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When costs aoar: Serbia’s infrastructure projects struggle with budget overruns

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If salaries grew at the same rate as the costs of most highways, bridges, tunnels and metros, we would likely be enjoying the long-promised Swedish standard of living by now. However, the reality is far from that, as most announced projects in Serbia are experiencing delays, mirroring our struggle to achieve Scandinavian standards.

Take, for instance, the tunnel from the Sava to the Danube slopes. Despite years of intensive announcements by city authorities, the cost estimate has skyrocketed by €145 million. Interestingly, this tunnel will be constructed by the Chinese company Power China.

But this isn’t an isolated case. It often seems that the most expensive term in Serbia is “highway.” Consider the Morava Corridor, initially projected at less than €750 million for 112 kilometers between Preljina and Pojate. Now, with loans secured for its construction, the cost has ballooned to at least €1.6 billion.

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“It’s highly likely that there were either poor planning or even corruption involved. Cost planning must be meticulously integrated into every project, especially those funded by the national or municipal budgets. Lack of transparency in such projects allows for manipulation,” explains Dušan Pavlović, a professor at the Faculty of Political Sciences, to Forbes Magazine.

He emphasizes that without transparency, there’s ample room for cost manipulation in public sector projects, a scenario many administrations find advantageous.

Similar cost escalation issues are observed in projects managed by local authorities.

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