Programmatic Private and Financial Development Policy Credit (PPFDPC-1) (Serbia)

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The First Programmatic Private and Financial Development Policy Credit (PPFDPC-1) for Serbia and Montenegro is the first in a series of up to four programmatic Development Policy Credit/Loans designed to support a multi-year program of assistance to the Republic of Serbia to address key institution building and reform challenges in both private and public sectors. The overall programmatic DPCL program aims to support sustainable economic growth and employment creation in Serbia. This project aims to support the Government of Serbia's actions in two broad areas: (1) strengthening the fiscal discipline in enterprise, energy and transport sectors, and attracting foreign direct investment; and (2) building a more efficient and stable financial sector and improving access to finance. Project aims will be achieved through government reforms as summarized in two pillars: Strengthening fiscal discipline, that is, reducing the Ministry of Economy's subsidy program and strengthening the Transition Fund mechanisms for displaced workers; privatizing, restructuring and bankruptcy of socially-owned enterprises; strengthening the legal framework for mining concessions; agreeing upon a time-bound process for the interim restructuring of Serbia's national electric power utility; and beginning to rationalize the railway sector in accord with a time-bound plan. Second, building a more efficient and stable financial sector, specifically, privatizing state-owned banks and divesting financial assets; strengthening the insurance sector regulation and resolution regime; the National Bank of Serbia's addressing banking sector supervision, regulation and resolutions; and improving access to finance by adopting a mortgage law.