Serbia and Montenegro is making progress in economic growth but more reforms are needed to further promote its transition towards a market economy, the EBRD says in its latest strategy on the country, issued just six months ahead of its annual meeting in Belgrade on May 22-23, 2005.
The strategy says one of the country’s key challenges is to create a business-friendly investment climate by tackling red tape and corruption, and to boost private-sector development. Despite some early privatisations in the oil and tobacco sectors, for example, which contributed around €1bn to state coffers last year, the speed of privatisation in 2004 has slowed down.
Olivier Descamps, business group director for Southern and Eastern Europe, says the country has seen the financial benefits of privatisations, and officials must build on this by further promoting the privatisation of large-scale enterprises such as the energy and telecommunications sector.
According to the bank’s latest transition report, growth in Serbia and Montenegro has picked up in 2004 to at least 5%, up from 3% the year before. To help promote further growth and attract more foreign investment, the EBRD will focus on core areas, which include:
- Corporate sector development, such as promoting large-scale privatisations, supporting agribusiness projects, including those with a regional dimension, developing projects in property and tourism and greenfield investments, especially working with foreign strategic investors.
- Energy and infrastructure, where the bank will, together with partners like the European Investment Bank, European Union and World Bank, help develop transport, energy and municipal projects across the country. In particular, the bank will focus on projects which have a regional dimension, such as electricity, and will continue to support processes that will eventually lead to the privatisation of the telecommunications sector.
- Technical cooperation, commercial and official co-financing, where the EBRD will continue its good relationship with the EIB, World Bank and donor agencies, and aim to work with more local and foreign banks on investments in the country. The bank will, thanks to the renewed support of the European Agency for Reconstruction, continue the work of the Turn Around Management Programme (TAM) and Business Advisory Services (BAS), which are important projects that benefit entrepreneurs, local companies and the economy.
The EBRD signed its first project in Serbia and Montenegro in April 2001. In that short period, Descamps claims, it has become the largest single investor in the country, having committed nearly €600mn in new investments, and mobilised a further €620mn in foreign investment. This is a figure the EBRD intends to expand on significantly, he adds.