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Serbia's European Integration Process

Highlights Serbia's achievements in the EU integration process and the challenges it faces. Discusses macroeconomic stability, growth, and opportunities in strategic sectors.

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Serbia's European Integration Process

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  1. Serbia and the EU Božidar DjelićDeputy Prime Minister of Serbia Hellenic Foundation for European and Foreign Policy (ELIAMEP) Athens, March 31st, 2008 Economy and Finance Department

  2. SUMMARY • Major achievements in 2007 and the European Agenda for 2008 • Macroeconomic stability and growth • Numerous opportunities in strategic sectors Economy and Finance Department

  3. The European Integration process has been the major challenge for Serbia since 2001 1/2 • Serbia started the SAA negotiations in October 2005 and successfully completed them in September 2007. The SAA was initialed on November 7th, 2007 in Brussels • Since 2001 Serbia has been actively working on the harmonization of its legislation with the acquis communaitaire. The Government is now in the final stage of preparing the National Program of Integration • The overall speed of the integration process is primarily determined by the political constellation Economy and Finance Department

  4. The European Integration process has been the major challenge for Serbia since 2001 2/2 • Political requirements, besides the full cooperation with the ICTY, include long-term political and economic stability of the country • The unilateral declaration of independence of Kosovo has further complicated the bilateral relations between Serbia and some EU member states • Serbia must remain committed to its European future for it not only ensures its long-term success in all areas, but it is the best chance we have to preserve our sovereignty and territorial integrity in Kosovo and Metohija Economy and Finance Department

  5. The Government has continued Serbia’s European Integration process: • The EU Justice, Liberty and Security Mission identified key priorities and tasks in the process of judiciary and security reforms; the preliminary report will be presented on April 4th in Belgrade • Serbia continued the dialogue on full visa liberalization and the third round of talks is to be held in April in Brussels • The issuing of new biometric Serbian passports is scheduled to commence in the end of April • The plenary session of the Enhanced Permanent Dialogue with the European Commission will be held on April 4th in Belgrade • The IPA 2007 Financing Agreement is to be signed in the beginning of April 2008 Economy and Finance Department

  6. Serbia needs a clear and unequivocal support of the EU • Acceleration of the visa liberalization process – presentation of the roadmap by the end of April and the abolishment of visa regime for Serbian citizens by the end of 2008 at the latest • Signing of the SAA as soon as possible – Serbia has full administrative capacities for the SAA implementation; laws needed for the implementation are awaiting ratification by the new Parliament • Granting Serbia the candidate status by the end 2008 • Financial assistance for Serbia has been increased – current assistance under the IPA mechanism amounts to EUR 190 million annually for the period 2007-2011 Economy and Finance Department

  7. Macroeconomic stability and growthGDP • GDP growth is the highest in the region • An average growth for 2001 – 2006 period is 5.3 % Source: National Statistics Office * Estimation Economy and Finance Department

  8. Macroeconomic stability and growthInflation • The inflation rate is stabilizing after 2001 • The inflation in 2007 was result of supply side shocks: oil price, drought… Source: National Statistics Office Economy and Finance Department

  9. Macroeconomic stability and growth Foreign trade • Export growth rates are among the highest within the transition countries • Foreign trade deficit amounts to € 6.9 bil. in 2007 (22.8% of GDP) due to huge imports of capital and intermediate goods (€ 8.3 bil.) Source: UNCTAD Economy and Finance Department

  10. Macroeconomic stability and growthForeign direct investment • Significant increase in FDI has been recorded since 2001 • According to preliminary results FDI in 2007 were mostly greenfield ($2 bil.) Source: National Bank of Serbia * Preliminary results Economy and Finance Department

  11. Macroeconomic stability and growthForeign debt • With foreign debt of 57.2 % of GDP in 2007, Serbia is ranked among moderately indebted countries Source: National Bank of Serbia, Ministry of Finance and National Statistics Office * Estimation Economy and Finance Department

  12. Macroeconomic stability and growthPublic debt • Public debt decreased in 2006 and in 2007 fell well below Maastricht criteria (60 %) Source: Ministry of Finance * Estimation Economy and Finance Department

  13. Macroeconomic stability and growthForeign currency reserves • Foreign currency reserves reached a record level in 2007 • Foreign reserves/imports of goods and services ratio was 8.3 in 2007, the highest in the region Source: National Bank of Serbia Economy and Finance Department

  14. Numerous opportunities in strategic sectorsAdequate framework • Ongoing harmonization with the EU Acquis • Sector specific legislation, property legislation, etc • Corporate income tax rate – 10 % • Personal income tax rate – 12 % • 10-year tax holiday for large investments • Subsidies for hiring new employees • Tax credit for investing in fixed assets • Up to 80 % of the investment amount • Accelerated depreciation Economy and Finance Department

  15. Numerous opportunities in strategic sectorsFramework or new schemes underway • IPO strategy, legal framework and pilot projects envisaged for 2008 • PPP law and pilot projects envisaged for 2008 • Investments in infrastructure - € 3 to 5 bil. per year (Belgrade by-pass, Highway Nis-Bulgarian border, Highway Leskovac-Pancevo and the Pancevo Bridge, Corridor X, Highway Horgos-Pozega) • Energy sector - €2 bil. (Construction of power plants Kolubara B, TENT (700 MW) lignite fired TPP and Novi Sad cogeneration capacity) • IPO for EPS envisaged for 2010 • Air transport (Privatization of JAT Airways, JAT Tehnika, Cargo center construction, and IPO for Belgrade Airport envisaged for 2009) • Telecommunications (IPO for Telekom Srbija is envisaged for 2008) Economy and Finance Department

  16. Thank you !kabinet.potpredsednika@sr.gov.yu Economy and Finance Department

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