Cooperation Strategy Serbia 2010 - 2013 - Deza - admin.ch

SERBIA 2010-2013
means of assistance that are required to stabilize
the economy. These will most probably help
maintain the relative stability of the domestic currency.
The public sector must revert to a rigorous
austerity policy, which includes lowering public
spending, as well as reducing transfers to local
governments. Efforts to increase revenue levels
are ongoing, but require measures in the politically
sensitive issue of taxation. The private sector
has been faced with a drop in demand and
in foreign direct investment, leading to declines
in production, imports and exports, as well as an
increased unemployment.
Despite significant withdrawals of domestic savings
and foreign credit funds, the banking system has
remained relatively stable, owing to the National
Bank of Serbia’s discipline. Compared with neighbouring
countries, Serbian banks have appropriate
capital adequacy ratios and are not facing solvency
problems. The government has set up a package
of measures aimed at providing incentives to boost
economic activity. Evidently, much will depend on
whether the current global crisis abates soon, or
the recession drags on.
1.3 Social developments
After years of declining trends, poverty has recently
increased again to 7.9%, affecting the elderly,
young people and children in particular. In addition,
as much as 20% of the population live just
above the poverty line, and are vulnerable to
external shocks such as the current global crisis.
Regional disparities are pronounced, with rural
areas (in the south-west and south) having the
highest poverty rates. Serbia shows an accelerated
process of demographic ageing, with a rural
exodus emptying entire villages.
As in other countries of the region, the Roma
population and the other 20 recognized “national
minorities” are in a difficult situation, both
economically and socially. Exclusion and discrimination
persist, in particular with regard to
housing and access to basic services such as
health and education. The global crisis is likely
to worsen the living conditions and prospects of
marginalized groups.
Overall, the civil society in Serbia is not very
strong, and the well-established NGOs are
mostly concentrated in Belgrade. Social dialogue
and partnerships are advancing slowly, with difficulties,
especially at the national level. Migration
constitutes an important issue, as many refugees
and internally displaced persons (IDPs) are still
not really integrated in the society. The number
of returnees from Western Europe is increasing.
As a response to these social challenges, the
government has decided to draw up and implement
social inclusion policies, as well as a comprehensive
migration management strategy. Both
are essential to the EU integration process.
1.4 International aid
Serbia currently receives around EUR 400 million in
international aid annually, with IPA funding expected
to increase over the next years. Covering only
4% of overall public expenditures, this aid is marginal,
but its importance is increasing in the light of
the current budgetary problems. In fact, the global
crisis has further exposed the need to strengthen
dialogue between the Serbian government and its
international development partners.
Serbia has signed the Paris Declaration on Aid
Effectiveness and developed a National Aid
Effectiveness Agenda. In cooperation with other
ministries, the Ministry of Finance – through its
Sector for the Programming and Management
of EU Funds and Development Assistance – has
made a significant effort in the implementation
of the National Agenda. Nevertheless, many
donors continue to pursue diverse priorities and
approaches, leading to a fragmentation of aid.
The government intends to align donor activities
more closely with national priorities by means of
the recently updated Needs Assessment of the
Republic of Serbia for International Assistance.
The document is focused on priorities linked to
EU accession. The main instrument, the IPA funds
(50% of international aid), are routed first and
foremost through the government, while the local
levels do not have direct access to them. Another
effort undertaken by the Ministry of Finance is to
provide support to line ministries in the process
of planning and prioritizing international aid, as
capacity in this area is still weak.
Donor harmonization includes periodic coordination
meetings and information sharing between
multilateral and bilateral agencies, as well as the
co-financing of projects to an increasing degree.
Donors and the government all agree that sector-related
policy dialogue and sector-based
approaches should increase. However, in order
to progress along this track, national capacities
need to be improved to allow the government to
assume full leadership. Existing sector coordination
groups are mainly donor-driven and do not
yet work at a strategic level. The programming of
IPA funds for the 2007-2013 period provides an
excellent opportunity to enhance the administrative
capacities of state institutions and to improve
aid effectiveness in Serbia.
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