Second Public Expenditure Development Policy Loan

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The objective of the Second Public Expenditure Development Policy Loan Program (PEDPL2) is to help reduce the size of Serbia's large public sector by supporting reforms that will help improve the efficiency of public spending. The PEDPL program is central to the Bank's engagement in Serbia as described in the Country Partnership Strategy (CPS) and the Country Partnership Strategy Progress Report (CPSPR). The amount for the (PEDPL2) is USD 100 million. The PEDPL2 will be part of a coordinated financing package with the International Monetary Fund (IMF) and the European Commission (EC). PEDPL2 focuses on expenditure rationalization measures, targeting the public sector wage bill and the pension bill. The public sector wage bill has been in excess of ten percent of Gross Domestic Product (GDP) for the past five years, and pension spending the largest single spending category in Serbia is the second highest in Europe and Central Asia (ECA), a region where pension spending is typically high. After PEDPL2, the Third Public Expenditure Development Policy Loan Program (PEDPL3) will focus on expenditure rationalization in social sectors, including rationalization of the school network and payment reform in health areas where potential fiscal savings are the largest. First Public Expenditure Development Policy Loan Program (PEDPL1) focused on overarching public expenditure reforms.