responsible  person’  has  been  slightly  amended  but 
concerns remain as to whether this will have the desired effect of stopping the overuse of this 
offence in  the context  of business disputes,  which is  harmful to  the business climate and to 
legal certainty. In addition to the  new Law on Organisation and Jurisdiction of Government 
Authorities  in  Suppression  of  Organised  Crime,  Terrorism  and  Corruption,  the  Law  on 
Amendments  and  Supplements  to  the  Law  on  Seizure  and  Confiscation  of  Proceeds  from 
Crime  was  adopted.  There  is  a  serious  delay  in  the  adoption  of  the  new  law  on  the 
Anti-Corruption  Agency.  It  should  urgently  address  the  shortcomings  identified,  in 
particular  as  regards  conflicts  of  interests,  asset  declarations  by  public  officials,  combining 
public functions and access to information.   

The  law  on  access  to  public  information  needs  to  be  further  amended  to  ensure  effective 
implementation.  The  improvements  should  be  based  on  cooperation  with  the  Commissioner 
for free access to information of public importance and with civil society. Requests for access 
to information which were refused mainly concern procedures with an impact on the budget. 
(see also under Public administration reform) 

There  is  a  delay  in  adopting  amendments  to  the  law  on  political  party  financing.  This  is 
needed  to  provide,  among  other  things,  for  transparent  financing  of  political  entities  and 
electoral  campaigns,  to  introduce  more  efficient  sanctions  and  to  clarify  duties  between  the 
Agency, the State Audit Institutions, the tax administration and other state authorities in this 
regard. 

The law on whistle-blower protection has continued to be implemented.  All courts in Serbia 
received  during  2017  a  total  of  149  new  cases  of  protection  of  whistle-blowers  from 
retaliation  (same  as  in  2016),  and  out  of  the  total  caseload  of  229  cases, 158  cases  were 
finalised (2016: 106). 

Strategic framework 

The implementation of several important measures in Serbia’s anti-corruption strategy and 
action  plan  for  2013-2018,  revised  in  June  2016,  remains  behind  schedule.  Adequate 
resources and human capacity to ensure their full implementation have not yet been allocated. 
There is a delay in extending the competences of the  inter-ministerial coordination group 
chaired by the Prime Minister for the implementation of the national anti-corruption strategy 

22 

 
 
 
to cover the relevant part of the action plan for Chapter 23. Furthermore, this body still does 
not ensure coordinated implementation of both these action plans.  

There is a delay in amending the government’s rules of procedure to make it obligatory for it 
to  consider  the  Anti-Corruption  Council’s  reports  within  three  months  of  their  submission. 
Furthermore,  an  obligation  for  the  government  to  follow  up  on  the  recommendations  of  the 
Anti-Corruption  Agency’s  reports  is  yet  to  be  established.  An  empowered  civil  society  and 
improved  coordination  and  monitoring,  together  with  a  stronger  political  commitment,  are 
needed in order to achieve tangible results in the fight against corruption.  

Fundamental rights 

The legislative and institutional framework for upholding human rights is in place. However, 
consistent and efficient  implementation  of legislation  and  policies  throughout  the country is 
urgently  needed.  In  addition  to  making  substantial  efforts  to  uphold  freedom  of  expression, 
Serbia needs to address the shortcomings outlined below and in particular:  

→  strengthen  human  rights  institutions  and  guarantee  their  independence,  including  via  the 
allocation of the necessary financial and human resources;  

→ step up actions to protect the rights of the groups facing discrimination, including lesbian, 
gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  persons  with  disabilities,  people 
with  HIV/AIDS  and  other  vulnerable  groups:  actively  pursue  investigation,  prosecution  and 
convictions for hate-motivated crimes; 

→ give higher priority to the rights of the child: develop a national action plan for children 
and  a  national  action  plan  to  address  violence  against  children;  improve  coordination  and 
oversight of the child protection system and ensure that existing legislation and policies are 
effectively implemented; address the violations taking place in institutions;   

→  develop  a  comprehensive  approach  for  the  protection  of  national  minorities  by 
implementing  its  action  plan  on  national  minorities  consistently  across  the  country  and 
amending the legal framework by means of an inclusive, transparent and efficient process; 

→ efficiently implement and monitor the strategy and action plan for Roma inclusion. 

Serbia has ratified eight of the nine core human rights treaties. It has yet to become a party to 
the  International  Convention  on  the  Protection  of  the  Rights  of  All  Migrant  Workers  and 
Members  of  their  Families.  Overall,  the  implementation  of  international  human  rights 
instruments  still  needs  to  be  improved.  The  Report  on  Human  Rights  for  the  Universal 
Periodic Review – Third Cycle included 190 recommendations for Serbia of which it accepted 
74 and said that the remaining 116 will be examined no later than June 2018. In 2017 it was 
reviewed by the Committee against racial discrimination, the UN Human Rights Committee 
and the UN Committee on the Rights of the Child. Serbia submitted a report to the Committee 
on the Elimination of Discrimination against Women in October 2017. Serbia is in the process 
of  being  granted  observer  status  in  the  European  Agency  for  Fundamental  Rights.  The 
participation  of  Serbia  as  observer  in  its  work  is  an  important  step  towards  its  gradual 
alignment with the acquis in the area of fundamental rights.  

Since  September  2016,  the  European  Court  of  Human  Rights  (ECtHR)  has  found 
violations  of  the  European  Convention  on  Human  Rights  (ECHR)  in  34  cases  (out  of  36) 
relating mainly to the right to a fair trial and the protection of property.  During the reporting 
period,  1 910 new applications were  registered by the Court.  On 1 February  2018, the total 
number  of  applications  pending  before  the  Court  was  960.  There  are  currently  66  cases 
against Serbia under the enhanced supervisory procedure.  

23 

 
 
 
As  regards  promotion  and  enforcement  of  human  rights,  the  office  of  the  Protector  of 
Citizens has been accredited to the Global Alliance of National Human Rights Institutions as 
being in full compliance with the Paris Principles. Following the resignation of the previous 
incumbent,  a  new  Ombudsman  was  elected  in  2017.  To  strengthen  the  independence  and 
efficiency  of  the  Ombudsman’s  Office,  the  Law  on  the  Ombudsman  needs  to  be  amended. 
The Ombudsman has visited municipalities to raise citizens’ awareness of their rights. In 2017 
most  complaints  to  the Ombudsman  were  on  the  right  to  good  administration  and on  social 
and  economic  rights.  However,  the  capacity  of  the  Ombudsman’s  Office  to  handle  such 
complaints needs to be increased. Cooperation with the parliament also needs to be improved. 
90.6 % of the Ombudsman’s recommendations were fulfilled during 2017. However, certain 
recommendations of significant public interest have still not been addressed.  

In  the field of  prevention  of  torture  and ill-treatment, the  Public Prosecutor’s Office and 
the Ministry of Interior adopted an official methodology for investigations into allegations of 
torture  and  other  forms  of  ill-treatment.  The  Ombudsman’s  Office  remained  active  in  its 
capacity as the national preventive mechanism. Legislation needed to implement the law on 
the police, which should regulate the treatment of persons detained in police custody, is still 
lacking  and  penalties  for  ill-treatment  and  torture  remain  inadequate.  A  large  number  of 
recommendations of the European Committee for the Prevention of Torture and Inhuman or 
Degrading  Treatment  or  Punishment  have  yet  to  be  applied.  Proper  legal  safeguards  to 
prevent torture and abuse in social institutions have yet to be adopted. No progress has been 
made  towards  de-institutionalisation,  including  of  persons  with  mental  disabilities  and  the 
elderly.  

Regarding  the  prison  system,  measures  were  taken  to  improve  infrastructure  and  living 
conditions  in  several  locations.  The  strategy  and  action  plan  for  reducing  overcrowding  in 
prisons was adopted in March 2017. However, serious understaffing in prison treatment and 
probation services is hampering progress in its implementation. Some initial steps were taken 
to reorganise the service for treatment and alternative sanctions. The number of prisoners in 
2017  was  approximately  10  500.  Overcrowding  and  poor  living  conditions  in  some  closed 
wards  is  still  a  matter  of  concern.  Limited  progress  was  made  in  improving  access  to 
healthcare and specialist treatment programmes. Cooperation with local self-government and 
civil  society  on  alternative  sanctions  and  reintegration  needs  to  be  systematised.  There  is  a 
need to improve the functioning of the prison training centre to ensure specialised training for 
prison staff. 

On  the  protection  of  personal  data,  the  country  has  ratified  the  Council  of  Europe 
Convention  108  on  the  Protection  of  Individuals  with  regard  to  Automatic  Processing  of 
Personal  Data  and  its  additional  protocol.  In  2016,  the  Commissioner  for  Information  of 
Public  Importance  and  Personal  Data  Protection  received  422  complaints  and  initiated  828 
inspection  procedures.  Adequate  resources  are  needed  for  the  effective  performance  of  the 
Commissioner’s  tasks.  The  government  started  working  on  a  new  law  on  personal  data 
protection to harmonise the legislation with the new EU acquis entering into effect on 25 May 
2018. On its part, the Commissioner proposed a draft model law reflecting the new EU legal 
framework. Work should continue in view of adopting a new legislation in line with the new 
General  Data  Protection  Regulation  and  Directive.  Inspections  in  several  sectors  (e.g. 
banking,  health  and  education)  indicate  a  lack  of  knowledge  and  protective  measures, 
especially regarding sensitive data. The Commissioner’s office remains understaffed. 

Freedom  of  thought,  conscience  and  religion  is  constitutionally  guaranteed  and  generally 
respected. Religiously motivated incidents have continued to decrease. However, the lack of 
transparency and consistency in the registration process of religious communities remains one 
of the main obstacles preventing some religious groups from exercising their rights. 

24 

 
 
 
Freedom of expression  

Serbia has some level of preparation concerning freedom of expression. However, there was 
no  progress  over  the  reporting  period  and  this  lack  of  progress  is  increasingly  a  matter  of 
concern. The overall environment is still not conducive to the exercise of this right. Cases of 
threats, intimidation and violence against journalists are still a concern,  while investigations 
and final convictions remain rare. Serbian authorities need to react promptly to and publicly 
condemn hate speech and threats against journalists. Legislation on the media still needs to be 
fully  implemented.  Serbia’s  legal  framework  needs  to  provide  for  greater  transparency  of 
ownership  and  funding  of  media  outlets.  Co-financing  of  media  content  to  meet  public 
interest  obligations  needs  to  be  implemented  in  line  with  the  legislative  framework.  This 
requires  transparent  and  fair  procedures  without  interference  by  the  state  administration, 
especially at local level. 

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

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

→  ensure  the  full  implementation  of  media  laws  and  strengthen  the  independence  of  the 
Regulatory Body for Electronic Media; 

→ adopt the new strategy for the development of a public information system, in a transparent 
and inclusive manner;  

→  ensure  adequate  funding  of  public  broadcasting  services,  and  transparent  and  equitable 
co-funding for media content serving the public interest.  

As  regards  intimidation  of  journalists,  cases  of  threats,  intimidation  and  violence  against 
journalists remain a concern. There are numerous credible reports of verbal, physical attacks 
and attacks against property of journalists. In this respect, Serbia needs to elaborate guidelines 
clarifying their classification as  criminal  or  other type of offences and closely monitor their 
follow-up by the law enforcement authorities. While several cases have been solved and some 
criminal  charges  have  been  filed,  convictions  are  still  rare.  Serious  efforts  are  needed  to 
identify  and  prosecute  those  suspected  of  violating  internet  freedoms.  A  Memorandum  of 
Understanding  signed  between  journalists’  organisations,  the  Prosecutor’s  Office  and  the 
Ministry of the Interior aimed at providing greater security for journalists at work has yet to 
lead to more efficient legal treatment of cases and ensure access to justice. The commission 
tasked with looking into three unresolved cases of murdered journalists from 1999 and 2001 
has made progress in completing an investigation of one of these, for which the indictment is 
still pending. The trial for the murder of one media publisher is still ongoing while the third 
case is still being looked into by the commission.  

There  have  been  no  significant  changes  to  the  legislative  environment  during  the  reporting 
period.  The  adoption  of  a  new  strategy  for  the  development  of  a  public  information  system 
through inclusive consultation with stakeholders is still pending. 

As regards implementation of the legislative framework, the independence of the Regulatory 
Body  for  Electronic  Media  (REM)  needs  to  be  strengthened  to  allow  it  to  safeguard  media 
pluralism. It will also allow it to carry out its tasks in reacting to programme changes eroding 
editorial  content  and  programme  composition,  as  stipulated  in  the  frequency  licences,  by 
giving  it  the  power  to  issue  commensurate  fines.  The  REM  failed  to  address  imbalances  in 
media coverage of the 2016 presidential campaign. Co-financing needs to be implemented in 

25 

 
 
 
line  with  the  legislative  framework,  using  transparent  and  fair  procedures  and  without 
interference by the state, especially at local level. Hate speech and discriminatory terminology 
is often tolerated in the media and is rarely tackled by regulatory authorities or prosecutors. 
The  Press  Council  has  recorded  an  increase  of  breaches  of  the  Journalistic  Code  of 
Professional Conduct in print media (approximately 7 % rise in 2017). Political and economic 
influences over media result in widespread self-censorship. Statements by high-ranking state 
officials  on  the  investigative  work  of  journalists  have  not  been  conducive  to  creating  an 
environment  where  freedom  of  expression  can  be  exercised  without  hindrance.  Serbian 
authorities need to provide active support to independent bodies, human rights defenders and 
independent journalists, and promptly react to and publicly condemn hate speech and threats. 

Funding  available  for  the  two  public  service  broadcasters  is  insufficient.  The  temporary 
nature  of  the  funding  model  –  a  combination  of  subscription  fees,  budget  subsidies  and 
commercial  contributions  –  leaves  them  vulnerable  to  political  influence.  Public  services 
should  more  actively  engage  in  opening  their  programmes  to  a  plurality  of  views  and 
promoting  public  dialogue.  Public  broadcasting  services  in  minority  languages  need  to  be 
strengthened, especially as regards the Radio Television of Serbia (RTS). 

As regards economic factors, lack of transparency in 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  media 
continues to be a source of concern. Serbian authorities should ensure that informal pressure 
on editorial policy is not exerted through the distribution of advertising funds, including from 
public  companies,  as  well  as  project  co-funding  from  local  budgets.  Co-funding  of  media 
content  serving  public  interest  should  be  brought  into  line  with  existing  legislation  and 
criteria,  and  implemented  in  a  fair  and  transparent  way  which  is  not  detrimental  to  market 
equality.  

There  are  three  main  professional  associations  in  Serbia.  Journalists  have  little  job  security 
and the editorial environment, which favours ‘tabloidisation’, is not conducive to improving 
journalistic standards. 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. 

Freedom  of  assembly  and  association  are  guaranteed  by  the  Constitution  and  generally 
respected.  Legislation  is  also  generally  in  line  with  European  standards,  but  has  yet  to  be 
aligned  with  the  Guidelines  on  Freedom  of  Peaceful  Assembly  of  ODIHR.  Secondary 
legislation necessary for full implementation of the law on freedom of assembly has not been 
adopted.  Cases  of  excessive  use  of  force  by  law  enforcement  bodies  have  been  reported. 
Violent  counter-assemblies  are  often  not  prosecuted,  while  penalties  are  often  not 
proportionate or perpetrators not sanctioned at all.  

Regarding  property  rights,  the  Agency  for  Restitution  has  adopted  some  49  400  opinions 
and first instance decisions on return of confiscated properties (out of approximately 76 000 
claims), concerning the restitution of 33 448 ha of agriculture and forest land, 6 016 buildings, 
apartments and business premises and 300 ha of construction land. The large majority of the 
decisions  have  been  approved  by  the  Ministry  of  Finance  and  property  returned  to  owners. 
Implementation of the law on the restitution of heirless Jewish property has begun.  

Non-discrimination  legislation  is  broadly  in  line  with  the  European  standards,  although 
further  alignment  with  the  acquis  is  still  needed.  In  August  2017,  a  new  sector  for  anti-
discrimination policy and improvement of gender equality was established within the Ministry 
of Labour, Employment, Veterans and Social Affairs. The division of responsibilities between 
the  new  sector  and  the  coordination  body  for  gender  equality  needs  to  be  clarified  and  an 

26 

 
 
 
efficient  institutional  set  up  with  adequate  resources  needs  to  be  ensured.  The  Office  for 
Human and Minority Rights has developed an e-learning tool to increase public awareness on 
identification and protection mechanisms. The Office of the Commissioner for the Protection 
of  Equality  held  training  sessions  for  police,  the  courts  and  local  self-governments  units.  A 
code  of  equality  that  provides  guidelines  for  creating  an  anti-discrimination  policy  for 
employers  was also published. Concerns remain on the implementation of the national anti-
discrimination  strategy  (2014-2018),  which  has  now  expired  and  a  new  one  has  not  been 
adopted yet. Amendments to the Criminal Code adopted in November 2016 further improved 
the prohibition and  punishment of racial  and other  discriminatory criminal  acts. The groups 
most  discriminated  against  are  women,  persons  with  disabilities,  Roma,  LGBTI  persons, 
people  with  HIV/AIDS  and  the  elderly.  Human  rights  defenders,  together  with  LGBTI 
persons,  often  face  hate  speech,  threats  and  violence.  These  abuses  should  be  promptly  and 
properly investigated, prosecuted and sanctioned.  

Concerning  equality  between  women  and  men,  the  new  Gender  Equality  Law,  drafted  by 
the  coordination  body  for  gender  equality,  has  still  not  been  adopted.  The  national  strategy 
and  action  plan  for  combating  violence  against  women  in  family  and  partner  relationships 
expired  in  2015.  The  Law  amending  the  Criminal  Code  and  the  Law  on  Prevention  of 
Domestic Violence were  adopted in November 2016 (in line with the Istanbul Convention). 
The latter law introduces emergency measures for perpetrators, multi-sectoral cooperation in 
preventing  and  responding  to  violence  in  the  family,  and  increased  responsibility  and 
accountability  of  employees  in  the  relevant  institutions.  In  the  first  three  months  since  its 
entry  into  force  in  June  2017,  9  403  cases  of  violence  against  women  were  reported  to  the 
Public  Prosecutor’s  Office.  A  national  action  plan  for  the  implementation  of  UN  Security 
Council  Resolution  1325  –  Women,  Peace  and Security  was  adopted. The  Statistical  Office 
data  on  the  position  of  women  and  men  in  Serbia  show  wide  gender  gaps  in  the  areas  of 
labour,  time  use,  political  participation,  property  and  access  to  resources.  Women  with 
disabilities,  older,  rural  and  Roma  women  continued  to  be  among  the  most  discriminated 
against in society. The role of the media in perpetuating gender stereotypes and minimising 
gender-based violence remains a source of concern. Greater efforts should be made to change 
social attitudes to the roles and responsibilities of women and men.  

On  the  rights  of  the  child,  the  National  Plan  of  Action  for  Children  expired  in  2015.  The 
functioning of the National Council for Child Rights has been erratic. Ensuring more effective 
coordination  and  oversight  of  the  child  protection  system  should  be  prioritised  and  efforts 
made to ensure that policies are uniformly implemented. Statistical data on vulnerable groups 
are  still  not  disaggregated,  particularly  on  Roma  children  and  children  with  disabilities. 
Violence against children remains a concern and a national strategy on this issue is lacking. 
Since  July  2016,  the  Ombudsman  has  received  109  complaints  reporting  violence,  abuse  or 
neglect  of  children,  a  majority  referring  to  violence  at  schools.  A  new  Law  on  Juvenile 
Offenders  and  Protection  of  Minors  in  Criminal  Proceedings  has  yet  to  be  adopted.  The 
Juvenile  Justice  Council  should  be  re-established  and  its  functioning  ensured.  Better 
protection should be ensured for child victims who testify in criminal proceedings. There are 
serious  concerns  over  child  rights  violations  taking  place  in  large-scale  institutions  for 
children,  particularly  those  with  disabilities,  who  also  face  challenges  regarding  access  to 
education. Integrated, community-based services should be further expanded. 

Little  progress has taken place  on  the  rights  of persons with disabilities, and the situation 
remains very difficult, in particular as regards access to services, employment and education. 
Serbia is a party to the UN Convention on the Rights of Persons with Disabilities (CRPD) and 
was reviewed in April 2016 by the UN Committee on the Rights of Persons with Disabilities. 
The adoption of a strategic framework on disability is still pending. Placement and treatment 

27 

 
 
 
in  social  institutions  of  people  with  psychosocial  and  intellectual  disabilities  is  still  not 
regulated in accordance with international standards. Full deprivation of legal capacity on the 
basis of impairment remains common practice, although some progress was made on partial 
deprivation. (see also Chapter 19 — Social policy and employment) 

As  part  of  public  awareness  on  the  rights  of  lesbian,  gay,  bisexual,  transgender  and 
intersex (LGBTI) persons, both the Serbia Pride in June and the Pride Parade in September 
2017  took  place  without  incidents,  the  latter  attended  by  the  Prime  Minister  and  other 
government  representatives.  Training  on  adequate  social  protection  services  for  LGBTI 
persons  and 
their  families  was  provided  for  employees  of  social  work  centres. 
Anti-discrimination  training  has  also  been  given  to  the  police,  and  efforts  are  ongoing  to 
improve communication with the LGBTI community. However, the situation remains difficult 
and  activities  in  the  action  plan  for  the  national  anti-discrimination  strategy  that  benefit 
LGBTI persons are behind schedule. There has also been a slight increase in violence against 
LGBTI persons. Investigation, prosecution and penalties for hate speech, threats and attacks 
against members of the LGBTI community are often inadequate. Centralised official data on 
hate  crimes  are  still 
to 
discrimination, family rejection, homelessness and violence. Provision of new official identity 
documents  is  slow,  which  affects  their  democratic  rights.  There  is  no  law  on  gender 
recognition. Discriminatory content has been removed from two high school textbooks, with 
six more to be revised. Stronger, visible political commitment to promote social inclusion and 
respect for the rights of LGBTI persons is needed.  

lacking.  Transgender  persons  are  particularly  vulnerable 

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

Some initial steps were taken to align procedural rights with the EU acquis. An analysis of 
the national normative framework for implementing minimum EU standards on the rights and 
protection  of  victims  of  crime  (under  the  relevant  Directive)  has  been  finalised,  and  new 
services  established  within  the  Public  Prosecutor’s  Office,  albeit  limited  to  providing 
information and with limited staff.  Access to justice is hindered by lack of an efficient free 
legal  aid  system,  the  poor  availability  and  quality  of  performance  of  appointed  defence 
lawyers,  inefficient  procedures  for  awarding  compensation  through  civil  proceedings,  and 
weak enforcement of final judgments. The adoption of the Law on Free Legal Aid has been 
further delayed. Issues such as the purpose of the law, its beneficiaries and providers of free 
legal aid still need to be addressed. Civil society organisations continued to provide assistance 
to  vulnerable  groups.  Cooperation  between  the  War  Crimes  Prosecutor’s  Office  and  the 
Witness Protection Unit (WPU) improved following a protocol on urgent measures applied in 
the witness protection programme from April 2017. The analysis of the work of the WPU as 
to  working  conditions,  lack  of  specialised  staff  and  on  legislative  changes  needed  for  a 
protective change of identity needs to be followed up. In 2017, the ECtHR found that Serbia 
had violated the right to liberty and security (in Mitrović v. Serbia) and the right to a fair trial 
(in Krndija and others v. Serbia). Serbia still lacks a national victim support system. 

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. While 
interethnic  relations  continue  to  be  good  and  stable,  regional  differences  persist.  Overall, 
implementation  of  policies  and  legislation  needs  to  be  improved  to  address  existing 
discrepancies.  Some  regions  inhabited  predominantly  by  national  minorities  remain  among 
the  most  underdeveloped.  The  implementation  of  the  action  plan  for  the  realisation  of  the 
rights of national minorities must be sped up and coordination and inclusion of stakeholders 
improved.  The  Republic  National  Minority  Council  has  established  good  cooperation  with 
national minority councils. The fund for national minorities is functioning and its funding has 
been  increased.  Local  councils  for  interethnic  relations  have  not  been  established  in  all  the 

28 

 
 
 
municipalities  where  such  obligation  is  stipulated  by  the  law.  Furthermore,  their  role  and 
mandate should be clarified. Alignment of the Law on Protection of Rights and Freedoms of 
National  Minorities  and  the  Law  on  National  Minority  Councils  with  the  relevant 
Constitutional Court decision and sectoral laws is still pending. While the Regulation on the 
Work  of  the  State  Prosecutorial  Council  was  amended  to  take  into  account  the  ethnic 
composition  of  the  population  in  the  nomination  of  public  prosecutors,  national  minorities 
remain underrepresented in public administration.  

There  has  been  progress  in  the  area  of  education.  The  Ministry  of  Education  has  started  to 
implement  the  rulebook  on  general  standards  of  achievement  for  Serbian  as  a  second 
language.  Following  the  signing  of  a  memorandum  of  understanding  and  relevant  annexes 
with eight national minority councils on the publication of textbooks in minority languages, 
their preparation and printing of the books continues. Constructive dialogue with the National 
Minority Council is needed about preparing and printing textbooks in the Albanian language. 
Preparations  for  providing  textbooks  for  secondary  schools  have  not  yet  started.  Access  to 
religious  worship  in  minority  languages  should  be  enabled  throughout  Serbia.  Following 
media  privatisation,  broadcasting  of  programmes  in  minority  languages  remains  vulnerable 
due  to  lack  of  sufficient  funding  and  control  of  content.  Public  broadcasting  in  minority 
languages at national level still needs to be improved.  

A  strategy  for  social  inclusion  of  Roma  2016-2025,  together  with  an  action  plan  has  been 
adopted. A body was set up to monitor the implementation of the strategy but it rarely meets. 
Its work is supported by an expert group, which includes civil society organisations and the 
National  Roma  Council.  Progress  was  made  on  reporting  on  the  2015  Roma  seminar 
conclusions  and  a  follow-up  seminar  took  place  in  2017.  Job  descriptions  for  local  Roma 
coordinators  should  be  uniform  throughout  Serbia  and  made  official.  Most  Roma  in  Serbia 
have  civil documentation (birth certificates and ID cards).  The procedure for registering the 
birth  of children whose parents lack personal documents needs to  be monitored. During  the 
reporting period, there was an increase in Roma students benefiting from affirmative action. 
Serbia has the highest number of Roma children enrolled in primary school (84 %). However, 
they  still  face  barriers  and  lack  adequate  support  in  education.  In  2017,  only  17 %  of 
marginalised  Roma  children  attended  kindergartens.  Drop  outs  remain  high,  especially  for 
Roma girls and only 14 % of Roma youth complete secondary education, one of the lowest 
rates in the Western Balkans. The percentage of those completing tertiary education remains 
extremely low. Segregation in education needs to be addressed. Marginalised Roma have low 
employment rates and the situation is worsening since 2011. Informal employment continues 
to be high among the marginalised Roma population, and the informality gap is the highest in 
the  region.  Further  measures  to  facilitate  the  transition  from  education  to  the  labour  market 
are  thus  needed.  In  addition,  Roma,  are  still  underrepresented  in  public  administration.  The 
Law  on  Housing  and  Building  Maintenance,  regulating  evictions  and  relocations,  has  come 
into  force.  An  assessment  for  the  legalisation  of  existing  settlements  should  be  carried  out. 
The  Ministry  of  Construction  has  provided  some  improvement  of  living  conditions  in 
informal  settlements  in  11  municipalities.  These  efforts  should  increase  as  many  Roma 
households  have  no  access  to  drinking  water  or  connection  to  the  sewage  system.  A  large 
majority  of  Roma  have  health  insurance.  Child  marriage  and  early  and  forced  marriages 
remain  a  concern  and  there  is  a  lack  of  support  services  for  girls  subject  to  child  marriage. 
Domestic violence is also often unreported.  

As  of  1  July  2017  there  were  201  047  internally  displaced  persons  (IDPs)  in  Serbia,  of 
whom one third remains in a vulnerable position. The government has taken some measures 
and adopted a strategy to solve the problems of refugees and IDPs, but solutions remain slow 
and  limited,  with  a  need  for  increased  funding.  The  law  on  permanent  and  temporary 

29 

 
 
 
residence,  which  allows  people  to  apply  for  residence  at  social  welfare  centres,  needs  to  be 
implemented  more  consistently.  Five  collective  centres,  accommodating  108  IDPs,  are 
gradually  being  closed.  Roma  IDPs  remain  the  most  marginalised  and  vulnerable.  Serbia  is 
engaged in the regional dialogue on durable solutions for displaced persons from Kosovo (the 
‘Skopje process’).  

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

Serbia  has  some  level  of  preparation  to  implement  the  acquis  on  justice,  freedom  and 
security.  Some  progress  was  made  in  areas  such  as  human  resource  management  in  the 
Ministry of Interior and the police, and capacity in both the Prosecutor’s Office for Organised 
Crime and the Prosecutor’s Office for Cybercrime were improved. A new strategy and action 
plan to  prevent and fight trafficking in  human beings were adopted, a National Coordinator 
for Combating Trafficking in Human Beings was appointed in October 2017, and a new Law 
on the Prevention of Money Laundering and Terrorist Financing was adopted.  

Despite  a  marked  decrease  in  the  migratory  influx  compared  to  2015,  Serbia  remains  the 
country  most  affected  by  the  movements  along  the  Western  Balkans  route.  It  significantly 
contributed  to  the  management  of  the  mixed  migration  flows  by  playing  an  active  and 
constructive  role  and  by  cooperating  effectively  with  neighbouring  countries  and  Member 
States.  Serbia  adopted  a  new  law  on  asylum  and  temporary  protection, a  law  on  foreigners, 
and a law on border control, as well as amendments to the law on police and the law on the 
national DNA registry.  

Serbia needs to produce a convincing track record, particularly in the fight against high-level 
corruption and organised crime, including money laundering. There is a delay in the adoption 
of the strategy and action plan to counter irregular migration.  

In the coming period, Serbia should in particular: 

  develop a strategic approach towards financial investigations, including by (i) adopting the 
Financial  Action  Task  Force  (FATF)  concept  on  financial  investigations;  (ii)  automatically 
implement  financial  investigations  when  dealing  with  organised  crime,  terrorism,  money 
laundering and serious corruption cases; (iii) start financial investigations from the very start 
of  the  criminal  investigation;  and  (iv)  apply  a  multidisciplinary  and  proactive  approach  to 
financial investigations; 

  implement its integrated border management strategy and action plan;  

  implement  the  new  law  on  asylum  and  temporary  protection,  the law  on  foreigners,  and 
the law on border control; 

 adopt and implement the strategy and action plan to counter irregular migration. 

Serbia is implementing a detailed action plan which was adopted prior to the opening of the 
accession negotiations in this chapter in July 2016 and the country is in the process of revising 
its action plan with more realistic deadlines. 

Fight against organised crime 

Serbia has  some level of  preparation  in  the fight against organised crime.  Some  progress 
was made in fulfilling the recommendations of the previous report. Serbia has yet to establish 

30 

 
 
 
a  convincing  track  record  of  effective  financial  investigations,  and  of  investigations, 
prosecutions and final convictions in money laundering cases. The number of convictions for 
organised crime continues to remain low.  

In addressing the shortcomings, Serbia should in particular: 

→  establish  a  convincing  track  record  of  investigation,  prosecution,  and  convictions  in 
organised  crime  cases,  including  money  laundering,  based  on  proactive  investigations 
(including systematic tracking of money flows and the efficient use of special investigative 
measures  to  collect  relevant  evidence),  and  establish  an  initial  track  record  of  freezing  and 
confiscating criminal assets; 

→ secure the operational autonomy of the police from the Ministry of the Interior during the 
pre-investigation and investigation phase; 

→ further enhance the independence and capacity of the internal control sector of the police.  

Institutional set-up and legal alignment 

The  total  number  of  police  officers  is  42  426.  There  are  601  police  officers  per  100  000 
inhabitants, compared with the EU average of 211 in 2015. 

The legal framework for police cooperation needs to be further aligned with the acquis. The 
role, competences and operational accountability of the police should be further clarified. The 
legal framework is insufficient to guarantee the operational independence of the police from 
the  Ministry  of  the  Interior,  and  thus  to  ensure  full  accountability  only  to  the  prosecution 
during the pre-investigation and investigation phase.  

The reform of the human resource management system for the Ministry of the Interior and the 
police  is  being  finalised.  Progress  has  also  been  made  on  transparency  in  recruitment  and 
transfer procedures, and on overall management of human resources. The rulebook on internal 
organisation and systematisation has not been adopted. A code of police ethics, a regulation 
on  conducting  disciplinary  proceedings  in  the  Ministry  of  the  Interior  and  a  rulebook  on 
complaints  procedure  were  adopted  with  a  view  to  improving  police  integrity.  The  internal 
affairs sector of the Ministry of the Interior is undergoing substantial reorganisation.  A new 
head of police was appointed.  

Amendments  to  the  Law  on  Seizure  and  Confiscation  of  Proceeds  of  Crime  have  been 
adopted  and,  in  line  with  the  acquis,  allow  for  extended  confiscation.  The  working 
arrangement between  the  Serbian  Ministry  of  Interior  and  the  EU  Agency  for  Law 
Enforcement  Training  (CEPOL)  has  been  signed  in  September  2017  and  ratified  in  March 
2018. A strategy for the prevention and suppression of trafficking in human beings has been 
adopted,  together  with  the  relevant  action  plan.  A  National  Coordinator  for  Combating 
Trafficking  in  Human  Beings  was  appointed  in  October  2017.  A  Law  on  the  Prevention  of 
Money Laundering and Terrorist Financing was adopted in December 2017. 

Serbia has yet to adopt a strategy on cybercrime, a new financial investigation strategy and 
corresponding action plan and a strategy and action plan on small arms and light weapons for 
the period 2017-2021.  

The Financial Investigation Unit has 63 staff, following reinforcement in 2017. Serbia needs 
to focus on the implementation of the action plan agreed with FATF. The establishment of an 
asset recovery office (ARO) in line with the acquis needs to be completed. 

Implementation and enforcement capacity  

As regards the track record, there has been little progress in dismantling criminal networks 

31 

 
 
 
and establishing a track record of proactive investigations, prosecutions and convictions in the 
fight against organised crime. A number of new investigations into organised criminal groups 
in  2017  was  initiated  against  191  persons  (out  of  which  evidentiary  activities  against  28 
persons  were  conducted  in  summary  proceedings,  after  which  motions  for  indictment  were 
filed), compared with 143 in 2016. The number of final convictions in organised crime cases 
remains  low  compared  to  the  estimated  value  of  the  criminal  market  in  the  region    (final 
convictions in 2017 were adopted against 110 persons compared with 123 in 2016). 

Operational  police  cooperation  at  bilateral  and  regional  level  improved.  Serbia  is  a  very 
active  partner  in  the  region.  A  Serbian  liaison  officer  has  been  appointed  to  Europol 
headquarters.  Good  cooperation  with  Europol  on  investigations  has  led  to  a  series  of 
successful operations. Serbia also provides good contributions to the Serious and Organised 
Crime  Threat  Assessment  (SOCTA)  report,  and  it  trained  and  appointed  a  liaison  officer  to 
Europol’s office in The Hague. The Prosecutor’s Office for Organised Crime put in operation 
an  advanced  and  comprehensive  investigative  intelligence  tool  to  run  investigations 
(Sidda/Sidna).  The  Ministry  of  the  Interior  is  working  on  establishing  the  Fugitive  Active 
Search Team.  

Specialised  units  of  the  police  need  to  be  staffed  and  equipped,  with  the  necessary  national 
budgetary  resources  made  available,  in  accordance  with  national  and  regional  threat 
assessments. 

As  regards  operational  arrangements  for  special  investigative  measures,  the  police’s 
dependency  on  the  security  and  intelligence  agencies  in  law  and  in  practice  to  carry  out 
certain  special  investigative  measures  in  criminal  investigations  continued  to  be  a  matter  of 
serious concern.  

The level  of  inter-agency  cooperation, information  flow and exchange needs to  be further 
improved. The Ministry of the Interior is working on setting up a central criminal intelligence 
system  and  harmonised  data  collection.  Co-operation  between  the  police  and  the  Special 
Prosecution Office for High Tech Crime continues to improve. The latter received substantial 
staff reinforcement. In May 2017 two deputy public prosecutors have been transferred there; 
and  currently  there  are  four  deputy  public  prosecutors  and  one  special  prosecutor  acting  in 
this  office.  When  it  comes  to  the  administrative  staff,  two  prosecutorial  assistants  were 
assigned  to  this  Prosecutor’s  Office,  so  that  there  are  now  five  of  them  in  total.  Moreover, 
three  vacant  positions  for  the  administrative  staff  (positions  for  registrar  officers)  are 
expected to be filled. 

The operational capacity of the Cybercrime Department of the Ministry of the Interior needs 
to  be  strengthened  through  the  establishment  of  special  investigative  units  on  credit  card 
fraud, e- commerce and e-banking, and on combatting illicit and harmful internet content.   

Serbia  is  implementing  its  strategy  and  action  plan  for  the  prevention  and  suppression  of 
trafficking  in  human  beings  for  2017-2022.  The  capacity  of  the  Centre  for  Protection  of 
Victims of Trafficking in Human Beings should be strengthened. A support fund for victims 
should  be  established,  and  the  compensation  mechanism  in  civil  proceedings  needs  to  be 
improved.  Efforts  to  facilitate  victims’  reintegration  in  society  require  particular  attention. 
The  mixed  migration  flows  passing  through  the  country  also  offer  new  opportunities  for 
traffickers:  unaccompanied  minors  are  at  particular  risk.  Efforts  should  be  stepped  up  to 
reduce children’s vulnerability to trafficking and improve the identification of and assistance 
to  child  victims.  A  limited  number  of  mainly  low  profile  cases  have  been  successfully 
investigated.  Investigative  capacity  in  this  field  was  substantially  increased  by  transferring 
competences from the Border Police Directorate to the Criminal Police Directorate. However, 
Serbia  should  more  proactively  investigate  and  gather  evidence  in  order  to  rely  less  on 

32 

 
 
 
victims’ statements and to avoid re-victimisation. 

On  trafficking  in  weapons,  Serbia  successfully  destroyed  18  009  pieces  of  confiscated 
weapons  in  2017,  which  is  evidence  of  the  positive  impact  of  the  acts  of  legalisation  and 
voluntary  handover  carried  out  in  recent  years.  The  Serbian  Police  Directorate  also  made 
significant progress in improving the physical security and stockpile management of weapons 
and ammunition they are storing. 

Serbia needs to start to input data on lost and stolen firearms into the Interpol-administered 
iArms  Database,  starting  with  data  from  2012  onwards.  Serbia  should  also  step  up  its 
operational  capacity  (including  cross-intelligence  collection,  analysis  and  exchange  of 
information) and establish a centralised arms registry. Serbia should furthermore ensure the 
secure storage and destruction of confiscated weapons and ammunition.  

Serbia  should  bring  its  legal  framework  in  the  field  of  weapons  and  ammunition  further  in 
line  with  the  relevant  EU  acquis  and  ensure  more  stringent  control  over  deactivation, 
marking, record keeping and secure storage of weapons and ammunition. 

The  majority  of  convictions  in  money  laundering  are  for  self-laundering  connected  to  a 
domestic predicate offence.  However, in  2017 there were  seven  persons convicted for third 
party laundering, out of which one based on foreign predicate conviction and one stand-alone 
conviction.  Furthermore  there  was  one  money  laundering  conviction  of  legal  entity.  There 
were  three  outgoing  money  laundering-related  mutual  legal  assistance  (MLA)  requests  and 
international exchange of operational information has substantially improved.  

Law  enforcement  agencies  and  prosecution  services  do  not  have  direct  access  to  relevant 
databases.  Serbia  needs  to  ensure  that  the  judiciary  has  an  appropriate  level  of  technical 
understanding,  and  builds  up  relevant  case-law  on  the  admissible  evidence  in  court  in 
accordance with the applicable law. The Administration for Prevention of Money Laundering 
(APML)  and  the  Republic  Public  Prosecutor  signed  an  agreement  to  intensify  their 
cooperation;  the  latter  issued  an  instruction  according  to  which  relevant  prosecution  offices 
are obliged to act pro-actively upon receiving information from the APML.   

No  progress  has  been  made  on  precautionary  freezing  of  assets  at  an  early  stage  of  an 
investigation.  The  impact  of  the  new  Law  on  Seizure  and  Confiscation  of  the  Proceeds  of 
Crime  has  yet  to  be  seen.  Indirect  or  circumstantial  evidence,  especially  in  cases  of 
inexplicable  wealth,  is  rarely  gathered  or  accepted  by  the  courts.  The  capacity  to  carry  out 
complex financial investigations alongside criminal investigations needs to be stepped up in 
order  to  track  money  flows  and  lead  to  the  seizure  and  confiscation  of  criminal  assets. 
Confiscation  of  criminal  assets  should  become  a  strategic  priority  in  the  fight  against 
organised crime, terrorism and high-level corruption in Serbia. Criminal groups engage in an 
increasingly wide range of profitable illegal activities, and reinvest substantial profits in the 
Serbian economy. Currently, Serbia’s tools for freezing, managing and confiscating criminal 
assets are not adequately effective. It should therefore implement a more comprehensive and 
coherent  legal  framework  for  the  confiscation  of  proceeds  of  crime. It should  focus  on 
implementing  rules  on  the  confiscation  of  assets  which  are  not  directly  linked  to  a  specific 
crime,  but  which  clearly  result  from  similar  criminal  activities  committed  by  the  convicted 
person (extended confiscation), rules on confiscating criminal assets that were transferred on 
purpose  from  the  suspect  to  a  third  party  (third-party  confiscation).  It  should  allow 
confiscation  of  criminal  assets  where  a  criminal  conviction  is  not  possible,  in  particular 
because  the  suspect  is  deceased,  permanently  ill  or  has  fled  (non-conviction-based 
confiscation),  ensure  that  competent  authorities  make  more  systematic  use  of  temporarily 
freezing assets that risk disappearing if no action is taken, subject to prompt confirmation by 
a  court  (precautionary  freezing).  In  addition,  it  is  crucial  that  financial  investigations  into  a 

33 

 
 
 
person’s assets are allowed to continue for years after a criminal conviction in order to fully 
execute  a  previously  issued  confiscation  order  (effective  execution).  Finally,  Serbia  should 
urgently step up its capacity to manage frozen or confiscated assets so that they do not lose 
economic value (asset management). 

Fighting  organised  crime  and  corruption  remains  fundamental  to  countering  criminal 
infiltration of the political, legal and economic systems. 

Fight against terrorism 

Institutional set-up and legal alignment 

Serbia’s  legal  and  policy  framework  is  largely  aligned  with  the  acquis  and  international 
instruments on anti-terrorism. The new Law Amending the Law on the Freezing of Assets 
for  the  Purpose  of  Terrorism  Prevention  was  adopted  in  December  2017.  The  national 
strategy  and  action  plan  for  preventing  and  fighting  terrorism  (2017-2021)  was  adopted  in 
October  2017.  It  covers  prevention  of  violent  extremism  and  radicalisation,  elimination  of 
terrorist threats, and response and prosecution in the event of terrorist attacks.  

There  is  a  need  to  establish  a  single  database  on  terrorism-related  information  at  national 
level,  which  will  contribute 
information  exchange  and  better 
interinstitutional, regional and international cooperation. 

to  more  efficient 

Implementation and enforcement capacity 

Cooperation  between  the  Police  Service  for  Combating  Terrorism  and  Extremism  and 
Europol has further intensified in 2017 and is at a very good level. Serbia is also participating 
in the implementation of the Western Balkan Counter Terrorism initiative (WBCTi). There is 
progress  with  prevention  and  anti-radicalisation  activities,  involving  local  religious  leaders, 
local authorities and civil society through targeted activities with the OSCE mission to Serbia. 
Serbia  should  focus  on  developing  the  necessary  capacity  to  detect  and  interrupt  financial 
flows supporting terrorism. In this respect, the APML has changed its internal organisation by 
creating  a  Terrorist  Financing  Prevention  Team  to  deal  specifically  with  terrorist  financing-
related cases.  

So far, Serbia has indicted seven people on terrorism-related charges (including radicalisation 
and  recruitment),  of  whom  six  also  face  charges  for  financing  terrorism.  Serbia  has  been 
affected to some extent by the phenomena of radicalisation and of its citizens fighting in other 
countries  for  terrorist  organisations.  The  authorities  have  evidence  of  around  49  Serbian 
citizens who are foreign terrorist fighters, and 10 returnees.  

Legal and irregular migration  

Institutional set-up and legal alignment  

Serbia’s legal framework is partially in line with the acquis. The Central Register Database on 
Foreigners has been created. Serbia has adopted a new law on foreigners, aiming to align its 
national legislation with the acquis in areas such as family reunification, the status of third-
country  nationals  with  long-term  residence,  the  conditions  for  admission  of  third-country 
nationals  for,  inter  alia,  scientific  research,  and  residence  permits  issued  to  third-country 
nationals who are victims of trafficking in human beings. The new law also aims at alignment 
with  the  Return  Directive.  Amendments  to  the  Criminal  Code  were  adopted,  leading  to 
increased penalties for smuggling and trafficking in human beings. 

The  strategy  and  action  plan  to  counter  irregular  migration  for  2017-2020  still  needs  to  be 
adopted.  Serbia  adopted  and  regularly  updated  a  response  plan  to  cope  with  the  increased 
number  of  migrants  on  its  territory,  but  the  latest  one  expired  at  the  end  of  2017.  A  robust 

34 

 
 
 
return  mechanism,  in  line  with  EU  requirements,  still  needs  to  be  put  in  place.  A  basic 
procedure for an early warning, preparedness and crisis management strategy is in place.  

Responsibilities  for  migration  management  are  divided  between  various  state  authorities: 
the  Ministry  of  the  Interior,  the  Commissariat  for  Refugees  and  Migration,  the  Ministry  of 
Foreign Affairs, the Ministry of Justice and the Ministry of Labour, Employment, Veteran and 
Social Policy. There is a need for enhanced coordination between these government and state 
institutions and the international and national organisations active in this field, including non-
governmental  organisations.  Uncertainty  over  the  respective  responsibilities  of  the  various 
institutions has led to protection gaps. 

The department for the prevention of trans-border crime, irregular migration and trafficking in 
human  beings  within  the  Border  Police  Directorate  deals  with  irregular  migration.  The  task 
force  on  people  smuggling,  within  the  Criminal  Police  Department,  has  improved  its 
operational capacity. Further strengthening of interinstitutional coordination and the capacity 
to respond to requests for international cooperation is needed. 

Implementation and enforcement capacity  

Serbia  managed  a  significant  influx  of  migrants  and  refugees  and  is  making  considerable 
efforts to ensure basic living conditions and services for all migrants stranded in the country.  
Serbia is making commendable efforts to  provide formal education for all migrant children. 
The  overall  staffing  situation  in  the  area  of  migration  remains  insufficient,  in  particular 
against the background of continuous migration flows.  

Serbia has one detention centre in Padinska Skela with a capacity of 30 places and works on 
upgrading  are  under  way.  It  is  expected  that  the  increased  capacity  will  fulfil  European 
standards. 

Most of the irregular  migrants  currently in  the country  do not  have  any legal status and are 
hosted in temporary accommodation facilities. 7 505 irregular migrants were detected by the 
authorities in Serbia in 2017. The number of asylum-seekers, migrants and refugees staying in 
the  country  went  down  to  around  4  000  at  the  end  of  2017  with  more  than  90 % 
accommodated  in  government  centres.  The  remaining  migrants  are  sleeping  rough  in  the 
border areas with Hungary and Croatia and in the Belgrade city centre. 

There is a need for systematic provision of psychosocial support, for suitable accommodation 
for unaccompanied children and for a sufficient number of legal guardians. Furthermore, the 
facilities need enough adequately trained staff. Coordination between all institutions involved 
in tackling irregular migration should be stepped up.  

In 2016, 6 050 people were intercepted at the borders and 349 criminal charges were filed for 
human smuggling against 604 perpetrators who tried to smuggle 5 181 people. In 2017, the 
number of people intercepted at the border was 2 638; 161 criminal charges were filed against 
269  perpetrators  trying  to  smuggle  1  188  people.  Migrant  smuggling  networks  originating 
from  and  operating  in  Western  Balkan  countries  remain  active  and  continue  to  smuggle 
irregular migrants. 

The number of people effectively returned to their country of origin remains low, although 
Serbia  benefits  from  a  programme  for  Assisted  Voluntary  Returns  run  by  the  International 
Organisation  for  Migration.  In  2017,  234  people  had  agreed  to  return  voluntarily  by  mid-
November 2017. Serbia cannot return people if asylum decisions are negative, due to the lack 
of readmission agreements.  

The  readmission agreement  with the  EU is being  implemented satisfactorily. There are 21 
implementing protocols signed with the EU and they are well implemented when it comes to 

35 

 
 
 
the  readmission  of  own  nationals.  In  2016,  13  595  Serbian  nationals  have  been  ordered  to 
leave  the  EU  territory  and  the  return  rate  reached  90  %  in  2016.  Nevertheless,  Serbia’s 
cooperation  on  the  readmission  requests  of  third  country  nationals  remains  very  low  and 
particular attention should be given to improving cooperation on this provision. 

Serbia  has  concluded  readmission  agreements  with  Bosnia  and  Herzegovina,  Denmark, 
Canada,  Norway,  Croatia,  Switzerland,  the  former  Yugoslav  Republic  of  Macedonia, 
Moldavia, Montenegro and Russia. Negotiations are concluded with Turkey and ongoing with 
Ukraine, Algeria, Morocco, Iraq, Pakistan, Arab Emirates, Belarus and Georgia. Nevertheless, 
the  return  of  the  vast  majority  of  the  third  country  nationals  present  on  Serbia’s  territory 
remains very difficult, due to the lack of readmission agreements with the four main countries 
of origin of the irregular migrants in Serbia, i.e. Afghanistan, Pakistan, Iraq and Iran.  Serbia 
needs to conclude readmission agreements with those countries. 

Serbia  has  been  invited  by  the  European  Integrated  Management  Initiative  Network  to 
participate as an observer in their Country Working Groups on Afghanistan, Iraq and Iran. In 
January  2018,  Serbia  has  signed  a  partnership  declaration  with  the  European  Reintegration 
Network program. Serbia holds an observer status in the program and tailor made support will 
be developed for building Serbia’s capacity in the field of return and reintegration. 

Asylum  

Institutional set-up and legal alignment  

Serbia is party to the Geneva Convention on the status of refugees. A new law on asylum and 
temporary protection was adopted.  

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 responsible for 
determining  asylum  status.  Appeals  against  its  decisions  can  be  submitted  to  the  Asylum 
Commission and subsequently to the Administrative Court of Appeal as a final instance. The 
Asylum  Commission  did  not  work  for  several  months  because  new  members  needed  to  be 
appointed  and  there  was  a  backlog  of  decisions.  New  members  of  the  Commission  were 
appointed and the Commission is now operational.  

Implementation and enforcement capacity  

The Asylum Office of the Ministry of the Interior is only partially staffed (17 people out of 
the 29 planned). Nine new officers are in the process of being recruited. 

Regarding  the  asylum  procedure,  the  capacity  to  assess  the  merits  of  applications  has 
improved,  with  country  of  origin  information  used  and  assessed.  By-laws  on  integration  of 
refugees have been adopted, providing for individual integration plans. Efforts to improve the 
access of beneficiaries of international protection to integration measures, including access to 
the labour market, should be sustained. Serbia needs to continue close cooperation with EU 
Member  States  and  its  neighbours  with  a  view  to  ensuring  effective  access  to  international 
protection.  

The  Asylum  Office  registers  asylum  seekers  in  an  electronic  database.  The  border  police 
registers  asylum  seekers  in  its  own  separate  biometric  database.  The  identification  and 
registration process of irregular migrants could be further improved. 

In  2017,  the  number  of  asylum  seekers  fell  considerably  compared  with  2016,  while  cases 
processed  and  protection  status  granted  increased  in  relative  terms.  In  2017,  out  of  6  195 
(2016:  12  821)  people  who  expressed  an  intention  to  seek  asylum,  235  (2016:  574)  people 
lodged  an  application,  3  (2016:  19)  people  received  refugee  status,  11  (2016:  23)  people 

36 

 
 
 
received subsidiary protection and 42 (2016: 40) people received a negative decision. In most 
cases the procedure was suspended because the applicant absconded.   

The  Commissariat  for  Refugees  and  Migration  is  the  state  authority  responsible  for  the 
reception  and  accommodation  of  asylum  seekers,  management  of  asylum  centres  and 
integration of people who were granted international protection. 

There are five regular asylum centres and 13 temporary accommodation facilities (transit and 
reception centres) with a total capacity of 6 030 long-term and 1 067 short-term places. There 
are  three  centres  with  a  de  facto  capacity  of  22  beds  to  host  unaccompanied  minors.  Steps 
should be taken to gradually increase this capacity and Serbia should pay special attention to 
the needs of unaccompanied minors in line with international standards, given that in January 
2018  alone  there  were  143  unaccompanied  minors  accommodated  in  asylum,  reception  and 
transit  centres.  All  reception  centres  are  open  facilities,  vulnerable  to  infiltration  by  people 
smugglers and other criminals. On the basis of a memorandum of understanding, the Minister 
of  the  Interior  cooperates  smoothly  with  the  European  Asylum  Support  Office  (EASO). 
Serbia was granted observer status in the reception network organised by EASO. 

Visa policy 

Overall,  the  visa  liberalisation  benchmarks  continue  to  be  fulfilled.  Further  improvement  of 
the  implementation  is  expected,  including  the  organisation  of  a  high-profile  information 
campaign on the rights and obligations of visa-free travel targeting areas particularly affected 
by irregular migration.  

Serbia’s visa issuing system is partially in line with the EU Visa Code. Interconnection of the 
integrated  Serbian  Visa  Information  System  with  all  diplomatic  and  consular  missions  and 
other relevant databases is not yet complete, but has advanced further. The number of visas 
issued  at  borders  was  rather  low  throughout  the  reporting  period  and  only  undertaken  in 
exceptional humanitarian circumstances.  

The visa regime is in line with the EU lists of visa-required countries except for the nationals 
of  Bahrain,  Belarus,  Bolivia,  China,  Cuba,  Guinea-Bissau,  India,  Indonesia,  Iran,  Jamaica, 
Kazakhstan,  Kuwait,  Mongolia,  Oman,  Qatar,  Turkey,  Tunisia  and  Russia.  For  six  of  those 
countries, the visa-free regime was implemented during the reporting period. Serbia’s recent 
decisions  to  grant  visa-free  travel  to  citizens  of  countries  that  are  on  the  EU’s  negative  list 
raise concerns. Serbia  needs to  monitor  and control the implications  of the visa-free regime 
with  third  countries,  especially  with  Iran.  Serbia  is  encouraged  to  refrain  from  further 
diverging from the EU common visa policy with which it is expected to progressively align.  

Schengen and external borders  

Institutional set-up and legal alignment  

Serbia  adopted  a  strategy  and  action  plan  for  integrated  border  management  2017-2020. 
Legal,  technical,  infrastructural  and  human  resource  requirements  for  adopting  a  Schengen 
action plan have been assessed. A new law on border control has been adopted. 

The border police is a specialised civilian body, part of the General Police Directorate under 
the Ministry of the Interior. It has eight regional centres and 47 local stations responsible for 
border surveillance as well as 40 stations for border control at the 94 border crossing points. 
Serbia needs to create a single coordination centre for the exchanging of police information, 
with a view to preparing to set up of a SIRENE (Supplementary Information Request at the 
National Entries) office. 

37 

 
 
 
 
 
Implementation and enforcement capacity  

There is a good cooperation on border control with Serbia and EU Member States. There are 
already some joint controls with the presence of EU border police officers working with the 
Serbian border police. This will be further enhanced as a status agreement is being negotiated 
with  the  Commission,  which  would  allow  the  deployment  of  European  Border  and  Coast 
Guard  teams  with  executive  powers  by  the  European  Border  and  Coast  Guard  Agency  in 
Serbia. 

Serbia is a transit country for illegal migration and the smuggling of drugs, firearms and other 
commodities. Combating these phenomena and establishing appropriate border management, 
including management of ‘green’ (land) borders, needs to be further strengthened.  

The border police has a total of 3 500 staff and has a Risk Analysis Unit. Risk analysis at the 
central  level  is  conducted  in  accordance  with  CIRAM  2  (the  Common  Integrated  Risk 
Analysis Model) and is harmonised with EU practice in terms of data collection methods, the 
reporting format and analysis of the vulnerability of borders. 

Implementation  of  the  integrated  border  management  strategy  and  its  action  plan  has 
started. The cooperation body provided for in the action plan has been appointed.  

Meeting  European  standards  requires  adequate  staffing  at  the  border  crossing  points  and 
border posts and further investment in infrastructure and equipment. Maintenance and repair 
of border facilities needs to be improved significantly. One of the challenges is the lack of a 
clear  division  of  responsibilities  for  the  management  of  the  crossing  points  (in  terms  of 
planning,  reconstruction,  current  and  investment  maintenance,  and  construction).  Moreover, 
there  is  no  regulation  governing  the  procedure  and  requirements  for  the  opening  of  border 
crossing points. 

Most border crossing points are equipped with basic IT equipment, 3M passport readers, first 
line  control  devices  and  other  technical  devices  for  control  measures  to  combat  irregular 
migration.  Some  65 %  of  the  border  crossing  points  are  linked  to  Interpol  databases.  These 
account for 95 % of border traffic. 

Cooperation  with  the  neighbouring  countries  remains  good,  particularly  at  technical  level. 
Joint  patrols  are  also  being  organised  with  all  neighbouring  countries  except  Croatia. 
Unauthorised  border  crossing  points  at  border  sections  with  Bosnia  and  Herzegovina  and 
Montenegro still need to be sealed off.  

The Working Arrangement with the European Border and Coast Guard Agency (EBCGA) is 
being implemented smoothly. Following the new mandate of the EBCGA which enables it to 
carry  out  operations  on  the  territory  of  neighbouring  third  countries,  negotiations  on  an 
agreement with Serbia are still ongoing and should be concluded as quickly as possible.  

Interim IBM common crossing points with Kosovo continue to be fully operational. There has 
been some progress in establishing the permanent IBM common crossing points with Kosovo 
in Merdare and Mutivode, and in establishing the additional interim common crossing points 
in  Kapi  and  Izvor. Additional  measures  need  to  be  taken  to  prevent  illegal  crossings  and 
criminal activities. 

The agreement on cooperation in the field of prevention and suppression of corruption at the 
border between the Republic Public Prosecutor’s Office, the Ministry of Internal Affairs and 
the Ministry of Finance was signed. 

38 

 
 
 
 
 
Judicial cooperation in civil and criminal matters 

Serbia has finalised assessments of its national legislation with a view to alignment with the 
acquis in this area. There is a need to also carry out a review of the administrative, budgetary 
and training needs in this regard. During the second half of 2017, Serbia successfully handled 
significantly more incoming judicial cooperation requests than during the second half of 2016 
(1 281 compared to 2 254 in civil, and 1 969 compared to 2 054 in criminal matters), while 
there  was  a  reduction  in  handling  outgoing  criminal  matters  cooperation  requests  compared 
with  the  second  half  of  2016  (961  compared  to  788  for  criminal  matters).  For  civil  matters 
there is an increase from 982 in 2016 to 1 042 in 2017. Overall, this resulted in fewer pending 
requests in December 2017 than in December 2016. The total of all pending cases was 23 176 
in December 2017 compared to 23 474 in December 2016. Serbia needs to continue its efforts 
to addressing pending cases and handling cases within a reasonable timeframe.  

Serbian  courts  have  direct  cooperation  with  courts  of  Bosnia  and  Herzegovina,  the  former 
Yugoslav  Republic  of  Macedonia,  Montenegro  and  Slovenia.  There  is  further  need  to 
facilitate direct cooperation on outgoing requests between Serbian and foreign courts and to 
centralise the receipt of requests for international judicial cooperation within the court system, 
in  line  with  the  findings  of  analysis,  so  they  can  be  processed  more  efficiently.  Present 
infrastructure used for replying to requests for mutual legal assistance and statistics need to be 
further  improved  for  ensuring  better  monitoring  and  promptly  reaction  applying  the  mutual 
recognition  principle  subject  to  pending  analysis  of  capacity  needed  to  improve  efficiency,  
including special legal and language skills.  

Serbia has close cooperation with Eurojust. In 2017, Serbia was involved in 26 Eurojust cases, 
mainly  cases  concerning  drug  trafficking,  money-laundering,  corruption  and  organised 
property  crime.  Organised  crime  groups  were  involved  in  several  cases.  Serbia  also 
participated in three coordination meetings organised by Eurojust and took part in four joint 
investigation teams supported by Eurojust. Serbia has not signed a (operational) cooperation 
agreement  with  Eurojust,  due  to  a  delay  in  harmonising  the  legislation  on  protection  of 
personal data with the acquis.  

On civil matters, the 2007 Hague Convention on Child Support has not yet been ratified even 
if its Protocol on applicable law was already ratified in 2013. 

Cooperation in the field of drugs  

Serbia  is  implementing  its  Strategy  for  Drug  Abuse  Suppression  (2014–2021)  and  has 
implemented an accompanying action plan (2014–2017) which are both in line with the EU 
Strategy and Action Plan and reflect the main objectives of the renewed (2013) EU-Western 
Balkan Action Plan on Drugs.  

The Law on Psychoactive Controlled Substances and the Law on Precursors have yet to  be 
adopted.  

The  Service  for  Drug  Addiction  Prevention  and  Drug  Trafficking  Suppression  within  the 
Serbian Criminal  Police  Directorate suffers from lack of staff and equipment. Nevertheless, 
good regional and international cooperation continued, with important results in terms of drug 
seizures  and  of  dismantling  international  drug  smuggling  chains.  The  national  coordination 
office  (Office  for  Combatting  Drugs)  is  operational  but  remains  understaffed  and  does  not 
have the capacity to fully perform its duties.  

In line with the national drugs strategy, a clear definition of the responsibilities and powers of 
the various institutions involved in inter-agency cooperation is still needed, as well as smooth 
exchange  of  data.  An  early  warning  system  on  new  psychoactive  substances  has  been 

39 

 
 
 
established within the Centre for Monitoring Drugs in the Ministry of Health. 

The lack of secure storage of seized drugs and drug precursors prior to destruction remains an 
issue of concern. An appropriate process for the destruction of precursors has yet to be set up.  

Furthermore,  according  to  current  legislation,  it  is  not  possible  to  keep  only  a  small  drug 
sample  as  material  evidence  for  court  proceedings,  but  the  entire  seized  quantity  has  to  be 
stored. Overall, and although progress was made, this policy area would benefit from a more 
proactive and holistic approach.  

The anti-drug department of the police investigated a number of drug-related cases in 2017 in 
a  fruitful  cooperation  with  third  countries’  police  services,  reaching  important  results  and 
seizures. Serbian authorities confiscated 4 166 tonnes of drugs, mainly herbal cannabis (3 921 
tonnes)  but  also  17.8  tonnes  of  heroin  and  12.7  tonnes  of  cocaine.  In  this  respect  8  392 
criminal  offences  have  been  recorded  by  Serbian  authorities  involving  4  130  offenders. 
Serbian authorities destroyed 5 465 tonnes of narcotic drugs during 2017. 

Customs cooperation 

Regional  and  international  customs  cooperation  continued,  including  through  joint  actions 
(see  also  Chapter  29  —  Customs  union).  The  investigative  powers  of  customs  officers  and 
their ability to exchange data with other agencies need to be broadened. Training and further 
by-laws  are  needed  for  the  implementation  of  the  Naples  II  Convention  upon  accession,  in 
particular on hot pursuit, cross-border surveillance and controlled delivery. 

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

3. FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS 

Key economic figures 

2015 

2016 

2017 

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

GDP growth (%) 

Unemployment rate (female; male) (%) 

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) 

Source: Eurostat 

36 

0.8 

17.7 
16.8) 

63.6 
71.6) 

-4.7 

5.4 

(18.8; 

(55.6; 

37 

2.8 

15.3 
14.6) 

65.6 
73.1) 

-3.1 

5.5 

1.9 

13.5 
12.9) 

(14.3; 

(16.1; 

(58.1; 

-5.7 

6.6 

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

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 

40 

 
 
 
 
 
 
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, the Western Balkans and Turkey at ministerial level in 
May each year. 

3.1 The existence of a functioning market economy 

Serbia  has  made  good  progress  and  is  moderately  prepared  in  developing  a  functioning 
market  economy.  Some  of  the  policy  weaknesses,  in  particular  with  regard  to  the  budget 
deficit,  were  addressed.  Growth  fundamentals  are  sound  and  macroeconomic  stability  was 
preserved.  Price  pressures  were  subdued  and  monetary  policy  supported  growth.  The 
restructuring and privatisation of state-owned enterprises partially advanced. The stability and 
performance of the financial sector strengthened. Labour market conditions improved further. 

However, government debt is still high and budgetary framework and governance need to be 
strengthened.  External 
reforms  of  public 
administration,  the  tax  authority,  and  state-owned  enterprises  (SOEs)  remain  incomplete. 
Unemployment and economic inactivity are high, particularly among women and youth. The 
private  sector  is  underdeveloped  and  hampered  by  weaknesses  in  the  rule  of  law  and  the 
enforcement of fair competition. 

increased.  Major  structural 

imbalances 

In order to support long-term growth, Serbia should pay particular attention to: 

→  sustain  good  fiscal  results  in  order  to  lower  government  debt  and  improving  revenue 
collection in a systematic and business-friendly way; 

→  continue  the  restructuring  and  privatisation  of  state-owned  enterprises  and  public 
administration reform; 

→ enhance labour market participation and employment especially for women and youth. 

Economic governance 

Figure 1 Serbia GDP growth 

P
D
G

f
o
%

40

35

30

25

20

15

10

5

0

2012 2013 2014 2015 2016 2017

GDP per capita in PPS (EU28=100) (lhs)
GDP growth (rhs)

Source: Eurostat, national sources 

Macroeconomic stability 

4,0

3,0

2,0

1,0

0,0

-1,0

-2,0

-3,0

economy. 

Despite delays in key structural reforms, the 
authorities  remain  committed  to  creating  a 
functioning  market 
The 
implementation  of  the  Stand-By  Arrangement 
with  the  International  Monetary  Fund  was 
completed  successfully  in  February  2018.  The 
policy  guidance  jointly  adopted  in  May  2017 
has  been  partially  implemented.  The  strong 
budget  performance  continued  unabated  and, 
along  with  low  inflation  and  well-anchored 
inflationary expectations, it allowed additional 
monetary  policy  relaxation.  Reforms  of  the 
public  administration,  the  tax  administration, 
and  the  restructuring  of  large  state-owned 
enterprises advanced slowly. Financial stability 
strengthened.  Following 
in 
improving the business environment, efforts in 
this area weakened. 

recent  strides 

Growth fundamentals and prospects are sound. Although economic growth decelerated to 
1.9 % in 2017 due to temporary shocks in energy and agricultural production, the underlying 

41 

 
 
 
 
 
 
 
growth trend remains vibrant. Economic activity continues to be supported by a strong export 
expansion  and  rising  investment.  This  growth  model  is  further  sustained  by  foreign  direct 
investment  in  tradable  sectors.  Private  consumption,  underpinned  by  higher  income  and 
employment levels, went up in 2017 and is poised to increasingly contribute to and drive the 
growth  momentum  of  the  economy.  The  income  gap  with  the  EU  remained  broadly 
unchanged:  in  2016,  per  capita  GDP  in  purchasing  power  terms  stood  at  37 %  of  the  EU 
average, the same level as in 2012. 

External  imbalances  increased  but  their  financing  was  healthy  and  buffers  remained 
adequate. After several years of decline, the current account deficit went up again to 5.7 % of 
GDP  in  2017,  driven  by  lower  exports  of  agricultural  goods  as  a  result  of  a  drought, 
worsening terms of trade, higher direct investment income outflows, and surging imports due 
to  buoyant  domestic  demand.  The  deficit  was,  however,  fully  covered  by  net  foreign  direct 
investment which continued to be broad-based and increased for a third year in a row to reach 
6.6 %  of  GDP.  The  level  of  external  debt  was  broadly  stable  over  previous  years  before 
declining to around 70 % of GDP in 2017. External risks were cushioned by sizeable official 
foreign  exchange  reserves  which  have  consistently  covered  around  six  months’  worth  of 
imports of goods and services. 

Inflation stayed close to the target and monetary policy further supported growth. 2017 
ended with inflation at 3.0 %, exactly in the centre of the band targeted by the central bank. 
Price pressures remained subdued and inflation expectations contained. The continuing strong 
fiscal consolidation and dinar appreciation due to significant capital inflows were instrumental 
in  achieving  price  stability.  They  also  allowed  monetary  policy  to  become  more 
accommodative:  cuts  in  the  key  policy  rate  resumed  in  the  autumn  when  it  was  lowered  in 
two  steps  of  25  basis  points  each,  to  3.5 %,  followed  by  another  25  points  cut  in  March. 
Lending conditions improved further and credit activity increased, boosted by past monetary 
policy  easing  and  reduced  risk  premiums.  The  central  bank  intervened  on  the  foreign 
exchange market buying a net EUR 0.7 billion in 2017. 

10

80

70

30

40

20

50

60

f
o
%

P
D
G

outperformed 

2,0
1,0
0,0
-1,0
-2,0
-3,0
-4,0
-5,0
-6,0
-7,0
-8,0

Figure 2 Serbia fiscal developments 

Strong  fiscal  consolidation  was  decisive 
in  instilling  confidence  in  the  economy 
and  supporting  the  recovery.  Between 
2014  and  2017,  the  general  government 
budget  turned  from  a  deficit  of  6.6 %  of 
GDP  to  a  surplus  of  1.2 %.  Final  budget 
outcomes 
significantly 
initially planned targets mainly because of 
revenue 
an 
performance,  including  some  one-offs, 
licences, 
from 
like 
revenues 
superdividends 
state-owned 
from 
structural 
companies 
improvement  in  the  budget  balance  over 
this  period  was  around  6 %  of  GDP, 
driven both by improved revenue collection and subdued current expenditure. The successful 
implementation  of  the  consolidation  programme  created  space  for  additional  wage  and 
pension increases which continued with the 2018 budget as well. For the first time, this year’s 
budget  also  included  a  limited  reduction  of  labour  taxation,  mainly  in  the  low-income 
segment.  As  a  result  of  prudent  fiscal  policy,  the  growth  of  government  debt  was  reversed: 
after peaking at 74.6 % of GDP in 2015, it fell to 61.5 % of GDP in 2017. Although interest 

Source: Eurostat, national sources 

2013
Public debt (LHS)

unexpectedly 

Budget balance (RHS)

strong 

The 

etc. 

4G 

2014

2015

2016

2012

2017

0

42 

 
 
 
 
 
 
 
payments  have  declined,  they  are  still  significant  and  debt  service  costs  remain  sensitive  to 
interest and exchange rate fluctuations. 

Good  fiscal  results  need  to  be  sustained  in  view  of  the  still  high  indebtedness  and 
elevated  risks.  The  share  of  mandatory  expenditure  is  large  and  restrains  the  scope  to 
increase productive spending. The unfinished reform of state-owned enterprises, in particular 
in  the  petrochemical,  mining  and  energy  sectors,  remains  a  constant  source  of  contingent 
liabilities  and  could  easily  undermine  the  hard-won  fiscal  sustainability.  Improved  tax 
revenue collection has been a major element of the recent consolidation. Preserving revenue 
gains,  thus,  calls  for  avoiding  further  delays  in  implementing  the  tax  administration 
transformation  programme  which  was  updated  in  December  2017.  Some  elements  of  the 
cost-cutting  programme  of  the  previous  years,  like  the  partial  employment  freeze  and  the 
targeted reduction of pensions have been retained in 2018 but they are not a substitute for a 
systemic approach to expenditure restraint and constitute an implicit liability. 

There  are  still  important  weaknesses  in  the  budgetary  framework  and  governance 
systems  and  efforts  to  strengthen  them  progressed  slowly.  Public  administration  reform 
advanced  with  delays.  In  particular,  the  implementation  of  the  wage  system  reform  in  the 
public sector was postponed, and its introduction is now planned with the 2019 budget. There 
are  still  important  shortcomings  in  the  capital  budgeting  system.  Capital  expenditure 
execution  underperformed  last  year  despite  efforts  to  improve  the  project  appraisal  process 
and establish a single project pipeline. As part of the public finance management programme, 
a  new  public  internal  financial  control  strategy  was  adopted  in  May  2017,  together  with  a 
2017-2018 action plan. The system of fiscal rules is weak as it is not sufficiently binding and 
relevant for policy-making, but work on its strengthening has been slow. 

The macroeconomic policy mix  was appropriate. It brought  macroeconomic stability and 
improvement  in  major  economic  indicators.  Although  there  are  still  significant  economic 
challenges  and  headline  economic  growth  was  slow,  the  restrictive  fiscal  stance  and 
accommodative  monetary  policy  ensured  price  stability,  stimulated  investment  activity, 
increased  employment,  and  reduced  the  country  risk  premium.  Full  implementation  of  the 
public  sector  reforms  and  strengthening  of  key  fiscal  institutions  would  help  sustain  these 
results and support convergence with the EU. 

Functioning of product markets 

Business environment 

The business environment improved somewhat, but significant weaknesses still need to 
be addressed. Over the last  few years Serbia improved  its standing in  various international 
business  rankings.  This  was  mainly  due  to  reforms  facilitating  the  process  of  dealing  with 
construction  permits  and  registering  property.  The  institutional  and  regulatory  environment, 
however,  remain  weak.  Business-relevant  laws  continue  to  be  adopted  under  urgent 
procedures, without the necessary consultation of interested groups. Delays in the adoption of 
secondary  legislation  hamper  the  implementation  of  adopted  laws.  The  courts  enforcing 
property rights remain overburdened with a significant, although declining, backlog of cases. 
Property  restitution  continued,  with  more  than  half  of  the  cases  resolved,  and  restitution  in 
kind  is  almost  complete.  Fair  competition  is  negatively  affected  by  the  size  of  the  informal 
economy,  which  remains  considerable,  estimated  at  up  to  30 %  of  GDP.  Unpredictable  and 
unjustified  para-fiscal  charges  continue  to  hamper  the  business  environment.  Licensing 
procedures  under  different  authorities  often  lack  transparency,  creating  a  discriminatory 
business  environment.  More  efforts  are  needed  to  streamline  the  work  of  different 
inspectorates. 

43 

 
 
 
 
State influence on product markets 

The  state  presence  in  the  economy  slightly  declined.  The  share  of  administered  prices 
(estimated  at  19 %  of  the  consumer  basket)  was  broadly  unchanged.  Advances  in  the 
privatisation  and  restructuring  of  state-owned  enterprises  (together  with  cyclical  factors 
stemming from favourable international market developments) helped improve their financial 
performance. As a result, the level of direct state aid to them has fallen. Nevertheless, some 
enterprises  accumulated  new  arrears  and  the  non-transparent  practice  of  taking  over  part  of 
their debt by the state, in particular towards the electricity company EPS and the gas supplier 
Srbijagas, continued. Electricity prices increased slightly as of October 2017. Administrative 
capacity and political willingness to manage subsidies remains weak. The provision of budget 
subsidies to foreign investors, in a non-transparent manner and without systematic control of 
the state aid authority, also continued. 

Privatisation and restructuring 

Privatisation  and  restructuring  of  state-owned  enterprises  advanced,  although 
challenges remain. After the Privatisation Agency closed in 2016, most of the companies in 
its portfolio went into bankruptcy proceedings. There were several successful privatisations of 
companies  that  had  been  a  burden  on  public  finances  for  years.  Nevertheless,  around  140 
companies,  employing  some  50,000  people,  remain  to  be  resolved.  A  big  part  of  the 
employment  is  concentrated  in  several  large  enterprises  in  the  petrochemical  and  mining 
sectors. The authorities have committed to either launching privatisation tenders for them or 
seeking strategic investors in the first half of 2018. The restructuring of key utilities advanced 
with  varied  speed  and  success.  "Railways  of  Serbia"  has  taken  important  steps  towards 
reorganising  its  assets,  network  and  staff.  The  state-owned  power  utility  Elektroprivreda 
Srbije  followed  its  restructuring  plans  only  partially.  The  company  also  has  to  address 
corporate  governance  and  management  issues.  These  issues  were  a  factor  in  the  temporary 
decline  in  electricity  production  in  early  2017.  The  payment  collection  rate  of  Srbijagas 
continued to improve and future investment decisions by the enterprise should be based on a 
new  appraisal  methodology.  The  delayed  unbundling  of  the  company  and  further 
strengthening of its operational and financial performance remains a priority. 

Functioning of the financial market 

Financial stability 

The  performance  of  the  financial  sector  improved.  The  liquidity  position  of  the  banking 
system remained strong, while capital adequacy increased further from an already high level. 
The  benign  economic  environment  and  lower  provisioning  needs  boosted  profitability  to 
levels  not  seen  before  the  2008  crisis.  The  implementation  of  the  resolution  strategy  for 
non-performing loans supported a reduction of the gross non-performing loans ratio to 11.1 % 
in November 2017 — its lowest value since 2009 and down by nearly half since its peak in 
2015. In 2017, banks wrote off non-performing loans worth 2.3 % of GDP — most of it due 
to  a  central  bank  decision  requiring  the  accounting  write-off  of  fully  provisioned 
non-performing loans. Despite these strong results, the level of non-performing loans is still 
high,  and  their  reduction  was  uneven  and  less  pronounced  in  state-owned  banks.  With  the 
exception  of  preparations  for  steering  Banka  Postanska  Stedionica  towards  retail  banking, 
restructuring and privatisation plans for state-owned financial institutions have been delayed 
amid persistent governance issues. In the last 2 years, the proportion of overall deposits and 
loans  in  dinars  rose,  although  still  only  slightly,  driven  mainly  by  higher  dinarisation  of 
household loans and deposits. Financial stability was enhanced by continuous improvements 
in the regulatory and macroprudential framework and in particular the introduction of Basel 
III standards last year. 

44 

 
 
 
Access to finance 

Lending  activity  accelerated  and  access  to  finance  improved.  The  financial  system  is 
dominated by foreign-owned commercial banks, which hold three quarters of banking system 
assets. The banking sector consolidated following the merger or sale of several small banks. 
State  control  of  key  entities  in  both  the  banking  and  insurance  sectors  has  remained 
unchanged, as privatisation plans have been delayed. Lending conditions improved. The cost 
of  corporate  and  household  borrowing  declined rapidly  from  the  beginning  of  the monetary 
easing cycle in September 2013 until mid-2016, and has continued falling since then, although 
at a much lower pace. At the same time, in the last two years, demand for new loans started 
recovering and commercial banks eased their credit standards, contributing to increased credit 
activity. This was particularly marked in some segments of the market such as cash loans to 
households, which grew to rival housing loans and will need to be managed carefully to limit 
excesses  and  reduce  financial  system  vulnerabilities.  Total  commercial  bank  lending  to  the 
non-monetary  sector,  excluding  effects  from  the  exchange  rate  and  non-performing  loan 
write-offs,  increased  by  close  to  10 %  in  2017.  However,  it  remained  rather  low,  at  an 
estimated 46 % of GDP. 

Functioning of the labour market 

Labour  market  conditions  improved  further,  although  unemployment  is  still  high.  In 
2017 the employment rate reached 46.7 % — its highest level since the start of the (revised) 
labour force survey in 2014. The structure of employment improved slightly, as informal and 
agricultural employment declined,  although both remained significant at around one fifth  of 
total  employment.  Employment  in  industry  and  services  and  registered  private  sector 
employment  increased.  Wages  grew  only  moderately.  Unemployment  fell  significantly  as 
gains in employment outweighed the number of those entering the labour market. However, at 
13.5 %  in  2017,  it  is  still  high.  Long-term  unemployment,  i.e.  the  number  of  unemployed 
people  looking  for  a  job  for  more  than  a  year,  declined  by  around  35 %  over  the  last  three 
years.  The  position  of  women  and  youth  on  the  labour  market  improved  as  well,  although 
their rates of activity, employment and unemployment remained far worse than those of men. 

Figure  2  Unemployment  in  Serbia  (%  of 
active population) 

Figure 34 Participation rates in Serbia (% 
of labour force) 

60

50

40

30

20

10

0

80

70

60

50

40

30

20

10

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unemployment rate

Youth unemployment rate

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Women

Men

Source: Eurostat, national sources 

Limited  steps  were  taken  to  address  major  structural  problems  of  the  labour  market. 
Demographic trends are very negative: the population is rapidly declining  and aging. While 
demand  for  labour  is  growing,  job  creation  is  still  inadequate.  Emigration  of  the  highly 
educated remains a serious challenge. Almost a quarter of all unemployed completed tertiary 

45 

 
 
 
 
 
 
education,  which  points  to  a  considerable  gap  between  acquired  skills  and  labour  market 
demand.  About  1  in  5  in  the  age  group  15-24  is  not  in  employment,  education,  or  training, 
albeit  there  have  been  some  improvements.  Active  labour  market  measures  target  young 
people,  women,  redundant  workers  released  in  the  process  of  restructuring  state-owned 
enterprises,  and  long-term  unemployed.  However,  these  measures  are  too  limited,  given  the 
number  of  unemployed,  and  predominantly  one-off  like  job counselling and  job  fairs.  In  an 
attempt  to  boost  job  creation,  reduce  undeclared  work,  and  limit  the  impact  on  cost 
competitiveness  of  the  decision  to  increase  the  minimum  wage  by  10 %,  the  government 
increased  the non-taxable personal income threshold from the beginning of 2018.  However, 
labour  taxation, in  particular the social security burden, remained disproportionally high  for 
lower wages. 

3.2 The capacity to cope with competitive pressure and market forces within the EU 

Serbia  has  made  some  progress  and  is  moderately  prepared  to  cope  with  competitive 
pressure  and  market  forces  within  the  EU.  The  structure  of  the  economy  improved  and 
economic integration with the EU increased further. 

However,  the  quality,  equity  and  relevance  of  education  and  training  do  not  fully  match 
societal  and  economic  needs.  The  level  of  investment  activity  is  also  below  the  economy’s 
needs. Despite  some improvements, SMEs face a number of challenges, including high  and 
unpredictable para-fiscal charges, and difficult and costly access to finance. 

In order to support long-term growth, Serbia should pay particular attention to: 

→ continue to improve the quality, equity and relevance of the education system; 

→  stimulate  private  investment  and  improving  prioritisation  and  management  of  public 
infrastructure projects; 

→ better regulate and reduce para-fiscal charges. 

Education and innovation 

The  education  system  faces  a  number  of  structural  challenges.  Serbia’s  population  is 
ageing and shrinking by around 0.5 % per year. Public spending on education as a percentage 
of  GDP  is  comparable  to  that  of  EU  countries,  but  outcomes  in  terms  of  skills  and  key 
competences  are  weaker.  Serbia  ranked  below  all  EU  Member  States  in  the  2017  World 
Economic Forum human capital index, with particularly weak results in the 15-24 age group. 
The level of research investment is below 1 % of GDP and cooperation between researchers 
in the public and private sector is not systematically supported. 

The  quality,  equity  and  relevance  of  education  and  training  have  to  be  improved  in 
order  to  better  match  societal  needs.  Both  employers  and  graduates  believe  that  the 
country’s  education  institutions  do  not  equip  students  with  key  soft  skills,  such  as  problem 
solving  and  decision-making.  National  strategic  documents  and  recently  adopted  legislation 
aim  to  address  the  outdated  curricula  and  obsolete  teaching  methods  in  pre-university 
education; however, the implementation is yet to follow. The Law on national qualifications 
framework  has  been  adopted  and  should  now  be  linked  with  a  progressive  reform  of  the 
education system at all levels, including non-formal and informal learning. 

Physical capital and quality of infrastructure 

The  stock  and  quality  of  infrastructure  is  poor  and  below  the  economy’s  needs.  The 
share  of  total  investment  in  the  economy  is  low  at  below  20 %  of  GDP.  Work  on  major 
infrastructure projects intensified in recent years but the level of public investment remained 
suboptimal.  Foreign  direct  investment  has  been  on  the  rise  in  the  last  three  years,  staying 

46 

 
 
 
above  5 %  of  GDP.  A  large  share  of  it  was  channelled  into  greenfield  projects  in  tradable 
sectors, thus further increasing the production and export base. 

Structural reforms in the transport and energy sectors could support new investment. In 
order  to  ensure  efficient  use  of  public  resources,  the  investment  appraisal,  implementation, 
and  monitoring  processes  need  to  be  further  strengthened.  The  transport  and  energy  sectors 
require  improvement  in  traffic  management,  maintenance  and  road  safety,  and  in  energy 
efficiency  and  diversification.  Information  and  communication  technology  infrastructure 
continued to expand. Almost two thirds of households have internet access at home and the 
use of online public services increased. The authorities have made digitalisation one of their 
top priorities. 

Sectoral and enterprise structure 

The  structure  of  the  economy  continued  to  change  incrementally.  Due  to  its  high 
dependency  on  weather  conditions,  agricultural  performance  was  volatile.  Nevertheless,  its 
share  of  GDP  has  fallen  for  several  years  in  a  row,  confirming  a  shift  in  economic  activity 
towards  other  sectors.  However,  at  6.5 %  of  GDP  and  close  to  a  fifth  of  total  employment, 
agriculture is still relatively important in comparison to peer countries. Services and industry 
remained dominant in the economy, both in terms of value added  — with shares of slightly 
above half and one fifth of GDP respectively — and employment. The recent influx of foreign 
direct  investment  helped  reviving  manufacturing  activity.  However,  some  of  the  foreign 
investments  benefit  from  state  aid  and  remain  technologically  less  sophisticated.  Further, 
sustained investment in industry and manufacturing is needed to safeguard and upgrade skills, 
improve  productivity  and  ensure  the  integration  of  a  larger  number  of  domestic  firms  into 
cross-border value chains. 

Horizontal  support  to  small  and  medium-sized  enterprises  increased.  Small  and 
medium-sized  enterprises  (SMEs)  are  particularly  active  in  construction,  retail  and  tourism 
services.  In  order  to  further  encourage  SME  development,  the  government  extended  the 
activities of the 2016 Year of Entrepreneurship to the whole decade and is providing various 
programmes of financial and non-financial assistance to the sector. Nevertheless, SMEs face a 
number  of  challenges,  including  an  unpredictable  business  environment,  and  are  most 
vulnerable  to  the  high  and  unpredictable  para-fiscal  charges.  Despite  recent  improvements, 
access to finance also remains difficult and costly. 

Economic integration with the EU and price competitiveness 

Figure 5 Serbia trade integration with the EU 

80

70

60

50

40

30

20

10

0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

180

160

140

120

100

80

60

40

20

0

47 

 
 
 
 
Source: Eurostat, national sources 

Economic  integration  with  the  EU 
increased further. Trade openness rose 
above  110 %  of  GDP  in  2017  as  both  imports  and  exports  grew  by  double  digits  in  euro 
terms. The EU is by far Serbia’s main trading and investment partner, accounting for around 
two thirds of total trade and more than three quarters of net foreign direct investment inflows. 
It  is  followed  by  the  Central  European  Free  Trade  Agreement  (CEFTA)  countries,  which 
represented  around  a  fifth  of  exports  but  less  than  5 %  of  total  imports  last  year.  The 
development  of  a  Regional  Economic  Area  based  on  EU  rules  and  standards,  to  which  all 
Western  Balkan  economies  have  committed,  has  the  potential  to  generate  untapped  growth. 
The national quality infrastructure still does not fully support trading operators and there are 
non-tariff  barriers  impeding  intra-regional  trade  as  well  as  the  trade  with  the  EU.  Better 
services could be offered to support the internationalisation of companies, in particular SMEs, 
and to bring domestic and foreign companies together. The dinar appreciated against all major 
currencies  in  2017,  reducing  price  competitiveness.  However,  non-price  competitiveness 
improved further due to rising foreign direct investment in tradable sectors. 

4. 

REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS  

There  are  no  outstanding  issues  concerning  Serbia’s  respect  for  the  Dayton/Paris  Peace 
Agreement. Serbia continues to support Bosnia and Herzegovina’s path to joining the EU and 
the  sovereignty  and  territorial  integrity  of  Bosnia  and  Herzegovina.  As  envisaged  by  the 
Dayton agreement, Serbia continues to preserve special relations with Republika Srpska, with 
whom a joint governmental session was held in Belgrade in November 2017.  

According to the Prosecutor of the International Criminal Tribunal for the former Yugoslavia 
(ICTY)/Mechanism  for  International  Criminal  Tribunals  (MICT),  Serbia's  cooperation  on 
requests  for  assistance  remained  satisfactory  over  the  reporting  period.  In  December  2017, 
both the former ICTY President and ICTY Prosecutor, however, raised again concerns as to 
the  lack  of  cooperation  of  Serbia  in  connection  with  the  ongoing  contempt  of  court  case 
against  Serbian  citizens.  MICT  has  since  confirmed  its  jurisdiction  over  this  contempt  case 
and decided to consider whether to refer for trial this case to national authorities, as provided 
for under its Statute. In this regard, the Serbian authorities indicated that Serbia “is prepared 
to  conduct  criminal  proceedings”  against  the  accused  persons.  MICT  further  granted  the 
Amicus Curiae Prosecutor’s request to make submissions on this referral to Serbia, including 
as  to  whether  it  would  serve  the  interests  of  justice,  the  expediency  of  the  proceedings  and 
would  respect  the  right  of  the  accused  to  a  fair  trial.  The  decision  to  refer  the  case  will 
eventually have to be taken by MICT. 

Serbia  needs  to  fully  and  unequivocally  accept  and  implement  the  ICTY’s  rulings  and 
decisions and to show preparedness to face its recent past. There have been instances in which 
state  authorities  have  provided  public  fora  for  ICTY-convicted  war  criminals.  One  of  these 
cases is the appointment of an ICTY-convicted war criminal as guest lecturer at the Serbia’s 
military academy. This is a worrying development which raises concerns.  

Domestic handling of war crimes  

Serbia does not have bilateral immunity agreements granting exemption from the jurisdiction 
of  the  International  Criminal  Court  and  complies  with  the  EU  common  positions  on  the 
integrity  of  the  Rome  Statute  together  with  the  related  EU’s  guiding  principles  on  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 

48 

 
 
 
 
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, some progress has been made 
on implementing the upgraded plan for 6.289 housing units worth EUR 105 million funded by 
the EU; so far 1 100 housing solutions have  been delivered.  The implementation  is behind 
schedule  but  picking  up.  The  issue  of  refugees’  pensions  between  Croatia  and  Serbia 
continues to be unresolved.  

The unresolved fate of missing persons who disappeared in the conflicts of the 1990s remains 
a humanitarian concern in the Western Balkans. In March 2018 a total of 10 332 people were 
still missing as a result of the conflicts in the region. Of these, 6 675 cases are related to the 
conflict in Bosnia and Herzegovina, 2 057 to the conflict in Croatia and 1 658 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.  Efforts  must  continue  to  find  information  on  potential 
gravesites and clarify the fate and whereabouts of those still unaccounted for. Two sessions of 
the  Belgrade-Pristina  Working  Group  on  Missing  Persons,  chaired  by  the  International 
Committee of the Red Cross (ICRC), were held in 2017. An extraordinary session took place 
at ICRC Headquarters in Geneva, convened in the framework of the round table organised by 
the United Nations Interim Administration Mission in Kosovo (UNMIK), under the auspices 
of  the  Office  of  the  United  Nations  High  Commissioner  for  Human  Rights  (OHCHR),  to 
boost  the  clarification  of  the  fate  of  missing  persons  in  Kosovo.  After  over  18  months  of 
excavation works at the location of potential gravesite at Kizevak mine, Raska municipality, 
the Serbian authorities officially closed the site in June 2017 and have found no trace of any 
victims. The Serbian Ministry  of the Interior  has been  cooperative in  providing information 
from its archives to ICRC, related to persons missing in Kosovo 1998-1999. No information 
has been provided by the Ministry of Defence. In November 2017 a meeting of Serbian and 
Montenegrin  commissions  for  missing  persons  took  place  in  Belgrade  and  relevant 
information  was exchanged. No progress  has  been made  in cooperation between Serbia and 
Croatia. The commissions of the two governments last met formally in June 2015. 

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 maintained 
its engagement in a number of regional cooperation initiatives in south-east Europe, such as 
the South-East European Cooperation Process, the Regional Cooperation Council, the Central 
European Free Trade Agreement (CEFTA), the Adriatic-Ionian Initiative, the European Union 
Macro-Regional Strategies for the Danube Region (EUSDR), the Adriatic and Ionian Region 
(EUSAIR),  the  Brdo-Brijuni  process,  the  Western  Balkan  Six  initiative  and  the  Berlin 
process.  The  Serbian  Prime  Minister  also  participated  in  an  informal  meeting  of  regional 
leaders in Durres, Albania in August 2017. Serbia took over the yearly rotating chairmanship 
of  CEFTA  in  2017.  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, 
especially on the connectivity agenda, has continued to foster increased regional cooperation. 
Building  on  the  results  of  previous  summits,  the  July  2017  Trieste  summit  saw  further 
advances on the ‘connectivity agenda’ but also opened cooperation in new areas, on setting up 
a  regional  economic  area  (REA).  Serbia  has  participated  actively  and  swiftly  appointed  a 
national  coordinator  for  the  REA.  The  implementation  of  the  REA  multiannual  action  plan 
will strengthen trade links in CEFTA to allow further economic integration within the region, 
based  on  EU  rules  and  standards.  Serbia  also  needs  to  reinforce  efforts  to  implement  the 
connectivity  reform  measures  it  committed  to  under  the  connectivity  agenda,  in  particular 

49 

 
 
 
those  enabling  a  regional  electricity  market.  The  implementation  of  the  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. Bilateral conventions on regional cooperation 
(under  Article  15  of  the  SAA)  are  in  force  with  Montenegro  and  the  former  Yugoslav 
Republic  of  Macedonia.  The  convention  with  Bosnia  and  Herzegovina  has  been  signed  in 
January 2018 and is yet to be ratified. Serbia initiated the process of concluding a convention 
with Albania.  

Relations  with  Albania  remained  stable  overall.  The  first  visits  in  decades  by  Albanian’s 
President to Serbia, in March and November 2017, were a major step forward. The Albania-
Serbia  Joint  Chamber  of  Commerce  was  established  in  Tirana.  Bilateral  ties  were  also 
strengthened  on  the  occasion  of  regional  and  international  events  attended  by  both  Prime 
Ministers. Serbia also cooperates with Albania under the Albania-Serbia-Italy Trilateral. The 
latest trilateral meeting took place in February 2018. 

Relations with Bosnia and Herzegovina remained good. The first visit of the newly elected 
Serbian President in the region to Sarajevo in September 2017, which was also the first visit 
of such nature since 2011, was a major milestone. Members of the Bosnia and Herzegovina 
Presidency  in  return  visited  Belgrade  in  December  2017.  Ministers  of  Foreign  Affairs  of 
Serbia, Bosnia and Herzegovina and Turkey met in Belgrade in December 2017. The Chair of 
the Council of Ministers of Bosnia and Herzegovina visited Belgrade in January 2017 and the 
Chair  of  Bosnia  Herzegovina  Presidency  in  January  2018.  Serbian  President  and  Bosnian 
member of the Presidency met in Istanbul in January 2018. 

Relations  with  the  former  Yugoslav  Republic  of  Macedonia  were  good  overall.  Sporadic 
tensions,  such  as  those  in  August  2017,  were  swiftly  resolved.  The  Prime  Minister  of  the 
former Yugoslav Republic of Macedonia visited Belgrade in November 2017. 

Relations with Montenegro continued to be good. The joint committee of the governments of 
Montenegro  and  Serbia  in  the  context  of  the  EU  accession  met  for  the  second  time  in 
November 2016. The Montenegrin Prime Minister visited Belgrade in February 2017 as his 
first bilateral visit following his election. In July 2017, the Serbian Prime Minister took part in 
an  international  meeting  in  Podgorica  and  met  with  her  Montenegrin  counterpart.  Serbian 
Minister of Foreign Affairs visited Podgorica in January 2018. There were no developments 
on issues related to citizenship rights in the two countries. The demarcation of borders is still 
pending. 

Relations with  Turkey deepened.  In October  2017, the Turkish President visited Serbia. On 
this  occasion,  several  agreements  were  signed,  including  on  the  establishment  of  a  High 
Cooperation  Council.  Extension  of  the  existing  bilateral  FTA  was  initialled  by  the  two 
Presidents while the additional protocols were formally signed in January 2018 in Ankara and 
are now pending for parliamentary ratification. The Serbian and Turkish Presidents also met 
in  July  2017  at  the  World  Petroleum  Forum  in  Istanbul,  on  the  occasion  of  the  annual  UN 
General Assembly in September 2017 and in Istanbul in January 2018.   

Relations with neighbouring EU Member States Hungary, Romania and Bulgaria remained 
good.  A  joint  session  of  the  Serbian  and  Hungarian  governments  and  a  bilateral  business 
forum took place in November 2016 in Niš, Serbia. Frequent ministerial meetings were held. 
The Serbian Prime Minister visited Romania in November 2016. The Serbian President took 
part  in  meetings  with  Bulgarian,  Greek  and  Romanian  Prime  Ministers  in  October  2017  in 
Varna and in December 2017 in Belgrade. Relations with Croatia continued to be mixed. The 

50 

 
 
 
Croatian  President  attended  the  inauguration  ceremony  of  the  new  Serbian  President.  The 
Serbian President visited Croatia in February 2018. 

5. NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO 

Work under the EU-facilitated dialogue has continued throughout the reporting period. Four 
official  high-level  meetings  took  place  under  the  facilitation  of  HRVP  Mogherini  in  July, 
August  and  September  2017,  as  well  as  March  2018.  Presidents  Vučić  and  Thaçi  agreed  to 
work  on  a  new  phase  of  the  dialogue  with  a  view  to  a  comprehensive  normalisation  of 
relations  between  Serbia  and  Kosovo.  This  work  is  currently  ongoing  and  needs  to  be 
accelerated. Meetings at technical level resumed early 2018.  

January  2017  saw  an  attempt  to  send  a  train,  emblazoned  with  Serbian  nationalist  slogans, 
from  Belgrade  to  the  north  of  Kosovo.  Following  heavy  pressure  from  the  EU  and  other 
international partners, the train did not enter northern Kosovo.  

Implementation of the 25 August 2015 Agreements has overall been slow. Progress has been 
made  on  the  Association/Community  of  Serb  majority  municipalities  in  Kosovo.  On  4 
April 2018, Kosovo has given a mandate to the Management Team to start drafting the statute 
of the Association/Community. The energy agreement between Serbia and Kosovo must be 
implemented without further delay in order to avoid that this longstanding dispute has further 
consequences for energy stability and security in Serbia, Kosovo and countries across Europe.  
These  consequences  have  become  more  acute  and  visible  in  recent  months.  Serbia  needs  to 
register and license the two Serbian energy companies to be established in Kosovo as a matter 
of  urgency.  A  wall  in  North  Mitrovica  alongside  the  bridge  was  illegally  constructed  in 
December 2016. It has since been dismantled. The  Mitrovica bridge, on which works have 
started in August 2016, should be opened without further delay or obstructions. The telecoms 
agreement  is  now  fully  implemented.  Kosovo  has  been  allocated  a  dialling  code  for  its  use 
and  operation  in  November  2016.  Serbia  established  a  telecommunications  company  as 
subsidiary of Serbija Telekom under the Kosovo legal and regulatory framework.  

Further progress has been made on the implementation of the April 2013 ‘First agreement of 
principles  governing  the  normalisation  of  relations’.  The  justice  agreement  is  now  fully 
implemented. In October 2017, Kosovo President Thaçi decreed 40 Kosovo Serb judges, 13 
prosecutors  and  their  respective  support  staff,  thus  finalising  the  recruitment  process  of  the 
judicial personnel for the north. All former Serbian judicial personnel is now fully integrated 
into  the  Kosovo  system,  as  are  Kosovo  Serb  police  and  civil  protection  personnel.  In  the 
context of the liaison arrangements, official visits are directly arranged by liaison officers in 
line with the relevant agreement but on occasions the agreement is not fully respected. Events 
in  March  2018  surrounding  the  entry  procedures  and  the  treatment  of  Serbian  government 
official Marko Djuric heightened tensions. 

Some of the Technical Dialogue Agreements (2011-2012) are not being implemented. Both 
sides  need  to  remain  committed  to  the  continued  implementation  of  the  agreement  on 
representation  and  participation  of  Kosovo  in  regional  forums.  The  issue  of  university 
diplomas  recognition  is  yet  to  be  solved  as  are  the  licence  plate  related  elements  of  the 
agreement on freedom of movement. 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, Serbia has obstructed progress in constructing four out of six permanent common 
and 
crossing 
Mucibabe/Muçibabë.  Additional  measures  need  to  be  taken  by  Serbia  to  close  illegal 

Tabavije/Bërnjak, 

Konculj/Konqul 

Jarinje/Jarinjë, 

points in 

51 

 
 
 
crossings. Requests for mutual legal assistance are being processed. Serbia provides support 
for the judicial process led by EULEX.  

Overall, Serbia has remained engaged in the dialogue. However, Serbia needs to make further 
substantial  efforts  and  contribute  to  the  establishment  of  circumstances  conducive  to  a 
comprehensive normalisation of relations with Kosovo. A legally binding agreement is urgent 
and  crucial  so  that  Serbia  and  Kosovo  can  advance  on  their  respective  European  paths.  In 
Serbia, President Vučić has launched an internal dialogue on Kosovo in July 2017. 

6. ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

6.1. 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 in the area of free movement of goods. Some progress was 
made in adopting and implementing harmonised and sectoral area legislation.  

In the coming year, Serbia should in particular: 

→ adopt an action plan for compliance with Articles 34-36 of the Treaty on the Functioning 
of the European Union (TFEU); 

→ adopt a strategy and an action plan for the implementation of the EU acquis in this chapter, 
covering both the sectoral (‘New Approach’ and ‘Old Approach’) and horizontal legislation 
and organisations; 

 → provide adequate administrative capacities to ensure the implementation of the European 
Regulation  on  Registration,  Evaluation,  Authorisation  and  Restriction  of  Chemicals 
(REACH), as well as at the Directorate for Measures and Precious Metals. 

General principles 

There was no progress in the area of general principles of free movement of goods. Serbia 
has still not adopted an action plan for compliance with Articles 34-36 of the TFEU. Serbia 
has  also  not  yet  adopted  a  strategy  and  action  plan  for  implementing  the  acquis  on  this 
chapter.  Administrative  structures  for 
technical  regulations,  standards,  accreditation, 
metrology, conformity assessment and market surveillance require further strengthening.  

Non-harmonised area 

Some progress was made in the  notification of technical regulations, with the adoption of 
the law on technical requirements for product and conformity assessment which aims to set up 
the legal basis for the functioning of the Product Contact Point in compliance with the acquis. 
Networks of contact points among authorities and among economic operators benefiting from 
the current notification procedure have been established.  

Harmonised area: quality infrastructure 

The  legal  basis  for  technical  regulations,  standards,  conformity  assessment,  metrology  and 
accreditation  exists  and  is  designed  with  the  aim  of  aligning  with  the  acquis;  however, 
administrative  capacities  and  financial  resources  need  further  improvement  in  the  areas  of 
market surveillance, metrology, accreditation and standards.  

52 

 
 
 
 
On standardisation, the Serbian Institute for Standardisation (ISS) became a full member of 
the  European  Committee  for  Standardisation  (CEN)  and  the  European  Committee  for 
Electrotechnical Standardisation (CENELEC) in January 2017. As of January 2018, the rate 
of adopted European standards has reached 98 % (CEN and CENELEC standards). ISS also 
adopted 26.5 % of European Telecommunications Standards Institute’s standards. 

The  ISS  administrative  and  financial  capacities  have  slightly  improved,  but  require  further 
strengthening.  

The equipment for improving conformity assessment services was upgraded. Currently there 
are  552  conformity  assessment  bodies  in  Serbia  and  180  more  are  in  the  process  of  being 
accredited.   

More  efforts  are  needed  for  the  effective  implementation  of  presumption  of  conformity,  in 
relationship to imports of goods from the EU.  

Concerning  accreditation,  the  Accreditation  Body  of  Serbia  (ABS)  was  re-evaluated 
successfully in a peer evaluation by the European Co-operation for Accreditation Association 
in  2017,  enabling  ABS  to  maintain  its  status  in  the  European  Accreditation  Multilateral 
Agreement. 

On  metrology,  the  Directorate  for  Measures  and  Precious  Metals  has  a  very  low 
administrative  capacity,  preventing  it  from  carrying  out  its  daily  operations  as  well  as  its 
supervisory role. The number of internationally recognised national standards for calibration 
and  measurement  stand  at  147.  No  progress  was  made  on  market  surveillance,  as  the 
amendments  to  the  law  on  general  product  safety,  aiming  to  further  align  with  the  acquis, 
remain to be adopted.  The market inspection’s administrative and financial capacities remain 
inadequate.  In  2017  the  market  surveillance  authorities  carried  out  5,254  inspections  in  the 
area  of  compliance  and  product  safety;  1,228  dangerous  products  were  removed  from  the 
market, in the proactive and reactive market surveillance activities.  

Harmonised area: sectoral legislation 

In  the  area  of  the  ‘New  and  Global  Approach’  product  legislation,  implementing  
legislation  on  equipment  and  protective  systems  intended  for  use  in  potentially  explosive 
atmospheres, recreational crafts, transportable pressure equipment and aerosol dispensers, as 
well as a law on medical devices were adopted in 2017, aiming to ensure full alignment with 
the  acquis.  Implementing  legislation  on  measuring  instruments  has  been  adopted  in  2018, 
with  the  aim  of  fully  aligning  with  the  acquis.  Further  alignment  is  needed  in  the  areas  of 
cableways,  radio  and  telecom  equipment,  pressure  equipment,  construction  products,  civil 
explosives,  pyrotechnic  articles,  toy  safety,  eco-design,  energy  efficiency,  and  on  civil 
explosives. Companies report all transactions regarding civil explosives to the Ministry of the 
Interior. 

In  the  field  of  ‘Old  Approach’  product  legislation,  the  legislation  on  tractors,  motor 
vehicles, non-road mobile machinery emissions is not in line with EU law. The legislation on 
REACH and the legislation on chemicals classification, labelling and packaging (CLP) aims 
to align with the acquis. The CLP law is in line with the UN Globally Harmonised System of 
Classification and Labelling of Chemicals. The adoption of implementing legislation and the 
provision  of  adequate  implementing  capacity  is  needed  for  effective  implementation  of 
REACH.  The  administrative  and  inspection  capacity  necessary  for  the  implementation  of 
REACH  and  CLP  require  strengthening.  On  fertilisers,  the  current  legislation  needs  to  be 
amended to ensure accreditation of the relevant conformity assessment bodies. 

53 

 
 
 
A licensing and regulation system for economic operators dealing with drug precursors is in 
place,  obliging  economic  operators  to  report  suspicious  orders  or  transactions.  The 
mechanisms  to  detect  drug  precursors  smuggling  are  in  place  as  well.  Legislation  on  good 
laboratory practices is in place and aims at full alignment with the acquis.  

On procedural measures, Serbia implemented the military control lists for dual-use goods in 
line with the EU and international export control regime; however national legislation is not 
in  line  with  EU  law  with  regard  to  firearms,  or  defence  products.  Serbian  legislation  on 
pricing  of  medicinal  products  and  on  the  return  of  cultural  objects  unlawfully  removed 
from the territory of an EU Member State needs to be aligned with the acquis.  

6.2. 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 the reporting period.  

In the coming year, Serbia should in particular: 

→  continue  enhancing  cooperation  with  EU  Member  States  on  co-ordination  of  social 
security systems.  

No new legislation on access to the labour market was adopted. Procedures for issuing work 
permits to EU citizens, who are currently covered by rules for third country nationals, need to 
be further simplified. EU citizens will have fully free access to the labour market (without a 
work permit) only from the date of Serbia’s accession to the EU.    

There  has  been  no  progress  on  preparations  for  joining  EURES  (the  European  network  of 
employment services).  

Relating  to  coordination  of  social  security  systems,  a  new  agreement  with  Romania  has 
been ratified, while an agreement with Greece has  been signed. Preparations for agreements 
on electronic exchange of social security data with Bulgaria, Hungary and Italy have started. 
Electronic exchange of social security data is operational with Slovenia, Croatia, the former 
Yugoslav  Republic  of  Macedonia  and  Montenegro.  Legislative  and  technical  conditions  for 
social security institutions to cooperate with their counterparts in EU Member States should 
be further improved. 

There has been no progress on the European Health Insurance Card.  

6.3. 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  areas.  Some  progress  was  made  on  legislative 
alignment  in  the  fields  of  postal  services  and  mutual  recognition  of  professional 
qualifications.  

In the coming year, Serbia should in particular:  

→  adopt  the  umbrella  law  on  services,  continue  to  harmonise  sectoral  regulation  with  the 
umbrella  law  and  the  acquis  and  establish  a  point  of  single  contact  as  a  one-stop-shops  for 
service providers to obtain information and complete administrative formalities online; 

54 

 
 
 
→  adopt  a new  law  on  mutual  recognition  of professional  qualifications  and  implement  the 
adopted strategy and action plan; 

→ adopt the law on postal services and relevant implementing legislation to further open up 
the postal market; increase the capacity for postal services inspection. 

There  were no  developments  on  the  right  of  establishment.  No  point  of  single contact  has 
been established.  

On  freedom  to  provide  cross-border  services,  the  umbrella  law  on  services  has  not  been 
adopted  yet.  An  action  plan  to  align  sectoral  laws  with  the  umbrella  law  and  the  Services 
Directive was adopted in December 2016. 

In September 2017, the government adopted the 2017-2020 strategy for postal services. The 
law  on  postal  services,  aiming  to  align  with  the  second  and  third  Postal  Directives,  is  at  an 
advanced stage of preparation but is yet to be adopted. Implementation of this law should help 
to further liberalise the market and increase the powers of the postal services regulator in line 
with the acquis. Capacity for postal services inspection is still insufficient. The public postal 
operator still needs to be transformed into a private company. 

In  November  2017,  the  government  adopted  a  strategy  for  harmonising,  transposing  and 
implementing the acquis in the field of mutual recognition of professional qualifications. 

6.4. 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.  

Serbia  is  moderately  prepared  on  free  movement  of  capital.  No  progress  was  made  on 
meeting the recommendations set out in 2016.  

In the coming year, Serbia should in particular: 

→ further liberalise capital movements in line with its obligations under the Stabilisation and 
Association Agreement (SAA); 

→  further  align  its  legislation  with  the  latest  acquis  on  the  prevention  of  the  use  of  the 
financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  increase  the 
capacity  of  the  Administration  for  the  Prevention  of  Money  Laundering  and  enhance 
cooperation between all stakeholders to improve investigation and reporting.  

Certain restrictions on capital movements and payments remain in breach of the SAA and 
are not in line with the acquis. These concern financial loans by Serbian legal entities to non-
resident  borrowers  and  the  purchase  of  agricultural  land  by  EU  nationals  on  the  same 
conditions  as  those  for  Serbian  citizens.  Amendments  to  the  law  on  foreign  exchange 
operations, aimed at lifting restrictions on non-resident borrowers, have been agreed but have 
yet to be adopted. 

There  were  no  developments  in  payment  systems;  Serbia’s  legislation  is  already  mostly  in 
line with the acquis in this area.   

Regarding  the  fight  against  money  laundering  and  terrorism  financing,  a  new  law  on  the 
prevention of money laundering and of the financing of terrorism was adopted in December 
2017, further aligning the legislation with the EU Directive on the prevention of the use of the 
financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing  (AML/CFT). 
However a number of strategic shortcomings remain, including on the preventive measures on 
AML/CFT  as  well  as  limited  supervisory  action  in  the  financial  and  non-financial  sector  to 

55 

 
 
 
mitigate the risks. The Financial Action Task Force (FATF) assessed that Serbia has not taken 
sufficient corrective actions to correct strategic deficiencies identified in the 2016 Moneyval’s 
report and invited Serbia to prepare an action plan. In February 2018, FATF included Serbia 
on  its  grey  list  of  jurisdictions  with  strategic  deficiencies  in  their  AML/CFT  regime.  The 
Administration  for  the  Prevention  of  Money  Laundering  (APML)  operates  as  a  financial 
intelligence unit within the Ministry of Finance. In 2017, the problem of inadequate premises 
was solved and new staff were hired. However, the APML continues to be understaffed and 
its  capacity  for  supervision  remains  weak.  In  2017,  2  417  suspicious  transactions  were 
reported. The highest number came from banks, with over 752 reports on suspicious clients. 
The  APML  transferred  information  on  354  reports  to  relevant  enforcement  authorities.  44 
reports were submitted by the APML to the prosecution, which resulted in the conviction of 
10  persons  for  money  laundering.  Cooperation  among  stakeholders  in  this  area  is  still 
insufficient to ensure proper investigation and prosecution of offences. 

6.5. 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. No progress was made during the reporting 
period.  Significant  efforts  are  needed  to  further  improve  competition,  efficiency  and 
transparency in public tenders. 

In the coming year, Serbia should in particular: 

→  ensure  further  alignment  with  the  EU  Directives  on  public  procurement,  including 
concessions; 

→  ensure  that  intergovernmental  agreements  concluded  with  third  countries  and  their 
implementation  do  not  unduly  restrict  competition  and  are  in  line  with  the  national 
legislation and the EU acquis; 

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

Institutional set-up and legal alignment 

The  legal  framework  is  broadly  in  line  with  the  acquis.  The  legislation  on  defence  and 
security procurement still contains too many exemptions that are excessively applied without 
justification. Serbia should ensure that intergovernmental agreements concluded with non-EU 
countries  and  their  implementation  are  in  line  with  the  principles  of  equal  treatment, 
non-discrimination, transparency and competition and are fully consistent with the EU acquis 
and  national  legislation.  The  law  on  public-private  partnerships  and  concessions  was 
amended in December 2016, among other things to allow scope for awarding a concession in 
phases  if  the  estimated  value  of  the  contract  exceeds  EUR  50  million.  The  government 
adopted  in  January  2017  the  relevant  implementing  legislation  in  relation  to  this  amended 
law. The legislation is not yet in line with the new Directive on concessions.  

In December 2016, the government adopted an action plan for implementation of the public 
procurement  strategy  for  2017.  Implementation  of  this  action  plan  has  been  partial  with 
delays in adopting new legislation. In December 2017, the government adopted a new action 
plan for 2018. 

56 

 
 
 
The  Public  Procurement  Office  (PPO)  supervises  compliance  with  the  law  on  public 
procurement  and  maintains  the  public  procurement  portal.  The  PPO  published  four 
manuals/instructions  and  one  model  for  tender  documentation  for  contracting  authorities  to 
help them apply of the law. 

Implementation and enforcement capacity 

In  the  first  half  of  2017,  Serbia’s  public  procurement  market  decreased  slightly  as  a 
percentage of GDP to 7.2 % following the 2016 trend. In 2016, it had fallen to 8 % from 
8.9 %  in  2015,  following  three  consecutive  increases.  The  average  number  of  bids  per 
tender  improved  in  the  first  half  of  2017  to  3.3,  from  2.9  bids  per  tender  in  both  2016  and 
2015. The share of contracts awarded to foreign bidders  fell to 1 % in the first half of 2017 
after increasing to 5 % in 2016, from 2 % in 2015. 

Monitoring  of  contract  award  and  implementation  remained  stable.  The  proportion  of 
negotiated procedures without prior notice remains low, having fallen to 3 % in the first half 
of 2017 and in 2016, from 4 % in 2015. Open procedures increased to account for 93 % of the 
total  value of contracts in  the  first half of 2017 and in 2016, from 89 %  in  2015 enhancing 
transparency.  Centralised  public  procurement  contracts  rose  to  represent  15  %  of  the  total 
annual  procurement  budget  in  2016  and  the  first  half  of  2017,  from  10.7  %  in  2015.  This 
should  have  a  positive  impact  on  efficiency.  However,  the  use  of  the  most  economically 
advantageous  tender  criterion  fell  sharply  to  12  %  in  2016  and  the  first  half  of  2017  from 
19 %  in  2015.  The  increasing  use  of  the  lowest  price  as  the  selection  criterion  might 
ultimately lead to  higher product life-cycle costs for Serbian citizens. No progress has  been 
made in in the field of e-procurement using e-tools, such as e-submission and e-auctions. A 
detailed  and  comprehensive  plan  for  the  roll-out  of  e-procurement  needs  to  be  prepared. 
Irregularities were found in 10 % of tenders inspected by the State Audit Institution in 2016, 
down from 28 % in 2015, pointing to potentially positive trends in tender implementation. 

Capacity  to  manage  public  procurement  processes  was  further  improved  through  the 
certification  of  670  additional  public  procurement  officials  in  2016  of  and  another  474  in 
2017. The PPO received approval in 2017, for the first time, to increase its staff and to hire 
eight new employees. Recruitment is under way. However, with a total of 28 staff members at 
present and a wide range of responsibilities, the PPO still lacks the administrative capacity to 
carry out many of its tasks. The Commission for Public-Private Partnerships and Concessions 
is  also  understaffed  with  only  the  Vice-President  of  the  Commission  working  full  time  on 
project proposals.  

There were no developments in integrity and handling conflicts of interest. 

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,  an 
independent state body. 

The Republic Commission took 1,370 decisions on requests for protection of rights in 2016 
and  another  834  in  the  first  nine  months  of  2017.  Public  procurement  procedures  were 
partially or fully annulled in 786 cases in 2016 (57 % of all decisions) and in 515 cases in the 
first  nine  months  of  2017  (61 %  of  all  decisions).  The  Republic  Commission  reviewed  the 
implementation of all its decisions ordering a partial or total annulment of public procurement 
procedures. The number of contracting authorities not complying has fallen to below 1 % of 
all  decisions  taken.  In  2016,  the  Republic  Commission  issued  fines  to  11  contracting 
authorities  that  failed  to  comply  with  its  decisions  and  orders.  It  took  a  number  of  other 
decisions  in  line  with  its  broad  mandate,  including  decisions  on  complaints  about  the 

57 

 
 
 
conclusions of contracting authorities in 203 cases in 2016 and another 162 cases in the first 
nine months of 2017.  

On implementation capacity, the Republic Commission prepared an internal action plan to 
improve its work. It gained new members in December 2016, in line with 2015 amendments 
to the law on procurement that increased its membership from 6 to 8. It has not used its power 
to  initiate  and  conduct  misdemeanour  procedures  in  the  first  instance  because  of 
inconsistencies  between  the  procurement  and  misdemeanor  legislation.  This  impedes  the 
access of contracting parties to judicial review by the Republic Commission in this field. 

Administrative courts’ capacity to deal with more complex and numerous public procurement 
cases remains weak and proceedings are very lengthy. 

6.6. 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. No progress was made within the 
reporting period.  

Serbia should pay particular attention in the coming year to: 

→  adopt  the  company  law  under  preparation,  and  continue  to  improve  alignment  with  the 
company  law  acquis,  notably  on  takeovers  and  the  transparency  requirements  for  listed 
companies; 

→ align its accounting and statutory audit legislation with the acquis and ensuring adequate 
funding and resources for the public audit oversight system. 

Amendments to the company law, which will include provisions on cross-border mergers, are 
at an advanced stage of preparation but have yet to be adopted. Further alignment is needed 
on transparency  requirements for listed companies and in remaining  areas  on takeover bids. 
Serbia’s Corporate Governance Code is based on EU’s best practice and on OECD principles. 
Amendments  to  the  law  on  companies  and  the  law  on  the  procedure  for  registering  with  the 
Serbian  Business  Registers  Agency  aim  to  facilitate  e-registration  procedures  for  business 
entities, including single-member companies. Serbia continues to enhance exchange with EU 
Member States’ business registers. 

Concerning corporate accounting and auditing, the legislative framework is not yet aligned 
with the acquis. The system of public audit oversight will be reorganised; here, close attention 
should be paid to requirements for quality assurance, investigations and penalties relating to 
public-interest entities. Serbia applies International Financial Reporting Standards (IFRS) and 
the IFRS for small and medium-sized companies. 

6.7. 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 on intellectual property rights. There was no progress 
in this area. The recommendations set out in 2016 have not been met.  

These remain valid and Serbia should therefore, in particular: 

58 

 
 
 
→  further  align  the  law  on  copyright  and  related  rights,  the  law  on  topographies  of 
semiconductor products, and the laws on patents and trademarks with the acquis; 

→ further strengthen enforcement capacity and coordination of different stakeholders. 

The new law on copyright and related rights and the law on the protection of topographies 
of semiconductor products remain to be adopted. The process for adopting legislation in this 
area is slow. 

On  industrial  property  rights,  the  law  on  patents  and  the  law  on  trademarks  need  to  be 
further aligned with the acquis. The Intellectual Property Office is relatively well staffed and 
efficient. 

Concerning  enforcement,  the  number  of  counterfeit  and  pirated  goods  confiscated  by  the 
Market Inspectorate increased significantly in 2016 and then dropped sharply in 2017 but the 
number of requests submitted to it by economic operators has increased. The number of items 
destroyed  by  the  customs  administration  almost  halved  in  2016  and  this  trend  continued  in 
2017. The number of software legality checks performed by the tax administration decreased 
slightly in 2016 and then increased in 2017. The number of indictments brought by the Public 
Prosecutors  Office  increased  in  2016  and  again  in  2017.  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  established  in  October  2014  did  not  meet  in 
2016.  Its  three  working  groups  were  active  in  awareness  raising  activities,  drafting  of  the 
revised  IPR  strategic  framework  and 
information  exchange  for  IPR  enforcement. 
Coordination  among  different  institutions  involved  in  IPR  enforcement  requires  further 
strengthening, through adequate IT infrastructure. A revised strategic framework for IPR has 
yet to be adopted. 

6.8. Chapter 8: Competition policy 

EU rules protect free competition. They include antitrust rules against restrictive agreements 
between companies and abuse of dominant position, and also include rules on concentrations 
between  companies  which  would  significantly  impede  competition.  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 has been made in the field of legislative alignment and enforcement of 
state aid rules.  

Serbia should pay particular attention in the coming year to: 

→  make  significant  progress  in  the  alignment  of  its  legislation  on  state  aid,  in  particular  to 
repeal  the  exemption  of  enterprises  in  the  process  of  privatisation  from  state  aid  control,  in 
line with its obligations under the Stabilisation and Association Agreement; 

→  take  additional  steps  to  align  existing  schemes,  in  particular  the  fiscal  state  aid  schemes 
(namely the Law on Corporate Income Tax, the Law on Personal Income Tax and the Law on 
Free Zones) with the acquis;                                                                                                                                                                                                                                                                                                                                                                                                                                         

→  step  up  its  efforts  to  make  the  Commission  for  State  Aid  Control  more  independent  and 
effective. 

Antitrust and mergers 

The legislative framework remains broadly in line with Article 101 (restrictive agreements) 
and Article 102 (abuse of dominant position) of the TFEU and with the relevant provisions of 
the  SAA.  The  law  on  protection  of  competition  provides  for  ex  ante  control  of  mergers, 

59 

 
 
 
following the principles of the Merger Regulation. Implementing legislation continues to be 
progressively aligned with the acquis in the areas of antitrust policy and mergers. 

On the institutional framework, the Commission for Protection of Competition (CPC) is the 
main  institution  responsible  for  implementing  the  legal  framework.  It  is  an  operationally 
independent authority whose four members and President are appointed by the parliament, the 
CPC  acts  upon  a  complaint,  notification  (e.g.  for  mergers)  or  on  its  own  initiative.  Its 
decisions may be appealed before the Administrative Court. 

Regarding enforcement capacity, the CPC has enough staff (46, including 29 case handlers). 
On  implementation,  the  number  of  antitrust  cases  and  the  relative  size  and  significance  of 
companies  under investigation has increased. The CPC adopted five decisions on restrictive 
agreements in 2016 and 2017 each. There were also three decisions on abuse of dominance 
cases in 2016 and 2017 each. The level of fines imposed over the past two years was twice 
that of the previous three years (2013-2015) at over EUR 3.5 million in 2016 and 2017. The 
CPC imposed remedies in only two merger cases over the past two years and has still never 
prohibited  a  merger.  The  CPC’s  investigations  of  large  private  and  public  companies 
contributed  to  improving  its  credibility  and  public  image.  Competition  advocacy  activities 
increased.  Over  the  past  two  years,  the  CPC  issued  a  total  of  seven  opinions  on  draft 
legislation in the fields of communal services, services, criminal law, railways and interbank 
charges,  postal  services  and  road  transport  of  freight.  The  CPC’s  decisions  have  been 
increasingly  upheld  by  appeal  courts;  however,  the  capacity  of  the  judiciary  to  handle 
complex competition cases needs to be strengthened significantly.  

State aid 

As regards  the legislative framework,  the national law on state  aid control broadly reflects 
mostly Articles 107 and 108 of the TFEU and the relevant provisions of the SAA. However, 
some provisions in the implementing legislation on certain forms of aid and specific sectors 
need  to  be  aligned  with  the  acquis.  These  concern  the  exemption  from  state  aid  rules  for 
companies in the process of restructuring and privatisation. Existing aid schemes particularly 
the  fiscal  state  aid  schemes  included  in  the  Law  on  Corporate  Income  Tax,  the  Law  on 
Personal  Income  Tax  and  the  Law  on  Free  Zones,  need  to  be  aligned  with  the  acquis.  To 
comply  with  the  SAA,  the  Commission  for  State  Aid  Control  (CSAC)  needs  to  step  up  its 
efforts  to  provide to  the  European Commission  with  information  on  a  number  of  individual 
decisions approving large amounts of state aid to important actors in the economy in line with 
its obligation under Article 73(5) of the SAA. The regional aid map has yet to be drafted. 

On the institutional framework, the CSAC is responsible for implementing the law on state 
aid  control.  The  CSAC’s  decisions  may  be  appealed  against  the  Administrative  Court.  The 
five members of the CSAC are mostly appointed by aid-granting ministries and its secretariat 
is  administratively  part  of  the  Ministry  of  Finance.  As  a  result,  the  CSAC  cannot  be 
considered as operationally independent, as required by the SAA.  

The  enforcement  capacity  of  the  CSAC  remains  insufficient.  With  only  5  full-time  staff 
members in its secretariat, it needs to be significantly strengthened. There was no progress on 
implementation of the law on state aid. In 2016 and 2017, the CSAC took 49 decisions upon 
notification and 39 decisions of its own initiative. This number is comparable to the number 
of  decisions  taken  in  the  previous  years  (2013-2015),  which  may  demonstrate  proactivity. 
However, the CSAC has not yet taken a single decision prohibiting state aid, nor conditional 
decision or a decision in favour of recovery. Monitoring of compliance in this area needs to be 
significantly strengthened, including compliance with the conditions for "cumulation" of aid. 
In November 2017, a European Commission’s investigation confirmed that Protocol V of the 
SAA does not apply in the case of aid granted to the steel mill in Smederevo before its assets 

60 

 
 
 
were privatised. Serbia needs to ensure that this aid is claimed and recorded when liquidating 
the company Zelezara Smederevo. Awareness of state aid rules among stakeholders remains 
low, especially among the authorities granting aid. This is indicated in particular in the low 
number of CSAC decisions that were appealed against the courts. Advocacy activities need to 
be significantly stepped up. 

Liberalisation 

The  law  on  protection  of  competition  and  the  law  on  state  aid  control  apply  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  to  provide  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  in 
line with the state aid acquis. In 2016, the CPC reached three important decisions related to an 
abuse  of  dominant  position  affecting  large  public  companies.  Enforcement  of  competition 
rules  on  public  companies  needs  to  continue.  There  are  no  monopolies  of  a  commercial 
character within the meaning of Article 37 of the TFEU. 

6.9. 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. Some progress was made in 
this  field,  especially  in  the  field  of  banks  and  financial  conglomerates,  but  more  work  is 
required to implement the financial services acquis.  

In the coming year, Serbia should in particular: 

→  take  additional  steps  to  align  with  the  Capital  Requirements  Directive  and  Regulation 
(CRR/CRD IV package) and the Solvency II Directive. 

On banks and financial conglomerates, the National Bank of Serbia (NBS) started in June 
2017 to implement its plan to align with the Basel III standards. The end 2017 deadline was 
not  met  and  efforts  need  to  continue  in  2018.  The  NBS  adopted  an  action  plan  and  a 
supervision  manual  aiming  at  improving  the  bank  supervisory  process.  Legislation  on 
financial conglomerates has yet to be adopted.  

With regard to insurance and occupational pensions, the NBS adopted the strategy for the 
implementation of the Solvency II Directive in July 2016. In the first phase of the strategy, a 
detailed  analysis  of  compliance  was  produced.  In  the  second  phase,  a  quantitative  impact 
study is being implemented. There were no developments on alignment with the Directive on 
the activities and supervision of institutions for occupational retirement provision in the areas 
technical  provisions. 
of  cross-border  activities, 
Administrative  capacity  remains  weak,  notably  in  the  NBS,  Ministry  of  Finance,  Deposit 
Insurance Agency and Ministry of Labour. There were no developments in financial market 
infrastructure. 

investment  rules  and  regulation  of 

In  the  securities  markets  and  investment  services,  amendments  to  the  law  on  financial 
collaterals  have  not  yet  been  adopted.  The  Ministry  of  Finance’s  administrative  capacity  to 
regulate securities markets remains weak. 

61 

 
 
 
6.10. 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 the field  of information  society  and media.  No  progress 
can  be  reported  over  the  past  year,  regarding  the  implementation  of  the  previous 
recommendations.  

In the coming year, Serbia should in particular: 

→ finalise the harmonisation of the legislative framework in electronic communications with 
the 2009 EU regulatory framework; 

→ ensure the financial and operational independence of the two regulators, namely RATEL – 
for electronic communication and postal services and REM – for electronic media; 

→  take  effective  measures  to  improve  market  operators’  access  to  telecommunication 
infrastructure, in particular to ducts, antennas and fibre optic infrastructure; 

→ develop a national strategy on cybersecurity. 

There  was  some  progress  in  the  field  of  electronic  communications  and  information  and 
communication technologies, with the adoption of a law on e-document, e-identification and 
trust  services  in  e-business,  in  line  with  the  acquis.  A  law  on  electronic  communications 
aimed at alignment with the 2009 EU regulatory framework, as well as a law on broadband 
and the Next Generation Networks Strategy until 2023, based on the Digital Agenda, have yet 
to be adopted. The country’s broadband coverage remains low. The administrative capacity of 
the  Ministry  of  Trade,  Tourism  and  Telecommunications  on  these  issues  continues  to  be 
inadequate.  

The  European  emergency  number  112  has  not  yet  been  implemented  and  its  permanent 
financing has still to be ensured.  

RATEL’s financial and operational independence remains limited. Its administrative capacity 
improved slightly; however, further strengthening is needed. Competitive safeguards have yet 
to be fully implemented. Access to infrastructure is regulated, however the implementation is 
not effective and, in practice, operators have difficulties in accessing ducts, fibre optic cables 
and antennas.  

In the field of information society, progress was made with the establishment of an office for 
IT and e-government with horizontal tasks and reporting to the Prime Minister. Progress was 
also made with the adoption of the law on e-government and with the further introduction and 
development of e-services, including at the National eGovernment Portal. Full harmonisation 
of the law on information security with the Directive on network and information systems is 
pending. 49 % of companies are currently active through e-business.  

No progress has been made audio-visual policy.   

The  media  department  of  the  Ministry  of  Culture  is  in  charge  of  developing  the  public 
information system. Two independent regulatory bodies – the Republic Agency for Electronic 
Communications  and  Postal  Services  (RATEL)  and  the  Regulatory  Authority  for Electronic 
Media (REM) – regulate the electronic media sphere.   

A  registry  of  media  services  was  established.  A  rulebook  on  the  procedure  for  issuing  an 
authorisation  for  the  provision  of  media  services  on  demand  and  guidelines  for  identifying 

62 

 
 
 
media services on demand were adopted in 2017. However, the media services registry does 
not currently have any records of on-demand media service providers. 

REM’s  Council  still  operates  with  six  out  of  nine  members,  which  however  is  a  sufficient 
independent, 
quorum  for  decision-making.  While  REM 
politicization, in particular through the appointment of its Council members, persists. 

legally  and  financially 

is 

The REM needs to adopt a new strategy for developing radio and audio-visual media services. 
REM continues to fail to monitor broadcasters effectively. In the 2016 and 2017 monitoring 
reports,  REM  assessed  that  none  of  the  commercial  stations  met  all  programme  content 
obligations under the law on electronic media, but issued no sanctions, which raises questions 
as to the institution’s effectiveness in enforcing the market rules.   

The  stability  and  predictability  of  the  legislation  establishing  sources  of  financing  for  the 
public service broadcasters needs to be strengthened. 

No measures have been taken by the government to systematically include media literacy in 
the educational system. The Ministry of Culture and Information has been playing a proactive 
role in the area of promoting and supporting media literacy initiatives, but on the project level. 

6.11. 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. Good progress 
was  made  by  achieving  entrustment  with  budget  implementation  tasks  for  all  the  measures 
included  in  the  IPARD  II  Programme  and  amending  the  law  on  agriculture  and  rural 
development.  

In the coming period, Serbia should in particular: 

→  implement  the measures  entrusted under the IPARD II programme and seek entrustment 
with budget implementation tasks for other measures of the programme;  

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

As  regards  horizontal  issues,  the  action  plan  for  acquis  alignment  in  agriculture  and  rural 
development still needs to  be adopted.  The National Program for  Agriculture for the period 
2018-2020  was  adopted  in  2017  while  the  program  for  rural  development  still  needs  to  be 
adopted.  A  fully  functional  IPARD  agency  was  established.  The  amendment  to  the  law  on 
agriculture  and  rural  development  established  the  legal  basis  for  IPARD  and  also  for  the 
future  Integrated  Administration  and  Control  System  (IACS),  which  is  yet  to  be 
developed.  Further  alignment  with  EU  policies  requires  decoupling  of  payments  from 
production  and  linkage  of  area  based  payments  to  cross-compliance  standards.  The  Farm 
Accountancy  Data  Network  (FADN)  is  established,  formal  institutional  responsibilities 
designated, and aligning legislation has been adopted. Serbia has a farm advisory system in 
place.  

In  the  area  of  the  common  market  organisation  (CMO),  a  number  of  implementing  legal 
acts  aiming  at  further  alignment  in  the  wine  sector  were  adopted.  Serbia  should  take  steps 
towards  aligning  with  the  other  elements  of  the  CMO,  including  sector  specific  schemes, 
marketing  standards,  support  for  public  and  private  storage,  marketing  and  producer 
organisations, market intervention.     

63 

 
 
 
On rural development, Serbia has taken a significant step forward in being entrusted by the 
European Commission with budget implementation tasks for two investment measures under 
the IPARD II Programme. Serbia should focus on spending EU funds while, at the same time, 
prepare remaining IPARD measures for implementation in 2018.  

Progress is slow in the area of quality policy. Legislation in the area of agricultural products 
and  foodstuffs  needs  to  be  aligned to  facilitate policy  development  in  this  field.  Legislation 
pertaining to quality wine products also needs to be fully aligned with the acquis. As regards 
organic  farming,  Serbia  has  established  a  competent  authority  for  organic  production,  a 
system of accreditation of control bodies and a system of certification of organic production. 
Further alignment with the acquis on organic production is however needed. A national action 
plan for the development of the organic sector has yet to be adopted.  

6.12. 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 reporting period.  

In the coming year, Serbia should:  

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

→  substantially  strengthen  the  administrative  capacity  of  the  veterinary,  phytosanitary  and 
national reference laboratories directorates; 

→ consistently apply and improve the risk based approach to sanitary control at borders. 

In the area of general food safety, Serbia has yet to define a strategy and action plan for full 
transposition of the acquis. Serbia needs to increase the effectiveness of controls, in particular 
by  strengthening  its  administrative  capacity  for  inspections,  applying  risk-based  checks  at 
borders, establishing clear provisions on conflicts of interest, using specific methodologies to 
audit staff regarding their task performance, improving coordination, and drafting integrated 
multiannual  control  plans.  Serbia  should  further  align  its  legislation  on  management  of 
emergency  situations  regarding  food  and  feed  safety  with  the  acquis.  On  food  safety  rules 
and specific rules for feed, the permitted level of aflatoxins in milk has remained higher than 
that  permitted  by  the  acquis.  The  national  reference  laboratory  for  milk  testing  has  been 
opened  but  it  is  yet  to  be  accredited  so  that  it  can  perform  official  controls.  On  veterinary 
policy, the annual programmes of animal health protection measures for 2017 were adopted. 
Serbia is yet to decide on the timing of steps for an acquis-harmonised approach to combating 
classical swine fever. The implementation of the multiannual programme to eradicate rabies 
in  wildlife  was  only  partly  completed  in  2017.  The  Veterinary  Directorate  remains 
understaffed and its administrative capacity further deteriorated, threatening to reach critical 
levels.  The  enforcement  of  legislation  on  animal  welfare,  in  particular  during  the  time  of 
slaughter, needs to improve.  

In  relation  to  the  placing  of  food,  feed  and  animal  by-products  on  the  market,  Serbia 
adopted  a  national  strategy  for  upgrading  agri-food  establishments  in  January  2017,  but  its 
implementation needs to start. The strategy for management of animal by-products has yet to 
be  adopted.  A  national  monitoring  and  control  programme  for  food  of  animal  origin  was 
adopted but is still to be implemented. 

64 

 
 
 
In  the  area  of  phytosanitary  policy,  the  annual  programmes  of  plant  health  measures  were 
adopted. A legal framework for the sustainable use of pesticides and a national action plan to 
reduce the impact of pesticide use – a known risk factor for public health and environment – 
needs  to  be  adopted  and  implemented.  The  plant  variety  list  is  not  aligned  with  the  acquis. 
While the Ministry of Agriculture established the Council for the Assessment of Risk on Food 
Safety,  there  was  no  progress  on  aligning  the  law  on  genetically  modified  organisms 
(GMO) with the acquis. 

6.13. 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  by 
adopting a rulebook on catch certification.  

In the coming year, Serbia should in particular:  

→ adopt an action plan that will ensure full compliance with the requirements of the  acquis 
by the date of accession, in particular regarding organisation of the markets, aquaculture, data 
collection and control measures against illegal, unreported and unregulated fishing.   

Serbia still does not have any structural actions in place for small-scale fisheries or inland 
fisheries.  Administrative  capacity  in  the  sector  needs  to  be  strengthened.  Policies  should  be 
put  in  place  on  market-related  activities  and  data  collection  regarding  fish  and  fishery 
products,  in  line  with  the  acquis.  While  the  rulebook  on  catch  certification  was  adopted  in 
February  2017,  its  implementation  and  full  alignment  with  the  acquis  concerning  illegal, 
unreported and unregulated fishing need to be ensured.  

Statistical data collection on aquaculture for 2016 was carried out in line with the acquis.  

6.14. Chapter 14: Transport 

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 this area. Good progress 
was  made  on  the  2016  recommendations  on  road  safety  and  rail  reform,  which  remain  a 
priority. Administrative capacity for all modes of transport needs to be further strengthened. 

In the coming year, Serbia should in particular:  

→  improve  road  safety  by  taking  measures  to  reduce  fatalities  and  advance  in  Intelligent 
Transport  Systems  (define  the  strategic  framework,  adopt  legislation,  and  improve  capacity 
for implementation and enforcement); 

→  continue  to  focus  on  implementing  rail  reform  including  market  opening,  the  network 
statement, infrastructure management and market monitoring; 

→  comply  with  the  requirements  under  the  first  transitional  phase  under  the  European 
Common Aviation Agreement (ECAA). 

As regards the general transport acquis, key strategic documents for the transport sector are 
in  place.  Updates  need  to  be  adopted  (transport  strategy,  strategy  for  the  transport  of 
dangerous  goods)  and  strategies  for  air  and  road  transport  prepared.  Serbia’s  legislation  is 

65 

 
 
 
fully  aligned  with  the  acquis  on  summertime  arrangements,  and  criteria  for  the  award  of 
public  service  obligations  contracts  are  implemented.  While  overall  administrative  capacity 
needs to be strengthened by means of a streamlined organisation and better trained staff, some 
improvements  have  been  made  by  increasing  the  number  of  staff  in  the  line  ministry. 
Resources  and  staffing  in  the  accident  investigation  body  covering  air,  rail  and  waterborne 
transport need to be further increased for it to become fully operational. EU passenger rights 
legislation needs to be implemented in all modes of transport.  

On road transport, Serbia has a reasonable level of alignment. Legislation on the transport of 
dangerous goods is in place but needs to be further aligned with the acquis. Serbia made good 
progress  in  implementing  legislation  on  the  legal  entities  responsible  for  conformity 
assessment of existing equipment under the law on carriage of dangerous goods. Legislation 
on road freight and passenger traffic is well aligned with EU law, allowing market access for 
national  and  international  goods  and  passenger  transport.  In  February  2017,  Serbia  further 
harmonised its legislation on transport licences. 

In early 2018, Serbia adopted new road safety legislation. The rising trend of fatal road traffic 
accidents was halted, with the number of accidents falling from 607 in 2016 to 580 in 2017. 
However,  the  number  of  road  fatalities  is  still  significantly  above  the  EU  average.  Further 
efforts are needed to reduce them, e.g. by implementing and enforcing road safety legislation, 
by education and awareness raising as well as measures to make roads and vehicles safer for 
users.  Further  progress  on  enforcement  of  roadside  checks  and  the  enforcement  capacity  of 
inspection  officers  was  made.  Efforts  to  draft  legislation  on  clean  and  energy-efficient  road 
transport vehicles and on intelligent transport systems need to be stepped up and legislation 
on the deployment of infrastructure for alternative fuels further developed. The issue of road 
charges potentially discriminating against foreign operators in relation to road charges needs 
to be addressed. 

and 

financial 

the  operational 

On  rail  transport,  Serbia’s  state  railways  consist  of  a  holding  company  and  separate 
subsidiaries  for  infrastructure  management,  passenger  and  freight  operations.  Progress 
towards 
railway 
service/infrastructure  operators  needs  to  be  sustained.  The  network  statement  is  regularly 
updated.  Recent  statements  were  improved  regarding  compliance  with  Serbia’s  general 
negotiating  framework  and  inclusion  of  information  on  railway  facilities  but  further  efforts 
are needed. Good progress has been achieved on rail market opening. Track access has been 
available  to  domestic  railway  companies  since  2016,  and  three  companies  had  entered  the 
market by early 2018. However, further efforts are required to ensure full opening of the rail 
market. 

sustainability  of 

independent 

Railway  safety  legislation  is  in  place  but  further  improvements  in  training  capacity, 
examination methods and licensing procedures are pending. Some technical specifications for 
interoperability  have  been  published,  but  publication  of  the  others  is  needed  to  allow  full 
implementation of existing legislation. 

The legislation on maritime transport is well aligned with the acquis; however, no progress 
was made in developing adequate implementation capacity. The law on maritime navigation 
complies with the acquis on vessel traffic monitoring and information systems. In the area of 
satellite navigation, Serbian participation in the Galileo programme has not started yet.  

In  inland  waterway  transport,  Serbia  has  a  high  level  of  alignment.  The  river  information 
services  system  is  operational  and  highly  interoperable  with  systems  in  EU  Member  States. 
An authority responsible for inland waterways has been set up within the line ministry. Serbia 
actively participates in the EU strategy for the development of the Danube Region (EUSDR). 
It has signed the main international agreements on inland waterways and bilateral agreements 

66 

 
 
 
with  neighbouring  countries.  Administrative  capacity  still  needs  to  be  strengthened,  in 
particular  for  international  cooperation.  Serbia  needs  to  take  further  measures  regarding  the 
river ports network statement. 

Serbia  has  achieved  a  good  level  of  alignment  with  the  acquis  on  aviation  and  has  made 
considerable progress with implementing the first and part of the second transitional phase of 
the  European  Common  Aviation  Agreement  (ECAA).  On  the  Single  European  Sky  (SES), 
Serbia completed transposition and local implementation of SES I and SES II on air traffic. 
Legislation on aviation safety is aligned. Working arrangements with the European Aviation 
Safety  Agency  (EASA)  cover  all  aspects  of  the  acquis  in  civil  aviation  safety  and 
environmental protection of products, organisations and personnel. The suspension of articles 
on the licensing of air carriers and access to air routes should be lifted before the entry into 
force  of  the  second  transitional  phase  of  the  ECAA.  Further  engagement  in  technical 
discussions  on  normalising  the  lower  airspace  regime  over  Kosovo  is  needed  within  the 
Balkans Aviation Normalisation Meetings chaired by NATO. 

As regards combined transport, specific legislation is not yet ready. This mode is covered in 
the  existing  general  transport  master  plan  and  development  plan  for  2015-2020.  The 
construction of the first modern intermodal terminal in Belgrade has yet to start. One privately 
operated intermodal terminal became operational in 2017. 

6.15. Chapter 15: Energy  

EU  energy  policy  covers  security  of  supply,  the  internal  energy  market,  energy  efficiency, 
renewable energy sources, nuclear energy, nuclear safety and radiation protection.  

Serbia  is  moderately  prepared  in  the  field  of  energy.  Some  progress  was  made  on  the 
recommendations set out in 2016, though it was limited to promoting investments in energy 
efficiency and in renewable energy, in addition to progress on nuclear safety.  

In the coming year, therefore, Serbia should in particular: 

→ fully unbundle Srbijagas and develop competition in the gas market; 

→ fully implement the connectivity reform measures; 

→  strengthen  human  capacity  and  promote  investment  in  energy  efficiency  and  renewable 
energy;  and  initiate  reforms  to  introduce  cost-reflective  electricity  tariffs  fully  taking  into 
account investment needs for EU integration and social security implications.  

Serbia  achieved  a  high  level  of  alignment  on  security  of  supply  and  established  a  central 
stockholding  body;  it  still  has,  however,  to  implement  the  action  plan  for  the  Directive  on 
minimum  oil  stocks.  Oil  stocks  increased  slightly  compared  to  the  previous  year, 
corresponding, at the beginning of 2018, to 18 days of average daily consumption. Following 
significant  reductions  in  electricity  production  in  early  2017,  production  recovered  but  coal 
reserves  remain  at  a  low  level.  Planning  capacity  in  Serbia’s  state-owned  public  power 
company EPS needs to be strengthened. Serbia continued with preparatory activities for two 
stretches  of  the  Trans-Balkan  electricity  corridor  and  finalised  works  on  the  interconnector 
with Romania. Preparations for building a  gas interconnector with Bulgaria slowed down in 
2017 and need to accelerate. 

Electricity  power  exchange  increased  in  2017.  The  Framework  and  Inter-TSO  Agreement 
between Serbia’s transmission system operator EMS and the Kosovan operator KOSTT needs 
to  be  fully  implemented  without  any  further  delay.  In  December  2017,  Serbia  signed  an 
agreement with  the Joint Allocation Office Luxembourg  for its border with  Croatia while it 
has yet to establish regionally coordinated auctions with its other neighbouring countries. 

67 

 
 
 
As  regards  the  internal  energy  market,  Serbia’s  primary  legislation  is  compliant  with  the 
third energy package.  The natural gas  grid code has been  drafted but  third-party access and 
other  features  cannot  be  implemented  because  the  transmission  system  operators  Srbijagas 
and Yugorosgaz have not yet been unbundled. The transfer of staff and assets from Srbijagas 
to Transportgas Srbija has yet to start. The functional unbundling of EPS’ distribution system 
operator has to be completed. Both the electricity and natural gas markets are open, with all 
customers  having  the  right  to  choose  their  suppliers.  In  both  sectors,  households  and  small 
customers  have  the  right  to  be  supplied  under  regulated  prices.  The  non-regulated  marked 
accounted for 43.3 % of total end-user electricity consumption in 2016. Electricity tariffs do 
not  reflect  the  level  of  investment  and  maintenance  in  the  electricity  sector  needed  for 
Serbia’s energy and climate reforms. 

The  Serbian  Energy  Agency  is  legally  distinct and  functionally  independent  from  any  other 
public  entity.  The  agency’s  capacity  is  insufficient  for  it  to  take  on  all  regulatory  tasks 
provided for under the third energy package and the new acquis upfront. Staff levels should 
increase from the current 38 staff members to 56 by 2020. 

In  hydrocarbons,  Serbia  has  yet  to  align  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  partly  transposes  the  renewable  energy  Directive.  During  the 
reporting  period,  Serbia  adopted  several  by-laws.  The  by-law  on  bio-fuels  is  still  pending. 
Serbia’s  national  renewables  target  for  2020  is  set  at  27 %  of  gross  final  consumption  of 
energy. The latest data (2015) show renewable sources accounted for 21.8 % share of energy. 
The  new  model  of  power  purchase  agreement  increased  investments  slightly  and  additional 
wind power projects with a volume of 483 MW are in the pipeline. However, Serbia is not yet 
on course to achieve its 27 % target.  

Serbia adopted its third energy efficiency action plan in December 2016. By the end of 2015, 
Serbia had achieved 49 % of its goal of 9 % savings in final energy consumption for 2010-
2018.  In  June  2017,  Serbia  submitted  the  first  annual  report  under  the  energy  efficiency 
Directive. The current legislation on efficient use of energy and on the energy performance of 
buildings is partly in line with the corresponding EU Directives. Alignment with the energy 
efficiency  acquis  continued  through  the  adoption  of  several  by-laws  but  implementation 
remains critically low in terms of consumption based metering and billing in district heating, 
among other topics. Administrative capacity needs to be increased considerably at all levels. 
Capacity  in  the  Ministry  of  Mining’s  department  for  energy  efficiency  is  insufficient  to 
implement  the  acquis.  Serbia  lacks  a  system  of  sustainable  financing  for  energy  efficiency 
measures.  

On  nuclear  energy,  nuclear  security  and  radiation  protection,  Serbia’s  legislation  is 
partially in line with the acquis. Serbia is a signatory of a number of key conventions, treaties 
and  agreements  including  those  on  non-proliferation,  protection  of  nuclear  material  and 
notification  of  nuclear  accidents.  In  18  December  2017,  Serbia  deposited  its  instrument  of 
ratification  of  the  Convention  on  Nuclear  Safety  and  the  Joint  Convention  on  the  Safety  of 
Spent Fuel Management and on the Safety of Radioactive Waste Management. Serbia has one 
nuclear  site  with  two  nuclear  research  reactors  and  radioactive  waste  storage,  and  one 
abandoned uranium mine. In addition to the newly built radioactive waste storage facility, two 
old storage facilities were licensed in November 2016. An action plan has yet to be drafted for 
decommissioning research reactor A at the Vinca site. Preparatory activities for improving the 
radiological and security situation at the Vinca site are under way. The Radiation Protection 
and Nuclear Safety Agency is insufficiently  staffed  to  perform its duties. In  February 2018, 

68 

 
 
 
the  number  of  permanent  staff  posts  was  24.  Inspection  functions  have  not  yet  been 
transferred  to  the  Agency.  The  Agency’s  budget  is  insufficient  to  ensure  its  proper 
functioning. 

6.16. 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 
legislative alignment, but the reform of the tax administration has slowed down.  

In the coming year, Serbia should pay particular attention to: 

→ remove discrimination in the application of excise duties on imported spirits,  

→ step the implementation of the tax administration reform programme to further simplify tax 
procedures, streamline the tax administration’s activities and ensure sufficient human and IT 
resources, improve tax collection and combat the informal economy. 

Legislation  on  indirect  taxation,  adopted  in  December  2016  and  entering  into  force  as  of 
January  2018  removed  the  discrimination  in  the  excise  duties  applied  to  imported  coffee.  
However,  the  excise  duties  continue  to  be  applied  on  imported  spirits  in  a  discriminatory 
manner, in breach of the SAA. At the end of 2016, some steps were taken to further align the 
law on value added tax (VAT) with the acquis, as concerns the application of VAT rules to 
services  provided  to  foreign  persons.  From  December  2017,  VAT  for  foreigners  export  of 
personal  goods  valued  carried  on  their  personal  luggage  over  EUR  100  is  refunded,  further 
aligning  the  legislation  with  the  acquis.  In  direct  taxation,  the  Corporate  Tax  Law  further 
simplified  write-off  procedures  for  non-performing  loans.  The  law  on  personal  income  tax 
increased  non-taxable  thresholds  and  introduced  a  "tax  holiday"  for  start-ups.  The  public 
consultations carried out before this legislation was adopted were insufficient since only a few 
business associations were consulted and they were not given enough time to comment.   

There  was  some  progress  on  administrative  cooperation  and  mutual  assistance.  In  the 
beginning of 2018, Serbia joined the Inclusive Framework to Prevent Base Erosion and Profit 
Shifting  and  the  Global  Forum  on  Transparency  of  Information  for  Tax  Purposes.  It 
committed  to  ratifying  the  OECD  Multilateral  Convention  on  Mutual  Administrative 
Assistance in Tax Matters by the end of 2019.  

On  operational  capacity  and  computerisation  of  the  tax  administration,  positive 
developments in previous years resulted in electronic filing accounting for a high percentage 
of total tax revenues. There were sustained efforts to fight tax evasion, notably on VAT and 
excise duties. The tax administration still lacks administrative capacity. Implementation of the 
2015-2020 general programme for transformation of the tax administration slowed down. The 
government adopted a revised 2018-2023 action plan for its implementation. The programme 
proposes  the  removal  of  non-core  activities  from  the  tax  administration’s  portfolio  and 
proposes  a  further  reduction  of  the  tax  administration’s  local  branches.  Further  efforts  to 
improve the predictability of tax decisions and services to tax payers are still needed. Appeal 
procedures against tax administration decisions remain lengthy. 

6.17. Chapter 17: Economic and monetary policy 

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

69 

 
 
 
Serbia  is  moderately  prepared  and  has  established  a  good  institutional  and  administrative 
framework in the area of economic and monetary policy. Some progress was made as regards 
alignment  with  the  acquis,  especially  through  progressive  improvement  of  the  Economic 
Reform Programme.  

In the coming year, Serbia should in particular: 

→  improve  economic  policy  coordination,  particularly  in  designing  and  implementing 
structural reforms; 

→  put  in  place  a  more  relevant  system  of  fiscal  rules  in  order  to  strengthen  the  budgetary 
framework.  

On  monetary  policy,  the  legal  framework  for  the  central  bank  (National  Bank  of  Serbia  - 
NBS)  guarantees  its  independence;  however,  further  efforts  are  needed  to  comprehensively 
ensure  the  NBS’s  functional  and  institutional  independence,  in  line  with  the  EU  acquis. 
Monetary policy has gradually been further relaxed, while the exchange rate remained stable 
and the NBS reduced the scope of its interventions in the foreign exchange market. Foreign 
exchange reserves are  kept at  an appropriate level. With regard to economic policy, further 
alignment  with  the  Directive  on  requirements  for  budgetary  frameworks  is  needed.  Further 
steps  in  aligning  fiscal  reporting  with  the  European  System  of  National  and  Regional 
Accounts  are  necessary.  The  statistical  coverage  and  definition  of  the  general  government 
should be improved. Programme budgeting needs to be strengthened and administrative and 
IT  capacity  reinforced.  Fiscal  rules  are  weak,  non-binding  and  not  respected.  Although  the 
authorities  recognise  the  need  for  new  fiscal  rules,  they  have  not  taken  effective  steps  to 
strengthen  them.  The  Fiscal  Council  is  a  respected  and  independent  institution  that  actively 
participates  in  debates  over  economic  and  fiscal  policy.  The  mandate  of  its  members  was 
recently renewed, which ensured continuity of the work and quality of debate.   

The  2018-2020  Economic  Reform  Programme  was  submitted  on  time.  Its  analytical 
diagnostics  further  improved,  as  did  consultation  of  stakeholders.  The  structural  reform 
framework is coherent and sufficiently comprehensive. However, further efforts are needed to 
inter-ministerial  coordination  and 
improve 
implementation.  

for  economic  planning, 

the  capacity 

6.18. 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 the area of statistics. Some progress was made in further 
aligning some sectoral statistics with the acquis. Serbia notified to the European Commission 
its  nomenclature  for  statistical  regions  and  it  was  accepted  as  compatible  with  the  NUTS 
Regulation. The transmission of statistical data to Eurostat has also improved. The Statistical 
Office needs to retain highly qualified staff to meet the obligations of the acquis.  

In the coming year, Serbia should in particular       

→ adopt the new statistical law to increase the independence of the Statistical Office;  

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

The legal framework for statistical infrastructure is largely in line with the European Code 
of Practice. The professional independence of the Statistical Office of the Republic of Serbia 
(SORS)  needs  to  be  enhanced.  In  this  regard,  a  draft  law  provides  for  the  SORS  to  report 

70 

 
 
 
directly  to  parliament.  Despite  recruitment  in  2017,  the  SORS  needs  to  be  further 
strengthened  by  increasing  staff  numbers  and  improving  their  skills.  The  SORS  has  signed 
memoranda  of  understanding  with  a  large  number  of  the  administrative  data  providers,  but 
further  efforts  are  needed  to  broaden  and  develop  this  cooperation.  Data  transmission  to 
Eurostat  has  further  developed,  but  data  coverage  needs  to  be  increased.  The  main 
classifications (NACE Rev. 2, ISCO-08) are aligned with the EU acquis. 

Concerning  territorial  classification,  Serbia  notified  to  the  European  Commission  its 
classification  of  territorial  units  in  October  2017.  The  definition  of  territorial  units  in  the 
notification is now in line with the EU Regulation on the common nomenclature of territorial 
units for statistics. Serbia should communicate its regional GDP in line with this classification 
to the European Commission as soon as possible.   

Regarding  macroeconomic  statistics,  the  SORS  continued  to  compile  quarterly  and  annual 
GDP  in  current  and  constant  prices.  Quarterly  sector  accounts  are  not  yet  compiled.  Serbia 
has advanced work on the compilation of supply-use and input-output tables, however regular 
production of these tables needs to be established. The SORS transmits good-quality monthly 
data  on  trade  in  goods  in  the  required  breakdown  by  mandatory  partner  country.  The  NBS 
compiles the monthly balance of payment (BOP), quarterly BOP and quarterly international 
investment  position  data,  in  compliance  with  the  Balance  of  Payments  and  International 
Investment  Position  Manual  (BPM6).  It  transmits  annual  data  on  trade  in  services  in 
accordance with the BOP Vademecum. The SORS continues to provide the Commission with 
notification tables for the excessive deficit procedure (EDP). The quality and completeness of 
the EDP notification data and the government finance statistics need to be further improved. 
Financial accounts need to be further developed. Continued efforts are needed to produce the 
complete data required by the ESA 2010 transmission programme. 

With regard to structural business statistics, data coverage is not yet fully in line with the 
acquis.  Some  data  on  national  tourism  is  collected.  For  transport,  road,  railway  and  inland 
waterways data is collected but need to be further harmonised with the acquis. Air transport 
statistics are already broadly compliant. Serbia fully complies with the EU acquis in research 
and  development  and  GBARD  (Government  Budget  Allocations  for  Research  and 
Development) statistics. The Community Innovation Survey is conducted every two years and 
the  data  is  sent  to  Eurostat.  The  annual  surveys  on  information  and  communication 
technology (ICT) partially meet EU standards and are carried out regularly.  

Serbia  is  partially  in  line  with  the  acquis  on  social  statistics.  The  Survey  on  Income  and 
Living Conditions is regularly carried out in compliance with EU standards and data sent to 
Eurostat.  The  European  system  of  integrated  social  protection  statistics,  labour  market 
statistics,  and  labour  cost  statistics  are  in  line  with  the  acquis.  Regarding  the  Labour  Force 
Survey, data sets for 2014Q3-2017Q2 were transmitted to Eurostat in 2017 and consequently 
validated;  the  SORS  provided  good  quality  annual  quality  reports  from  2013  till  2016. 
Statistics  on  structure  of  earnings  was  transmitted  to  Eurostat  in  2016  according  to  EU 
regulations.  Work  to  produce  statistics  on  job  vacancies  progressed,  but  further  efforts  are 
needed.  Public  health  statistics  in  line  with  the  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  requirements  –  the  legal  base  and  databases  need  to  be 
further harmonised. Serbia needs to prepare the methodology and the technical specifications 
for the next population and housing census in 2020/2021.   

Regarding  agriculture  statistics  Serbia  has  aligned  its  Annual  Crops  statistics  system  with 
the acquis and has made very good progress towards compliance in animal and milk statistics. 
Further  efforts  should  be  made  in  developing  poultry  statistics  and  continuing  the 

71 

 
 
 
development of vineyard register and orchard statistics. Serbia submitted aquaculture data to 
Eurostat for the first time in November 2017 and is fully compliant with EU acquis in fishery 
statistics. 

Annual energy statistics are produced for all relevant energy sources. In addition to monthly 
coal  and  electricity  data,  the  SORS  started  transmitting  monthly  gas  data  since  January 
2017.Waste and water statistics have been collected and broadened, and only data on waste 
treatment infrastructure remains incomplete. Some environment statistics are produced. 

6.19. Chapter 19: Social Policy and employment 

Serbia is moderately prepared in the area of social policy and employment. Some progress 
was  made  in  further  aligning  the  relevant  legislation  with  the  acquis,  mainly  in  the  area  of 
health  and  safety  at  work,  and  the  functioning  of  social  dialogue.  Active  labour  market 
policies have been consolidated albeit with very limited coverage of the unemployed.  

In the coming period, Serbia should in particular: 

→ increase financial and institutional resources for employment and social policies to more 
systematically target the young, women and long-term unemployed; 

→  improve  the  adequacy  of  the  social  benefit  system  to  provide  more  effective  support  for 
parts of the population most in need; 

→ significantly strengthen the bipartite and tripartite social dialogue at all levels. 

In the field of labour law, there have been no changes in legislation. The law adopted in 2014 
remains only partially aligned with the  acquis. Legislative work has stalled in areas such as 
the right to strike, the legal framework for the operation of private employment agencies and 
seasonal  work.  A  regulation  on  preventive  measures  for  the  safety  and  health  at  work  of 
young  people  was  adopted  in  the  first  half  of  2017.  A  Regulation  on  the  identification  of 
hazardous  child  labour  came  to  effect  as  of  January  2018.  The  share  of  undeclared  work, 
which stood at 21.8 % in 2017.Q3, 2.3 % down from 2016.Q3, requires the development of a 
comprehensive  approach  in  order  to  achieve  a  significant  reduction.  Labour  inspectorate 
activities have been intensified, notably in relation to combating undeclared work. However, 
the  labour  inspectorate’s  capacities  need  to  be  further  strengthened  including  by  filling 
vacancies and providing it with the necessary equipment and training. 

In the area of health and safety at work, a number of by-laws and rulebooks were adopted. 
These relate to the prevention of sharp injuries in the hospital and healthcare sector, protection 
of health of pregnant workers and workers who have recently given birth or are breastfeeding, 
and protection of young people at work.  

Social dialogue remains weak, in particular regarding the involvement of the Social Partners 
in policy developments relevant to them. Collective agreements are mainly concluded in the 
public  sector;  in  the  private  sector  company  level  bargaining  is  dominant  but  no  aggregate 
figures  are  available.  Four  sectoral  collective  agreements  have  been  signed  (musicians  and 
performing  artists,  agriculture,  construction,  chemicals  and  non-metal  industry).  Two  on 
musicians  and  performing  artists,  and  on  agriculture  are  already  in  force,  the  others  were 
cancelled by the employers’ side. The legal framework needs to be adjusted and the capacity 
of social partners strengthened in order to foster the use of collective bargaining. No progress 
has  been  made  regarding  the  tripartite  dialogue.  However,  the  budgetary  allocation  for  the 
Economic  and  Social  Council  doubled  in  2017.  In  the  second  half  of  2017,  there  was 
agreement between the government and the social partners to raise the minimum hourly wage 
by 10 %.  

72 

 
 
 
On  employment  policy,  the  labour  market  indicators  continued  to  improve  in  2017.  The 
employment rate for the 15-64 years old increased from 45.2 % in 2016 to 46.7 % in 2017. In 
2017 4Q, informal employment rate was 19.8 %. Unemployment went down from 15.3 % in 
2016 to 13.5 % in 2017, while activity rate increased to 54 %. Unemployment for youth has 
decreased  from  35 %  in  2016  to  32 %  but  remains  high.  Severe  challenges  regarding  the 
integration  of  long-term  unemployed,  redundant  workers  and  young  people  into  the  labour 
market  still  remain.  Access  to  the  labour  market  is  particularly  difficult  for  Roma,  women, 
persons with disabilities and youth, especially with secondary education. Budget allocations 
for active labour market policies have been maintained in 2017, but are too low to cover the 
number of jobseekers. Only one sixth of registered unemployed (617 000 in December 2017) 
benefit  from  a  measure,  and  only  20  000  jobseekers  benefit  from  a  longer  training  or  work 
measure. The mid-term performance review of the 2011-2020 National Employment Strategy 
has  been  finalised  and  the  2018  National  Employment  Action  Plan  has  been  adopted.  The 
release  of  the  first  report  on  implementation  of  Serbia’s  Economic  and  Social  Reform 
Programme is still pending. 

There were no developments as regards the European Social Fund.  

In  the  area  of  social  inclusion  and  protection,  in  2016,  7.3 %  of  the  population  was 
considered to live in absolute poverty. About half a million people are unable to meet basic 
subsistence needs.  The  share  of  persons  at-risk-of-poverty  or  social  exclusion  is  the  highest 
among all European countries conducting statistics on income and living conditions (SILC), 
standing  at  38.7 %  (SILC  2017).  The  at-risk-of-poverty  rate  is  25.5 %,  implying  some  1.8 
million  people.  The  law  on  financial  support  for  families  with  children  has  been  adopted, 
while the amendments regarding the laws on social welfare and family law are still pending. 
3.7 % of the population had benefited from financial social assistance in 2016. The Ministry 
of Labour, Employment, Veterans, and Social Affairs allocated RSD 700 million in 2017 for 
the earmarked transfers aimed at developing  existing and establishing new social protection 
services.  The  overall  allocation  is  50 %  higher  than  in  2016.  This  is  urgent  given  that  the 
coverage  and  adequacy  of  cash  benefits  to  provide  for  essential  needs  is  insufficient.  In 
addition, the quality of service needs to improve, and oversight and regulatory mechanisms, 
monitoring  and  evaluation  should  be  strengthened.  The  draft  Law  on  Financial  Support  to 
Families  for  Children  has  been  adopted  and  foresees  increased  levels  of  child  allowance  to 
children  with  disability  and  increased  coverage  with  parental  leave  benefits  for  certain 
categories of women who were previously not recognised as eligible. No progress was made 
in  the  local-level  social  care  services  or  de-institutionalisation  process.  The  system  of 
earmarked  transfers  introduced  by  the  social  welfare  law  needs  to  be  implemented  more 
systematically and transparently.   

In the field of non-discrimination in employment and social policy, the Commissioner for 
Protection  of  Equality  published  the  guidelines  for  the  development  of  anti-discrimination 
policy for employers in Serbia (‘Equality Code of Practice’) in June 2017. Serbian authorities 
should follow-up on its recommendations.  

In  the  area  of  equal  opportunities  between  women  and  men  in  employment  and  social 
policy,  the  employment  rate  for  men  is  now  14.7 %  higher  and  their  activity  rate  15.7 % 
higher  to  those  for  women.  Women’s  inactivity  reflects  unpaid  work  in  the  household, 
inadequate  support  to  women  in  reconciling  work  and  family  responsibilities,  employers’ 
discriminatory treatment of young women, the existing wage gap, lower statutory retirement 
age,  as  well  as  the  existence  of  a  statutory  minimum  social  insurance  contributions  base, 
which discourages formal part-time work.  

73 

 
 
 
6.20. Chapter 20: Enterprise and industrial policy 

EU enterprise and industrial policy strengthens competitiveness, facilitates structural change 
and  encourages  a  business-friendly  environment  that  stimulates  small  and  medium  size 
enterprises (SMEs).  

Serbia is moderately prepared on enterprise and industrial policy. Some progress was made 
on promoting entrepreneurship and facilitating access to finance for SMEs.  

In the coming year, Serbia should in particular: 

→ develop a comprehensive industrial policy based on EU principles and using the findings 
of the smart specialisation exercise; 

→ make efforts to improve the predictability of the business environment, with the emphasis 
on addressing the issue of unpredictable parafiscal charges. 

The  main  tool  of  enterprise  and  industrial  policy  remains  the  strategy  and  policy  for 
industrial development 2011-2020.  It has been implemented only partially and with a focus 
on  restructuring  and  regional  development  rather  than  on  competitiveness.  The  strategy  to 
support the development of SMEs, entrepreneurship and competitiveness 2015-2020 is being 
implemented.  In  order  to  stress  the  importance  of  SMEs  for  the  economy,  the  year  of 
entrepreneurship  in  2016  was  extended  to  a  decade  of  entrepreneurship.  Serbia  is 
implementing the Small Business Act recommendations, although again only partially.  

Serbia  needs  to  increase  predictability  in  the  business  and  administrative  environment  for 
SMEs. To this end, the country should develop performance measurements for policy-making 
activities and put more emphasis on implementing the ‘think small first’ principle. It needs to 
assess the adverse impact of widespread and unpredictable parafiscal charges on SMEs. The 
regulatory  impact  assessment  and  the  SME  test  need  to  be  systematically  performed  when 
making laws and bylaws.  

On enterprise and industrial instruments, Serbia continues to use budgetary subsidies for 
newly-created  jobs  as  an  incentive  for  foreign  direct  investments.  Favourable  loans  and 
guarantees for SMEs are provided by the Development Fund and through joint programmes 
with commercial banks, including through COSME. Access to finance remains costly and is a 
key  obstacle  to  further  development  of  the  sector.  Payment  discipline  is  weak.  In  response, 
Serbia should speed up alignment of its rules on payments, indemnity interest rates, expedited 
recovery procedures and compensations with the EU Directive in this area.   

In  sectoral  policies,  Serbia  has  started  working  on  the  development  of  a  new  sector-based 
industrial  strategy  and  should  step  up  this  work  by  enhancing  administrative  capacity  and 
taking into account the findings of its smart specialisation pilot project.  

6.21 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  on 
the  2016  recommendation  on  the  gas  interconnector  with  Bulgaria  and  on  operational 
planning and infrastructure development.  

In the coming year, Serbia should in particular:  

→  increase  the  number  of  staff  working  on  transposing,  implementing  and  enforcing  the 
Trans-European networks acquis; 

74 

 
 
 
→ advance the adoption of maintenance plans for the entire core network; 

→  accelerate  preparations  for  the  construction  of  the  gas  interconnector  with  Bulgaria;  in 
particular,  finalise  land  acquisition,  the  geotechnical  survey,  and  the  design  for  building 
permit. 

On  transport  networks,  Serbia  continues  to  play  an  active  role  in  the  Western  Balkan  6 
connectivity  agenda,  and  made  good  progress  on  connectivity  reform  measures.  Serbia 
continues to align its legislation on interoperability. Serbia needs to ensure alignment with the 
TEN-T  Regulation  in  implementing  planned  transport  network  projects  including  railway 
projects on the routes Budapest to Belgrade and Belgrade to the border with Montenegro. In 
2017,  moderate  progress  was  made  on  improving  infrastructure  for  navigation  in  Serbian 
waterways.  

In  2017,  Serbia  ratified  the  Transport  Community  Treaty  and  adopted  a  Railway 
Infrastructure  Programme.  Adoption  of  the  updated  transport  strategy  for  2016-2025  is  still 
pending.  The  railway  border-crossing  agreement  between  Serbia  and  the  former  Yugoslav 
Republic of Macedonia has been signed but adequate infrastructure needs to be built for it to 
become  effective.  On  road  infrastructure,  major  sections  of  the  Orient  East-Med  corridor’s 
South  and  East  branches  have  been  finalised.  Construction  of  the  final  part  of  the  Belgrade 
bypass has begun. Serbia needs to continue to implement its priority projects on the core and 
comprehensive networks. 

On  trans-European  energy  networks,  Serbia  progressed  by  adopting  the  2017/2018 
implementation  programme  for  the  energy  development  strategy  in  October  2017. 
Administrative  capacity  for  transposing  and  implementing  the  trans-European  energy 
networks is insufficient and needs to be strengthened. Serbia continued preparations for two 
stretches  of  the  Trans-Balkan  electricity  corridor.  The  Resita-Pančevo  400  kV  electricity 
interconnector between Romania and Serbia was completed on the Serbian side, and put into 
operation in December 2017. Serbia continues to actively participate in the Central and South 
Eastern  Europe  Gas  Connectivity  initiative.  Preparations  for  building  a  gas  interconnector 
between Serbia and Bulgaria slowed down in 2017 and need to accelerate. 

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

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

Serbia is moderately prepared on regional policy and coordination of structural instruments. 
Some  progress  continued  to  be  made  in  gaining  experience  in  managing  EU  funds  under 
indirect management.  

In the coming year, Serbia should, as in the past, in particular: 

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

→ continue to ensure adequate capacity to implement indirect management programmes. 

Some  preparatory  work  was  done  to  introduce  the  legislative  framework  for  EU  cohesion 
policy in the national system. The transposition of key legislation under other chapters (e.g. 
EU  law  on  environmental  impact  assessment,  anti-discrimination  legislation,  public 
procurement, state aid control, etc.) is a necessary prerequisite for effective implementation of 
European structural and investment funds. Multi-annual budget planning is regulated through 
the Law on the Budget System. Credibility of the medium-term budgetary framework which 

75 

 
 
 
is  defined  in  the  Fiscal  Strategy  is  hampered  by  the  fact  that  it  does  not  include  financial 
projections  at  the  sector  strategy  or  programme  levels.  National  co-financing  for  EU 
programmes is ensured at project level but a systematic approach for ensuring national multi-
annual co-financing of cohesion programmes needs to be developed.  

The institutional framework for the management of EU pre-accession assistance (IPA) has 
been established and is operational; however, the implementation capacities need to be further 
tested.  

increasing 

in  2017  by 

Persistent  weaknesses  in  administrative  capacity  in  key  institutions  managing  EU  funds 
were  partially  addressed 
the 
decentralised/indirect  management  structures.  However,  staff  turnover  remains  an  issue  of 
concern  and  a  staff  retention  policy  still  needs  to  be  developed  and  implemented.  Capacity 
building and training activities for the management of EU funds under IPA at national level 
have  increased.  The  staff  has  also  gained  experience  through  the  management  of 
decentralised/indirect  management  programmes.  A  pilot  capacity  building  programme  has 
been  prepared  as  a  first  step  towards  introducing  a  systemic  approach  for  strengthening 
administrative capacity for EU cohesion policy. 

the  number  of  staff 

in 

Some  progress  has  been  made  in  programming  with  the  progressive  introduction  of  the 
sectoral  approach  under  the  IPA.  However  there  is  a  proliferation  of  strategies  in  some 
sectors,  which  need  to  be  consolidated,  costed  and  properly  linked  to  budget  planning.  As 
regards investments, in June 2017 Serbia adopted a decree to better link investment planning 
to  the  budgetary  process.  EU  funded  projects  were  excluded  from  its  application. EU  funds 
are  prioritised  through  the  National  Investment  Committee  and  Single  Project  Pipeline.  In 
view of efficient resource allocation and the need to build sector pipelines for future structural 
fund  management,  Serbia  should  develop  these  existing  parallel  structures  into  a  single 
mechanism for prioritising all investments regardless of the source of financing, in accordance 
with the PFM reform programme adopted by the government.  

On monitoring and evaluation, the monitoring committees under indirect management have 
been  set  up  and  meet  regularly.  The  evaluation  plan  for  decentralised  IPA  funds  has  been 
adopted but implementation has not started yet. A management and information system still 
needs to be strengthened. 

On financial management, control and audit, the national systems were further developed 
to comply with the requirements for indirect management of IPA funds. A Head of the Audit 
Authority was recruited, and the capacities of the institution have been strengthened.   

6.25. Chapter 25: Science and research 

The  EU  provides  significant  support  to  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 is at a good level of preparation in the area of science and research. Some progress 
was  made  with  regard  to  innovation  policy  and  participation  to  the  EU  programmes  for 
research. In the coming year, Serbia should in particular: 

→ implement the national research strategy, and in particular stimulate cooperation between 
industry and academia. 

The  main  priorities  of  the  European  Research  Area  are  incorporated  in  the  strategy  for 
scientific and technological development, adopted at the beginning of 2016. However, there 
has  been  no  progress  in  the  implementation  as  the  strategy  remains  without  an  action  plan. 
The national level of investment in research remains low at 0.9 % of GDP with only one third 

76 

 
 
 
of this amount coming from the private sector. Statistics on the number of researchers are not 
fully aligned with international standards. This impedes more thorough policy dialogue in this 
area. 

Serbia continues to be active and successful in the EU research programme Horizon 2020 as 
well as in EUREKA, COST and the NATO Science and Peace for Security programmes. In 
particular,  the  number  of  early-stage  or  experienced  researchers  participating  in  Marie 
Skłodowska-Curie Actions has increased steadily over the last years, counting a total of 126 
funded  talented  researchers  since  2014.  Progress  was  achieved  by  joining  and  actively 
participating in the European Social Survey. 

On  measures  for  innovation,  the  Serbian  Innovation  Fund  continues  to  be  active  with 
additional  budget  contributions  from  the  ministry.  In  order  to  step  up  cooperation  with 
businesses  and  increase  private  sector  investment,  Serbia  proactively  engaged  in  the  smart 
specialisation  exercise,  in  cooperation  with  the  European  Commission.  It  should  follow  up 
with concrete measures on the recommendations of the exercise.  

6.26. Chapter 26: Education and culture  

The EU supports cooperation in education and culture through funding programmes and the 
coordination  of  Member  State  policy  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 improving the curricula and establishing the Erasmus+ national agency. 

In the coming year, Serbia should in particular:  

→  increase  participation  in  early  childhood  education,  in  particular  by  children  from 
disadvantaged backgrounds; 

→ finalise the establishment of the national qualifications framework system.  

In  the  area  of  education  and  training,  the  education  strategy  and  its  action  plan  is  being 
implemented,  albeit  with  delays.  There  have  been  few  public  consultations  on  recently 
adopted  regulations.  Enrolment  and  attainment  rates  in  pre-university  education  are 
consistently high. However, the participation of children below the age of 6 in early childhood 
education remains low. The rate of early school leavers fell to 7.5 % in 2015, from 8.5 % in 
2014,  while  lifelong  learning  remains  low  at  5 %  (the  EU  2020  target  is  15 %). 
Comprehensive training of school staff is needed to complement the ongoing outcome-based 
curricular changes. The training should focus on developing students’ key competencies. 

Study  programmes  in  higher  education  needs  to  better  match  requirements  in  the  labour 
market. The unemployment rate for graduates with tertiary education (up to 24 years of age) 
has  dropped,  yet  remains  high  at  35.9 %  in  2017.  Emigration  by  young,  skilled  people 
remains  high.  Education  remains  a  high  risk  sector  for  corruption,  especially  in  higher 
education. 

Some progress was achieved in the development of vocational education and training (VET) 
curriculum  to  better  meet  the  needs  of  the  labour  market.  As  the  next  step,  the  national 
work-based  learning  model  in  VET  should  focus  on  setting  up  quality  assurance  and 
monitoring  mechanisms.  The  plans  for  reducing  VET  enrolment  and  enlarging  the  general 
secondary  education  should  continue  by  making  the  curricula  more  relevant  and  increasing 
the  attractiveness  and  quality  of  general  secondary  education.  The  national  qualifications 
framework needs to be finalised and institutional capacities put in place. 

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Some  progress  was  made  in  increasing  the  participation  of  Roma  students  in  all  levels  of 
education.  The  implementation  of  measures  to  reduce  the  Roma  drop-out  and  segregation 
should be strengthened, in particular on the local level. Some progress has been achieved in 
integrating  migrant  children  in  the  education  system,  but  further  support  to  these  efforts  is 
needed. 

Serbia  will  participate  in  the  next  round  of  PISA  testing  (in  2018)  after  it  abstained  in  the 
2015  round.  Serbia  has  formed  a  working  group  with  a  view  of  achieving  substantive 
improvements in reducing the number of low achievers in mathematics, science and reading – 
the areas which were recognised as weak in PISA. Serbia continues to participate successfully 
in  the  Erasmus+  programme  as  a  third  country  with  around  3,000  incoming  and  outgoing 
mobilities  last  year,  with  an  overall  number  of  mobilities  set  above  8  000.  The  country  has 
been performing outstandingly in the Capacity Building for Higher Education action, with 26 
projects  selected  over  the  last  three  calls  (65 %  acting  as  coordinating  institution). 
Participation  in  the  Jean  Monnet  programme  significantly  increased  with  five  selected 
projects.  Preparations  to  set  up  a  national  agency  for  Erasmus  are  progressing  well.  Serbia 
will participate in Erasmus+ under the same conditions and opportunities as the EU Member 
States as of January 2019, which is a significant step forward.  

The Youth Strategy Action Plan 2018-2020 is being drafted. The youth policy coordination 
mechanisms  at  local  level  should  be  further  strengthened.  The  local  branch  office  of  the 
Regional Youth Cooperation Office (RYCO) has been established in Belgrade.  

The Ministry of Culture and Information drafted the Strategy of the Development of Culture 
2017–2027.  The  process  was  criticised  for  lacking  consultations  with  stakeholders.  The 
strategy includes a very ambitious and potentially unrealistic increase of the budget for culture 
from the current 0.68 % to 1.68 % of GDP by 2027. Serbia is implementing measures under 
the  UNESCO  Convention  on  the  Protection  and  Promotion  of  the  Diversity  of  Cultural 
Expression.  

Serbia is participating successfully in the Creative Europe Programme.  

6.27. 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 some level of preparation in the area of environment and climate change. Some 
progress has been made in further aligning with the acquis, strategic planning and addressing 
the 2016 recommendations.  

In the coming year, Serbia should in particular: 

→  enhance  administrative  and  financial  capacity  by  strengthening  the  Environmental 
Protection  Agency,  operationalising  and  adequately  resourcing  the  Green  Fund  and  further 
improving interinstitutional coordination, in particular between central and local levels; 

→ intensify implementation and enforcement work, such as closing non-compliant landfills, 
investing  in  waste  separation  and  recycling,  reinforcing  air  quality  monitoring,  advancing 
river basin management and preparing for Natura 2000; 

→  implement  the  Paris  Agreement,  including  by  developing  a  comprehensive  strategy  for 
climate change, consistent with the EU 2030 framework for climate and energy policies and 
well integrated into all relevant sectors.  

78 

 
 
 
Environment 

In the area of horizontal legislation, Serbia has achieved a high level of alignment with the 
acquis.  The  new  financing  facility  (the  Green  Fund)  is  not  yet  operational.  Predictable 
financing  based  on  the  polluter  pays  principle  is  needed  to  raise  investment  levels  in  the 
sector.  The  quality  of  public  consultations  is  gradually  improving  but  Serbia’s  capacity  to 
carry  them  out  needs  to  increase,  particularly  at  local  level.  The  environmental  impact 
assessment  process  needs  further  strengthening,  especially  for  transboundary  projects  and 
projects  in  the  extractive  industries.  Strategic  environmental  assessments  need  to  cover  all 
relevant  plans  and  programmes  including  the  national  emission  reduction  plan.  Further 
progress is needed on transposing and implementing the remaining horizontal legislation, in 
particular  the  Liability  Directive.  Efforts  to  implement  the  Environmental  Crime  Directive 
and  the  INSPIRE  Directive  are  ongoing.  The  capacities  of  the  environmental  inspectorate 
need to be further strengthened both at central and local levels. 

In  the  field  of  air  quality,  Serbia  has  a  good  level  of  alignment  with  the  acquis.  Available 
data  show  an  alarming  degree  of  over-polluted  air  in  some  of  Serbia’s  main  cities.  The 
quality,  availability  and  accessibility  of  air  quality  data  needs  to  improve.  Serbia  needs  to 
adopt  a  national  air  protection  strategy.  Six  agglomerations  have  been  identified  where  the 
tolerant  value  is  exceeded.  Only  three  air  quality  plans  exist,  one  for  Bor  (2013),  one  for 
Belgrade (2016) and a third for Pančevo (2017). Air quality plans and functioning monitoring 
systems  for  relevant  areas  where  data  is  still  not  available  need  to  be  developed.  Further 
efforts  are  needed  to  finish  transposing  and  implementing  the  EU  Directive  on  volatile 
organic compound emissions, and to comply with EU requirements on the sulphur content of 
liquid fuels. 

Regarding waste management, there is a good level of alignment with the acquis. Efforts are 
ongoing to improve the implementation in this sector, which is at an early stage. The national 
waste  management  strategy  and  municipal  waste  management  plans  need  to  be  updated  to 
reflect legal provisions on waste minimisation and waste separation at source, and to include 
quantitative targets for waste recovery and recycling. The share of recycled waste in overall 
waste management is still low. 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. No progress has been made on medical waste. In Subotica, the first regional 
transfer loading stations were put in operation; this should be replicated in other regions. 

The level  of alignment for  water  quality is moderate. In December 2016, Serbia adopted a 
strategy  for  water  management  running  until  2034.  A  national  strategy  and  action  plan  on 
water  protection  have  yet  to  be  adopted.  Untreated  sewage  remains  the  main  source  of 
pollution.  Serbia  needs  to  make  significant  efforts  to  further  align  its  legislation  with  the 
acquis,  and  to  strengthen  administrative  capacity,  in  particular  for  monitoring,  enforcement 
and  interinstitutional  coordination.  Local  governance  should  be  improved,  in  particular, 
through  establishing  clear  rules  on  responsibilities  for  the  operation  and  maintenance  of 
facilities. A code of good agricultural practice needs to be adopted and implemented. 

The  level  of  alignment  with  the  acquis  in  the  field  of  nature  protection,  in  particular  the 
Habitats  and  Birds  Directive  is  moderate.  Gaps  in  transposition  allowing  hunting  of 
non-huntable  birds  have  not  yet  been  addressed.  Funds  earmarked  in  2017  for  the  national 
ecological  network  and  preparation  for  Natura  2000  remained  unused.  The  institutional 
framework for Natura 2000 needs to be streamlined and adequately resourced. EU standards 
on prohibited means of capturing and killing wild animals need to be fully incorporated in all 
legislation,  including  legislation  on  hunting.  Enforcement  capacities  for  meeting  Serbia’s 

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obligations  under  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild 
Fauna  and  Flora  (CITES)  should  be  strengthened.  The  institutional  set-up  and  national  and 
local  administrative  capacity  need  to  be  substantially  strengthened,  focusing  on  improving 
enforcement. 

As regards industrial pollution and risk management, alignment with most of the acquis is 
at an early stage. Capacity constraints hamper progress in implementation across the sector. 
The  necessary  legal  basis  for  issuing  permits  for  mining  waste  management  has  been 
established. Law enforcement on industrial pollution needs to be stepped up. Serbia needs to 
address  the  acquis  requirement  for  either  a  fully  integrated  permitting  process  covering  all 
areas or formal consultation between permitting authorities. 

There is a high level of alignment with the acquis on chemicals. Further efforts are required 
regarding the REACH and CLP Regulations, and alignment is pending for the legislation on 
animal experiments, asbestos and biocides. Serbia needs to boost its administrative capacity to 
implement the legislation in  these  areas, and ensure proper monitoring of persistent organic 
pollutants. 

Serbia has a good level of alignment with EU rules on noise 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.  Progress  has  been  made  on 
applying tools for the civil protection mechanism, such as post disaster need assessments and 
flood risk mapping.  A strategic framework for civil protection has been developed including 
an  action  plan  on  disaster  risk  management,  although  the  corresponding  law  has  not  been 
adopted. As an active member of the EU Civil Protection Mechanism, Serbia needs to further 
strengthen  its  capacity  for  disaster  prevention,  disaster  risk  reduction  and  disaster  risk 
management  including  flood  risk  management.  As  a  precondition  to  access  to  the Common 
Emergency  Communication  and  Information  System  (CECIS),  Serbia  needs  to  establish 
relevant Secure Trans European Services for Telematics between Administrations (sTESTA) 
connections. Serbia needs to ensure that the Niš Humanitarian Centre does not duplicate the 
role of the Emergency Response Coordination Centre of the European Commission and does 
not contradict its membership in the Union Civil Protection Mechanism. 

Climate change  

Serbia has achieved some level of preparation but implementation is at a very early stage. A 
national cross-sectoral strategy on climate change, consistent with the EU 2030 framework for 
climate  and  energy  policies,  is  currently  being  developed.  It  also  addresses  adaptation  to 
climate change. The National Climate Change Committee should do more to integrate climate 
action into other sectors. In May 2017, Serbia ratified the Paris Agreement. In October 2017, 
Serbia  submitted  its  second  communication  to  the  UN  Framework  Convention  on  Climate 
Change (UNFCCC). However, the accuracy of data provided needs to be improved. 

On  legislative  alignment,  Serbia’s  environmental  protection  agency  continues  to  improve 
greenhouse  gas  inventories.  Work  on  addressing  greenhouse  gas  emissions  from  land  use, 
land use change and forestry started. Serbia needs to reinforce its administrative and technical 
capability to fully align with climate acquis monitoring and reporting. Drafting of legislation 
on  greenhouse  gas  emissions  monitoring,  reporting  and  verification  in  line  with  the  EU 
emissions  trading  system  and  effort  sharing  regulation  was  finalised  in  November  2017. 
Transposition  and  implementation  of  legislation  on  fluorinated  gases  and  ozone  depleting 
substances continues, including preparations to ratify the Kigali amendment to the Montreal 

80 

 
 
 
Protocol.  A  number  of  by-laws  were  adopted  on  the  Fuel  Quality  Directive.  Considerable 
strengthening of administrative capacity is needed, together with awareness-raising activities. 

6.28. 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  in  cross-border  healthcare,  and  serious 
cross-border health threats including communicable diseases, as well as medicines for human 
and veterinary use. 

 Serbia  is  moderately  prepared  in  consumer  and  health  protection.  Some  progress  was 
made with the adoption the law on medical devices and the laws on transfusion medicine and 
bio-medically assisted fertilisation.  

In the coming period, Serbia should in particular: 

→  strengthen  the  administrative  capacity  of  relevant  authorities  for  consumer  protection, 
market surveillance and sanitary inspection; 

→ strengthen the overall managerial capacities and human resources as well as the financial 
sustainability of the public health insurance fund.   

Little  progress  can  be  reported  on  horizontal  aspects  of  consumer  protection.  In  the 
institutional  framework,  the  department  for  consumer  protection  remains  the  main  authority 
for  developing  the  consumer  protection  policy  and  enforcing  collective  consumer  rights, 
initiating  collective  redress  cases.  The  National  Council  for  Consumer  Protection  was 
re-established in April 2017.  The national consumer complaint register is operational and it 
became  publicly  accessible  in  the  reporting  period.  The  number  of  complaints  filed  by 
consumers  in  the  reported  period  amounted  to  16  928,  out  of  which  25  are  currently  being 
solved  in  court  and  14  were  solved  by  out-of-court  procedures.  A  better  cooperation 
mechanism  between  the  line  ministries  and  consumer  organisations  needs  to  be  established.  
The administrative capacity of the authorities for consumer protection and inspection services 
in charge of consumer protection, product safety and non-safety related issues requires further 
strengthening.  

No  progress  was  made  on  product  safety-related  issues,  as  the  amended  law  on  general 
product  safety  focusing,  inter  alia,  on  misleading  products  and  the  law  on  safety  items  of 
general use, regulating issues regarding cosmetics, remain to be adopted. Sanitary inspection 
administrative  capacities  need  to  be  strengthened,  particularly  in  view  of  staff  retirement, 
while  sanitary  inspection  standard  control  procedures  need  to  be  adjusted  with  a  strict  and 
systematic  application  of  risk-based  controls.  Coordination  amongst  the  relevant  Product 
Safety Council stakeholders has improved. 

On  non-safety-related  issues,  some  progress  was  made  with  the  adoption  of  the  law  on 
medical devices in 2017. Serbia needs to align to the remaining acquis in this area.  

In  the  area  of  public  health,  national  legislation  on  healthcare  is  partly  aligned  with  the 
acquis.  There  has  been  no  progress  in  ensuring  the  sustainability  of  the  public  health  fund. 
The national plan for human resources in the health sector is still not implemented, with an 
increased  number  of  physicians  leaving  the  country.  The  EU-funded  centralised  electronic 
health  record  system  is  still  not  used  and  compliance  with  EU  Health  Indicators  is  not  yet 
ensured.  

No  progress  was  made  on  the  preparation  of  a  new  strategy  on  tobacco  control,  the 
implementation of pictorial warnings or an increase in the price of cigarettes. There has been 

81 

 
 
 
a small  increase in the percentage of smokers among women and teenagers in the reporting 
period. In May 2017, Serbia adopted  a law on the confirmation of the protocol to eliminate 
illicit  trade  in  tobacco  products,  in  line  with  the  WHO  Framework  Convention  on  Tobacco 
Control. Tobacco control legislation is partly aligned with acquis, and the use of tobacco in 
public places is not aligned with EU recommendations. 

There was limited progress on aligning with the acquis on blood, tissues, cells and organs, 
following  the  adoption  of  a  law  on  transfusion  medicine  and  on  bio-medically  supported 
fertilisation, both designed to be fully aligned with the acquis. They will be implemented as of 
January  2019.  EU-level  quality,  safety  standards  and  inspection  services  have  yet  to  be 
developed.  The  overall  administrative  and  technical  capacities  of  the  Directorate  for 
Biomedicine to perform oversight of the sector as the competent authority are still quite weak.  

On serious cross-border health threats including communicable diseases, surveillance and 
response  capacities  remain  limited  and  require  modernisation.  A  centralised  health 
information and communication system is yet to be implemented.  

No progress has been made in harmonising with the Directive on the application of patients’ 
rights  in  cross-border  healthcare.  An  e-Health  Unit  at  the  Ministry  of  Health  needs  to  be 
established in order to coordinate the complex activities involved in the implementation of a 
comprehensive health information system at all levels of care.  

More  attention  needs  to  be  given  to  effective,  sustainable  financing  of  disease-specific 
strategies,  including  the  national  HIV/AIDS  strategy  and  awareness-raising,  particularly  on 
the  importance  of  child  vaccination.  Additional  work  is  needed  on  surveillance  of 
antimicrobial resistance and quality control and standardisation of laboratories. Prescribing of 
antibiotics  needs  to  be  strictly  controlled  to  strengthen  the  fight  against  anti-microbial 
resistance. 

Health  promotion  regarding  non-communicable  diseases  is  still  not  advanced.  National 
cancer screening for colorectal, breast and cervical cancers is slowly progressing but in many 
regions of the country  is still only  sporadic and not  performed in  a systematic manner. The 
National Cancer Register is maintained by the National Institute for Radiology and Oncology.  

There was no progress in the development of community-based mental health services. 

Regarding nutrition and physical activity, no progress is noted. 

There were no developments on medicines for human and veterinary use, or on maximum 
sale prices criteria for medicines. On cosmetics there was no progress in the reporting period. 
There was also no progress on drug abuse prevention.   

Regarding  the  prevention  of  harmful  use  of  alcohol,  a  national  programme  to  reduce  the 
harmful effects of alcohol and alcohol induced disorders in the Republic of Serbia has been 
adopted.  

On  health  inequalities,  access  to  healthcare  services  needs  to  be  improved  for  people  with 
disabilities, people living with HIV, children and adults who use drugs, prisoners, women in 
prostitution, LGBTI people, internally displaced persons and Roma.  

6.29. 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. 

82 

 
 
 
Serbia is at a  good level  of  preparation  in  the area  of customs union.  Some  progress  was 
made by streamlining some customs processes.  

In the coming year, Serbia should in particular: 

→ further upgrade the customs processing system by integrating risk management; 

→ further improve the IT system of the national customs to enable integration with the EU 
system. 

As regards customs legislation, there is a high level of alignment with the acquis. Serbia is a 
member  of  the  common  transit  area,  applying  EU  rules  on  transit  movements.  Rules  on 
customs  enforcement  of  intellectual  property  rights  are  broadly  in  line  with  the  EU  acquis. 
The  Regional  Convention  on  Pan-Euro-Mediterranean  (PEM)  preferential  rules  of  origin  is 
applied  in  Serbia.  The  customs  tariff  nomenclature  has  been  aligned  with  the  2017  EU 
Combined Nomenclature. In June 2017 Serbia ratified the Protocol to the WHO Framework 
Convention on Tobacco Control to Eliminate the Illicit Trade in Tobacco Products.  However, 
legislation on duty relief, drug precursors, cultural goods, free zones, and security aspects still 
needs  to  be  aligned  with  the  acquis.  Moreover,  fees  charged  to  lorries  entering  customs 
terminals to discharge customs obligations are not in line with the acquis.  

The  customs  administration  continued  to  strengthen  its  administrative  and  operational 
capacity.  Customs  duty  collection  continued  to  increase  by  6.8 %  in  2016  and  by  8.8 %  in 
2017. Since the successful launch of common transit operations in February 2016, the number 
of transit declarations issued by the customs administration has been rising by 13 % in 2016 
and by 17 % in 2017.  

The customs administration’s new business strategy and the accompanying action plan 2017-
2020  were  adopted  in  November  and  December  2017,  respectively.  Strategic  and  modern 
management  techniques,  including  quality  assurance  and  change  management,  are  lacking. 
The IT strategy also needs to be updated. Work on setting up a functional, interconnected IT 
system progressed, but the IT division continues to lose qualified staff. A system for retaining 
qualified IT engineers should be established. Significant effort and investment are needed to 
ensure interconnectivity and interoperability with EU IT systems. 

The risk management system needs to be strengthened. Pre-arrival/pre-departure risk analysis 
should  be  conducted  consistently  and  across  the  board  and  harmonised  with  the  Union 
Customs Code. Work on strengthening the capacity of the customs laboratory has started, but 
the laboratory needs to be further equipped. 

6.30. 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.  No progress was made in 
the last year and capacity to pursue key challenges in trade policy weakened.  

In the coming year, Serbia should in particular: 

→ urgently remove the recently imposed export restrictions on non-hazardous waste, which 
are  not  justified  under  the  Stabilisation  and  Association  Agreement  and  which  point  to 
weaknesses in administrative capacity to implement trade policy; 

→  complete  its  WTO  accession  by  adopting  a  WTO  and  EU  acquis-compliant  law  on 
genetically modified organisms and complete remaining bilateral market access negotiations; 

83 

 
 
 
the  Ministry  of  Trade,  Tourism  and 
in 
→  strengthen  administrative  capacity 
Telecommunications  for  dealing  with  trade  with  the  EU,  CEFTA  and  WTO  accession,  in 
particular  view  a  view  to  implement  the  multiannual  action  plan  for  the  regional  economic 
area. 

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  (GMO),  and  on  the 
completion of market access negotiations with a small number of WTO members. 

Since  May  2017,  Serbia  has  introduced  a  number  of  restrictions  concerning  the  exports  for 
recovery  of  non-hazardous  waste  leading  to  a  temporary  halt  in  the  issuance  of  new  export 
licences.  Serbia  should  remove  these  restrictions  without  delay  and  avoid  applying  such 
measures unless fully justified.    

 In  November  2017  the  Government  set  up  a  coordination  body  for  trade  facilitation. 
This  body  should  ensure  cooperation  across  different  ministries  dealing  with  trade 
policy as well as with external stakeholders. The capacity of the administration to collect 
market  statistics  is  an  issue  that  needs  to  be  addressed.  The  administrative  capacity  of 
units in the Ministry of Trade, Tourism and Telecommunications in charge of trade with the 
EU, CEFTA and WTO accession needs to be strengthened.  

Serbia aligned its national control list of dual-use goods with the latest EU regime on exports, 
transfer, brokering and transit of these items in May 2017. In December 2017, Serbia adopted 
a  new  regulation  on  the  export  and  import  of  goods  which  could  be  used  for  capital 
punishment,  torture  or  other  cruel,  inhumane  or  degrading  treatment  or  punishment.  It  is 
aligned  with  the  relevant  EU  regulation.  Serbia  needs  to  continue  its  efforts  to  join  the 
Wassenaar Arrangement. 

Serbia took important commitments at the occasion of the Western Balkans Summit in Trieste 
to implement a Multiannual Action Plan for the development of a Regional Economic Area 
(REA)  in  the  Western  Balkans.  The  implementation  of  the  action  plan  will  allow  the 
deepening  and  widening  of  economic  integration  within  the  region,  based  on  EU  rules  and 
standards. It is important for Serbia to play a constructive role within CEFTA to allow for the 
timely and smooth implementation of the REA Multiannual Action Plan. 

As concerns bilateral agreements with non-EU countries, Serbia completed negotiations on 
further  liberalisation  of  trade  with  Turkey  under  the  existing  bilateral  free  trade  agreement. 
Serbia  is  still  negotiating  a  free  trade  agreement  with  Ukraine.  In  November  2016,  Serbia 
signed a bilateral investment treaty (BIT) with Qatar. Serbia needs to ensure compatibility of 
its bilateral investment treaties with the EU acquis.  

Some progress has been made on development policy and humanitarian aid. Serbia has still 
not  established  a  policy  or  legal  frameworks  in  this  area,  and  development  assistance  and 
humanitarian aid is granted on an ad hoc basis. Serbia participates in the EU Civil Protection 
Mechanism. 

6.31. Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  under  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. Some progress was made as Serbia started the review of 
its security and defence strategies and the implementation of its law on restrictive measures. 

84 

 
 
 
In the coming year, Serbia should in particular:  

→  complete  the  review  of  its  national  security  and  defence  strategies  fully  reflecting 
Serbia’s EU orientation in these areas; 

→  continue  to  apply  its  law  adopting  international  sanctions,  including  EU  restrictive 
measures, and monitor its implementation;  

→ improve alignment with EU declarations and Council decisions on common foreign and 
security policy.  

The political dialogue between the EU and Serbia on foreign and security policy issues was 
further  strengthened,  with  the  first  CFSP/CSDP  informal  consultations  held  in  Belgrade  in 
October 2017. The review of Serbia’s 2009 national security and defence strategies is ongoing 
and needs to be finalised to move towards a policy based on the EU’s guiding principles for 
international action, in line with Serbia’s strategic goal of EU membership.  

(For  more  information  on  developments  in  bilateral  relations  with  other  enlargement 
countries and EU Member States, see Political criteria — Regional issues and international 
obligations.) 

The  institutional  framework  enabling  Serbia’s  participation  in  the  common  foreign  and 
security policy (CFSP) and security and defence policy (CSDP) is in place.  

On  the  common  foreign  and  security  policy  (CFSP),  Serbia  supported  the  global  strategy 
for the European Union’s foreign and security policy. When invited, Serbia aligned with 34 
out  of  65  EU  declarations  and  Council  decisions,  representing  an  alignment  rate  of  around 
52 % during the reporting period. Serbia did not align with EU restrictive measures related to 
Russia  and  Ukraine,  among  other  matters.  A  database  for  monitoring  the  imposition  and 
implementation of restrictive measures needs to be established, as provided for in Serbian law 
on  the  implementation  of  international  sanctions,  including  EU  restrictive  measures.  Serbia 
continued to declare support for the territorial integrity and sovereignty of Ukraine, including 
Crimea.  

(For  more  information  on  developments  concerning  the  International  Criminal  Court,  see 
Political criteria — Regional issues and international obligations.) 

Serbia continued with intense relations and strategic partnerships with a number of countries 
world-wide.  Frequent  high-level  contacts  and  regular  bilateral  visits  with  Russia  were 
maintained,  together  with  military  technical  cooperation,  including  joint  military  drills, 
sustained  relations  with  the  Collective  Security  Treaty  Organisation  and  arms  trade 
arrangements.  Serbia  ratified  an  agreement  on  cooperation  and  joint  action  between  its 
Ministry  of  Interior  and  the  Russian  Federal  Protective  Service.  Serbia  needs  to  make  sure 
that implementation of this agreement does not infringe on its obligations under EU accession 
negotiations  related,  inter  alia,  to  data  protection  and  exchange  of  classified  information. 
Serbia  maintained  good  relations  with  the  US.  Serbia  also  participated  in  over  20  military 
joint drills with the US and NATO in 2017. Serbia continued to further strengthen its political 
and  economic  relations  with  China.  Serbia  actively  supported  the  Chinese  'Belt  and  Road’ 
initiative.  

Serbia  supported  EU  measures  and  documents  on  conflict  prevention.  Serbia  chaired  the 
OSCE Forum for Security Cooperation during the last trimester of 2017.    

Serbia continued to participate in some, but not all, international export control arrangements 
and instruments on non-proliferation. Serbia applied for membership of the Australia Group 
in  March  2017  and  ratified  the  Convention  on  Nuclear  Safety  in  November  2017.  Serbia 

85 

 
 
 
complied with the Chemical Weapons Convention and had the legislation and administrative 
structures in place. A small arms and light weapons national registration system and database, 
together  with  a  stockpiling  system,  were  in  place  but  needed  upgrading.  The  process  for 
collecting  and  destroying  illegally  possessed  weapons  and  ammunition  continued.  Serbia’s 
ratification of the Additional Protocol to its Safeguards Agreement pursuant to Article III of 
the Nuclear Non-Proliferation Treaty was still pending. Serbia’s 2009 application to join the 
Wassenaar Arrangement is still pending. 

Serbia  continued  to  engage  actively  with  international  organisations.  Serbia  maintained  its 
policy of military neutrality but cooperation with NATO continued.   

Serbia was implementing its agreement with the EU on security procedures for exchanging 
and protecting classified information.  

Serbia  continued  to  actively  participate  in  military  crisis  management  missions  under  the 
common  security  and  defence  policy  notably  the  EU  training  missions  in  Mali,  Central 
African Republic and Somalia, and EU NAVFOR Atalanta. Serbia continued to participate in 
the roster of the EU Battle Groups. Serbia also participated in UN peacekeeping missions. 

6.32. Chapter 32: Financial control 

The  EU  promotes  the  reform  of  national  governance  systems  to  enhance  managerial 
accountability and sound financial management of income and expenditure and external audit 
of public funds. 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  all  areas.  The 
Commission  recommendations  from  2016  were  partially  implemented.  High  level  political 
support  will  remain  instrumental  for  implementation  of  Public  Internal  Financial  Control 
(PIFC) reforms at all levels of the administration and in state-owned companies.  

In the coming period, Serbia should in particular:  

→  start  preparing  a  policy  document  that  defines  and  explains  the  national  approach  to  the 
implementation  of  managerial  accountability,  including  how  it  applies  to  institutional 
responsibilities, resource allocation, reporting on the achievement of objectives, and financial 
management; 

→    provide  a  mandate  for  the  Central  Harmonisation  Unit  to  implement  quality  reviews  of 
internal control systems in individual institutions and ensure that the Central Harmonisation 
Unit starts to implement such reviews; 

→ take necessary measures to ensure that the system for detection of irregularities works in 
practice, both for the EU funds and for the national budget. 

Public internal financial control  

The  strategic  framework  is  not  fully  in  place.  A  PIFC  strategy  until  2020  was  adopted  in 
May  2017,  but  it  focuses  mostly  on  the  activities  of  the  Central  Harmonisation  Unit.  Some 
deliverables from the action plan to this strategy are already overdue. A policy approach on 
PIFC  in  the  public  sector,  focusing  on  managerial  accountability,  needs  to  be  developed.  A 
mechanism for effective coordination, monitoring and reporting of the public administration, 
public financial management and PIFC reforms needs to be still put in place. 

Managerial accountability still needs to be fully embedded in the administrative culture of 
the  public  sector.  There  are  weaknesses  in  accountability  lines  between  (semi)  independent 
bodies  and  their  natural  parent  ministries  and  in  linking  government  strategic  and  financial 

86 

 
 
 
planning. In addition, the management culture is centralised with little delegation of decision-
making  powers  to  middle  management.  Ministers  and  senior  management  are  involved  in 
technical  decisions,  which  distract 
them  from  key  strategic  functions.  Managerial 
accountability  is  further  limited  by  the  focus  on  compliance  (see  Public  Administration 
Reform).  

The legal framework for internal control implementation is broadly in line with the internal 
control  framework  of  the  Committee  of  Sponsoring  Organisations  and  the  guidelines  of  the 
International Organisation of Supreme Audit Institutions (INTOSAI). However, amendments 
to  the Budget System Law are still needed to reinforce managerial accountability. Also,  the 
FMC  manual  needs  to  be  upgraded.  Implementation  of  internal  control  remains  generally 
weak.  Irregularity  management  and  risk  management  need  to  be  further  developed.  The 
Ministry  of  Finance  has  integrated all  ex-post  control  functions  under  one  department.  This 
functional  consolidation  is  expected  to  ensure  that  centralised  financial  inspection  will  be 
compatible with PIFC requirements.  

Internal  audit  practice  in  the  public  sector  is  still  developing  and  the  situation  across  the 
public sector is diverse. While the legal requirements are in place, clarity is still needed about 
all institutions required to establish an internal audit function. Senior management still needs 
to better understand and actively support internal audit. Most of the central institutions have 
an audit charter and perform audit activity according to strategic and annual audit plans. The 
number of certified auditors, internal audit units and conducted audits has increased, as well 
as the number of recommendations implemented. The Central Harmonisation Unit has done 
internal audit quality review in 10 ministries, but quality assurance needs to further improve.  

The  Central  Harmonisation  Unit  (CHU)  is  gradually  shifting  its  focus  from  training 
activities to methodological guidance. The CHU annual report now attempts to better identify 
weaknesses  and  propose  corrective  measures.  Future  reports  should  assess  both  the 
implementation  of the PIFC strategy and the recommendation  of the previous year’s report. 
While the CHU has the possibility to employ 13 staff, 9 posts are currently filled. 

External audit  

The  State  Audit  Institution’s  (SAI)  constitutional  and  legal  framework  is  in  line  with 
INTOSAI standards. The SAI law provides for a comprehensive audit remit and guarantees its 
functional,  organisational  and  financial independence.  The  SAI  does  not,  however,  audit  all 
public institutions annually. 

On institutional capacity, the SAI is governed by a Council with 5 members nominated by 
the parliament. The SAI has 426 posts. Currently 326 posts are filled, of which 285 are filled 
by  audit  staff.  The  SAI  has  an  internal  audit  unit  with  one  internal  auditor.  The  SAI’s 
Strategic  Development  Plan  for  2016-2020,  which  focuses  on  improved  audit  quality  and 
performance management, is being implemented. The SAI continues to detect errors and file 
misdemeanour, economic offence and criminal charges against individuals with the competent 
authorities.  This  requirement  of  the  SAI  law  needs  to  be  reviewed  in  the  medium  term  and 
addressed in light of the overall national arrangements for budget inspection.  

The  SAI  is  continuously  improving  the  quality  of  its  audit  work.  The  sector  for  audit 
methodology and quality control has been strengthened and internal guidance has been issued. 
Performance audit work is gradually expanding. 

To increase the impact of audit work, the SAI has set up internal procedures to follow up on 
the implementation of audit recommendations. The SAI annual audit report is discussed in the 
relevant parliamentary committee, but effective parliamentary scrutiny and follow-up to SAI 

87 

 
 
 
reports  and  audit  findings  is  not  yet  ensured.  The  SAI  continued  to  proactively  improve  its 
cooperation with stakeholders and increase its communication with the media. 

Protection of the EU’s financial interests  

Serbia has ensured a high degree of acquis alignment, but it needs to assess alignment with 
the new EU Directive on the fight against fraud to the Union’s financial interests by means of 
a criminal law. The anti-fraud coordination service (AFCOS) was set up in August 2017 as 
a unit in the Department for control of public funds in the Ministry of Finance. The envisaged 
number of staff is 9, but currently has only 3. The amended legal provisions require AFCOS 
to  conduct  administrative  checks  of  reported  irregularities.  The  AFCOS  network  is 
operational and meets regularly. A national anti-fraud strategy for the protection of the EU’s 
financial interests was adopted in October 2017.  

Serbia  ensures  cooperation  with  the  European  Commission  and  reports  on  irregularities 
and suspected fraud cases via an online Irregularity Management System. 22 cases have been 
reported through the system since 2012, including 12 cases in 2016 and 1 case in 2017. The 
respective  national  responsibilities  for  reporting  still  need  to  be  clarified.  Although 
cooperation in investigative activity has continued well on a case by cases basis, Serbia needs 
to further develop a solid track record on investigations and reporting on irregularities. 

Protection of the euro against counterfeiting  

Serbia has achieved a high degree of acquis alignment. In December 2017 the National Bank 
of Serbia adopted a decision on authentication of euro coins and banknotes and the handling 
of  euro  coins  unfit  for  circulation.  Serbia  has  signed  the  International  Convention  for  the 
Suppression of Counterfeiting Currency. The technical analysis is performed by the National 
Bank. The National Bank has formal cooperation agreements with the European Commission 
on  coins  and  the  European  Central  Bank  on  banknotes.  Cooperation  with  neighbouring 
countries is ongoing. Serbia takes part in the actions of the Pericles 2020 programme. 

6.33. Chapter 33: Financial and budgetary provisions 

This  chapter  covers  the  rules  governing  the  funding  of  the  EU  budget  ("own  resources"). 
These resources mainly consist of i) contributions based on the gross national income of each 
Member  State;  ii)  customs  duties;   and  iii)  a  resource  based  on  value-added  tax.  Member 
States  must  have  the  appropriate  administrative  capacity  to  adequately  co-ordinate  and 
ensure the correct calculation, collection, payment and control of own resources.  

Serbia  is  at  an  early  stage  of  preparations  in  this  area.  A  group  for  the  coordination  and 
management  of  the  EU’s  own  resources  has  been  set  up.  Some  progress  was  made  in  the 
underlying policy areas affecting the correct functioning of the own resources system.  

In the coming year, Serbia should, in particular; 

→  take further steps to boost the administrative capacity of the coordination group and the 
various institutions involved in the own resources system; 

→  develop the organisational and procedural links between these institutions. 

There was some progress in the underlying policy areas indirectly affecting the own resources 
system  (for  progress  in  these  areas,  see  chapters  16-Taxation,  18-Statistics,  29-Customs 
union  and  32-Financial  control).  There  was  some  progress  towards  meeting  the  specific 
administrative  conditions  for  own  resources,  in  particular  formally  establishing  the 
coordination structure.   

88 

 
 
 
Regarding  traditional  own  resources,  higher  collection  of  customs  duties  was  recorded  in 
2016  and  the  upward  trend  continued  in  2017.  As  regards  value  added  tax  (VAT)-based 
resources,  increased  efforts  by  the  tax  administration  to  fight  tax  evasion  have  led  to 
increased  collection  of  VAT.  As  regards  gross  national  income-based  resources,  national 
accounts  have  further  improved.  However,  Serbia  will  still  need  to  make  further  efforts  to 
ensure  compliance  with 
the 
exhaustiveness of the national accounts and gross national income (GNI) calculations. Despite 
some  positive  results,  instruments  and  mechanisms  to  fight  and  reduce  tax  evasion  and 
informal economy need to be further strengthened.        

the  European  System  of  Accounts  (ESA  2010)  and 

Regarding  administrative  infrastructure,  the  capacity  of  the  institutions  in  charge  in  the 
relevant  policy  areas  needs  to  be  further  strengthened.  A  group  for  the  coordination  and 
management of own resources of the EU tasked with ensuring correct calculation, accounting, 
forecasting,  collection,  payment,  control  and  reporting  on  implementation  of  the  EU’s  own 
resources policy and rules has been established in the Ministry of Finance. 

89 

 
 
 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND SERBIA 

Within the framework of the accession negotiations, twelve chapters have been opened (5 – 
public  procurement;  6  –  company  law;  7  –  intellectual  property  law;  20  –  enterprise  and 
industrial policy; 23 – judiciary and fundamental rights; 24 – justice, freedom, security; 25 – 
science and research; 26 – education and culture; 29 – customs union; 30 – external relations; 
32  –  financial  control;  35  –  other  issues  /  normalisation  of  relations  between  Serbia  and 
Kosovo), two of which have been provisionally closed (chapters 25 and 26). Serbia tabled its 
negotiating  positions  on  chapters  9,  13,  33,  17  and  18.  Serbia  was  also  invited  to  table  its 
negotiating positions on chapters 2, 4, 10, 14, 21, 27 and 28.  

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). Compliance issues remain in the area of state aid and fiscal discrimination 
on  alcohol.  As  of  1  September  2017,  capital  flows  between  the  EU  and  Serbia  should  have 
been  fully  liberalised.  However,  restrictions  on  intra-company  lending  and  sales  of 
agricultural  land  remain.  Since  May  2017,  Serbia  has  introduced  a  number  of  restrictions 
concerning  exports  of  non-hazardous  waste  leading  to  a  temporary  halt  in  the  issuance  of 
export licences. Serbia should address all these compliance issues as a matter of priority.  

Regular political and economic dialogue between the EU and Serbia has continued. Meetings 
of  the  Stabilisation  and  Association  (SA)  Council  took  place  in  December  2016  and 
November  2017.  Sub-committee  meetings  were  held,  together  with  a  meeting  of  a  special 
group on public administration reform. The SA Parliamentary Committee met in September 
and  December  2017.  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  fourth  economic  reform  programme  and  is  implementing 
reforms  recommended  by  the  Economic  and  Financial  Affairs  Council.  Further  efforts  are 
needed  to  improve  the  capacity  for  economic  planning,  inter-ministerial  coordination  and 
implementation. 

Visa-free travel for citizens of Serbia travelling to the Schengen area has been in force since 
December 2009. A readmission agreement between the European Union and Serbia has been 
in  force  since  2008.  As  part  of  the  visa  suspension  mechanism  report,  the  Commission  is 
monitoring and reporting on the continuous fulfilment of the visa liberalisation benchmarks. 
The  mechanism  enables  the  EU,  under  certain  conditions,  to  temporarily  suspend  visa-free 
travel  for  nationals  of  a  certain  country  in  case  of  a  substantial  increase  of  migratory  or 
security risk as well as in case of non-fulfilment of visa liberalisation benchmarks. The first 
monitoring report under the suspension mechanism has been adopted on 20 December 2017. 

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 2017 amounts to EUR 138.2 million overall, with most of the funding supporting 
alignment  with  the  EU  acquis,  justice,  energy  and  environment.  An  additional  EUR  25 
million have been allocated to the IPA Rural Development programme (IPARD). To support 
Serbia  in  border  and  migration  management  following  the  refugee  crisis  of  2015-2016,  the 
Commission has allocated up to EUR 77.6 million which are already under implementation, 
while in December an action of EUR 12 million has been approved by the Board of the EU 
Trust Fund in response to the Syria Crisis to support Serbia in responding to the needs of the 
migrants  present  in  Serbia,  covering  in  particular  costs  incurred  in  food  provision  and 
protection. In addition, Serbia is benefiting from the European Instrument for Democracy and 
Human Rights (EIDHR). 

90 

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

91 

 
 
 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 16.02.2018) 
Serbia 

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

Note 
1) 

2005 
7 456 
77 474 

2012 
7 217b 
77 474 

2013 
7 182 
77 474 

2014 
7 147 
77 474 

2015 
7 114 
77 474s 

2016 
7 076 
77 474s 

National accounts 
Gross domestic product (GDP) (million 
national currency) 
Gross domestic product (GDP) (million 
euro) 
GDP (euro per capita) 
GDP per capita (in purchasing power 
standards (PPS)) 
GDP per capita (in PPS), 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 
(in volume) 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 (2010 = 100) 
Labour productivity per person employed: 
GDP (in PPS) per person employed relative 
to EU average (EU-28 = 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 
(%) 

Note 

2005 
  1 751 3

71 
21 103 

2012 
3 584 23
6 
31 683 

2013 
3 876 40
3 
34 263 

2014 
3 908 47
0 
33 319 

2015 
4 043 46
8 
33 491 

2016 
4 261 92
8 
34 617 

2 836 
7 400 

4 400 
9 900 

4 781 
10 100 

4 672 
10 100 

4 720 
10 500 

4 904 
10 700 

32 

5.5 

37 

-1.0 

38 

2.6 

37 

-1.8 

36 

0.8 

37 

2.8 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

12.0 
23.6 
5.7 
58.7 
95.2 

9.0 
24.9 
5.4 
60.7 
95.7 

9.4 
26.6 
5.1 
58.9 
93.1 

9.3 
25.1 
5.1 
60.5 
93.4 

8.2 
25.9 
5.5 
60.4 
90.9 

7.9 
25.9 
5.4 
60.8 
88.4 

20.1 

21.2 

17.2 

16.7 

17.7 

17.7 

4.7 

-0.2 

0.4 

0.8 

1.2 

1.3 

27.1 

36.9 

41.2 

43.4 

46.7 

50.0 

47.1 

53.6 

51.9 

54.2 

56.4 

57.5 

: 

: 

: 

: 

: 

: 

92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

Inflation rate and house prices 
Harmonised consumer price index (HICP), 
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 
balance for primary income (million euro) 
Balance of payments current account: net 
balance for secondary income (million euro) 
Net balance for primary and secondary 
income: 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 balance (inward - outward) of 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) 

Note 
2) 

2005 
102.8 

2012 
100.2 

2013 
105.6 

2014 
98.8 

2015 
107.1 

2016 
112.1 

3) 

3) 

: 
17.8 

4.9 

: 

: 

: 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

: 
: 

: 

: 

: 

: 

Note 

2005 
: 

2012 
7.4 

2013 
7.7 

2014 
2.3 

2015 
1.5 

2016 
1.3 

: 

: 

: 

: 

: 

: 

Note 
4) 

2005 
-1 779 

2012 
-3 671 

2013 
-2 098 

2014 
-1 985 

2015 
-1 577 

2016 
-1 075 

: 

: 

: 

: 

: 

: 

-5 634 

-4 159 

-4 111 

-3 993 

-3 119 

111 

313 

465 

725 

907 

-1 097 

-1 419 

-1 343 

-1 658 

-2 022 

2 949 

3 166 

3 003 

3 349 

3 159 

69 

43 

89 

161 

79 

-9.8 

-9.6 

-7.9 

-5.6 

-4.6 

5) 

4) 

84.8 

0.7 

10.8 

14.3 

22.8 

34.0 

752.8 

1 298.1 

1 236.3 

1 803.8 

1 899.2 

256.0 

249.7 

264.2 

310.4 

227.8 

73.1 

70.7 

35.4 

49.7 

106.0 

: 

: 

: 

93 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 external debt of the whole economy, 
relative to GDP (%) 
Gross external 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 (%) 
**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, 42 countries (2005 = 100) 

: 

: 

: 

: 

1 008.8 

1 547.9 

1 500.4 

2 114.2 

2 126.9 

624.4 

1 145.0 

1 109.3 

1 530.1 

1 410.4 

: 

89.9 

98.3 

102.9 

101.8 

6.5 

9.9 

-5.4 

12.8 

-4.0 

Note 

2005 
1.1 

2012 
-6.8 

2013 
-5.5 

2014 
-6.6 

2015 
-3.7 

2016 
-1.3 

48.7 

58.1 

61.1 

71.8 

76.0 

73.0 

43.2 

41.1 

39.7 

41.5 

41.9 

43.2 

42.1 

47.9 

45.1 

48.1 

45.6 

44.5 

Note 

2005 
59.3 

2012 
80.9 

2013 
74.8 

2014 
77.1 

2015 
78.3 

2016 
76.5 

6) 

7) 

8) 

9) 

: 

223.6 

184.0 

177.7 

167.8 

152.4 

1 695 

2 715 

3 387 

3 562 

4 148 

4 923 

2 248 

4 227 

4 776 

5 075 

5 776 

6 547 

5 367 

14 438 

14 976 

15 280 

16 193 

17 794 

6 531 

19 783 

19 261 

19 708 

20 719 

21 632 

: 

: 

: 

: 

: 

: 

1.7p 

0.5p 

2.8p 

6.3p 

: 

: 

: 

: 

: 

: 

: 

: 

9.92 

9.81 

7.04 

9.45 

2.61 

3.04 

22.20 

13.75 

12.00 

10.50 

6.50 

5.50 

6.00 

8.75 

7.00 

5.50 

2.50 

2.50 

10) 

82.990 

113.128 

113.137 

117.306 

120.733 

123.118 

: 

: 

: 

: 

: 

: 

94 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
**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) 

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 (%) 

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 (%) 

: 

: 

: 

: 

: 

: 

: 

: 

11 189 

9 907 

10 378 

10 205 

Note 

2005 
8 439 

2012 
13 522 

2013 
13 345 

2014 
13 512 

2015 
14 425 

2016 
15 225 

3 148 

8 251 

10 413 

10 562 

11 447 

12 742 

-5 291 

-5 271 

-2 933 

-2 950 

-2 978 

-2 483 

95 

105 

106 

106 

108 

111 

64.7 

62.5 

63.8 

65.7 

67.0 

67.6 

56.9 

58.5 

55.7 

57.1 

57.3 

58.7 

Note 

2005 
-4.6 

2012 
-4.9b 

2013 
-4.8 

2014 
-4.9 

2015 
-5.4 

2016 
-5.1 

8.0 

6.2 

6.3 

5.7 

5.3 

70.2 
75.6 

72.3b 
77.5b 

72.6 
77.9 

72.8 
78.0 

72.8 
77.9 

: 

: 
: 

Not
e 
11) 

2005 

2012 

2013 

2014 

2015 

2016 

70.1 

64.5 

66.1 

68.0b 

68.1 

70.0 

11) 

55.4 

49.0 

51.3 

54.8b 

56.0 

59.1 

11) 

66.6 

56.9 

59.6 

62.5b 

63.7 

66.3 

11) 

44.4 

41.2 

43.2 

47.2b 

48.3 

51.9 

11) 

35.4 

31.6 

34.3 

36.7b 

37.3 

42.7 

21.0 
21.3 
5.2 
52.5 

21.3 
21.1 
4.7 
52.8 

19.9b 
20.2b 
4.5b 
55.4b 

19.4 
19.9 
4.5 
56.1 

18.6 
20.2 
4.3 
57.0 

11) 
11) 
11) 
11) 

: 
: 
: 
: 

95 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (%) 
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 levels 0-2) (%) 
Unemployment rate for persons (aged 25–64) 
having completed tertiary education (ISCED 
levels 5-8) (%) 

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) (2010 = 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) 

11) 

11) 

: 

: 

32.6 

32.7 

31.4b 

29.7 

28.3 

67.4 

67.3 

68.6b 

70.3 

71.7 

11) 

20.8 

24.1 

22.3 

19.4b 

17.8 

15.4 

11) 
11) 
11) 

16.8 
26.5 
47.7 

23.4 
25.1 
51.1 

21.1 
23.9 
49.4 

18.5b 
20.5b 
47.4b 

16.9 
18.8 
43.2 

14.8 
16.2 
34.9 

11) 

16.5 

18.8 

17.0 

13.0b 

11.4 

10.0 

11) 

11) 

Not
e 
12) 

11) 

Not
e 

: 

: 

23.4 

21.2 

18.6b 

15.8 

13.7 

15.9 

17.2 

14.5b 

14.4 

13.4 

2005 

2012 

2013 

2014 

2015 

2016 

25 514 

57 430 

60 708 

61 426 

61 145 

63 474 

75.2 

101.1 

99.2 

97.5 

95.2 

97.6 

: 
: 
11.4 

: 
: 
8.1 

38 
36.6 
8.9 

39 
40.3 
8.5b 

38 
37.6 
7.5 

39 
38.1 
7.0 

2005 

2012 

2013 

2014 

2015 

2016 

198.7 

229.6 

246.5 

251.5 

257.7 

266.8 

700.4 

1 269.3 

1 284 

1 317.1 

1 293.8 

1 291.8 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

96 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Infrastructure 

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

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 (%) 

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 solid fuels (thousand 
TOE) 
Primary production of gas (thousand TOE) 
Net imports of all energy products (thousand 
TOE) 
Gross inland energy consumption (thousand 
TOE) 
Gross electricity generation (GWh) 

Agriculture 

Agricultural production volume index of 
goods and services (at producer prices) (2010 
= 100) 
Utilised agricultural area (thousand hectares) 

Not
e 
13) 

Not
e 

Not
e 

Not
e 

Not
e 

2005 

2012 

2013 

2014 

2015 

2016 

49.2 

49.3 

49.3 

49.3 

48.6 

48.6 

374 

607 

607 

607 

693 

741 

2005 

2012 

2013 

2014 

2015 

2016 

3.8 

4.5 

4.3 

4.3 

4.0 

3.9 

0.42 

0.91 

0.73 

0.77 

0.87 

0.89 

: 

: 

0.45 

0.42 

0.43 

0.44 

0.39 

47.5 

55.8 

62.8 

63.8 

64.7 

2005 

2012 

2013 

2014 

2015 

2016 

81.6 

71.3 

72.9 

63.1 

71.0 

: 

601.7 

486.9 

487.4 

441.9 

486.1 

495.0 

33.3e 

25.0 

27.4 

31.0 

27.1 

29.0p 

: 

33.8 

40.4 

41.5 

44.4 

48.7 

2005 

2012 

2013 

2014 

2015 

2016 

10 210 

10 759 

11 330 

9 389 

10 708 

10 762 

583 

1 195 

1 231 

1 163 

1 068 

978 

 7461 

7 278 

7 671 

5 713 

7 201 

7 317 

229 
5 536 

425 
4 051 

423 
3 536 

444 
3 665 

456 
4 009 

417 
4 470 

15 702 

14 546 

14 937 

13 294 

14 736 

15 425 

36 474 

36 799 

39 877 

34 060 

38 298 

39 342 

2005 

2012 

2013 

2014 

2015 

2016 

: 

84.3 

98.7 

108.0 

101.6 

111.1 

14) 

3 608 

3 462b 

3 491 

3 507 

3 469 

3 440 

97 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 
Raw milk available on farms (thousand 
tonnes) 
Harvested crop production: cereals (including 
rice) (thousand tonnes) 
Harvested crop production: sugar beet 
(thousand tonnes) 
Harvested crop production: vegetables 
(thousand tonnes) 

1 096 

921e 

913 

920 

916 

893 

3 212 

3 139e 

3 144 

3 236 

3 284 

3 021 

1 748 

1 867 

1 841 

1 967 

1 992 

1 865 

1 664 

1 554e 

1 548 

1 596 

1 611 

1 604 

14) 

10 092 

6 355b 

9 091 

10 848 

8 437 

10 869 

14) 

3 298 

2 483b 

3 180 

3 507 

2 183 

2 684 

14) 

1 052 

936b 

1 062 

965 

1 108 

1 156 

: = not available 
b = break in series 
e = estimate 
p = provisional 
* = 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)  Data might not be reliable due to delays in updating the Serbian statistical business register. 
4)  2005: based on balance of payments manual edition 5 (BPM5). 
5)  Secondary income only. 
6)  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, in other words accounts from which payments can be made without any restrictions. 

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

so-called frozen foreign currency savings). 

9)  The total financial sector liabilities are the sum of all liabilities of the financial sector excluding captive 

financial institutions. 

10)  Arithmetic mean of official middle exchange rates of the dinar against the euro on working days. 
11)  2014: change of weighting system. 
12)  2005: wages and salaries paid to employees of legal entities. 2012-2016: wages and salaries paid to 

employees of legal entities and of unincorporated enterprises. 

13)  Density relative to the total area (including inland waters) rather than the land area. 
14) 

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

98