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Nov 23, 2017 12:47 EEST
November 23 (SeeNews) - Serbia's government should deepen the public sector reforms through privatisation, restructuring of state-owned enterprises (SOEs), and improved efficiency of public administration, the European Bank for Reconstruction and Development (EBRD) said.
"Higher predictability of the business environment, lower para-fiscal charges, and an easier access to finance would support entrepreneurs and small and medium-sized enterprises (SMEs) the most," the EBRD noted in its Transition Report 2017-2018 published on Wednesday.
After bringing down the level of non-performing loans (NPLs), the focus now should be on more efficient judicial processes, improved out-of-court restructuring, and an easier access to NPLs for a broader range of potential investors. Despite the recent increase in dinar deposits and household dinar loans, Serbia is still among the most euroised countries globally, the EBRD said.
NPLs have dropped significantly in the past two years but remain high by regional standards while long-term debt of over-indebted companies is around 25% of GDP, the bank noted.
Room for further improvement of business climate still remains in several areas, most notably in protecting minority investors, resolving insolvency, getting credit and electricity, as well as in enforcing contracts. The "top five" most problematic factors for doing business in Serbia are tax rates, access to financing, inefficient government bureaucracy, corruption and policy instability, according to the report.
The rightsizing process of public administration continued, resulting in 22,000 people leaving from the end of 2014 to the end of 2016, close to the envisaged level of 25,000 to 30,000 in 2015-17. However, the current civil service framework still does not guarantee the neutrality of the public administration, merit-based recruitment, promotion and dismissal procedures, the bank added.
On the other hand, the fiscal adjustment in Serbia has overperformed. This reflects consistent application of spending cuts introduced earlier as well as rising revenues in 2016.
The EBRD expects Serbia's GDP growth to slow to 1.8% in 2017 from 2.8% last year.
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