BELGRADE (Serbia), February 2 (SeeNews) – The Heritage Foundation said a dramatic increase in fiscal health, trade freedom and judicial effectiveness has allowed Serbia to climb 19 positions to 80th place in the 2018 global economic freedom index published by US-based think-tank.
Serbia's overall score puts the country within the group of moderately free economies, as it rose to 62.5 points in 2018 from 58.9 in the 2017 edition of the index, when it was on the list of the economically unfree countries.
However, only Bosnia and Herzegovina and Moldova rank lower among the countries in Southeast Europe in the chart, covering freedoms ranging from property rights to entrepreneurship, graded on a scale from 0 to 100.
"Serbia is ranked 37th among 44 countries in the Europe region, and its overall score is below the regional average but above the world average," The Heritage Foundation said in the 2018 Index of Economic Freedom report.
"The many large state-owned enterprises in the electricity, communications, and natural gas sectors should be reformed and eventually privatised. Deeper institutional reforms are also needed to tackle bureaucracy, reduce corruption, and strengthen a judicial system that is vulnerable to political interference."
The country has an adequate body of laws for the protection of property rights, but enforcement of property rights through the judicial system can be very slow, The Heritage Foundation said.
The judiciary in Serbia operates independently but continues to be plagued by endemic problems. Pervasive corruption affects the security, education, housing, and labour sectors as well as privatization processes and the judiciary, The Heritage Foundation said.
Despite some progress, time-consuming regulatory requirements continue to impede business efficiency. High unemployment rates and the need for private-sector job creation remain challenges to labour freedom.
"Some reforms in large state-owned enterprises have been made, but the government still subsidizes loss-making public companies such as RTB Bor, Resavica, Petrohemija, Azotara, and MSK Enterprises."
Trade is extremely important to Serbia’s economy, as the combined value of exports and imports equals 109% of the gross domestic product. The average applied tariff rate is 1.3%. However, nontariff barriers impede some trade, according to the report.
Government openness to foreign investment is above average. Reforms involving privatisation and consolidation have revived the formerly defunct banking sector. Non-performing loans (NPLs) continue to account for over 20% of total loans, The Heritage Foundation said.