A record construction drive promises faster growth. Special procurement routes, state-company weaknesses and project arrears will determine who captures the value — and who carries the risk.
Serbia is building towards 2027 with the urgency of a company trying to make its quarter. The budget for 2026 allocates RSD740bn to capital investment, equivalent to 6.7 per cent of gross domestic product. Expo-related works sit inside a wider programme of roads, railways, utilities, energy, health facilities, digital infrastructure and urban development.
The investment can lift a slowing economy. The IMF expects growth of 2.8 per cent in 2026 and 4 per cent in 2027, helped by Expo spending. Contractors gain order books, banks gain project finance and guarantees, materials suppliers gain demand. New hotels, transport links and public spaces may retain value after the six-month exhibition closes.
The same sprint is a governance stress test. Serbia’s Expo legislation and implementing decree exempt covered projects from the ordinary public-procurement law. A decree selecting a strategic partner for a large solar programme used another exceptional route. These mechanisms can accelerate delivery, but they reduce the transparency and contestability that EU accession is meant to strengthen.
A large market with too few bidders
Public procurement represented 10.87 per cent of GDP in 2024, and the value of contracts rose 22 per cent. The average procedure attracted 2.5 bids; 50.75 per cent received only one. Exempt contracts were worth €5.7bn, including €1.2bn awarded under intergovernmental agreements. The State Audit Institution found irregularities covering more than a fifth of the contract value it examined.
Those numbers do not prove that every special project is poor value. They do show why the market attaches a political-risk premium. A well-connected incumbent can absorb uncertain specifications, delayed certificates and unofficial coordination because it understands how the state works. A foreign newcomer may demand a sovereign guarantee, an international partner or a margin large enough to compensate. Smaller Serbian suppliers can be pushed into subcontracting chains where payment terms are weaker than the headline public budget suggests.
The question is not whether Serbia can build quickly. It is whether speed produces contestable assets, clean balance sheets and suppliers that get paid on time.
The most attractive entrants will therefore be specialists rather than generalists: rail signalling, grid equipment, water treatment, digital ticketing, venue technology, engineering assurance and lifecycle maintenance. They can sell scarce capability into a political timetable without betting the whole company on a single state counterparty. Banks and insurers will price the difference between an ordinary public contract and a project whose legal route is exceptional.
The state-company balance sheet behind the skyline
Serbia’s state-owned enterprises make the investment programme possible and expose its weaknesses. The governance law that entered into force in September 2024 is intended to professionalise ownership, boards and reporting. The Commission still describes practical improvement as limited, with subsidies, political influence and temporary managers persisting.
Elektroprivreda Srbije must finance reliable power while restructuring a coal-heavy system. Elektrodistribucija Srbije needs to strengthen the grid. Srbijagas remains central to gas infrastructure and supply. Roads of Serbia accumulated domestic arrears large enough for the IMF to demand a stocktake, monthly reporting and a clearance strategy. Telekom Srbija and Air Serbia combine commercial ambition with state ownership and policy objectives.
Each company creates a different corporate landscape. Equipment vendors and lenders value the scale and implicit state support. Private rivals worry about uneven financing, preferential access or objectives that shift after contracts are signed. Professional boards, published performance targets and hard budget constraints would improve both sides: suppliers would price less uncertainty, and competitors could distinguish public service obligations from commercial advantage.
From construction boom to institutional asset
Serbia has demonstrated that it can mobilise capital through budgets, bilateral agreements and strategic partnerships. The 1GW solar and battery programme agreed with Hyundai Engineering and UGT Renewables is an example of the scale the state can convene. Its exemption from ordinary procurement is also an example of the governance trade-off.
The EU’s concern is not with infrastructure as such. Serbia needs it. The concern is whether appraisal, competition, debt recognition and post-completion oversight are consistent across ordinary tenders, special laws and government-to-government projects. A motorway or exhibition district can be delivered on time and still leave a weak institutional return if maintenance, contingent liabilities or supplier arrears are hidden.
Expo 2027 will concentrate that test in one visible place. Incumbent contractors and state companies have the relationships and balance sheets to dominate. Newcomers can win where technology or capacity is scarce. Citizens and investors will judge the programme later, when the crowds have gone and the assets must earn their keep.
The best outcome is not a construction spectacle but a repeatable public-investment system: projects selected on evidence, competed where possible, disclosed in full and operated by companies with accountable boards. Serbia’s state capitalism is very good at starting. EU convergence requires it to become equally good at measuring, maintaining and paying for what it finishes.
