Public Finance Review - Fiscal Policy for a High-Income Serbia

Jul 19, 2026

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Public Finance Review examines Serbia’s fiscal policy for a high-income trajectory, focusing on the foundations for macroeconomic stability and the sustainability of the current fiscal stance. It assesses recent developments in public finances, highlights fiscal risks and the role of fiscal policy in economic recovery, and translates findings into policy implications. The review analyzes revenue performance and tax system equity, proposes measures to improve spending efficiency and manage rigidities, and evaluates state-owned enterprise risks and public sector pay system reforms.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages88

Reading Time3 h 42 min

AccessFree to download

Acknowledgments

Abbreviations and Acronyms

List of Figures, Tables, and Boxes

Summary

Chapter 1. Strong Macroeconomic Foundations Provide a Sound Basis for Fiscal Policy

Recent economic developments helped to consolidate public finances

The current fiscal stance and outlook are sustainable

Several fiscal risks need careful management

Fiscal policy played an important role in economic recovery

Policy implications and recommendations

Chapter 2. Strengthening Revenues and Enhancing Equity

Recent revenue performance was strong

Revenue performance assessment

The progressivity of the tax system could be improved

The buoyancy of the Serbian tax system is comparable to its peers

The productivity and efficiency of the tax system is in line with comparators

Policy implications and recommendations

Chapter 3. Getting More from Every Dinar Spent: Improving Efficiency and Managing Rigidities

The size and composition of public spending have changed in recent years

The efficiency of public expenditures could be improved

Expenditure policy could be made more equitable

Policy implications and recommendations

Chapter 4. Managing State-Owned Enterprise Risks to Safeguard Fiscal Health

The SOEs reform agenda remains significant

Recent regulatory reforms help to address longstanding challenges

Serbia’s SOE sector remains large by regional standards

Serbia’s SOEs carry significant fiscal cost and risk

A credit risk analysis of the largest SOEs reveals weaknesses

Policy implications and recommendations

Chapter 5. Toward a More Transparent and Equitable Public Sector Pay System

Serbia needs a reformed public sector pay system

Systemic weaknesses persist

Options for pay and grading reform

Different scenarios for implementation

Policy implications and recommendations

Annexes

Annex I: Health Excise Tax Assessment

Annex II: Altman Z score for selected SOEs

References

Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Pub lic Disc losure Authorized Public Finance Review Fiscal Policy for a High-Income Serbia Public Finance Review Fiscal Policy for a High-Income Serbia © 2025 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; [Internet: www.worldbank.org](Internet: www.worldbank.org)[ ](Internet: www.worldbank.org)[Some rights reserved.](Some rights reserved.) This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others does not mean the World Bank endorses the views expressed by those authors or the content of their works. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution: Please cite the work as follows: “World Bank. 2025. Serbia Public Finance Review: Fiscal Policy for a High-Income Serbia. © World Bank.” Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; email: [pubrights@worldbank.org](pubrights@worldbank.org). Cover photo: [holgs/istockphoto. com](holgs/istockphoto. com)[ ](holgs/istockphoto. com)[Cover & report design: Kane Chong](Cover & report design: Kane Chong) Table of Contents Acknowledgments 4 Abbreviations and Acronyms 5 List of Figures, Tables, and Boxes 6 Summary 8 Chapter 1. Strong Macroeconomic Foundations Provide a Sound Basis for Fiscal Policy 16 1.1 Recent economic developments helped to consolidate public finances 17 1.2 The current fiscal stance and outlook are sustainable 20 1.3 Several fiscal risks need careful management 23 1.4 Fiscal policy played an important role in economic recovery 26 1.5 Policy implications and recommendations 27 Chapter 2. Strengthening Revenues and Enhancing Equity 28 2.1 Recent revenue performance was strong 29 2.2 Revenue performance assessment 31 2.3 The progressivity of the tax system could be improved 34 2.4 The buoyancy of the Serbian tax system is comparable to its peers 36 2.5 The productivity and efficiency of the tax system is in line with comparators 37 2.6 Policy implications and recommendations 39 Chapter 3. Getting More from Every Dinar Spent: Improving Efficiency and Managing Rigidities 40 3.1 The size and composition of public spending have changed in recent years 41 3.2 The efficiency of public expenditures could be improved 44 3.3 Expenditure policy could be made more equitable 51 3.4 Policy implications and recommendations 53 Chapter 4. Managing State-Owned Enterprise Risks to Safeguard Fiscal Health 54 4.1 The SOEs reform agenda remains significant 55 4.2 Recent regulatory reforms help to address longstanding challenges 56 4.3 Ser

FAQs

What macroeconomic conditions does the review use as a basis for fiscal policy in Serbia?

It emphasizes strong macroeconomic foundations, consolidating public finances through recent economic developments, and evaluates whether the fiscal stance and outlook remain sustainable.

How does the review evaluate Serbia’s revenue system and tax equity?

It assesses recent revenue performance, examines progressivity of the tax system, and compares tax buoyancy, productivity, and efficiency with peers and comparators.

What reforms does the review propose regarding public spending and state-owned enterprise risks?

It focuses on improving efficiency, making expenditure policy more equitable, and managing SOE-related fiscal risks through reforms and analysis of credit risks and regulatory changes.

Jul 19, 2026

Upload by Eliana