Download Human Development - United Nations in Serbia

Serbia: National Context and Outstanding Priorities
UNDAF Workshop
Belgrade, 2-6 June 2008
Country Context: Political
Background
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Growing political maturity reflected in peaceful and
democratic national and local elections (May 2008).
Yet fluid political situation: uncertainty about formation of
governing coalition and evident differences between two
blocs, primarily on the issue of EU integration.
Advancing European integration and recent major progress
made towards Stabilization and Association Agreement
(SAA).
Status of Kosovo still playing prominent and controversial
role in Serbia’s political life, possibly impeding the SAA
process.
Active role in regional and global initiatives: as of 2007 Serbia
is a signatory to Energy Community of SEE Treaty and to
CEFTA (Central Europe Free Trade Agreement). Serbia
ratified the Kyoto Protocol and is progressing towards joining
the WTO.
Country Context: Economic
Background
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Progress in economic reforms continues, resulting in
increased macro-economic stability and better incomes. GDP
per capita approached $ 5,400 in 2007. However, two-digit
inflation remained in 2007.
Public debt has almost halved as a proportion of GDP and
reserves stand at over 30% of GDP. Yet private external
liabilities continue to grow quickly.
The economy has grown at average 5.5 % per anum, driven by
the private sector.
Current account deficit continues to expand, unsettling the
focus of monetary and exchange rate policies. Serbia’s
reserve position is yet comfortable due to private sector and
FDI inflows (FDI average 6.7 % of GDP in last 5 years)
External debt remains about 60% of GDP in 2007, despite
London and Paris Club debt write downs.
Trade deficit remained high in 2007, with exports reaching
only 50% of imports.
(Cont.) Country Context: Economic
Background
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Investment remained at the solid 22-23 percent of GDP in
2007. In fast-growing transition economies such as Slovakia,
Croatia, Bulgaria investment share has been ~30% of GDP.
Privatization agenda is still unfinished: large utilities and over
1,000 socially owned enterprises remain to be privatized.
According to LSMSs 2002 and 2007 the percentage of
population living in poverty has fallen by 50 percent (from
14.6 in 2002 to 6.6 in 2007). Poverty profile remained the
same, with persistently high regional differences.
Fiscal deficit remains, with spending increasing in 2007 as a
proportion of GDP. Public expenditures reached 44 % of GDP
in 2007.
Governance indicators for Serbia continue to improve,
although at the slower pace. Perceptions of ineffective rule of
law and weak control of corruption remain.
Unemployment remains a continuing problem, at 21.6 percent
of the labor force (Labor Force Survey 2007).
Overview: Serbia’s Outstanding
Priorities
According to the GoS Memorandum on the 2009 Budget and
Economic and Fiscal Policy for the year 2010 –2011, the
following themes stand out on the GoS agenda:
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EU Integration
Macro-economic stability
Economic growth and future reforms (enterprise, business
environment, financial sector reform, transport, energy
sectors)
Increasing employment and living standards
Social policy reforms
Balanced regional development
Rule of law and human rights
EU Integration: Priorities
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Accelerated integration with EU remains over-arching
priority. Future government profile will influence the pace of
integration process.
Continuation or halting of the Stabilization and Association
Agreement (SAA) will influence all aspects of the Government
reform’s program. Key points include:
- Harmonization of Serbian legislation and practices
with EU standards
- Public administration reform
- Improving economic framework, trade
cooperation and attracting FDI
- Reform and advancement of environmental and
energy sector
Macro-economic Stability: Priorities
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GoS committed itself to accelerate structural reforms in the
financial and public sector. Special attention will be paid to
increasing external vulnerabilities and growing current
account deficit.
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GoS fiscal policy will aim to reduce public expenditures as a
percentage of GDP and increase revenue base.
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Stabilization of inflation will be among key GoS and National
bank of Serbia (NBS) priorities.
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Financial management and reform of public administration
figure prominently at the GoS priority list. Decentralization,
professionalization and rationalization of civil service is
envisaged to take place in the coming period.
Economic Growth: Priorities
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GoS further commits to encouraging private sector led
economic growth. Improving business environment and
strengthening enterprise and financial sectors should lead
towards increased competitiveness.
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Strengthening the capacity of judicial system to address
business issues remains important. This is a part of the
overall GoS judicial reform strategy which should reduce
case backlog and delays and should ultimately result in
modern judiciary system.
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Structural reforms and further privatization of large utility
companies (NIS, EPS, JAT, ZS) and more then 1,000 socially
owned enterprises is planned to continue.
(Cont.) Economic Growth: Priorities
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Completion of restructuring of financial sector is foreseen to
take place. Insurance sector reform and strengthening of
capital markets would consolidate financial sector reforms.
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Transport network (road and rail infrastructure) is in frail
state, remaining well bellow EU levels. Significant investment
needs are evident. GoS is placing high priority on revitalizing
infrastructure, which is also required within the context of the
European Commission overall framework for South East
Europe.
Progress has been made in upgrading Serbia’s energy sector
over the last years. Restructuring of energy sector according
to EU guidelines and Energy Community of South East
Europe (ECSEE) Treaty will require separation of EPS
generation, transmission and distribution assets. Although
privatization of EPS is not foreseen by the GoS in the coming
period, the structure for new private investment in generation
capacity is to be created.
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Increasing Employment and Living
Standards
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Unemployment remains a continuing problem, at 21,6 percent of the
labor force (Labor Force Survey 2007). Government employment
strategy focuses on the private sector as the major generator of new
jobs, and FDIs.
National Employment Strategy for the period 2005-2010 sets out the
ambitious target of employment growth of 1.5 percent a year, with
the unemployment rate decreasing from the current level to 15.5 % in
2010. Expanding job opportunities is one of the Government’s main
economic policy priorities until 2010.
High youth unemployment is related to the challenge to link
education and labour demand. Reform of primary, secondary
education and alignment with Bologna is half-way through and
figures among GoS priorities.
Retraining and increasing knowledge of the labour force (men and
especially women) to adjust to structural changes in the economy
and industry will remain important.
(Cont.) Increasing Employment and
Living Standards
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Poverty measures (LSMS) suggest that the proportion of of the
population living bellow absolute poverty line (roughly 12.5 USD per
day) has fallen from 14.6 in 2002 to 6.6 in 2007. The Government is
thus already close to meeting their 2010 target of reducing poverty
to 6.5 percent.
Yet, a number of people in Serbia belong to the vulnerable part of
society (such as Roma, IDPs, refugees, people with disabilities,
elderly). Poverty remains high in rural areas, which are home to two
thirds of all poor people in Serbia. Poverty profile and regional
differences remained the same as in 2002.
Pension spending makes 75 percent of the total social protection
payments. Pensions will for sure be one of the most important
priorities of the next government.
Overcoming regional disparities and creating opportunities for
people in underdeveloped regions (unemployment in Bor region is
for example 40% high) is addressed by the GoS Regional
Development Strategy of 2007.
Social policy: Priorities
Education
 Quality of education in Serbia is below EU standards. Key GoS
priorities in the forthcoming period include further Bologna
alignment and creation of stronger linkages between education and
labor market demands (Strategy for professional education 2006).
 GoS also plans to adopt set of legislation for pre-school, primary
and secondary education in order to address poor access to
education, in particular of Roma, children with disabilities and the
poor.
 GoS aims to reach 4% of GDP in 2011 for education expenditure and
expand the sources of financing by including contributions from
self-government, private sector and donations.
Health
 Continuation of health sector reform is foreseen to take place, based
on a number of adopted policies and legislation regulating the
sector. Key GoS medium term objectives are further modernization
of health system, improved system management and education.
(Cont.) Social policy: Priorities
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Client-based approach is the center of health care system
reform, according to the Memorandum on Budget 2009.
Development of a preventive care system is required.
 Out of 7.7 million people in Serbia 1.2 is without health
insurance. Access to health is thus among key objectives of
the GoS.
 Health expenditures in 2007 reached 6 % of GDP, considered
to be high to EU standards. Expenditure levels are expected
to remain the same in the forthcoming period (2009-2011)
Social Welfare
 Priority agenda in the social welfare entails further
implementation of reforms. MOP covered in 2007 over 50 000
families, while child allowances covered approx. 200.000
families.
(Cont.) Social policy: Priorities
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Better targeting of social welfare benefits and/or an increased
amounts of MOP could help reduce poverty.
Further GoS priorities include decentralization of services and
deinstitutionalization. A relatively significant number of local
services has been already created (home care, elderly care, day care
centers for children and adults with disabilities, shelters for victims
of violence etc) but the gap is evident in smaller and poorer
municipalities. Deinstitutionalization with formation of new services,
supported by combined national and local financing, will continue.
Social safety nets to reduce the impact on poor households of
needed increases in energy tariffs will also be critical.
The reform implementation also includes new role of centers for
social work (case management), introduction of social welfare mix,
and of licensing and accreditation.
(Cont.) Social policy: Priorities
Social dialogue
 One of the key EU social acquies include establishment of
bipartite and tripartite social dialogue at national and local
levels. Government, representative trade unions and
association of employers are to be brought together to
discuss further restructuring of public utilities and their
transition towards competitive market economy.
 Wage negotiations, severance packages, vocational training
of the staff will be key themes in the forthcoming period.
 Serbia just recently signed a Collective agreement and
therefore further steps ought to be made in it’s
implementation.
Balanced Regional Development
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Improving the welfare of rural populations has been recently
recognized as important objective. A vast amount of small
rural households are prone to poverty due to structural
changes and transition (UNDP). Creating new off-farm
employment is one of the GoS regional priorities.
Fiscal decentralization and municipal reform is recognized by
GoS as crucial to reduce regional disparities and to ensure
that EU pre-accession programmes and financing can be
utilized fully.
Management of natural resources, including abundant
agricultural land, forests and water resources as identified as
priority as of 2005 but results are yet to be seen.
Climate change effects will especially impact on rural
communities dependant on agriculture. Shifting from disaster
response to disaster risk reduction is a serious challenge for
GoS
Rule of Law and Human Rights
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According to the National Judicial Reform Strategy of 2006
the aim of the reform is establishment of an effective judiciary
based on independence, transparency, responsibility and
efficiency. This is among key GoS priorities in the period
2009-2011.
Adoption of the 2008 package of laws on the judiciary is of
exceptional importance for the judicial reform in particular
because of the establishment of new judicial institutions,
such as Supreme Court of Cassation, appellate courts, the
Constitutional Court, Higher Minor Offences Court. This will
provide a significant contribution to increasing efficiency of
the High Court Council and the State Prosecutorial Council
In the period 2008-2010 the GoS also plans to establish the
Agency for anti-corruption.
Reform of police is yet another GoS priority as it is required in
the process of EU integration.
(Cont.) Rule of Law and Human Rights
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Serbia is a party to almost all UN human rights treaties, and
has signed but not ratified Convention on the Protection of
Migrant Workers(CMW), Convention on Rights of Persons
with Disabilities (CPD) and Convention for the Protection of
All Persons from Enforced Disappearance (CED).
Although recognized as important, national plan or strategy
on human rights is still to be addressed by the GoS.
Conclusion: Key Challenges in the
Coming Period
 Uncertain pace of EU Integration process
 Internal political polarization and weak
executive and legislative powers
 Macro-economic instability
 Partial economic and social reforms
 Delayed public administration and judiciary
reform
 Stagnation/deterioration of living standard