## tarea2026063 ## Source details **Canonical URL:** [tarea2026063](https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026063.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2026/english/tarea2026063.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2026/english/tarea2026063.pdf.json) --- ### Preface — mission, team, and meetings - Mission purpose and timing: - IMF Fiscal Affairs Department (FAD), with Statistics Department (STA), visited Belgrade during January 28-February 10, 2025 to conduct a Fiscal Transparency Evaluation (FTE). - Mission team: - FAD: Mr. Maximilien Queyranne (Lead), Ms. Yasemin Hürcan, Mr. Jonas Frank. - STA: Mr. Philip Stokoe. - FAD Expert: Mr. Johann Seiwald. - Meetings held with Ministry of Finance officials, SAI, SORS, NBS, other ministries, public enterprises, and civil society (list of named officials and institutions as provided). - Acknowledgements: mission expressed gratitude for cooperation and support, naming specific local support staff and interpreters. ### Fiscal reporting: scope, publications, frequency, and timeliness - Overview: - Assessment against IMF Fiscal Transparency Code on coverage (institutions, stocks, flows), frequency/timeliness, quality/accessibility/comparability, and reliability/integrity. - Three main report categories reviewed: budget execution reports, consolidated financial statements, and fiscal statistics. - Main published fiscal reports (selected): - Monthly Public Finance Bulletins (cash-based outturns across budgetary central government, four Social Security funds, public entities benefiting from Health Insurance Fund, subnational governments, autonomous province of Vojvodina, Roads of Serbia, Corridors of Serbia, other extrabudgetary units). - Monthly Macroeconomic and Fiscal Data (excel). - Monthly Central Government Operations (CGO) Statistics (cash). - Monthly General Government Operations (GGO) Statistics (cash). - Monthly and Quarterly Public Debt Reports (PDA, MoF). - Quarterly Debt Statistics (NBS → World Bank Quarterly Public Sector Debt Database) in line with GFSM 2014. - Government Finance Statistics (SORS → IMF) general government cash-basis GFSM 2014. - Reporting calendar and lags (selected): - Public Finance Bulletin: Monthly, Lag 35d. - Macroeconomic and Fiscal Data: Monthly, Lag 35d. - Central Government Operations (MoF): Monthly, Cash, GFSM 2014, Lag 35d. - General Government Operations (MoF): Monthly, Cash, GFSM 2014, Lag 35d. - Public Debt Monthly Reports (MoF): Monthly, Lag 35d. - Public Debt Quarterly Reports (MoF): Quarterly, Lag 30d. - Quarterly Debt Statistics (NBS): Quarterly. - Final Account (MoF): Annual, Cash, Nat., Lag 7m. - Government Finance Statistics (SORS): Annual, Cash, GFSM 2014, Lag ~12m. - Note: Lag measures average time between end of reporting period and publication, in days (d) or months (m). ### Coverage of institutions, stocks, and flows — findings and gaps - Institutional coverage (Good): - Total public sector units (per SORS Sectoral Classification): 11,310. - Subsector counts and 2023 percent of GDP figures (from Table 1.2): - Public Sector: Number of entities 11,310; Revenue 55.95; Expenditure 56.1; Balance -0.2; Intra-PS expenditure 0.0; Net expenditure 56.1; Net expenditure (Percent) 100.0 - General government: Number of entities 10,366; Revenue 40.1; Expenditure 42.3; Balance -2.2; Intra-PS expenditure 0.0; Net expenditure 42.3; Net expenditure (Percent) 75.5 - Central government: Number of entities 1,073; Revenue 22.8; Expenditure 25.0; Balance -2.3; Intra-PS expenditure 6.0; Net expenditure 19.1; Net expenditure (Percent) 34.0 - Social Security Funds: Number of entities 421; Revenue 16.8; Expenditure 16.8; Balance 0.1; Intra-PS expenditure 0.0; Net expenditure 16.8; Net expenditure (Percent) 29.9 - Local governments: Number of entities 8,872; Revenue 6.5; Expenditure 6.5; Balance 0.0; Intra-PS expenditure 0.0; Net expenditure 6.5; Net expenditure (Percent) 11.5 - Nonfinancial public corporations: Number of entities 932; Revenue 14.2; Expenditure 12.5; Balance 1.7; Intra-PS expenditure 0.3; Net expenditure 12.2; Net expenditure (Percent) 21.8 - Central Bank: Number of entities 1; Revenue 1.0; Expenditure 0.7; Balance 0.2; Intra-PS expenditure 0.0; Net expenditure 0.7; Net expenditure (Percent) 1.3 - Other financial public corporations: Number of entities 11; Revenue 0.9; Expenditure 0.8; Balance 0.1; Intra-PS expenditure 0.0; Net expenditure 0.8; Net expenditure (Percent) 1.5 - Key distributional findings: - Public sector expenditures = 56.1 percent of GDP in 2023. - General government accounts for 75.5 percent of total public sector net expenditure. - Central government ≈ 34 percent of general government net expenditure. - Social security funds ≈ 30 percent. - Subnational governments ≈ 11.5 percent. - Public corporations account for remaining 24.5 percent of net expenditures, almost all from nonfinancial corporations. - Gaps in institutional coverage and implications: - No single report provides complete coverage of general government or public sector activity; coverage improved in 2023–2024 with further expansions planned in 2025. - Some extrabudgetary units (EBUs) remain outside MOF fiscal reports; largest excluded units include Serbian Railways Infrastructure, Serbiavoz, Serbia Water, Radio Television Serbia. - These excluded entities estimated total expenditures in 2023 of 1.6 percent of GDP. - Missing expenditures from those entities in 2023 ≈ 0.9 percent of GDP (due to budget transfers). - Authorities plan inclusion of these units over 2025 and 2026. - Wider public sector has significant unreported expenditures (13.9 percent of GDP) and liabilities. - Coverage of stocks (Good): - Republican Budget balance sheet (Final Account) published annually with granular stocks of nonfinancial assets, financial assets and liabilities in national presentation. - Balance sheet data not published for other parts of general government; no published balance sheet data for wider public sector. - In-year reports include government debt (including guaranteed debt) and deposits, but presentation of deposits could be improved. - NBS has compiled comprehensive quarterly general government and government subsector financial balance sheets (not yet published). - SORS has preliminary estimates of general government fixed assets (not yet published). - Gaps in stock coverage (Figure 1.2 summary — percent of GDP): - Non-Financial assets: 39.9 - Financial assets: 23.2 - Liabilities: 37.6 - Consolidated public sector balance sheet estimates (end-2023): - Consolidated public sector asset holdings ≈ 154.1 percent of GDP. - Consolidated public sector liabilities ≈ 85.6 percent of GDP. - Public sector net worth ≈ 68.6 percent of GDP. - Public sector net financial worth ≈ -25.4 percent of GDP. - Component details: - Nonfinancial assets: 93.9 percent of GDP (primarily infrastructure assets; natural resource assets 17.1 percent of GDP). - Financial assets: 60.2 percent of GDP (bulk are NBS assets). - Liabilities: 85.6 percent of GDP (primarily government debt securities and loans, and NBS liabilities). - Comparative position: - Serbia’s net worth is in the upper range of other countries in IMF FTE reports; gross liabilities relatively low. - Reasons include absence of large state-owned commercial banks and treatment of pension obligations under SNA 2008 / GFSM 2014 / ESA 2010 conventions. ### Coverage of flows, accruals, and tax expenditures - Coverage of flows (Basic): - Main fiscal reports compiled on a cash basis with no accrual adjustments; reports cover cash revenues, expenditures, and financing. - Limitations noted: - Poor reflection of guaranteed debt and guarantee calls (recorded as installments when paid rather than at decision time). - Poor capture of payment arrears; past concerns in local governments and public health institutions. - SORS progress on accrual reporting: - SORS developed accrual-based estimates of general government operations in line with ESA 2010; first estimates published end-2024. - Accrual data under development, unconsolidated, and not directly comparable with MOF headline fiscal data. - Consolidated accrual estimates expected to be published later in 2025. - If compiled and disseminated regularly, accrual-based reporting could complement or replace cash-based fiscal reports. - Coverage of tax expenditures: - Assessment: Not Met. - Legal framework: - Budget System Law (BSL) defines tax expenditure and requires reporting revenues foregone (Article 2 paragraph 22) but provision not yet implemented due to capacity constraints. - Budget users must provide fiscal implication estimates when proposing legislative or regulatory amendments to tax or social security legislation. - Stock-take and identified tax expenditures (exact amounts reported): - investment incentives in CIT: RSD 29 billion - investment incentives in PIT: RSD 3.5 billion - personal allowance in PIT: RSD 56.9 billion - job creation incentives in SSC: RSD 15 billion - relief of buyers of apartments for property transfer tax and VAT: RSD 9 billion - A comprehensive stock take initiated; gaps remain (notably reduced VAT rates). Recommendation to publish a tax expenditure report in budget annex. ### Timeliness, internal consistency, reconciliations, and revisions - Frequency and timeliness findings: - Monthly fiscal reports provide timely cash-based budget execution and are published a little over a month after the reporting period. - Final accounts timeliness: - Final accounts must be published within 9 months after fiscal year (Article 78 BSL). - MoF prepares draft law on final budget account by June 20; Government submits to National Assembly by July 15. - Drafts in 2022 and 2023 were published on August 29 and July 2 when submitted to Government. - Drafts are not revised based on SAI audits or amended by Parliament; often final when submitted to Government. - Internal consistency and Stock-Flow Adjustment (SFA) issues: - Fiscal reports include two of three internal consistency checks required under FTC (reconciliation of above-the-line deficit and below-the-line financing included). - No published reconciliation of financing and change in headline public debt stock. - Eight-year SFA history shows debt stock changes not always explained by deficits: - Over last 8 years, debt stock increased by 1.3 percent of GDP more than required to fund the deficit. - 2017 SFA: 5 percent of GDP (debt fell by 6.3 percent of GDP despite a surplus of only 1.1 percent of GDP). - In the 2020s, debt consistently increased by 2 percent of GDP more than required to fund the deficit. - Mission explanations for SFA: revaluations in foreign currency debt, non-deficit debt-creating flows (acquisitions of financial assets and accumulation of government deposits), changes in stock of guaranteed debt. - Recommendation: include detailed reconciliation table in Public Finance Bulletin explaining non-deficit changes in debt stock. - Reconciliation table (Serbia: Reconciliation of General Government Consolidated Balance (=Financing) and Change in Public Debt, 2016-2023) — selected exact figures preserved: - Opening Stock of Debt (percent of GDP): 2016: 64.2; 2017: 61.9; 2018: 52.0; 2019: 48.0; 2020: 48.8; 2021: 47.7; 2022: 47.5; 2023: 44.3 - Closing Stock of debt (percent of GDP): 2016: 65.2; 2017: 55.5; 2018: 51.4; 2019: 49.7; 2020: 54.4; 2021: 53.9; 2022: 52.4; 2023: 48.0 - A GG Balance* (percent of GDP): 2016: 1.1; 2017: -1.1; 2018: -0.6; 2019: 0.2; 2020: 7.7; 2021: 3.9; 2022: 3.0; 2023: 2.1 - B Change in debt stock (percent of GDP): 2016: 1.0; 2017: -6.3; 2018: -0.6; 2019: 1.7; 2020: 5.6; 2021: 6.2; 2022: 4.9; 2023: 3.7 - C=A-B SFA (percent of GDP): 2016: -0.2; 2017: -5.3; 2018: 0.0; 2019: 1.5; 2020: -2.1; 2021: 2.3; 2022: 1.9; 2023: 1.6 - Explanation components (percent of GDP), selected: D Net Acquisition of fin assets 2016:-1.1; 2017:-0.5; 2018:0.1; 2019:2.0; 2020:-0.9; 2021:1.4; 2022:1.0; 2023:2.1. I Appreciation (+) / Depreciation (-) of foreign debt 2016:1.4; 2017:-4.3; 2018:0.9; 2019:0.1; 2020:-0.7; 2021:1.1; 2022:0.6; 2023:-0.1. - Source: Public Finance Bulletin November 2024, GDP estimates from SORS and IMF Staff Calculations. Note: A positive sign indicates a deficit, and a negative sign a surplus. - Historical revisions and data consistency: - MoF fiscal statistics are generally not revised; previous years’ data not updated with broader coverage causing breaks in time series. - Inclusion of extrabudgetary units classified inside general government should be implemented across time series, at least back to 2019; likely impact would increase consolidated general government revenue and expenditure in past years by around 1 per cent of GDP. - Recommendation: MoF should develop a formal revisions policy and disclose material revisions with supporting data. - Statistical integrity, external audit, and comparability: - Monthly GFS compiled by MoF on GFSM 2014 basis published on MoF website. - SORS developing ESA 2010 reporting; SORS published ESA 2010 based data on general government operations (unconsolidated). - NBS developing government financial accounts used in this report (not yet published). - External audit: SAI audits final accounts; SAI audits indicate irregularities in cash-based financial statements amounting to around 0.2 percent of total expenditure in 2023; audit opinions qualified but not adverse; draft final accounts not updated based on audit findings. - No published reconciliations between national/budget presentation and GFSM 2014 fiscal statistics by MoF. - Discrepancies in 2023 fiscal aggregates (RSD billion — exact figures preserved): - National Presentation vs GFSM 2014: - Public Revenues: 3,473 vs Total Revenue: 3,457 - Tax Revenue1/: 3,078 vs Taxes: 2,071 - Nontax revenue: 0.351 vs Non-Tax Revenue: 0.290 - Public Expenditures: 3,654 vs Total Expenditures: 3,638 - Interest payment: 0.149 vs Interest: 0.140 - Subsidies: 0.213 vs Subsidies: 0.185 - Capital Expenditures: 0.568 vs Net investment in nonfinancial assets: 0.553 - Footnote: National presentation “taxes” include social contributions to social security funds; in GFSM 2014 these are shown separately as “social contributions”. - Source: Public Finance Bulletin November 2024 and General Government Operations data, MOF. ### SORS accrual data and reconciliation needs - SORS will publish accrual-based data on general government operations, introducing timing and coverage differences relative to MOF cash-based data. - SORS has broader coverage of general government than current MOF fiscal reports. - Conceptual/presentational differences between GFSM 2014 and ESA 2010 should be explained; accrual-based SORS data should be reconciled to MOF fiscal reports and fiscal statistics. ### Priority recommendations for fiscal reporting (Section 1.5 — preserved recommendations) - Recommendation 1.1. Further expand coverage of institutional units and stocks in fiscal reports: - Continue expansion of general government coverage and incorporate remaining EBUs into fiscal reports. - Publish stocks of government deposits alongside debt stock data in in-year reports. - Publish annual estimates of government financial assets and liabilities for general government and subsectors being developed for EU reporting requirements. - Note: Remaining EBUs include Serbian Railways Infrastructure, Serbiavoz, Radio Television Serbia, Resavica and Serbia Water. - Recommendation 1.2. Publish a tax expenditure report in an annex to budget as required in the Budget System Law: - Identify tax expenditures in tax laws. - Assess available information in tax administration. - Classify by policy area. - Calculate revenue loss using available information and develop estimations. - Recommendation 1.3. Improve reconciliation of data within and between fiscal reports: - Publish reconciliation tables between MOF national presentation, GFSM 2014, and SORS accrual data outlining main differences. - Publish stock-flow reconciliation table to identify debt changes not resulting from fiscal balance. - Recommendation 1.4. Introduce a revisions policy for fiscal data and improve consistency over time: - Develop and publish a revisions policy for MoF fiscal statistics and introduce revisions where appropriate with clear explanations. ### Fiscal forecasting, budget process, and public investment - Fiscal forecasting and budgeting assessment areas: comprehensiveness of budget and documentation; orderliness/timeliness; policy orientation; credibility of forecasts. - Key points: - Budget Unity (Good): Republican budget covers 65 direct budget users; EBUs’ own-source revenues were not included in 2023 budget documentation (equivalent to 2 percent of total central government revenues). - Macroeconomic Forecasts (Advanced): - FS includes GDP growth, inflation, unemployment, foreign trade; uses IMF WEO and ECB forecasts. - Provides baseline, optimistic, and pessimistic GDP growth scenarios and medium-term consolidated revenues and expenditures. - Serbia’s average forecasting errors for real GDP growth over 2015-23: 0.1 percentage point for year ahead (EU average 0.4 percentage point). Two- and three-years ahead forecasting errors: 0.03 percent and 0.5 percent respectively (below EU averages 0.9 and 0.8). - Medium-Term Budget Framework (Not Met): - MTBF exists but revenues and financing outturns presented only in final accounts, not within main budget documentation. - Average medium-term expenditure forecasting error: 1.1 percent for year t, 2.3 percent for year t+1, and 3.5 percent for year t+2. - Average medium-term revenue forecasting error: 1.0 percent for year t, 1.8 percent for t+1, and 2.4 percent of GDP for t+2. - Recommendation: present outturns and medium-term projections for revenues, expenditures, and financing on a consistent basis with annual budget. - Public investment (trends and risks): - Since 2015, public investment nearly tripled from 2.5 percent to 7.3 percent GDP in 2024; expected to rise to 8.3 percent in 2027. - Investment surge related to "Leap into the Future – Serbia EXPO 2027" program (2024–2027). - Institutional framework for appraisal, budgeting, and monitoring is being rolled out after 2023 PIM Decree; PIMIS and SPIRI not fully aligned. - Key weaknesses: transparency/oversight in PIM, public procurement exemptions, insufficient systematic CBA for large projects. - Recommendation: increase transparency/oversight, reduce procurement exemptions, ensure strong project appraisal to manage cost-overrun risks. - Orderliness and timeliness: - BSL sets detailed timetable and content requirements; draft budget submission deadlines generally met and draft budgets publicly available one day after submission. - Budgets approved by Parliament before fiscal year start in past five years; 2024 BSL amendment requires Parliament approval by 20 December. - Policy orientation and fiscal rules: - BSL fiscal rules: debt rule with deficit rule, limits on public wage and pension spending. - Implementation of deficit rule postponed until 2029 (December 2022 amendment). - Government FS deficit target: 3 percent of GDP for 2025-2027, contrasting with fiscal rule of 1.5 percent of GDP. - FS projects debt-to-GDP stabilizing at 46.5 percent by 2027 (below 60 percent rule). - Performance information and public participation: - Performance information (Good): program objectives operationalized with output indicators; quality varies; final accounts include report on achievement of performance targets. - Citizen’s budget published (Basic); no formal citizen voice in national budget process; MoF plans online citizen comment platform with quiz requirement. ### Forecast reconciliation, ERP, and MTBF credibility - ERP reconciles aggregate revenues and expenditures between successive ERPs with qualitative explanations; ERP covers general government spending without breakdown by effects and sectors. - Indicative reconciliation table (Table 2.4) presented in ERP (indicative figures preserved as presented in source): - Example row: 2024 Budget | 2024 Budget Year | 2025 (BY+1) | 2026 (BY+2) | 2027 | 2028 — Total expenditure: 100 110 120; Reconciliation components: Accounting or one-off: -5 -6 -8; Macroeconomic Factors: 3 4 6; Policy Measures: 0 5 3; Total Variation: -2 3 1 - Forecast revisions and MTBF credibility: - Average forecasting deviations: between plan for budget year and actuals: 6 percent; plan for first outer year with actuals: 12 percent; plan for second outer year: 17 percent. - Recommendations include introducing enhanced summary tables, systematic publication of documents, strengthening performance information and participation, and transparency in public investment appraisal and tendering. ### Fiscal risks: disclosure, analysis, and management - Coverage of fiscal risk reporting: - Government prepares ERP and FS including fiscal risk information; Department of Fiscal Risk Monitoring active with international support. - MoF starting an annual Fiscal Risk Statement (FRS) not yet published; alignment with FS recommended. - Macro and specific risks: - Macroeconomic Risks (Assessment: Good): sensitivity analysis and alternative scenarios included in budget documentation; probabilistic forecasts not prepared. - Specific Fiscal Risks (Assessment: Good): disclosed risks include guarantees, financial sector, SOEs, SNGs, environmental risks, litigations; some quantitative disclosures exist but many risk calibrations and individual exposures not disclosed. - Litigations: Maximum exposure 2024 estimated at 3.1 percent GDP; MoF estimates about 0.2 percent GDP could materialize each year over next three years. - Long-term sustainability (Assessment: Not Met): - 2025 FS presents 10-year projections (2024-2033); Revised 2025 FS shortened to seven years. - Authorities do not disclose long-term projections for pension and health funds. - Pension expenditures declined from 12.5 percent of GDP in 2015 to 10.4 percent GDP in 2023. - Health fund expenditures increased from 4.5 percent GDP in 2015 to 5.2 percent GDP in 2022. - SORS projects population in 2052 will be 5,2 million, a decline of about 1.5 million compared to 2022. - Recommendation: publish long-term sustainability analyses for pensions and health. - Selected specific fiscal risks (Table 3.2, percent of GDP): - One-off guarantees (stock): 2 - Standardized Loans guarantees (stock): 5 - Of which called: 0.1 - On-lending (stock): 1 - Called guarantees (paid out): 0.1 - Public-Private Partnerships, investment cost: 3.7 - Bank liabilities: Insured deposits (net of Deposit Insurance Assets): 21.7 - Total liabilities (excluding equity) of publicly owned insurance company Dunav: 0.6 - Total liabilities (excluding equity) of the Housing Loan Insurance: 0.1 - Financial liabilities (excluding equity liabilities) of financial and non-financial public corporations: 18.9 - Natural disasters (budget spending): 0.1 - Litigations: 0.2 - Public expenditure on pensions: 9.7 10.1 - Public expenditure on the health fund: 5.2 - Contingency reserves and reporting: - Two contingency reserves per BSL: current budget reserve (limit 4 percent of revenues and receipts from sales of non-financial assets) and permanent budget reserve (limit 0.5 percent). - No regular in-year reporting on current budget reserve; only information in final accounts. - In 2023, there were 83 government decisions on uses from current budget reserve. - MoF table submitted to government does not include total amount; using planned revenues, 2022 contingency reserve numbers exceeded 4 percent limit. - Extracted contingency reserve fragment (million RSD and percent): - 2021 55,713 1,336,324 4.2% - 2022 113,829 1,516,851 7.5% - 2023 72,298 1,843,364 3.9% - Guarantees, on-lending, and PPPs: - Guarantees on issue equivalent to 7 percent of GDP historically; revised 2025 FS indicates guaranteed debt stock is 2 percent of GDP (down from 7.5 percent of GDP in 2012). - Limit for 2025 guarantees: RSD 365 billion (0.4 percent of GDP) for projects listed in Article 3A. - Recording practice concern: guarantee calls recorded on cash basis installment by installment; recommendation to apply GFSM 2014 and ESA MGDD guidance. - On-lending stock around EUR 800 million (1 percent of GDP) at end-2024. - PPPs (Not Met): government does not publish total rights, obligations, and other exposure under PPP contracts. PPP capital stock rose to 2 percent of GDP; investment cost of PPPs added during 2021-2023: 0.7 percent GDP for total investment cost of 3.7 percent GDP during 2021-2023 (WB PPI Database). Example: Nikola Tesla Airport concession estimated capital investment worth 1.3 percent of GDP. - Financial sector exposure (Advanced): - General government financial assets and liabilities: 50.7 percent and 50.3 percent of GDP in 2023. - Banking sector indicators (Table 3.4, Serbia 2023 — exact values): - Tier 1 capital to assets, Percent: 10.9 - Nonperforming loans to total gross loans, Percent: 3.2 - Customer deposits to total (non interbank) loans, Percent: 132.1 - Liquid assets to total assets, Percent: 41.0 - Return on assets, Percent: 2.5 - Public sector financial sector exposure (Table 3.5, Serbia 2023, percent of GDP): - 1 Total bank liabilities: 89.5 - 2 Of which eligible deposits: 38.8 - 3 Of which insured: 22.9 - 4 Total Deposit Insurance Agency assets: 1.2 - 5 Net exposure (Position 3 minus 4): 21.7 - Box 3.2 highlights: total financial sector liabilities (consolidated) 89 percent GDP in 2023; Deposit Guarantee Scheme insures deposits up to EUR 50,000; Deposit Insurance Scheme capitalization peaked at 1.2 percent of GDP in 2024; two state-owned banks jointly had liabilities of 5.3 percent of GDP in 2023. - Natural resources (Not met): - Natural resource stocks and flows not disclosed; royalty fees vary 1 to 7 percent. - Natural resource revenues during 2015-2021 ≤ 0.1 percent GDP; rose to 0.2 percent GDP in 2022 and 2023. - Ministry of Mining and Energy preparing a 20-year forecast strategy. ### Subnational governments, public corporations, SOEs, and quasi‑fiscal activities - Subnational governments (SNGs): - Monthly consolidated SNG data published but not by individual entity (except Vojvodina) and without fiscal performance indicators. - SNGs use national information system SPIRI since January 2025. - SNG revenues ~5 percent GDP and spending ~7 percent GDP during 2015-2023; subnational self-government units spend 6.5 percent GDP (summary). - Legal borrowing limits: debt stock up to 50 percent of local government current revenues previous year; debt service below 15 percent of current revenue; short-term borrowing up to 5 percent of current revenues. - Risks from financial relations with SNG-owned public corporations and de facto guarantees (e.g., letters of comfort to banks for GSP) not fully captured. - Public corporations and SOEs: - Disclosure limited: FS reports on 36 companies but excludes many large public corporations (e.g., Serbia Telecom). - Regular budget recipients and amounts (annual, exact wording preserved): - Railways: around RSN 20 billion per year. - Roads of Serbia: around RSN 15 billion per year. - Resavica: around RSN 5 billion per year. - SOE Governance Law adopted September 2023; envisaged fully effective in 2026 following transition period; many implementing bylaws pending; dividend policy not included (regulated in annual budget law). - Magnitude of liabilities and QFAs: - Major public corporations’ financial liabilities (excluding equity liabilities) amount to 18.9 percent of GDP. - Serbia Telecom: 4.9 percent of GDP. - EPS: 3.6 percent of GDP. - Biggest loss-making companies Putevi and Railway Infrastructure ≈ 0.1 percent of GDP. - Quasi-fiscal activities exist and are not yet quantified. - Recommendations include reporting all budget transactions as budget annex, publishing SOE financial performance reports under SOE Law, and identifying/quantifying QFAs. ### Key recommendations (selected, preserved) - Reporting and data reconciliation: - Expand coverage of institutional units and stocks; publish government deposits alongside debt; publish annual gov’t financial assets/liabilities. - Publish tax expenditure report with revenue-loss estimates and classification. - Publish reconciliation tables between national presentation, GFSM 2014, and SORS accrual data; publish stock-flow reconciliation explaining debt changes not due to deficit. - Develop and publish a formal revisions policy and implement back revisions for changes in coverage. - Fiscal risk management: - Publish more frequent data on standardized guarantees and improve classification/reporting of guarantees per GFSM 2014 and ESA MGDD. - Clarify contingency reserve calculation and introduce in-year reporting and transparent allocation criteria. - Gradually adopt SALM approach; publish risk assessment of financial assets and integrate cash and debt management. - Disclose PPP obligations and exposures and improve PPP institutional integration with PIM. - Improve SOE reporting and quantify quasi-fiscal activities. - Publish long-term sustainability analyses for pensions and health, extend projection horizons. - Budgeting, forecasting, and public investment: - Present outturns and medium-term projections for revenues, expenditures, and financing on a consistent basis with annual budget. - Publish draft budget and all annexes permanently and systematize MoF publications on website. - Strengthen project appraisal, reduce procurement exemptions, publish CBAs and monitor cost overruns for projects over Euro 20 million. - Reestablish Parliamentary Budget Office to support budget scrutiny. ### Selected key statistics and evaluation highlights (preserved figures) - Public sector expenditures: 56.1 percent of GDP (2023). - Consolidated public sector assets: ≈ 154.1 percent of GDP (end-2023). - Consolidated public sector liabilities: ≈ 85.6 percent of GDP (end-2023). - Public sector net worth: ≈ 68.6 percent of GDP (end-2023). - Public sector net financial worth: ≈ -25.4 percent of GDP (end-2023). - Public investment: 2.5 percent GDP in 2015 → 7.3 percent GDP in 2024; expected 8.3 percent in 2027. - Pension and health fund expenditures combined (long-term pressures): 15.5 percent GDP. - Contingency reserve utilizations: 2021 4.2%; 2022 7.5%; 2023 3.9% (as presented in contingency reserve fragment). - Financial sector consolidated liabilities: 89 percent GDP (2023). - Deposit Insurance Agency assets: 1.2 percent of GDP (2023). - Public corporations’ financial liabilities (excluding equity): 18.9 percent of GDP. - Guaranteed debt stock (revised 2025 FS): 2 percent of GDP (2024); historical high 7.5 percent of GDP (2012). - On-lending stock: EUR 800 million (1 percent of GDP, end-2024). - Standardized loans guarantees outstanding as of September 30, 2024: €2.5 billion (5% of GDP); called guarantees paid out: €66.9 million (0.1% of GDP); recoveries: €6 million. *IMF Technical Assistance Report — content unit: tarea2026063 (excerpts as provided).* ### Preface _________________________________________________________________________ 6 ### Preface ### Mission purpose and timing - In response to a request by the Ministry of Finance, a mission from the IMF’s Fiscal Affairs Department (FAD), with participation of the Statistics Department (STA), visited Belgrade during January 28-February 10, 2025, to conduct a Fiscal Transparency Evaluation (FTE). ### Mission team - FAD: Mr. Maximilien Queyranne (Lead), Ms. Yasemin Hürcan, Mr. Jonas Frank. - STA: Mr. Philip Stokoe. - FAD Expert: Mr. Johann Seiwald. ### Meetings with Ministry of Finance officials - Ms Ana Tripović, Secretary of State. - Ms Milica Jovanovic, Assistant Minister and Head of the Macroeconomic and Fiscal Projections and Analyses Department, and her team: Ljubica Matic and Ognjen Jancić. - Mr Darko Komnenić, Assistant Minister for the Budget, and Ms Milesa Marjanović, Head of the Budget Sector, and their team. - Mr Marko Gvero, Director of Treasury. - Ms Ana Tripović and Head of the Public Debt Administration. - Ms Sanja Putnik, Assistant Minister of the Capital Projects Department. - Mr Zlatko Džigal, Head of the Department for Fiscal Risk Monitoring. - Mr Ognjen Popović, Head of the Financial Sector Department. ### Meetings with other public institutions and oversight bodies - Mr Vroljub Arsić, Chairman of the Committee on Finance, State Budget and Control of Public Spending of the National Assembly. - Mr. Duško Pejović, President of the State Audit Institution and Auditor General. - Mr Dušan Gavrilović and Ms. Vesna Simonović, Statistics Office of the Republic of Serbia. - Mr Savo Jakovljević, Director of Research; Ms Ivana Vasić; Mr Tomo Vujović, National Bank of Serbia. ### Meetings with other government agencies, public enterprises and civil society - Representatives of: Ministry of Economy; Ministry of Construction, Transport and Infrastructure; Ministry of Energy and Mining; Ministry of Environment; Ministry of European Integration; The National Public Procurement Office; the Health Insurance Fund; The Insurance Deposit Fund; The National Railway Passenger company Srbijavoz; Elektroprivreda Srbije (EPS); the City of Belgrade; the City of Nis; the Belgrade public transport company (GSP); and Transparency Serbia. ### Acknowledgements and local support - The mission expressed gratitude to the authorities for productive discussions and outstanding cooperation. - Special thanks to Nenad Vlaketić, Advisor to the Minister of Finance, for arrangements and facilitating the work of the mission. - The mission is very grateful to Lev Ratnovski, Resident Representative; Marko Paunović and Desanka Obradović (local economists); and Zvezdana Marjanovic for excellent support. - The mission is grateful to Ms. Radmila Vujović and Ms. Marija Rosić for interpretation and translation services. *IMF Technical Assistance Report — Preface* ### 1. Fiscal reports should provide a comprehensive, timely, reliable, comparable, and ### tarea2026063 - 1. Fiscal reports should provide a comprehensive, timely, reliable, comparable, and accessible summary of the government’s financial performance, financial position, and cash flows ### Overview - The chapter assesses Serbia’s fiscal reporting practices against the IMF’s Fiscal Transparency Code across the following dimensions: - Coverage of public sector institutions, stocks, and flows; - Frequency and timeliness of reporting; - Quality, accessibility, and comparability of fiscal reports; - Reliability and integrity of reported fiscal data. - Three main categories of fiscal reports reviewed: budget execution reports, consolidated financial statements, and fiscal statistics. ### Published fiscal reports (main items summarized) - Monthly Public Finance Bulletins: cash-based outturns for revenue, expenditure, and financing for budgetary central government, four Social Security funds, public entities benefiting from the Health Insurance Fund, subnational governments, autonomous province of Vojvodina, Roads of Serbia, Corridors of Serbia and other extrabudgetary units. - Monthly Macroeconomic and Fiscal Data: main tables from the Public Finance Bulletin in excel format. - Monthly Central Government Operations (CGO) Statistics: cash-based outturns for the budgetary central government. - Monthly General Government Operations (GGO) Statistics: cash-based outturns with same coverage as Monthly Public Finance Bulletins. - Monthly Public Debt Reports (PDA, MoF): stocks of general government, central government and subnational government debt, broken down by currency, domestic/external, and by creditor; information on debt yields. - Quarterly Public Debt Reports (PDA, MoF): reconciliation tables of central government debt stocks with issuance and repayments; detailed information on government guarantee recipients. - Quarterly Debt Statistics (NBS → World Bank Quarterly Public Sector Debt Database): stock of budgetary central government debt by instrument at face value in line with GFSM 2014. - Government Finance Statistics (SORS → IMF): general government and subsector revenue and expenditure, on a cash basis, in line with GFSM 2014. ### Reporting calendar and lags (selected entries from Table 1.1) - Public Finance Bulletin: Monthly, Lag 35d. - Macroeconomic and Fiscal Data: Monthly, Lag 35d. - Central Government Operations (MoF): Monthly, Cash, GFSM 2014, Lag 35d. - General Government Operations (MoF): Monthly, Cash, GFSM 2014, Lag 35d. - Public Debt Monthly Reports (MoF): Monthly, Lag 35d. - Public Debt Quarterly Reports (MoF): Quarterly, Lag 30d. - Quarterly Debt Statistics (NBS): Quarterly. - Final Account (MoF): Annual, Cash, Nat., Lag 7m. - Government Finance Statistics (SORS): Annual, Cash, GFSM 2014, Lag ~12m. - Note: Lag measures average time between end of reporting period and publication, in days (d) or months (m). ### Coverage of Fiscal Reports — Institutions (Good) - Total public sector units (per SORS Sectoral Classification): 11,310. - Subsector composition and key entities: - Central government: includes budgetary central government units, ministries, agencies and extrabudgetary units; largest entities include Roads of Serbia, Corridors of Serbia, Serbian Railways Infrastructure, Serbiavoz. - Social security funds: 421 units, including Pension Insurance Fund, Military Health Fund, Unemployment Fund, Health Fund, and health institutions benefiting from Health Fund. - Subnational government: 8,870 units, including Autonomous Province of Vojvodina and 145 municipalities; majority are schools. - Nonfinancial public corporations: 932 corporations, including Elektroprivreda Srbije (EPS), Serbia Telekom, Serbia Gas. - Public financial corporations: largest include National Bank of Serbia, Dunav Insurance, Banka Postanska Stedionca, Srpska Banka. - Table 1.2: Public sector finances, 2023 (Percent of GDP unless otherwise stated): - Public Sector: Number of entities 11,310; Revenue 55.95; Expenditure 56.1; Balance -0.2; Intra-PS expenditure 0.0; Net expenditure 56.1; Net expenditure (Percent) 100.0 - General government: Number of entities 10,366; Revenue 40.1; Expenditure 42.3; Balance -2.2; Intra-PS expenditure 0.0; Net expenditure 42.3; Net expenditure (Percent) 75.5 - Central government: Number of entities 1,073; Revenue 22.8; Expenditure 25.0; Balance -2.3; Intra-PS expenditure 6.0; Net expenditure 19.1; Net expenditure (Percent) 34.0 - Social Security Funds: Number of entities 421; Revenue 16.8; Expenditure 16.8; Balance 0.1; Intra-PS expenditure 0.0; Net expenditure 16.8; Net expenditure (Percent) 29.9 - Local governments: Number of entities 8,872; Revenue 6.5; Expenditure 6.5; Balance 0.0; Intra-PS expenditure 0.0; Net expenditure 6.5; Net expenditure (Percent) 11.5 - Nonfinancial public corporations: Number of entities 932; Revenue 14.2; Expenditure 12.5; Balance 1.7; Intra-PS expenditure 0.3; Net expenditure 12.2; Net expenditure (Percent) 21.8 - Central Bank: Number of entities 1; Revenue 1.0; Expenditure 0.7; Balance 0.2; Intra-PS expenditure 0.0; Net expenditure 0.7; Net expenditure (Percent) 1.3 - Other financial public corporations: Number of entities 11; Revenue 0.9; Expenditure 0.8; Balance 0.1; Intra-PS expenditure 0.0; Net expenditure 0.8; Net expenditure (Percent) 1.5 - Key distributional findings: - Public sector expenditures = 56.1 percent of GDP in 2023. - General government accounts for 75.5 percent of total public sector net expenditure: - Central government ≈ 34 percent of general government net expenditure. - Social security funds ≈ 30 percent. - Subnational governments ≈ 11.5 percent. - Public corporations account for remaining 24.5 percent of net expenditures, almost all from nonfinancial corporations. ### Gaps in institutional coverage and implications - No single report provides complete coverage of general government or public sector activity; coverage of general government has improved in 2023–2024 with further expansions planned in 2025. - Some extrabudgetary units remain outside MOF fiscal reports and statistics; largest excluded units: Serbian Railways Infrastructure, Serbiavoz, Serbia Water, Radio Television Serbia. - These excluded entities estimated total expenditures in 2023 of 1.6 percent of GDP. - Missing expenditures from those entities in 2023 ≈ 0.9 percent of GDP (due to budget transfers). - Authorities plan inclusion of these units over 2025 and 2026. - Wider public sector has significant unreported expenditures (13.9 percent of GDP) and liabilities (notably in public financial corporations). ### Coverage of Stocks (Good) - Republican Budget balance sheet (Final Account) published annually with granular stocks of nonfinancial assets, financial assets and liabilities in national presentation. - Balance sheet data not published for other parts of general government; no published balance sheet data for wider public sector. - In-year reports include government debt (including guaranteed debt) and deposits, but presentation of deposits could be improved; government deposits appear in macroeconomic trends section of Public Finance Bulletin and in NBS data but not in an easily understood presentation alongside other fiscal data. - NBS has compiled comprehensive quarterly general government and government subsector financial balance sheets (not yet published). - SORS has preliminary estimates of general government fixed assets (not yet published). ### Gaps in stock coverage (Figure 1.2 summary) - Main unreported stock components (percent of GDP): - Non-Financial assets: 39.9 percent of GDP (nonfinancial assets of subnational governments, extrabudgetary units, public corporations not reported). - Financial assets: 23.2 percent of GDP (financial assets of subnational governments, social security funds, public corporations beyond equity recorded in republican balance sheet). - Liabilities: 37.6 percent of GDP (currency and deposit liabilities of NBS and other public financial corporations; other accounts payable across entities). ### Consolidated public sector balance sheet estimates (end-2023) - Consolidated public sector asset holdings ≈ 154.1 percent of GDP. - Consolidated public sector liabilities ≈ 85.6 percent of GDP. - Public sector net worth ≈ 68.6 percent of GDP. - Public sector net financial worth ≈ -25.4 percent of GDP. - Component details: - Nonfinancial assets: 93.9 percent of GDP (primarily infrastructure assets; natural resource assets 17.1 percent of GDP). - Financial assets: 60.2 percent of GDP (bulk are NBS assets). - Liabilities: 85.6 percent of GDP (primarily government debt securities and loans, and NBS liabilities including currency in circulation and banking system reserves). ### Comparative position - Serbia’s net worth is in the upper range of other countries in IMF FTE reports; gross liabilities are relatively low. - Reasons cited: - No large state-owned commercial banks. - No employment-related pension schemes for government employees; pension obligations are reflected as long-term fiscal pressures rather than balance sheet liabilities under SNA 2008 / GFSM 2014 / ESA 2010 conventions. - Serbia’s social security pension scheme obligations are not recorded as liabilities; pension pressures are addressed via a fiscal rule to contain total pension expenditures (see principle 3.1.3). ### Coverage of Flows (Basic) - Main fiscal reports are compiled on a cash basis with no accrual adjustments. - Reports cover cash revenues, expenditures, and financing. - Limitations of cash-based reporting: - Poor reflection of guaranteed debt and guarantee calls: current practice records payments of debt service by government on behalf of principal debtor as capital transfers as each installment is paid, rather than as capital transfers for the whole debt called or de facto assumed at decision time (GFSM 2014 and Eurostat Guidance on Manual on Government Deficit and Debt). - Poor capture of payment arrears, enabling seemingly balanced budgets while accruing accounts payable not appearing in expenditure or deficit data. Payment arrears have been a past concern in local governments and public health institutions, though not a serious issue currently. - SORS progress on accrual reporting: - SORS developed accrual-based estimates of general government operations in line with ESA 2010; first estimates published end-2024. - This accrual data is under development, unconsolidated, and not directly comparable with MOF headline fiscal data. - Consolidated accrual estimates expected to be published later in 2025. - If compiled and disseminated regularly (including NBS below-the-line data), accrual-based reporting could complement, be incorporated into, or ultimately replace cash-based fiscal reports, potentially improving ratings. ### Coverage of Tax Expenditures - Coverage of tax expenditures: Not Met. *Source: tarea2026063 - 1. Fiscal reports should provide a comprehensive, timely, reliable, comparable, and accessible summary of the government’s financial performance, financial position, and cash flows (https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026063.pdf)* ### 16. The government does not publish estimates of the revenue loss from tax expenditures. ### 16. The government does not publish estimates of the revenue loss from tax expenditures. ### Tax expenditure reporting: legal framework and implementation status - The Budget System Law (BSL) defines tax expenditure and requires reporting revenues foregone from tax expenditures (Article 2 paragraph 22). The provision does not require a classification by policy area. - Due to capacity constraints this provision has not yet been implemented. - When proposing legislative or regulatory amendments to tax or social security legislation, budget users are required to provide estimates of their fiscal implications to the Government. ### Stock-take, coverage, and identified tax expenditures - A comprehensive stock take has only been initiated, leaving uncertainty about the total size of tax expenditure which appears comparatively low as a result. - An initial analysis by the tax administration identifies the most material revenue foregone from: - personal income tax (PIT) - corporate income tax (CIT) - value added tax (VAT) - social security contributions (SSC) - Gaps remain, in particular for tax expenditure from reduced VAT rates. - Largest identified tax expenditures (exact amounts as reported): - investment incentives in CIT: RSD 29 billion - investment incentives in PIT: RSD 3.5 billion - personal allowance in PIT: RSD 56.9 billion - job creation incentives in SSC: RSD 15 billion - relief of buyers of apartments for property transfer tax and VAT: RSD 9 billion - International comparisons suggest Serbia’s use of tax expenditures is below average but including reduced or zero VAT will increase the number significantly. - Source statement on comparative data: Serbia's data is based on information in the tax administration system; 2023 data for Serbia and 2022 data for comparator countries. ### Findings on frequency and timeliness of fiscal reporting - Monthly fiscal reports: - Provide a timely and relatively comprehensive picture of unfolding fiscal developments. - Are cash-based budget execution reports covering the Republican budget, Vojvodina, subnational governments, four social security funds, entities benefiting from the health fund, a growing number of extrabudgetary units, and aggregated data for the general government. - Are published a little over a month after the reporting period. - Provide breakdowns of revenues, expenditures and financing in the national classification and revenue source at the aggregate central government level. - Monthly debt reports provide stock of debt by residence of creditor, by creditor, expressed in euros, US dollars and RSD, and as percentage of GDP. - Timeliness of annual financial statements: - Final accounts of the Republic of Serbia have to be published within 9 months after the end of the fiscal year (Article 78 of the BSL). - MoF must prepare a draft law on the final budget account by June 20; Government must submit draft to the National Assembly by July 15, which is made public. - In 2022 and 2023, the draft of the law of final accounts were published on August 29 and July 2 when the Ministry of Finance submitted it to Government. - Drafts are not revised based on audits by the Supreme Audit Institution (SAI) or amended by Parliament; they are in substance final when submitted to Government. - The Ministry of Finance aims for discussion of the final accounts in Parliament before the budget debate even though the BSL submission deadline has not been met. ### Publication and accessibility of final accounts materials - The draft of the final accounts is accompanied by extensive information (around 600 pages) including: - a balance sheet - an income statement - a cashflow statement - statement on budget execution - statement on capital expenditure - a significant number of explanatory notes - These materials are published as part of the draft budget and can be retrieved from the Parliamentary webpage but are not available on the Ministry of Finance webpage. ### Classification and presentation of fiscal data - Fiscal reports present spending by administrative, economic, and functional classification, and program information. - Revenue, expenditure, and financing data are disseminated in a national economic classification resembling a modified GFSM 86 presentation; infra-annual GFS data are compiled and reported in line with GFSM 2014 and published on the MoF website. - SORS compiles and disseminates more granular annual GFS to IMF STA in the GFSM 2014 framework. - Functional expenditure disclosures could be improved: - Functional expenditures are published only in annexes of the Economic Reform Program (ERP). - Data are limited to the ten main COFOG divisions rather than more granular COFOG groups. - The budget classification structure includes: chapter (administrative), head, program, function, program/activity/project, and economic classification. ### Internal consistency, stock-flow adjustment (SFA) issues, and reconciliation - Serbia’s fiscal reports include two of the three internal consistency checks required under the FTC, including reconciliation between the above-the-line fiscal deficit and below-the-line financing. - There is no published reconciliation of financing and the change in the stock of the headline measure of public debt. - Over the last 8 years, debt stock has increased by 1.3 percent of GDP over what is required to fund the deficit; in some years the Stock-Flow Adjustment (SFA) has been extremely large. - 2017 SFA: 5 percent of GDP (debt fell by 6.3 percent of GDP despite a surplus of only 1.1 percent of GDP). - In the 2020s, debt consistently increased by 2 percent of GDP more than required to fund the deficit. - The mission’s explanations for SFA include: - revaluations in foreign currency debt (especially in 2017 following a fall in the value of the Euro against the Denar), - non-deficit debt creating flows (acquisitions of financial assets and accumulation of government deposits), - changes in the stock of guaranteed debt. - Recommendation: Include a detailed reconciliation table in the Public Finance Bulletin explaining changes in the stock of debt arising from reasons other than the deficit to enhance transparency. ### Reconciliations and example reconciliation table (selected data preserved exactly) - Table: Serbia: Reconciliation of General Government Consolidated Balance (=Financing) and Change in Public Debt, 2016-2023 (percent of GDP) - Opening Stock of Debt: - 2016: 64.2 - 2017: 61.9 - 2018: 52.0 - 2019: 48.0 - 2020: 48.8 - 2021: 47.7 - 2022: 47.5 - 2023: 44.3 - Closing Stock of debt: - 2016: 65.2 - 2017: 55.5 - 2018: 51.4 - 2019: 49.7 - 2020: 54.4 - 2021: 53.9 - 2022: 52.4 - 2023: 48.0 - A GG Balance*: - 2016: 1.1 - 2017: -1.1 - 2018: -0.6 - 2019: 0.2 - 2020: 7.7 - 2021: 3.9 - 2022: 3.0 - 2023: 2.1 - B Change in debt stock: - 2016: 1.0 - 2017: -6.3 - 2018: -0.6 - 2019: 1.7 - 2020: 5.6 - 2021: 6.2 - 2022: 4.9 - 2023: 3.7 - C=A-B SFA: - 2016: -0.2 - 2017: -5.3 - 2018: 0.0 - 2019: 1.5 - 2020: -2.1 - 2021: 2.3 - 2022: 1.9 - 2023: 1.6 - Explanation for SFA: - D Net Acquisition of fin assets: - 2016: -1.1 - 2017: -0.5 - 2018: 0.1 - 2019: 2.0 - 2020: -0.9 - 2021: 1.4 - 2022: 1.0 - 2023: 2.1 - E Currency and deposits: - 2016: -0.9 - 2017: -0.4 - 2018: 0.4 - 2019: 2.7 - 2020: 0.1 - 2021: 1.6 - 2022: 1.3 - 2023: 2.1 - F Acquisition of financial assets: - 2016: 0.0 - 2017: 0.0 - 2018: 0.2 - 2019: 0.9 - 2020: 0.3 - 2021: 0.2 - 2022: 0.1 - 2023: 0.5 - G Receipts from repayment of loans: - 2016: -0.1 - 2017: -0.1 - 2018: -0.4 - 2019: -0.7 - 2020: -0.4 - 2021: -0.4 - 2022: -0.2 - 2023: -0.5 - H Privatization proceeds: - 2016: -0.1 - 2017: -0.1 - 2018: -0.1 - 2019: -0.8 - 2020: -0.9 - 2021: 0.0 - 2022: -0.1 - 2023: 0.0 - I Appreciation (+) / Depreciation (-) of foreign debt: - 2016: 1.4 - 2017: -4.3 - 2018: 0.9 - 2019: 0.1 - 2020: -0.7 - 2021: 1.1 - 2022: 0.6 - 2023: -0.1 - J Change in stock of guaranteed debt: - 2016: -0.6 - 2017: -1.1 - 2018: -0.5 - 2019: -0.1 - 2020: -0.1 - 2021: -0.1 - 2022: 0.3 - 2023: 0.4 - K=D+I+J Explained SFA: - 2016: -0.2 - 2017: -6.0 - 2018: 0.4 - 2019: 2.0 - 2020: -1.7 - 2021: 2.4 - 2022: 1.9 - 2023: 2.3 - L=C-K Residual: - 2016: 0.0 - 2017: 0.7 - 2018: -0.4 - 2019: -0.5 - 2020: -0.4 - 2021: -0.2 - 2022: 0.0 - 2023: -0.7 - Source: Public Finance Bulletin November 2024, GDP estimates from SORS and IMF Staff Calculations - Note: A positive sign indicates a deficit, and a negative sign a surplus. ### Historical revisions and data consistency - Fiscal statistics published by the MoF are generally not revised; previous years’ data are not updated with broader coverage, leading to breaks in time series. - Inclusion of extrabudgetary units classified inside general government should be implemented across time series, at least back to 2019, and the impact of these reclassifications on previously published data should be disclosed with detailed supporting data. - The likely impact of including these entities would be to increase consolidated general government revenue and expenditure in past years by around 1 per cent of GDP. - Recommendation: MoF should develop a formal revision policy to ensure data are revised where appropriate and material revisions explained to users. ### Statistical integrity, external audit, and comparability - The MoF and SORS compile and disseminate fiscal statistics according to international standards: - Monthly GFS compiled by MoF on a GFSM 2014 basis are published on the MoF website. - SORS is developing ESA 2010 reporting and compiles and submits GFS to IMF STA in GFSM 2014; SORS recently published ESA 2010 based data on general government operations, though the data is unconsolidated. - NBS is developing government financial accounts and has used data as the foundation of the government balance sheet compiled within this report; this data is not yet published. - External audit: - Financial audits of final accounts are undertaken by the independent SAI in line with international standards. - SAI audits indicate irregularities in the cash-based financial statements amounting to around 0.2 percent of total expenditure in 2023; auditors report several irregularities leading to a qualified opinion on the final accounts (but qualifications do not justify an adverse opinion). - The draft final accounts are not updated based on the audit findings; most audit findings are reflected in final accounts of future fiscal years. - Comparability: - No reconciliations are published between the fiscal data in the national / budget presentation and the GFSM 2014 fiscal statistics published by the MoF. - Composition differences exist between the two data sets and should be explained. ### Discrepancies in 2023 fiscal aggregates (preserve numbers exactly) - Table: Serbia: Discrepancies in Fiscal Reports vs Fiscal Statistics (GFSM 2014) 2023 (in RSD billion) - National Presentation vs GFSM 2014: - Public Revenues: 3,473 vs Total Revenue: 3,457 - Tax Revenue1/: 3,078 vs Taxes: 2,071 - Nontax revenue: 0.351 vs Non-Tax Revenue: 0.290 - Public Expenditures: 3,654 vs Total Expenditures: 3,638 - Interest payment: 0.149 vs Interest: 0.140 - Subsidies: 0.213 vs Subsidies: 0.185 - Capital Expenditures: 0.568 vs Net investment in nonfinancial assets: 0.553 - Footnote: In the national presentation, “taxes” include the social contributions to social security funds, while in the GFSM 2014 data these revenues are not included as part of “taxes”, but shown separately as “social contributions”. - Source: Public Finance Bulletin November 2024 and General Government Operations data, MOF. *IMF Technical Assistance Report (excerpts as provided).* ### 36. In the longer term, a third set of fiscal data will be published by SORS, in the form of ### tarea2026063 - 36. In the longer term, a third set of fiscal data will be published by SORS, in the form of ### SORS accrual data and reconciliation needs - SORS will publish a third set of fiscal data in the form of accrual-based data on general government operations. - As SORS data will be accrual data, the time of recording for transactions will introduce further differences between different sets of fiscal data for Serbia. - SORS has broader coverage of the general government sector than current MOF fiscal reports. - Conceptual and/or presentational differences exist between the GFSM 2014 presentation and the ESA 2010 framework; these differences should be explained to users of the data. - Accrual-based SORS data should be reconciled to fiscal reports and fiscal statistics published by MOF. ### Priority recommendations for improving fiscal reporting (Section 1.5) - Recommendation 1.1. Further expand the coverage of institutional units and stocks in fiscal reports. - Continue to expand the coverage of the general government sector and incorporate the remaining extra budgetary units into fiscal reports. - Publish stocks of government deposits alongside the debt stock data, in in-year fiscal reports. - Publish the annual estimates of government financial assets and liabilities for the general government and its subsectors that are being developed to meet EU reporting requirement. - Note: Remaining EBUs include Serbian Railways Infrastructure, Serbiavoz, Radio Television Serbia, Resavica and Serbia Water. - Recommendation 1.2. Publish a tax expenditure report in an annex to budget as required in the Budget System Law. - Identify the different tax expenditures in the tax laws. - Assess the available information in the tax administration system. - Classify according to the different policy areas. - Calculate the revenue loss by using available information and develop appropriate estimations. - Recommendation 1.3. Improve the reconciliation of data within and between fiscal reports. - Publish reconciliation tables between the fiscal data compiled by the MOF in the national presentation and in the GFSM 2014 data (and with the accrual data published by SORS in due course), outlining the main sources of difference between key aggregates. - Publish a stock-flow reconciliation table to clearly identify changes in the stock of debt that are not a result of the fiscal balance. - Recommendation 1.4. Introduce a revisions policy for fiscal data and improve the consistency of data over time. - Develop and publish a revisions policy for fiscal statistics produced by the MOF and introduce revisions to previously reported data to strengthen consistency of time series of fiscal statistics. ### Summary assessment of fiscal reporting (selected findings from Table 1.7) - Principle 1.1.1 Coverage of Institutions - Assessment: Good: Fiscal reports cover most GG units, including social security funds with work underway to expand coverage to incorporate remaining GG entities. - Priority: Medium: Revenues and expenditures of public corporations of 16 and 14 percent of GDP were excluded from fiscal reports in 2023. - Rec: 1.1 - Principle 1.1.2 Coverage of Stocks - Assessment: Good: Annual balance sheet data, with stocks of nonfinancial assets, financial assets, and liabilities are reported for the Republican Budget in the Final Account. - Priority: Medium: Unreported public sector assets and liabilities of 63.1 and 37.6 percent of GDP. - Rec: 1.1 - Principle 1.1.3 Coverage of Flows - Assessment: Basic: Fiscal reports are presented on a cash basis. - Priority: Medium: Accrual basis would more accurately reflect current practices on granting and recording of guaranteed debt. - Rec: 1.1 - Principle 1.1.4 Coverage of Tax Expenditures - Assessment: Not met: Neither budget documents nor fiscal reports include a presentation of tax expenditures. - Priority: High: A comprehensive stock take has been initiated, with total size of tax expenditure still unknown. - Rec: 1.2 - Principle 1.2.1 Frequency of In-Year Reporting - Assessment: Advanced: Monthly fiscal reports, covering the operations of the general government and government debt are published 35 days after the end of the period. - Priority: Low: Monthly reports already meet advanced requirements, but could be expanded to include information on government deposits. - Principle 1.2.2 Timeliness of Annual Financial Statements - Assessment: Good: Final accounts have to be submitted to Parliament by July 15 and were submitted for the 2022 and 2023 final accounts in July or August. - Priority: Medium: Timely submission of final accounts has improved in the last few years ensuring they are available for the budget debate. - Principle 1.3.2 Internal Consistency - Assessment: Good: Fiscal reports include reconciliations of the budget balance and financing and stocks and flows of central government debt. - Priority: High: Stock-flow discrepancies of ~2 percent of GDP or more should be explained. - Rec: 1.3 - Principle 1.3.3 Historical Revisions - Assessment: Not met: With some limited exceptions, fiscal statistics prepared by the Ministry of Finance are not revised, and no revision policy exists. - Priority: Medium: Changes in coverage should be reflected through changes to historic data and clear explanations to users of the basis of revisions. - Rec: 1.4 - Principle 1.4.1 Statistical Integrity - Assessment: Basic: Headline fiscal data are compiled by the Ministry of Finance rather than an independent statistical agency. - Priority: Medium: In the long term, complement MOF data with independent estimates from SORS and NBS. - Principle 1.4.2 External Audit - Assessment: Basic: SAI publishes audit reports on the reliability of the cash-based final accounts but no audit opinion on balance sheet due to major qualifications concerning assets. - Priority: Low: Financial audits are conducted based on international standards and cash-based final accounts are not subject to an adverse audit opinion. - Principle 1.4.3 Comparability of Fiscal Data - Assessment: Basic: Budget execution reports are prepared on the same basis as the annual budget. Differences between fiscal reports and GFSM 2014 or ESA 2010 data are not explained. - Priority: Medium: Discrepancies between national presentation and GFSM 2014 basis fiscal data should be explained. - Rec: 1.3 ### Fiscal forecasting and budgeting (key points) - Chapter assesses Serbia’s practices against the IMF’s Fiscal Transparency Code across: - Comprehensiveness of the budget and associated documentation; - Orderliness and timeliness of the budget process; - Policy orientation of budget documentation; - Credibility of the fiscal forecasts and budget proposals. - Main fiscal forecasting and budgeting reports listed include: Annual Budget Law, Annex Performance Information, Citizen Budget, Fiscal Strategies and revised Fiscal Strategies, Economic Reform Program. (Table 2.1 summary in source.) - 2.1.1 Budget Unity (Good) - Republican budget covers 65 direct budget users; EBUs’ own source of revenues were not included in budget documentation in 2023 and are equivalent to 2 percent of total central government revenues. - Own source revenues in 2024 will be significantly lower as agencies and institutions have been included in the RB in 2024. - EBUs not included in central government are disclosed in the Public Finance Bulletin and include Roads of Serbia, Corridors of Serbia, 39 scientific institutions and 24 public agencies such as Serbia Water, Railway. - 2.1.2 Macroeconomic Forecasts (Advanced) - Fiscal Strategy (FS) includes macroeconomic forecasts: GDP growth and components, inflation, unemployment, foreign trade; uses IMF WEO and ECB forecasts. - FS provides baseline, optimistic and pessimistic GDP growth scenarios and medium-term consolidated revenues and expenditures for RB and SNGs, analysis of fiscal risks, debt management strategy, and cyclically-adjusted fiscal balance calculations. - FS draft is provided to the Fiscal Council for comments before finalization; government submits finalized draft to Parliament for comments. - Serbia’s average forecasting errors for real GDP growth over 2015-23: 0.1 percentage point for year ahead (below EU average of 0.4 percentage point). Two- and three-years ahead forecasting errors of 0.03 percent and 0.5 percent were below EU averages of 0.9 and 0.8 respectively. A slight optimistic bias is observed in inflation forecasts. - 2.1.3 Medium-Term Budget Framework (Not Met) - Serbia has an MTBF but does not fully meet FTC principles because revenues and financing outturns are only presented in final accounts and not within main budget documentation; medium-term revenue and financing projections are not included in the table presenting medium-term expenditure projections. - Expenditure outturns for two preceding years are detailed in Annexes 2 and 3 of the draft budget law; medium-term expenditure projections for the two outer years are presented by budget chapter level in Article 49 since 2024, but not on the same basis. - Average medium-term expenditure forecasting error: 1.1 percent for year t, 2.3 percent for year t+1, and 3.5 percent for year t+2. - Average medium-term revenue forecasting error (GG revenue forecasts): 1.0 percent for year t, 1.8 percent for t+1, and 2.4 percent of GDP for year t+2. - Recommendation: Present outturns and medium-term projections for revenues, expenditures, and financing on a consistent basis with the annual budget to meet FTC standards. - 2.1.4 Investment projects (Basic) - Annex 3 of the Updated 2025 FS (October 2024) published for the first time actual spending, planned multi-annual spending for 2025-2027 and total project cost (with no cost overrun information) for individual projects greater than EUR 20 million (projects regulated by the 2023 PIM Decree). - The 2025 Budget expanded disclosure for public investment spending for the RB (about 6 percent GDP in 2025), including projects greater than EUR 20 million (PIM Decree), projects smaller than EUR 20 million, and projects completed within a budget year. - Cost-Benefit Analysis (CBA) is not systematically carried out for large projects and results are not published before approval. - Public procurement law contains significant exemptions from open competition (13 categories of negotiated procedures without public tendering and 24 types of exemptions), including government-to-government agreements and Special Laws granting exemptions (e.g., EXPO Belgrade 2027). - National Procurement Office annual reports show: large share of tenders exempted from competition; public investment tenders receive on average 2.7 bids (average 2.6 for all bids); only one bid was submitted in 51 percent of public procurement procedures. *IMF Technical Assistance Report | 30-40 (extracted content)* ### 52. Public investment spending in Serbia his comparatively high, making it important that it is ### 52. Public investment spending in Serbia his comparatively high, making it important that it is ### Public investment trends and risks - Since 2015, public investment has nearly tripled, from 2.5 percent to 7.3 percent GDP in 2024, and is expected to gradually rise to 8.3 percent in 2027. - The investment surge is related to the "Leap into the Future – Serbia EXPO 2027" program, which spans from 2024–2027, and comprises large infrastructure investment. - Institutional framework for appraisal, budgeting, and monitoring is only gradually being rolled out following the enactment of several rulebooks approved as part of the 2023 PIM Decree. - Information and data in the Public Investment Management System (PIMIS) and the Information System for Budget Execution Planning and Financial Reporting (SPIRI) are not yet fully aligned. - Key weaknesses and required actions: - Increase transparency and oversight in public investment management. - Address significant weaknesses in public procurement to reduce exemptions from competitive tendering. - Ensure strong project appraisal to manage risks of cost overruns. ### Orderliness of Budget Documentation (Fiscal Legislation; Advanced) - The BSL is described as a comprehensive legal framework ensuring an orderly budget process. - Article 31 of the BSL defines the timetable for budget preparation and approval and covers the timetable for subnational budgets. - Article 32 indicates key content requirements for government’s budget proposals. - Government is required to submit the FS, draft Law on the Budget of the Republic of Serbia to the National Assembly, and the financial plans of the social security funds. - Subnational governments’ budgets should be submitted by the subnational government’s executive body to the subnational government assembly. - Article 44 defines procedures for discussing, amending, and approving the government’s budget proposal in parliament; Parliament can only introduce expenditure or revenue neutral amendments. - Powers to amend the budget after approval (BSL): - Virements (Article 61). - Contingency reserves (Articles 69 and 70). - Supplementary budget (Article 63). ### Timeliness of Budget Documents (Basic) - Article 31 of the BSL requires that the draft budget is submitted to parliament by November 15, one and a half month before the start of the coming fiscal year. - Draft budgets have become available to the public one day after submission to Parliament. - Timing has been respected over the last five years; exception: the 2024 draft budget was submitted to Parliament in October in 2023, two months before the fiscal year starts, as required by the good practice rather than the basic practice of the FTC. - Table: Dates of Budget Submission, Approval and Publication for the past Five years (as presented) - 2021: Date draft budget submitted to Parliament — November 20, 2020; Date draft budget made available to the public — November 20, 2020; Date final budget law approved by Parliament — December 10, 2020; Date final budget law published — December 11, 2020 - 2022: Date draft budget submitted to Parliament — November 03, 2021; Date draft budget made available to the public — November 4, 2021; Date final budget law approved by Parliament — November 23, 2021; Date final budget law published — November 24, 2021 - 2023: Date draft budget submitted to Parliament — November 17, 2022; Date draft budget made available to the public — November 18, 2022; Date final budget law approved by Parliament — December 9, 2022; Date final budget law published — December 12, 2022 - 2024: Date draft budget submitted to Parliament — October 5, 2023; Date draft budget made available to the public — October 6, 2023; Date final budget law approved by Parliament — October 26, 2023; Date final budget law published — October 27, 2023 - 2025: Date draft budget submitted to Parliament — November 7, 2024; Date draft budget made available to the public — November 8, 2024; Date final budget law approved by Parliament — November 27, 2024; Date final budget law published — November 28, 2024 - Budgets have always been approved by Parliament before the fiscal year starts for the last five years. - In 2024, the BSL was amended to set a specific deadline requiring Parliament’s approval of budget law by 20 December. ### Policy Orientation and Fiscal Rules - Fiscal rules in BSL: debt rule articulated with a deficit rule, and specific limits to public wage and pension spending. - Implementation of the deficit rule postponed until 2029 following a December 2022 amendment to the BSL. - Government commitment in the FS: - Deficit target of 3 percent of GDP for the 2025-2027 period (FS target). - Contrasts with a more stringent fiscal rule of 1.5 percent of GDP. - Government rationale: postponement due to the investment cycle related to the “Leap to the Future” policy — strategic choice to balance fiscal prudence with the need to boost economic growth. - FS projects debt-to-GDP ratio to stabilize at 46.5 percent by 2027, below the 60 percent rule. - Fiscal Council responsibilities and disclosure: - Prepares and submits its opinion to the government and the National Assembly and publishes the opinion and assessment on their website. ### Performance Information (Good) - Objectives for each program are broadly operationalized by output indicators. - Many sectors still rely predominantly on input or output indicators, providing limited performance information. - Quality of performance information varies across budget users; some annex objectives and indicators are well defined and relevant. - Performance information influences in-year reallocation decisions, especially for capital projects. - Final accounts include a report on achievement of performance targets, with an annex reporting actual performance vs performance targets and comments. - Potential improvement: report on high-level sector or cross-cutting objectives and performance indicators. - Green and gender budgeting steps: - Gender objectives set for each budget chapter; gender specific indicators included. - For green budgeting, annexes (Annex 1 and Annex 1A listing climate relevant projects) presenting tagging methodology and results included for the first time in the 2025 Republican Budget. - Example (Box 2.1) — Chapter 34: MINISTRY OF FAMILY WELFARE AND DEMOGRAPHY, PROGRAM: 0903 — Selected indicators: - Number of child allowances granted for children in poverty — Unit: Number; Base year: 2021; Base value: 272042; Target value in 2024: 290000; Target value in 2025: 290000; Target value in 2026: 30000 - Number of newborn children - parental allowance — Unit: Number; Base year: 2021; Base value: 85297; Target value in 2024: 98000; Target value in 2025: 105000; Target value in 2026: 110000 ### Public Participation (Basic) - A citizen’s budget explaining key budget elements is published on the webpage of the MoF and includes: - (i) an introduction by the Minister of Finance; (iii) the composition of revenues, expenditures, and sources of financing; (iii) recent development for pension spending; (iv) implications of the budget for different sectors; (v) a summary of the medium-term fiscal framework; (vi) breakdown of subsidies and capital expenditure; (vii) key elements of program-based budgeting; and (viii) green budgeting; plus a glossary and explanation of the budget process. - Citizens do not have a formal voice in the national budget process; no established mechanisms for citizen participation. - MoF plans to introduce an online platform allowing citizens to comment on the budget in June this year; participation requires passing a quiz on budget to increase budget literacy, with a need to calibrate difficulty to avoid creating an obstacle. - Public hearings in Parliament mainly include government organizations (Fiscal Council, Statistics Office, SAI) and some NGOs focused on fiscal policy; short period between hearings and voting reduces impact on decision making. - International comparison metrics: - Open Budget Survey 2023 on public participation: Serbia scored 2 (out of 100). - World Bank’s voice and accountability index: Serbian government scored 46 percent in 2023 compared to 57 in 2013. - Serbia scores lower than the ‘European and Central Asian’ average (67 percent). ### Credibility and Independent Evaluation (Advanced) - Fiscal Council independence is guaranteed in the BSL; it is an independent legal entity accountable to the National Assembly. - Appointment and resources: - Three members proposed by: President of the Republic (nominating the President of the Fiscal Council), the Minister of Finance, and the Governor of NBS. - It has a separate budget line but no specific legal safeguard for its budget; draft budget submitted to the MoF and has not been subject to budget cuts. - Resources remained stable with 5 professional and 4 supportive staff members. - Fiscal Council mandate includes: - (i) examining macroeconomic and fiscal assumptions; - (ii) assessing economic policies proposed by the Government to comply with fiscal objectives; - (iii) assessing fiscal risks and likelihood of compliance with fiscal rules; - (iv) assessing rationale for activating the escape clause of the fiscal rule and plan to return to compliance; - (v) reviewing adequacy of economic classifications, including for capital expenditure. - Fiscal Council activities and scope: - Evaluates credibility of government’s macroeconomic and fiscal forecasts and performance against fiscal objectives; evaluates quality and assumptions but does not present its own forecast. - Conducted costings only for laws with significant fiscal impact such as tax or pension reforms. - Presented assessments in public hearings in November/early December in Parliament. - Conducts special analyses (e.g., budgetary reserves or public corporations) if resources allow. - Parliamentary Budget Office (PBO): - Established in 2015 with four staff funded by international grants, discontinued after COVID-19 and end of funding. - Discussions ongoing to reestablish a Parliamentary Budget Office on a permanent basis. ### Supplementary Budget (Basic) - BSL and annual Budget Law give the MoF broad authority to carry out budget adjustments altering the composition of the budget and increasing total expenditure above approved budget. - MoF may approve virements within a budget chapter of a line ministry up to 10 percent and approve use of a budget reserve amounting up to 4 percent of revenues. - From 2019 to 2023, approved virements amounted to 6.7 percent of the original budget on average; highest in 2020 with 8.4 percent due to COVID-19 interventions. - Incremental revenues from grants amounted to only 0.3 percent of GDP in 2023 but not the full amount was used to increase spending. - Mechanisms such as virements and reserves should primarily accommodate expenditure overruns. - Supplementary budgets approved significant expenditure increases in recent years: - On average, total budget expenditures were increased by 14.3 percent through supplementary budget (also including 2020 to accommodate COVID-19 related spending). - Actual spending was lower than supplementary budget by about 12 percent. - Expenditure increases were higher than revenue increases in supplementary budgets except for 2022 (due to catch-up of revenues after COVID-19). *IMF Technical Assistance Report* ### 73. The ERP reconciles differences for aggregate revenues and expenditure between ### tarea2026063 - 73. The ERP reconciles differences for aggregate revenues and expenditure between ### Reconciliation of aggregate revenues and expenditures - The ERP reconciles differences for aggregate revenues and expenditure between successive ERPs accompanied by a qualitative explanation of sources of deviation, including new policies. - The ERP covers general government spending without a breakdown by effects and sectors. - The FS and the ERP include explanations for deviations between the outturn projection for 2024 and the original budget expenditure and revenues for 2024 with a breakdown by economic category. - Table 2.4 presents an indicative reconciliation table for expenditure (indicative figures as presented): - 2024 Budget | 2024 Budget Year | 2025 (BY+1) | 2026 (BY+2) | 2027 | 2028 - Total expenditure: 100 110 120 - Reconciliation in terms of: - Accounting or one-off: -5 -6 -8 - Macroeconomic Factors: 3 4 6 - Policy Measures: 0 5 3 - Total Variation: -2 3 1 - 2025 Budget | Estimated Actual | Budget Year BY+1 BY+2 - Total expenditure: 98 113 121 130 - Reconciliation in terms of: - Accounting or one-off: 2 13 15 - Macroeconomic Factors: -2 -2 -3 - Policy Measures: 0 -11 -12 - Total Variation: 0 0 0 - 2026 Budget | Estimated Actual | Budget Year BY+1 BY+2 - Total Expenditure: 113 121 130 139 (Source: Fiscal Transparency Handbook, IMF, 2018) ### Forecast revisions and implications for MTBF credibility - Revisions of the outer years of the MTBF are significant and require understanding causes for fiscal policy making. - Average forecasting deviations: - Between plan for the budget year and actuals: 6 percent - Plan for first outer year with actuals: 12 percent - Plan for second outer year: 17 percent - Understanding whether revisions result from new policies, macroeconomic changes, parameter changes, or statistical/model reasons is important for policy makers. ### Recommendations (Section 2.5) - Recommendation 2.1. Introduce enhanced summary tables in budget documents to enable full assessment of medium-term projections’ credibility. - Disclose revenues, expenditures and financing of the RB, including data for outturns for past two years, revised estimates for current budget year, and estimates for the coming budget year and two outer years by economic category. - Disclose the consolidated general government data in Tables 9, 10, 11 of the FS on a nominal basis. - Prepare a reconciliation table (see Table 2.4) for updating the medium-term estimates by describing the impact of new policies measures, macroeconomic factors, as well accounting and one-off measures. - Recommendation 2.2. Present all documents published by the MoF in a systematic and accessible form on the website. - Publish the draft budget and all annexes permanently. - Publish all annexes prepared as part of the financial statements (year-end report). - Recommendation 2.3. Strengthen use of performance information and participation in the budget process. - Improve the strategic performance information by introducing sectoral strategic outcomes; operationalize outcome objectives with outcome indicators. - Implement the plan to establish a budget participation portal for citizens. - Publish the annex on performance information of the financial statements. - Establish a performance dialogue with line ministries (e.g. in the budget committee). - Reestablish a parliamentary budget office to support members of Parliament in scrutinizing the budget. - Disseminate information about the citizen budget in different formats (e.g., videos, discussions in municipalities). - Recommendation 2.4. Strengthen transparency for public investment budgeting, project appraisal and tendering. - Increase competitive tendering in public works by reducing exemptions, including those contained in Special Laws, and improve reporting on all exemptions through the public procurement agency. - Monitor and disclose cost overruns for large multi-year projects (over Euro 20 million). - Publish cost-benefit analyses for projects (over Euro 20 million) before submitting them to the Capital Commission. ### Summary Evaluation: Fiscal Forecasting and Budgeting (Table 2.5) — selected entries - 2.1.1 Budget Unity - Assessment: Good: Budgetary CG, social security/health fund, and SNGs covered in budget documents, but not all EBUs. - Importance: Medium: Own source revenues of EBUs not included in budget documents equivalent to 1.4 percent of GDP in 2023. - 2.1.2 Macro Forecasts - Assessment: Advanced: Key economic indicators’ forecasts, their key components and underlying assumptions are included in the FS and the revised FS twice a year. - Importance: Low: Macroeconomic forecasts are accurate for the year ahead but show a slight optimistic bias for real GDP and inflation over the medium-term. - 2.1.3 Medium-Term Budget Framework - Assessment: Not met: Outturn and projections for the RB revenues and funding are not included in Annex 2, 3 of the budget documents for outturn and in Article 49 for projections. - Importance: High: Fragmentation in the presentation of outturns, revised budget, and projections prevents full assessment of credibility of medium-term projections. - 2.1.4 Investment Projects - Assessment: Basic: Multi-annual budgets of central government’s individual projects disclosed; CBAs not published; significant exemptions to competitive procurement. - Importance: High: Scaling up of public investment (7.3 percent GDP in 2024, relative to 2.5 percent in 2015) with large exemptions from open tender. - 2.4.3 Forecast Reconciliation - Assessment: Basic: The ERP reconciles aggregate revenues/expenditure between successive ERPs with qualitative comments. - Importance: Medium: Revisions of the outer years of the medium-term budget framework are significant (18 percent for n+2). ### Fiscal risks: disclosure, analysis, and reporting (Section III) - The assessment covers: - General arrangements for disclosure and analysis of fiscal risks. - Reporting and management of risks from guarantees, PPPs, and the financial sector. - Coordination of fiscal decision-making between central government, SNGs, and public corporations. - The government prepares several fiscal reports that include fiscal risk information; main ones are the ERP and the FS. - The Department of Fiscal Risk Monitoring is actively engaged in fiscal risk analysis with international support. - Table 3.1 lists selected government reports relevant to fiscal risks, including published ERP 2024-2026 (Section 4.6: Sensitivity analysis of the fiscal result and debt stock) and published Fiscal Strategy (Fiscal Risk Chapter (II. Chapter 5), 15 pages). Several internal reports are not published (e.g., Fiscal Risk Report, Financial analyses of public corporations, Fiscal risk report on Natural Disasters and Court Proceedings). ### Disclosure and analysis: macro and specific risks - 3.1.1 Macroeconomic Risks (Assessment: Good) - Budget documentation includes sensitivity analysis and alternative macroeconomic and fiscal forecast scenarios. - The 2024-2026 ERP develops a lower growth scenario and compares with baseline to gauge impact on deficit and public debt. - The 2025 FS presents different fiscal shocks and a stress test on public debt, including different growth scenarios. - Probabilistic forecasts (based on past outturn) are not currently prepared. - Serbia has experienced volatility: nominal GDP and revenue growth volatility over 2016–24 is higher than most advanced European countries but comparable to several other Southeast European countries. This volatility implies fiscal risk that can impact specific risks. - 3.1.2 Specific Fiscal Risks (Assessment: Good) - Main specific risks are disclosed in the 2024-2026 ERP and Chapter 5 of the 2025 FS: repayment of guarantees, financial sector, SOEs, subnational governments, environmental risks, and litigation risks. - The MoF is starting to prepare an annual Fiscal Risk Statement (FRS), not yet published and needing alignment with the FS to avoid duplication; MoF is considering publishing it as a self-standing FRS. - Likelihood assessments are mainly for litigations and environmental risks. - Box 3.1: Key disclosed specific fiscal risks (disclosed but not always quantified): - Repayment of guaranteed debt during 2020-2024 Q1, including guarantees for SOEs and guaranteed debt to creditors; planned guarantees for 2024 disclosed but probability of calls not disclosed. - Explicit liabilities to the financial sector risks include insured deposits (refer to FTC 3.2.5). - Fiscal risks related to 36 SOEs are assessed using adjusted “Altman Z Score” to assess likelihood categories (low, medium, high) but without disclosing risk calibration or individual SOE names; potential costs not assessed. - Subnational governments: risk mentioned but not specified or quantified; methodology for disclosure still under development. Quasi-fiscal activities (QFAs) are not quantified and disclosed. - Environmental risks: scenario analysis with likelihood assessment prepared for large-scale floods and earthquakes, assessing impact on fiscal deficit and debt in GDP terms; climate change fiscal risks not currently assessed. - Litigations: disclosure uses State Attorney’s Office records updated at least annually; risks that materialized during 2018-2024 and assessment for upcoming three years included. Maximum exposure 2024 estimated at 3.1 percent GDP, with MoF estimating about 0.2 percent GDP could materialize each year over the next three years. - 3.1.3 Long-Term Sustainability of Public Finances (Assessment: Not Met) - Government regularly publishes medium-term projections; time horizons vary. The 2025 FS presents 10-year projections (2024-2033) for revenue, expenditures, deficit, and public debt in percent of GDP, applying shock scenarios (natural disaster, health crisis, economic shock). The Revised 2025 FS (October 2024) shortens the horizon to seven years. - Authorities do not disclose long-term projections for pension and health funds. - No long-term projection to assess pension fund sustainability; fiscal council has started a report on pension sustainability. - Pension expenditures declined from 12.5 percent of GDP in 2015 to 10.4 percent GDP in 2023 due to parametric reforms in 2014 and under indexation. - No long-term study on health fund sustainability; health fund expenditures increased from 4.5 percent GDP in 2015 to 5.2 percent GDP in 2022. - Health fund monitors changing epidemiological trends to identify cost drivers (including cancer treatments) that need quantification for fiscal sustainability analysis. - Demographic projections: SORS projects population in 2052 will be 5,2 million, a decline of about 1.5 million people compared to 2022 (Population Projections for the Republic of Serbia 2022–2052 | Statistical Office of the Republic of Serbia). - Specific effects on long-term sustainability of pension and health funds have yet to be assessed. ### Selected specific fiscal risks: magnitude (Table 3.2) — percent of GDP - One-off guarantees:, including to non-financial public corporations and subnational governments (stock): 2 - Standardized Loans guarantees: 5 - Of which called: 0.1 - On-lending (stock): 1 - Called guarantees (paid out): 0.1 - Public-Private Partnerships, investment cost: 3.7 - Bank liabilities: Insured deposits (net of Deposit Insurance Assets): 21.7 - Total liabilities (excluding equity) of the publicly owned insurance company Dunav: 0.6 - Total liabilities (excluding equity) of the Housing Loan Insurance: 0.1 - Financial liabilities (excluding equity liabilities) of financial and non-financial public corporations: 18.9 - Natural disasters (budget spending): 0.1 - Litigations: 0.2 - Public expenditure on pensions: 9.7 10.1 - Public expenditure on the health fund: 5.2 (Source: MoF, IMF Staff estimates.) ### Risk management and contingencies - 3.2.1 Budgetary contingencies (Assessment: Basic) - The budget includes an allocation for contingencies but lacks transparent criteria for using current budget reserves and no in-year reporting. - Two contingency reserves per Articles 69 and 70 of the BSL: - Current budget reserve: limit defined as 4 percent of revenues and receipts from the sales of non-financial assets. - Permanent budget reserve: limit defined as 0.5 percent of revenues and receipts from the sales of non-financial assets. - It is unclear which revenues and receipts will be used for calculation of the limits (planned or rebalanced numbers). - Utilization: - Permanent budget reserve restricted to emergencies and natural disasters. - No specific and transparent criteria for using the current budget reserve. - Current budget reserve mainly utilized due to difficulties in accurately planning spending at a very detailed level. *IMF Technical Assistance Report | content from tarea2026063 (selected sections).* ### 85. There is no regular in-year reporting on current budget reserve. The only information on the ### There is no regular in-year reporting on current budget reserve. The only information on the ### Contingency reserve reporting and transparency - No regular in-year reporting on current budget reserve; the only information on the contingency reserve is found in the final accounts. - Some utilizations are classified due to government secrecy and are not disclosed in the final accounts. - In 2023, there were 83 government decisions on the uses from the current budget reserve. - The MoF table (Report on the Use of Funds from Current and Ongoing Budget Reserves in 2022) submitted to the government does not include the total amount. - Using planned revenues and receipts, the 2022 contingency reserve numbers have been significantly higher than the 4 percent limit indicated in the BSL. - Extracted table fragment (as presented): - 2021 55,713 1,336,324 4.2% - 2022 113,829 1,516,851 7.5% - 2023 72,298 1,843,364 3.9% - Contingency reserve (I) - Planned revenues (*) (II) - (I) / (II) million RSD ### Management of assets and liabilities (Basic) - The Law on Public Debt regulates sovereign borrowing and guarantees for central government, subnational governments, and four social security and health funds included in general government. - Article 5 of the Law on Public Debt assigns authority to borrow to Parliament and the MoF. - Article 73 of the BSL requires the RS budget to set a limit on the total amount of debt and on guarantees issued during the budget year. - Article 3A includes a nominal limit and lists projects that could benefit from guarantees; Article 3B covers the limit on project loans. - The Fiscal Statement (FS) discloses public debt risks but does not analyze or disclose risks to the overall balance sheet. - The FS includes a public debt management strategy chapter with refinancing, interest rate, and exchange rate risks, alternative scenarios, and stress tests. - Since December 2020, the Public Debt Administration has conducted hedging transactions (financial derivatives) to hedge foreign exchange and interest rate risk; the latest swap operation was in June 2024 and aimed at converting dollar liabilities to euro at a fixed interest rate. - On the financial asset side there is no published risk analysis or asset management strategy. - General government financial assets and liabilities were 50.7 percent and 50.3 percent of GDP in 2023, respectively. - Government cash balances in EUR and USD are deposited and remunerated in the NBS. - The Deposit Insurance Fund (DIF) has financial assets and an investment strategy but it is not published. - Recommendation (gradual SALM adoption and integration): - Gradually adopt a sovereign asset and liability management (SALM) approach. - Publish risk assessment around financial assets and integrate cash and debt management. - Start by assessing risks associated with financial assets and liabilities and understanding interlinkages. - Monitor and quantify impacts of movements in exchange rates, interest rates, inflation, and commodity prices on sovereign assets and liabilities. - Liability-side aim: minimize debt service costs subject to prudent risk. - Asset-side aim: accumulate adequate net foreign assets, including foreign exchange reserves, for monetary and FX policy and shock buffering. - Avoid uncoordinated management that may cause significant mismatches on the government’s balance sheet. ### Guarantees (Good) - Total guarantees on issue are equivalent to 7 percent of GDP. - One-off guarantees: - Guarantees are issued for borrowing of public companies and subnational government; issued only for investment needs per the Law on Public Debt. - Annual limit on new guarantees set in Article 3A of annual budget laws. - The limit for 2025 is RSD 365 billion (0.4 percent of GDP) for investment projects listed in Article 3A. - The revised 2025 FS indicates that guaranteed debt stock is 2 percent of GDP (down from 7.5 percent of GDP in 2012). - Non-guaranteed debt decreased from 2.2 percent of GDP to 0.3 percent in the same period. - Main beneficiaries: EPS (Electricity company), Serbijagas, and Road Company. - One-off guarantees are managed by the PDA. - Standardized guarantees (COVID-19 credit guarantee schemes): - Disclosed in FS with related actual and expected budget payments; no quarterly information disclosed. - Disbursement under both schemes ended on July 31, 2022; outstanding amounts have declined since. - As of September 30, 2024, €2.5 billion (5% of GDP) in loans were issued under both schemes. - €66.9 million (0.1% of GDP) paid out for called guarantees and €6 million recovered. - During the FTE mission, the government was issuing another credit guarantee scheme for first-time home buyers’ mortgage; related law was adopted in March 2025 (after the mission). - Recording practice concern: - Guarantee calls are recorded on a cash basis, with capital transfers recorded as each installment of guaranteed debt is repaid, rather than reflecting the full amount as government debt. - As a result, a portion of current guaranteed debt stock should be treated as an actual liability rather than contingent. - Recommendation: apply GFSM 2014 and ESA MGDD guidance on guarantees and debt assumptions. - On-lending: - Serbia’s stock of on-lending debt is around EUR 800 million (1 percent of GDP) at end-2024. - If borrower nonpayment is expected, government should record these amounts as expenditures (as done for recent loans to Serbiagas). ### Public-Private Partnerships (Not Met) - The government does not publish total rights, obligations, and other exposure under PPP contracts. - Annual PPP Commission reports list approved projects but do not disclose total investment cost or annual obligations; many projects appear to be concession arrangements. - Contingent liabilities associated with PPPs are not assessed; the fiscal risk chapter of the 2025 FS does not analyze PPP fiscal risks. - Exposure and trends: - Serbia has invested in PPPs since 2012 in green energy (wind; hydropower), waste treatment, and Belgrade airport concession. - PPP capital stock rose to 2 percent of GDP. - During 2021-2023, three projects with an investment cost of 0.7 percent GDP were added, for a total investment cost of 3.7 percent GDP during 2021-2023 (WB PPI Database). - According to MoE information, there is no approved pipeline of PPP projects currently. - The PPP institutional framework is not fully unified with the PIM framework (2023 PIM Decree); the PPP Commission meets separately and criteria for choosing investment modality (traditional procurement vs. PPP) is not fully defined. - Example: the 25-year concession contract with Vinci for Nikola Tesla Airport in Belgrade has estimated capital investment worth 1.3 percent of GDP. ### Financial sector exposure and disclosure (Advanced) - The government’s potential fiscal exposure to the financial sector is analyzed and disclosed. - Financial sector risks are disclosed in the fiscal risk chapter of the 2025 FS, focusing on the Deposit Insurance Scheme, NPLs, two state-owned banks, two public insurance companies, and standardized guarantees (COVID-19 credit schemes). - NBS publishes an annual Financial Stability Report (last edition from 2023) including detailed risk analysis and stress tests. - General government financial assets and liabilities were 50.7 percent and 50.3 percent of GDP in 2023. - Table 3.4 (Indicators of Banking Sector Stability, 2023) — Serbia row (preserve presented values exactly): - Tier 1 capital to assets, (Core FSI), Percent: 10.9 - Nonperforming loans to total gross loans (Core FSI), Percent: 3.2 - Customer deposits to total (non interbank) loans (Additional FSI), Percent: 132.1 - Liquid assets to total assets, Percent: 41.0 - Return on assets (Core FSI), Percent: 2.5 - Public sector financial sector exposure (Table 3.5, Serbia: 2023, in percent GDP): - 1 Total bank liabilities: 89.5 - 2 Of which eligible deposits: 38.8 - 3 Of which insured: 22.9 - 4 Total Deposit Insurance Agency assets: 1.2 - 5 Net exposure (Position 3 minus 4): 21.7 - Box 3.2 highlights and figures: - Total financial sector liabilities (consolidated) stand at 89 percent GDP in 2023. - Regulatory Capital to Risk-Weighted Assets ranged from 20.2 to 23.4 percent during 2015-2023. - Banks became more profitable from 2021 with ROA/ROE above the EU average. - NPLs were 2.6 percent at Q3-2024 (NBS data). - Deposit Guarantee Scheme insures individual deposits up to EUR 50,000; target funding level of 7.5 percent of total covered deposits in 2030. - Deposit Insurance Scheme capitalization peaked at 1.2 percent of GDP in 2024. - Two state-owned banks (Postanska, Srpska) jointly had total liabilities of 5.3 percent of GDP in 2023. - Total liabilities (excluding equity) of publicly owned insurance company Dunav were 0.6 percent of GDP in 2023; Housing Loan Insurance was 0.1 percent of GDP. - Assessment: public sector exposure to financial sector risks in Serbia is considered low; financial stability risks are regularly monitored and disclosed by NBS. ### Natural resources (Not met) - Natural resource stocks and flows are not disclosed. - Companies licensed for the “use of mineral resources and deposits” pay a royalty fee varying from 1 to 7 percent depending on resource type. - Revenues collected from these fees are not published; MoF monitors gross collected revenue and distribution annually based on licensed companies’ quarterly reports. - At the subnational level, these revenues are recorded as “own revenue” but should be recorded as transfers from central government. - Forward-looking annual estimates for these revenues are not produced; exploitation plans sent by licensed companies to the Ministry of Mining and Energy could be used to produce estimates. - International standards on natural resource transparency (e.g., EITI) are not followed. - Fiscal impact to date: - During 2015-2021, natural resource revenues did not exceed 0.1 percent GDP annually. - Natural resource revenues rose to 0.2 percent GDP in 2022 and 2023. - These levels are in line with other SEE countries (none exceeding 0.5 percent GDP) and well below natural resource economies (examples cited: Kazakhstan 3.7 percent of GDP; Azerbaijan 15.5 percent of GDP). - The Ministry of Mining and Energy is preparing a strategy on mineral resources planned to include a 20-year forecast with price and extraction scenarios. *Italic source attribution: IMF Technical Assistance Report, extracted content unit.* ### 99. Fiscal costs from past natural disasters are disclosed but estimates of potential fiscal ### 99. Fiscal costs from past natural disasters are disclosed but estimates of potential fiscal ### Natural disaster fiscal risks and disclosures - Total contingencies used for natural disasters during 2018-2023 is published (0.1 percent of GDP). - The authorities prepare probabilistic and shock scenarios and include a probabilistic assessment of earthquakes and floods, which has not been disclosed. - The 2023-2030 Disaster Risk Reduction and Emergency Management Strategy notes that by 2041-2060 the temperature will further increase in the range of +2.5 and more likely +3.1°C. - Climate change risks are monitored through the Ministry of Environment; the specific fiscal risk impact is not assessed. - Historical event: May 2014 floods and landslides affected over 1.6 million citizens and caused damages of nearly 4.4 percent of GDP. - Recent assessments (2024) indicate: - Large-scale floods can cause a fiscal deficit increase in the range of 0.1 percent to 2.1 percent of GDP. - Public debt increase between 0.1 percent to 7.7 percent of GDP in the years after the shock. - Contingency Reserve for Natural Disasters is currently limited to 0.5 percent of budget revenues. - Footnote figures (paid amounts, all in RSD): 2.0 billion in 2018; 4.2 billion in 2019; about 3 billion in 2020; 0.5 billion in 2021; 0.2 billion in 2022; and 0.8 billion in 2023. - MoF’s probabilistic assessments on earthquakes (not disclosed) indicate: - Fiscal deficit may increase in the range of 0.1 percent to 2.7 percent of GDP (2024). - Public debt can increase in the range of 0.1 percent to 10.3 percent of GDP. ### Subnational governments (SNGs) — monitoring and fiscal coordination - Publication practice: - Monthly consolidated summary data on SNG finances are published, but do not contain data by individual entities (except for the autonomous province of Vojvodina), nor fiscal performance indicators. - Revenue and expenditures are disclosed but not the deficit and debt or other financial performance information on subnational finances. - Each SNG sends monthly statements to the Ministry of Finance; data are aggregated in the Public Finance Bulletin without differentiating by individual entities (except Vojvodina). - Legal and reporting developments: - The law requires the financial statements of all SNG units to be audited and published locally; SAI audits a sample of SNGs and publishes reports. - As of January 2025, local governments are using the national information system SPIRI, which is expected to overcome some reporting challenges. - Fiscal size and controls: - SNG fiscal importance in terms of share of GDP was stable during 2015-2023, with total revenues around 5 percent GDP and spending around 7 percent of GDP. - Revenue growth is controlled by the Ministry of Finance by setting an annual cap. - Subnational self-government units spend 6.5 percent GDP (noted in summary evaluation). - Risks and limits: - There is a legal limit on liabilities for investment and for short-term borrowing for recurrent expenditures by subnational governments. - Borrowing for investment includes limits: (i) stock of debt up to 50 percent of the local government budget’s current revenues from the previous year; and (ii) debt service below 15 percent of the budget’s current revenue of the previous year (Law on Public Debt, Articles 33, 35 and 36). - Short-term borrowing allowed up to 5 percent of current revenues from the previous year to cover financing needs for recurrent expenditure. - Fiscal risks arise from financial relations with subnational government-owned public corporations, especially in large cities like Belgrade, where de facto guarantees have been provided (e.g., letters of comfort to banks for GSP), amounts not captured in guaranteed debt stock. ### Public corporations and SOEs — disclosures and fiscal risks - Disclosure scope and gaps: - Only some financial transactions between the RS and public corporations are disclosed in the annual reports; FS presents dividend payments and subsidies for enterprises classified as public enterprises and does not include all public corporations (excludes joint stock companies and limited liability companies). - Loan payments, onlending, write-offs of debt, QFAs and indirect support are not covered. - Regular budget recipients and amounts: - Railways: around RSN 20 billion per year. - Roads of Serbia: around RSN 15 billion per year. - Resavica (underground coal exploitation): around RSN 5 billion per year. - Government servicing and guarantees: - Loans of Railways and Roads of Serbia are serviced by Government, as are loans of Srbijagas; government guaranteed debt of public corporations are included in government debt. - During the recent energy crisis, Srbijagas and EPS were recipients of subsidies. - SOE Governance Law: - Adopted in September 2023; envisaged to become fully effective in 2026 following a transition period. - Provides legal basis for an ownership policy, uniform management of all public corporations independent of legal form. - Exclusions: public corporations in insurance, military, banking sector, institutes or non-profit, operating in innovative sectors, and those subject to privatization or bankruptcy. - Law regulates governance structure, reporting requirements, annual performance plans, audit, transparency, and renumeration of managers; many sections require implementing bylaws. Dividend policy is not included and is regulated in the annual budget law. - Financial performance reporting: - FS reports on financial performance of some public corporations (36 companies), including EPS, EDS, Serbia Gas and Railways Infrastructure; excludes large public corporations such as Serbia Telecom. - FS shows total revenues, expenses and net profit, number of employees, total assets and liabilities; out of 36 companies, 14 enterprises were making losses in 2023. - Ministry of Economy plans to report based on the Law on SOEs as of 2026 to be more comprehensive. - Magnitude of liabilities and quasi-fiscal activities: - Major financial and non-financial public corporations’ financial liabilities (excluding equity liabilities) amount to 18.9 percent of GDP. - Serbia Telecom: 4.9 percent of GDP. - EPS: 3.6 percent of GDP. - Biggest loss-making companies were Putevi and Railway Infrastructure, amounting to around 0.1 percent of GDP. - Quasi-fiscal activities exist and are not yet quantified (examples: regulated electricity prices that are non cost-recovering, costs for collecting other fees by EPS not compensated by other entities). - A draft bylaw on public sector obligations has been prepared to improve transparency on costing and disclosure of these quasi-fiscal activities. ### Recommendations (priorities for improving fiscal risk transparency) - Recommendation 3.1. Improve reporting arrangements and risk management related to guarantees. - Publish more frequent data for standardized guarantees related to the COVID-19 credit schemes and the new scheme created by the draft Law on Mortgages. - Improve reporting and classification of guarantees in debt reports based on the guarantee call expectations (GFSM 2014 and ESA MGDD). - Consider introducing a credit risk analysis based on analytical tools to provide one-off guarantees. - Recommendation 3.2. Strengthen the BSL provisions concerning contingency reserve. - Clarify which revenues and receipts from sales of non-financial items are taken into account when calculating the 4 percent rule in contingency reserve. - Introduce more transparent allocation criteria for the main contingency reserve. - Introduce in-year reporting on the utilization from the contingent reserve. - Recommendation 3.3. Improve the analyses and disclosure of risks on asset and liability management (initially financial asset and liabilities). - Develop an asset and liability management strategy considering the drivers of costs and risks for both financial liabilities and assets. - Publish data on receivables related to guarantees and on-lending and start managing these financial assets actively. - Recommendation 3.4. Improve disclosure of Public-Private Partnership contracts and operations. - Disclose total obligations and other exposures under public-private partnership contracts. - Recommendation 3.5. Improve reporting and fiscal risk management of SOEs. - Report on all budget transactions as an annex to the annual budget (including write-offs, guarantees and on-lending). - Publish a report on financial performance based on the Law on SOEs to cover all SOEs, irrespective of their legal form. - Identify and quantify the quasi-fiscal activities and report on them. - Recommendation 3.6. Strengthen transparency on subnational finances and fiscal risks. - Publish key headline data of individual subnational governments. - Publish aggregate analysis on key performance indicators (fiscal balance; debt levels and repayment capacity; expenditure arrears). - Control and closely monitor debt issuances by subnational public corporations. - Recommendation 3.7. Strengthen the analysis and disclosure of long-term sustainability, including in key expenditure areas (pensions, health fund). - Forecast key fiscal aggregates for at least a ten-year horizon both in the Fiscal Strategy and the Revised Fiscal Strategy, and thirty-year horizon in the medium term, covering also demographically sensitive spending categories. - Finalize and publish a long-term sustainability report for the pension fund and incorporate projections into long-term fiscal sustainability analysis. - Prepare long-term sustainability analysis for the health fund, incorporate findings into long-term fiscal sustainability analysis. ### Key statistics and evaluation highlights (selected figures from summary evaluation) - Long-term fiscal pressures: - Pension and health fund expenditures are 15.5 percent GDP, with growing long-term pressures due to changing demographics (ageing). - Budgetary contingencies: - Budget includes 4 percent allocation; no transparent criteria for utilization and no in-year reporting related to utilization. - 4 percent rule is not clear. 2021 and 2022 utilizations are 4.2 and 7.5, respectively. - Financial assets and liabilities: - High currency and deposits: 10 percent of GDP. - Equities: 10 percent of GDP. - Guarantees: - Guaranteed debt stock decreased from 7.5 percent of GDP in 2012 to 2.2 percent in 2024. - Natural resources: - Natural resource revenues small (0.2 percent GDP in 2022). - Public corporations: - Major public corporations’ financial liabilities (excluding equity liabilities) amount to 18.9 percent of GDP. - Serbia Telecom: 4.9 percent of GDP. - EPS: 3.6 percent of GDP. *IMF Technical Assistance Report — content unit: Fiscal risks, subnational finances, and public corporations (selected excerpts).* --- _Source: https://www.imf.org/-/media/files/publications/tar/2026/english/tarea2026063.pdf_