Encouraged by macroeconomic reforms, financial stability and fiscal discipline, the investment climate in Serbia has moderately improved in recent years, and American investors generally view business in Serbia positively, according to the US State Department Report.
It is reported that Serbia replaced its 30-month Policy Coordination Instrument (PCI) with a new two-year stand-by arrangement with the International Monetary Fund (IMF) in December 2022, which provides direct assistance to the Serbian budget to cover the high cost of energy imports.
It is stated that the stand-by arrangement “pacifies the issuers of government bonds”, as well as that Serbia will probably benefit by getting more favorable rates than it would otherwise.
The Government of Serbia introduced significant reforms
When it comes to US investors, the Report states that US investors are generally on a level playing field and can take advantage of various programs designed to attract foreign direct investment (FDI).
It is noted that the US embassy in Belgrade often helps investors when problems arise, and that Serbian leaders respond to investment problems, and reminds that in 2021, the US and Serbia signed an investment promotion agreement that enabled a guarantee scheme for bank lending to small and medium-sized enterprises.
It is added that the Government of Serbia recognized economic growth and the creation of new jobs as the main priorities and introduced significant reforms in the Labor Law in connection with the issuance of building permits, inspections, public procurement and privatization. It is emphasized that these reforms helped to improve the business environment.
“If the government delivers on the reforms promised during the EU accession process, business opportunities should continue to grow. Sectors benefiting include agriculture and agro-processing, solid waste management, sanitation, environmental protection, information and communication technology (ICT), renewable energy , health care, mining and manufacturing,” the report states.
Obstacles to attracting investments to Kosovo
The State Department also published a report on the business climate in Kosovo, which states that the dispute with Belgrade and corruption are the main obstacles to attracting investment.
A number of structural issues are also highlighted that limit Kosovo’s potential to attract additional foreign direct investment (FDI), including limited regional and global economic integration, political interference in the economy and judiciary, unreliable energy supply, corruption and weak rule of law, including lack of enforcement contract.
It is pointed out that the ability of the Pristina authorities to sustain growth relies heavily on international financial support and remittances.
“Kosovo’s ongoing dispute with Serbia and the lack of formal recognition by many countries and international organizations, including the United Nations, also hampers investment and creates obstacles for doing business,” the report for this year states.
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