A new decree would impose stronger feasibility tests, centralise project oversight and give the Ministry of Finance a larger gatekeeping role as Serbia manages one of the region’s largest public-investment programmes.
Serbia is preparing a significant overhaul of the rules governing public capital projects, tightening project appraisal and introducing a more centralised system for deciding which investments should proceed as the country approaches the peak of its EXPO 2027-related infrastructure cycle.
The Ministry of Finance opened consultations on the draft decree between 10 and 17 August 2026. As of 20 August, the existing 2023 Capital Projects Decree remains formally in force, meaning the proposed framework has not yet completed the adoption process. The draft nevertheless gives a clear indication of the direction of policy: larger public investments would face more systematic feasibility analysis, cost-benefit testing, central registration and post-completion evaluation before and after public money is committed.
The timing matters. Serbia is operating with unusually high public investment while trying to maintain a general-government deficit ceiling of 3 per cent of GDP in 2026 and 2027. The European Commission estimates gross fixed capital formation by the government at around 6.7 per cent of GDP in 2026, following 7.1 per cent in 2025, before easing to 6.4 per cent in 2027 and 6.1 per cent in 2028. These are very large numbers by European standards and reflect the continuing motorway, railway, energy, urban infrastructure and EXPO-related investment cycle.
The proposed decree would define capital projects broadly. It covers construction and major maintenance of buildings and public infrastructure, associated project-planning services, land acquisition, machinery, equipment and other non-financial assets serving a public purpose. The framework would apply not only to projects financed directly from the budget, but also to investments supported through government borrowing, sovereign guarantees, subsidies, donations, transfers, EU funds and financing from international institutions or foreign governments. Projects in the security sector are explicitly excluded.
That breadth is important because Serbia’s capital programme is financed through an increasingly diversified mix of budget resources, bilateral loans, international financial institutions, government guarantees and market borrowing. A project may therefore create fiscal risk without appearing immediately as conventional budget expenditure. Guarantees, delayed payments, cost overruns, state-owned enterprise liabilities and maintenance commitments can all migrate towards the sovereign balance sheet over time.
Under the draft, projects would be divided into republican, provincial and local categories according to estimated cost, principal beneficiary and source of financing. A republican capital project would normally need estimated expenditure of at least €20 million, with the Republic of Serbia as the principal beneficiary. Projects financed wholly or partly through public money, EU resources, international assistance, guarantees or subsidies could fall into this category.
For provincial and local projects, the proposed threshold is substantially lower at €2 million. Provincial investments would primarily benefit the autonomous province, while local projects would predominantly serve municipalities or cities. A project that cannot be classified according to the prescribed criteria would not qualify as a capital project for the purposes of the decree.
The €20 million national threshold is particularly relevant because it is already central to Serbia’s discussions with the International Monetary Fund. The IMF has been working with Belgrade on stricter appraisal procedures for major projects above that level, including standardised cost-benefit analysis, disclosure of underlying cost assumptions and stronger monitoring of construction delays and overruns. The Fund has also argued that the public-investment framework should progressively cover large projects implemented through special arrangements and government-to-government agreements, rather than allowing economically significant investments to remain outside the normal appraisal system.
The centrepiece of the proposed regime is a centralised capital-project database under the Ministry of Finance. It would record projects and documentation throughout the investment cycle and support appraisal, selection, prioritisation, implementation monitoring and ex-post assessment of results.
This is more consequential than creating another administrative register. A properly functioning database can give the Finance Ministry a consolidated view of commitments extending over several budget years, allowing officials to distinguish between projects that have political approval and those that are genuinely ready for implementation.
Serbia already introduced its Public Investment Management Information System, or PIMIS, at republic level in 2024, and authorities have indicated that they intend to extend its use to provincial and local government. Integration with the broader budget system is intended to produce a unified pipeline in which projects move through identifiable preparation, approval and implementation stages rather than entering the budget before engineering, land, financing or procurement questions are settled.
The new rules would also formalise a Capital Projects Commission responsible for assessing, selecting and prioritising republican projects, monitoring implementation and directing the broader capital-project management process. The commission would be chaired by the Serbian prime minister, with the ministers responsible for finance, construction and European integration serving as deputy chairs. Separate commissions would operate at provincial and local levels.
Giving the prime minister the chairmanship creates considerable political authority, but the financial importance of the reform will depend on how strongly technical appraisal influences the commission’s decisions. Public-investment frameworks produce the largest fiscal gains when poorly prepared projects can genuinely be delayed, redesigned or rejected. A database and commission have limited value when they operate only after the political decision to build has effectively become irreversible.
That issue has repeatedly surfaced in assessments of Serbia’s public finances. The European Commission said in its 2026 Economic Reform Programme assessment that improving public-investment management remained a key challenge and noted that the government continued to have substantial discretion to designate certain projects as being of particular importance, potentially placing them outside standard planning and oversight arrangements. It called for stronger long-term planning, regular monitoring and a unified and transparent public-investment system.
The new decree goes some distance towards answering those criticisms. Project preparation would be significantly more structured. Where planning and construction legislation already requires a preliminary justification study and full justification study, those documents would become part of the capital-project assessment process. For republican projects where such studies are not required under construction legislation, project sponsors would instead have to prepare preliminary feasibility and full feasibility studies.
A cost-benefit analysis would also have to accompany the relevant feasibility documentation for republican projects undergoing assessment. The finance minister would prescribe the detailed methodology, content and submission requirements.
This could prove to be one of the most economically important elements of the reform. Serbia’s infrastructure debate has traditionally focused on construction value, kilometres built and completion deadlines. Cost-benefit analysis shifts the emphasis towards economic returns: expected traffic, productivity gains, demand forecasts, operating costs, environmental effects, alternative solutions and the long-term burden of maintaining the finished asset.
Maintenance is particularly important. A motorway, railway, hospital, water system or energy installation does not stop creating fiscal obligations once construction ends. The IMF has specifically encouraged Serbia to integrate maintenance and operating costs more systematically into medium-term budgeting. Capital expenditure that looks affordable during construction can become expensive when operating subsidies, maintenance contracts, staffing and replacement investment are considered over several decades.
The draft divides the capital-project lifecycle into preparation and implementation. The preparatory stage would cover pre-selection of an investment idea, analysis of the proposal, project preparation, readiness assessment and final selection. Implementation would include execution, revisions to implementation plans, project rationalisation, completion and evaluation of the effects achieved.
That sequencing is designed to address a familiar infrastructure problem: projects being budgeted before they are technically ready. Incomplete design documentation, unresolved land acquisition, utility relocation, permitting problems or unrealistic cost assumptions often produce delays and supplementary contracts after construction begins. Stronger readiness assessment moves part of that risk assessment to the period before the state commits itself financially.
The proposal also introduces fines of between RSD 50,000 and RSD 150,000 for responsible officials who breach the decree. Existing projects that began under the 2023 framework but remain unfinished would continue their project cycle under the new rules. Once adopted and published in the Official Gazette, the new decree is expected to enter into force on the eighth day after publication, replacing the 2023 regulation.
The regulatory changes are also connected to Serbia’s EU financing architecture. Public-investment management is one of the reforms included in the country’s Reform Agenda under the EU Growth Plan for the Western Balkans. Approximately €13.59 million of EU financial support is attached to individual milestones concerning improvement of the public-investment framework, including a policy paper and time-bound action plan and subsequent strengthening of the legal framework. This makes the reform more than a domestic administrative exercise: progress can affect the release of EU-linked funding.
The sovereign-financing environment gives the same issue another dimension. Serbia entered 2026 with S&P rating the country BBB- with a stable outlook, its first investment-grade rating, while Fitch in July maintained BB+ with a positive outlook. Moody’s rates Serbia Ba2 with a stable outlook, having removed its previous positive outlook in February amid higher political and geopolitical risks.
Capital-project governance will not determine Serbia’s sovereign rating on its own, but it affects several variables that rating agencies and bond investors watch closely: fiscal predictability, contingent liabilities, public-debt efficiency, current-account pressures generated by investment-related imports and the credibility of medium-term expenditure plans.
The cost of financing has also become more visible. Serbia raised roughly €3 billion equivalent through a three-tranche international bond operation in April 2026. The transaction included a €1 billion five-year eurobond with a 4.25 per cent coupon, a €900 million 12-year green bond with a 4.875 per cent coupon, and a $1.25 billion ten-year dollar bond, whose obligations were hedged into euros at an effective euro coupon of around 4.66 per cent. Investor demand was strong, but these financing costs are materially above the exceptionally cheap sovereign funding available before the global interest-rate cycle turned.
Higher funding costs increase the value of project selection. Borrowing at four or five per cent to finance infrastructure can still make economic sense when the asset raises productivity, removes transport or energy bottlenecks and generates durable economic benefits. The calculation looks very different for projects whose economic returns are weak, whose construction costs repeatedly increase or whose operating subsidies become permanent budget liabilities.
This is especially relevant during the current investment peak. The IMF expects Serbian growth of around 2.8 per cent in 2026 before acceleration to approximately 4 per cent in 2027, supported in part by EXPO-related activity. Public debt remains moderate, and both the IMF and European Commission expect the debt ratio to continue declining under the baseline fiscal path. The European Commission’s ERP projections put gross government debt at around 44.5 per cent of GDP in 2026, 44.3 per cent in 2027 and 44.1 per cent in 2028.
That provides Serbia with more fiscal room than many regional peers, but it also makes the quality of expenditure increasingly important. With the major EXPO-related construction cycle eventually winding down, the policy challenge will move from maximising the volume of investment towards selecting projects capable of sustaining growth once extraordinary public construction spending fades.
The decisive test for the new decree will therefore not be whether Serbia produces more studies, databases or administrative approvals. It will be whether the system changes actual investment decisions: whether unrealistic projects are stopped before procurement, whether cost overruns trigger intervention, whether lifecycle costs appear in budgets, and whether large projects implemented through exceptional legal or financing arrangements face comparable economic scrutiny.
Serbia has already demonstrated that it can mobilise large amounts of capital from international bond markets, bilateral creditors, European institutions and domestic resources. The next stage of the public-investment cycle is increasingly about demonstrating that each borrowed or budgeted euro produces sufficient economic value. A genuinely unified capital-project system would strengthen not only budget discipline but also the credibility of Serbia’s broader investment-led growth model at a time when infrastructure spending, sovereign borrowing and EU integration are becoming more closely connected.
