COMMISSION STAFF WORKING DOCUMENT Serbia 2019 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 2019 Communication on EU Enlargement Policy
Date: 2019-05-29
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Serbia, accession criteria, accession negotiations, pre-accession strategy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 29.5.2019  SWD(2019) 219 final  COMMISSION STAFF WORKING DOCUMENT Serbia 2019 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 2019 Communication on EU Enlargement Policy {COM(2019) 260 final}  
 
 
Table of Contents 

Introduction 

Context 

Summary of the report 

Fundamentals first: political criteria and rule of law chapters 

Functioning of democratic institutions and Public Administration Reform 

1. 

1.1  

1.2  

2. 

2.1. 

2.1.1   Democracy 

2.1.2.  Public administration reform 

2.2. 

Rule of law and fundamental rights 

2.2.1.  Chapter 23: Judiciary and fundamental rights 

2.2.2 

Chapter 24: Justice, freedom and security 

3. 

3.1. 

3.2. 

4. 

5. 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

6.5. 

6.6. 

6.7. 

6.8. 

6.9. 

6.10. 

6.11. 

6.12. 

6.13. 

6.14. 

6.15. 

6.16. 

6.17. 

6.18. 

Fundamentals first: economic development and competitiveness 

The existence of a functioning market economy 

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

Good neighbourly relations and regional cooperation 

Normalisation of relations between Serbia and Kosovo 

Ability to assume the obligations of membership 

Chapter 1: Free movement of goods 

Chapter 2: Freedom of movement for workers 

Chapter 3: Right of establishment and freedom to provide services 

Chapter 4: Free movement of capital 

Chapter 5: Public procurement 

Chapter 6: Company law 

Chapter 7: Intellectual property law 

Chapter 8: Competition policy 

Chapter 9: Financial services 

Chapter 10: Information society and media 

Chapter 11: Agriculture and rural development 

Chapter 12: Food safety, veterinary and phytosanitary policy 

Chapter 13: Fisheries 

Chapter 14: Transport 

Chapter 15: Energy 

Chapter 16: Taxation 

Chapter 17: Economic and monetary policy 

Chapter 18: Statistics 

1 

3 

3 

3 

5 

5 

5 

9 

13 

13 

30 

43 

43 

48 

51 

53 

55 

55 

56 

57 

58 

59 

61 

62 

63 

65 

65 

67 

68 

69 

69 

71 

74 

75 

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6.19. 

6.20. 

6.21. 

6.22. 

6.25. 

6.26. 

6.28. 

6.29. 

6.30. 

6.32. 

6.33. 

Chapter 19: Social Policy and employment 

Chapter 20: Enterprise and industrial policy 

Chapter 21: Trans-European networks 

Chapter 22:  Regional policy and coordination of structural instruments 

Chapter 25: Science and research 

Chapter 26: Education and culture 

Chapter 28: Consumer and health protection 

Chapter 29: Customs union 

Chapter 30: External relations 

Chapter 32: Financial control 

Chapter 33: Financial and budgetary provisions 

Annex I – Relations between the EU and Serbia 

Annex II– Statistical Annex 

77 

79 

80 

81 

82 

83 

87 

89 

90 

93 

95 

97 

99 

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1. 

INTRODUCTION 

1.1  

Context  

The  European  Council  granted  Serbia  the  status  of  candidate  country  in  2012.  The 
Stabilisation and Association Agreement (SAA) between Serbia and the EU entered into force 
in  September  2013.  Meetings  of  the  joint  bodies  under  the  agreement  took  place  at  regular 
intervals.  Serbia continued to  implement  the SAA, although a number of compliance issues 
remain.  

Since the opening of Serbia’s accession negotiations in January 2014, 16 out of 35 chapters 
have been opened, two of which were provisionally closed. Four chapters were opened during 
the reporting period. The overall pace of negotiations will continue to depend in particular on 
a more intense pace of reforms  on rule of law and in  the normalisation of its relations with 
Kosovo as per the requirements of the Negotiating Framework.  

1.2  

Summary of the report1 

As  regards  the  political  criteria,  there  is  an  urgent  need  to  create  more  space  for  genuine 
cross-party  debate,  in  order  to  forge  a  broad  pro-European  consensus  which  is  vital  for  the 
country’s progress on its EU path. Several opposition parties started boycotting the parliament 
in  early  2019.  The  ruling  coalition’s  parliamentary  practices  led  to  a  deterioration  of 
legislative debate and scrutiny, and undermined the parliament’s oversight of the executive.  

Weekly  anti-government  protests  started  in  Belgrade  in  December  2018  in  reaction  to  an 
attack on an opposition party leader. The overall peaceful protests, demanding freedom of the 
media and free and fair elections, grew over time. Several opposition parties have announced 
their intention to boycott parliamentary elections, unless demands for free and fair elections 
are  met.  Serbia  needs  to  fully  address  all  recommendations  on  the  elections,  identified  by 
international observers, as a matter of priority.  

Serbia  is  moderately  prepared  in  the  area  of  public  administration  reform.  Some  progress 
was made in the area of service delivery and with the adoption of several new laws. Political 
influence on senior managerial appointments remains an issue of serious concern, especially 
regarding  an  excessive  number  of  acting  positions.  Serbia’s  ability  to  attract  and  retain 
qualified  staff  in  the  administration  dealing  with  EU  issues  is  crucial.  A  coordinated 
monitoring  and  reporting  system  of  the  public  administration  reform  strategy  and  public 
financial management reform programme is yet to be established.  

Serbia’s judicial system has some level of preparation. Some progress was achieved during 
the reporting period. Last year’s recommendations have only been partially addressed. Some 
progress  was  achieved  in  the  reduction  of  old  enforcement  cases  and  following  up  on 
measures to harmonise court practice. The constitutional reform process, intended to align the 
constitution with European standards for the judiciary, is ongoing. Further to the adoption of 
the constitutional amendments, the system for the appointment and evaluation of judges and 
prosecutors  needs  to  be  revised  to  allow  for  fully  merit-based  judicial  recruitments  and 
careers. Currently, the scope for political influence remains of concern.   

Serbia  has  some  level  of  preparation  in  the  fight  against  corruption.  Limited  progress  has 
been made. There is no measureable impact of corruption-prevention reforms. A revised Law 

1 This report covers the period from March 2018 to March 2019. 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. 

3 

 
 
                                                           
on  the  prevention  of  corruption  (also  known  as  law  on  the  Anti-Corruption  Agency)  was 
adopted in May 2019. As regards the repression of corruption, the Law on organisation and 
jurisdiction  of  government  authorities  in  suppression  of  organised  crime,  terrorism  and 
corruption, which entered into force in March 2018, is being implemented but it is too early to 
fully  assess  its  impact.  Law  enforcement  and  judicial  authorities  still  need  to  establish  a 
credible  track  record  of  operationally  independent  prosecutions  and  of  finalised  high-level 
corruption  cases.  Overall,  corruption  is  prevalent  in  many  areas  and  remains  an  issue  of 
concern.  

Serbia  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Some  progress 
was made over the reporting period. Serbia started to implement the new economic chapter of 
the criminal code and the Law on organisation and jurisdiction of state authorities in the fight 
against  organised  crime,  terrorism  and  corruption  and  adopted  a  cybercrime  strategy  for 
2019-2023. At the same time, no progress was made in fulfilling the recommendations of the 
previous  report.  Serbia  has  yet  to  establish  a  convincing  track  record  of  effective 
investigations,  prosecutions  and  final  convictions  in  organised  crime  cases,  including 
financial investigations leading to a track record of freezing and confiscating criminal assets. 
The  number  of  convictions  for  organised  crime  (notably  in  the  fight  against  trafficking  in 
human beings) remains low.  

The legislative and institutional  framework for upholding  fundamental rights  is  broadly in 
place. Amendments  improving the legislative framework related to  national  minorities were 
adopted.  Consistent  and  efficient  implementation  of  legislation  and  policies  needs  to  be 
ensured. While Serbia has some level  of preparation, no progress  was  made on  freedom of 
expression. This lack of progress is now a matter of serious concern. A new media strategy 
was drafted in a transparent and inclusive manner; it needs to be adopted and implemented. 
Serbia  needs  to  step  up  measures  to  protect  the  rights  of  persons  facing  discrimination, 
including  LGBTI  persons,  persons  with  disabilities,  persons  with  HIV/AIDS  and  other 
vulnerable individuals.  

As regards the economic criteria, Serbia has made some progress and is moderately prepared 
in  developing  a  functioning  market  economy.  External  imbalances  are  on  the  rise,  although 
their financing remained healthy. Price pressures remained subdued and inflation  contained. 
Major fiscal adjustments over previous years have significantly improved debt sustainability. 
Financial sector stability was preserved and labour market performance has improved with the 
exception  of  the  youth  activity  rate,  which  declined.  Major  structural  reforms  of  public 
administration,  the  tax  authority,  and  state-owned  enterprises  advanced  slowly,  prolonging 
long-standing  inefficiencies.  The  authorities  are  addressing  weaknesses  in  the  budgetary 
framework  and  its  governance  at  a  slow  pace.  The  state  retains  a  strong  footprint  in  the 
economy and the private sector is underdeveloped and hampered by weaknesses in the rule of 
law and in the enforcement of fair competition. 

Serbia has made some progress and is moderately prepared to cope with competitive pressure 
and  market  forces  within  the  Union.  The  structure  of  the  economy  improved  further  and 
economic  integration  with  the  EU  remained  high.  However,  despite  some  progress,  the 
quality,  equity  and  relevance  of  education  and  training  does  not  fully  meet  labour  market 
needs.  Investment  increased  but  remains  insufficient,  after  years  of  underinvestment,  to 
address infrastructure gaps. Although the cost of small and medium enterprises borrowing has 
declined  recently,  they  still  face  a  number  of  challenges,  including  a  volatile  business 
environment and unfair competition. 

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

4 

 
 
context  of  being  granted  the  seat  of  the  Transport  Community  Treaty  Secretariat,  Serbia 
should  now  provide  further  support  to  ensure  the  conditions  are  in  place  for  it  to  take  up 
operations swiftly.  

Regarding the normalisation of relations with Kosovo, Serbia has remained engaged in the 
dialogue  and  showed  restraint  in  its  response  to  the  introduction  of  the  customs  tariffs. 
However, Serbia needs to make substantial efforts, in particular in its international relations, 
to  establish a conducive environment  to  the conclusion of a legally binding agreement with 
Kosovo. Such an agreement is urgent and crucial so that Serbia and Kosovo can advance on 
their respective European paths. 

As  regards  its  ability  to  assume  the  obligations  of  membership,  Serbia  has  continued  to 
work towards aligning its legislation with the EU acquis across the board. Adequate financial 
and human resources and sound strategic frameworks will be crucial for the pace of reforms. 
Serbia  has  a  good  level  of  preparation  in  some  areas  such  as  company  law,  intellectual 
property,  transport  policy,  science  and  research,  education  and  culture,  and  customs.  Serbia 
improved the linking of 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,  external  relations,  social  policy  and  employment, 
monetary  policy  and  financial  services,  Serbia  is  moderately  prepared.  Serbia  continued  to 
make good progress in agriculture and in aligning with the EU transport acquis while limited 
progress was noted in the area of energy. The policy areas of environment and climate change 
have yet to receive adequate attention.  

Serbia  needs  to  address,  as  a  matter  of  priority,  issues  of  non-compliance  with  the  SAA, 
regarding  in  particular  state  aid  control,  fiscal  discrimination  on  imported  spirits,  and 
restriction  to  competition  in  the  card-based  payment  system.  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 continued to manage the effects of the mixed migratory flows towards the EU, which 
have stabilised throughout 2018. It made some progress in implementing the integrated border 
management strategy. The European Border and Coast Guard Status Agreement with the EU 
was initialled. The strategy and action plan to counter irregular migration have been adopted. 
Serbia needs to respect the obligation of readmission of third country nationals under the EU 
Serbia  Readmission  Agreement.  Serbia  furthermore  should  refrain  from  further  diverging 
from the EU visa policy. 

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS  

2.1. 

Functioning of democratic institutions and Public Administration Reform 

2.1.1   Democracy  

The  reporting  period  was  increasingly  marked  by  a  polarised  political  scene.  This  has  a 
negative impact on the work of democratic institutions, in particular the parliament. There is 
an urgent need to create space for genuine cross-party debate and conditions for meaningful 
participation by the opposition in the parliament. 

A new opposition group, the Alliance for Serbia, was established in September 2018. As of 
February 2019, several opposition parties, including those in the Alliance for Serbia, started 
boycotting parliamentary sessions. The same parties have announced their intention to boycott 
parliamentary elections under the present conditions.  

5 

 
 
Weekly  anti-government  protests  started  in  Belgrade  in  December  2018  in  reaction  to  an 
attack  on  the  leader  of  an  opposition  party.  The  protests  grew  over  time,  encompassing 
broader  demands  and  spreading  to  other  towns  across  Serbia.  The  demonstrations  were 
overall peaceful. Protestors demand, in  particular, freedom  of the media  and conditions  that 
ensure  free  and  fair  elections.  The  protests  have  not  lined  up  behind  any  political  party, 
though the Alliance for Serbia has played a more visible role in recent weeks.  

Elections 

Serbia  has  not  made  sufficient  use  of  the  interval  between  elections  to  address  persistent 
shortcomings.  These  include  the  lack  of  transparency  of  party  and  campaign  financing,  the 
blurred  distinction  between  party  and  state  activities,  and  the  unbalanced  media  coverage. 
Serbia  still  needs  to  address  all  priority  recommendations  of  the  Office  for  Democratic 
Institutions  and  Human  Rights  of  the  Organisation  for  Security  and  Cooperation  in  Europe 
(OSCE/ODIHR).  

Almost  all  of  the  OSCE/ODIHR  recommendations  stemming  from  the  previous  elections 
have yet to be addressed. This includes the need for a comprehensive and inclusive review of 
the legal  framework on  elections, in  order to regulate all essential  aspects and  address  gaps 
and  loopholes.  Independent  regulatory  bodies  need  to  be  empowered  to  exercise  their 
monitoring  and  oversight  role  proactively  and  effectively.  The  unbalanced  media  coverage 
reported  during  previous  elections  needs  to  be  urgently  tackled.  These  reforms  should  be 
undertaken  in  an  inclusive  and  transparent  manner,  and  as  a  matter  of  priority  ahead  of  the 
next elections.  

A  limited  number  of  recommendations  have  been  partially  implemented,  such  as  those 
regarding  candidate  registration,  secret  balloting,  standardised  training  of  polling  board 
members,  and  the  publication  of  election  results.  The  digitalisation  of  the  voter  list  is  a 
positive step. A new law on the central registry was adopted in March 2019.   

Several  local  elections  took  place,  in  which  irregularities  were  reported  by  domestic 
observers. These cannot be evaluated independently, but the institutional response to reported 
irregularities has been limited. Credible allegations of pressure being put on voters and public 
employees need to be investigated and those responsible brought to justice. 

In reaction to the anti-government protests, the ruling coalition raised the possibility of early 
parliamentary elections. This de facto pre-election mode deepened the political divide rather 
than  contributing  to  cross-party  consensus.  The  Alliance  for  Serbia  and  other  opposition 
parties  have  announced  that  they  will  boycott  elections,  unless  demands  for  free  and  fair 
elections are met.   

Parliament  

The ruling coalition’s parliamentary practices led to a deterioration in legislative debate and 
scrutiny,  and significantly  undermined the parliament’s oversight  of the  executive. There is 
an  urgent  need  to  create  space  for  genuine  cross-party  debate  and  conditions  for  the 
opposition  to  participate  meaningfully  in  the  parliament.  The  role  of  independent  bodies 
needs to be urgently guaranteed and supported.  

Practices  of  the  ruling  coalition  often  prevented  the  parliament  from  properly  exercising  its 
legislative function. These included merging unrelated laws under one discussion point, and 
proposing  hundreds  of  amendments  irrelevant  to  the  content  of  legislation.  These  practices, 
which  aim  to  use  up  the  allocated  time  for  debate  in  the  plenary,  have  been  employed 
systematically since December 2017. In addition, the use of urgent procedures remains high at 
around 44% from February 2018 to February 2019. As a result of the above, the parliamentary 

6 

 
 
opposition in most cases was not able to participate effectively in the legislative debate and to 
present its draft amendments, including on key legislative pieces such as the 2019 budget.  

As  of  March  2019,  several  opposition  parties,  including  those  in  the  Alliance  for  Serbia, 
started boycotting parliamentary sessions, also at provincial and local self-government level. 
Some  opposition  members  continue  to  participate  in  the  parliamentary  committees.  In  the 
current  polarised  environment,  it  is  crucial  that  cross-party  debate  and  meaningful 
participation  in  the  parliament  are  restored  as  a  matter  of  priority.  Existing  mediation  and 
dialogue  mechanisms,  such  as  those  by  the  European  Parliament,  should  be  utilised.  The 
meeting  of  the  parliamentary  collegium  in  April  should  be  followed  up  on  with  a  view  to 
improving law-making procedures. In this regard, the rules of procedure should be amended 
and a code of conduct adopted with EU expertise. 

The  parliament’s  oversight  of  the  executive  remains  weak.  As  in  previous  years,  the 
parliament  failed  to  support  the  role  of  independent  institutions. Since  2014,  the  parliament 
has  not  discussed  any  of  the  annual  reports  by  independent  bodies  in  its  plenary  sessions, 
exemplifying  its  lack  of  willingness  to  ensure  effective  oversight  over  the  government.  The 
holding  of  regular  question  and  answer  sessions  with  the  executive  has  increased  and  five 
such  sessions  were  held  in  2018.  Only  one  public  hearing  was  held  in  2018.  The  lack  of 
annual work plans and the ad hoc nature of agenda setting leads to uncertainty. Non-majority 
representatives head only two parliamentary committees. 

The parliament continued to hold debates on Serbia’s negotiating positions for EU accession 
chapters  as  well  as  exchanges  with  the  core  negotiating  team  and  with  the  National 
Convention on the European Union (see under Civil society).  

93  of  250  members  of  parliament  are  women.  There  is  also  a  women’s  parliamentary 
network.  

In line with OSCE/ODIHR and the Council of Europe’s Group of States against Corruption 
(GRECO) recommendations, financing for political parties and electoral campaigns need to 
be made more transparent (see under fight against corruption). 

Governance  

EU membership continued to be the Serbian government’s strategic goal. However, human 
and  financial  resources  on  EU  accession  need  to  increase  and  the  government  should  put 
more  emphasis  on  domestic  communication  on  the  EU.  Inclusiveness  and  transparency  on 
EU-related reforms need to be improved as a matter of priority.  

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  across  all  of  the  institutions  involved  to  meet 
Serbia’s objectives on EU accession negotiations.  

Consultations  continued  with  relevant  stakeholders,  including  civil  society  organisations, 
through the National Convention on the EU. However, the inclusiveness and transparency of 
the  reform  process,  in  particular  on  EU  accession-related  issues,  need  to  be  improved  as  a 
matter of priority and public consultations on policies and legislation to be more than just a 
formality.  In the context of constitutional reform, stakeholder consultations took place in an 
acrimonious environment.  

The  role  of  independent  bodies  needs  to  be  fully  acknowledged  and  their  recommendations 
followed  up  appropriately.  Monitoring  of  the  implementation  and  impact  of  the  reform 
processes  needs  to  be  further  improved.  Authorities  should  put  more  emphasis  on  objective 
communication about the EU, which is Serbia’s main political and economic partner. Serbia’s 

7 

 
 
strategic choice of EU accession needs to be more actively and unambiguously communicated 
in the public debate. Further efforts are needed to promote EU 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. In November 2018 the Council of Europe’s Congress of Regional and 
Local Authorities organised a specific session to discuss reports related to political pressures 
exercised by ruling party authorities on opposition-run local governments. 

Constitutional  changes  are  still  needed  in  some  areas  to  address  issues  relevant  to  the 
accession negotiations.  

Civil society 

No progress was made towards establishing an enabling environment for the development and 
financing of civil society. Further efforts are needed to ensure systematic cooperation between 
the government and civil society. 

Civil society organisations (CSOs) and human rights defenders continued to raise awareness 
about civil and political rights. This takes place in an environment not open to criticism, with 
the authorities making negative statements, echoed by the media, on civil society in  general 
and  on  funding  of  certain  associations  in  particular.  Harsh  criticism  against  human  rights 
defenders has continued in tabloid newspapers. 

The  National  Convention  on  the  EU  (composed  of  representatives  of  governmental  bodies, 
political  parties,  non-governmental  organisations,  experts,  trade  unions,  private  sector  and 
representatives  of  professional  organisations),  whose  goal  is  to  contribute  to  a  structured 
debate on Serbia’s accession to the EU, has continued to monitor and assess the progress of 
accession negotiations. The authorities should use its expertise more systematically, in order 
to benefit from the full potential of the Convention and its working groups. 

Amendments to the Law on state administration, Law on local self-government and the Law 
on the planning system introduced specific provisions aimed at improving public participation 
in policy development. However, the relationship between the government and CSOs is still 
marked  by  fragmented  cooperation.  The  continued  frequent  use  of  the  urgent  procedure  for 
the adoption of laws limits the effective inclusion of civil society in the law-making process. 
A  number  of  CSOs  have  reported  that  periods  for  public  consultations  are  sometimes  too 
short,  or  that  their  comments  on  draft  laws  were  not  given  sufficient  consideration  and 
follow-up.  A  national  strategy  and  action  plan  to  contribute  to  an  enabling  environment  for 
civil society have still not been adopted. A council for civil society cooperation still needs to 
be  set  up.  Criteria  for  public  financial  support  for  CSOs  need  to  be  better  defined  and 
implemented to ensure overall transparency, especially at local level. 

Civilian oversight of the security sector   

Parliament  continues  to  be  responsible  for  the  oversight  of  the  security  sector.  The 
parliamentary  committee  responsible  for  this  task  continued  to  review  the  activities  of  the 
security-information, military and defence services. In May 2018, amendments to the law on 
the  Security-Information  Agency  were  adopted.  A  law  on  access  to  state  security  files  still 
needs to be adopted. 

8 

 
 
2.1.2.  Public administration reform  

Serbia is moderately prepared with the reform of its public administration. Some progress 
was made in the area of service delivery and with the adoption of new laws regulating policy 
planning,  public  consultations,  e-government,  and  salary  system  in  the  public  sector. 
However,  the  Commission’s  recommendations  made  over  the  last  few  years  have  not  been 
fully  addressed,  especially  regarding  de-politicisation  and  professionalisation  of  public 
service,  and  therefore  remain  valid.  In  particular,  political  influence  on  senior  managerial 
appointments  remains  an  issue  of  serious  concern.  It  was  not  sufficiently  addressed  in  the 
2018 amendments to the Law on civil servants.  

In the coming year, Serbia should in particular:  

  start  recruiting  senior  civil  servants  effectively  through  a  merit-based  procedure  and 

reduce the excessive number of acting positions;  

  issue practical guidance to line institutions on strategic planning, monitoring and reporting 
and ensure a strong quality control role for the Public Policy Secretariat to allow for the 
effective implementation of the new Law on the planning system;   

  develop  a  single  mechanism  for  prioritising  all  investments  regardless  of  the  source  of 
financing  and  ensure  integration  of  capital  investment  planning  and  project  appraisal  in 
the budget process. 

Strategic framework for public administration reform  

Serbia is implementing its public administration reform strategy and action plan as well as 
the public financial management reform programme, which is undergoing revision. These 
umbrella  strategies  are  supported  by  a  number  of  specific  strategic  documents.  The 
government  ensures  regular  monitoring  and  reporting  on  implementation  of  reforms,  but  a 
coordinated  monitoring  and  reporting  system  is  yet  to  be  established,  also  covering 
managerial accountability (see Chapter 32 – Financial Control). Civil society takes part in the 
monitoring of reforms. Political support for public administration reform continues through 
the  Public  Administration  Reform  Council,  chaired  by  the  Prime  Minister.  Financial 
sustainability  remains  a  concern  due  to  reliance  on  donor  funding.  There  are  also 
inconsistencies  between  costing  of  strategies,  appropriations  in  the  budget,  and  the 
medium-term expenditure framework.  

Policy development and coordination  

Institutions  are  in  place  for  a  central  government  policy-making  system,  including  for  the 
European integration process, but there are weaknesses due to the continuing focus on formal 
and procedural  issues.  The strategic planning  system  was improved with  a new  Law  on the 
planning  system,  which  was  adopted  in  April  and  entered  into  force  in  October  2018,  and 
secondary  legislation  adopted  in  February  2019.  This  legislation  sets  out  clear  rules  for 
developing, monitoring and reporting on sector strategies. The Public Policy Secretariat needs 
to  start  ensuring  strong  quality  control,  including  on  the  costing  of  strategies  and  their 
linkages  to  medium-term  fiscal  planning.  The  national  plan  for  the  adoption  of  the  acquis 
(NPAA) and the government annual work programme need to be better synchronised. 

The  capacity  for  inclusive  and  evidence-based  policy  and  legislative  development, 
including when aligning with the acquis, needs strengthening. Administrative data collection 
and its systematic use for policy and law-making needs to improve across the administration. 
Secondary legislation  adopted in early 2019 provides for a detailed methodology on impact 
assessments  and  for  an  obligation  of  line  institutions  to  consider  the  opinion  of  the  Public 
Policy  Secretariat  prior  to  submitting  documents  to  the  government.  Regulatory  impact 

9 

 
 
assessments  should  be  systematically  submitted  to  the  parliament  together  with  legislative 
proposals.  Better  coordination  between  the  Ministry  of  Finance  and  the  Public  Policy 
Secretariat  has  yet  to  be  established  to  ensure  that  there  are  no  discrepancies  between 
financial  impact  assessments,  which  the  Ministry  of  Finance  coordinates,  and  financial 
inter-ministerial 
information 
consultations, no official high-level mechanisms exist for resolving possible conflicts between 
services. The regulatory framework for public consultations was improved with amendments 
to  the  laws  on  state  administration  and  on  local  government  and  the  Law  on  the  planning 
system, requiring that public consultations are organised early in the policy-making process. 
The impact of these regulations has yet to be assessed in practice. 

impact  assessments.  With  regard 

the  regulatory 

to 

in 

As  regards  public  scrutiny  of  government  work,  the  new  Law  on  the  planning  system 
requires  the  government  and  ministries  to  prepare  and  publish  monitoring  reports  on 
implementation  of  strategic  documents.  They  should  start  measuring  achievements  against 
stated  objectives  rather  than  report  on  implemented  activities.  Quarterly  reports  on  the 
implementation  of  the  NPAA  are  now  regularly  published.  The  government’s  website  was 
revised  in  October  2018,  but  it  still  does  not  provide  easy  access  to  the government’s  main 
public  policy  documents,  such  as  annual  government  work  plans  or  action  plans  for  the 
implementation of the government programme.  

Public financial management  

The 2016-2020 public financial management (PFM) reform programme is being implemented 
albeit  with  delays.  The  ongoing  revision  needs  to  ensure  more  realistic  planning,  costing, 
sequencing, and increased focus on performance indicators and results.   

The  government’s  main  achievement  in  PFM  has  been  to  keep  the  public  finances  on  a 
sustainable  path,  maintaining  the  improved  quality  of  in-year  financial  reporting  and  more 
realistically planned revenue and expenditure projections. The capital budget execution level 
has  further  increased.  The  tax  administration  has  focused  on  boosting  tax  compliance, 
improving  efficiency  of  revenue  collection  and  reducing  the  tax  collection  administrative 
burden.  All  budget  beneficiaries  are  obliged  to  report  on  the  performance  of  the  budget 
programme.  The  State  Audit  Institution  has  continued  to  increase  both  the  coverage  and 
quality of their audits of public funds. 

The  key  outstanding  issues  concern  the  budget  calendar,  which  is  not  being  complied  with, 
resulting  in  insufficient  time  allocated  to  proper  preparation,  assessment  and  debate  among 
the  stakeholders.  Although  the  budget  is  structured  by  programmes,  the  link  between  the 
government programme and sector strategies and operational plans of budget beneficiaries is 
still  weak.  Serbia  still  needs  to  develop  a  single  mechanism  for  prioritising  all  investments 
regardless of the source of financing and to ensure that procedures are in place to guarantee 
the integration of capital projects’ planning and appraisal in the budget process. Furthermore, 
the  government’s  investment  planning  and  management  capacity  needs  to  be  improved, 
including  the  capacity  to  control  public  assets  funded  by  loans  from  third  countries  (see  
Chapters 5, 16, 29 and 32). 

Serbia  is  committed  to  improving  budget  transparency.  A  ‘citizens’  budget  is  published. 
The  executive’s  budget  proposal  and  the  year-end  report  should  be  more  comprehensive.  A 
transparency roadmap, a pre-budget statement, and a mid-year report are still to be produced 
and published. The Ministry of Finance does not publish the budget execution profile at the 
beginning  of  the  year,  preventing  an  analysis  of  deviations  from  targets.  Budget  execution 
reports contain the basic elements  but  do not  break down expenditure figures for individual 
budget  organisations.  Public  participation  in  the  budget  process  continues  to  be  weak  and 

10 

 
 
budget  oversight  by the  legislature needs to  be improved.  The 2019 budget  was adopted by 
the parliament without substantive debate (see under Parliament). 

Public service and human resources management  

The  civil  service  legislation  defines  merit-based  recruitment  and  dismissal  procedures. 
Amendments  were  introduced  in  the  Law  on  civil  servants  in  December  2018  and  new 
secondary legislation was adopted in January 2019. While the amendments introduce criteria 
for  the  organisation  of  the  selection  tests  based  on  competency  assessments,  the  heads  of 
institutions  still  have  too  much  discretion  in  setting  up  selection  committees.  Obligatory 
recruitment procedures have been introduced for certain categories of temporary staff, which 
make  up  around  10%  of  the  civil  service.  The  possibility  to  convert  certain  categories  of 
temporary  contracts  into  permanent  civil  service  contracts  should  be  carefully  considered. 
With regard to the risk of  abuse of the dismissal process, the revised performance appraisal 
procedure introduces a longer timeframe for improving performance, including the possibility 
to  attend  professional  training  following  a  negative  assessment,  at  both  expert  and 
management  level.  Performance  appraisal  grades  remain  inflated.  The  amendments  also 
introduced  a  new  performance  assessment  system  reflecting  the  policy  priorities  of 
institutions.  

Political influence over recruitments to senior civil service positions continues to be an issue 
of  serious  concern.  The  merit-based  recruitment  procedure,  as  prescribed  in  law,  has  not 
always  been  complied  with.  Rather,  the  provision  in  the  law  that  allows  appointments  to 
‘acting positions’ for six months (with a maximum extension of three months) has been often 
misused.  This  has  resulted  in  high  staff  turnover  and  loss  of  institutional  memory  in  some 
cases and in violation of the legal time limit in other cases. As of March 2019, 63% of filled 
senior positions are held on an acting basis. The amendments to the Law on civil servants did 
not  address  these  shortcomings,  apart  from  restricting  the  appointments  to  already  existing 
civil servants as of 1 July 2019. The phasing out of the current acting positions needs to be 
effectively monitored by the competent institutions. 

A  competency-based  human  resources  management  system  was  introduced  with  the 
amendments to the Law on civil servants. Its effectiveness has yet to be assessed in practice. 
The Human Resources Management Service under the Ministry of Public Administration and 
Local Self-Government needs to strengthen its capacity to coordinate and harmonise the work 
of  line  institutions’  human  resources  units.  The  human  resources  management  information 
system  remains  underdeveloped  and  does  not  interact  with  other  national  databases  such  as 
the treasury payroll registry. There have not yet been improvements regarding remuneration 
of  civil  servants.  The  implementation  of  the  2016  Law  on  the  salary  system  in  the  public 
sector,  which  introduces  the  principle  of  equal  pay  for  equal  work  for  all  public  sector 
employees, has been postponed to 2020.  

Progress has been made with professional development, following the establishment of the 
National Training Academy for Public Administration in 2018. The academy has a mandate 
to  provide  training  for  all  public  officials,  including  at  the  local  level.  Specific  training 
modules target senior managers.  

A code of ethics for civil servants aims to ensure integrity in public service. Further efforts 
are needed to ensure full implementation of the existing integrity plans in the judiciary and in 
the public administration  and to  address corruption in local administration  through adoption 
of local action plans. The impact of the implementation of these integrity plans has yet to be 
assessed. 

11 

 
 
Accountability of the administration  

Following the government’s rightsizing efforts and decrease of public administration staff by 
over 45,000, the structure of the public administration still needs to be streamlined. The lines 
of accountability  between  agencies  and their  parent institutions are blurred, contributing to 
overlapping  functions,  fragmentation,  and  unclear  reporting  lines.  Political  commitment  to 
managerial  accountability  and  systematic  delegation  of  responsibilities  is  still  needed. 
Institutions  continue  to  have  a  bureaucratic  and  process-oriented  approach  to  planning, 
budgeting and the reporting of their activities (see Chapter 32 — Financial control).  

The Ombudsman has a key role to play in ensuring citizens’ right to good administration, 
and  public  authorities  are  obliged  to  report  on  the  implementation  of  his  recommendations. 
However,  for  the  fourth  consecutive  year,  the  parliament  did  not  discuss  in  the  plenary  the 
Ombudsman’s  annual  report  and  hence,  no  conclusions  were  made  for  the  government’s 
review (see under Governance). Citizens’ right to access public information is regulated in 
the  Law  on  access  to  information  of  public  importance,  which  is  under  revision. 
Administrative  silence,  whereby  public  authorities  fail  to  properly  act  on  the  citizens’ 
information requests, continues to be a major issue. Enforcement of the decisions taken by the 
Commissioner  for  free  access  to  information  of  public  importance  needs  to  be  ensured  (see 
Chapter 23 – Fight against corruption). 

With  regard  to  citizens’  right  to  administrative  justice,  the  administrative  court  operates 
with  an  insufficient  number  of  judges  while  coping  with  broadening  responsibilities, 
especially  over  labour  disputes  including  at  local  self-government  level,  which  affects  its 
efficiency.  A  new  Law  on  free  legal  aid  was  adopted  in  November  2018,  and  it  includes  a 
regulatory framework for legal aid in administrative cases. While the citizens’ right to seek 
compensation is regulated, no statistical data is collected to monitor implementation. 

Service delivery to citizens and businesses  

The government continues to be committed to creating a more user-oriented administration. 
Progress was made with the development of further e-services, such as e-payments, and the 
adoption  of  an  e-government  law  in  April  2018.  Secondary  legislation  and  a  new  e-
government  strategy  for  2019-2021  are  being  developed.  There  is  strong  co-ordination  and 
leadership in this area from the e-government office and the Prime Minister’s Delivery Unit. 
Digital signatures are being used, but only around 5% of the population avail of this service. 
A  more  modern  e-government  portal  is  currently  being  designed.  While  electronic  service 
delivery  continues  to  advance,  there  is  still  no  central  policy  ensuring  citizens’  access  to 
services.  

The  legal  framework  for  simplification  of  administrative  procedures  has  been  in  place 
since  the  2016  Law  on  general  administrative  procedures.  However,  there  continues  to  be 
regulatory  uncertainty  for  citizens  and  businesses  due  to  considerable  delays  with  aligning 
sector legislation with this law. Citizens are often not aware of their improved rights, allowing 
the  administration  to  apply  old  cumbersome  procedures.  The  capacities  of  the  Ministry  of 
Public  Administration  and  Local  Self-Government  to  exercise  an  efficient  oversight  of  the 
implementation of this law are limited, and there are overlaps in coordination with the Public 
Policy Secretariat.  

12 

 
 
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 of fundamental rights in law and in practice.  

Serbia  has  some  level  of  preparation  to  apply  the  acquis  and  European  standards  in  this 
area.  Serbia  made  limited  progress.  In  April  2018,  Serbia  submitted  to  the  Venice 
Commission  the  draft  constitutional  provisions  aimed  at  strengthening  the  independence  of 
the  judiciary.  The  latter  submitted  its  Opinion  in  June  2018  with  a  number  of 
recommendations  on  changes  required  for  the  draft  provisions  to  meet  European  standards. 
The  revised  draft  sponsored  by  the  government  follows  these  recommendations.  The 
constitutional  reform  process  continues  through  parliamentary  procedures,  initiated  in 
November 2018. Corruption is prevalent in many areas and remains an issue of concern. The 
legal  framework  on  fundamental  rights  is  broadly  in  place  but  its  implementation  is 
inconsistent.  There  was  no  progress  made  as  regards  freedom  of  expression.  The  overall 
environment is still not conducive to the exercise of this right. The role of independent and 
regulatory  bodies  needs  to  be  recognised,  their  capacities  strengthened,  including  their 
budgets and skilled staff, and their functional independence must be guaranteed in practice.  

Serbia  is  implementing  an  action  plan  which  was  adopted  prior  to  the  opening  of  the 
accession  negotiations  on  this  chapter  in  July  2016.  Serbia  is  in  the  process  of  revising  its 
action  plan  with  measures  oriented  towards  meeting  the  interim  benchmarks  of  the  EU 
common position. 

Functioning of the judiciary  

Serbia has some level of preparation in the area of judiciary. It made some progress during 
the reporting period: while last year’s recommendations have only been partially addressed, 
progress  was  made  in  reducing  old  enforcement  cases  and  in  following  up  on  measures  to 
harmonise  court  practice.  Some  changes  to  the  rules  for  judicial  appointments  and  for 
evaluating  the  work  of  judges  and  prosecutors  were  adopted,  but  the  system  needs  to  be 
thoroughly  revised  following  the  adoption  of  the  constitutional  amendments  to  allow  for 
merit-based  judicial  recruitments  and  careers.  Currently,  the  scope  for  political  influence 
remains a concern. The constitutional reform is ongoing.   

In the coming year, Serbia needs in particular to make significant progress on: 

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

  ensuring both in law (in the context of the ongoing constitutional reform) and in practice 
that the High Judicial Council and the State Prosecutorial Council can fully assume their 
role  and  achieve  an  independent  and  efficient  judicial  administration  in  line  with 
European standards, including regarding the execution of the judicial budget;  

  adopting  and  implementing  a  human  resources  strategy  for  the  entire  judiciary  and 
establishing  a  uniform  and  centralised  case  management  system,  which  in  combination 
should  lead  to  a  measurable  improvement  in  efficiency  and  effectiveness  of  the  justice 
system. 

13 

 
 
Strategic documents  

Serbia’s  main  strategic  document,  together  with  the  action  plan  on  Chapter  23,  was  the 
national  judicial reform  strategy (2013-2018).  Its renewal  is  ongoing. A  draft assessment of 
the  previous  strategy  was  presented  in  November  2018.  Furthermore,  the  World  Bank  is 
carrying  out  a  follow-up  review  to  its  court  functional  review,  and  has  completed  a 
prosecution  functional  review.  These  reviews  are  aimed  at  informing  the  renewal  of  the 
national judicial reform strategy and the revision of the action plan for Chapter 23. The new 
strategic documents should include clearly defined activities and performance indicators.  

Management bodies 

The High Judicial  Council (HJC) and the State Prosecutorial  Council (SPC) are responsible 
for  the  appointments,  evaluation,  transfers  and  dismissals  of  judges  and  prosecutors,  and 
related budgetary issues. The 2019 budget of the HJC is EUR 2.02 million (EUR 2.75 million 
in 2018). The 2019 budget of the SPC is EUR 1.04 million (2018: EUR 1.02 million).  

As  regards  the  budget  for  the  judiciary  and  the  prosecution,  responsibilities  continue  to  be 
divided between the Ministry of Justice and the two councils. This also has an adverse impact 
on the efficiency of budgetary planning, in terms of resource allocation, and execution. The 
action plan for Chapter 23 envisaged the transfer of residual budgetary responsibilities from 
the  Ministry  of  Justice  to  the  councils  by  early  2017.  This  is  delayed:  while  the  current 
legislative framework provides for this transfer to the HJC, it has been further postponed (for 
the fourth time) to 2020. The Law on public prosecution was still not amended to allow for 
the same transfer to the SPC.  

Both councils should further improve the transparency of their work, including by making the 
reasoning  of  their  decisions  on  appointment,  promotions,  transfers  and  disciplinary 
proceedings  available to the public. The councils’ professional and administrative capacities  
need to be further strengthened. Training is being provided in an ad hoc manner, mostly by 
external  providers.  A  more  systematic  approach  towards  the  professional  improvement  and 
long-term training plans for judicial and prosecutorial staff as well as the councils’ own staff 
are needed for the better overall operation of the judicial system. 

Independence and impartiality  

The  current  constitutional  and  legislative  framework  continues  to  leave  room  for  undue 
political  influence  over  the  judiciary.  Future  legislative  changes  (required  to  finalise  the 
constitutional changes) will need to enhance the safeguards for judicial independence. A fully 
objective,  transparent  and  merit-based  system  for  appointing,  transferring  and  promoting 
judges  and  prosecutors  in  line  with  European  standards  will  need  to  be  put  in  place  also  to 
promote  professionalism  and  improve  quality.  In  addition,  the  current  broad  discretionary 
powers  of  court  presidents  and  heads  of  prosecution  offices  over  the  work  of  individual 
judges and deputy prosecutors respectively should not have an adverse impact on the quality 
of the adjudication of cases.  They also need to respect the safeguards for independence and 
autonomy in this field, in particular in relation to instructions to individual prosecutors.  

The constitutional reform process continued throughout 2018 in an acrimonious environment 
and  there  was  no  consensus  reached  during  stakeholder  consultations.  In  April  2018, 
following  a  few  public  roundtables,  the  draft  provisions  were  submitted  to  the  Venice 
Commission.  The  Venice  Commission  adopted  its  Opinion  in  June  2018,  providing 
recommendations  on  the  provisions  so  they  can  meet  European  standards.  On  a  number  of 
issues, several possible options were recommended. The Venice Commission also noted that 
the budget for the judiciary had not been addressed. In October 2018, the Ministry of Justice 
finalised the text after the Venice Commission Secretariat stated that the recommendations of 

14 

 
 
the  June  Opinion  had  been  followed.  In  late  November  2018,  the  government  submitted  to 
parliament an initiative to change the constitution, a step necessary to begin the parliamentary 
procedure.   

It  is  important  for  the  constitutional  reform  to  be  finalised  at  the  level  of  implementing 
legislation, in particular on the jurisdiction and organisation of courts and prosecution offices, 
the  role  and  effective  functioning  of  the  councils  and  the  Judicial  Academy.  Serbia  is 
encouraged to consult the Venice Commission in this legislative reform process. 

Pressure on the judiciary remains high. Public comments continue to be made by government 
officials,  some  at  the  highest  level,  on  ongoing  investigations  or  court  proceedings,  and  on 
individual  judges  and  prosecutors.  The  HJC  issued  several  statements  in  response  to  public 
comments and in reaction to complaints received by judges on intimidation and threats. The 
SPC’s Commissioner for Autonomy reviewed over 40 cases of alleged inappropriate political 
influence,  and  issued  several  advisory  opinions.  The  draft  rulebook  and  instructions  on  the 
work of the Commissioner were finalised, but not yet adopted.   

Accountability 

Disciplinary  procedures  are  in  place  for  both  judges  and  prosecutors.  In  2018,  the  SPC 
disciplinary prosecutor processed 152 disciplinary reports received and initiated a procedure 
in five cases. The Disciplinary Commission issued the following sanctions: public warnings, 
prohibition of career advancement, decrease in salary, and a dismissal in one case. During the 
same period, the HJC’s Disciplinary Commission had 30 cases in process, 25 of which were 
new  cases  proposed  by  the  disciplinary  prosecutor  in  2018.  The  Disciplinary  Commission 
issued a public warning and imposed several salary reductions.  Judges and prosecutors have 
an  obligation  to  declare  their  assets  on  an  annual  basis  and  to  report  possible  conflicts  of 
interest. 

Both councils have codes of ethics and ethical boards in place. Following the adoption of new 
rules of procedure, their members need to be re-appointed.  

A revision of the disciplinary rules is needed in order to better define the offences, streamline 
the procedures and strengthen the capacity of the disciplinary bodies. In addition, the codes of 
ethics  need  revision  in  order  to,  among  other  things,  clarify  which  provisions  in  the  codes 
should  entail  disciplinary  liability  for  their  non-compliance.  The  SPC  started  reviewing  the 
disciplinary rules for prosecutors.  

Professionalism and competence  

In  2018,  the  HJC  elected  51  judges  to  permanent  positions,  and  promoted  42  judges  to 
higher-level courts. It also proposed to parliament 187 first-time judges. The SPC elected 110 
deputy prosecutors and promoted 28 deputy prosecutors.  

In the context of the constitutional amendments, there is a need to revise the current system of 
recruitment,  transfer  and  promotion  of  judges  and  prosecutors,  in  order  to  ensure  that  their 
careers  are  fully  based  on  merit,  with  a  clear  link  between  performance  evaluation  and 
career advancement. The methodology for the evaluation of the professional performance of 
judges  should  include  participation  in  training  initiatives.  At  present,  Serbia  has  two 
categories of eligible candidates for the judicial professions: alumni of the Judicial Academy, 
and judicial and prosecutorial assistants. Thus far, mainly candidates from the latter group are 
being  appointed.  In  light  of  the  Venice  Commission  Opinion,  having  a  national  judicial 
academy as the sole entry point to the judicial profession at basic court level is ‘well founded 
with the aspiration and commitment to strengthen the calibre and professionalism of judicial 

15 

 
 
and  prosecutorial  training,  but  it  would  be  advisable  to  protect  the  Academy  from  possible 
undue influence’.  

Quality of justice 

The  quality  of  initial  and  continuous  training  programmes  provided  by  the  Judicial 
Academy needs to be improved. Training should better respond to real needs by, for example, 
focusing  on  judicial  skills  and  ethical  values,  including  the  role  of  a  judge  in  a  democratic 
society.  Continuous  training  activities,  which  also  require  coordination  efforts  in  order  to 
avoid  overlapping,  are  still  highly  dependent  on  different  donors.  The  cooperation  between 
the Judicial Academy and the HJC should be strengthened. Some strategic internal documents 
such  as  manuals  and  guidelines  for  evaluating  mentors  and  rules  for  evaluating  continuous 
training  were  prepared.  A  new  database  allows  for  easier  access  to  the  European  Court  of 
Human  Rights  case-law  related  to  Serbia.  A  multi-annual  work  programme  on  judicial 
training  still  needs  to  be  adopted.  A  quality  control  mechanism,  which  regularly  and 
effectively assesses the impact of the training provided, is yet to be put in place. Overall, there 
is  no systematic approach to  the professional  improvement through training of the judiciary 
staff.  Further improvement  of internal  capacity  and organisation of the Judicial  Academy is 
pending.  

Further steps were taken to improve the consistency of jurisprudence: non-binding guidelines 
by the Supreme Court of Cassation on improving consistency in the interpretation of the law 
are  in  place  in  all  four  appellate  courts.  The  Supreme  Court  of  Cassation  established  a 
specialised department to analyse divergences in court decisions. It also adopted a new list of 
key  words  for  a  more  precise  search  in  the  electronic  case  law  database,  and  it  adopted 
instructions for the selection, listing and archiving of relevant court decisions in this database. 
Efforts in this regard need to continue, as a functional judicial database plays a central role in 
effectively improving consistency of case-law.   

There is a need to revise the Civil Procedure and the Criminal Procedure Codes in a number 
of  areas  including  document  management  and  the  recording  of  hearings,  in  order  to  bring 
them in line with European standards and best practices.  

The 2019 budget for the judiciary (courts and prosecution offices) is EUR 299 million. There 
is limited provision in the budget to meet infrastructure needs.   

In 2018, there were 2,418 full-time judges effectively working (2017: 2 586) i.e. 37.4 judges 
per 100,000 inhabitants.  The trend towards fewer active judges thus  continues. The average 
age  of  judges  in  Serbia  is  54.  There  were  769  holders  of  the  public  prosecutor  function 
effectively  working  in  2018  (2017:  628)  i.e.  10.98  per  100  000  inhabitants  (2017:  10).  The 
European average is 21 judges and 11 prosecutors per 100 000 inhabitants. In the absence of a 
comprehensive human resource strategy, there is a mismatch between the number of judges 
per court and the size of the court administration.  

The Serbian judiciary continues to rely on several different case management applications that 
are not  interconnected. Furthermore, there is  only one centralised statistical  tool (generating 
only  one  type  of  report)  that  does  not  cater  for  the  different  systems.  This  hampers  data 
collection  and  exchange.  The  earlier  adopted  general  information  and  communication 
technology (ICT) guidelines have not  yet led to an overall strategic vision and plan for ICT 
solutions, which are urgently needed. A comprehensive countrywide system to process and 
manage  cases  across  the  judicial  and  prosecutorial  networks,  including  to  provide 
comprehensive and reliable statistical data in line with European standards, is still to be put in 
place.  

16 

 
 
An  automatic  case  allocation  system  with  some  technological  support  is  in  place  in  all  the 
courts. It is based on objective and pre-determined criteria, on the normative principle of the 
‘natural judge’ and on the requirement to assign cases randomly. This is an essential tool to 
support judicial independence and impartiality. In 20 pilot courts, both basic and higher, the 
tool has been improved with the introduction of a case weighting formula.   

In spite of increasing numbers compared to previous years, the services of public notaries are 
still not available throughout Serbia. Eight districts do not yet have public notaries. Secondary 
legislation  was  adopted  to  better  regulate  the  management  of  documents,  including  land 
register  registration,  the  electronic  issuance  of  certificates  and  on  filing  property  tax 
applications.  

Still little progress is being made in introducing alternative dispute resolution mechanisms 
such  as  mediation.  Info-desks  for  the  public  and  court  users  were  established.  The  Law  on 
court  fees  was  amended.  As  of  January  2019,  the  law  should  provide  for  an  additional 
incentive to parties by waiving court fees for successful mediation in civil cases, before or at 
the  first  hearing.  The  new  provisions  on  peaceful  labour  dispute  resolution  provide  for 
specialised mediation in collective labour disputes. The impact of these measures has yet to be 
seen. 

Efficiency  

The implementation of the national backlog reduction programme (for 2016-20) continued to 
be  supervised  by  the  Supreme  Court  of  Cassation.  It  has  a  positive  impact  on  the  courts’ 
efficiency  with  the  backlog  of  old  enforcement  cases  shrinking.  In  2018  the  number  of 
enforcement cases decreased by 78,135 cases. However, the overall high number of pending 
backlog cases still remains a concern (781 137 cases at the end of 2018). The highest number 
of  backlog  cases  (86.6%  of  the  total)  are  in  basic  courts.  From  2016  to  2017,  the  overall 
clearance rate dropped from 139.87% to 106.04%, but in 2018 it increased again to 110.03%. 
Thus for the third year in a row, the Serbian judicial system was able to process more cases 
than it received, even with fewer active judges than in 2017.   

There  are  still  significant  differences  in  workload  across  the  country.  Lengthy  proceedings, 
the lack of a free legal aid system – until the new law is implemented in October 2019 – and 
the  failure  in  processing  indemnity  claims  continue  to  hamper  the  quality  of  justice  and 
citizens’ access to justice (see under Procedural rights).   

The amended Law on enforcement and security from 2016 that extended the authority of the 
public enforcement agents has accelerated procedures and has enabled the ‘utility bill’ cases 
to  be  reduced  more  efficiently.  During  the  second  half  of  2018,  enforcement  agents  have 
solved 163,812 cases, compared to 116,120 during the first half of 2018.  

As the backlog results to some extent also from malfunctioning corporate governance within 
the  mostly  government-controlled  utility  companies,  the  government  is  also  responsible  for 
addressing it.  

Domestic handling of war crimes cases  

Serbia  needs  to  fully  cooperate  with  the  International  Residual  Mechanism  for  Criminal 
Tribunals (IRMCT), including by fully accepting and implementing its rulings and decisions. 
There have been public and repeated challenges by Serbia, including from the highest levels, 
of  the  judgments  of  the  International  Criminal  Tribunal  for  the  former  Yugoslavia  (ICTY). 
Serbia’s state of non-cooperation in  relation to the arrest of people indicted for contempt of 
court  had  not  been  resolved  by  the  time  the  IRMCT  assumed  the  jurisdiction,  rights  and 

17 

 
 
obligations of the ICTY. The final decision as to whether this case will be adjudicated by the 
IRMCT or in Serbia is pending.   

Regarding judicial cooperation issues, the existing bilateral  protocols on cooperation related 
to  war  crimes,  crimes  against  humanity  and  genocide  between  the  Prosecutor’s  Office  of 
Serbia  and  its  counterparts  in  Bosnia  and  Herzegovina,  Croatia  and  Montenegro  have 
contributed to improving relations and reducing judicial impunity for war crimes. In 2018, the 
cooperation  with  Bosnia  and  Herzegovina  has  led  to  indictments  being  issued  in  Serbia.  
Cooperation with Croatia faced a number of impediments and has not led to tangible results. 
Mutual  legal  cooperation  between  Kosovo  and  Serbia  is  extremely  limited  in  war  crimes 
cases. 

The  implementation  of  the  2016  national  strategy  for  investigation  and  prosecution  of  war 
crimes  has  continued  at  a  slow  pace.  A  monitoring  mechanism  for  overseeing  its 
implementation is in place. It has issued five reports.  

The  prosecutorial  strategy  2018-2023  was  adopted  in  April  2018.  It  did  not  include  clear 
criteria for prioritising war crimes cases as envisaged in the Serbian action plan for Chapter 
23. In order to support the implementation of this strategy, additional posts were planned for 
the  Office  of  the  War  Crimes  Prosecutor  (OWCP),  including  additional  deputy  prosecutors 
and  a  psychologist  to  support  victims  and  witnesses.  Eight  deputy  prosecutors  have  been 
appointed: five new posts and three as replacements for retired colleagues. There has been a 
further  delay  in  assessing  the  confidentiality  rules  (disclosure  of  confidential  information 
during investigations and/or tampering of evidence).  

In December 2018, the OWCP released its own report on criminal complaints filed nationally 
since 2003. According to this report, there were  - out of a total of 76 cases  - 13 against the 
mid-ranking perpetrators and none against high-ranking officers.  

In 2018, 10 indictments were filed by the OWCP (compared to 3 in 2017) of which 7  cases 
were  transferred  from  Bosnia  and  Herzegovina.  Seven  have  been  confirmed.  These 
indictments concern cases not involving high-ranking suspects. Currently, there are 16 cases 
ongoing  at  first  instance,  and  1  case  at  appeal  level.  Most  of  the  ongoing  cases  are  against 
low-ranking  defendants.  Most  cases  have  seen  significant  delays  on  various  (including 
medical  and procedural) grounds. Significant  court  hearing delays experienced in  2017  also 
continue, for instance in the ‘Srebrenica’ case. Moreover, there have been reported instances 
of intimidation of witnesses and observers. 

Serbia currently has 2 382 cases at the pre-investigation stage.  

Some administrative steps were taken to improve the efficiency of investigations through the 
adoption  in  early  2018  of  joint  internal  operating  rules  between  the  OWCP  and  the  War 
Crimes Investigation Service. The latter moved to more suitable premises for keeping records 
of  war  crimes  in  order  to  prepare  a  database  to  investigate  those  crimes.  This  should  help 
prioritise investigations and prosecutions.    

Overall, Serbia needs to demonstrate a firmer commitment to the domestic processing of war 
crimes  at  all  levels.  In  addition,  meaningful  regional  cooperation  and  good  neighbourly 
relations are needed to overcome the legacies of the past, and to constructively foster mutual 
trust, dialogue and tolerance in the region, avoiding actions and statements that go against this 
goal.  This  should  also  imply  honouring  the  victims  of  the  past.  There  have  been  several 
instances in which the state authorities have provided public space and took part in promoting 
activities of ICTY-convicted war criminals. This is not creating an environment conducive for 
an impartial and effective adjudication of war crimes cases.  

18 

 
 
Fight against corruption 

Serbia has some level of preparation in the fight against corruption. Limited progress has 
been  made.  There  is  no  measureable  impact  of  corruption  prevention  reforms.  The  revised 
Law  on  the  prevention  of  corruption  (previously  known  as  law  on  the  Anti-Corruption 
Agency)  was  adopted  on  21  May  2019.  The  law  needs  to  comply  with  the  acquis, 
international  agreements  and  GRECO  recommendations.  As  regards  the  repression  of 
corruption, the Law on organisation and jurisdiction of government authorities in suppression 
of organised crime, terrorism and corruption, which entered into force in March 2018, is being 
implemented  but  it  is  too  early  to  fully  assess  its  impact.  Law  enforcement  and  judicial 
authorities  still  need  to  establish  a  credible  track  record  of  operationally  independent 
prosecutions  and  finalised  high-level  corruption  cases.  Overall,  corruption  is  prevalent  in 
many  areas  and  remains  an  issue  of  concern.  There  is  a  need  for  strong  political  will  to 
effectively  address  corruption  issues,  as  well  as  a  robust  criminal  justice  response  to 
high-level corruption. Serbia should in particular: 

  improve its track record on investigations, indictments and final convictions in high-level 

corruption cases, including the seizure and confiscation of criminal assets; 

  implement legislation on the Anti-Corruption Agency that needs to be compliant with the 
acquis, international agreements and GRECO recommendations, in order to strengthen the 
Agency’s role as a key institution in a more effective fight against corruption; 

  conduct an impact assessment on its anti-corruption policy with a view to adopting a new 

ambitious strategy and action plan.  

Track record 

As  regards  Serbia’s  track  record  of  investigating,  prosecuting  and  trying  corruption  cases, 
there  were  criminal  charges  filed  against  9,095  individuals  with  the  special  departments  for 
combating corruption in the Higher Prosecutors’ Offices. They filed indictments against 547 
individuals.  Courts  convicted  332  individuals  based  on  indictments  by  these  special 
departments,  out  of  which  there  were  court-accepted  plea  agreements  for  294  defendants. 
Courts also convicted 41 individuals   in relation to high-level corruption offences (based on 
indictments  by  the  Prosecutor’s  Office  for  Organised  Crime)  in  2018  (compared  to  50  in 
2017).  Of  these,  13  were  based  on  plea  agreements.  Confiscation  of  assets  was  imposed  in 
two  of  these  cases.  The  Prosecutor’s  Office  for  Organised  Crime  indicted  21  individuals. 
Overall, for all types of corruption cases, there were first instance convictions against 1 952 
individuals in 2018 (compared to 2 140 in 2017). Serbia needs to demonstrate a convincing 
track record on the final confiscation of assets. 

Serbia  urgently  needs  to  improve  its  results  in  detecting  and  prosecuting  corruption  crimes, 
based on increased technical expertise, and better coordination and data exchange between all 
institutions involved. Serbia also needs to step up the application of the concept of financial 
investigations.  

The Anti-Corruption Agency issued 77 opinions related to requests on conflicts of interest in 
2018 (2017: 41). It filed 31 requests for misdemeanour proceedings (2017: 20).  The Agency 
initiated 151 procedures (37 based on complaints and 114 ex officio) (203 for 2017: 37 based 
on  complaints  and  166  ex  officio)  on  grounds  related  to  accumulation  of  functions  without 
prior  approval  of  the  Agency,  and  166  procedures  for  other  situations  related  to  conflict  of 
interest or nepotism (145 based on complaints and 21 ex officio) (170 for 2017: 101 based on 
complaints and 69 ex officio). In 2018, the misdemeanour courts had still not issued any first 
instance judgments, filed by the Agency in 2018.  

19 

 
 
The  Agency  submitted  45  requests  related  to  income  and  asset  declarations  for 
misdemeanour proceedings in 2018 (2017: 86) of which 43 were related to a failure to submit 
asset  declarations  on  time.  Based  on  the  Agency’s  work  in  previous  years,  misdemeanour 
courts  issued  49  convictions  in  2018  (2017:  63). The Agency  filed  16  criminal  charges  in 
2018 (2017: 15) 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,  2  final  judgements  were  issued  with  a  conditional  sentence  of 
imprisonment, 14 cases  were finalised with the  deferral of criminal prosecution, in 14 cases 
criminal  charges  were  dismissed  and  in  3  cases  acquittals  were  issued.  Proceedings  are 
underway in 17 cases. Overall, the number of cases dealt with by the Agency is decreasing. In 
general,  the  measures  that  the  Agency  can  impose  do  not  have  a  deterrent  effect,  and  more 
stringent  rules  on  the  accountability  of  officials  in  cases  involving  conflicts  of  interest  are 
needed. The ongoing process of drafting the new law on the Anti-Corruption Agency provides 
a good opportunity to ensure that the Agency gets a more robust and ambitious mandate when 
it comes to identifying and preventing corruption. 

The Agency also performs checks on the funding of political activities and of elections, and 
submitted  90  requests  for  misdemeanour  proceedings  for  violations  of  the  Law  on  political 
activities  financing  in  2018  (against  273  in  2017).  In  the  same  period,  courts  rendered  113 
final verdicts. As most of them impose low sentences, they do not have the desired deterrent 
effect. Based on final sentences, in 2018, the Agency published 33 decisions on the loss of the 
right of political entities to use public funds for their regular work during 2019 (against four 
in  2017). The law on misdemeanours provides for misdemeanour plea agreements  as a new 
mechanism,  which  was  implemented  by  the  Agency  in  May  2018  for  the  first  time.  The 
Agency signed four such agreements in 2018. Overall, the system for controlling of political 
activities  and  electoral  campaign  financing  needs  to  become  more  transparent  and  effective 
through  improving  legislation  and  applying  the  recommendations  of  the  OSCE/ODIHR  and 
the Council of Europe Group of States against Corruption (GRECO).  

A comprehensive and evidence-based assessment of access to information is not possible, as 
the  majority  of  public  authorities  do  not  comply  with  the  obligation  to  provide  data  to  the 
Commissioner for Access to Information of Public Importance regarding citizens’ requests for 
information. The Commissioner established that  87% (2017: 86%) of citizens’ complaints  – 
most  of  them  concerning  administrative  silence  –  were  well-founded,  meaning  that  the 
information requested by citizens should have been provided by the authorities according to 
the  Law on access  to  information  of public importance.  In 55% (2017:  62%) of these well-
founded  cases,  the  authorities  reported  that  they  acted  upon  the  Commissioner’s  request  to 
provide the information to the complainants even before a decision was made on the appeal, 
which would indicate that there was no reason not to disclose the requested information in the 
first place. 

During  2018,  courts  in  Serbia  received  122  new  cases  based  on  the  law  on  whistle-blower 
protection  (2017:  149)  and  out  of  the  total  caseload  of  193  cases,  124  cases  were  finalised 
(2017: 158).   

Institutional framework 

Prevention of corruption 

Serbia’s  institutions  for  preventing  corruption  broadly  meet  international  standards.  As 
regards the revision of the  law on the Anti-Corruption Agency, enabling it to better assume 
its role as the key institution in this area, a first draft was prepared by a Ministry of Justice 
working  group  in  July  2018.  This  draft  did  not  fully  comply  with  the  GRECO 
recommendations. A second draft was published on the Ministry’s website in February 2019 

20 

 
 
further to consultations with a GRECO-affiliated expert. The government submitted a draft to 
parliament  in  early  May  2019  under  urgent  procedure  (see  under  Parliament  on  the  use  of 
urgent procedures). Parliament adopted the law on 21 May 2019. The law needs to  comply 
with the acquis, international agreements and GRECO recommendations. Efforts are needed 
to  empower  the  Agency  to  step  up  data  collection  in  an  accountable  manner  and  its  data 
analysis,  including  access  to  relevant  databases.  The  Anti-Corruption  Agency’s  budget  has 
increased for 2019, and the new ‘staff systematisation’ allows for 123 workplaces, as well as 
the  contracting  of  157  employees  (compared  to  92  workplaces  and  139  employees 
previously).  The  Agency  currently  has  only  80  employees  on  a  permanent  basis.  Priority 
should be given to adequately resourcing the Agency in order for it to be a leading player in 
preventing corruption and monitoring progress in this regard, and to work in an independent 
and  transparent  manner.  Serbia’s  institutions  need  to  cooperate  with  and  respond  to  the 
Agency’s reports and instructions as provided for under the law. 

Public  procurement,  infrastructure  projects,  healthcare,  education,  construction  and  spatial 
planning, and public companies remain particularly vulnerable to corruption. No tangible 
improvements  took  place  in  relation  to  verifications  and  procedural  transparency  in  these 
fields. Serbia’s public procurement legislation is largely in line with the  acquis. A draft law 
aimed at further alignment including on e-procurement was prepared. The public procurement 
office still lacks staff and technical capacity. It needs to step up efforts in supervising other 
institutions  and  monitoring,  partly  by  setting  up  a  centralised  database.  The  anti-corruption 
action plan focusing on higher education has yet not yielded concrete results.   

In order to fight corruption at local level, the Anti-Corruption Agency had provided the local 
authorities with a model anti-corruption action plan. Only six local authorities set up a body to 
monitor the implementation of plans drawn up that were based on this model (76 plans out of 
145 required had been adopted). The Law on civil servants was amended in 2018 to include 
provisions  concerning  conflicts  of  interest  in  public  administration  and  disciplinary 
procedures;  however,  the  amendments  did  not  sufficiently  address  shortcomings  in 
transparent and merit-based recruitment.  

The  Anti-Corruption  Council,  in  its  advisory  role  to  the  government,  remained  active  in 
exposing and analysing cases of systemic corruption. However, the government still refuses to 
systematically follow up on its recommendations, and the Council is yet to be systematically 
included in procedures for adopting legislation that has a potential bearing on corruption. The 
authorities should establish a more constructive relationship with the Council. 

Law enforcement 

The  new  Law  on  the  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 to investigate and prosecute corruption cases. 
Adequate training has been organised. In the special departments for combating corruption in 
the Higher Prosecutors’ Offices in Kraljevo, Niš, Novi Sad and Belgrade a total of 44 deputy 
public  prosecutors  have  taken  up  work.  Also,  five  task  forces  were  established  in  these 
departments,  which  include  representatives  of  the  police,  the  tax  administration  and  the 
administration  for  the  prevention  of  money  laundering.  A  department  for  the  fight  against 
corruption  is  operating  within  the  Criminal  Police  Directorate,  and  dedicated  bodies  have 
been  established  in  the  same  cities.  Coordination  meetings  between  the  police  and  the 
prosecution  are  organised  regularly,  and  liaison  officers  have  been  appointed.  Of  the  five 
financial forensic experts envisaged, only two have been employed. They are yet to be hired 
in the new special departments for combating corruption in Kraljevo, Niš and Novi Sad.  

21 

 
 
While the impact of these new structures has yet to be fully assessed, so far the institutional 
and technical capacity of police, prosecutors and judges remains insufficient overall and needs 
improvement. Financial investigations are being launched more proactively, but their impact 
on a substantially increased number of final convictions is yet to be demonstrated.  

Internal  control  departments  in  line  ministries  continue  to  lack  equipment,  resources  and 
human  capacity.  The  State  Audit  Institution  audited  200  statements  from  public  funds 
beneficiaries  in  2018. For 117, it concluded that the internal  control system  did  not  provide 
reasonable  assurance  that  the  goals  concerning  compliance  with  regulations  and  procedures 
were  achieved.  Some  76.5%  of  the  audited  entities  were  found  not  to  have  appropriately 
established the internal audit function.   

Legal framework 

Serbia is a party to all international anti-corruption conventions, including the United Nations 
Convention  against  Corruption.  The  legal  framework  for  the  fight  against  corruption  is 
broadly  in  place.  Parliament  adopted  amendments  to  the  law  on  the  Anti-Corruption 
Agency.  This  law  needs  to  comply  with  the  acquis,  international  agreements  and  GRECO 
recommendations. 

The  Law  on  free  access  to  information  of  public  importance  still  needs  to  be  further 
amended  to  ensure  its  effective  implementation  including  through  an  appropriate  access  to 
information. Amendments are being prepared (see under Public administration reform). The 
legal  framework  on  whistle-blower  protection  still  needs  to  be  aligned  with  the  new  EU 
acquis on this issue. 

There  is  a  further  delay  in  amending  the  Law  on  financing  of  political  activities.  This  is 
needed,  among  other  things,  to  increase  transparency  in  financing  political  entities  and 
electoral  campaigns  including  the  use  of  public  resources,  to  introduce  more  efficient 
sanctions,  and  to  clarify  the  duties  between  the  relevant  state  authorities.  The  State  Audit 
Institution  has  performed  financial  statement  audits  and  compliance  audits  on  five  political 
entities in 2018.  

In its latest evaluation round in March 2019, GRECO noted that 10 recommendations on the 
prevention  of  corruption  in  respect  of  members  of  parliament,  judges  and  prosecutors  were 
partially implemented and 3 not  implemented (instead of 7  partially implemented and 6 not 
implemented  in  2018).  It  concluded  for  the  second  year  in  a  row  that  Serbia  had  not 
implemented  satisfactorily  or  dealt  with  in  a  satisfactory  manner  any  of  the  13 
recommendations.  Following  one  of  these  recommendations,  a  new  law  on  lobbying  was 
adopted in November 2018. GRECO also concluded that the overall level of compliance with 
the  recommendations  is  no  longer  ‘globally  unsatisfactory’  and  that  Serbia  was  no  longer 
subject to the non-compliance procedure.   

Strategic framework 

The  Anti-corruption  Agency  monitored  the  implementation  of  Serbia’s  anti-corruption 
strategy and action plan for 2013-2018. Out of 177 measures to be completed by the end of 
2017, the Agency found that 26% were implemented in accordance with the indicators, while 
61% were deemed not implemented at all (while the remaining measures were deemed to be 
partially implemented). A number of steps to effectively implement and monitor this strategy 
and its follow-up strategy, as well as the relevant sections in the action plan for Chapter 23, 
have been seriously delayed.   

22 

 
 
Fundamental rights 

The  legislative  and  institutional  framework  for  upholding  human  rights  is  broadly  in  place. 
Amendments improving the legislative framework related to national minorities were adopted 
in  June  2018.  However,  consistent  and  efficient  implementation  of  legislation  and  policies 
needs  to  be  ensured.  In  addition  to  making  substantial  efforts  to  uphold  freedom  of 
expression,  Serbia  needs  to  address  shortcomings  already  identified  in  the  2018  report.  In 
particular, Serbia needs to:  

  strengthen  human  rights  institutions,  guarantee  their  independence,  including  via  the 
allocation  of  the  necessary  financial  and  human  resources,  and  follow  up  on  their 
recommendations; 

  step up measures to protect the rights of persons facing discrimination, including lesbian, 
gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  persons  with  disabilities, 
persons  with  HIV/AIDS  and  other  vulnerable  individuals;  actively  pursue  investigation 
and convictions for hate-motivated crimes; and adopt a new anti-discrimination strategy; 

  ensure a consistent implementation of legislation regarding national minorities, including 
Roma2, leading to a tangible improvement in the effective exercise of their rights across 
the country. 

Serbia  has  ratified  eight  of  the  nine  international  human  rights  instruments.  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. By decision of the Stabilisation and Association 
Council,  Serbia  was  granted  observer  status  in  the  European  Agency  of  Fundamental  Rights. 
The participation of Serbia as observer in the work of this agency is an important step towards 
its  gradual  alignment  with  Union  law  in  the  area  of  fundamental  rights.  In  particular,  it  will 
contribute  to  the  exchanges  of  best  practices  facilitating  the  advancements  on  concrete 
fundamental right issues in line with applicable EU standards. 

In 2018, the European Court of Human Rights delivered 13 (2017: 26) judgments concerning 
Serbia and found that it violated the European Convention for the Protection of Human Rights 
and Fundamental Freedoms in 12 (2017: 25) cases. Four violations related to the right to a fair 
trial,  six  to  the  length  of  proceedings,  one  to  non-enforcement,  and  one  to  the  protection  of 
property.  There  are  currently  69  (2017:  66)  cases  against  Serbia  in  the  enhanced  monitoring 
procedure before the Committee of Ministers of the Council of Europe.  

As regards promotion and enforcement of human rights, the number of citizens’ complaints 
submitted to the Ombudsman decreased by 19% (2017: 4 060; 2018: 3 282), while the number 
of recommendations from the Ombudsman addressed to the authorities remained stable (2017: 
799; 2018: 793). For the fourth consecutive year, the parliament failed to discuss in the plenary 
the annual reports of the Ombudsman and of other independent bodies; therefore no conclusions 
for the government’s review were  made. According to the  Ombudsman, the percentage of his 
recommendations  followed  up  by  the  authorities  remains  high  (2017:  90.6%;  2018:  93.2%), 
although  certain  recommendations  related  to  “public  interest”  have  still  not  been  addressed. 
There has been a serious delay in amending the law on the Ombudsman.  

In the field of prevention of torture and ill-treatment, the Ombudsman, in his capacity as 
the national preventive mechanism, made fewer visits to relevant sites, namely police stations, 
prisons, social welfare institutions, psychiatric hospitals, and visits to oversee the treatment of 

2  In  line  with  the  terminology  of  European  institutions,  the  umbrella  term  ‘Roma’  is  used  here  to  refer  to  a 
number of different groups, without denying the specificities of these groups. 

23 

 
 
                                                           
refugees  and  migrants  (2017:  61;  2018:  44).  NGOs  participating  in  the  national  preventive 
mechanism  deem  that  cooperation  from  the  Ombudsman’s  office  has  decreased.  As  a  large 
number  of  recommendations  by  the  European  Committee  for  the  Prevention  of  Torture  and 
Inhuman or Degrading Treatment or Punishment (CPT) had not been implemented, the CPT 
issued a report in June 2018 following its ad hoc visit to Serbia, stating that ill-treatment is an 
accepted  practice  within  the  current  police  culture.  The  Public  Prosecutor’s  Office  and  the 
Ministry of the Interior conducted training on the official methodology for investigations into 
allegations  of  torture  and  other  forms  of  ill-treatment.  A  new  commission  for  the 
implementation  of  standards  in  police  conduct  related  to  investigating  cases  of  torture  has 
been  established  but  there  has  been  no  impact  yet.  Secondary  legislation  needed  for  the 
appropriate implementation of the law on the police, which should regulate the treatment of 
individuals  detained  in  police  custody,  is  delayed.  A  law  for  the  prevention  of  ill-treatment 
and  abuse  in  social  institutions  has  yet  to  be  adopted.  The  government  submitted  draft 
amendments  to  the  criminal  code to parliament in early May  2019, under urgent procedure, 
introducing  life imprisonment without the possibility of conditional  release  for a number of 
crimes. Parliament adopted the amendments on 21 May 2019. There are relevant provisions of 
the European Convention of Human Rights and the case law of the European Court of Human 
Rights. The amended law will have to be assessed on this basis.  

Regarding the prison system, the renovation and modernisation of several prisons, including 
the prison hospital in Belgrade, continued in line with the strategy for reducing overcrowding 
in  penal  institutions.  A  new  prison  was  built  in  Pančevo  and  is  operational.  A  decision  on 
reorganising  the  service  for  treatment  programmes  and  alternative  sanctions  was  adopted  in 
May  2018  but  has  yet  to  be  implemented.  The  revision  and  improvement  of  treatment 
programmes  in  prisons  and  prison  medical  facilities  is  ongoing,  in  line  with  CPT 
recommendations.  The  more  restrictive  use  of  incarceration  measures  and  increased 
application of alternative sanctions contributed to a stable prison population. Amendments to 
the  Law  on  execution  of  extrajudicial  sanctions  and  measures  were  adopted  in  November 
2018  to  improve  the  use  of  alternative  sanctions.  However,  shortcomings  remain  in 
accommodation conditions and in the provision of legal aid and health care. 

A new Law on personal data protection was adopted in November 2018, aiming at aligning 
with  the  new  acquis,  i.e.  the  General  Data  Protection  Regulation  and  Law  Enforcement 
Directive.  It  will  enter  into  application  in  August  2019.  The  mandate  of  the  previous 
Commissioner  for  access  to  information  of  public  importance  and  personal  data  protection 
ended  in  December  2018.  A  new  Commissioner  needs  to  be  appointed  in  a  transparent 
manner,  taking  into  account  relevant  professional  experience.  The  Commissioner’s  office 
remains  understaffed  and  underfunded.  It  needs  adequate  resources  to  perform  its  tasks, 
especially  given  the  increased  responsibilities  under  the  new  law.  Serbia  has  not  signed  or 
ratified  the  2018  Protocol  amending  the  Convention  for  the  Protection  of  Individuals  with 
regards to Automatic Processing of Personal Data. 

Freedom  of  thought,  conscience  and  religion  is  constitutionally  guaranteed  and  generally 
respected.  However,  the  lack  of  transparency  and  consistency  in  the  process  for  registering 
religious  communities  continues  to  be  one  of  the  main  obstacles  preventing  some  religious 
groups from exercising their rights. The law on churches and religious communities has yet to 
be aligned with international standards. 

----------------------------------------------------------------------------------------------------------------- 

Freedom of expression  

Serbia has some level of preparation concerning freedom of expression. However, there was 
no progress made over the reporting period. This lack of progress is now a matter of serious 

24 

 
 
concern.  A  working  group  composed  of  both  media  associations  and  public  officials 
submitted  a  draft  strategy  for  the  development  of  a  public  information  system  (the  media 
strategy)  to  the  government  in  December  2018;  a  consultation  process  has  so  far  been 
conducted  in  a  transparent  and  inclusive  manner.  With  regard  to  the  Commission’s 
recommendations  in  the  2018  report,  the  overall  environment  is  still  not  conducive  to  the 
exercise  of  freedom  of  expression.  Cases  of  threats,  intimidation  and  violence  against 
journalists  are  still  a  concern.  While  several  cases  have  been  solved  and  some  criminal 
charges filed, investigations and final convictions remain rare overall. The first ever sentence 
in a case involving the murder of a journalist was pronounced, in first instance, in April 2019. 
The  Serbian  authorities  need  to  react  promptly  to  and  publicly  condemn  hate  speech  and 
threats against journalists. Legislation on the media sector still needs to be fully implemented. 
Serbia’s legal framework needs to provide for more stringent criteria regarding 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 and swiftly followed 
up  by  law  enforcement  and  the  judicial  authorities,  as  well  as  publicly  condemned  by 
government officials;  

  ensure  the  full  implementation  of  media  laws,  and  strengthen  the  independence  of  the 

Regulatory Body for Electronic Media and boost its capacity to work proactively; 

  adopt and implement a new media strategy, in a transparent and inclusive manner; 

  ensure  suitable  funding  of  public  broadcasting  services,  transparent  and  equitable 
co-funding  for  media  content  serving  the  public  interest,  and  increased  transparency  in 
media ownership and advertising. 

A working group composed of both media associations and public officials submitted a draft 
media strategy to the government in December 2018; a consultation process has so far been 
conducted  in  a  transparent  and  inclusive  manner.  Results  have  yet  to  be  achieved  on  the 
thirteen most pressing issues for media freedom identified by media associations gathered in 
the ‘Team for Dialogue’. 

Intimidation of journalists 

Seven  physical  attacks  and  attacks  against  the  property  of  journalists  were  recorded  by  the 
Serbian  authorities  during  the  reporting  period.  Some  media  associations  reported  that 
political, economic, and other pressures on journalists increased. In this respect, Serbia needs 
to  categorise  these  crimes  as  criminal  or  as  other  types  of  offences  and  ensure  appropriate 
investigation  and  adjudication.  While  several  cases  have  been  solved  and  some  criminal 
charges  filed,  convictions  remain  rare  overall.  Serious  efforts  are  needed  to  identify  and 
prosecute those suspected of violating internet freedoms, as well as those using social media 
to  intimidate  and  threaten  journalists.  The  2016  memorandum  of  understanding  between 
journalists’ organisations, the Prosecutor’s Office and the Ministry of the Interior has  yet to 
lead  to  more  efficient  legal  treatment  of  cases  and  to  ensure  access  to  justice.  Media 
associations  suspended  their  participation  in  the  standing  working  group  on  the  safety  of 
journalists for seven months due to the perceived lack of results; the working group resumed 

25 

 
 
its activities in October 2018. The commission tasked with looking into three cases involving 
the  murder  of  journalists  from  1999  and  2001  has  made  progress  in  completing  an 
investigation into one of these cases, for which the indictment is still pending. In another case, 
in April 2019, progress was also made with the pronouncing, at first instance, of the first ever 
sentence  in  a  case  involving  the  murder  of  a  journalist.  The  third  case  is  still  being 
investigated by that commission.   

Implementation of legislation / institutions  

The independence of the Regulatory Body for Electronic Media needs to be strengthened to 
enable  it  to  safeguard  media  pluralism.  This  would  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. Hate 
speech  and  discriminatory  terminology  are  often  used  and  tolerated  in  the  media  and  are 
rarely tackled by regulatory authorities or prosecutors. The authorities need to promptly react 
to  and  publicly  condemn  hate  speech  and  threats  against  independent  bodies,  human  rights 
defenders and independent journalists. The Press Council continued to record an increase of 
breaches of the journalistic code of professional conduct in print media. Statements by high-
ranking  state  officials  on  the  daily  and  investigative  work  of  journalists  are  preventing  the 
creation of an environment where freedom of expression can be exercised without hindrance. 
The frequent refusal by public bodies to disclose information, or their administrative silence, 
following  requests  submitted  under  the  Law  on  free  access  to  information  of  public 
importance hinders the work of journalists.  

Public service broadcaster 

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  service  broadcasters 
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 Radio Television of Serbia.  

Economic factors  

Political and economic influence over the media continues to be a source of concern. 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.  The  reporting  period  was  characterised  by  several  acquisitions  of  media  companies. 
The  media  register  needs  to  be  improved  and  monitored.  The  information  contained  in  the 
register  is  limited,  difficult  to  browse  through,  and  does  not  provide  the  possibility  of 
efficiently  detecting  who  is  able  to  influence  the  media,  directly  or  indirectly.  Claims  have 
been made that fiscal inspections have been used disproportionally to exert economic pressure 
on  certain  media  outlets.  The  Serbian  authorities  should  ensure  that  informal  pressure  on 
editorial  policy  is  not  exerted  through  the  distribution  of  advertising  funds,  including  from 
public  companies  and  in  an  overall  context  of  decreasing  advertising  revenues,  or  through 
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 that is not detrimental to market equality, especially at local level. This 
includes  setting  reasonable  deadlines  for  the  calls  for  proposals,  selecting  members  of 
evaluation commissions in a transparent manner, taking due account of previous breaches of 
the  journalists  code  of  ethics  when  evaluating  applicants,  and  monitoring  the  effective 
implementation  of  the  awarded  grants.  Administrative  courts  have  decided  in  favour  of  the 
plaintiffs in several cases involving irregularities in these calls.  

26 

 
 
Professional organisations and working conditions 

Journalists have little job security and the editorial environment, which favours ‘tabloidism’, 
is  not  conducive  to  improving  journalistic  standards.  Journalists’  job  security  should  be 
strengthened  and  press  associations  need  to  strengthen  their  role  in  trade  union  and 
employment matters. 

(See also Chapter 10 - Information society and media) 

----------------------------------------------------------------------------------------------------------------- 

Freedom of assembly and association are guaranteed by the Constitution and are generally 
respected. Legislation is 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 yet to be adopted.  

Issues of labour and trade union rights are further covered in Chapter 19 - Social policy and 
employment. 

Regarding  property  rights,  the  Agency  for  Restitution  continued  with  restitutions  in  kind, 
having  adopted  a  total  of  about  54,400  opinions  and  first  instance  decisions  on  return  of 
confiscated properties, corresponding to around 73% of the 74,000 submitted claims since the 
Agency  was  established  in  2012.  As  regards  compensation,  when  restitution  in  kind  is  not 
possible,  amendments  to  the  law  on  property  restitution  and  compensation  were  adopted  in 
December 2018, extending the deadline for the repayment of financial bonds by three years to 
December 2021. The implementation of the law on the restitution of heirless Jewish property 
continued and the number of restituted properties increased.   

In  the  field  of  non-discrimination,  legislation  is  broadly  in  line  with  European  standards, 
although  it  needs  to  be  further  aligned  with  the  acquis.  The  European  Commission’s  new 
recommendation on standards for equality bodies, adopted on 22 June 2018, will need to be 
taken into account. The Commissioner for the Protection of Equality continued to participate 
in  the  work  of  the  European  Network  of  Equality  Bodies.  Her  office    introduced  an  annual 
award  for  a  municipality  with  the  best  practice  in  promoting  tolerance  and  creating  equal 
opportunities. A rulebook on the conduct of educational institutions in cases of suspected or 
established discriminatory behaviour and defamation was adopted in August 2018. The anti-
discrimination  strategy  expired  in  January  2018  and  a  new  one  has  yet  to  be  adopted.  The 
2016  amendments  to  the  criminal  code  related  to  prohibition  and  punishment  of  criminal 
racial  acts  and  other  acts  of  discrimination  have  yet  to  be  fully  aligned  with  the  acquis. 
According  to  the  Equality  Commissioner’s  annual  report,  the  largest  number  of  complaints 
relate to discrimination on grounds of disability, age and gender-based discrimination. Human 
rights defenders, together with LGBTI persons, often face hate speech, threats and violence. 
These abuses should be promptly and properly investigated and penalised.  

Concerning  equality  between  women  and  men,  the  adoption  of  a  new  Law  on  gender 
equality  has  been  seriously  delayed.  The  division  of  responsibilities  between  the  sector  for 
anti-discrimination policy and improvement of gender equality within the Ministry of Labour, 
Employment, Veterans and Social Affairs and the coordination body for gender equality still 
needs to be clarified and an efficient institutional set-up with adequate resources needs to be 
ensured.  A  new  EU  Index  of  Gender  Equality  for  Serbia  was  published  in  December  2018, 
indicating  that  the  largest  amount  of  progress  made  in  gender  equality  was  in  the  area  of 
politics, due to the increased participation of women in the parliament, government, and local 
assemblies. Older, rural and Roma women, as well as women with disabilities 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 concern. 

27 

 
 
On  violence  against  women  and  domestic  violence,  adoption  of  the  related  strategy  and 
action plan has been seriously delayed. The coordination body for gender equality submitted a 
first  national  report  on  the  implementation  of  the  Istanbul  Convention  on  violence  against 
women  to  the  Council  of  Europe  in  July  2018.  Since  the  adoption  of  a  new  law  against 
domestic violence, a high number of cases of violence have been reported; police and social 
workers need to be  further  trained  to implement  the law  efficiently.  A new SOS hotline for 
female victims of violence was set up. Serbia adopted a national programme for safeguarding 
and  improving  sexual  and  reproductive  health  in  order  to  align  its  priorities  with  the  global 
strategy for women’s, children’s and adolescents’ health (2016-2030) and the related World 
Health Organisation’s action plan. Additional funding is needed to ensure implementation of 
this programme in terms of improving access to quality services. 

An integrated national framework to ensure proper implementation of the rights of the child 
has yet to be established. The National Council for Child Rights set up a working group for 
the  drafting  of  the  action  plan  for  children,  as  the  previous  plan  had  expired  in  2015.  A 
working group on early development of the child was also set up within the National Council. 
Statistical data on vulnerable groups is still not disaggregated, particularly on Roma children 
and children  with  disabilities. Violence against children remains a  concern. A draft strategy 
(2018-2022)  on  child  protection  and  preventing  violence  against  children  was  prepared  and 
needs to be adopted. The Juvenile Justice Council was re-established in April 2018. Adoption 
of  amendments  to  the  Law  on  juvenile  offenders  and  protection  of  minors  in  criminal 
proceedings  has  been  further  delayed.  Better  protection  should  be  ensured  for  child  victims 
who  testify  in  criminal  proceedings.  There  are  still  serious  concerns  over  child  rights 
violations taking place in state institutions for children. In particular, there are concerns over 
violations of the rights of children with disabilities, who also face challenges regarding access 
to inclusive education. Integrated, community-based services should be further expanded. 

No progress has been made on the rights of persons with disabilities. Serbia is party to the 
UN Convention on the Rights of Persons with Disabilities. There is a lack of funding for the 
development  of  community-based  services,  licensed  service  providers  and  social  services. 
The adoption of a strategic framework on disability is still pending. Placement and treatment 
in  social  institutions  of  people  with  psychosocial  and  intellectual  disabilities  is  still  not 
regulated in accordance  with international standards. Serbia is still lacking a comprehensive 
strategy on deinstitutionalisation (see Chapter 19 — Social policy and employment). 

As  regards  the  rights  of  LGBTI  persons,  two  pride  parades,  in  June  and  September  2018, 
took place without any incidents, the latter attended by the Prime Minister and several high-
level  officials.  There  was  a  noticeably  smaller  police  presence  than  in  previous  years.  The 
first  LGBTI  community  centre  in  Serbia  was  opened  in  Novi  Sad  in  April  2018,  primarily 
targeting LGBTI youth and their families. There was also some progress made in education, 
as six out of eight textbooks with discriminatory content were changed. Amendments to the 
law  on  birth  registry  now  enable  the  entering  of  data  on  gender  change  into  the  registry. 
However, the overall situation in Serbia remains broadly the same as in previous years, with 
low 
the  expired  anti-discrimination  strategy. 
Implementation  of  the  hate  crime  legislation,  including  on  grounds  of  sexual  orientation, 
remains inadequate. While centralised official data on hate crimes is still lacking, civil society 
organisations reported a slight increase in violence and attacks on LGBTI persons, including 
from within their families. In November 2018, six years after the introduction of the concept 
of hate crime in the  Criminal Code, the first  hate crime  decision was delivered in  a case of 
domestic violence, motivated by the fact that the victim was an LGBTI person. Transgender 
persons  are  particularly  vulnerable  to  violence,  abuse  and  discrimination.  Intersex  persons 
remain invisible both socially and legally. 

implementation  of  activities  under 

28 

 
 
Concerning procedural  rights, the  legal framework remains only  partially  aligned with the 
acquis. Regarding access to justice, a new Law on free legal aid was adopted in November 
2018 and is to be implemented as of October 2019; an issue to be followed is the accessibility 
of  free  legal  aid  to  the  most  vulnerable  groups.  There  is  no  nationwide  institutionalised 
support for victims  and  witnesses of crimes. A  national strategy is  being  prepared as a first 
step  to  improve  the  protection  of  victims  and  witnesses  and  increase  their  access  to  justice. 
With respect to the support provided to and the protection of witnesses, there is a delay in 
adopting  amendments  related  to  the  implementation  of  urgent  measures  for  witness 
protection. Steps already taken to increase the capacity of the Witness Protection Unit within 
the  Ministry  of  the  Interior,  along  with  new  rules  and  procedure  for  selecting  staff,  are 
expected  to  improve  its  work.  There  is  a  further  delay  in  implementing  most  of  the 
recommendations of the analysis of the Witness Protection Unit carried out in 2016.  

The legal framework for respect for and protection of minorities and cultural rights is in place 
and generally upheld, in line with the Council of Europe Framework Convention on National 
Minorities.  The  implementation  of  Serbia’s  action  plan  for  the  realisation  of  the  rights  of 
national  minorities  and  relevant  legislation  needs  to  lead  to  a  tangible  improvement  in  the 
effective  exercise  of  national  minorities’  rights  throughout  the  country.  Some  progress  was 
made  with  amendments  to  the  legal  framework  in  June  2018.  Elections  for  the  National 
Minority Councils were  held in November 2018. The  Fund for the  National  Minorities was 
further  increased.  In  June  2018,  amendments  to  the  Law  on  local  self-government 
strengthened  to  some  extent  the  Councils  for  Interethnic  Relations,  but  their  role,  mandate, 
composition and work still need to be clarified. Those councils have still not been established 
and made operational in all the municipalities where this is required by law. Despite the legal 
obligation to  take  into account  the  ethnic  composition of the population, national minorities 
remain underrepresented in the public administration. 

There has been further progress in the area of education. A new law on textbooks, simplifying 
the  procedure  for  import  and  approval  of  textbooks  in  national  minority  languages,  was 
adopted in April 2018. The process of preparing and printing textbooks for national minorities 
continued  and  has  produced  positive  results.  Another  five  textbooks  were  provided  in  the 
Albanian language but more work is needed to complete this task. The process of preparing 
textbooks for secondary schools has not  yet started. Access to religious worship in minority 
languages  should  be  enabled  throughout  Serbia.  Public  broadcasting  in  minority  languages 
has  still  not  been  sufficiently  extended  outside  of  Vojvodina.  Following  the  media 
privatisation process, the broadcasting of programmes in minority languages remains fragile 
and dependent on funding. 

Regarding  Roma  inclusion,  a  working  group  for  the  preparation  of  an  action  plan  for  the 
implementation of the strategy for social inclusion of  Roma for  2019-2020 was  established. 
The coordination body for monitoring the implementation of the strategy chaired by a Deputy 
Prime Minister met twice during the reporting period. The institutional structure dealing with 
Roma  integration  remains  ineffective  and  complicated,  without  a  clear  distribution  of  tasks. 
Coordination between the national and local authorities and budgeting at local level still need 
to  be  reinforced.  Job  descriptions  for  local  Roma  coordinators,  pedagogical  assistants  and 
health  mediators,  should  be  uniform  throughout  Serbia  and  institutionalised.  Most  Roma  in 
Serbia have civil documentation; however, the procedure for registering the birth of children 
whose  parents  lack  personal  documents  needs  to  be  monitored,  and  related  secondary 
legislation  needs  to  be  amended.  There  was  an  increase  in  Roma  students  benefiting  from 
scholarships. However, only 9% of Roma children attend kindergartens, compared with 28% 
of  non-Roma  children  living  in  the  vicinity.  The  drop-out  rate  remains  high,  especially  for 
Roma  girls,  and  only  67%  of  Roma  youth  complete  compulsory  education,  compared  with 

29 

 
 
96%  of  the  non-Roma  population.  The  percentage  of  those  completing  tertiary  education 
remains  extremely  low,  namely  1%  compared  with  16%  of  the  non-Roma  population. 
Segregation  in  education  needs  to  be  addressed.  The  unemployment  rate  for  Roma  is  36% 
(45%  for  Roma  women)  compared  with  16%  of  the  non-Roma  population.  Informal 
employment  is  decreasing  but  continues  to  be  high  among  the  Roma  population  and  the 
informality  gap  is  the  highest  in  the  Western  Balkans  region.  In  addition,  Roma  are  still 
underrepresented in the public administration.  

A working group for drafting a national housing  strategy has been  established. Many Roma 
households have no access to electricity, drinking water or connection to the sewage system. 
New  provisions  of  the  Law  on  financial  support  to  families  with  children  include  the 
condition  that  the  right  to  parental  allowance  depends  on  the  children  being  vaccinated. 
However only 12.7% of  Roma children have received all recommended vaccines, compared 
to 70.5% of non-Roma children in the country. Although child marriage is not common in the 
general population, almost 60% of girls from Roma settlements are married at an early age. 
Domestic violence is also often unreported. 

As  of  March  2019,  there  were  199,584  internally  displaced  persons  (IDPs)  in  Serbia,  of 
whom 68,514 remain vulnerable and with displacement-related needs.  All collective  centres 
but one are closed. The government has taken some measures and adopted a strategy to solve 
the problems of refugees and IDPs. However, solutions remain slow and limited, with a need 
for  increased  funding.  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  through  strengthening  the  legal  framework  to  address 
money laundering and fulfilling most of last  year’s  recommendations.  The Financial  Action 
Task Force (FATF) in February 2019 tentatively concluded that Serbia adopted all measures 
included in the action plan it had agreed with the FATF and that this warranted an onsite visit 
assessment,  planned  for  end  May  2019,  to  verify  implementation.  Serbia  continued  to 
significantly contribute, as a transit country, to the management of the mixed migration flows 
towards the EU by playing an active and constructive role and cooperating effectively with its 
neighbours  and  EU  Member  States.  It  made  some  progress  in  implementing  the  integrated 
border management strategy and its action plan. The strategy and the action plan to counter 
irregular migration have been adopted.  

Serbia needs to produce a convincing track record, particularly in the fight against high-level 
corruption and organised crime, including money laundering. It also needs to consolidate its 
efforts  in  putting  in  place  an  asylum  system  compliant  with  the  acquis  and  European 
standards.  

In the coming period, Serbia should in particular:  

  refrain  from  further  diverging  from  the  EU  visa  policy  and  take  concrete  steps  to  fully 
align with it, starting with those nationalities that are heavily prone to irregular migration 
to the EU; 

30 

 
 
  adopt a new strategy and action plan for the control of light and small-calibre weapons;  

  provide training to judges and prosecutors on freezing, seizing and confiscating proceeds 

of crime, in particular on the concept of extended confiscation.  

Serbia  is  implementing  an  action  plan  which  was  adopted  prior  to  the  opening  of  the 
accession  negotiations  on  this  chapter  in  July  2016.  Serbia  is  in  the  process  of  revising  its 
action  plan  with  measures  oriented  towards  meeting  the  interim  benchmarks  of  the  EU 
Common Position. 

Fight against organised crime  

Serbia  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Some  progress 
was made over the reporting period. Serbia started to implement the new economic chapter of 
the criminal code and the Law on organisation and jurisdiction of state authorities in the fight 
against organised crime, terrorism and corruption and adopted a cybercrime strategy for 2019-
2023.  Serbia  has  yet  to  establish  a  convincing  track  record  of  effective  investigations, 
prosecutions and final convictions in organised crime cases, including financial investigations 
leading  to  a  track  record  of  freezing  and  confiscating  criminal  assets.  The  number  of 
convictions  for  organised  crime  (notably  in  the  fight  against  trafficking  in  human  beings) 
remains low.  

As no progress was made in fulfilling last year’s recommendations, they remain valid. Serbia 
should increase its efforts in addressing the shortcomings, and 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  their  confiscation  as  well  as  the 
efficient use of special investigative measures to collect relevant evidence);   

  secure the operational autonomy of the police from the Ministry of the Interior during the 

pre-investigation and investigation phase;  

  further  strengthen  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  30  565.  There  are  425  police  officers  per  100 000 
inhabitants,  compared  with  the  EU  average  of  318  in  2016  according  to  Eurostat.  The  total 
number of prosecutors is 780. When the prosecution-led investigation system was introduced 
in 2013, the number of prosecutors was not significantly increased. The Prosecutor’s Office 
for  Organised  Crime  is  understaffed  with  only  20  prosecutors  in  charge  of  investigating 
complex crimes countrywide.  

As  regards  the  main  institutions  to  combat  organised  crime,  the  Law  on  organisation  and 
jurisdiction of state authorities in the fight against organised crime, terrorism and corruption 
has incorporated some provisions of the expired financial investigation strategy. In line with 
the law, special departments were established to investigate corruption offences and economic 
crime and to carry out asset seizures. Furthermore, a financial forensic service and task forces 
were established and liaison officers were hired (see Chapter 23 – Judiciary and Fundamental 
Rights).  

Concerning  human  resource  management,  a  rulebook  on  internal  organisation  and 
systematisation was adopted. The latest  amendments to the Law on police raise concerns as 
regards the transparency of recruitment procedures that give broader discretionary powers to 

31 

 
 
the  Minister  of  the  Interior  than  a  previous  version  of  the  law.  In  August  2018,  several  top 
police  officials  were  suddenly  transferred  to  different  positions  by  the  Minister  without  the 
proper  procedure  being  followed  or  without  explanations  to  the  public  being  provided.  To 
further  guide  the  work  of  the  Sector  for  Internal  Control  of  the  Ministry  of  the  Interior 
(MoI),  rulebooks  on  conducting  the  integrity  test,  on  performing  internal  controls  and  on 
records  of  asset  declarations  have  been  adopted.  The  MoI  also  adopted  a  methodology  for 
conducting risk analysis within the Ministry. While the continuous professional development 
of  members  of  the  internal  control  sector  is  ensured,  it  needs  to  be  further  strengthened 
through  the  employment  of  more  permanent  staff  and  better  allocation  of  resources.  The 
number of systematised job positions increased by 42, bringing the total number to 127. The 
sector’s functional independence has improved but is not yet fully guaranteed. 

The MoI’s Financial Investigation Unit has 65 staff after further reinforcement in 2018. It also 
intends to operate as the Serbian Asset Recovery Office, which is in the process of becoming 
operational. The secure communication channel SIENA has been established. The Directorate 
for  the  Administration  of  Seized  Assets  in  the  Ministry  of  Justice  is  responsible  for  asset 
management in Serbia. 

Despite further amendments to the Law on police, the legal framework is still insufficient to 
guarantee the operational independence of the police from the MoI. Thus the police continues 
to also report to the MoI and not just to the prosecution office during the pre-investigation and 
investigation phase. Media relations, including press releases on ongoing operations, are still 
managed mainly by the MoI and not by the prosecution and/or the police.     

Amendments  to  the  Criminal  Code,  including  on  economic  crimes,  entered  into  force  in 
March  2018.  The  new  provision  on  money  laundering  ensures  autonomy  of  the  offence  of 
money laundering from a predicate crime. This should significantly facilitate prosecution and 
adjudication of this crime.   

Following the Financial Action Task Force (FATF) inclusion of Serbia in February 2018 in 
its  list  of  countries  having  strategic  deficiencies  in  anti-money  laundering  (AML)  and  in 
countering  the  financing  of  terrorism  (CFT),  Serbia  has  engaged  in  intensive  legislative 
activity; in June 2018 Serbia finalised a national risk assessment. To reflect this progress, in 
December  2018  MONEYVAL  -  the  Council  of  Europe’s  Committee  of  experts  on  the 
evaluation of anti-money laundering measures and financing of terrorism – has re-rated Serbia 
as  ‘largely  compliant’  with  some  relevant  FATF  recommendations.  The  FATF  tentatively 
concluded in February 2019 that Serbia adopted all measures included in  its action plan and 
that  this  warranted  an  onsite  visit  assessment  to  verify  implementation.  If  the  FATF  onsite 
visit in Serbia planned for May 2019 confirms this positive assessment, then Serbia could be 
removed  in  2019  from  the  FATF’s  compliance  document  of  countries  with  strategic 
deficiencies in their AML/CFT system (see Chapter 4 – Free movement of capital).  

The strategic framework for fighting organised crime includes a 2018 update of the serious 
and organised crime threat assessment with nine priorities identified, prepared by the Service 
for  Crime  Analysis.  The  capacities  of  this  service  need  to  be  strengthened.  Serbia  is 
implementing its  strategy  for the prevention and suppression of trafficking in  human beings 
2017-2022, in particular for women and children, while an action plan for 2019-2020 is under 
development. The strategy for social inclusion of Roma men and women in Serbia 2016-2025 
also  includes  measures  aimed  at  the  prevention  of  trafficking  in  human  beings,  as  well  as 
protection, support and reintegration of victims. 

Serbia has adopted its cybercrime strategy for 2019-2023. It aims, among other things, at 
strengthening  Serbia’s  institutional  capacity,  and  thus  envisages  the  creation  of  specialised 

32 

 
 
units within the Security Information Agency, the military police and the customs office, as 
well as the reinforcement of existing units with the MoI.  

Implementation and enforcement capacity  

As  regards  the  track  record,  there  has  been  little  progress  made  in  dismantling  criminal 
networks  and  in  establishing  a  track  record  of  proactive  investigations,  prosecutions  and 
convictions in  the fight  against organised crime. New investigations into organised criminal 
groups  were  initiated  in  2018  against  146  individuals  (compared  with  191  in  2017). 
Indictments were filed against 152 individuals. The number of convictions in organised crime 
cases  remains  low  compared  with  the  estimated  value  of  the  criminal  market  in  the  region: 
Convictions  in  2018  were  rendered  against  155  individuals  (out  of  which  105  were  plea 
agreements  approved  by  the  courts)  compared  with  110  in  2017.  Amendments  to  the 
Agreement on operational and strategic cooperation with Europol, which are necessary due to 
the  extension  of  Europol’s  extended  mandate  to  include  criminal  offences  against  EU 
financial interests, and financial market manipulations, are being prepared. An agreement on 
seconding a Europol liaison officer to Serbia is still pending.   

A working arrangement between the MoI of Serbia and the European Union Agency for Law 
Enforcement Training was ratified and entered into force in April 2018. It provides a basis for 
mutual  support  in  training  activities  for  law  enforcement  officials  and  the  exchange  of  best 
practices  in  cooperation  mechanisms,  and  should  help  boost  notably  the  effectiveness  of 
fighting cross-border crime.  

As  regards  operational  arrangements  for  special  investigative  measures,  the  police’s 
dependency on the security and intelligence agencies to carry out certain special investigative 
measures  in  criminal  investigations  continues  to  go  against  good  practice  and  should  be 
addressed.  

The level of inter-agency cooperation, information flow and exchange further improved with 
the implementation of the aforementioned law on organisation. Inter-agency task forces have 
already  been  established  in  3  out  of  4  special  prosecution  departments  and  13  institutions 
appointed  liaison  officers  to  cooperate  with  the  law  enforcement  authorities  and  the 
prosecution  services.  The  prosecution  services  have  continued  to  develop  IT  solutions  with 
the  aim  of  conducting  investigations  in  a  more  efficient  way.  The  operational  connection 
between  the  investigative  intelligence  tool  (SIDDA/SIDNA)  and  the  prosecution  case 
management  system  software  was  established,  allowing  for  an  automatic  data  transfer.  In 
addition,  there  have  been  further  developments  in  the  setting  up  of  a  central  criminal 
intelligence system. The finalisation of the development of these tools and their effective use 
in criminal investigations is yet to be achieved. The platforms need to be secure to allow for 
communication between the institutions and to provide effective access to the data needed for 
investigations.  

Serbia  participates  in  seven  Operational  Action  Plans  of  the  EU  Policy  Cycle  for  serious 
international  and  organised  crime  (2018-2021/European  Multidisciplinary  Platform  Against 
Criminal Threats, EMPACT). This includes among others action plans on ‘cannabis, cocaine 
and  heroine’,  ‘firearms  trafficking’,  ‘organised  crime  property  crime’,  ‘facilitated  illegal 
immigration’ and ‘trafficking in human beings’.  

For instance, under the  EMPACT priority  on facilitation of illegal  migration crime priority, 
Serbia took part in the annual planning of operational actions. It committed to participate in 
five  operational  actions  together  with  EU  Member  States  to  combat  migrant  smuggling  in 
2019. Serbia’s law enforcement authorities should make use of regional initiatives, such as the 
Joint  Operational  Office  in  Vienna,  and  the  Task  Force  Western  Balkans,  which  serve  as 

33 

 
 
regional  operational  platforms  for  international  investigations  into  migrant-smuggling 
organised crime groups. Under the EMPACT priority on firearms, Serbia also took part in the 
annual  planning of operational  actions.  It  committed to  participate in  16 operational  actions 
together  with  EU  Member  States  to  combat  firearms  trafficking  in  2019,  ranging  from  the 
development of a global intelligence picture, to operational activities and training. 

As regards the fight against money laundering, the number of convictions over the reporting 
period remains low. This number increased in the first quarter of 2019.  In 2018, there were 
convictions against six individuals. All convictions were stand-alone money laundering cases 
without  a  previous  conviction  for  a  predicate  criminal  offence  and  were  followed  by  the 
confiscation of significant criminal assets. Four out of the six convictions included third party 
money laundering. The police and prosecution services intensified their efforts to identify and 
prosecute money laundering. Based on the newly introduced approach of ‘follow the money’, 
orders for investigation were issued against 149 individuals and indictments were filed against 
44  individuals,  focusing  more  on  cases  of  stand-alone  money  laundering  (professional 
launderers).  Some  17  individuals  were  indicted  for  third  party  money  laundering.  Criminal 
judges will need to adjust to this increased activity and new approach, improve their level of 
technical  understanding,  and  build  up  relevant  jurisprudence.  More  generally,  Serbia’s  law 
enforcement institutions should analyse the reasons for the low number of convictions.  

Law enforcement agencies and prosecution services still do not have direct access to relevant 
databases  related  to  taxes,  the  land  register,  and  vehicles’  registration,  among  others.  The 
database of money laundering cases was updated as a follow-up to the agreement concluded 
between the Administration for Prevention of Money Laundering (APML) and the Republic 
Public  Prosecutor  as  well  as  the  latter’s  mandatory  instruction  to  act  proactively  upon 
receiving  information  from  the  APML.  In  line  with  the  FATF  recommendations,  the 
prosecution offices started to submit feedback to  the AMPL on their suspicious transactions 
reports. Serbia still needs to ensure that also 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  quantity  and  quality  of  seizure  and  confiscation  of  assets  (in  particular  permanent 
confiscation)  remains  low  despite  a  more  proactive  approach  in  carrying  out  financial 
investigations.  There is  a lack of consolidated jurisprudence in  this  field. The impact  of the 
2016 Law on seizure and confiscation of the proceeds of crime has yet to be seen. Extended 
confiscation is not implemented and judges and prosecutors would benefit from more training 
on the concept of confiscation in general and on extended confiscation in particular. 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 was stepped up with the aforementioned implementation of the law on 
organisation. Confiscation of criminal assets still has to become a strategic priority in the fight 
against organised crime, terrorism and high-level corruption in Serbia.  

The  number  of  convictions  on  trafficking  in  human  beings  is  low  (23  individuals  were 
convicted,  while  no  individuals  were  convicted  of  having  committed  the  offence  within  the 
context  of  organised  crime).  However,  in  2018  Serbia  applied  the  ‘especially  sensitive 
victims’  provision  to  18  victims  (compared  with  10  in  2017),  thereby  ensuring  a  better 
protection of victims and a higher quality of the investigation.   

The  revision  of  the  standard  operating  procedures,  i.e.  the  document  that  defines  roles  and 
responsibilities  of  all  key  anti-trafficking  stakeholders  in  identification,  support  and  case 
processing,  is  underway.  Serbia  is  starting  to  be  more  proactive  in  terms  of  detection, 
identification  and  protection  of  victims  of  trafficking  in  human  beings.  Specialised 

34 

 
 
investigation teams were established in 27 criminal police units throughout Serbia. Capacity 
building  of  Serbian  authorities  on  prevention  and  identification of  victims  of  trafficking  in 
human beings for the purpose of labour exploitation is ongoing. The capacity of the Centre for 
Human Trafficking Victims’ Protection still needs to be strengthened. A victims’ shelter was 
opened  in  February  2019.  Efforts  should  be  stepped  up  to  further  enhance  protection  and 
support for victims of trafficking in human beings (notably children), to avoid re-victimisation 
during  investigation  and  trial,  and  to  facilitate  the  victims’  reintegration  into  society. 
Although the legal framework provides grounds for it, compensation is rarely granted. There 
is no fund or scheme for compensation. 

On trafficking in weapons, the number of convictions is low within the context of organised 
crime (a conviction against one individual). There were 868 individuals convicted for illegal 
production, possession, carrying or trade in weapons or explosives. Significant progress was 
made in improving the conditions for physical security and stockpile management of weapons 
and ammunition. One storage and two evidence rooms have been upgraded. At the same time, 
there  was  no  progress  with  the  input  of  data  on  lost  and  stolen  firearms  into  the  i-arms 
database  administered  by  Interpol.  There  was  no  destruction  of  weapons  during  2018.  In 
2018, a total of 1 898 firearms of different types and 49 380 pieces of ammunition of different 
calibre  were  seized.  A  new  strategy  for  the  control  of  light  and  small-calibre  weapons  for 
2018-2023 has been drafted but not yet adopted.    

On cybercrime, convictions were rendered against 49 individuals; investigation / evidentiary 
actions  were  initiated  against  349  individuals.  Furthermore,  both  the  Special  Prosecutor 
Office  for  High-Tech  Crime  and  the  Police  Department  for  High-Tech  Crime  actively 
participated  in  three  large  international  operations.  An  increase  in  cybercrime  has  been 
observed, with the most common types including online fraud and forgery, abuse of payment 
cards and unauthorised access to computers and networks. Serbia needs to continue to ensure 
that its capacity meets the increasing challenges in detecting and prosecuting cyber criminals. 

Proactively  fighting  organised  crime  and  corruption  remains  critical  to  countering  criminal 
infiltration of the political, legal and economic systems. 

Cooperation in the field of drugs  

Institutional set-up and legal alignment 

A Law on the psychoactive controlled substances was adopted in July 2018 incorporating the 
definition of psychoactive substance according to the acquis. The National Monitoring Centre 
for Drugs, hosted in the Ministry of Health, manages the National Early Warning System on 
new psychoactive substances, and collects, manages and shares information as stipulated by 
the law. Serbia already  has a relatively  well-established warning system,  the associated risk 
assessment  procedure  and  the  subsequent  control  mechanism  for  adding  new  psychoactive 
substances  to  its  drug  control  legislation.  It  is  taking  the  necessary  steps  in  order  for  this 
system  to  be  connected  to  the  European  Early  Warning  System,  and  is  working  to  align  its 
data collection, analysis and reporting on drug seizures with European Monitoring Centre for 
Drugs and Drug Addiction (EMCDDA) requirements.  

The position of the Office for Combatting Drugs, an inter-ministerial coordination office, still 
needs to be strengthened by a clarification of responsibilities between this office, the National 
Monitoring Centre for Drugs and a Government Commission for the Control of Destruction of 
Psychoactive Controlled Substances.    

Implementation and enforcement capacity 

35 

 
 
In 2018, 1080 individuals were convicted of illegal prosecution and trafficking of narcotics, 
29 of whom had committed the offence within the context of organised crime. Although still 
suffering from a lack of staff and equipment, the Service for Drug Addiction Prevention and 
Drug  Trafficking  Suppression  in  the  Criminal  Police  Directorate  achieved  good  results  in 
recent years. It is now being reinforced with additional staff (55 compared with 15 officers in 
2016). Two major investigations led to a number of arrests (48 in total) in Serbia, Spain and 
Germany and to the seizure of a large quantity of drugs (1.5 tons of marijuana and 300 kg of 
cocaine).  An  investigation  was  also  supported  by  a  joint  investigation  team,  where  Serbian 
Police acted in close cooperation with the German Bundeskriminalamt. 

The scope of data exchange with  Europol  increased significantly. A special mailbox for the 
Narcotics  Prevention  and  Narcotics  Control  Service  was  opened  in  the  Secure  Information 
Exchange  Network  Application  in  July  2018.  Some  110  analytical  files  related  to  drug 
cooperation  with  Interpol  were  opened.  During  the  second  half  of  2018,  a  total  of  over  2.6 
tons  of  various  substances  (mainly  cannabis,  accounting  for  2.4  tons)  were  confiscated 
compared to the first half of 2018, when 1.3 tons were confiscated. 

Serbia’s cooperation with the EMCDDA runs smoothly and is managed through its National 
Monitoring  Centre  for  Drugs.  In  2018,  Serbia  reported  one  first-time  detection  of  a  new 
psychoactive substance on its territory to the EMCDDA. 

The  lack  of  secure  storage  for  drugs  and  drug  precursors  prior  to  destruction  remains  a 
concern.  According  to  current  legislation,  it  is  not  possible  to  keep  only  a  small  sample  as 
material evidence for court proceedings instead of the entire seized quantity. An appropriate 
process  for  the  destruction  of  drugs  and  drug  precursors  has  yet  to  be  set  up.  Although 
progress was made in preparing legislative amendments and destruction programmes, overall 
this policy area would benefit from a more proactive and holistic approach.  

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. A national coordination body for the prevention and combating 
of terrorism was established and a national coordinator appointed in April 2019.  

In  order  to  set  up  a  single  national  database  and  exchange  mechanism  for  terrorism-related 
information,  the  required  legislative  changes  have  been  prepared.  Prior  to  their  adoption, 
adequate resources have to be provided and training needs addressed.  

The  amendment  to  the  Law  on  freezing  of  assets  with  the  aim  of  preventing  terrorism  and 
proliferation of weapons of mass destruction was adopted in May 2018 in order to meet one 
of  the  FATF  recommendations.  Serbia  now  has  a  framework  and  mechanism  for 
implementing the UN system on targeted financial sanctions for terrorism; updates to the UN 
list  are  transposed  automatically.  This  includes  the  possible  freezing  of  assets  of  the  person 
concerned  immediately  after  their  identification.  Serbia  also  has  the  possibility  to  propose 
individuals to be included on the system’s list, and to create its own list. It has adopted such a 
list of individuals in 2018, whose  assets were frozen within 24 hours of the adoption of the 
government decision. 

A national counter-terrorism strategy (2017-2021) is in place. In October 2018, Serbia signed 
the joint EU-Western Balkans action plan on counter-terrorism, which sets out concrete steps 
for enhanced cooperation in countering terrorism and preventing radicalisation over the next 2 
years. 

36 

 
 
Implementation and enforcement capacity 

In  2018,  convictions  for  terrorist  associations  were  rendered  against  7  individuals  out  of 
whom  4  have  also  been  convicted  of  financing  of  terrorism.  Six  persons  were  convicted  of 
recruiting and training for committing terrorist acts and one of public inciting to commission 
of terrorist offences.  

Cooperation  between  the  Police  Service  for  Combating  Terrorism  and  Extremism  and 
Europol  has  further  intensified.  There  is  progress  with  prevention  and  anti-radicalisation 
activities including through the preparation of manuals, involving local religious leaders, local 
authorities  and  civil  society  through  targeted  activities  with  the  OSCE  and  USAID.  On  the 
financing  of  terrorism,  the  APML  has  created  a  new  organisational  unit  to  deal  specifically 
with combatting terrorism financing and its monitoring. Serbia is actively participating in the 
implementation of the Western Balkan counter terrorism initiative.  

The  new  national  money  laundering  and  terrorist  financing  risks  assessment  identifies  the 
growing threat posed by cybercrime in connection with money laundering, especially through 
a type of online fraud which consists of e-mail account ‘hijackings’ and/or fraudulent account 
changes  (sent  by  mail).  Companies  in  various  industries  have  been  targeted,  resulting  in 
substantial  fraudulent  money  transfers  to  foreign  accounts.  In  these  cases,  criminal  money 
flows are difficult to trace as they are converted into cryptocurrencies. 

Serbia,  in  cooperation  with  international  partners,  undertook  efforts  to  address  the  threat  of 
Islamic  extremism.  While  this  is  a  rather  limited  phenomenon  in  Serbia,  other  forms  of 
violent extremism should be addressed. Violence in sport is a subject of concern and the role 
of  the  National  Council  for  Preventing  Negative  Incidents  in  Sport  should  be  clarified. 
Attention  should  also  be  paid  to  exploring  possible  connections  between  right-wing 
extremism and football hooliganism.  

Legal and irregular migration  

Institutional set-up and legal alignment  

Responsibilities for migration management are shared between the MoI, the Commissariat for 
Refugees and Migration, the Ministries of Foreign Affairs, of Justice, of Defence and others 
in  the  fields  of  education,  health  and  social  affairs.  Coordination  among  all  these  state 
institutions  as  well  as  with  international  and  national  organisations  active  in  the  field  still 
needs  to  be  strengthened.  At  an  operational  level,  information  exchange  and  ad  hoc 
coordination  among  institutions  are  in  place.  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.  

With  the  adoption  of  the  laws  on  state  border  control,  on  foreigners  and  on  asylum  and 
temporary protection in March 2018, Serbia improved its alignment in the area of migration 
management  with  the  acquis.  The  new  Law  on  foreigners  has  introduced  provisions  in 
relation  to  temporary  stays  on  humanitarian  grounds,  which  can  contribute  to  better  legal 
protection  for  migrants  in  irregular  situations.  Furthermore,  the  rights  of  migrants  in 
proceedings  before  state  authorities  as  well  as  their  rights  pending  repatriation  have  been 
defined,  and  the  return  mechanisms  improved.  Secondary  legislation  was  adopted.  The 
rulebook  on  the  procedures  for  issuing  (temporary)  ID  cards  for  foreigners  still  needs  to  be 
adopted.     

The  EU-Serbia  readmission  agreement,  in  force  since  January  2008,  is  facilitated  by 
implementing  protocols  concluded  with  21  EU  Member  States.  Serbia  has  11  bilateral 

37 

 
 
readmission  agreements,  including  with  Bosnia  and  Herzegovina,  North  Macedonia  and 
Montenegro. 

A  strategy  and  action  plan  to  counter  irregular  migration  have  been  adopted.  The 
government’s response plans to cope with mixed migration flows for 2018 and 2019 were not 
published.  

Implementation and enforcement capacity  

Most  of  the  irregular  migrants  currently  in  Serbia  do  not  have  a  legal  status  and  stay  in 
temporary accommodation facilities. The number of asylum-seekers, migrants and refugees is 
stable at around 4,400 people, with the biggest groups coming from Afghanistan, Pakistan and 
Iran. Exit and entry numbers suggest a significant fluctuation in the migrant population.  

In 2018, the number of people intercepted at the border was 3,648, mainly from Afghanistan, 
Pakistan and Iran. In the same period, criminal charges were filed against 162 perpetrators of 
people smuggling. Some 67 individuals were convicted of illegal crossing of state borders and 
smuggling.  Migrant  smuggling  networks  originating  from  and  operating  in  Western  Balkan 
countries  remain  active  in  and  around  migration  centres  and  continue  to  smuggle  irregular 
migrants.  In  May  2018,  a  memorandum  of  cooperation  was  signed  between  the  MoI,  the 
Republic Public Prosecutor's Office and the Commissariat for Refugees and Migration. This 
memorandum  regulates  the  cooperation  between  these  institutions  in  the  field  of  combating 
smuggling. Measures in this regard are taken on an irregular basis, and long-term effects have 
not  been observed, although facilitators of smuggling are  regularly apprehended. Successful 
investigations  against  organised  smuggling  networks  remained  an  exception.  Efforts  to 
overcome deficiencies in this regard need to be stepped up. A multi-disciplinary task force on 
people smuggling, which was a model to other countries and had improved its capacity and 
cooperation with international partners, was dissolved in March 2019.   

As  regards  accommodation  for  migrants,  considerable  efforts  to  ensure  basic  living 
conditions  and  services  for  all  migrants  staying  in  the  country  continued.  Education  was 
provided  to  children  through  their  inclusion  in  the  Serbian  education  system.  Serbia  is 
providing  a  considerable  amount  of  health  services  to  migrants  through  its  regular  health 
service.  On  average,  between  80%  and  90%  of  the  migrants  are  accommodated  in  state 
centres. Others are sleeping rough in  the areas  close to  the  Hungarian and Croatian borders 
and in Belgrade’s city centre. The long-term accommodation capacity in Serbia is about 6,000 
places. The Commissariat for Refugees and Migration is regularly reviewing its contingency 
plan.   

The overall staffing situation in the area of migration is dependent on international funding. 
The  extension  of  the  detention  centre  in  Padinska  Skela  is  ongoing.  Mobile  centres  for 
registration and very short-term accommodation for irregular migrants were established at the 
Bulgarian and Romanian borders. They are not yet operational.  

Serbia  benefits  from  a  programme  for  assisted  voluntary  return  run  by  the  International 
Organisation  for  Migration.  Through  this  assistance,  278  migrants  were  returned  to  their 
country  of  origin  in  2018.  The  MoI  is  in  charge  of  forced  return.  In  2018,  it  returned  46 
migrants  to  their  country  of  origin.  The  return  of  the  vast  majority  of  migrants  present  in 
Serbia  remains  difficult,  due  to  the  lack  of  readmission  agreements  with  the  four  main 
countries of origin i.e. Afghanistan, Pakistan, Iraq and Iran.  

The  EU-Serbia  readmission  agreement  is  being  implemented  satisfactorily  as  far  as  the 
return of Serbia’s own nationals is concerned. The readmission of third country nationals has 
been unsatisfactory. Serbia repeatedly disrespected this obligation under the EU Readmission 
Agreement.  Following  the  Joint  Readmission  Committee  held  in  October  2018,  the 

38 

 
 
readmission  of  third  country  nationals  from  Romania  to  Serbia  is  being  managed  with  the 
European Commission’s involvement.  

Asylum  

Institutional set-up and legal alignment  

Serbia has the necessary  institutions to  handle asylum  applications.  The  Asylum Office, the 
authority  determining  asylum,  is  a  separate  unit  in  the  MoI’s  Border  Police  Directorate. 
Appeals against its decisions can be submitted to the Asylum Commission and subsequently 
to the Administrative Court of Appeal as a final instance.  

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.  

The  new  Law  on  asylum  and  temporary  protection,  adopted  in  March  2018  and  in  force 
since  June,  represents  a  significant  improvement  compared  with  previous  asylum 
legislation.  At  the  same  time,  harmonisation  needs  to  continue  in  order  to  achieve  an 
asylum  system  fully  in  line  with  EU  standards.  The  new  law  introduces  new  deadlines 
which  should  contribute  to  improving  the  efficiency  of  the  asylum  process.  However,  it 
also introduced a fairly short deadline for the filing of asylum applications; in order for this 
time limit to be complied with, additional coordinated efforts by all concerned institutions 
are  needed  to  ensure  that  asylum  seekers  have  access  to  the  procedure.  Secondary 
legislation linked to the registration and asylum procedure was adopted.   

Implementation and enforcement capacity  

In 2018, the number of asylum seekers until the end of September remained in the same range 
as  in  2017.  In  2018,  out  of  8  380  individuals  who  expressed  an  intention  to  seek  asylum 
(2017: 6 195), 341 lodged an application (2017: 235). In 2018, 199 decisions were made for a 
total of 272 individuals. Some 10 individuals received refugee status, 14 received subsidiary 
protection and 25 received a negative decision. Some 45 individuals had their asylum request 
rejected (i.e. declared inadmissible). In 128 cases concerning 178 individuals, the procedure 
was discontinued because the applicant absconded.    

The Asylum Office increased its staff to 23 (out of the 29 planned) with new case managers. 
Its capacity to handle cases and assess the merits of applications has improved, including the 
analysis  of  country  of  origin  information,  while  further  advanced  training  is  needed. 
Translation is still provided through international organisations.  

With  the  new  Law  on  asylum  and  temporary  protection  there  is  now  a  single  biometric 
database  used  by  the  police  for  identifying  and  registering  asylum  seekers.  An  electronic 
database  with  personal  information  of  asylum  seekers  and  information  on  the  stage  of  the 
asylum proceedings is managed by the Asylum Office. Preparations for the connecting to the 
EU asylum fingerprint database (Eurodac) are in their initial phase and plans have been made 
to  improve  the  interconnection  of  these  databases  in  order  to  speed  up  the  process  of 
verification  of  identities.  While  faced  with  increased  mixed  migratory  movements  and 
sizeable arrivals,  Serbia continued to  make substantial  efforts  to  meet  the essential needs of 
migrants  passing  through  or  remaining  on  its  territory.  There  are  16  fully-functioning  state 
reception  facilities  (asylum  centres,  reception  and  transit  centres)  and  3  which  have  been 
temporarily  put  on  stand-by.  There  is  capacity  for  around  6  000  long-term  accommodation 
stays  (hard  shelter/collective  rooms)  and  around  1  000  short-term  accommodation  stays  in 
temporary shelters. The national authorities assess and track development of these capacities 
against EU and international standards.  

39 

 
 
The  number  of  unaccompanied  minors,  accommodated  in  asylum,  reception  and  transit 
centres increased to 500 by the end of 2018. There are, however, only three centres dedicated 
to hosting unaccompanied minors with a capacity of 30 beds within the social welfare system. 
More suitable accommodation for unaccompanied children together with individualised care 
is needed.  

Programmes for social integration, access to accommodation, language learning and access to 
the labour market are in place. In 2018, 15 individuals with asylum status received support for 
housing,  and  25  individuals  attended  language  classes.  Eight  individuals  with  asylum  status 
attended a programme on Serbian culture, history and the constitution.  

Serbia  has  signed  the  UN  migration  compact.  The  MoI  and  the  Commissariat  for  Refugees 
and Migration cooperate with the European Asylum Support Office (EASO) on the basis of a 
comprehensive  roadmap.  Serbia  was  granted  observer  status  in  the  reception  network 
organised by EASO. A European migration liaison officer, responsible for the entire region, is 
operational from Belgrade. 

Visa policy 

The visa regime is only partially in line with the EU list of third countries whose nationals are 
visa exempt or visa required. By granting visa freedom to a number of countries on the EU’s 
negative  list  between  September  2017  and  July  2018,  including  Azerbaijan  (2018),  India 
(2017),  Indonesia  (2017),  Iran  (2017,  in  the  meantime  revoked),  Guinea-Bissau  (2017), 
Suriname (2018), and Burundi (2018), Serbia veered away from aligning its visa policy. Visa 
freedom  for  citizens  of  Iran  resulted  in  a  surge  of  irregular  migrants  arriving  by  air  to 
Belgrade.  Visa  freedom  for  Iranian  nationals  was  abolished  on  17  October  2018.  A  similar 
trend, but to a lesser extent, is noticeable with Indian nationals, who since July 2018 became 
significantly more prominent in the statistics of illegal border-crossings in the Western Balkan 
region.  These  detections  can  be  linked  to  the  abolition  of  visa  requirements  for  Indian 
nationals by Serbia in September 2017. 

Serbia  needs  to  refrain  from  further  diverging  from  the  EU  common  visa  policy  and  take 
concrete steps to fully align with it, starting with those nationalities that are heavily prone to 
irregular migration to the EU.  

The visa issuing system is partially in line with the EU Visa Code. While interconnection of 
the integrated Serbian Visa Information System with all diplomatic and consular missions and 
other  relevant  databases  is  almost  complete.  It  is  operational  in  90  diplomatic/consular 
missions out  of 91.  It  is not  currently operating  in  Tehran (Iran) due to  technical problems. 
The number of visas issued at borders remained low throughout 2018 and were available only 
in exceptional humanitarian circumstances. 

Serbia  continued  to  implement  the  relevant  measures  to  prevent  the  abuse  of  the  visa-free 
regime with the EU under the post-visa-liberalisation process.   

Increased  attention  is  required  to  successfully  reintegrate  returnees,  especially  the  most 
vulnerable  such  as  the  Roma  that  represent  a  large  number  of  returns.  Enhanced 
communication  and  coordination  is  needed  between  respective  governments,  between 
governments and local authorities and with international organisations and NGOs active in the 
reintegration of returnees. 

40 

 
 
Schengen and external borders 

Institutional set-up and legal alignment 

Since  the  new  Law  on  state  border  control  entered  into  force  in  spring  2018,  11  pieces  of 
secondary  legislation  have  been  adopted.  The  new  law  assigns  the  responsibility  for  the 
management  of  border  crossing  points  to  the  Directorate  for  Property  and  thus  clarifies  a 
longstanding issue on responsibilities for planning, maintenance, and construction of border 
crossing points. A document on standardisation and management of border crossing points as 
well as staffing needs has been prepared but still needs to be adopted.    

The  Border  police  is  a  specialised  civilian  body  and  part  of  the  General  Police  Directorate 
under the MoI. Serbia still needs to create a single coordination centre for exchanging police 
information  and  start  preparations  for  setting  up  a  SIRENE  (Supplementary  Information 
Request at the National Entries) office.  

Serbia also needs to step up efforts in preparing a Schengen action plan. 

Implementation and enforcement capacity.  

Some progress has been observed in the implementation of the integrated border management 
(IBM)  strategy  2017-2020  and  the  related  action  plan.  Inter-agency  cooperation  for  border 
management  (border  police,  customs,  phytosanitary  and  veterinary  inspections)  has  gained 
momentum with the establishment of an IBM coordination mechanism. A new agreement of 
all IBM agencies on joint risk analysis and an early warning system is being prepared. 

Instructions  on  information  exchange  between  the  Operational  Centre  of  the  Border  Police 
Department  and  the  Command  Centre  of  the  Customs  Administration  were  adopted  in 
October 2018. An electronic information exchange platform to be used by all IBM agencies 
needs to be developed.  

The  MoI  adopted  standard  operating  procedures  for  profiling,  checking  and  registering 
irregular  migrants  as  well  as  a  training  plan  for  their  implementation.  Border  police  and 
customs officers participated in a variety of training courses to strengthen their capacities for 
combatting  irregular  migration  as  well  as  on  measures  for  identifying  victims  of  human 
trafficking and people smuggling. 

A status agreement with the EU for the deployment of the European Border and Coast Guard 
teams with executive powers has been initialled in September 2018. A working arrangement 
between the European Boarder and Coast Guard Agency (EBCGA) and Serbia is in place. An 
EBCGA liaison officer, responsible for the entire region, operates from Belgrade. Continuous 
activities with  EBCGA covered participation in  joint  return  flights,  statistical  reporting, risk 
analysis, operational  activities, development  of a list of experts and equipment available for 
joint operations, as well as the strengthening of cooperation via the EBCGA contact point in 
Mali  Zvornik.  Serbia  actively  participated  in  the  Western  Balkan  Risk  Analysis  Network. 
International cooperation was further strengthened and joint patrols are now operating along 
the borders with Montenegro, Bulgaria, North Macedonia, Hungary, Bosnia and Herzegovina 
and Romania. Operational procedures for joint patrols with Hungary, Bulgaria and Romania 
were developed. Although training courses for joint  patrols  with  border police from  Croatia 
already  took  place,  the  start  of  joint  patrols  with  Croatia  is  still  pending.  There  is  regular 
cooperation  and  information  exchange  in  joint  contact  centres.  As  regards  unauthorised 
border  crossing  points,  all  locations/roads  accessible  for  illegal  crossing  of  the  border  with 
Bosnia  and  Herzegovina  have  been  blocked.  At  the  border  with  Montenegro,  there  was  no 
tangible progress.    

41 

 
 
Interim IBM common crossing points with Kosovo continue to be operational. There has been 
limited  progress  in  establishing  the  six  permanent  IBM  common  crossing  points  between 
Serbia  and  Kosovo  as  stipulated  in  the  IBM  agreement  in  the  context  of  the  EU-facilitated 
Belgrade-Pristina  Dialogue  (see  under  Normalisation  of  relations  between  Serbia  and 
Kosovo).  Additional  measures  need  to  be  taken  to  prevent  illegal  crossings  and  criminal 
activities, including corruption.  

Judicial cooperation in civil and criminal matters 

On normative alignment with the acquis in the field of judicial cooperation in civil matters, 
the relevant analysis, based on a preceding study of December 2017, was finalised. Work on a 
needs  assessment  for  the  budget,  financial  cost,  human  resources,  training  and  statistics  is 
ongoing. In civil matters, the most intensive cooperation between Serbian and foreign courts 
is  with  Austria,  Bosnia  and  Herzegovina,  Croatia,  Germany,  Montenegro  and  Switzerland. 
The 2007 Hague Convention on Child Support has not yet been ratified.  

Serbia needs to prepare and adopt a new law on cooperation in criminal matters with the EU 
Member  States,  together  with  a  number  of  related  laws,  with  a  view  to  acquis  alignment. 
Work  on  a  needs  assessment  for  the  budget,  financial  cost,  human  resources,  training  and 
statistics  is  ongoing.  In  criminal  matters,  the  most  intensive  bilateral  cooperation  between 
Serbian  courts  and  prosecution  offices  has  been  established  with  Austria,  Bosnia  and 
Herzegovina, Croatia, Germany, Hungary, Italy, Montenegro and Switzerland.  In the case of 
the  former  President  of  the  State  Union  of  Serbia  and  Montenegro  who  was  convicted  in 
Montenegro  and  is  currently  staying  in  Serbia,  it  needs  to  be  ensured  that  the  judgment  is 
being enforced. 

During the second half of 2018, Serbia (at the level of the Ministry of Justice) had 2,839 new 
incoming  requests  for  judicial  cooperation  (both  civil  and  criminal)  and  sent  out  a  total  of 
1 680 requests. By comparison, during the first half of 2018, Serbia had a total of 3 201 new 
incoming requests, and sent a total of 1 812 requests. 

According  to  the  Serbian  authorities,  Serbia  handled  12  135  incoming  judicial  cooperation 
requests (both civil and criminal) during the second half of 2018, compared to 14 729 requests 
during the first half of 2018. Among those that Serbia dealt with, it replied positively to 9 223, 
and  refused  2  912.  At  the  end  of  December  2018  the  pending  cases  (both  incoming  and 
outgoing requests) remained at 7 518 (compared to 13 297 at the end of June 2018), signalling 
a further reduction. 

The process of signing an operational type agreement with Eurojust was initiated in December 
2018 and negotiations are at an advanced stage. Regular cooperation with Eurojust continued 
through contact points in the Ministry of Justice and the Republic Public Prosecutor’s Office. 
Serbia  is  the  most  requested  country  in  the  region,  and  overall,  the  second  most  requested 
third country in Eurojust’s casework. Serbia was involved in 34 cases in 2018 (compared with 
28  in  2017,  and  15  in  2016)  related  to  swindling  and  fraud,  drug  trafficking  and  money 
laundering. Serbia also actively cooperated in one joint investigation team.   

All aspects of customs cooperation are now covered under Chapter 29 – Customs Union. 

42 

 
 
3. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS 

Source: Eurostat and national sources 

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

Economic  governance  has  become  even  more  central  in  the  enlargement  process  in  recent 
years.  The  Commission’s  monitoring  takes  place  in  two  processes:  the  Economic  Reform 
Programme exercise and the below assessment of compliance with the economic criteria for 
accession.  Each  enlargement  country  prepares  an  Economic  Reform  Programme  (ERP) 
annually, setting out a medium-term macro-fiscal policy framework and a structural reform 
agenda aimed at ensuring competitiveness and inclusive growth. The ERPs are the basis for 
country-specific  policy  guidance  jointly  adopted  by  the  EU  and  the  Western  Balkans  and 
Turkey at ministerial level in May each year. 

3.1. 

The existence of a functioning market economy 

Serbia  has  made  some  progress  and  is  moderately  prepared  in  developing  a  functioning 
market  economy.  External  imbalances  are  on  the  rise,  although  their  financing  remained 
healthy. Price pressures remained subdued and inflation expectations contained. Major fiscal 
adjustment over previous years has significantly improved debt sustainability. Financial sector 
stability  was  preserved  and  labour  market  performance  has  improved  with  the  exception  of 
the activity rates of women and young people, which declined. 

However,  major  structural  reforms  of  public  administration,  the  tax  authority,  and 
state-owned  enterprises  (SOEs)  advanced  slowly,  prolonging  long-standing  inefficiencies. 
The  authorities  are  only  slowly  addressing  weaknesses  in  the  budgetary  framework  and  its 
governance.  The  state  retains  a  strong  footprint  in  the  economy  and  the  private  sector  is 
underdeveloped and hampered by weaknesses in the rule of law, in particular corruption and 
judicial inefficiency, and in the enforcement of fair competition. 

In order to improve the functioning of the market economy, Serbia should in particular: 

  maintain the identified medium-term budgetary objective close to balance; 

43 

Serbia: Key economic figures2010-15 average201620172018GDP per capita (% of EU-28 in PPS)36.837.036.0:Real GDP growth 0.93.32.04.3Economic activity rate of the population aged 15-64 (%), total:65.666.767.8      female:58.159.660.6      male:73.173.875.1Unemployment rate (%), total:15.914.113.3      female:16.714.814.2      male:15.313.512.5Employment (annual growth %):5.62.81.4Nominal wages (annual growth %)5.73.83.96.0Consumer price index (annual growth %)5.81.63.02.0Exchange rate against EUR111.6123.1121.3118.3Current account balance (% of GDP)-7.1-2.9-5.2-5.1Net foreign direct investment, FDI (% of GDP)4.55.26.27.5General government balance (% of GDP)-5.0-1.21.10.6General government debt (% of GDP)54.568.858.754.6 
 
 
  strengthen  fiscal  rules  by  making  them  more  binding  and  capable  of  anchoring  fiscal 

policy; 

  finalise the privatisation and restructuring process of the remaining state-owned banks; 

  significantly  increase  funding  and  the  implementation  of  active  labour  market  measures 

adjusted to the needs of the unemployed. 

Economic governance 

The  authorities  remained  committed  to  macroeconomic  stability  and  continuing 
economic  reforms,  although  some  reforms  have  stalled.  In  July,  after  successfully 
completing a three-year Stand-By Arrangement with the International Monetary Fund, Serbia 
agreed  to  a  new  non-disbursing  programme  supported  by  a  30-month  policy  coordination 
instrument.  The  policy  guidance  jointly  agreed  at  the  May  2018  Economic  and  Financial 
Dialogue  between  the  EU  and  the  Western  Balkans  and  Turkey  has  been  partially 
implemented. The macroeconomic policy mix was appropriate and macroeconomic and fiscal 
indicators improved. However, the implementation record of structural  reform has remained 
mixed.  The  efficiency  and  predictability  of  the  institutional  environment  is  not  yet  ensured 
and  does  not  sufficiently  support  long-term  growth.  Weaknesses  remain  in  the  fiscal 
governance  framework,  the  business  environment,  the  public  administration  and  the  tax 
administration, and in the way the state intervenes and manages its presence in the economy. 

Macroeconomic stability 

Investment 

The  economy  has  shifted  up  a  gear. 
Economic  growth  accelerated  in  2018, 
to  over  4%  from  2%  in  2017,  boosted 
by  robust  domestic  demand  and  base 
effects. 
in 
particular,  was  very  strong,  benefiting 
from  a  number  of  factors:  the  low 
interest rate environment, higher growth 
expectations,  past  improvements  in  the 
business  environment,  increased  capital 
spending  by  the  government,  and  a 
stream  of  foreign  direct  investments. 
Rising domestic demand led to a strong growth in imports and the contribution of net exports 
to growth turned negative as from 2017. After years of decline or marginal growth, household 
consumption has expanded steadily since the end of 2017. Prospects for consumption growth 
remain strong as the economic cycle matures and labour market conditions improve further. 
The income gap with the EU, however, remained broadly unchanged over the last decade — 
per capita GDP in purchasing power terms stood at 37% of the EU average in 2017. 

activity, 

External  imbalances  are  on  the  rise  but  their  financing  remains  healthy.  Driven  by  a 
widening merchandise trade deficit, the current account deficit has nearly doubled since 2016, 
staying  above  5%  of  GDP  in  both  2017  and  2018.  The  growing  economy  triggered  a 
double-digit growth in imports of goods. Most of this increase, however, was in intermediate 
goods  and  energy,  reflecting  higher  energy  prices  and  expanding  investment  and  exports. 
Export  performance,  a  key  indicator  of  international  competitiveness,  remained  robust  in 
2018. Exports of manufacturing goods, which constitute the bulk of all exports, continued to 
expand.  Exports  increased  across  all  sectors,  except  for  food  products  due  to  a  bad 
agricultural  season  in  the  previous  year.  The  current  account  deficit  was  fully  covered  by 
large and broad-based net inflows of foreign direct investment. The official foreign exchange 

44 

-6-4-202468201320142015201620172018Serbia: Real GDP growth and contributions Priv. cons.Gov. cons.GFCFStocksNet exportsreal GDP growthSource: Macrobond, own calculations% y-o-y 
 
reserves remained adequate, covering more than twice the short-term external debt and around 
5 months’ worth of imports of goods and services. 

Price  pressures  remained  subdued  and  inflation  expectations  contained.  Despite  strong 
economic growth, inflation remained low in 2018, below the mid-point of the central bank’s 
tolerance band of 3% ±1.5 pps. Price stability was supported by a continuously strong dinar 
exchange rate and steady fiscal performance. Although energy prices  went up in the second 
half of the year, lower food prices helped contain inflationary dynamics. Contrary to previous 
years, the administered household electricity prices remained unchanged. The low and stable 
core  inflation,  which  hovered  around  1%  for  most  of  2018,  also  attested  the  absence  of 
inflationary  pressures.  Monetary  policy  has  cautiously  supported  economic  activity:  the  key 
policy rate of the central bank was cut twice by 25 basis points in March and April 2018 to 
3.0%. In April 2018, the central bank also narrowed the interest rate corridor around its key 
rate from ±1.5 pps to ±1.25 pps. The central bank continued its frequent interventions on the 
foreign exchange market, buying a net EUR1.6 billion in 2018. 

improved  debt 
Major  fiscal  adjustment  over  previous  years  has  significantly 
sustainability.  In  2018,  the  general  government  budget  ended  in  surplus  for  a  second 
consecutive year, while the 2019 budget envisages a small deficit of 0.5% of GDP. The good 
fiscal  performance  has  created  room  to  unwind  the  crisis  era  pension  cuts,  increase  capital 
spending  and  reduce,  albeit  only  marginally,  labour  taxation.  However,  expenditure 
composition remained poor: the share of economically productive capital expenditure is low 
in  comparison  to  public  infrastructure  needs,  in  particular  in  environmental  infrastructure, 
while  discretionary  current  spending 
increased  further  from  an  already 
elevated  level.  The  track  record  of 
prudent  fiscal  policy  has  played  a 
major role in increasing confidence in 
the  economy,  supporting  economic 
growth,  and  significantly  reducing 
government  debt.  Government  debt 
fell  from  a  peak  above  70%  of  GDP 
in  2015  to  around  55%  of  GDP  in 
2018. 

Delays  in  public  sector  reforms 
have  prolonged  long-standing  inefficiencies  and  fiscal  governance  challenges.  While 
revenue  collection  met  and  even  surpassed  expectations  recently,  the  implementation  of  the 
tax administration reform remains crucial to sustain revenue performance and provide better 
service  to  taxpayers.  The  authorities  are  only  slowly  addressing  weaknesses  in  budget 
planning and implementation. The extension of the problematic public employment freeze by 
another year undermines the quality of public service. Selective wage increases in 2019 and 
the postponement of the wage system reform have widened wage disparities across the public 
sector  as  well  as  pay  gaps  with  the  private  sector.  Envisaged  improvements  in  the  capital 
management  process  and  in  particular  the  establishment  of  a  single  mechanism  for  national 
investment  prioritisation  and  planning  are  still  pending.  In  addition,  EU-funded  projects  are 
excluded  from  its  application.  In  order  to  ensure  a  more  efficient  use  of  resources,  existing 
parallel structures need to be merged into a single mechanism for prioritising all investments 
regardless  of  the  source  of  financing,  in  accordance  with  the  public  financial  management 
reform  programme  adopted  by  the  government.  The  system  also  needs  to  expand  to  cover 
other  government-to-government  projects  that  have  been  a  recurring  concern  with  regard  to 
their transparency, cost efficiency and conformity with EU standards. 

45 

020406080-10-50510201320142015201620172018Serbia: Fiscal developmentsPrimary balance (lhs)Interest (lhs)GG balance (lhs)Public Debt (rhs)Source: National sources% ofGDP 
 
The  budgetary  framework  continues  to  be  only  partially  complied  with,  pointing  at 
weakness in public finance management. There were no meaningful parliamentary debates 
on  the  draft  annual  budget.  External  stakeholders  were  not  consulted  on  it  despite  legal 
obligations  to  include  them  in  the  process.  The  system  of  fiscal  rules  is  weak  as  it  is  not 
sufficiently  binding  and  relevant  for  policy-making.  The  work  on  their  strengthening  has 
stalled, although it remains a short-term government priority. Final annual budget reports are 
not presented to and adopted by the Parliament. 

The  macroeconomic  policy  mix  remained  appropriate.  It  helped  sustain  macroeconomic 
stability  and  supported  the  pick-up  in  economic  activity.  The  prudent  fiscal  policy  and 
cautious  monetary  policy  helped  contain  the  growing  risks  from  the  external  environment, 
despite widening external imbalances and a marked pick-up in  growth of private and public 
consumption.  As  in  previous  years,  the  continuation  of  economic  reforms  and  their  full 
implementation remain key to further strengthening the economy’s potential and to supporting 
real convergence with the EU. 

Functioning of product markets 

Business environment 

The  business  environment  has  improved  somewhat  amid  a  general  slowdown  in  the 
reform  momentum.  In  the  first  half  of  2018,  the  number  of  total  registered  companies 
increased  by  4.8 %:  newly-registered  companies  went  up  by  4.2 %,  while  the  number  of 
companies that  exited the market  fell by 3.7 %.  Over the last  few  years, Serbia has notably 
improved its standing in various international business rankings. However, the recent delays 
in  the  reform  process  resulted  in  the  country  sliding  down  in  some  of  the  latest  rankings. 
Although restitution in kind has progressed, the deadline for issuing financial compensation in 
the restitution process has been further delayed for another 2 years, until 2021. 

is  weak  and 

The  institutional  and  regulatory  environment  remains  weak.  Business-related  laws 
continue  to  be  adopted  under  urgent  procedure  without  the  necessary  consultation  of 
interested  groups,  reducing  predictability  and  quality  of  legislation.  Delays  in  adopting 
secondary  legislation  continue  to  hamper  the  implementation  of  adopted  laws.  In  general, 
contract  enforcement 
the  courts  enforcing  property  rights  remained 
overburdened.  Fair  competition  is  negatively  affected  by  the  large  informal  economy.  The 
control of State aid is weak and its granting non-transparent, as the legislation allows for too 
many  exemptions  and  the  control  body  does  not  have  all  needed  competences.  The 
Commission for State aid control (CSAC) remains understaffed and is still not operationally 
independent.  Decisions to  grant  State aid  are not regularly notified ex ante to  the CSAC by 
granting  authorities.  Granting  of  State  aid  seems  to  favour  market  incumbents  and  large 
investors. As a measure to fight the grey economy, the authorities have amended the Law on 
inspection supervision to permit supervision of unregistered activities. They also took steps to 
improve the coordination of inspections and to  facilitate a risk-based approach by means of 
introducing  a  unified  inspection  information  platform.  After  Serbia  was  put  on  the  list  of 
jurisdictions  with  strategic  deficiencies  by  the  Financial  Action  Task  Force  on  money 
laundering  in  early  2018,  the  Serbian  authorities  took  a  number  of  measures  to  address  the 
identified shortcomings. 

State influence on product markets 

State  ownership  in  the economy  has  gradually  declined  over  recent  years,  but  indirect 
state  presence  in  the  economy  remains  large  amid  persistent  governance  weaknesses. 
The financial performance of SOEs improved, helped also  by  a cyclical  economic upswing. 
Governance  of  these  enterprises  remains  under  strong  political  influence,  including  through 

46 

 
 
the  appointment  of  acting  managers,  instead  of  using  the  prescribed  nomination  process. 
Although the general trend sees the state continuing to withdraw from direct involvement in 
the economy, in some product market segments, like cable television operators, the majority 
state-owned  telecom  operator  has  actually  expanded  its  presence  after  several  acquisitions. 
The  share  of  administered  prices  remained  broadly  unchanged,  at  around  20%  of  the 
consumer basket. 

Privatisation and restructuring 

Privatisation  of  SOEs  advanced,  while  restructurings  progressed  slowly.  Since  2015, 
when the new privatisation law was adopted, more than 310 companies, mostly with zero or a 
small number of employees, have been put into bankruptcy. Other companies were privatised 
and  non-EU  investors  acquired  some  of  the  largest  firms  in  mining,  metallurgy,  and 
agriculture. Nonetheless, around 90 companies employing some 40,000 persons have yet to be 
resolved through either bankruptcy or privatisation. 

Restructuring  of  key  utility  companies  is  still  incomplete.  The  financial  performance  of 
key utility companies,  particularly in  the energy  sector, has improved over the recent  years, 
but  their  restructuring  has  advanced  rather  slowly.  The  state-owned  power  utility 
Elektroprivreda  Srbije  has  to  fully  address  its  corporate  governance  issues  and  finalise  the 
unbundling of electricity transmission and distribution operators in terms of organisation and 
decision-making. While long overdue, a change in the legal status to a joint stock company is 
envisaged in 2020. The company also needs to invest in securing new production capacities 
and refurbishing old ones. The financial consolidation of Srbijagas remains a key aspect of its 
reorganisation plan. Government support for servicing Srbijagas debt is planned to stop by the 
end of 2020. Serbia did not fully implement the third energy package and failed to unbundle 
Srbijagas and provide non-discriminatory third-party access to its transmission system. 

Functioning of the financial market 

Financial stability 

Financial  stability  was  preserved  and  the  financial  sector’s  performance  improved. 
Supported by rising economic activity, the profitability of commercial banks remained high. 
Other  indicators  also  show  that  the  performance  of  the  banking  system  was  strong.  Capital 
adequacy was high, well above the minimum set by the national bank and the implementation 
of the resolution strategy for non-performing loans (NPLs) supported their further reduction 
to 5.7% of total gross loans by the end of 2018. Liquidity, although declining, also remained 
high. With the view to addressing the persistently high degree of euroisation, the central bank 
and the government have revised their dinarisation strategy. A new NPL resolution strategy is 
envisaged as well, focusing on limiting the rise of new NPLs. The authorities have taken steps 
to  start  addressing  the  legacy  NPLs  in  the  portfolio  of  the  Deposit  Insurance  Agency.  The 
implementation  of  the  strategy  for  banks  in  which  the  state  has  ownership  continued,  albeit 
with delays, and the state remains in control of key entities in both the banking and insurance 
sectors.  The  privatisation  of  Komercijalna  banka  (the  third  largest  bank  by  assets)  has  been 
postponed to 2019. 

Access to finance 

Access  to  finance  improved.  Foreign-owned  banks  continued  dominating  the  financial 
system,  holding  around  three  quarters  of  banking  system  assets.  Favourable  financing 
conditions and higher economic activity have supported growth in lending. Credit expanded 
by  double-digits  for  both  corporates  and  households,  excluding  effects  from  exchange  rate 
changes and NPL sales and write-offs. Despite the vigorous credit activity, the central bank 
estimated that the overall credit-to-GDP ratio is below its long-term trend and, therefore, has 

47 

 
 
kept the countercyclical capital buffer unchanged at 0%. However, as vulnerabilities increased 
in some segments of the market, such as cash loans for households with long maturities, the 
central  bank  introduced  new  measures  to  curb  risks  from  excessive  loan  growth  in  these 
segments.  It  has  also  introduced  a requirement for commercial  banks  to  inform  their clients 
about  the  possible  risks  of  floating  interest  rates.  There  was  no  progress  in  establishing  the 
legal  framework  for  microfinance  institutions.  The  ad-hoc  and  urgent  adoption  of  a  special 
law  on  converting  mortgages  denominated  in  Swiss  francs  into  euros  undermines  the 
functioning of the financial market and came at significant cost for the budget. 

Functioning of the labour market 

The  labour  market  has  seen  marked  improvements  over  recent  years,  but  structural 
problems  and  demographic  challenges  still  need  to  be  tackled.  In  2018,  on  the  back  of 
stronger  economic  growth, 
labour 
market  indicators  achieved  their  best 
performance  since  the  start  of  the 
(revised) labour force survey in 2014. 
Activity and employment rates were at 
their highest, while unemployment (15 
years and over) went  down to  12.7%. 
long-term  unemployment 
Although 
and  young  people 
and 
unemployment 
their 
downward  trend,  the  activity  rate  for 
young  people  has  declined.  The 
proportion of young people in the age group 15-24 not in employment, education, or training 
fell further to 16.5% in 2018. The share of informal employment, two-thirds of which was in 
agriculture,  fell  to  around  20%  of  the  total.  However,  the  labour  force  likely  peaked  as  the 
declining  working  age  population  is  taking  its  toll  on  labour  supply.  A  steady  population 
decline by 0.5% every year, along with emigration and the brain drain, especially of educated 
young people, remain key medium-to-long-term economic challenges. In addition, persistent 
skills mismatches and large regional disparities have continued to be a major labour market 
issue resulting in high structural unemployment. 

continued 

female 

Real  wages have increased. The revival of economic activity  and tighter labour conditions 
have pushed up real wages, although in 2018 their growth still remained moderate at around 
4%.  Although  the  authorities  abolished  the  unemployment  contribution  paid  by  employers 
(0.75% of gross salary), the tax wedge remained disproportionally high for people with low 
salaries.  In  line  with  expectations  for  a  rise  in  wages  in  the  economy,  the  government 
increased the minimum hourly wage by 8.6% in 2019. 

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 further and 
economic  integration  with  the  EU  remained  high.  However,  despite  some  progress,  the 
quality,  equity  and  relevance  of  education  and  training  does  not  fully  meet  labour  market 
needs.  Investment  increased  but,  after  years  of  underinvestment,  remains  insufficient  to 
address  infrastructure  gaps.  Although  the  cost  of  borrowing  for  small  and  medium-sized 
enterprises (SMEs) has declined recently, they still face a number of challenges, including a 
volatile business environment and unfair competition. 

In order to improve competitiveness and long-term growth, Serbia should in particular: 

48 

 
 
  develop  a  single  mechanism  for  prioritising  and  monitoring  all  investment  regardless  of 

the source of financing; 

  unbundle Srbijagas and provide third-party access to gas infrastructure. 

Education and innovation 

Despite  some  progress,  the  quality,  equity  and  relevance  of  education  and  training  do 
not fully meet labour market needs. Public spending on education stood at around 3.1% of 
GDP  in  2018,  which  is  below  the  EU  average  of  around  5%  of  GDP.  Enrolment  rates 
remained high in general in primary and lower secondary education, at close to 100%, and at 
around  90%  in  upper  secondary  level.  Pre-primary  enrolment  lagged  at  some  60%,  despite 
having increased in 2017. The gross enrolment ratio in tertiary education also increased over 
recent  years to  nearly two thirds. However, employers and  recent  graduates  believe that the 
country’s  education  institutions  do  not  equip  students  with  key  transversal  skills,  such  as 
problem solving and decision making. In line with national strategic documents and recently 
adopted  legislation,  the  authorities  are  progressively  updating  curricula  in  all  12  years  of 
general education. Teacher training is needed to support the implementation of new curricula 
and  the  development  of  students’  key  competencies.  The  introduction  of  the  national  dual 
education  model  is  increasing  in  scope  and  aims  to  improve  the  relevance  of  vocational 
education.  The  institutional  framework  for  implementing  the  recently  adopted  Law  on 
national  qualifications  framework  is  being  established.  This  framework  is  part  of  a 
progressive  reform  of  the  education  system  at  all  levels,  including  non-formal  and  informal 
learning. 

The  level  of  spending  on  research  and  development  increased  over  recent  years, 
although it remains low at 0.9% of GDP. The increase in expenditure came almost entirely 
from  the  private  sector,  while  funding  from  the  government  budget  was  broadly  stable  at 
around 0.4% of GDP, providing less than half of total R&D financing in 2017. The number of 
scientific-research  organisations  stood  broadly  unchanged.  However,  the  number  of 
employees in research and development activity declined slightly, representing only 0.8% of 
total  employment  in  2017.  In  order  to  support  innovation,  Serbia  introduced  specialised 
instruments  —  collaborative  grants  for  joint  business-academia  projects  to  promote  and 
support  business-academia  collaboration  and 
the 
establishment of a science and innovation park in Belgrade, three more are under construction 
in other cities. 

innovation  vouchers.  Following 

Physical capital and quality of infrastructure 

Investment increased but after years of underinvestment its level remains insufficient to 
address infrastructure gaps. Both public and private investment have been rising in the last 
couple of years. The economy continues to attract significant foreign direct investment, which 
have  been  instrumental  for  the  shift 
towards  tradable  sectors  and  higher 
exports.  However,  the  share  of  total 
investment  in  the  economy  is  still 
relatively low, under 20% of GDP, and 
the  quality  and  quantity  of  physical 
infrastructure  needs  further  upgrading. 
Despite  recent  increases,  particularly 
in  roads  and  railways,  the  level  of 
government  investment  still  does  not 
the 
correspond 

the  needs  of 

to 

49 

02004006008001000RS, 2006EU, 2006RS, 2016EU, 201604812Serbia: Selected indicators relative to populationElectricity production, GWh per 1000 inhabitantsRoad length, km per 1000 inhabitantsRail passenger-km per inhabitant, lhsSource: Eurostat 
 
economy.  In  addition,  the  available  fiscal  space  has  been  used  mostly  for  current  spending 
and  non-productive  capital  expenditure,  instead  of  for  more  growth-friendly  spending  on 
infrastructure and basic public services. 

The  institutional  framework  supporting  new  investment  is  weak.  Soft  measures,  like 
improving traffic management, maintenance and safety in all transport modes, and increasing 
energy  efficiency  and  diversification  could  potentially  improve  the  performance  of  the 
transport and energy sectors. The users-pay principle is not sufficiently applied when it comes 
to maintaining existing infrastructure and implementing new infrastructure investment plans. 
Transparency,  assessment  and  prioritisation  of  investment  needs  are  still  weak.  Public 
procurement  rules are not  always fully  complied with,  nor are they always fully  compatible 
with  EU  standards,  particularly  in  big  infrastructure  projects  financed  or  implemented  by 
non-EU companies. 

The  authorities  have  made  digitalisation  one  of  their  top  priorities.  A  new  law  on 
e-government was adopted in April 2018, which aims to enable simpler, more transparent and 
efficient  functioning  of  electronic  public  services  and  to  facilitate  communication  with  the 
administration.  The  strategy  for  developing  e-government  for  2019-2021  has  not  yet  been 
adopted. The application of the law is hampered by the lack of a fully developed legislative 
framework  and  the  necessary  secondary  legislation.  The  information  and  communication 
sector  continued  expanding,  increasing  its  share  in  the  economy  and  in  total  exports.  The 
share  of  households  that  have  a  computer  and  access  to  a  broadband  internet  connection 
increased further to more than 72% in 2018. The share of individuals using e-commerce also 
steadily  increased  to  some  55%  in  2018,  while  the  shares  of  those  who  have  never  used  a 
computer or the internet halved over the last decade to less than 25%. 

Sectoral and enterprise structure 

Construction and some services have increased their weight in the economy. Services are 
by far dominating the economy, providing more than 60% of total value added. Sectors like 
transportation, retail trade, and information and communication, benefited from the revival of 
economic activity and the steady expansion of international trade to increase their economic 
weight. Reflecting the new investment cycle, construction, which reached its lowest point in 
2013,  has  recovered  to  above  4%  of  GDP.  The  performance  of  the  agricultural  sector 
remained  volatile,  mainly  because  of  its  very  high  dependency  on  weather  conditions. 
Although it rebounded strongly in 2018, after a slump in the previous year, it has been on a 
downward  trend  over  the  last  5  years.  The  weight  of  industry  levelled  off  or  even  declined 
largely  because  of  a  drop  in  mining  and  quarrying  activity  and  in  the  energy  sector.  The 
employment structure has changed as well: there was a steady fall in agricultural employment, 
which fell from nearly 20% in 2014 to some 15% in 2018, while there were increases in the 
share of employment in the industry and service sectors. 

SMEs  are  the  backbone  of  the  economy.  They  provide  60%  of  total  employment  and 
turnover in the economy, and nearly half of the value added. SMEs are particularly active in 
construction,  accommodation  and  food  service,  retail,  and  real  estate.  The  authorities  are 
implementing  several  programmes  to  support  SME  development,  focusing  on  facilitating 
innovation,  finance,  and  internationalisation.  SMEs  receive  around  60%  of  new  corporate 
loans. Their cost of borrowing has declined recently, although it remained above the cost for 
large  companies.  SMEs  still  face  a  number  of  challenges,  including  a  volatile  business 
environment  and  lack  of  non-bank  financing.  The  Law  on  charges,  adopted  in  December 
2018,  aims  to  reduce  some  of  this  uncertainty  by  consolidating  all  parafiscal  charges  and 
removing or merging some of them. 

50 

 
 
Economic integration with the EU and price competitiveness 

Economic integration with the EU remained high. Serbia’s financial system is dominated by 
commercial  banks,  and  banks  with  majority  ownership  from  EU  countries  hold  more  than 
70%  of  all  banking  system  assets.  The  EU  is  also  by  far  Serbia’s  biggest  trading  and 
investment  partner,  accounting  for  almost  two  thirds  of  total  trade  and  three  quarters  of  net 
foreign direct  investment  inflows. It  is  followed by trade with  the signatories of the  Central 
European  Free  Trade  Agreement  (CEFTA)  (excluding  Kosovo),  which  represented  slightly 
less than a fifth of total exports and around 4% of total imports in 2018. The imposition of a 
100%  tariff  by  Kosovo  in  late  2018  on  imports  from  Serbia  and  Bosnia  and  Herzegovina 
affected  Serbia’s  export  of  goods  of  around  1.1%  of  GDP  per  year.  Serbia’s  national 
infrastructure for checking standards has improved over the last year, but it still does not fully 
support  trading  operators  and  there  are  non-tariff  barriers  impeding  intra-regional  trade  as 
well as trade with the EU. 

In 2018, trade openness rose further, above 110% of GDP from some 90% 5 years earlier as 
both  imports  and  exports  maintained  strong  growth.  After  a  strong  appreciation  in  the 
previous year, the dinar nominal and real effective exchange rate remained broadly stable in 
2018. 

4. 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION  

Good  neighbourly  relations  and  regional  cooperation  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,  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, the Adriatic and Ionian Region, the Coalition the 
Commission Tasked with Establishing the Facts about All Victims of War Crimes and Other 
Serious Human Rights Violations Committed on the Territory of the Former Yugoslavia for 
Reconciliation  Commission  (RECOM),  the  Regional  School  of  Public  Administration 
(ReSPA)  and  the  Brdo-Brijuni  process.  Serbia  took  part  in  the  implementation  of  the 
Multiannual  Action  Plan  (MAP)  for  the  development  of  a  Regional  Economic  Area  in  the 
Western Balkans, although more attention is needed to secure timely adoption of the incurred 
measures as well as streamlining regional commitments into national policies. 

Building  on  the  results  of  previous  summits,  the  July  2018  London  Summit  brought  a 
renewed  commitment  to  the  connectivity  agenda.  Dialogue  with  the  Western  Balkans 
continued in Skopje on the implementation of the Digital Agenda, to which all leaders of the 
region  had  committed  through  a  statement  of  support.  More  particularly  concerning  the 
negotiations on roaming fees, a regional agreement was signed at the Western Balkans Digital 
Summit  in  Belgrade  in  April  2019  enabling  Roam  like  at  Home  (RLAH)  as  of  July  2021. 
Serbia  participated  in  the  European  Commission’s  regional  conference  on  media  (Media 

51 

 
 
 
Days) in Skopje. Member States and the Western Balkan partners signed the Joint Action Plan 
on  Counter  Terrorism  for  the  Western  Balkans  at  the  Justice  Home  Affairs  Ministerial  in 
Tirana  in  October  2018.  Serbia  contributed  to  the  work  of  the  Regional  Youth  Cooperation 
Office  (RYCO).  However,  Serbia  delayed  the  adoption  of  decisions  necessary  for  the 
functioning of RYCO by  dismissing the  youth  representative to  RYCO’s board ahead of its 
planned meeting on 13-14 March 2019 in Pristina. In the context of being granted the seat of 
the  Transport  Community  Treaty  Secretariat,  Serbia  should  now  provide  further  support  to 
ensure the conditions are in place for it to take up operations swiftly. In February 2019, at the 
Ministerial  Meeting on  Clean Energy  Transition held  in  Podgorica, the  Ministers of Energy 
and Environment of the Western Balkans committed to adopting concrete measures aiming at 
the implementation of the Paris Agreement and the Energy Community obligations based on 
the EU Clean Energy for All Europeans Package.  

There  are  no  outstanding  issues  concerning  Serbia’s  respect  for  the  Dayton/Paris  Peace 
Agreement. Serbia continues to support Bosnia and Herzegovina’s territorial integrity and its 
path to joining the EU. As envisaged by the Dayton agreement, Serbia continues to preserve 
special relations with Republika Srpska, with whom joint governmental sessions were held in 
August  2018  and  February  2019.  Attendance  by  Serbian  officials  of  the  Republika  Srpska 
National Day on 9 January 2019 stirred controversies in Bosnia and Herzegovina.  

Along  with  Bosnia  and  Herzegovina,  Croatia  and  Montenegro,  Serbia  has  continued  to 
cooperate  closely  in the  implementation  of  the  regional  housing  programme  under  the 
Sarajevo  Declaration  Process  which  aims  to  find  sustainable  solutions  for  some  74  000 
people  who  became  refugees  or  displaced  persons  as  a  result  of  the  armed  conflicts  in  the 
former  Yugoslavia  in  the  1990s.  Amongst  them,  there  are  still  persons  who  are  potentially 
entitled  to  receive  pensions.  In  Serbia,  over  6  000  housing  units  are  set  to  be  provided  by 
2021, funded by the EU (80%), Serbia, and another 15 donors. 1 600 housing units are under 
construction across the country.  

The  unresolved  fate  of  missing  persons  who  disappeared  during  the  conflicts  of  the  1990s 
remains  a  humanitarian  concern  in  the  Western  Balkans.  As  of  February  2019,  a  total  of 
10 247  individuals  are  still  missing  as  a  result  of  the  conflicts  in  the  region.  Regional 
cooperation  on  missing  persons  continued  within  the  scope  of  the  various  bilateral 
arrangements.  A  new  inter-institutional  expert  group  was  established  in  spring  2018  to 
improve the exchange of data relevant for investigating the fate of missing persons. In June 
2018,  a  Memorandum  of  Cooperation  was  signed  between  the  Serbian  Office  of  the  War 
Crimes  Prosecutor  and  the  Serbian  Commission  on  Missing  Persons.  The  latter  also  held  a 
meeting  with  its  Croatian  counterpart  in  May  2018.  In  November  2018,  Bosnia  and 
Herzegovina, Croatia, Kosovo, Montenegro and Serbia signed a framework plan to promote 
regional cooperation in  addressing the issue of persons missing from  conflicts in the former 
Yugoslavia. 

Three  International  Committee  of  the  Red  Cross-chaired  meetings  of  the  Belgrade-Pristina 
Working  Group  on  Missing  Persons  were  held  during  2018.  Serbia  acted  upon  all  requests 
from  Pristina  and  undertook  four  field  assessments  in  search  of  alleged  grave  sites  in  the 
Raška  municipality  in  August  and  October  2018  but  no  human  remains  were  found.  An 
official meeting on missing persons between Serbia and Croatia  was held in  May  2018 and 
two technical meetings took place in February and July 2018. Despite these contacts, only 7 
cases of missing persons related to Kosovo and 39 related to Croatia were resolved in 2018.  
The seemingly improved communication needs to be further strengthened in order to achieve 
tangible progress. The appointment of a Serbian special envoy for missing persons in Croatia 
is  a  positive  development.  Serbia  needs  to  cooperate  constructively  with  its  neighbours  in 
tracing and identifying the fate of missing persons or their remains, including through swift 

52 

 
 
exchange of information. The families of missing persons need more comprehensive support 
than currently available to help them overcome the psychological and psychosocial impact of 
the disappearance of a relative and to help them exercise their legal and administrative rights. 
The  capacity  of  the  state  mechanism  for  searching  missing  persons  should  be  further 
strengthened. 

Serbia  remained  committed  to  bilateral  relations  with  other  enlargement  countries  and 
neighbouring EU Member States. Bilateral conventions on regional cooperation are in force 
with  Montenegro  and  North  Macedonia.  The  convention  with  Bosnia  and  Herzegovina  was 
signed in January 2018 but has not yet been ratified. Serbia initiated the process of concluding 
a convention with Albania.  

Relations  with  Albania  have  remained  stable.  Regular  exchanges  took  place  between  civil 
society, youth and media organisations. In May 2018, the two countries signed an agreement 
on tourism cooperation. Leaders of both countries regularly met at regional and international 
events. Serbia also cooperates with Albania under the Albania-Serbia-Italy trilateral meetings 
of Foreign Affairs Ministers.    

Relations with Bosnia and Herzegovina have remained good. Progress needs to be made in 
concluding the negotiations over the border demarcation and proceeding with the ratification.  

Relations  with  Montenegro  have  been  stable  and  high-level  visits  have  taken  place.  There 
were no developments on issues related to citizenship rights between the two countries. The 
demarcation  of  borders  is  still  pending.  Bilateral  political  consultations  between  the  two 
Foreign Affairs Ministries were held  in  May 2018. Several  agreements on road and railway 
border  crossings  were  signed  during  the  reporting  period,  including  the  opening  of  the 
Cemerno-Granice border crossing in August 2018. 

Relations  with  North  Macedonia  have  been  stable.  In  May  2018,  the  Speaker  of  the 
Parliament  of  North  Macedonia  visited  Belgrade.  In  September  2018,  the  Serbian  President 
and  Prime  Minister  Zaev  met  at  the  Presevo-Tabanovci  border  crossing  to  announce  the 
launch  of  an  integrated  border  management  project.  The  Serbian  President  attended  the 
inauguration of President Pendarovski in May 2019.   

Relations with Turkey further deepened. The Serbian President made several visits to Turkey. 
He  attended  the  inauguration  of  the  Turkish  President  in  July  2018.  Serbia  signed  an 
agreement on the TurkStream pipeline in Istanbul in October.  

Relations  with  the  neighbouring  EU  Member  States  of  Hungary,  Romania,  and  Bulgaria 
have  remained  good.  The  President  of  Bulgaria  and  the  Hungarian  Prime  Minister  visited 
Serbia in June and  September 2018 respectively. The Serbian President took part in meetings 
with the Bulgarian, Greek and Romanian Prime Ministers in  November 2018 in Varna and in 
March 2019 in Bucharest. Relations with Croatia continued to be mixed. The Speaker of the 
Croatian  Parliament  visited  Serbia  in  April  2018  but  the  visit  was  interrupted  due  to  an 
incident instigated by the far-right in the Serbian parliament.  

5. 

NORMALISATION OF RELATIONS BETWEEN SERBIA AND KOSOVO 

In the framework of the EU-facilitated dialogue, work continued with a number of high-level 
meetings  led  by  High  Representative/Vice  President  Mogherini  with  Presidents  Vučić  and 
Thaçi. This new phase aims to conclude a fully comprehensive and legally binding agreement 
between Serbia and Kosovo, in line with international law and EU  acquis and acceptable to 
EU Member States  and the region.  This  work  was interrupted in  November 2018 following 
the decision by the Kosovo government to impose customs tariffs of 100% on imported goods 
from Serbia and Bosnia and Herzegovina, on political and economic grounds.  

53 

 
 
On  the  implementation  of  past  agreements,  further  consolidation  has  been  made  on  the 
implementation  of  the  April  2013  ‘First  agreement  of  principles  governing  the 
normalisation of relations’ with the full implementation of the justice agreement which has 
enabled  the  newly  integrated  judicial  personnel  to  address  the  judicial  backlog  with  their 
judicial colleagues.  

Implementation of the 25 August 2015 Agreements has overall remained slow. No progress 
has been made on the Association/Community of Serb majority municipalities and Kosovo 
has yet to engage constructively in its establishment. The  energy agreement between Serbia 
and  Kosovo  must  be  implemented  without  further  delay  in  order  to  avoid  this  longstanding 
dispute from having further consequences for energy stability and security in Serbia, Kosovo 
and  countries  across  Europe. Following  the  completion  of  the  registration  of  Elektrosever, 
Serbia needs to file for the licensing process in Kosovo as a matter of urgency. The works on 
the  Mitrovica  bridge  are  completed  and  the  bridge  should  be  opened  to  vehicle  traffic 
without further delay or obstructions. The full implementation of the telecoms agreement has 
enabled the introduction of the new dialling code.   

As  regards  the  Technical  Dialogue  Agreements  (2011-12),  some  are  not  or  only  partially 
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 issues 
of cadastre and university diplomas recognition are 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  the  related  agreement.  On  IBM,  the  interim  common 
crossing  points  with  Kosovo  continue  to  be  operational.  There  has  been  limited  progress  in 
establishing the six permanent IBM common crossing points between Serbia and Kosovo as 
stipulated  in  the  IBM  agreement.  Serbia  did  not  engage  constructively  in  starting  the 
establishment  of  these  crossing  points  on  the  Serbian  side  (in  Jarinje,  Mucibabe,  and 
Konculj). This led to a suspension of EU funds in July 2018. Of those hosted by Kosovo (in 
the  construction  at 
Tabavije/Bërnjak,  Mutivodë/Mutivode  and  Merdarë/Merdare), 
Tabavije/Bërnjak has not yet started due to the failure of Belgrade to relocate the electricity 
pylons  to  allow  for  construction  to  commence.  At  Mutivodë/Mutivode,  all  cooperation  by 
Serbian technical representatives has stopped since March 2018. Finally the refusal of Serbian 
authorities  to  vacate  the  provisional  premises  of  the  Merdarë/Merdare    crossing  point  and 
move into the new ones  significantly delays the traffic and puts at risk the implementation of 
EU-funded  projects.  There  has  also  been  no  progress  in  establishing  the  additional  interim 
common crossing points in Kapi/Kapija Vrapce and Rajetici/Izvor. Additional measures need 
to be taken by Serbia to close illegal crossings.  

Requests  for  mutual  legal  assistance  are  in  principle  being  processed.  In  some  instances, 
cooperation  by  Serbia  in  high-level  investigations  has  not  been  forthcoming.  Mutual  legal 
cooperation is extremely limited in war crimes cases. 

Overall, Serbia has remained engaged in the dialogue and showed restraint in its response to 
the  introduction  of  the  customs  tariffs.  However,  Serbia  needs  to  make  further  substantial 
efforts  and  contribute,  in  particular  in  its  international  relations,  to  the  establishment  of  a 
conducive environment to the conclusion of a legally binding agreement with Kosovo. Such 
an agreement is urgent and crucial so that Serbia and Kosovo can advance on their respective 
European paths.  

54 

 
 
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.  Limited  progress 
was  made  with  the  adoption  of  sectoral  legislation  in  the  harmonised  area  designed  to  be 
aligned with the EU acquis. However, recommendations of the previous report have still not 
been met. 

In the coming year, Serbia should in particular: 

  adopt  an  action  plan  to  ensure  compliance  with  Articles  34-36  of  the  Treaty  on  the 
Functioning of the European Union and adopt a strategy and action plan for implementing 
the EU acquis in this chapter for both the sectoral (‘New Approach’ and ‘Old Approach’) 
and horizontal legislation and relevant organisations; 

  remove transitional provisions from  legal texts regarding the Serbian conformity mark; 

  provide  adequate  administrative  capacities  for  market  surveillance,  metrology,  and  the 
Agency  for  the  homologation  of  vehicles,  as  well  as  for  the  implementation  of  the 
European  Regulation  on  Registration,  Evaluation,  Authorisation  and  Restriction  of 
Chemicals (REACH). 

General principles 

Regarding  general  principles, a strategy and an action plan for implementing  the acquis  in 
this  chapter  for  both  the  sectoral  (‘New  Approach’  and  ‘Old  Approach’)  and  horizontal 
legislation  and  relevant  organisations  have  yet  to  be  adopted.  The  European  Commission 
noted  that  during  the  reporting  period,  it  came  to  light  that  Serbian  legislation  includes 
‘transitional provisions’ regarding the Serbian conformity mark. These provisions have been 
inserted by Serbia on a horizontal basis and need to be removed. Serbia’s legal framework for 
product  safety  is  partly  aligned  to  the  EU  acquis  (see  Chapter  28  –  Consumer  and  health 
protection). 

Non-harmonised area 

On  horizontal  measures,  the  Product  Contact  Point  has  been  established,  while  a  detailed 
procedure  for  its  functioning  remains  to  be  designed.  An  action  plan  to  ensure  compliance 
with Articles 34-36 of the Treaty on the Functioning on the EU remains to be adopted. 

Harmonised area: Quality infrastructure 

Administrative  structures  dealing  with  the  legal  bases  for,  and  implementation  of,  technical 
regulations,  accreditation,  metrology  and  conformity  assessment  were  upgraded  but 
nevertheless require further strengthening.  

On  standardisation,  the  Serbian  Institute  for  Standardisation  is  a  full  member  of  the 
the  European  Committee  for 
European  Committee  for  Standardisation  (CEN)  and 
Electrotechnical Standardisation (CENELEC). According to the 2018 fourth quarter data, the 
rate  of  adopted  CEN  European  standards  was  99.95%  and  CENELEC  European  standards 
was  98.11%.  The  Serbian  Institute  for  Standardisation  adopted  76.18%  of  the  European 
Telecommunications Standards Institute’s standards.  

55 

 
 
The number of conformity assessment bodies has increased to a total of 590, out of which 56 
are designated conformity assessment bodies. 

Although  Serbia  removed  certain  provisions  on  certificates  for  conformity  to  allow  easier 
import procedures for a segment of radio and telecommunications terminal equipment related 
goods,  more  action  is  needed  to  effectively  implement  the  presumption  of  conformity  in 
relation to imports of goods from the EU in several other sectors.   

Concerning  accreditation,  the  Accreditation  Body  of  Serbia  obtained  an  extension  of  the 
International  Accreditation Forum  on Multilateral  Recognition  Arrangement for information 
security  management  system,  food  safety  management  system  and  metadata  management 
system sub-scopes.  

On  metrology,  the  number  of  internationally  recognised  standards  for  calibration  and 
measurement stands at 38. 

The administrative and financial capacities for market surveillance inspection require further 
strengthening. In 2018, the market surveillance authorities carried out 5,915 inspections in the 
area of product compliance and 268 in relation to product safety and ordered 464 corrective 
measures, while 293,218 non-compliant products were removed from the market. There is no 
available data on judiciary proceedings that have been initiated and resolved.   

Harmonised area: sectoral legislation 

In  the  area  of  ‘New  and  global  approach’  product  legislation,  a  law  on  construction 
products was adopted. However, this was designed to be aligned with the previous rather than 
the  current  EU  acquis.  Implementing  technical  legislation  on  non-automatic  weighing 
instruments  and  measuring  instruments  was  adopted  in  2018,  designed  to  ensure  alignment 
with the acquis.  

In  the  area  of  the  ‘Old  approach  product  legislation’,  the  legislation  on  tractors,  motor 
vehicles, and non-road mobile machinery emissions has yet to be aligned with the most recent 
EU  legislation  in  this  area.  Legislation  providing  for  adequate  implementing  capacity 
designed  to  ensure  the  effective  implementation  of  REACH,  has  yet  to  be  adopted.  The 
administrative  and  inspection  capacity  necessary  for  implementing  the  REACH  and  CLP 
(classification, labelling  and packaging) regulations needs to  be strengthened, as well as the 
administrative  capacities  and  IT  resources  of  the  traffic  safety  agency  in  charge  of  vehicle 
homologation. 

On  procedural  measures,  Serbia  implemented  a  national  control  list  of  arms  and  military 
equipment aligned with the EU’s Common Military List, and adopted a national control list of 
dual-use  goods  designed  to  be  aligned  with  the  latest  EU  acquis  on  exports,  transfer, 
brokering  and  transit  of  these  items.  A  law  on  production  and  trade  in  arms  and  military 
equipment, and a law on testing, labelling and marking of weapons, devices and ammunition 
has been adopted and needs to be aligned with the EU acquis. Serbian legislation on the return 
of cultural objects unlawfully removed from the territory of an EU Member State has yet to 
be aligned with the EU 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  regarding  the  Commission’s  recommendation  from  2018,  through  the 
signing of new  agreements  on electronic exchange of social  security  data  with  EU Member 

56 

 
 
States.  Serbia  also  streamlined  the  procedure  for  issuing  work  permits  to  third-country 
nationals. 

In the coming year, Serbia should in particular: 

  continue  to  enhance  cooperation  with  EU  Member  States  on  coordination  of  social 

security systems by improving legislative and technical conditions; 

  carry  out  preparations  for  joining  EURES  (the  European  network  of  employment 

services). 

Amendments  to  the  legislation  on  access  to  the  labour  market  adopted  in  June  2018 
shortened the procedure for issuing work permits. 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.    

Regarding preparations for joining EURES (the European network of employment services), 
Serbia upgraded the information system of the National Employment Service. 

Regarding  the  coordination  of  social  security  systems,  an  agreement  with  Romania  came 
into  force  in  April  2018  and  with  Switzerland  in  January  2019.  An  agreement  with  Greece 
was signed in 2018. Negotiations of agreements on electronic exchange of social security data 
are  ongoing  with  Germany  and  Austria  and  are  planned  to  take  place  with  Hungary,  while 
initiatives for opening negotiations with Bulgaria and Italy are ongoing. Electronic exchange 
of  social  security  data  is  operational  with  Slovenia,  Croatia,  North  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 remains moderately prepared in these areas. No progress was made on the right of 
establishment and freedom to provide services. The Commission recommendations from 2018 
were not implemented and remain fully valid. 

In the coming year, Serbia should in particular: 

  adopt  the  umbrella  law  on  services,  complete  harmonisation  of  sectoral  laws  with  the 
umbrella law and the acquis and establish a point of single contact, as a portal that allow 
service providers to get information and complete administrative procedures online; 

  adopt the law on postal services as well as relevant implementing legislation and increase 

the capacity of the postal services inspectorate; 

  adopt a new law on mutual recognition of professional qualifications. 

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

In  the  area  of  freedom  to  provide  cross-border  services,  the  umbrella  law  on  services, 
aiming  to  align  with  the  EU  Services  Directive,  has  not  been  adopted  yet.  Alignment  of 
sectoral laws with the draft umbrella law and the EU Services Directive is underway, in line 
with the action plan adopted in December 2016. 

57 

 
 
The strategy for postal services 2017-2020 is being implemented. The law on postal services, 
aiming to align with the second and third EU Postal Services Directives, has not been adopted 
yet.  Despite  some  effort  to  improve  the  administrative  capacity  of  the  postal  services 
inspectorate, staff number in this area remains low.  

Since  its  adoption  in  November  2017,  the  strategy  for  harmonising,  transposing  and 
implementing the acquis in the field of mutual recognition of professional qualifications is 
being implemented. The law on mutual recognition of professional qualifications has not been 
adopted yet. 

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 remains moderately prepared on free movement of capital. Good progress was made 
in all areas, especially on the fight against money laundering and counter terrorism financing. 
However,  the  Commission  recommendations  from  2018  were  only  partially  met  and  thus 
remain valid. 

In the coming year, Serbia should in particular: 

  liberalise  capital  movements  in  line  with  its  obligations  under  the  Stabilisation  and 

Association Agreement (SAA); 

  demonstrate  through  a  track  record,  increasing  effectiveness  in  monitoring,  supervision, 

financial intelligence, investigation and reporting. 

As regards capital movements and payments, amendments to the law on foreign exchange 
operations,  aimed  at  lifting  the  general  restriction  on  loan  to  non-resident  borrowers,  were 
adopted in April 2018. Restrictions remain in certain cases, for reasons of public policy and 
macro financial stability. These limitations must be justified, targeted and proportionate. The 
agricultural law still does not guarantee that EU nationals can acquire agricultural land under 
the  same  conditions  as  those  for  Serbian  nationals  and,  as  such,  does  not  comply  with  the 
SAA.  

On  payment  systems,  amendments  to  the  law  on  payment  services  were  adopted  in  June 
2018,  aiming  at  further  alignment  with  the  EU  Directive  on  payment  accounts  particularly 
regarding  the  transparency  and  comparability  of  bank  account  fees  and  the  protection  of 
payment service users’ rights to a basic payment account and to switch payment accounts. In 
December  2018,  the  National  Bank  of  Serbia  (NBS)  adopted  implementing  legislation  on 
payment  services,  establishing  a  list  of  representative  services  linked  to  a  payment  account 
and defining the form and content of the fee information document and statement of fee to be 
used  by  all  payment  service  providers.  In  October  2018,  the  NBS  enabled  a  new  instant 
payment system which allows payment service providers to execute instant fund transfers. A 
law  on  multilateral  interchange  fees  and  special  operating  rules  for  card-based  payment 
transactions was adopted in June 2018, bringing further alignment with the EU Regulation on 
Interchange  Fees  for  Card-based  Transactions.  This  new  law,  which  entered  into  force  in 
December 2018, introduced a phased reduction of interchange fees for card transactions.  

Regarding  the  fight  against  money  laundering  and  terrorism  financing  (AML/CFT), 
several  laws  were  adopted  and  entered  into  force  in  spring  2018  (including  the  law  on 
factoring, law on accounting, law on auditing, law on games of chance, law on intermediation 
in  the  trade  and  lease  of  real  estate)  to  implement  the  action  plan  agreed  in  February  2018 
with  the  Financial  Action  Task  Force  (FATF)  and  to  address  recommendations  included  in 

58 

 
 
MONEYVAL’s  2016  report.  In  December  2018,  MONEYVAL  re-rated  positively  10 
recommendations for Serbia. An updated national risk assessment was adopted in May 2018 
and is being implemented. As a result, the understanding of risks have improved and risks are 
better  mitigated.  In  December  2018,  the  NBS  adopted  amendments  to  its  guidelines  on 
applying the AML/CFT law, taking into account  findings of the national risk assessment. A 
new  law  on  centralised  records  of  beneficial  ownerships  was  adopted  in  May  2018  and 
entered into force in  June, aiming at  further alignment  with  the acquis. On the basis of this 
new  law,  a  Centralised  Record  of  Beneficial  Owners  was  established  in  December  2018 
within the Serbian Business  Registers Agency. Supervision  of lawyers, notaries and casinos 
has substantially improved through the adoption and implementation of dedicated guidelines, 
training programmes and off-site and on-site controls. On targeted financial sanctions related 
to  terrorism  financing,  an  online  application  tool  was  introduced,  allowing  updates  in  real 
time  according  to  the  United  Nations  Security  Council  lists.  FATF  tentatively  concluded  in 
February  2019  that  Serbia  adopted  all  measures  included  in  its  action  plan  and  that  this 
warrants  an  on-site  visit  assessment  to  verify  implementation.  If  the  FATF  onsite  visit 
planned  for  May  2019  confirms  this  positive  assessment,  then  Serbia  could  be  removed  in 
2019  from  FATF’s  compliance  document  of  countries  with  strategic  deficiencies  in  their 
AML/CFT system.  

In  2018,  the  Administration  for  the  Prevention  of  Money  Laundering  (APML)  has 
substantially increased its capacity. It has recruited four new staff and has now 33 employees. 
Its budget was doubled and it moved to new premises. In 2018, 2,294 suspicious transactions 
were reported. The highest number came from payment institutions, with over 1,297 reports 
on  suspicious  clients.  The  APML  submitted  information  on  380  reports  to  relevant 
enforcement authorities. 75 reports were submitted to the prosecution services. As a follow up 
of the agreement with the Republic Public Prosecutor, the database of money laundering cases 
was  updated,  and  the  prosecutor’s  office  provided  feedback  to  APML  on  their  suspicious 
transactions reports, in line with the FATF recommendations.  

6.5.  Chapter 5: Public procurement 

EU rules ensure that 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  remains  moderately  prepared  on  public  procurement.  No  progress  was  made 
during  the  reporting  period.  Significant  efforts  are  needed  to  further  improve 
competition,  efficiency  and 
tenders.  The  Commission 
recommendations from 2018 were not implemented and remain fully valid. 

transparency 

in  public 

In the coming year, Serbia should in particular: 

  ensure  further  alignment  with  the  2014  EU  Directives  on  public  procurement, 
including  on  utilities  and  on  concessions,  in  particular  by  adopting  the  new  public 
procurement  law  and  amendments  to  the  law  on  public-private  partnership  and 
concessions;  

  ensure  that  intergovernmental  agreements  concluded  with  third  countries  and  their 
implementation do not unduly restrict competition, comply with the basic principles 
of public procurement, such as transparency, equal treatment and non-discrimination 
and are in line with the national legislation and the EU acquis; 

59 

 
 
  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 and institutional frameworks on public procurement are broadly aligned with the 
acquis. 

A new law on public procurement, aiming to further alignment with the 2014 EU Directives 
on public procurement, on utilities and on their remedies is under consultation and is yet to be 
adopted.  The  legislation  on  defence  and  security  procurement  still  contains  too  many 
exemptions  that  are  excessively  applied  without  justification  and  remain  to  be  aligned  with 
the relevant EU Directive. Intergovernmental agreements concluded with third countries and 
their  implementation  do  not  seem  to  be  systematically  in  line  with  the  principles  of  equal 
treatment, non-discrimination, transparency and competition and neither fully consistent with 
the  relevant  EU  acquis  and  national  legislation.  The  law  on  public-private  partnerships  and 
concessions is not yet in line with the new Directive on concessions.  

The  implementation  of  the  public  procurement  strategy  and  its  action  plan  for  2018  has 
been  delayed  as  the  adoption  of  new  legislation  is  pending.  A  new  strategic  framework  is 
being prepared but  has  yet  to  be adopted. This  new strategy should be harmonised with  the 
public financial management strategy.  

The  Public  Procurement  Office  (PPO)  supervises  compliance  with  the  law  on  public 
procurement  and  maintains  the  public  procurement  portal.  The  PPO  has  worked  on  the 
preparation of the new law on public procurement, including on implementing legislation.   

Implementation and enforcement capacity 

In 2018, Serbia’s public procurement market represented 8% of the GDP, slightly above the 
7.7% share in 2017. The average number of bids per tender fell to 2.5 in 2018, the lowest in 
the  last  five  years,  down  from  3  bids  in  2017.  The  share  of  contracts  awarded  to  foreign 
bidders remained stable at 3%. 

On  monitoring  of  contract  award  and  implementation,  the  proportion  of  negotiated 
procedures without prior notice remained at 3% in 2018. The share of open procedures stood 
at 91% of the total value of contracts. The share of centralised public procurement contracts 
stood  at  15%  of  the  total  annual  procurement  budget.  The  use  of  the  most  economically 
advantageous tender criterion remained low at 11%. 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  the  field  of  e-procurement  using  e-tools,  such  as 
e-submission  and  e-auctions.  A  detailed  and  comprehensive  plan  for  the  rollout  of 
e-procurement needs to be prepared. The State Audit Institution found irregularities in 7.4% 
of inspected procuring entities in 2017, falling from 10% in 2016.  

Capacity  to  manage  public  procurement  processes  was  somewhat  improved  through  the 
certification  of  485  additional  public  procurement  officials  between  February  2018  and 
February 2019. The PPO increased its number of staff to 38 out of which 12 positions remain 
vacant.  With  currently  a  total  of  26  staff  members  and  a  wide  range  of  responsibilities,  the 
PPO  lacks  the  administrative  capacity  to  carry  out  many  of  its  tasks.  The  Commission  for 
Public-Private  Partnerships  and  Concessions  also  remains  understaffed.  In  2018,  the 
Commission  approved  91  public-private  partnership  project  proposals,  including  38  with 
concessions, mainly in the transport, sanitation and urban planning sectors.  

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

60 

 
 
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 1,230 decisions on requests for protection of rights between 
January  2018  and  February  2019.  Public  procurement  procedures  were  partially  or  fully 
annulled  in  606  cases  (51%  of  all  cases).  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 remains stable at below 1% 
of all decisions taken. In the first ten months of 2018, the Republic Commission did not issue 
fines  to  contracting  authorities  for  failure  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 conclusions of contracting authorities in 156 cases during the given period. 

The  implementation  capacity  of  the  Republic  Commission  remains  stable  with  58  staff 
members,  eight  of  which  are  elected  officials.  The  Republic  Commission  has  not  used  its 
power  to  initiate  and  conduct  misdemeanour  procedures  in  the  first  instance  because  of 
inconsistencies  between  the  procurement  and  misdemeanour  legislation.  This  impedes  the 
access of contracting parties to judicial review by the Republic Commission in this field. 

Administrative courts’ capacity to deal with complex and numerous 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.  Some  progress  was  made  by 
adopting  amendments  to  the  law  on  companies.  The  Commission  recommendations  from 
2018 were only partially implemented and remain valid. 

Serbia should pay particular attention in the coming year to: 

  improve further alignment with the company law acquis; 

  align the accounting and statutory audit legislation with the acquis and ensuring adequate 

funding and resources for the public audit oversight system. 

In  June  2018,  amendments  to  the  company  law  were  adopted,  aimed  at  further  alignment 
with the acquis on shareholder rights, on sanctions for non-disclosure of financial statements, 
and in particular with the provisions on cross-border mergers. They also include provisions on 
the formation of European Company and European Economic Interest Grouping.  Legislation 
on company takeovers is largely in line with the acquis. Serbia’s Corporate Governance Code 
is based on EU best practice and OECD principles. The Serbian Business Registers Agency 
acts  as  a  one-stop-shop,  providing  a  unique  registration  and  tax  identification  number  to 
companies and ensuring public access to information. Since October 2018, the Agency offers 
the  possibility  to  incorporate  single-member  limited  liability  companies  electronically.  The 
database  of  companies  in  the  business  register  should  be  ready  to  interconnect  with  EU 
Member States’ business registers in the future. Further alignment is needed on transparency 
requirements for listed companies. 

Concerning  corporate  accounting  and  auditing,  new  legislative  amendments  are  being 
prepared,  aimed  at  further  acquis  alignment  in  these  areas.  Statutory  audit  is  mandatory  for 

61 

 
 
annual  financial  statements  of  large  and  medium-sized  companies,  and  penalties  for  non-
publication are in place. There are also specific requirements for the statutory audit of public-
interest entities. Reorganisation of the public audit oversight system is underway, the priority 
is to redefine the role of the supervisory body. Due attention should be paid to requirements 
for quality assurance, investigations and penalties relating to public-interest entities, as well as 
ensuring  adequate  funding  and  resources.  Serbia  applies  International  Financial  Reporting 
Standards  (IFRS)  and  the  IFRS  for  small  and  medium-sized  companies.  Mandatory 
application of International Standards on Auditing also applies. 

6.7. 

Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPR), 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 has been some 
progress with the adoption of the amendments to the law on patents and adoption of a new 
strategic 
focusing  on  enforcement.  The  Commission 
recommendations from 2018 were not fully implemented and remain valid. 

for  2018-2022, 

framework 

 In the coming year, Serbia should in particular:  

  adopt  the  copyright  and  related  rights  law,  the  law  on  topographies  of  semiconductor 

products and amendments to the law on trademarks; 

  strengthen  enforcement,  by 

improving  capacities  and  coordination  of  different 

stakeholders. 

Adoption of the new law on copyright and related rights and the law on the protection of 
topographies  of  semiconductor  products  has  been  further  delayed.  The  process  for  adopting 
legislation in this area remains very slow. 

On industrial property rights, amendments to the law on patents were adopted in December 
2018,  aiming  to  align  with  the  EU  Patent  Directive  and  the  EU  Directive  on  the  legal 
protection  of  biotechnological  inventions.  Amendments  to  the  law  on  trademarks  have  not 
been adopted yet. There has been no development as regards alignment with the EU Directive 
on  protection  of  design  and  with  the  trade  secret  EU  Directive.  The  Intellectual  Property 
Office remains relatively well staffed and efficient in registering trademarks. 

Concerning  enforcement,  the  capacity  of  the  Market  Inspectorate  has  been  stable  with  49 
market  inspectors  specialised  in  the  field  of  intellectual  property.  In  2018,  the  number  of 
counterfeit and pirated goods confiscated by the Market Inspectorate increased, as well as the 
number of requests submitted to it by economic operators. The number of the customs officers 
specialised in  intellectual  property protection decreased slightly to  14.  The number of items 
detained  by  the  customs  administration  decreased  while  the  number  of  items  destroyed 
increased. In April 2018, the customs administration put into operation the electronic database 
regarding  the  protection  of  IPR  at  the  borders,  in  accordance  with  the  new  customs  law.  In 
2019, the number of inspectors specialised in IPR within the tax administration was reduced 
to 4, in accordance with the Tax Administration Transformation Program and the relocation 
of  non-core  activities.  The  number  of  software  legality  checks  performed  by  the  tax 
administration significantly decreased in 2018. Capacity of the judiciary to handle IPR cases 
is still low, due to the low level of specialisation of judges in this field.  

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In October 2018, the government adopted a new strategic framework for intellectual property 
rights (IPR) for the period 2018-2022, which focuses on enforcement. IPR legislation has yet 
to  be  aligned  with  the  EU  Directive  on  the  enforcement  of  intellectual  property  rights.  The 
permanent  coordination body for the enforcement  of  IPR did  not  meet  in  2018.  Its  working 
groups were only active as regards the new strategic framework. They did not carry out any 
awareness  raising  activities  or  information  exchange  for  IPR  enforcement.  The  Intellectual 
Property Office has continued to operate an education and information centre, which provides 
training on IPR to SMEs, enforcement institutions, and research and development bodies and 
was  engaged  in  different  awareness  raising  activities.  Coordination  among  different 
institutions  involved  in  IPR  enforcement  requires  further  strengthening,  notably  through 
adequate IT infrastructure.  

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  include  rules  on  concentrations 
between  companies,  which  would  significantly  impede  competition.  EU  rules  also  set  out  a 
system  of  State  aid  control.  Governments  are  only  allowed  to  grant  State  aid  if  restrictive 
conditions are met, with a view to preventing distortion of 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. Last year’s recommendations were not implemented and remain valid.  

In the coming year Serbia should in particular: 

  make  significant  progress  in  the  alignment  of  its  legislation  on  State  aid,  in  particular 
repealing the exemption of companies in the process of privatisation from State aid rules, 
in line with its obligations under the Stabilisation and Association Agreement (SAA); 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; 

  increase  substantially  the  budget  of  the  Commission  for  State  Aid  Control  (CSAC),  as 

well as its enforcement powers, to ensure its independence and effectiveness; 

  align  the  law  on  multilateral  interchange  fees  and  special  operating  rules  for  card-based 

payment transactions with the acquis and SAA obligations.  

Antitrust and mergers 

The  legislative  framework  remains  broadly  in  line  with  the  acquis  and  the  relevant 
provisions of the SAA. The law on protection of competition provides for ex ante control of 
mergers, following the principles of the Merger Regulation. A new competition law has yet to 
be finalised and adopted.  

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.  

Regarding enforcement capacity, the CPC has 53 employees of which 34 are case-handlers 
with  a  good  level  of  expertise.  On  implementation,  the  number  of  antitrust  cases  and  the 
relative  size  and  significance  of  companies  under  investigation  continued  to  increase.  From 
January 2018 to  February  2019, the CPC adopted seven decisions on restrictive agreements 
and  two  on  abuse  of  dominance  cases.  The  level  of  fines  imposed  during  this  period  has 
increased  reaching  the  combined  level  of  fines  imposed  in  the  previous  2  years  at  over 

63 

 
 
EUR3.8 million. In the given period, the CPC has not prohibited any merger and has imposed 
remedies  in  only  one  case.  The  CPC’s  investigations  of  large  private  and  public  companies 
further contributed to improving its credibility and public image. In 2018, the CPC launched 
two  sector  enquiries  covering  tyre  and  cement  markets.  Competition  advocacy  activities 
continued  to  increase.  The  CPC  issued  three  opinions  on  draft  legislation  in  the  fields  of 
trademarks, road transport of passengers and free access to information. More generally, the 
CPC  should  be  consulted  on  all  draft  laws  concerning  competition,  such  as  the  law  on 
multilateral interchange fees and special operating rules for card-based payment transactions. 
Article  9  of  this  new  law,  adopted  in  June  2018,  is  not  in  line  with  the  acquis  and  not 
compliant  with  the  SAA.  Generally,  a  preferential  treatment  favourable  to  the  incumbent 
operator on the market is not contributing to the achievement of competition policy objectives 
and to the alignment with the acquis. 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  by  increasing  the  number  of  judges  with  expertise  in 
this field.  

State aid 

As regards the legislative framework, the law on State aid control broadly reflects Articles 
107  and  108  of  the  TFEU  and  the  relevant  provisions  of  the  SAA.  However,  provisions 
providing  exemption  from  State  aid  rules  for  companies  undergoing  restructuring  and 
privatisation  are  not  compliant  with  the  SAA  and  not  aligned  with  the  acquis.  Existing  aid 
schemes, including the fiscal State aid schemes part of 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  CSAC  needs  to  step  up  its  efforts  to  provide  the  European 
Commission with information on a number of individual decisions approving large amounts 
of State aid to major operators 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 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 very weak and insufficient with only four 
full time employees in its Secretariat. The CSAC’s budget needs to be substantially increased 
to  hire additional qualified staff  and thus  to  enable it to  perform  its  mandate. There was no 
progress made on implementing the law on State aid. From January 2018 to February 2019, 
the CSAC took 64 decisions upon notification and another 15 decisions in ex post procedure 
(illegal aid). However, the CSAC has not yet taken a single decision prohibiting state aid nor 
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. 
The CSAC should also closely monitor the implementation of intergovernmental agreements 
concluded  with  non-EU  countries,  which  should  not  provide  for  exemptions  from  national 
legislation, including fiscal  legislation and State  aid  control. Serbia  needs to  ensure that aid 
granted to the steel mill Smederevo before its assets were privatised is claimed and recorded 
when liquidating the company.  In January 2019, the commercial court dealing with the case 
declared  the  bankrupcy  of  Železara  Smederevo.  The  claims  have  yet  to  be  formally 
recognised  by  the  court.  Awareness  of  State  aid  rules  among  stakeholders  remains  low, 
especially  among  the  authorities  granting  aid.  This  is  particularly  highlighted  by  the  low 
number  of  CSAC  decisions  that  were  appealed  against.  Advocacy  activities  need  to  be 
significantly stepped up in order to increase the number of ex ante notifications. 

64 

 
 
Liberalisation 

In 2018, the CPC reached a significant decision relating to abuse of dominant position by one 
large  public  company.  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 at ensuring fair competition between and the stability of financial institutions, 
namely  banking,  insurance,  supplementary  pensions,  investment  services  and  securities 
markets. They include rules on authorisation, operation and supervision of these institutions. 

Serbia  remains  moderately  prepared  in  the  area  of  financial  services.  Some  progress  was 
made in this field. Last year’s recommendation remains valid. Serbia should, in particular: 

  take  additional  steps  to  align  with  the  banking  capital  requirements  framework 
(CRR/CRD IV and upcoming CRR2/CRD V) and the Solvency II Directive in the field of 
insurance. 

On  banks  and  financial  conglomerates,  in  June  2017,  the  National  Bank  of  Serbia  (NBS) 
introduced  the  Basel  III  standards  and  continues  to  monitor  their  implementation  by  banks. 
Following  the  adoption  of  the  amendments  to  the  Decision  on  Reporting  Requirements  for 
banks, the NBS is monitoring the leverage ratio. As a result of the implementation of the non-
profitable loans resolution strategy adopted in 2015, non-profitable loans are at a low level of 
EUR1.2  billion,  representing  6.4%  of  total  loans.  In  order  to  align  with  the  international 
Financial  Reporting  Standard  (IFRS)  9,  in  July  2018  the  NBS  adopted  amendments  to  the 
decision on consolidated supervision of a banking  group, introducing provisions concerning 
minority  interest  and  additional  tier  1  and  tier  2  instruments  issued  by  subsidiaries. 
Legislation on financial conglomerates has not been adopted yet.  

With regard to insurance and occupational pensions, the NBS adopted amendments to the 
strategy  for  the  implementation  of  the  Solvency  II  Directive  in  March  2018,  increasing  the 
number of quantitative impact studies and modifying the requirements on regulatory reporting 
according to the Solvency  II regime. Human resources capacities have  been strengthened in 
order to implement the strategy. There were no developments on alignment with the Directive 
on  the  activities  and  supervision  of  institutions  for  occupational  retirement  provision  in  the 
areas of cross-border activities, investment rules and regulation of technical provisions. There 
were no developments as regards financial market infrastructure. 

In  the  securities  markets  and  investment  services,  amendments  to  the  law  on  financial 
collaterals were adopted in June 2018, regulating secured loans, financial derivatives and repo 
markets.  The  Ministry  of  Finance’s  administrative  capacity  to  regulate  securities  markets 
remains weak. 

6.10.  Chapter 10: Information society and media  

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

internal  market 

functioning  of 

the  smooth 

the 

Serbia is moderately prepared in the field of information society and media. Some progress 
was made in the past year, in particular regarding the Digital Single Market and in the area of 
information society and e-government. However, the recommendations of the previous report 
have not been met.  

In the coming year, Serbia should in particular: 

65 

 
 
  harmonise  its  legislative  framework  in  electronic  communications  with  the  2009  EU 

regulatory framework;  

  ensure  financial  and  operational 

independence,  of 

the  regulators  for  electronic 

communication and postal services (RATEL) and for electronic media (REM);  

  take  measures  to  ensure  implementation  of  competitive  safeguards  and  facilitate  market 
operator’s  access  to  telecommunication  infrastructure  (ducts,  antennas,  fibre  optics  and 
fixed telephony infrastructure).  

In line with EU’s Digital Single Market objectives, progress was made with the adoption in 
April 2018 of the next generation networks strategy  until 2023, promoting cloud computing 
and the ‘Internet of Things’ as well as the development of 5G mobile systems. Serbia’s digital 
economic growth is steady; however a more holistic and coherent approach to digitalisation, 
and effective coordination of stakeholders are recommended. 

In the field of electronic communications and information technology, a law on electronic 
communications to align Serbian legislation with the 2009 EU regulatory framework has yet 
to be adopted. The financing of the telecom regulatory agency is still not in line with the EU 
acquis.  Administrative  and  inspection  capacity  of  the  line  ministry  backslid,  in  particular 
when it comes to inspections. Staff turnover remains a concern. Authorities took part in the 
preparations of the Regional Roaming Agreement and signed the agreement in April 2019. 

The  European  emergency  number  112,  along  with  its  financing  structure,  has  yet  to  be  put 
into operation.  

No  progress  can  be  reported  regarding  the  strengthening  of  RATEL’s  financial  and 
operational  independence.  Its  administrative  capacities  have  slightly  improved;  however  a 
further  increase  is  needed.  Concerning  implementation  of  competitive  safeguards,  RATEL 
has  deregulated  five  and  ex  ante  regulated  four  relevant  markets,  designating  ‘significant 
market  providers’  for  call  termination  in  fixed  telephony,  call  termination  in  mobile 
telephony,  broadband  access  and  access  to  infrastructure.  Difficulties  with  users-operators’ 
access  to  infrastructure,  cables,  ducts,  antennas  and  optical  fibres  persist,  as  well  as 
restrictions imposed by the legislation in environmental and municipal planning,  particularly 
at a local level. The 900 MHz radio-frequency bandwidth remains unassigned. 

In  the  field  of  information  society  services,  progress  was  made  in  strengthening  the 
coordination role of the newly established Office for IT and e-government, which report to the 
Prime Minister. The Law on e-government was adopted and a new information system linking 
the  six  biggest  databases  in  Serbia  was  established.  Progress  was  made  with  the  further 
introduction and development of e-services at the national e-government portal, the launching 
of  an  Open  Data  Portal  and  the  enhanced  interoperability  of  public  registers  providing  for 
easier  exchange  of  data  and  the  upgrading  of  the  data  centre.  In  April  2018,  the  Law  on 
electronic administration was adopted in order to present an umbrella regulation that governs 
the use of information technologies by the public administration, both at state and local self-
government levels. Full harmonisation of the law on information security with the Directive 
on network and information systems is pending. 

No progress was made in audio-visual policy in the reporting period. The Law on electronic 
media  regulates  media  services  for  both  commercial  and  public  service  media.  The  law 
defines  the  Regulatory  Authority  of  Electronic  Media  (REM)  as  an  independent  regulatory 
body  authorised  to  draft  a  strategy  for  the  development  of  radio  and  audio-visual  media 
services,  issue  licences  for  providing  media  services,  monitor  and  penalise  media  service 
providers,  draft  secondary  legislation  and  manage  the  Register  of  Media  Services  and  the 

66 

 
 
Record of On-Demand Media Service Providers. Since 2015, REM has delayed the adoption 
of a new strategy for the development of radio and audio-visual media services in line with 
the law. REM is also failing to effectively monitor and penalise broadcasters that do not meet 
all programme content obligations under the law.  

The REM Council takes decisions on all issues related to the regulator’s domain and has nine 
members. However, the Council still operates with only six members for more than 2  years 
and with an Acting President of the Board for 3 years.  

The legislation establishing sources of financing for the public service broadcasters needs to 
be  improved.  The  amendments  to  the  Law  on  public  media  services  and  the  Law  on  the 
temporary  regulation  of  the  collection  of  the  fee  for  the  public  service  media,  adopted  in 
December  2015  as  a  temporary  solution,  are  still  in  place.  These  are  causing  further 
uncertainty  over  the  editorial  independence  and  stable  financing  of  the  public  broadcasters 
Radio Television of Serbia and Radio Television of Vojvodina.  

In  2018,  RTS  introduced  five  minutes  of  TV  news  in  Albanian,  which  is  a  first  step  in 
fulfilling  its  obligation  to  produce  and  broadcast  programme  content  intended  for  national 
minorities. 

The  Ministry  of  Culture  and  Media  has  been  playing  a  proactive  role  in  promoting  and 
supporting  media  literacy  initiatives.  In  an  effort  to  systematically  improve  this  area,  the 
Ministry  formed  a  working  group  tasked  with  developing  a  manual  for  the  promotion  and 
development of media literacy in pre-university education (pre-school, primary and secondary 
education). 

6.11.  Chapter 11: Agriculture and rural development  

The  common  agricultural  policy  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 the area of agriculture and rural development. Good 
progress was made by adopting the action plan for acquis alignment in agriculture and rural 
development  and  implementing  the  Instrument  for  Pre-accession  Assistance  for  Rural 
Development programme (IPARD II). In the coming period, Serbia should in particular: 

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

  proceed  with  implementation  of  the  action  plan  for  acquis  alignment  in  agriculture  and 

rural development. 

As regards horizontal issues, the National Programme for Rural Development for the period 
2018-2020  was  adopted  in  July  2018.  In  October  2018,  the  government  adopted  its  action 
plan  for  transposing,  implementing  and  enforcing  the  acquis  in  agriculture  and  rural 
development.  This  action  plan  includes  a  detailed  timetable  for  the  establishment  of  the 
Integrated  Administration  and  Control  System  with  steps  underway  for  a  pilot  Land  Parcel 
Identification Project. Direct support measures will need to be brought in line with the acquis 
decoupling  from  production and linking payments  to  cross-compliance standards. The Farm 
Accountancy Data Network has been established but its sample size needs to be expanded and 
its overall capacity developed. Serbia has a farm advisory system in place.  

In  the  area  of  the  common  market  organisation,  umbrella  legislation  has  been  prepared 
aligning  towards  the  acquis  across  agricultural  markets.  Legislation  providing  further 

67 

 
 
alignment with the acquis in the wine sector was adopted and work is underway in the area of 
marketing standards for the fruit and vegetable sector.  

On  rural  development,  implementation  of  the  EU  pre-accession  programme  for  rural 
development  (IPARD  II)  continues  for  two  measures:  ‘Investments  in  physical  assets  of 
agricultural  holdings’  and  ‘Investments  in  physical  assets  concerning  processing  and 
marketing  of  agricultural  and  fishery  products’.  Entrustment  for  two  additional  measures  –
‘Farm Diversification and Business Development and Technical Assistance’ – is expected to 
be  submitted  mid-2019.  The  IPARD  Agency  should  continually  improve  its  operational 
system in order to ensure a timely use of the annual financial allocation from the EU.  

Progress  is  ongoing  in  the  area  of  quality  policy.  Legislation  in  the  area  of  agricultural 
products  and  foodstuffs  and  in  the  wine  sector  is  being  aligned  with  the  acquis,  which  will 
facilitate further policy development in these fields.  

As regards organic farming, a plan for the development of organic production, defining goals 
and  measures,  was  adopted  as  an  integral  part  of  the  National  Programme  for  Rural 
Development. However, further alignment with the acquis on organic production is needed.   

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.  Some  progress  has  been  made  in  implementing  recommendations  of  the  previous 
report,  in  particular  with  the  accreditation  of  the  reference  laboratory  for  milk  testing. 
However,  Serbia  has  not  yet  implemented  all  recommendations  of  last  year.  In  the  coming 
year, Serbia should in particular: 

  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 and retain highly competent staff; 

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

In the area of general food safety, Serbia still needs to adopt a strategy and action plan for 
full transposition of  the acquis.  Serbia  should increase the effectiveness  of  official controls, 
improve  the  risk-based  approach  at  borders  and  put  in  place  audit  of  inspection  staff. 
Integrated multiannual control plans have yet to be drafted.  

On  veterinary  policy,  annual  programmes  consisting  of  animal  health  protection  measures 
for  2018  were  adopted.  Serbia  has  yet  to  decide  on  an  acquis-harmonised  approach  to 
combating  classical  swine  fever.  The  multiannual  programme  to  eradicate  rabies  in  wildlife 
was  successfully  implemented  in  2018.  Some  steps  have  been  taken  towards  improving 
staffing of the Veterinary Inspectorate through delegation of duties. This should be followed 
up  by  further  strengthening  the  Veterinary  Directorate,  including  its  policy  departments. 
Animal welfare legislation is yet to be fully harmonised with the EU acquis. The enforcement 
of legislation on animal welfare, in particular at slaughter, needs to improve. 

Serbia adopted amendments to the laws on food safety, plant protection products, plant health 
and plant nutrition products and soil enhancers, all aiming at further aligning with the acquis. 

68 

 
 
In  relation  to  the  placing  of  food,  feed  and  animal  by-products  on  the  market,  Serbia 
adopted  the  decree  on  categorisation  and  upgrading  of  establishments,  which  is  yet  to  be 
implemented.  The  strategy  for  management  of  animal  by-products  has  yet  to  be  adopted. 
Although adopted, the national monitoring and control programme for food of animal origin 
has not been yet implemented.  

On food safety rules and specific rules for feed, the permitted level of aflatoxins in milk has 
remained five times higher than permitted by the acquis. The national reference laboratory for 
milk  testing  was  accredited  in  December  2018.  Institutional  sustainability  of  the  National 
Reference Laboratories Directorate and its adequate staffing should be ensured as a matter of 
priority.   

In the area of  phytosanitary policy, the Phytosanitary Directorate is  critically understaffed. 
Annual  programmes  of  plant  health  measures  were  adopted.  While  certain  tasks  related  to 
evaluation of plant protection products have been delegated, the related framework legislation 
has  yet  to  be  aligned  with  the  acquis.  A  legal  framework  and  a  system  for  control  of 
sustainable use of pesticides and a national action plan to reduce the impact of pesticide use 
are  not  yet  adopted.  There  was  no  progress  on  adopting  the  framework  legislation  on 
genetically modified organisms aligned with the acquis. 

6.13.  Chapter 13: Fisheries  

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

Serbia is moderately prepared in the area of fisheries. Limited progress has been made in 
the reporting period, particularly on statistics collection. Serbia has not  yet implemented the 
recommendation of the previous report. 

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  should  in  particular  start  strengthening  its  policy  formulation,  implementation,  and 
enforcement  capacities.  Structural  measures  are  not  yet  in  place  for  small-scale  or  inland 
fisheries.  Legislation  is  yet  to  be  adopted  on  market  support.  Statistical  data  collection  on 
aquaculture  for  2017  was  carried  out  in  line  with  the  acquis.  Data  collection  for  fish  and 
fishery  products  –  including  in  terms  of  methodology  –  is  largely  aligned  with  the  acquis, 
with the exception of the collection of socio-economic data, which still needs to be aligned. 
Serbia  should  implement  the  rulebook  on  catch  certification  and  bring  its  legal  framework 
into full alignment with the acquis on illegal, unreported and unregulated fishing as soon 
as a solution has been found regarding the fish catch certificate issue. 

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  has  a  good  level  of  preparation  in  this  area.  Good  progress  was  made  during  the 
reporting period, particularly in the field of rail reform, which remains a priority.  

69 

 
 
In the coming year, Serbia should in particular: 

  improve road safety by taking measures to reduce fatalities and serious injuries;  

  focus  on  implementing  rail  reform  including  market  opening,  the  network  statement, 
infrastructure management and market monitoring, as well as strengthen the capacities of 
the regulatory body for railways; 

  implement  connectivity  reform  measures,  in  particular  advance  in  intelligent  transport 
systems  (define  the  strategic  framework,  adopt  legislation,  and  improve  capacity  for 
implementation  and  enforcement); 
railway 
infrastructure  in  line  with  credible  and  costed  plans;  and  facilitate  border  crossing 
procedures for rail and road transport.  

improve  maintenance  of 

road  and 

As regards the general transport acquis, key strategic documents for the transport sector are 
in  place.  However,  there  is  a  need  to  revise  the  overall  transport  sector  strategy  and  the 
strategy for the transport of dangerous goods; strategies for air and road transport need to be 
prepared.  The  General  Transport  Master  Plan  2009-2027  should  be  updated  reflecting  new 
developments. Strategic documents should be based on option analyses and be costed.   

Serbia’s  legislation  is  fully  aligned  with  the  acquis  on  summertime  arrangements.  In  2018, 
Serbia achieved a high level of alignment with the acquis on public services obligations in the 
field of rail transport while this has yet to be realised for road transport. The methodology for 
calculating  the  compensation  and  award  of  the  public  service  contracts  should  be  updated. 
Amendments to the law on accident investigations for air, rail and waterborne transport from 
October  2018  provided  further  alignment  with  EU 
legislation  on  railway  safety. 
Administrative capacity for all modes of transport need to be further strengthened. 

On  road  transport,  Serbia  has  a  satisfactory  level  of  alignment.  In  2018,  Serbia  further 
aligned  its  legislation  on  transport  of  dangerous  goods,  training  of  professional  drivers, 
certificates  of  professional  competence,  driver’s  qualification  cards  and  working  times  of 
vehicle  crews  engaged  in  road  transport  and  tachographs.  Legislation  on  road  freight  and 
passenger  traffic  is  well  aligned  with  EU  law.  In  early  2019,  Serbia  further  increased  its 
alignment  regarding  market  access  for  goods,  passengers  and  pricing  by  adopting  new 
legislation  in  road  freight  transport  regarding  the  road  haulage  market,  goods  carriage  rates 
and criteria for access to the occupation of national and international road transport operators. 

The  previously  rising  trend  of  fatal  road  traffic  accidents  was  reversed,  with  the  number  of 
accidents falling since 2016. However, the number of road accidents with injuries increased in 
2017 before falling again in 2018. The number of road fatalities is still significantly above the 
EU  average.  Further  efforts  are  needed  to  improve  Serbia’s  road  safety  records  by 
implementing and enforcing legislation related to the safety of vehicles and to the behaviour 
of road users, by proper road design and maintenance, including the removal of blackspots, as 
well as by education and awareness raising. The number of roadside checks slightly declined 
in  2018.  Strengthening  the  enforcement  capacity  of  inspection  officers  and  implementing 
penalties  for  infringements  of  the  Agreement  concerning  the  Work  of  Crews  of  Vehicles 
Engaged  in  International  Road  Transport  (AETR)  remain  a  priority.  In  May  2018,  Serbia 
adopted provisions on the framework for the deployment of intelligent transport systems. An 
overall strategy on this is yet to be adopted and capacities need to be strengthened.   

Facilitating border-crossing procedures and improving the road maintenance system continue 
to  be  priorities,  including  the  adoption  of  a  multiannual  maintenance  plan  for  the  core 
network.  Performance-based  maintenance 
and 
responsibilities in the area of road maintenance should be further clarified. The issue of road 
charges potentially discriminating against foreign operators needs to be addressed. 

should  be 

contracting 

continued 

70 

 
 
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.  Work  on 
ensuring 
railway 
service/infrastructure  operators  is  ongoing.  Serbia  regularly  updates  its  railway  network 
statement. The methodology for track access charges needs to be updated. Further efforts are 
needed  to  ensure  full  compliance  with  both  the  acquis  and  Serbia’s  negotiating  framework. 
Serbia  continues  to  make  good  progress  on  rail  market  opening  with  five  private  freight 
companies operating on the market in early 2019 but further efforts are required to ensure full 
opening  of  the  rail  market,  including  on  the  issuance  of  train  drivers  licenses  and  safety 
certificates for railway undertakings and mutual recognition of the rolling stock. 

sustainability  of 

independent 

In  May  2018,  Serbia  adopted  new  laws  on  railways,  railway  safety  and  railway 
interoperability  achieving  a  high  level  of  alignment  with  EU  legislation  on  establishing  a 
single European railway area. Further improvements regarding training capacity, examination 
methods  and  licensing  procedures  are  still  pending  as  is  the  publication  of  the  remaining 
technical  specifications  for  interoperability.  Sustainable  and  costed  railway  infrastructure 
maintenance  plans  need  to  be  developed.  The  Railway  Directorate  in  its  function  as  a 
regulatory  body  and  safety  authority  needs  to  be  further  strengthened  and  its  decisions 
implemented.   

Legislation on maritime transport is well aligned with the acquis. Serbia’s law on maritime 
navigation  complies  with  the  acquis  on  vessel  traffic  monitoring  and  information  systems. 
Serbia should continue implementing provisions of the international conventions.   

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. It 
was  upgraded  by  installing  navigational  aid  systems  along  the  Danube  River.  An  authority 
responsible for inland waterways has been set up within the line ministry. Serbia continues to 
actively  participate  in  the  EU  strategy  for  the  development  of  the  Danube  Region.  It  has 
signed the main international agreements on inland waterways and bilateral agreements with 
neighbouring  countries.  Serbia  needs  to  strengthen  its  administrative  capacity  and  make 
improvements to the river ports network statement. 

Serbia  has  a  good  level  of  alignment  with  the  acquis  on  aviation.  It  has  progressed 
considerably  with  implementing  the  first  and  part  of  the  second  transitional  phase  of  the 
European  Common  Aviation  Agreement.  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 being further aligned. Lifting the suspension of articles on the 
licensing of air carriers and engaging on the normalisation of the lower airspace regime over 
Kosovo remain important priorities. 

There is no specific legislation on combined transport. This mode should be covered by the 
overall  transport  strategy  expected  to  be  adopted  in  Q4  2019.  Stimulation  measures  to 
promote combined transport were introduced in 2018.  

6.15.  Chapter 15: Energy  

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

Serbia  is  moderately  prepared  in  this  field.  Limited  progress  was  made  in  a  number  of 
areas.  However,  as  regards  energy  market  reforms  in  particular,  the  shortcomings  have  not 
been properly addressed. 

71 

 
 
In the coming year, Serbia should in particular: 

  fully unbundle and certify Srbijagas and Yugorosgaz and develop competition in the gas 
market  as  well  as  implement  the  conditions  requested  by  the  Energy  Community 
Secretariat on the exemption of Gastrans, in particular the measures that increase liquidity 
on the gas market and ensure third-party access to parts of the new capacity; 

  fully implement the connectivity reform measures as committed to under the Connectivity 

Agenda;  

  strengthen  human  resources  capacity  and  promote  investment  in  energy  efficiency 
including  through  establishing  a  sustainable  financing  system  and  initiate  reforms  to 
introduce  cost-reflective  electricity  tariffs  fully  taking  into  account  investment  needs, 
climate change commitments and social security implications as well as reform electricity 
price regulation accordingly.  

Serbia has a high level of alignment with the EU acquis on security of supply including on 
emergency  oil  stocks.  In  2018,  Serbia  adopted  a  long-term  plan  to  establish  and  maintain 
emergency  oil  stocks.  Oil  stocks  increased  slightly  compared  to  the  previous  year, 
corresponding, at the beginning of 2019, to 19 days of average daily consumption. However, 
the lack of gas market reforms could affect security of supply in the gas sector. In September 
2018,  the  Serbian  parliament  approved  the  removal  of  the  destination  clause  from  the 
intergovernmental  agreement  on  gas  supply  between  Serbia  and  Russia  in  line  with  EU 
legislation. The clause stipulated that the gas supplied under the agreement was intended for 
use  in  the  Serbian  market  only,  thereby  restricting  the  territory  to  which  the  Serbian  buyer 
could  sell  the  gas.  In  December  2018,  the  ministry  adopted  a  preventive  gas  action  and 
emergency plan using elements of the new EU regulation on the security of gas supply. Serbia 
continued  with  preparatory  activities  to  upgrade  the  Trans-Balkan  electricity  corridor. 
Preparations  for  building  the  gas  interconnector  with  Bulgaria  continued.  Activities  need  to 
accelerate in 2019 in order to achieve the commissioning scheduled for May 2022.  

In October 2018, the energy regulator AERS granted an exemption for the Serbian part of the 
‘Turk Stream 2’ (Gastrans) project from rules of the third energy package. In February 2019, 
the  Energy  Community  Secretariat  set  out  conditions  to  ensure  the  compliance  of  this 
exemption with the third energy package, and in particular that a larger share of the pipeline 
capacity  remain  available  for  the  market  in  Serbia.  In  March  2019,  the  regulator  issued  the 
final exemption decision which only partly reflects the conditions set and thus does not ensure 
compliance with the third energy package.  

The  energy  agreement  between  Serbia  and  Kosovo  must  be  implemented  without  further 
delay in order to avoid this longstanding dispute from having further consequences for energy 
stability  and  security  in  Serbia,  Kosovo  and  countries  across  Europe. Following  the 
completion of the registration of Elektrosever, Serbia needs to file for the licensing process in 
Kosovo as a matter of urgency. Serbia needs to set up regionally coordinated auctions with its 
Western Balkan neighbours.  

As  regards  the  internal  energy  market,  Serbia’s  primary  legislation  is  compliant  with  the 
third energy package. The wholesale electricity market and day-ahead markets are functional 
and  trading  volumes  on  the  organised  power  exchange  market  increased  in  2018.  The 
electricity balancing market is also functional, although it has only one provider of balancing 
services. Functional unbundling of the electricity transmission system operator EMS needs to 
be completed in line with the Energy Community Treaty requirements.  

72 

 
 
The  unbundling  of  EPS’,  Serbia’s  state  owned  electricity  utility’s,  distribution  system 
operator  has  been  formally  completed.  However,  concerns  related  to  the  effective 
implementation  of  functional  unbundling  related  to  independent  decision-making  remain. 
Serbia  continues  to  delay  the  unbundling  of  Srbijagas.  There  is  no  third-party  access  to  the 
gas  system  infrastructure  of  Srbijagas  and  Yugorosgaz.  The  unbundling  and  certification  of 
Yugorosgaz is not compliant with the requirements of the acquis as ruled by the Ministerial 
Council of the Energy Community.   

In  the  electricity  and  gas  sectors,  supply  prices  are  deregulated  for  all  customers,  but 
households and small customers have the right to be supplied under regulated prices. The non-
regulated market accounted  for  44.4% of total end-user electricity  consumption and 73% of 
total  end-user  gas  consumption  in  2017.  Some  3.57%  of  delivered  electricity  quantities  and 
0.9% of gas quantities were subject to supplier switching in 2017. There is no timeline for the 
phase-out  of  cross-subsidies  between  network  and  supply  activities  of  Srbijagas.  The 
recommendations of the energy regulator to adjust electricity tariffs should be implemented. 
Tariffs  also  need  to  reflect  the  level  of  investment  and  maintenance  in  the  electricity  sector 
that is needed for Serbia’s energy and climate reforms.  

The  Serbian  Energy  Agency  is  legally  and  functionally  independent  from  any  other  public 
entity; it has yet to establish a track record for enforcing compliance of regulated companies 
with Serbian  and Energy Community law in all cases.  Staff levels  should increase from the 
current 41 staff members to 56 by 2020, as foreseen by the IPA technical assistance project, 
so  the  Agency  can  implement  all  regulatory  responsibilities  under  the  third  energy  package 
and the new acquis upfront.  

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.  

The  Renewable  Energy  Directive  is  partially  transposed  into  Serbia’s  law  on  energy. 
Adoption of the implementing legislation on bio-fuels is still pending, as well as actual use in 
the transport sector. Serbia’s national renewables target for 2020 is set at 27% of gross final 
consumption  of  energy.  The  latest  data  for  2017  show  renewable  sources  accounted  for  a 
share  of  20.6%  of  energy  produced,  which  is  well  below  the  23.1%  trajectory  of  Serbia’s 
national renewable energy action plan. Wind power projects of 475 MW are currently in the 
construction phase. Serbia needs to intensify its efforts to switch from feed-in tariffs to feed-in 
premium support schemes, as well as to ensure transparent procedures for the connection of 
renewable  energy  producers  to  the  grid  in  the  framework  of  an  auction-based  programme. 
Any further development of hydropower should be in line with EU environmental legislation.  

Serbia  achieved  some  progress  in  energy  efficiency  through  adopting  secondary  legislation 
that  implements  rules  on  labelling,  amendments  to  the  Law  on  efficient  use  of  energy 
improving  energy  audits  and  energy  management,  and  the  implementation  of  eco-design 
requirements and secondary legislation implementing this law. Further secondary legislation 
is necessary to achieve full alignment, in particular with the Directive on Energy Performance 
of Buildings.  In  October 2018,  Serbia submitted  the second  annual  report under the Energy 
Efficiency Directive. So far, there has been negligible implementation of consumption-based 
metering and billing in district heating, except for new buildings. Human resource capacity in 
the Ministry of Mining and Energy’s department for energy efficiency slightly increased but 
remains  insufficient.  A  new  fee  on  energy  efficiency  was  introduced  in  December  2018;  it 
should  provide  urgently  needed  funding  for  energy  efficiency  projects.  A  more  strategic 
approach and better intergovernmental coordination is required to fully implement the acquis 
and to establish a sustainable financing system.  

73 

 
 
On  nuclear  energy,  nuclear  security  and  radiation  protection,  Serbia’s  legislation  is 
partially in  line with  the  acquis. A new  Law on  radiation  protection and  nuclear safety was 
adopted in 2019. The Convention on Nuclear Safety and the Joint Convention on the Safety of 
Spent  Fuel  Management  and  on  the  Safety  of  Radioactive  Waste  Management  entered  into 
force  in  2018.  Serbia  adopted  in  2018  a  protocol  with  the  International  Atomic  Energy 
Agency  related  to  the  Treaty  on  the  Non-proliferation  of  Nuclear  Weapons.  Serbia’s  two 
nuclear research reactors and one abandoned uranium mine are not licensed. An action plan 
has  yet  to  be  drafted  for  decommissioning  the  research  reactors.  The  licence  for  the  waste 
storage  facility  H3  in  Serbia’s  nuclear  site  in  Vinča  was  renewed  in  2018.  Activities  for 
improving the radiological and security situation at the Vinča site have started. The Radiation 
Protection  and  Nuclear  Safety  Agency  is  not  sufficiently  staffed  to  carry  out  its  duties.  By 
February 2019, the number of permanent staff had further decreased to 21. Budget and salary 
levels  appear  to  be  insufficient  to  ensure  the  Agency’s  proper  functioning  including 
inspectorate functions.  

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  on 
legislative alignment, while the reform of the tax administration has slowly moved forward. 
Last year’s recommendations were not implemented and remain valid. 

In the coming year, Serbia should in particular: 

  remove discrimination in the application of excise duties on imported spirits;  

  step  up  the  implementation  of  the  tax  administration  reform  programme  in  order  to 
streamline  the  tax  administration’s  activities  while  ensuring  sufficient  human  and  IT 
resources for this purpose, improve tax collection and combat the informal economy; 

  ensure that by the end of 2019 it signs and ratifies the OECD Multilateral Convention on 

mutual administrative assistance in tax matters. 

Legislation on indirect taxation was adopted in April 2018 and entered into force in January 
2019, introducing value-added tax (VAT) reimbursement to non-established taxable persons. 
Based  on  the  rulebook  on  the  form,  content  and  method  of  keeping  VAT  records,  a  new 
system for keeping records was introduced in July 2018. There has been no further legislative 
alignment  with  the  acquis  in  the  area  of  direct  taxation.  Despite  some  limited  progress, 
public  consultations  carried  out  before  the  adoption  of  tax  legislation  have  again  been 
insufficient,  not  providing  the  business  associations  with  enough  time  to  comment  and  thus 
failing to strengthen predictability.  

As  regards  administrative  cooperation  and  mutual  assistance,  in  June  2018  Serbia 
deposited its instrument of ratification for the Multilateral Convention to implement tax treaty 
related  measures  to  prevent  base  erosion  and  profit  shifting,  thus  underlining  its  strong 
commitment  to  preventing  the  abuse  of  tax  treaties  and  base  erosion  and  profit  shifting 
(BEPS) by multinational companies. The Convention entered into force as of 1 October 2018. 
Serbia has double taxation agreements with 27 EU member States.  Serbia still needs to sign 
and  ratify  the  OECD  Multilateral  Convention  on  Mutual  Administrative  Assistance  on  Tax 
Matters (MAC) before the end of 2019. 

74 

 
 
On operational capacity and computerisation of the tax administration, electronic filing of 
all tax returns has been finalised. Sustained efforts to fight tax evasion, notably on VAT and 
excise duties, have continued and resulted in increased tax revenues. The tax administration 
still  lacks  administrative  capacity  and  the  recruitment  of  new  staff  in  2018  only  partly 
addressed this issue. Implementation of the 2015-2020 general programme for transformation 
of the tax administration, and revised 2018-2023 action plan for its implementation has started 
with core and non-core activities being separated. Progress remains slow and the next steps – 
the reduction of field offices and the improvement of risk management  – should be stepped 
up.  A  number  of  training  sessions,  notably  within  the  framework  of  the  Fiscalis  2020  EU 
programme,  have  been  organised  in  2018.  Further  efforts  are  still  needed  to  improve  the 
predictability  of  tax  decisions  and  services  to  tax  payers.  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.   

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  in 
economic policy coordination, in particular in designing and implementing structural reforms. 
However,  the  budgetary  procedure  has  been  weak.  Not  all  recommendations  of  the  2018 
report were fully implemented. In the coming year, Serbia should thus take further measures 
to: 

  improve the transparency of the budgetary process by complying with the budget calendar 

and ensuring a meaningful parliamentary debate on budget issues; 

  strengthen  fiscal  rules  by  making  them  more  binding  and  capable  of  anchoring  fiscal 

policy.  

On  monetary  policy,  the  legal  framework  for  the  National  Bank  of  Serbia  (NBS)  is  well 
developed;  however,  further  efforts  are  needed  to  comprehensively  ensure  the  NBS 
independence, in line with the EU acquis. 

With  regard  to  economic  policy,  further  alignment  with  the  Directive  on  requirements  for 
budgetary frameworks is needed. The overall institutional environment related to the budget 
process  is  still  challenging.  The  budget  calendar  is  not  fully  complied  with,  there  was  no 
meaningful  parliamentary  debate on the 2019 budget,  and the authorities did  not submit the 
final annual budget execution report to the parliament. The alignment of fiscal reporting with 
the  European  System  of  National  and  Regional  Accounts  (ESA  2010)  is  incomplete  and 
progress in improving it remains slow. The monthly budget execution reports did not provide 
information  about  large  one-off  budgetary  items.  Programme  budgeting  needs  to  be 
strengthened  and  administrative  and  IT  capacity  reinforced.  Fiscal  rules  are  weak,  non-
binding  and  unable  to  anchor  fiscal  policy.  Although  the  authorities  recognise  the  need  to 
strengthen  them,  work  on  that  has  largely  stalled.  The  Fiscal  Council  is  a  respected  and 
independent institution that actively participates in debates over economic and fiscal policy.  

The  2019-2021  Economic  Reform  Programme  was  submitted  on  time.  Its  analytical 
diagnostics  are  good.  The  structural  reform  framework  is  coherent  and  sufficiently 
comprehensive.  However,  as  some  reforms  continue  to  lack  ambition,  further  efforts  are 
needed to improve the capacity for economic planning, inter-ministerial coordination, external 
consultations and timely implementation. 

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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.  The  transmission  of  statistical  data  to 
Eurostat has continued to improve. The Statistical Office needs to retain highly qualified staff 
and recruit additional staff to  meet  the obligations of the  acquis. Parts of the Commission’s 
recommendations from 2018 have not been implemented and remain valid. 

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 
Statistics  Code  of  Practice.  The  professional  independence  of  the  Statistical  Office  of  the 
Republic  of  Serbia  (SORS)  needs  to  be  increased.  The  law  on  enhancing  the  professional 
independence of the SORS has not been adopted and has been further delayed for a year. 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 expanded. The 
main classifications (NACE Rev. 2, ISCO-08) are aligned with the EU acquis. Registers are 
updated regularly. 

Concerning territorial classification, Serbia has started compiling regional ESA 2010 data. 
Estimates  of  regional  GDP  at  NUTS  2  and  3  levels  have  been  published  by  the  SORS  and 
data transmitted to Eurostat.   

Regarding  macroeconomic  statistics,  the  SORS  continued  to  compile  quarterly  and  annual 
GDP at current and constant prices. Quarterly sector accounts are not yet compiled. Serbia has 
further  advanced  work  on  the  compilation  of  supply-use  and  input-output  tables,  however, 
regular  production  of  these  tables  needs  to  be  ensured.  The  SORS  transmits  good-quality 
monthly data on international trade in goods in the required breakdown by mandatory partner 
country.  The  NBS  compiles  the  monthly  and  quarterly  balance  of  payments,  as  well  as 
quarterly international investment position data, in compliance with the Balance of Payments 
and  International  Investment  Position  Manual  (BPM6).  It  transmits  annual  data  on 
international trade in services in accordance with the Balance of Payments Vademecum. The 
SORS continues to provide the Commission with notification tables for the excessive deficit 
procedure (EDP) that are jointly prepared with the Serbian National Bank and the Ministry of 
Finance.  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 but methods for transmitting data have been established. Most of the data on internal 
tourism and some data on national tourism is collected. For transport, road and railway data 
are  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 

76 

 
 
development statistics. The Community innovation survey is conducted every two years and 
the  data  are  sent  to  Eurostat.  The  annual  surveys  on  information  and  communication 
technology fully meet EU standards and are carried out regularly for households/individuals 
and businesses.  

Serbia  partially  complies  with  the  acquis  on  social  statistics.  The  survey  on  income  and 
living  conditions  is  carried  out  regularly  in  compliance  with  EU  standards  and  data  sent  to 
Eurostat. Social protection, labour market and labour cost statistics are in line with the acquis. 
Serbia  carries  out  the  labour  force  survey  (LFS)  according  to  the  regulations  and  timely 
transmits  good  quality  data  to  Eurostat,  as  well  as  provide  timely  and  good  quality  LFS 
quality  reports  (annual  and  quarterly).  The  LFS  data  for  Serbia  have  been  disseminated 
regularly since 2018. The next structure of earnings survey is planned for 2019 and the SORS 
is exploring the possibility of using administrative sources which would further improve the 
harmonisation  with  the  European  statistical  system.  Work  to  produce  statistics  on  job 
vacancies is only progressing slowly. Public health statistics in line with the acquis are not yet 
fully available (causes of death statistics are fully compliant, non-expenditure health care data 
are highly compliant; expenditure health care statistics as well as European health  interview 
survey  data  are  missing).  Statistics  on  external  migration  and  asylum  are  collected  by  the 
Ministry of Interior, and are only partly harmonised with the relevant EU requirements – the 
first  phase  of  law  harmonisation  has  been  completed,  however  further  harmonisation  is 
needed. Serbia progressed in preparing the methodology and the technical specifications for 
the  next  population  and  housing  census  in  2020/2021:  the  management  structure  for  the 
census has been established and the detailed plan of activities has been drawn up. The SORS 
has  also  intensified  activities  related  to  the  2019  pilot  census  project  with  two  new  data 
techniques to be tested.   

Regarding  agricultural  statistics,  Serbia  is  highly  compliant  in  producing  crop  statistics, 
livestock meat statistics as well as milk and milk products statistics. Serbia has continued to 
submit aquaculture data to Eurostat and is fully compliant with EU requirements in fisheries 
statistics. Orchard survey data was sent to Eurostat in September 2018. Further efforts should 
be  made  in  developing  poultry  statistics  and  continuing  the  development  of  a  vineyard 
register. 

The annual and monthly energy statistics are produced for all relevant energy sources: coal, 
electricity  and  gas  data  are  regularly  transmitted.  Waste  and  water  statistics  have  been 
collected and broadened, and data on waste treatment infrastructure are being submitted as of 
June 2018. Some environmental accounts data 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  legislation  with  the  acquis,  mainly  in  the  area  of  working 
conditions. Regarding last year’s Commission recommendations, budget allocations for active 
labour  market  policies  slightly  increased  in  2018  albeit  with  still  very  limited  coverage  of 
training measures for the unemployed. 

In the coming period, Serbia should in particular:  

  ensure adequate financial and institutional resources for employment and social policies to 
more systematically target the young, women and long-term unemployed, and improve the 
adequacy of social benefits for people below the poverty threshold; 

  significantly strengthen the bipartite and tripartite social dialogue at all levels; 

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  ensure consistent implementation of the  labour and social  welfare legislation throughout 

the country. 

In the field of labour law, the law of 2014 is only partially aligned with the acquis. The Law 
on streamlined employment for seasonal labour in specific economic activities, which aims to 
regularise  for  the  first  time  seasonal  work  in  agriculture,  was  adopted  in  June  2018  and 
entered  into  force  in  January  2019.  The  Law  on  peaceful  settlement  of  labour  disputes  was 
amended  in  June  2018  to  extend  its  coverage  and  strengthen  the  role  of  the  related  agency. 
Several draft laws (amending law on strike, new law on private employment agencies) have 
yet to be adopted. The share of undeclared work remains at around 20% and requires a more 
comprehensive  approach,  also  for  non-agricultural  employment.  Labour  inspections  have 
focused on tackling undeclared work, but the results do not have an impact yet on the level of 
this type of work. 

In  the  area  of  health  and  safety  at  work,  a  strategy  and  action  plan  for  2018-2022  were 
adopted  in  December  2018.  A  number  of  specific  pieces  of  secondary  legislation  –  on 
minimum  safety  and  health  requirements  for  the  workplace,  requirements  related  to  use  of 
work equipment as well as personal protective equipment – were adopted in December 2018 
and January 2019. In 2018, the number of fatal injuries stood at 53, the highest number since 
2016, with the majority of fatalities occurring in the construction industry; 30% of the victims 
were non-registered workers. 

Social  dialogue  remains  weak,  in  particular  regarding  the  involvement  of  social  partners  in 
policy developments  relevant to  them. Adjusting the legal framework  and strengthening the 
capacity  of  social  partners  are  still  needed  to  foster  the  use  of  collective  bargaining.  The 
administrative  budget  of  the  Economic  and  Social  Council  further  increased  in  2018.  Some 
progress  was  made  in  tripartite  dialogue,  as  consultations  on  the  Economic  and  Reform 
Programme and on the draft action plan for Chapter 19 took place within the Economic and 
Social Council. In the second half of 2018, the minimum hourly wage was increased by 8.6% 
by means of a government decision, as consensus could not be reached within the Economic 
and Social Council.   

On employment policy, labour market indicators slightly improved in 2018. The employment 
rate for 15-64 year olds increased from 57.3% in 2017 to 58.8% in 2018. Unemployment went 
down from 14.1% in 2017 to 13.3% in 2018, while the activity rate increased from 66.7% in 
2017  to  67.8%  in  2018.  Youth  unemployment  decreased  from  31.9%  in  2017  to  29.7%  in 
2018 but remains high. Long-term unemployed people, redundant workers, women and young 
people face several challenges integrating into the labour market. Access to the labour market 
remains  particularly  difficult  for  the  Roma  and  persons  with  disabilities. Budget  allocations 
for active labour market policies slightly increased in 2018, but they are too low to cover the 
number  of  jobseekers.  Only  about  one  fourth  of  registered  unemployed  benefit  from  a 
measure,  and  most  measures  are  one-off  activities  such  as  job-search  training  and  job  fairs. 
The 2019 national employment action plan was adopted in late December 2018. The national 
employment service is participating in the experimentation of a bench learning exercise based 
on the experience developed by the European Network of Public Employment Services. The 
release  of  the  first  report  on  the  implementation  of  the  employment  and  social  reform 
programme is still pending.  

There were no developments as regards preparations for the European Social Fund.  

In  the  area  of  social  inclusion  and  protection,  in  2017,  7.2%  of  the  population  was 
considered  to  be  living  in  absolute  poverty  (7.3%  in  2016).  About  half  a  million  people  in 
Serbia  are  not  able  to  meet  basic  subsistence  needs.  As  in  previous  years,  there  is  more 

78 

 
 
poverty  in  rural  areas  than  in  urban  ones  (10.5%  vs.  4.9%),  while  the  regions  of  south  and 
eastern  Serbia  are  especially  hit  with  poverty.  Inequality  in  income  distribution  in  Serbia  is 
the highest among all European countries conducting surveys on income and living conditions 
(SILC), standing at 37.8% of Gini coefficient in 2017. The at-risk-of-poverty  rate is 25.7%, 
implying that some 1.8 million people are in poverty. A new strategy for social protection in 
Serbia for 2019-2025 and amendments to the Law on social welfare are being prepared. 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. No progress was made in local-level social 
care  services  or  in  the  de-institutionalisation  process.  The  system  of  earmarked  transfers 
introduced  in  2016  by  the  social  welfare  law  is  still  not  implemented  systematically  and 
transparently.  Budgetary  allocations  are  now  available  annually,  but  with  no  multi-annual 
commitments that would allow for the continuity of service provision at local level and for an 
evidence-based system of priority setting and monitoring of results. Amendments to the Law 
on pension and disability insurance were adopted in September 2018.  

In  the  field  of  non-discrimination  in  employment  and  social  policy,  the  authorities  still 
need to follow up on the recommendations of the Commissioner for the Protection of Equality 
on  developing  an  anti-discrimination  policy  for  employers  in  Serbia  (‘Equality  Code  of 
Practice’).  

In  the  area  of  equal  opportunities  between  women  and  men  in  employment  and  social 
policy, the employment rate for men (15-64 years) is 13.6 percentage points higher and their 
activity rate 14.5 percentage points higher than those for women. Women’s inactivity reflects 
unpaid  work in  the household,  including taking care of children, sick and/or elderly people, 
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 base for social insurance contributions, 
which discourages formal part-time work. The highest number of employed women is found 
among those who are highly educated.  

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  extending  support  measures  to  SMEs.  However,  last  year’s  recommendations  were  not 
implemented and remain valid. 

In the coming year, Serbia should in particular: 

  develop  a  comprehensive  industrial  policy  based  on  EU  principles  and  on  using  the 

findings of the smart specialisation exercise; 

  make efforts to improve the predictability of the business environment, with the emphasis 

on involving business more directly in the process of regulation. 

The main tool of industrial policy remains the strategy and policy for industrial development 
2011-2020 adopted in  June 2011. This  horizontal and cross-sectorial  strategy  has been only 
partially  implemented,  focusing  on  restructuring  and  regional  development  rather  than  on 
competitiveness. The work on the new industrial policy is at initial stage.  

Concerning  enterprise  policy,  the  strategy  to  support  the  development  of  SMEs, 
entrepreneurship  and  competitiveness  2015-2020  is  being  implemented  and  remains  a 

79 

 
 
relevant  policy document  in  this area. A mid-term  evaluation  of the strategy took  place this 
year, but the findings are not yet public and discussed. The findings of this evaluation should 
be used in the preparation of a new strategy. 

Serbia  needs  to  increase  predictability  in  the  business  and  administrative  environment, 
notably  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. Adoption of the Law on fees for the use of public goods in December 2018 has to a 
large  extent  addressed  the  long-time  issue  of  parafiscal  charges  by  cataloguing  all  charges 
under  one  law  and  abolishing  some  minor  charges.  However,  the  law  also  introduced  some 
new charges, the application of which remains unclear. The regulatory impact assessment and 
the  SME  test  need  to  be  systematically  performed  when  formulating  laws  and  secondary 
legislation. In general, businesses need to be better informed about regulatory changes and be 
actively invited to provide input in the process leading up to this regulation.  

limits 

the  modernisation  potential 

On enterprise and industrial instruments, Serbia continues to use budgetary subsidies for 
newly-created  jobs  as  an  incentive  for  foreign  direct  investments.  The  lack  of  specialised 
business-related  services 
in  domestic  enterprises. 
Favourable  loans  and  guarantees  for  SMEs  are  provided  by  the  Ministry  of  Economy  and 
Development  Fund  through  joint  programmes  with  commercial  banks,  including  through 
COSME  and  IPA.  New  financial  instruments  need  to  be  developed  to  better  respond  to  the 
needs of companies, particularly the most innovative ones. Payment discipline continues to be 
weak.  In  response,  Serbia  should  speed  up  alignment  of  its  rules  on  payments,  indemnity 
interest rates, expedited recovery procedures and compensation with the EU Directive in this 
area.   

In  sectoral  policies,  the  current  support  for  investment  prioritises  manufacturing.  The  new 
industrial  strategy  should  take  into  account  the  findings  of  the  smart  specialisation  pilot 
project and decide whether some sectors merit more support than others.  

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 2018 recommendation on the gas interconnector with Bulgaria. 

In the coming year, Serbia should in particular:  

  revise  the  transport  strategy  in  line  with  EU  guidelines  for  the  development  of 

trans-European transport networks; 

  strengthen  administrative  capacities  for  transposing,  implementing  and  enforcing  the 

Trans-European networks acquis; 

  accelerate  preparations  for  the  construction  of  the  gas  interconnector  with  Bulgaria 

(design, technical documentation, tender documents). 

On  transport  networks,  Serbia  remained  an  active  participant  in  the  Western  Balkan  6 
connectivity  agenda,  and  has  further  progressed  on  implementing  the  connectivity  reform 
measures.  Serbia  continues  to  align  its  legislation  on  interoperability.  Full  alignment  with 
technical  specifications  for  interoperability  is  still  pending.  Serbia  must  ensure  that  its 
transport  network  projects  including  the  railway  projects  on  the  Belgrade-Budapest  and 
Belgrade-Bar  routes  are  implemented  in  line  with  the  TEN-T  regulatory  framework.  Future 
investments that are made in infrastructure need to fully comply with EU standards on public 

80 

 
 
procurement, State aid and environmental impact assessments. Projects should be channelled 
through  a  single  project  pipeline,  confirming  the  strategic  orientation  towards  the 
trans-European  networks.  Serbia  continued  to  improve  its  infrastructure  for  navigation  in 
waterways in 2018, also utilising Connecting Europe Facility funds.  

The  agreement  on  establishing  the  seat  of  the  Transport  Community  Treaty  Secretariat  was 
adopted in February 2019. Serbia should now provide further support to ensure the conditions 
are in place for it to take up operations swiftly. Implementation of the railway infrastructure 
programme  commenced.  Adoption  of  an  updated  transport  strategy  is  still  pending. 
Construction  of  adequate  infrastructure  on  the  railway  border-crossing  between  Serbia  and 
North  Macedonia  should  be  accelerated.  On  road  infrastructure,  works  to  finalise  the 
upgrading  of  the  Orient  East-Med  corridor  continued,  albeit  with  set-backs.  While  it  was 
formally  announced  in  September  2018  that  works  would  begin  on  the  Belgrade  bypass, 
financial closure is still pending and project documentation is still being prepared. In view of 
the deadlines for completing the core and comprehensive networks in the EU – 2030 and 2050 
respectively  –  Serbia  should  harmonise  its  plans  and  prioritise  investments  in  infrastructure 
accordingly.  

trans-European  energy  networks,  administrative  capacities 

On 
transposition, 
implementation  and enforcement  of the  acquis remain insufficient  and need to  be improved 
and  energy  networks  need  to  be  upgraded  in  line  with  EU  legislation  on  trans-European 
networks.  Preparations  continue  to  upgrade  the  Trans-Balkan  electricity  corridor,  the  most 
advanced part being section 2 between Kragujevac and Kraljevo. Some progress was made in 
preparing the construction of a gas interconnector between Serbia and Bulgaria regarding land 
expropriation,  a  geotechnical  survey  and  contracting  for  design;  however,  activities  need  to 
accelerate. 

for 

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  has  been  made  in  implementing  last  year’s  recommendations  with  the 
adoption of the action plan for meeting the EU cohesion policy requirements.  

In  the  coming  year,  Serbia  should  implement  the  pending  recommendations  from  2018,  in 
particular:  

  start  implementing  the  adopted  action  plan  in  order  to  meet  the  requirements  of  the  EU 

cohesion policy;  

  ensure  adequate  capacity  to  implement  indirect  management  programmes  under  EU 
pre-accession assistance and guarantee that the key positions in the structures are filled on 
a permanent basis. 

Some  preparatory  work  was  done  to  introduce  the  legislative  framework  for  EU  cohesion 
policy into the national system, which is expected to be concluded by 2020. The transposition 
of  key  legislation  under  other  chapters  (e.g.  EU  law  on  environmental  impact  assessment, 
anti-discrimination legislation, public procurement, and State aid control) is a prerequisite for 
using  European  structural  and  investment  funds.  Multi-annual  budget  planning  is  regulated 
through  the  Law  on  the  budget  system.  The  credibility  of  the  medium-term  budgetary 
framework,  which  is  set  out  in  the  fiscal  strategy,  is  hampered  because  it  does  not  include 
financial projections at the sector strategy or programme levels. National co-financing for EU 

81 

 
 
programmes  is  ensured  at  project  level  but  a  systematic  approach  to  ensure  national  multi-
annual  co-financing  of  cohesion  programmes  needs  to  be  developed.  A  comprehensive 
legislative framework for cohesion policy has yet to be adopted. 

The institutional framework for the management of the EU’s Instrument for Pre-accession 
Assistance  (IPA)  has  been  established.  However,  the  implementation  capacities  need  to  be 
further tested regarding the contracting and  management of  IPA programmes under indirect 
management. The institutional framework for cohesion policy has not been decided yet. 

Weaknesses in administrative capacity in key institutions managing EU funds still need to 
be  addressed.  A  staff  retention  policy  needs  to  be  developed  and  implemented  in  order  to 
reduce  staff  turnover  and  to  retain  experienced  staff  in  the  indirect  management  structures. 
Key positions in the indirect management structures need to be filled on a permanent basis as 
constant changes undermine the capacities to manage EU funds.  

Capacity  building  activities  for  managing  EU  pre-accession  funds  and  for  introducing 
cohesion  policy  have  continued.  The  National  Academy  of  Public  Administration  became 
operational in March 2018. Its training courses include programmes on ‘Management of EU 
financial assistance’ and ‘EU cohesion policy’. By the end of 2018, a total of 160 participants 
from national and sub-national level attended the EU cohesion policy programme. 

Some  progress  has  been  made  in  programming  with  the  progressive  introduction  of  the 
sectoral approach under IPA. However, there is a proliferation of strategies in some sectors, 
which need to be consolidated, costed and properly linked to budget planning. To overcome 
this problem, the Law on planning system was adopted by the parliament in April 2018. The 
accompanying secondary legislation still needs to be developed and adopted. In view of the 
need  to  allocate  resources  efficiently  and  build  sector  pipelines  for  future  structural  funds 
management, Serbia still needs to develop a single mechanism for prioritising all investments 
regardless  of  the  source  of  financing,  in  accordance  with  the  public  financial  management 
reform programme.  

On monitoring and evaluation, the monitoring committees under indirect management have 
been set up and meet regularly. The evaluation plan for indirect management of IPA funds has 
been adopted but implementation has not started yet. A contract for developing a management 
and information system for IPA is being implemented. 

On financial management, control and audit, the national systems were further developed 
to comply with the requirements for indirect management of IPA funds. The capacities of the 
Audit Authority have been further 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,  the  more  so  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 as the action plan for the strategy on scientific and technological development was 
adopted, but last year’s recommendation has not fully been addressed.  

In the coming period, Serbia should in particular: 

  increase the national funding for research; 

  stimulate  more  intense  cooperation  between  industry  and  academia,  in  line  with  the 

national research strategy. 

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On research and innovation policy, the main priorities of the European Research Area are 
incorporated in Serbia’s strategy on scientific and technological development. Some progress 
in implementing the strategy was made with the adoption of the action plan in July 2018. A 
new  funding  mechanism,  the  Science  Fund,  is  to  be  established,  introducing  a  more 
competitive  approach  into  the  national  system.  National  open  science  and  open  access 
initiatives are well underway. 

Serbia continues to be active and successful in Horizon 2020 as well as in EUREKA, COST 
and  the  NATO  science  and  peace  for  security  programmes.  However,  the  national  level  of 
investment  in  research  remains  low  at  0.93  %  of  GDP  with  only  one  third  of  this  amount 
coming from the private sector.  

On measures for the Innovation Union, the Serbian Innovation Fund continues to be active 
with  increased  budget  contributions  from  the  Ministry  of  Education,  Science  and 
Technological  Development.  As  the  private  sector  continues  increasing  its  investment  in 
research,  more  decisive  steps  are  needed  from  the  public  sector  to  support  cooperation 
this  regard,  Serbia  should  follow  up  on 
between  businesses  and  academia.  In 
recommendations of the smart specialisation strategy, which is being developed with support 
from  the  European  Commission,  and  adopt  it  in  2019,  following  the  methodological 
framework of the Joint Research Centre for smart specialisation in  the EU enlargement  and 
neighbourhood countries. 

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. The EU and 
the Member States must also prevent discrimination and ensure quality education for children 
of migrant workers, including those from disadvantaged backgrounds.  

Serbia is at a good level of preparation in the area of education and culture. Overall, good 
progress was made. Some progress was made in improving the curricula, including in early 
childhood  education,  and  the  establishment  of  the  national  qualifications  framework  (NQF) 
system. Very good progress was made in establishing the Erasmus+ national agency. 

In the coming year, Serbia should in particular:  

  increase participation in early childhood education and care, in particular of children from 

disadvantaged backgrounds;  

  reference the NQF with the European qualifications framework and make the institutional 

set-up fully functional; 

  use  the  opportunities  offered  by  Erasmus+  as  it  now  holds  the  status  of  Programme 

Country. 

In  the  area  of  education  and  training,  the  education  strategy  and  its  action  plan  are  being 
implemented, albeit with  delays.  Enrolment  and  attainment rates in pre-university education 
are consistently high. However, only half of the children aged 3-5 are attending formal early 
child  care,  while  only  9%  of  the  children  from  Roma  settlements  aged  3-5  are  enrolled, 
compared to 28% of children from the richest households. The rate of early school leavers fell 
to 6.2% in 2017, from 7.4% in 2015, while lifelong learning remains low at 4.4%, way below 
the  EU  2020  target  of  15%.  Comprehensive  training  of  teachers  should  be  consistently 
provided to complement the ongoing outcome-based curricular changes. The training should 
focus on developing students’ key competencies.  

83 

 
 
The legislation regulating the national work-based learning model in vocational education and 
training  (VET)  was  complemented  and  its  scope  increased.  It  should  focus  on  setting  up 
quality assurance  and monitoring mechanisms before the end of the transition period. Some 
progress was made in reducing the share of secondary students in VET schools and increasing 
the  take-up  of  general  secondary  education,  by  making  the  curricula  more  relevant  and 
increasing  the  attractiveness  of  general  secondary  education.  The  structure  of  the  NQF’s 
legislative and institutional framework is in place. However, the capacity of the institutional 
set-up  should  be  built  up  to  make  the  NQF  system  fully  functional.  The  current  budget  to 
operate  the  NQF  Agency  is  very  low,  which  will  hamper  the  building  up  of  the  NQF’s 
capacity. The system of validation of non-formal and informal learning is yet to be developed. 

The  institutional  framework  for  quality  assurance  in  higher  education  was  reconstituted 
leading to the creation of the National Accreditation and Quality Assurance Entity, which is in 
line  with  one  of  the  pillars  of  the  Bologna-related  reforms.  The  attainment  of  tertiary  level 
qualifications for persons aged 30-34 is sluggishly increasing, reaching 31.4% in 2017, which 
is below the EU target of at least 40%. There is still a significant number  of  young, skilled 
people  emigrating.  Education  is  still  a  high  risk  sector  for  corruption,  especially  in  higher 
education.  

Some progress was made in increasing the participation of disadvantaged students in all levels 
of  education.  Pieces  of  secondary  legislation  were  adopted  to  provide  for  more  effective 
support to students in need of additional support in education. However, the implementation 
of measures to reduce drop-out rates and segregation has  yet to be strengthened. The  action 
plan on inclusive education has not been adopted.  

Serbia  continued  to  participate  successfully  in  the  Erasmus+  programme  with  almost  7,000 
outgoing mobilities of Serbian students and staff and 4,300 incoming mobilities since 2015. 
In addition, 38 capacity  building projects currently being implemented in the field of higher 
education.  Serbia  was  awarded  the  status  of  Programme  Country  and  is  participating  in 
Erasmus+  under  the  same  conditions  and  opportunities  as  the  EU  Member  States  as  of 
January 2019.  

Serbia participated in 2018 PISA testing and will take part in 2019 TIMSS and 2021 PIRLS 
assessments.  To  improve  monitoring  of  education  quality,  Serbia  revised  its  external 
evaluation  framework  and  conducted  national  testing  of  a  set  of  competencies  in  pre-
university education.  

In the area of culture, Serbia is implementing measures under the UNESCO Convention on 
the  protection  and  promotion  of  the  diversity  of  cultural  expression  and  recognised  cultural 
industries as a sector with potentials for economic development and connectivity. The Prime 
Minister’s Office established the Council for creative industries in March 2018, but the real 
impact  of  the  Council  is  yet  to  be  seen;  this  will  only  occur  after  the  future  action  plan  or 
work strategy for the Council has been developed.  

Serbia is participating successfully in the Creative Europe Programme. In 2018 – the year of 
European cultural heritage – three  cultural  heritage projects in Serbia  were awarded the EU 
prize  for  cultural  heritage,  the  Creative  Europe  Forum  was  organised  in  Belgrade  in  June, 
while Novi Sad continued its preparations to become one of the European Capitals of Culture 
in 2021.  

The youth strategy  action plan 2018-2020 was adopted, following public consultations. The 
number of youth policy coordination mechanisms at local level has increased but they should 
be  further  strengthened.  Serbia  actively  participated,  for  the  first  time,  in  organising  the 
European Week of Sports. 

84 

 
 
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  achieved  some  level  of  preparation  in  the  area  of  environment  and  climate 
change.  Limited  progress  was  made  in  further  alignment  with  the  acquis  and  on  strategic 
planning.  

In the coming year, Serbia should in particular:  

  enhance  administrative  and  financial  capacity  of 

local 
administration 
the  Environmental  Protection  Agency, 
operationalising  and  adequately  resourcing  the  Green  Fund  and  further  improving 
inter-institutional coordination, in particular between central and local levels;  

the  public  central  and 

authorities 

including 

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

  implement the Paris Agreement, including by adopting a comprehensive climate strategy 
and law, consistent with the EU 2030 framework for climate and energy policies and well 
integrated  into  all  relevant  sectors  and  develop  a  National  Energy  and  Climate  Plan,  in 
line with Energy Community obligations. 

Environment  

In the area of horizontal legislation, Serbia has achieved a high level of alignment with the 
acquis.  Serbia’s  Green  Fund  is  still  not  fully  operational.  Secondary  legislation  on  co-
financing was passed but overall progress on environmental financing including on the level 
of  funding  is  very  low.  Some  steps  were  taken  to  strengthen  administrative  capacity,  in 
particular for planning environmental infrastructure. Serbia needs more capacities to carry out 
qualitative  public  consultations,  particularly  at  local  level.  Legislation  on  environmental 
impact assessments needs to be further aligned and its implementation strengthened.  Strategic 
environmental assessments need to be done for plans and programmes from all relevant policy 
areas,  not  only  environment. In  September  2018,  Serbia  ratified  the  Bucharest  Agreement 
among  the  countries  of  South-Eastern  Europe  on  implementing  the  Convention  on 
Environmental Impact Assessment in a Transboundary Context. There was no progress made 
on  further  transposing  and  implementing  the  Liability  Directive.  It  is  necessary  to  further 
strengthen the capacities of the judiciary and the  environmental  inspectorate and establish  a 
track  record  on  implementing  the  Environmental  Crime  Directive.  The  Law  on  National 
Spatial Data Infrastructure, transposing the INSPIRE Directive, entered into force in 2018.  

In the field of air quality, Serbia has a good level of alignment with the acquis. Monitoring of 
air quality slightly improved with 36 stations operational but the monitoring network needs to 
be  considerably  reinforced.  Serbia’s  annual  report  on  air  quality  states  that  eight 
agglomerations have had air pollution above limits: Belgrade, Subotica, Niš, Pančevo, Užice, 
Valjevo,  Kraljevo  and  Kragujevac.  Air  quality  management  plans  are  not  in  place  for  these 
cities, except for Pančevo and Belgrade. Air quality plans for Smederevo and Novi Sad were 
approved in 2018. Further efforts are needed to finish transposition of and to implement the 
EU  Directive  on  volatile  organic  compound  emissions.  Compliance  is  pending  with  Energy 
Community Treaty requirements on the sulphur content of liquid fuels.  

85 

 
 
Regarding  waste  management,  there  is  a  good  level  of  alignment  with  the  acquis. 
Implementation is at an early stage. The national waste management strategy and municipal 
waste management plans need to be revised to reflect legal provisions on waste minimisation 
and  waste  separation  at  source,  and  to  include  quantitative  targets  for  waste  recovery  and 
recycling. Additional economic instruments for special waste streams need to be developed. 
The  share  of  recycled  waste  in  overall  waste  management  has  remained  at  a  low  level. 
Increased efforts are needed to close Serbia’s non-compliant landfills more quickly and invest 
in  waste  reduction,  separation  and  recycling.  No  progress  has  been  made  on  medical  and 
hazardous waste. In September 2018, Serbia adopted a law on the  Hong Kong International 
Convention for the safe and environmentally sound recycling of ships.  

The level of alignment  for water  quality is  moderate. Preparation  of  an  action  plan for the 
implementation of the water management strategy has started. Untreated sewage remains the 
main  source  of  pollution.  Non-compliance  remains  of  high  concern  in  some  areas,  such  as 
with arsenic. 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  inter-institutional  coordination.  Work  on  a  Serbian  River  Basin  Management  Plan  is 
progressing slowly. Local governance should be improved, in particular through establishing 
clear  rules  on  responsibilities  for  the  operation  and  maintenance  of  water  and  wastewater 
facilities.  

The  level  of  alignment  with  the  acquis  in  the  field  of  nature  protection,  in  particular  the 
Habitats and Birds Directive, is moderate. In 2018, Serbia adopted the Law on ratification of 
the Nagoya Protocol on Access to Genetic Resources. Gaps in transposition allowing hunting 
of  non-huntable  birds  have  not  yet  been  addressed.  EU  standards  on  prohibited  means  of 
capturing and  killing  wild animals  need to be  fully incorporated in  all legislation, including 
legislation on hunting. Work is ongoing for the identification and mapping of habitats types 
and  species  and  the  establishment  of  a  national  ecological  network  that  will  include  Natura 
2000 sites. The institutional set-up and national and local administrative capacity need to be 
substantially  strengthened,  focusing  on  improving  enforcement.  Enforcement  capacities  are 
insufficient, especially regarding wildlife trade and the Convention on International Trade in 
Endangered  Species  of  Wild  Fauna  and  Flora  (CITES).  Any  further  development  of 
hydropower  should  be  in  line  with  EU  environmental  legislation  including  environmental 
impact assessments with proper public consultations, nature protection and water management 
legislation.  

As regards industrial pollution and risk management, alignment with most of the acquis is 
at  an  early  stage,  including  on  the  Industrial  Emissions  Directive.  Persistent  administrative 
capacity  constraints  hamper  progress  in  implementation  across  the  sector.  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.  A  national  poison  control 
centre and sanction regime to ensure compliance are in place. No further progress was made 
regarding  the  REACH  and  CLP  Regulations.  Alignment  is  still  pending  for  legislation  on 
animal  experiments,  asbestos  and  biocides.  As  of  2018,  metallic  mercury  is  prohibited  for 
professional use. Serbia needs to boost its administrative capacity to implement the legislation 
in these areas, and ensure proper monitoring of persistent organic pollutants. In August 2018, 
Serbia  submitted  its  national  implementation  plan  for  the  implementation  of  the  Stockholm 
Convention on Persistent Organic Pollutants.   

86 

 
 
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.  A  strategic  framework  for  civil 
protection is in place including an action plan on disaster risk management for 2017-2020. In 
2018, Serbia adopted a new Law on disaster risk reduction and emergency management. Both 
the  strategic  framework  and  the  law  are  in  line  with  the  Sendai  framework  for  disaster  risk 
reduction.  Public  awareness  activities  are  ongoing.  As  an  active  member  of  the  EU  Civil 
Protection  Mechanism  Serbia  needs  to  further  strengthen  internal  coordination  and  its 
capacity  for  disaster  prevention,  disaster  risk  reduction  and  disaster  risk  management 
including  flood  risk  management  at  national  and  local  level.  In  2018,  five  local  emergency 
protection  and  rescue  plans  were  approved.  In  order  to  access  the  Common  Emergency 
Communication  and  Information  System,  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 the conditions for its participation 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  and  addressing  adaptation  to  climate  change,  is  still  pending 
adoption. The National Climate Change Committee should do more to integrate climate action 
into other sectors.  

Public  consultations  on  the  draft  Law  on  climate  change  took  place  in  spring  2018  but 
adoption is still pending. Legislative alignment during the reporting period included a ban on 
imports of equipment containing or relying on HCFC gas and rulebooks on fuel quality. Work 
on  improving  greenhouse  gas  inventories  continued.  Serbia  needs  to  strengthen  its 
administrative  and  technical  capability  to  fully  align  with  climate  acquis  monitoring  and 
reporting. Legislation on greenhouse gas emissions monitoring, reporting and verification in 
line  with  the  EU  emissions  trading  system  and  Effort  Sharing  Regulation  was  finalised  in 
2017  but  is  not  yet  adopted.  Increasing  investments  in  clean  energy  and  considerable 
strengthening of administrative capacity is needed, together with awareness-raising activities.  

6.28.  Chapter 28: Consumer and health protection  

EU rules protect consumers’ economic interests and 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 
including with the adoption of the Law on the transplantation of cells and tissues and the Law 
on human organ transplantation. However, the recommendations of the previous report have 
not been met. 

In the coming year, Serbia should in particular: 

  strengthen  the  administrative  capacity  of  relevant  authorities  for  consumer  protection, 

market surveillance and sanitary inspection; 

87 

 
 
  strengthen the overall managerial capacity, human resources and financial sustainability of 

the public health insurance fund. 

With regard to general aspects of consumer protection, a law on the protection of financial 
services users by distance contracting was adopted, designed to align Serbian legislation with 
the EU acquis. The National Council for Consumer Protection has delivered no visible output. 
There were 31 cases conducted by the line ministry in 2018, based on consumer complaints 
while  the  alternative  dispute  resolution  bodies  in  charge  of  alternative  consumer  disputes 
initiated  seven  proceedings  out  of  19  filed  complaints  but  concluded  none.  There  is  no 
available data on the number of complaints filed by consumers which were resolved in court. 

Better cooperation mechanisms between the line ministries and consumer organisations need 
to  be  established.  Similarly,  cooperation  among  consumer  protection  organisations  remains 
fragmented and requires improvement. The authorities’ administrative capacity for consumer 
protection  and  the  inspection  services  in  charge  of  consumer  protection,  product  safety  and 
non-safety related issues need further strengthening. The institutional setting and protection of 
consumer  protection  rights  and  interests  at  the  local  level  require  improvement.  Unfair 
commercial practices and contract terms need to be addressed, and vulnerable consumers need 
to be protected. 

Serbia’s legislation on general product safety is partly aligned with the EU acquis. The law 
on  safety  items  of  general  use  is  partly  aligned  with  EU  acquis  on  cosmetics.  Regarding 
market  surveillance,  sanitary  inspection’s  administrative  capacities  need  to  be  strengthened. 
Coordination amongst the relevant Product Safety Council stakeholders has improved.  

On  non-safety-related  issues,  secondary  legislation  for  the  law  on  medical  devices  was 
adopted and is designed to be fully aligned with the EU acquis. However, there has been no 
progress  on  alignment  with  the  acquis  regarding  cooperation  between  national  authorities 
responsible  for  enforcing  consumer  protection  laws,  multiannual  consumer  programmes, 
regulations  on  package  travel,  online  resolutions  of  consumer  disputes,  and  alternative 
resolution of consumer disputes. 

In the area of  public health, legislation on healthcare is  partly  aligned with the EU  acquis. 
The  sustainability  of  the  public  health  fund  still  needs  to  be  ensured.  The  national  plan  for 
human  resources  in  the  health  sector  has  still  not  been  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.  

A new strategy on tobacco control was not adopted, and the placing of pictorial warnings and 
increases  in  the  price  of  cigarettes  have  yet  to  occur.  There  was  a  small  increase  in  the 
percentage of smokers among women and teenagers in the reporting period. Tobacco control 
legislation  is  partly  aligned  with  EU  acquis,  but  the  use  of  tobacco  in  public  places  is  not 
aligned with EU standards.  

On blood, tissues, cells and organs, laws on the transplantation of cells and tissues, and on 
human  organ  transplantation  were  adopted,  both  designed  to  be  fully  aligned  with  the  EU 
acquis.  The  implementation  of  these  laws  are  expected  to  start  in  August  2019.  EU-level 
quality,  safety  standards  and  inspection  services  have  yet  to  be  developed.  The  overall 
administrative and technical capacity of the Directorate for Biomedicine to perform oversight 
of the sector as the competent authority is still very limited. 

On serious cross-border health threats including communicable diseases, surveillance and 
response  capacity  remains  limited  and  requires  modernisation.  A  centralised  health 
information and communication system has yet to be implemented.  

88 

 
 
Harmonising  Serbian  legislation  with  the  Directive  on  the  application  of  patients’  rights  in 
cross-border healthcare has yet to be completed. An e-Health Unit at the Ministry of Health 
should  be  established  to  coordinate  the  complex  activities  involved  in  setting  up  a 
comprehensive health information system at all levels of care.  

Regarding  communicable  diseases,  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  anti-microbial  resistance,  quality  control,  and  standardisation  of 
laboratories.  The  prescription  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.  Cancer 
screening for colorectal, breast and cervical cancers is slowly progressing but in many regions 
of the country is still only sporadic and is not performed in a systematic manner. The cancer 
register is maintained by the National Institute for Radiology and Oncology.  

There is still a need to develop community-based mental health services and progress needs 
to be made regarding nutrition and physical activity. 

There were no developments on medicines for human and veterinary use, or on maximum 
sale price  criteria  for medicines. On  cosmetics there was no progress  made in  the reporting 
period.  There  was  also  no  progress  made  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 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 the Roma.  

Serbian legislation on pricing of medicinal products has yet to be aligned to the EU acquis.  

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. 

Serbia  is  at  a  good level of preparation  in  the area of customs  union.  Some progress  was 
made with the adoption of the customs law and the law on customs services.  

In the coming year, Serbia should in particular: 

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

  further invest into 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.  A  new 
customs law was adopted in December 2018 to ensure further alignment with the EU Customs 
Code.  A  new  law  on  customs  service  was  also  adopted  in  December  2018,  aiming  to 
modernise the work of the Serbian customs administration. 

Serbia  is  a  party  to  the  Common  Transit  Convention,  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 preferential rules 
of origin is applied in Serbia. The customs tariff nomenclature was aligned with the 2018 EU 
Combined  Nomenclature  in  November  2017  and  was  amended  twice  in  February  and  July 

89 

 
 
2018.  The  customs  tariff  nomenclature  for  2019  was  aligned  with  the  EU  Combined 
Nomenclature in November 2018. 

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 on 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 10% in the first 9 months of 2018. 

The customs  administration’s  IT strategy needs to  be updated in  line with the new business 
strategy and the accompanying action plan for 2017-2020. Strategic and modern management 
techniques, including quality assurance and change management, are lacking. 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.  This  investment  needs  to  be  appropriately  budgeted  over  the  coming 
years. 

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 EU Customs 
Code.  Work  on  strengthening  the  capacity  of  the  customs  laboratory  is  underway,  but  the 
laboratory remains under-equipped. 

In  terms  of  fight  against  tobacco  smuggling,  Serbia  is  a  party  to  the  Protocol  to  Eliminate 
Illicit Trade in Tobacco Products since 2017. 

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.  Some  progress  was  made 
during the reporting period, but the capacity to pursue key challenges in trade policy needs to 
be strengthened further. Serbia ratified the Central European Free Trade Agreement (CEFTA) 
Additional Protocol 5 on trade facilitation. 

In the coming year, Serbia should in particular: 

  complete its World Trade Organisation (WTO) accession by adopting an amended law on 
genetically  modified  organisms  and  complete  remaining  bilateral  market  access 
negotiations; 

  strengthen  administrative  capacity 

in 

the  Ministry  of  Trade,  Tourism  and 

Telecommunications for dealing with trade with the EU, CEFTA and WTO accession; 

  implement  actions  under  the  multiannual  action  plan  to  develop  a  Regional  Economic 
Area,  in  particular  implement  CEFTA  Protocol  5  on  Trade  Facilitation,  adopt  and 
implement the pending CEFTA Protocol 6 on Trade in Services and negotiate and ensure 
a swift adoption of CEFTA Protocol 7 on Dispute Settlement. 

On  the  common  commercial  policy,  no  progress  was  made  on  Serbia’s  accession  to  the 
WTO. The possibility of Serbia becoming a member of the WTO depends on the adoption of 
a  modified  law  on  genetically  modified  organisms,  and  on the  completion  of  market  access 
negotiations with a small number of WTO members. 

90 

 
 
In May 2018, Serbia removed export restrictions on non-hazardous waste introduced in 2017, 
which  were  not  in  line  with  the  Stabilisation  and  Association  Agreement  (SAA).  Serbia 
should refrain from applying such measures unless fully justified. 

Administrative  and  operational  capacity  has  improved  with  the  government’s  coordination 
body for trade facilitation that has become operational with four expert working groups. Their 
respective  action  plans  have  generated  first  results  in  addressing  certain  non-tariff  barriers 
with the countries of the region. Overall, the administrative capacity of units in the Ministry 
of trade, tourism and telecommunications in charge of trade with the EU, CEFTA and WTO 
accession still remains to be strengthened. The capacity of the administration to collect market 
statistics also remains to be strengthened through the work of the coordination body. 

In March 2018, Serbia aligned its national control list of  dual-use goods with the 2017 EU 
regime  on  exports,  transfer,  brokering  and  transit  of  these  items.  Serbia  also  aligned  its 
national control list of arms and military equipment with the Common Military List in May 
2018. Serbia’s 2009 application to join the Wassenaar Arrangement is still ongoing. 

Concerning implementation of the Regional Economic Area (REA) multiannual action plan, 
Serbia  ratified  the  Additional  Protocol  5  on  Trade  Facilitation  to  the  CEFTA  Agreement  in 
September  2018.  Serbia  appointed  its  team  for  negotiations  of  Additional  Protocol  7  on 
Dispute  Settlement.  However,  the  adoption  of  Additional  Protocol  6  on  Trade  in  Service  is 
delayed due to political disputes in the region. It is important that Serbia plays a constructive 
role  within  CEFTA  to  allow  for  the  timely  and  smooth  implementation  of  the  REA 
Multiannual Action Plan.  

With  regard  to  bilateral  agreements  with  third  countries,  Serbia  ratified  a  new  bilateral 
investment  treaty  with  Turkey  in  September  2018.  In  March  2019,  Serbia  announced  the 
completion  of  its  Free  Trade  Agreement  (FTA)  negotiations  with  the  Eurasian  Economic 
Union.  The  text  of  the  FTA  will  need  to  comply  with  Serbia’s  obligations  under  the 
Stabilisation  and  Association  Agreement  and  will  have  to  include  an  exit  clause,  which 
guarantees  that  Serbia  can  denounce  the  agreement  by  the  date  of  its  accession  to  the  EU. 
Serbia  is  also  negotiating  a  free  trade  agreement  with  Ukraine.  Serbia  needs  to  ensure 
compatibility of all its agreements on trade, investment and economic cooperation and other 
relevant agreements with the EU acquis. 

No 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 the EU statements, to take part in the EU actions and to apply 
agreed sanctions and restrictive measures. 

Serbia  is  moderately  prepared.  Some  progress  was  made  as  the  government  submitted 
drafts  of  new  security  and  defence  strategies  for  consultation  and  continued  preparations  to 
allow participation of civilians in international missions and operations.  

In the coming year, Serbia should in particular:  

  improve alignment  with  EU declarations and Council decisions on common  foreign and 

security policy; 

91 

 
 
  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. 

The political dialogue between the EU and Serbia on foreign and security policy issues was 
further  strengthened,  and  the  second  common  foreign  and  security  policy  (CFSP)/common 
security  and  defence  policy  (CSDP)  informal  political  dialogue  was  held  in  Brussels  in 
October  2018.  Drafts  of  new  national  security  and  defence  strategies  were  prepared  by  the 
government  and  submitted  for  consultation.  In  adopting  and  implementing  these  strategies, 
Serbia should move towards a policy based on the EU’s guiding principles for international 
action,  in  line  with  Serbia’s  strategic  goal  of  EU  membership.  Furthermore,  a  political 
dialogue between the EU and Serbia on UN issues took place in October 2018. 

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

The  institutional  framework  enabling  Serbia’s  participation  in  the  CFSP  and  CSDP  is  in 
place. 

On the common foreign and security policy (CFSP), Serbia continues endorsing the global 
strategy  for  the  European  Union’s  foreign  and  security  policy.  During  the  reporting  period 
from beginning of March 2018 until end of February 2019, Serbia aligned, when invited, with 
46  out  of  87  relevant  High  Representative  declarations  on  behalf  of  the  EU  and  Council 
decisions, representing an alignment rate of around 53%. Serbia continued not to align with 
the EU restrictive measures related, inter alia, to Russia and Venezuela. An inter-ministerial 
working  group  is  in  charge  of  monitoring  the  imposition  and  implementation  of  restrictive 
measures,  and  the  Ministry  of  Foreign  Affairs  is  managing  the  database  of  restrictive 
measures,  in  line  with  the  Serbian  law  on  the  implementation  of  international  sanctions. 
Serbia continued to declare support for the territorial integrity and sovereignty of Ukraine.  

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. 

Serbia  continued  to  develop  intense  relations  and  strategic  partnerships  with  a  number  of 
countries  worldwide.  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.  The  President  of  Serbia  visited  Moscow  twice  in  May  and  October  2018. 
President  Vladimir  Putin  visited  Belgrade  on  17  January  2019.  Serbia  maintained  good 
relations with the US. Serbia also participated in around 20 military joint drills with the US 
and NATO in 2018. Serbia continued to further strengthen its political and economic relations 
with China. The Serbian President visited China in September 2018.   

Serbia supported EU measures and documents on conflict prevention.  

Serbia continued to participate in some, but not all, international export control arrangements 
and  instruments  on  non-proliferation.  Serbia  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, 
are in place and are being upgraded. The new strategy (2018-2023) and action plan are being 

92 

 
 
prepared.  The  process  for  collecting  and  destroying  illegally  possessed  weapons  and 
ammunition  continued.  In  July  2018,  Serbia  ratified  the  Protocol  for  the  Safeguards 
Agreement  with  the  International  Atomic  Energy  Agency  (application  of  safeguards  in 
connection  with  the  Treaty  on  the  Non-proliferation  of  Nuclear  Weapons).  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  and  intense  contacts  with  NATO  continued.  In 
October 2018, Serbia hosted a consequence management field exercise, jointly  organised by 
the Euro-Atlantic Disaster Response Coordination Centre and the Serbian Ministry of Interior. 

Serbia  continued  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  (CSDP),  notably  the  EU  training  missions  in  Mali, 
Central  African  Republic  and  Somalia,  and  EU  NAVFOR  Atalanta.  Serbia  is  preparing  the 
national  framework  for  participating  in  civilian  missions  under  the  CSDP.  This  includes 
launching training curricula in order to provide for regular training for civilian participants in 
the  EU-led  missions.  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, 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  the  area  of 
public  internal  financial  control  and  external  audit.  Further  efforts  are  needed  to  address 
managerial  accountability  and  to  strengthen  the  functioning  of  internal  control  and  internal 
audit.  The  timely  implementation  of  external  audit  recommendations  needs  to  be  improved. 
High-level  political  support  will  remain  instrumental  for  implementation  of  public  internal 
financial control reforms at all levels of the administration and in state-owned companies. The 
Commission’s  recommendations  from  2018  were  not  implemented  and  therefore  remain 
largely valid. 

In the coming period, Serbia should in particular: 

  implement  at  least  three  pilot  projects  on  managerial  accountability  in  key  institutions 
including  the  Ministry  of  Finance  and  the  Ministry  of  Public  Administration  and  Local 
Self-Government; 

  start to implement quality reviews on internal control; 

  take  necessary  measures  to  ensure  that  the  system  for  detecting  irregularities  works  in 

practice, both for the EU funds and for the national budget. 

Public internal financial control (PIFC) 

A strategic framework for PIFC is partially in place. Although a PIFC policy paper has been 
adopted,  a  more  comprehensive  policy  approach  will  need  to  be  developed  to  improve  and 
further  guide  the  implementation  of  PIFC.  The  public  administration  reform  action  plan 
addresses  a  number  of  enabling  conditions  for  PIFC  implementation.  The  public  financial 
management  reform  programme  and  the  2017-2020  PIFC  strategy  address  mainly  the 
development of financial management and control, internal audit and the role of the Central 

93 

 
 
Harmonisation  Unit  (CHU).  A  working  group  within  the  Public  Administration  Reform 
Council, was formed in December 2018 and aims to coordinate and monitor implementation 
of the PIFC policy paper. However, this working group has not yet met and a mechanism for 
effective  coordination,  monitoring  and  reporting  of  reforms  in  the  public  administration, 
public  financial  management  and  PIFC  is  yet  to  become  operational  (see  under  Public 
administration reform). 

Serbia  has  developed  guidelines  to  improve  the  understanding  and  implementation  of 
managerial accountability. However, further efforts are needed to fully embed this concept 
into  the  administrative  culture  of  the  public  sector.  The  culture  within  public  institutions  is 
centralised  with  little  delegation  of  budget  authority  or  decision-making  powers  to  middle 
management. Managerial accountability is further limited by a primary focus on compliance, 
rather than on performance. The Law on state administration, Law on civil servants, Law on 
planning system and the budget system law need to be assessed and if necessary, amended, to 
ensure  that  they  provide  a  coherent  basis  for  the  implementation  of  delegated  managerial 
accountability.  There  are  continued  weaknesses  in  accountability  lines  between  (semi) 
independent  bodies  and  their  natural  parent  institutions  (see  under  Public  administration 
reform). 

While the legal framework for internal control is broadly in line with international standards, 
its  functioning  remains  generally  weak.  The  financial  management  and  control  manual  has 
been  updated.  Risk  management  needs  to  be  further  developed  and  better  accepted  in  the 
administrative culture of the public sector. Detailed guidelines for the detection and acting on 
information  about  irregularities  still  have  to  be  developed.  The  Ministry  of  Finance  has  a 
centralised budget inspection function. 

Internal  audit  practice  is  regulated  in  line  with  international  standards.  However,  not  all 
institutions that are required to establish an internal audit unit have done so and many internal 
audit units are not yet sufficiently staffed. Most central institutions carry out audits according 
to  strategic  and  annual  audit  plans.  The 
internal  audit 
recommendations needs to be improved. 

implementation  of 

timely 

The  CHU  has  continued  shifting  its  focus  from  the  provision  of  PIFC  training  to  the 
development  and  dissemination  of  methodological  guidance.  It  has  continued  to  conduct 
internal audit quality reviews and should start to implement internal control quality reviews in 
order to improve guidance and annual reporting. The CHU prepares an annual report on the 
state of PIFC implementation and contains recommendations regarding systemic weaknesses. 
The CHU follows up on the state of implementation of these conclusions and reports on this 
in the subsequent annual report.  

External audit 

Serbia’s constitutional  and legal framework provides for independence of the State  Audit 
Institution (SAI) in line with the standards of the International Organisation of Supreme Audit 
Institutions  (INTOSAI).  The  SAI’s  financial  independence  was  adversely  affected  in  2018 
due  to  delayed  adoption  of  its  full  operating  budget.  However,  no  problems  were  reported 
with the 2019 budget approval.  

The  parliament  appointed  a  new  Auditor  General  in  April  2018.  The  number  of  staff 
employed by the SAI has remained constant, however its institutional capacity to carry out 
its core audit tasks is adversely affected by its continued focus on the detection of errors and 
filing  of  misdemeanour,  economic  offence  and  criminal  charges  against  individuals.  The 
appropriateness of this requirement of the SAI law should be reviewed in the medium term. 

94 

 
 
The  adequacy  of  the  current  SAI  operating  premises  should  also  be  reviewed.  The  SAI  has 
adopted a new strategic development plan for the period 2019-2023. 

Regarding the quality of audit work, the SAI has a dedicated sector for audit methodology 
and  quality  control.  The  SAI  has  carried  out  two  performance  audits  in  2019  and  six  are 
planned for 2019. 

The  SAI  has  continued  to  increase  the  impact  of  its  audit work  by  improving  cooperation 
with stakeholders and by increasing its communication with the media. The SAI follows up 
on  the  implementation  of  its  audit  recommendations.  Whilst  the  SAI  annual  audit  report  is 
discussed  in  the  relevant  parliamentary  committee,  increased  parliamentary  scrutiny  and 
follow-up still needs to be ensured.  

Protection of the EU’s financial interests 

While  Serbia  already  has  a  high  degree  of  acquis  alignment,  full  harmonisation  with  EU 
Directive on the fight against fraud to the Union’s financial interests by means of criminal law 
still needs to be ensured. Serbia is implementing the 2017-2020 national anti-fraud strategy to 
protect  the  EU’s  financial  interests.  The  anti-fraud  coordination  service  (AFCOS)  in  the 
Ministry of Finance has six staff, even though the planned number of staff is nine. Since 2018, 
AFCOS has been conducting administrative checks. It also coordinates the AFCOS network, 
which  has  five  additional  institutions  since  October  2018.  Serbia  cooperates  with  the 
European  Commission  during  investigations  and  it  reports  to  the  Commission  on 
irregularities  and  suspected  fraud  cases.  Since  2012,  Serbia  has  reported  27  cases  via  an 
online Irregularity Management System, including five cases in 2018. 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. The technical analysis is performed 
by the National  Bank. It has started to provide specialised training programmes for licensed 
entities so that they can authenticate euro coins and process euro denominated banknotes from 
1  January  2020  onwards.  The  National  Bank  has  formal  cooperation  agreements  with  the 
European  Commission  on  coins  and  with  the  European  Central  Bank  on  banknotes. 
Cooperation  with  neighbouring  countries  is  ongoing.  Serbia  continues  to  take  part  in  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  coordinate 
and ensure the correct calculation, collection, payment and control of own resources.  

Serbia  has  some  level  of  preparation  concerning  the  specific  administrative  conditions  for 
own  resources,  as  laid  down  in  the  own  resources  regulations.  Serbia  completed  the  own 
resources questionnaire and the group for the coordination and management of the EU’s own 
resources  is  operational.  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; 

95 

 
 
→  step up preparations to meet the specific administrative conditions for own resources,  as 

laid down in the own resources regulations. 

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).  After  formally  establishing  the  coordinating  structure, 
there  was  some  progress  towards  meeting  the  specific  administrative  conditions  for  own 
resources.    

Regarding traditional own resources (TOR, mainly customs duties), a new customs law was 
adopted in December 2018 in line with the EU Customs Code. Serbia has procedures in place 
to ensure that cases of fraud and irregularities are reported to the Serbian national authorities 
and  a  TOR  accounting  simulation  for  the  last  quarter  of  2018  took  place.  As  regards  value 
added tax (VAT)-based resource, sufficient data sources are available for the calculation of 
the Weighted Average Rate, deriving from the Supply and Use Tables that will be published 
for  the  first  time  in  2019.  As  regards  gross  national  income-based  resource,  Serbia  made 
further efforts to ensure compliance with the European System of Accounts (ESA 2010) and 
to  improve  the  exhaustiveness  of  the  national  accounts  and  the  gross  national  income 
calculations.  GNI estimates include those of the informal economy. Serbia already allocates 
financial intermediation services indirectly measured (FISIM) to the user sectors in line with 
ESA  2010  rules  and  the  Statistical  Office  continuously  improves  its  methods  and  data 
sources. However, the results of tax audits and the VAT fraud are not yet used to improve the 
exhaustiveness of the national accounts. 

Regarding  administrative  infrastructure,  the  capacity  of  the  institutions  in  charge  in  the 
relevant  policy  areas  needs  to  be  further  strengthened.  The  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  needs  to  be  better  staffed  and  supported  to  fulfil  its  coordination 
tasks. 

96 

 
 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND SERBIA 

Within the framework of the accession negotiations, sixteen chapters have been opened (5 – 
public  procurement;  6  –  company  law;  7  –  intellectual  property  law;  13  –  fisheries;  17  – 
economic  and  monetary  policy;  18  –  statistics;  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; 
33 – financial and budgetary provisions; 35 – 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  2,  4,  9,  and  21.  Serbia  was  also  invited  to  table  its 
negotiating positions on chapters 3, 10, 14, 27 and 28.  

Serbia  is  participating  in  the  Stabilisation  and  Association  Process.  Serbia  continued  to 
build  a  track  record  in  implementing  the  obligations  of  the  Stabilisation  and  Association 
Agreement (SAA). Some restrictions to free movement of capital were lifted in 2018 (on the 
possibility to grant loans to non-resident borrowers). In 2018, Serbia also removed the export 
ban on non-hazardous waste and free trade was restored. Compliance issues remain in the area 
of state aid and fiscal discrimination on alcohol. Restrictions on the acquisition of real estate 
also remain. In June 2018, Serbia introduced new restricting rules – regarding the issuance of 
payment  cards by banks  –  that are not in  line with the EU  acquis  and the SAA.  Finally, as 
regards  public  procurement,  inter-governmental  agreements  concluded  with  third  countries 
and  their  implementation  should  follow  the  EU  principles  of  equal  treatment,  transparency, 
non-discrimination  and  competition.  This  has  also  the  effect  of  preventing  EU  companies 
from participating in large-scale infrastructure projects implemented in the country. 

Regular  political  and  economic  dialogue  between  the  EU  and  Serbia  continued.  The 
Stabilisation and Association Council meeting took place in December 2018. Sub-committee 
meetings  were  held,  together  with  a  meeting  of  a  special  group  on  public  administration 
reform. The Stabilisation and Association Parliamentary Committee met in June and October 
2018, and March 2019. 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  fifth  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 second 
monitoring report under the suspension mechanism was adopted on 19 December 2018. 

Under  IPA  II,  Serbia  continues  to  benefit  from  pre-accession  assistance  with  a  total 
indicative  allocation  of  EUR1.5  billion  for  the  period  2014-2020.  The  revised  indicative 
strategy paper was adopted in August 2018, enhancing the response to new challenges such as 
migration,  terrorism  and  violent  extremism,  climate  change  and  economic  governance.  The 
IPA National Programme 2018 amounts to EUR 179 million overall, with most of the funding 
supporting alignment with the EU acquis, environment, competitiveness and social inclusion. 
An additional EUR 30 million have been allocated to the IPA Rural Development programme 

97 

 
 
(IPARD).  The  EU  has  continued  to  support  Serbia  in  border  and  migration  management 
following the refugee crisis of 2015-2016. In addition, Serbia is benefiting from the European 
Instrument for Democracy and Human Rights (EIDHR). 

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

98 

 
 
 
 
 
ANNEX II– STATISTICAL ANNEX 

STATISTICAL DATA (as of 03.05.2019) 

Serbia 

Basic data 

Population (thousand) 

Total area of the country (km²) 

Note  2006 

2013 

2014 

2015 

2016 

2017 

7 425.5 

7 181.5b 

7 146.8 

7 114.4 

7 076.4 

7 040.3 

77 474 

77 474 

77 474 

77 474 

77 474s 

77 474s 

National accounts 

Note  2006 

2013 

2014 

2015 

2016 

2017 

Gross domestic product (GDP) (million national currency) 

2 181 035  4 121 200  4 160 549  4 312 038  4 521 265  4 754 368 

Gross domestic product (GDP) (million euro) 

25 931 

36 427 

35 468 

35 716 

36 723 

39 183 

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) 

3 500 

8 400 

34 

5.1 

5 100 

5 000 

5 000 

5 200 

5 600p 

10 700 

10 800 

11 200 

11 400 

11 600 

40 

2.9 

39 

-1.6 

39 

1.8 

39 

3.3 

39 

2.0 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

99 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (%) 

8.2 

29.6 

4.9 

57.3 

96.3 

21.2 

0.5 

29.4 

47.5 

: 

8.8 

28.2 

3.6 

59.4 

90.8 

16.5 

0.9 

39.9 

48.1 

: 

8.4 

26.2 

3.8 

61.6 

91.6 

15.9 

0.6 

42.1 

50.2 

: 

8.0 

26.4 

4.5 

61.1 

88.4 

16.8 

1.8 

45.3 

52.3 

: 

8.2 

26.3 

4.7 

60.8 

86.9 

16.9 

1.0 

48.6 

53.4 

: 

7.3 

26.5 

5.0 

61.2 

87.0 

17.7 

1.8 

50.5 

57.1 

: 

Business 

Industrial production volume index (2010 = 100) 

Number of active enterprises (number) 

Note  2006 

107.3 

: 

Birth rate: number of enterprise births in the reference period (t) divided 
by the number of enterprises active in t (%) 

1) 

14.8 

Death  rate:  number  of  enterprise  deaths  in  the  reference  period  (t) 
divided by the number of enterprises active in t (%) 

1) 

10.7 

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) 

: 

: 

2013 

105.8 

2014 

98.8 

2015 

107.1 

2016 

111.7 

2017 

115.8 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

100 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total  value  added  (in  the  non-financial  business  economy)  (EUR 
million) 

: 

: 

: 

: 

: 

: 

Inflation rate and house prices 

Note  2006 

Harmonised  consumer  price  index  (HICP),  change  relative  to  the 
previous year (%) 

**Annual change in the deflated house price index (2010 = 100) 

: 

: 

2013 

7.7 

2014 

2.3 

2015 

1.5 

2016 

1.3 

2017 

3.3 

: 

: 

: 

: 

: 

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) 

Note  2006 

2) 

2) 

2) 

-2 355 

-4 981 

-41 

2013 

-2 098 

-4 159 

313 

2014 

-1 985 

-4 111 

465 

2015 

-1 234 

-3 645 

729 

2016 

-1 075 

-3 119 

907 

2017 

-2 051 

-3 997 

966 

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) 

**3  year  backward  moving  average  of  the  current  account  balance 
relative to GDP (%) 

: 

: 

: 

: 

-1 419 

-1 343 

-1 658 

-2 022 

-2 533 

3 166 

3 003 

3 340 

3 159 

3 514 

43 

89 

152 

79 

141 

-9.0 

-7.4 

-4.9 

-4.0 

-3.9 

**Five year change in share of world exports of goods and services (%) 

2) 

86.3 

10.3 

13.6 

22.8 

33.7 

47.7 

Net  balance  (inward  -  outward)  of  foreign  direct  investment  (FDI) 
(million euro) 

Foreign direct investment (FDI) abroad (million euro) 

: 

: 

101 

1 298.1 

1 236.3 

1 803.8 

1 899.2 

2 418.1 

249.7 

264.2 

310.4 

227.8 

130.0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of which FDI of the reporting economy in the EU-28 countries (million 
euro) 

Foreign direct investment (FDI) in the reporting economy (million euro) 

of which FDI of the EU-28 countries in the reporting economy (million 
euro) 

**Net international investment position, relative to GDP (%) 

Year  on  year  rate  of  change  in  gross  inflow  of remittances (in  national 
currency) from migrant workers (%) 

: 

: 

: 

: 

: 

70.7 

35.4 

49.7 

106.0 

63.0 

1 547.9 

1 500.4 

2 114.2 

2 126.9 

2 548.1 

1 145.0 

1 109.3 

1 530.1 

1 410.4 

1 819.7 

-84.1 

9.9 

-91.6 

-5.4 

-94.9 

12.8 

-94.5 

-4.0 

-91.0 

8.6 

Public finance 

Note  2006 

2013 

2014 

2015 

2016 

2017 

***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 (%) 

-1.4 

38.3 

41.6 

43.0 

Financial indicators 

Note  2006 

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) 

4) 

5) 

6) 

Total credit by monetary financial institutions to residents (consolidated) 
(million euro) 

55.1 

205.7 

2 533 

3 531 

8 031 

8 153 

-5.1 

57.5 

37.3 

42.5 

2013 

70.4 

184.0 

3 387 

4 776 

-6.2 

67.5 

39.0 

45.2 

2014 

72.4 

177.7 

3 562 

5 075 

-3.5 

71.2 

39.3 

42.8 

2015 

73.5 

166.8 

4 148 

5 776 

-1.2 

68.8 

40.8 

41.9 

2016 

72.1 

152.4 

4 923 

6 546 

1.1 

58.7 

41.5 

40.4 

2017 

65.3 

132.5 

5 653 

7 360 

14 976 

15 280 

16 193 

17 794 

19 206 

19 261 

19 708 

20 719 

21 632 

22 806p 

**Annual change in financial sector liabilities (%) 

7) 

: 

1.7p 

0.5p 

2.8p 

6.3p 

2.9p 

102 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
**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 (%) 

: 

: 

11.54 

17.00 

11.00 

: 

: 

7.04 

12.00 

7.00 

: 

: 

9.45 

10.50 

5.50 

: 

: 

2.61 

6.50 

2.50 

: 

: 

3.04 

5.50 

2.50 

: 

: 

2.27 

5.00 

2.00 

Euro exchange rates: average of period (1 euro = … national currency) 

8) 

84.110 

113.137 

117.306 

120.733 

123.118 

121.337 

Trade-weighted effective exchange rate index, 42 countries (2005 = 100) 

**3  year  change  (T/T-3)  in  the  trade-weighted  effective  exchange  rate 
index, 42 countries (2005 = 100) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Value of reserve assets (including gold) (million euro) 

9 020 

11 189 

9 907 

10 378 

10 205 

9 962 

External trade in goods 

Note  2006 

2013 

2014 

2015 

2016 

2017 

Value of imports: all goods, all partners (million euro) 

10 463 

13 345 

13 512 

14 425 

15 225 

17 559 

Value of exports: all goods, all partners (million euro) 

4 992 

10 413 

10 562 

11 447 

12 742 

14 365 

Trade balance: all goods, all partners (million euro) 

-5 471 

-2 933 

-2 950 

-2 978 

-2 483 

-3 194 

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 (%) 

99 

62.1 

57.2 

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) 

Note  2006 

-4.3 

106 

63.8 

55.7 

2013 

-4.8b 

106 

65.7 

57.1 

2014 

-4.9 

108 

67.0 

57.3 

2015 

-5.4 

111 

67.6 

58.7 

2016 

-5.1 

108 

67.6 

58.9 

2017 

-5.5 

7.4 

6.3 

5.7 

5.3 

5.4 

4.7 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life expectancy at birth: male (years) 

Life expectancy at birth: female (years) 

Labour market 

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

*Employment rate for persons aged 20–64: proportion of the population 
aged 20–64 that are in employment (%) 

Male employment rate for persons aged 20–64 (%) 

Female employment rate for persons aged 20–64 (%) 

Employment  rate  for  persons  aged  55–64:  proportion  of  the  population 
aged 55–64 that are in employment (%) 

Employment by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

People  employed  in  the  public  sector  as  a  share  of  total  employment, 
persons aged 20–64 (%) 

People  employed  in  the  private  sector  as  a  share  of  total  employment, 
persons aged 20–64 (%) 

Unemployment  rate:  proportion  of  the  labour  force  that  is  unemployed 
(%) 

70.8 

76.1 

Note  2006 

9) 

67.9 

72.6b 

77.9b 

2013 

66.1b 

72.8 

78.0 

2014 

68.0b 

72.8 

77.9 

2015 

68.1 

73.2 

78.3 

2016 

70.0 

73.1 

78.1 

2017 

71.2 

9) 

54.0 

51.3b 

54.8b 

56.0 

59.1 

61.5 

9) 

9) 

9) 

9) 

9) 

9) 

9) 

9) 

9) 

64.5 

43.8 

32.6 

: 

: 

: 

: 

: 

: 

59.6b 

43.2b 

34.3b 

21.3 

21.1 

4.7 

52.8 

32.7 

62.5b 

47.2b 

36.7b 

19.9b 

20.2b 

4.5b 

55.4b 

31.4b 

63.7 

48.3 

37.3 

19.4 

19.9 

4.5 

56.1 

29.7 

66.3 

51.9 

42.7 

18.6 

20.2 

4.3 

57.0 

28.3 

68.5 

54.5 

45.5 

17.2 

21.2 

4.1 

57.5 

27.8 

67.3 

68.6b 

70.3 

71.7 

72.2 

9) 

20.9 

22.3b 

19.4b 

17.8 

15.4 

13.6 

Male unemployment rate (%) 

Female unemployment rate (%) 

9) 

9) 

17.9 

24.9 

21.1b 

23.9b 

18.5b 

20.5b 

16.9 

18.8 

14.8 

16.2 

13.0 

14.4 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) (%) 

9) 

47.8 

49.4b 

47.4b 

43.2 

34.9 

31.9 

9) 

16.8 

17.0b 

13.0b 

11.4 

10.0 

8.2 

9) 

9) 

: 

: 

21.2 

18.6b 

15.8 

13.7 

12.3 

17.2 

14.5b 

14.4 

13.4 

11.8 

Social cohesion 

Note  2006 

2013 

2014 

2015 

2016 

2017 

Average nominal monthly wages and salaries (national currency) 

10) 

31 745 

60 708b 

61 426 

61 145 

63 474 

65 976 

Index  of  real  wages  and  salaries  (index  of  nominal  wages  and  salaries 
divided by the inflation index) (2010 = 100) 

83.7 

99.2 

97.5 

95.2 

97.6 

98.5 

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 (%) 

9) 

12.6 

38 

36.6 

8.9b 

38 

39.3 

8.5b 

40 

37.5 

7.5 

40 

39.4 

7.0 

38 

38.8 

6.2 

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) 

Note  2006 

203.6 

2013 

246.5 

2014 

251.5 

2015 

257.7 

2016 

266.8 

2017 

279.6 

894.7 

1 284.0 

1 317.1 

1 293.8 

1 291.8 

1 231.4 

Mobile broadband penetration (per 100 inhabitants) 

: 

: 

: 

: 

: 

: 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed broadband penetration (per 100 inhabitants) 

: 

: 

: 

: 

: 

35.4 

Infrastructure 

Note  2006 

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

11) 

49.2 

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 (%) 

374 

Note  2006 

3.9 

0.44 

: 

2013 

49.3 

607 

2013 

4.1 

0.68 

0.42 

2014 

49.3 

607 

2014 

4.0 

0.72 

0.43 

2015 

48.6 

693 

2015 

3.7 

0.81 

0.44 

2016 

48.6 

741 

2016 

3.6 

0.84 

0.39 

2017 

48.6 

963 

2017 

3.7 

0.87 

0.40 

Percentage of households who have internet access at home (%) 

18.5 

55.8 

62.8 

63.8 

64.7 

68.0 

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 (%) 

Note  2006 

86.9 

596.1 

2013 

76.0 

454.2 

2014 

65.3 

412.7 

2015 

73.3 

449.5 

2016 

75.9 

453.3 

2017 

: 

453.3 

30.7 

27.4 

31.0 

27.1 

29.0 

24.5p 

Road share of inland freight transport (based on tonne-km) (%) 

: 

40.4 

41.5 

41.2 

48.7 

51.5 

Energy 

Primary production of all energy products (thousand TOE) 

Primary production of crude oil (thousand TOE) 

Note  2006 

2013 

10 512 

11 371 

660 

1 277 

2014 

9 443 

1 216 

2015 

2016 

2017 

10 762 

10 695 

10 496 

1 121 

1 028 

988 

106 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary production of solid fuels (thousand TOE) 

Primary production of gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 

7 819 

236 

6 524 

7 671 

423 

3 602 

5 713 

444 

3 736 

7 201 

456 

4 108 

7 201 

417 

4 593 

7 216 

389 

5 330 

Gross inland energy consumption (thousand TOE) 

17 065 

14 940 

13 358 

14 808 

15 432 

15 748 

Gross electricity generation (GWh) 

36 481 

39 877 

34 060 

38 298 

39 342 

37 045 

Agriculture 

Agricultural production volume index of goods and services (at producer 
prices) (2010 = 100) 

Utilised agricultural area (thousand hectares) 

Livestock numbers: live bovine animals (thousand heads, end of period) 

Livestock numbers: live swine (thousand heads, end of period) 

Livestock  numbers:  live  sheep  and  live  goats  (thousand  heads,  end  of 
period) 

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) 

Note  2006 

: 

12) 

3 537 

1 106 

3 999 

1 855 

1 692 

8 825 

3 392 

1 140 

12) 

12) 

12) 

2013 

102.8 

3 495 

913 

3 144 

1 841 

1 548 

9 091 

3 180 

1 062 

2014 

110.1 

3 518 

920 

3 236 

1 967 

1 596 

10 848 

3 507 

965 

2015 

103.2 

3 480 

916 

3 284 

1 992 

1 611 

8 437 

2 183 

1 108 

2016 

112.3 

3 456 

893 

3 021 

1 865 

1 604 

10 869 

2 684 

1 156 

2017 

98.9 

3 438 

899 

2 911 

1 887 

1 599 

6 793 

2 513 

1 087 

: = not available 
b = break in series 
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. 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1) 
2) 
3) 
4) 

5) 

6) 

7) 

8) 

9) 
10) 

Footnotes 
Data might not be reliable due to delays in updating the Serbian statistical business register. 
2006: based on balance of payments manual edition 5 (BPM5). 
Secondary income only. 
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. 
The money supply M2, in addition to M1, includes other dinar deposits, both short-and long-
term. 
The  money  supply  M3,  in  addition  to  M2,  includes  short  and  long-term  foreign  currency 
deposits (without the so-called frozen foreign currency savings). 
The  total  financial  sector  liabilities  are  the  sum  of  all  liabilities  of  the  financial  sector 
excluding captive financial institutions. 
Arithmetic mean of official middle exchange rates of the dinar against the euro on working 
days. 
2014: change of weighting system. 
2006: wages and salaries paid to employees of legal entities. 2013-2017: wages and salaries 
paid to employees of legal entities and of unincorporated enterprises. 

11)  Density relative to the total area (including inland waters) rather than the land area. 
12) 

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

108