Private & Financial Sector Adjustment Credit 2 (PFSAC 2)

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The Second Private and Financial Sector Adjustment Credit (PFSAC II) will support the governments Serbia and Montenegro, and its largest constituent member state, Serbia, in the implementation of regulatory, institutional, and structural reforms seeking to significantly accelerate private sector-led growth through: (i) improving the business environment by means of comprehensive reform of enterprise entry, operation and exit; (ii) strengthening the financial system by privatizing and / or liquidating majority state-owned banks and improving the environment under which banks and other financial intermediaries operate; and (iii) privatizing and restructuring socially-owned enterprises that crowd out private sector growth, hamper banking sector recovery, and incur significant fiscal and quasi-fiscal costs. Accordingly the project will be focused in the following areas: reform of business enabling environment, reform of financial sector regulatory and supervisory framework, banking sector reform, and enterprise sector reform. The credit will be a two tranche operation whose design incorporates the lessons from the implementation of PFSAC I, as well as from transition reforms in the Europe and Central A region during the past decade. The main benefit of the proposed credit will be the facilitation of faster private sector growth and job creation, supported by a healthier and more developed financial system.